RALEIGH – It wasn’t a shocking result, based on the buzz of the past couple of months, but it was still dismaying to see the U.S. Supreme Court unanimously dismiss the Cuno lawsuit challenging the constitutionality of targeted tax incentives for economic development.
The 9-0 decision, importantly, did not speak to the underlying Commerce Clause issues at all. The Court simply found that the plaintiffs, who had won at the trial and appellate levels, did not have standing to sue under the strict standards long applied within the federal courts. As I have previously indicated, I happen to believe that the Cuno plaintiffs and their attorneys had constructed an ingenious and persuasive argument that, if upheld as a federal precedent across the whole country, would have at least modestly improved the fairness and efficiency of state tax codes. We’ll never know how the case would have turned out, or whether it would have significantly curtailed the corporate-welfare madness so prevalent in state capitals. That’s too bad.
But at least everyone knew going in that the federal courts took a narrow view of legal standing. It was always the vulnerability of Cuno-type challenges in the federal courts. The effort was worth trying, despite it all, because a federal precedent would have been powerful.
Unfortunately, shortly after the Cuno dismissal was handed down, Wake County Superior Court Judge Robert Hobgood used a similar argument about standing as part of his dismissal of a lawsuit, filed on behalf of several taxpayer plaintiffs by attorneys with the NC Institute for Constitutional Law, challenging the constitutionality of the incentives granted to Dell Computers as they sited a new plant in Forsyth County. This was far worse news, not just for the cause of combating government meddling in the private marketplace but also for the right of North Carolina citizens to challenge their governments in court for violations of the state constitution.
Obviously, no one should want a system in which the losers of every public-policy battle can easily take their cause into the state courts. Former Chief Justice Burley Mitchell, who represented Dell (and once served on the JLF board of directors), was surely right to comment that state judges should not act as policymakers, and was clearly clever to employ the loaded term “judicial activist” to make his point.
But by the standard he seems to be articulating, and Hobgood appears to believe is current state law, it is difficult to imagine how the North Carolina judiciary can serve its proper role of checking the other branches of state government when they run afoul of the state constitution. Certainly there are cases in which an individual suffers personal harm due to the unconstitutional action of the General Assembly or executive branch. In many other possible cases, however, individuals may suspect but may not know for sure that they are personally harmed by such an action. Or it may be impossible for an individual to claim to be among a small class of victims distinguished from the general population (as Hobgood appears to demand in his ruling) because the victims are the general population.
In North Carolina courts, the traditional understanding of standing was that any taxpayer could sue to challenge the constitutionality of government decisions that use his taxes along with those of everyone else’s. Of course such a suit may fail. It may be thrown out on a variety of other grounds. But for standing? If upheld, Hobgood’s decision will be an exceedingly dangerous precedent for individual rights and good government in North Carolina.
Hood is president of the John Locke Foundation.