June 2, 2023
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Supreme Court rules for small business owners, not government


Big companies can afford armies of lawyers to keep government regulators at bay.

Just look at the big banks’ response to the financial crisis or the clever-but-stupid way Plains All American used the courts to get around state pipeline regulations, then had a nasty oil spill due to negligence or worse.

But rare is the small business owner who will fight back.

Surprisingly, help for the little guy arrived this month from an unlikely place — the nation’s highest court.

In separate rulings announced on June 22, the Supreme Court gave small companies a pair of new weapons against government overreach.

The actual decisions are on pretty narrow grounds, but they signaled that both the conservatives and liberals on the court believe that, at least at times, the government has stuck its nose too far into private interests.

In the first decision, an 8-1 majority sided with Marvin Holmes, a California farmer who protested the taking of part of his raisin crop by a government-backed board that dates back to the Truman Administration.

That decision got a lot of press because raisins are a headline writer’s gift from the gods — think sour grapes, forbidden fruit and ripe for picking.

Chief Justice John Roberts added a touch of drama in oral arguments when he said that as opposed to a regulation that would limit production, “this is different because you come up with the truck and you get the shovels and you take their raisins, probably in the dark of night.” He noted in his written decision that the truck actually arrived at 8 a.m. and was turned away.

Holmes won on the narrow ground that the raisin board could not physically take his crops; the court also held that the ruling applies only to raisins. And while the conservative wing of the court agreed with Roberts, several liberals wrote concurring opinions that disagreed with parts of Roberts’ logic. But in my book, any victory for a small business owner is a victory for all of us.

Meanwhile, the court’s four liberal justices joined by Anthony Kennedy gave a Los Angeles hotel owner relief from constant harassment from police looking to inspect the hotel’s guest registry.

The court ruled that the police did not have a right to repeatedly conduct surprise searches of the registry without giving the owner an opportunity for a hearing.

Justice Sonia Sotomayor said it was not lawful for the owner to risk “being arrested on the spot” for not complying with the police request. The court held that the city’s ordinance violated the 4th Amendment because it allowed unreasonable searches.

This ruling was also quite narrow and it included exemptions for gun shops and other establishments where spot inspections of business records could be essential for public safety.  It also appeared to speak to situations where police were repeatedly checking on a hotel’s registry at all hours of the day and night without warning.

The conservatives on the court dissented on the grounds that searching a hotel’s registry in real time might be necessary for tracking down a criminal and Los Angeles was studying its options and presumably it could always tweak the ordinance to allow for an emergency exception.

In the final analysis, wins for small business owners at the nation’s high court are extremely rare. Most of the time, business owners have little relief from assenting to a government’s request for records or from going along with regulations that limit production or water use.

But the court seems to be in broad agreement that the scales of justice should not be tilted totally in the direction of government. For entrepreneurs like me who took a big leap into business ownership with no idea of the thousands of rules that now come into play, that in itself is a victory.

• Reach Editor Dubroff at hdubroff@pacbiztimes.com.