Romero v. Hodgson

MEMORANDUM OPINION AND ORDER

PER CURIAM.

Plaintiffs herein attack the exclusion, by both California and federal statutes, of agricultural labor from the definition of “employment” for the purposes of unemployment compensation. 26 U.S.C. § 3306(c) (1), (k); Calif.Unempl.Ins.Code, §§ 625-627. Essentially, they argue that this exclusion, when considered in light of the economic and social changes since the enactment of the Federal Unemployment Tax Act, constitutes “invidious discrimination” within the meaning of the due process and equal protection clauses of the Constitution.

The state and federal defendants moved to dismiss on various procedural grounds, invoking, among other things, sovereign immunity, the limits on federal equitable jurisdiction in tax cases (28 Ú.S.C. §§ 1341, 2201 and 26 U.S.C. § 7421), and failure to join necessary parties under Rule 19 of the Federal Rules of Civil Procedure. These motions were denied by this Court’s Order of July 9, 1970. Also denied at this time was plaintiff’s motion for a preliminary injunction.

*1202A three judge Court having been appointed under 28 U.S.C. § 2281, the matter was heard on all pending motions, including plaintiffs’ motions for declaratory and injunctive relief, and defendants’ motion to dismiss for failure to state a cause upon which relief could be granted.

Congress enacted the original Unemployment Tax Act in 1935 as part of the Social Security Act. The constitutionality of the Act as a whole, as well as of the exclusions from its coverage, was soon challenged in a series of cases which together developed a test of due process-equal protection rationality as deferential as any known to the law. Faced with the exclusion of agricultural employers from the tax provisions of the Act, the Supreme Court found two rationalia for the exemption: (1) “the legislature may withhold the burden of the tax in order to foster what it conceives to be a beneficent enterprise”; (2) “ [a] dministrative considerations * * * [relatively great expense, and inconvenience of collection may explain the exemption from taxation of * * * farmers.” Carmichael v. Southern Coal, 301 U.S. 495, 512-513, 57 S.Ct. 868, 874, 81 L.Ed. 1245 (1937); Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279 (1937); Helvering v. Davis, 301 U.S. 619, 57 S.Ct. 904, 81 L.Ed. 1307 (1937).

Plaintiffs and federal defendants have entered into a stipulation of facts which together describe a veritable revolution in American agriculture. Whereas the bulk of American farms in 1935 were small family enterprises dispersed in every corner of the country, todays corporate farms are automated, computerized entities which together account for 89% of the farm employment in the United States. Farmers today must keep records for the Internal Revenue Service and the Social Security Administration, and this fact casts further doubt, according to plaintiffs, on the continuing validity of Carmichael.

The Court accepts plaintiffs argument that a legislative classification must be judged in light of today’s circumstances, and that a classification deemed reasonable at the time of enactment can become quite arbitrary with the passage of time. Chastleton, etc., et al. v. Sinclair, 264 U.S. 543, 44 S.Ct. 405, 68 L.Ed. 841 (1924); Brown v. Board of Education, etc., 347 U.S. 483, 74 S.Ct. 686, 98 L.Ed. 873 (1954); Babbitz v. McCann, 310 F.Supp. 293 (E.D.Wis.1970); People v. Belous, 71 Cal.2d 954, 80 Cal.Rptr. 354, 458 P.2d 194 (1969).

But the history cited to us by plaintiffs teaches more than one lesson. The law of equal protection has undergone many changes in the past half century, and most important of these is, perhaps, the standard of deference to the legislature which came out of the turbulent thirties and which remains strong today. While many cases have shown the judiciary highly suspicious of legislative classifications which abridge what are called “fundamental” or “constitutional” rights, every presumption has run in favor of upholding laws which deal with regulation of the economy, the public health, or the collection and disbursement of taxes. Takahashi v. Fish and Game Comm., 334 U.S. 410, 68 S.Ct. 1138, 92 L.Ed. 1478 (1948) ; Shapiro v. Thompson, 394 U.S. 618, 89 S.Ct. 1322, 22 L.Ed.2d 600 (1969); Semler v. Oregon State Board of Dental Examiners, etc., 294 U.S. 608, 55 S.Ct. 570, 79 L.Ed. 1086 (1935); United States v. Maryland Insurance Corp., 91 S.Ct. 16, 27 L.Ed.2d 4 (1970).

There is something rigid about today’s law regarding constitutional reasonability, courts being forced to choose between the strict standard of Shapiro and the highly permissive one of Carmichael. But however this dichotomy might seem to ignore the subtleties involved in any judgment of “reasonableness”, it is an analysis which must be applied by this Court to the instant case. Dandridge v. Williams, 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970), involved a statutory classification which affected “the most basic economic needs of impoverished human beings”. Id. at *1203485, 90 S.Ct. at 1162. Yet Dandridge applied the traditional “any conceivable state of facts” test enunciated in the 1930’s, and found the classification reasonable.

Thus the standard to be applied to this case is the same one utilized by the Supreme Court in Carmichael. And while changing times might have vitiated the argument concerning the administrative burden of including agriculture in the Act, they have not affected the other rationale found good by the Carmichael Court, i. e., the desire to subsidize agriculture. The Court further notes that in recent years only one significant regulatory measure has been found to violate equal protection, and that “under-inclusive” classifications have proven themselves particularly resistant to judicial scrutiny. When the legislature chooses to inaugurate a reform as sweeping as that which is represented by unemployment compensation, it is often forced to make compromises which, whether in the name of politics or economy, are often impossible of explanation in strictly legal terms. Realizing this, the Courts have refused to require that the State remedy all aspects of a particular mischief or none at all. Developments in the Law; Equal Protection, 82 Harv.L.Rev. 1065, 1084-87 (1969). See also Gonzales v. Shea, 318 F.Supp. 572 (1970). Hence the exclusion of agriculture from unemployment compensation can be seen as an indirect subsidy of a “beneficent enterprise”, or as an effort to save the compensation fund from the drain which would result from the inclusion of another large “deficit industry”, or even as a necessary political compromise without which it would have been impossible to inaugurate a most important reform in American institutions. Whether all of this is good policy is of course not the question before us. We can only ask if these justifications are rational by the loose standards of Carmichael, Steward Machine, and Dandridge, cit. supra. We conclude that they are.

Accordingly, it is hereby ordered that plaintiff Romero take nothing by his action. It is further ordered that the motion of plaintiffs for injunctive relief is denied. The Clerk is directed to enter judgment for the defendants and against the plaintiffs, and to dismiss the complaint and cause of action.