State Courts Should Reject Federal Precedent When Interpreting State Contract Clauses

If there’s a scourge in state constitutionalism it’s the “lockstep doctrine,” the idea that state courts construing state constitutions should interpret them the same way the U.S. Supreme Court interprets similar language in the U.S. Constitution. Over and over again we “anti-locksteppers” shout from the mountaintops that it’s perfectly fine when state courts interpret state constitutions differently, even when the text in the two constitutions is exactly the same.

Advocating against lockstepping can be a way to combat disfavored policy results of U.S. Supreme Court cases. For example, following the U.S. Supreme Court’s ruling in Dobbs v. Jackson Women’s Health Organization, abortion advocates urged state courts to interpret state constitutional liberty and equality provisions as more protective than the federal Constitution. But anti-locksteppers should be open to state independence across the board, not just in areas where we disagree with the policy results of U.S. Supreme Court cases. This includes openness toward an independent interpretation of a type of clause my progressive friends might not be so enamored with — state contract clauses.

We’re taught not to mention the Contract Clause in mixed company. Nestled into Article I, Section 10 of the U.S. Constitution, it unambiguously states that “no state shall . . . pass any . . . law impairing the obligations of contracts.” In the wake of state populist policies following the Revolution, the framers drafted it to protect the expectations of people trying to make a living and to foster economic stability. For over a century the U.S. Supreme Court used it to find all manner of state laws unconstitutional.

The clause is an enumerated protection of economic liberty. This is something that should qualify it for special treatment under post-New Deal constitutional law. After all, in the famous Footnote Four of United States v. Carolene Products, the Court indicated that while it was largely forsaking an unenumerated right to contract, it would still take enumerated rights seriously. This has largely remained constitutional gospel ever since.

So why don’t we hear more about the Contract Clause? Well, by the time Carolene Products was decided in 1938 that “enumerated” right wasn’t much of one. Just four years before, in Home Building & Loan Association v. Blaisdell, the Court upheld the Minnesota legislature’s rewriting of mortgage contracts. The law gave borrowers more time to redeem their mortgages and not lose their homes to foreclosure. A noble and politically popular goal, of course, but also one that inarguably “impaired” the banks’ contracts.

Say what you will about the Warren Court or the Roberts Court jettisoning precedent or original meaning to arrive at a politically convenient conclusion: they have nothing on Blaisdell. Even if you like the reasoning or result of Blaisdell, it’s not controversial to say it didn’t follow from prior precedent and doesn’t comport with the original understanding (or really any understanding) of the Contract Clause. Indeed, the opinion itself rejected looking at the clause’s origins. An arch-defender of judicial restraint, the late legal scholar Lino Graglia, agreed with the case’s result but nevertheless said the Minnesota statute in question was “perhaps the most clearly unconstitutional law to come to the Court in its history.”

The Court put some teeth back in the clause in the 1970s when it came to public contracts, but overall, today the clause provides little more protection of the right to contract than the unenumerated version.

Forty states have their own contract clause, generally worded extremely similarly to the federal version. Washington is one. There, a group of landlords recently argued that Washington’s contract clause cognate protected their contractual right to evict tenants for nonpayment of rent, notwithstanding an executive order suspending evictions during the pandemic.

On September 28, 2023, the state high court rejected the landlords’ state contract clause claim, along with a number of challenges, in Gonzales v. Inslee. The court repeatedly cited Blaisdell when interpreting and applying the clause.

You can’t blame the Gonzales court too much here. The parties didn’t present argument that Blaisdell shouldn’t apply to the case, and under Blaisdell the landlords had a hard battle. Moreover, other state supreme courts have applied Blaisdell ubiquitously in interpreting their own contract clauses.

Indeed, I’ve found only one example of a state court rejecting Blaisdell under its own state constitution — Texas — and that was way back in 1934 itself. In recent decades, I haven’t found a single instance of a state high court rejecting Blaisdell as a proper authority for interpreting its own state constitution. Contrast this with Fourth Amendment law or due process jurisprudence, where state courts frequently (and often correctly!) reject U.S. Supreme Court reasoning. Even if you think the Supreme Court was right to protect Minnesota homeowners in 1934, you can accept that its method of constitutional interpretation was questionable and that perhaps a different method should apply to a state version. Most state contracts clauses were adopted before 1934 (such as Washington’s, in 1889). It is astonishing that only one state doesn’t comport with this later, made-from-whole-cloth precedent.

This is a sign of failure. It is a failure of judicial engagement, with judges blindly applying federal caselaw. It is also a failure of attorney engagement, as advocates miss opportunities to take a shot at Blaisdell when making state constitutional claims. And both failures should concern those of us who believe in the independence of state constitutions and state courts. State constitutionalism has made great strides in some areas. But the story of our 41 contract clauses tells us it has a long way to go.

Anthony Sanders is the director of the Center for Judicial Engagement at the Institute for Justice and the author of Baby Ninth Amendments: How Americans Embraced Unenumerated Rights and Why It Matters.