On a Depression-era dinner table sat a can of milk that wasn’t quite milk. It was called Milnut, and it was technically a “filled milk” – meaning it looked and tasted like the original but had been spun through a centrifuge to remove the butterfat and fortified with vegetable or coconut oil. The valuable butterfat was later sold separately, allowing Milnut to be priced cheaply. Its price, and the fact that it was shelf-stable, made it a formidable alternative to traditional dairy during hard times. And within the world of dairy, it was revolutionary. One reporter likened its makers to Thomas Edison and Henry Ford.
Milnut was safe to drink. But it was dangerous to the entrenched dairy industry, which lobbied Congress for an interstate shipping ban in the form of the Filled Milk Act. Eventually, federal regulators sued the maker of Milnut, Carolene Products Company, for selling filled milk across state lines. The resulting Supreme Court decision would go on to become a staple of constitutional law – not for its holding, but for a mere footnote. Though joined by only four justices and unnecessary to the outcome, that footnote now governs the way many of our constitutional rights are treated in court.
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The footnote is the basis for modern “tiers” of scrutiny – in which the court decides how strictly or how loosely to evaluate government action. The highest level (strict scrutiny) requires laws to be narrowly tailored to further some compelling government purpose. But rather than being a flexible test, it’s often characterized as “strict in theory, fatal in fact.” Conversely, the lowest tier (rational basis scrutiny) has been called “anything goes.” Economic freedom has been a loser in this scheme, since it has been relegated to the lowest tier and therefore receives almost no judicial scrutiny at all. Some courts have even upheld restrictions on economic rights based on justifications dreamt up by the judges themselves and explicitly disclaimed by the government.
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After the Supreme Court upheld the Filled Milk Act, Charles Hauser, one of Milnut’s founders, did not give up. He invested in studies showing Milnut’s healthfulness, innovated and changed the company’s name to Milnot, and skirted the Filled Milk Act by selling only within states where he had factories. He even built a factory on the Oklahoma-Missouri border so that the milk produced on each side could be sold in its respective state.
And he kept suing. Decades later his son would remark that he had “lived with this case almost all of [his] life.” Hauser spent “hundreds of thousands of dollars in legal fees and even a weekend in jail” fighting anticompetitive limitations on Milnut, before being pardoned by FDR. In 1972, a district court finally agreed that the Filled Milk Act, as applied to Milnut, violated due process. But by that time, Hauser was 92 and hospitalized, and the protectionist ban had succeeded in preventing his company from potentially becoming a nationwide success. His family remarked that it would have been futile to tell him the outcome of the lawsuit because he was no longer capable of understanding.
From the article:
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