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September 30, 1959


Before Hastings, Circuit Judge, and Perry and Hoffman, District Judges.

The opinion of the court was delivered by: Hastings, Circuit Judge.

The sole question presented by the Government's motion to strike certain portions of the complaint in this case is whether this court can and/or should take evidence to test plaintiffs' assertion that there is no rational basis in fact for the act of Congress prohibiting contracts for the sale of onions for future delivery on or subject to the rules of any board of trade in the United States. See Title 7 U.S.C.A. § 13-1. Basically, it is the Government's position that the congressional hearings establish a rational basis for the enactment of the law and that this court is precluded from hearing, de novo, evidence upon an important question of national policy determined by Congress. It further urges that the law is within the limits of the commerce power and does not violate the due process clause of the Fifth Amendment. If these premises are accepted, then, the Government argues, the allegations against which the motion is made are immaterial and should be stricken.


Plaintiffs contend that this court must take certain evidence before it can decide the basic constitutional questions raised by the complaint which are: (1) that the act is violative of due process in that it prohibits all persons under any circumstances from engaging in "an existing, lawful and essentially harmless business on or through a useful and lawful institution, to-wit: a board of trade, which is the only place where such lawful business can be transacted as a practical matter * * *"; (2) that the act is violative of due process in that it was arbitrarily and discriminatorily enacted without reasonable efforts being made to ascertain vital facts; and (3) that there is no rational basis in fact for the enactment.

Although stated as a separate ground of unconstitutionality, the argument that there is no rational basis in fact for the law would seem to be plaintiffs' conclusion based on its initial arguments that the act violates due process due to the essentially useful and harmless nature of the condemned activity and due to the failure of Congress to make reasonable efforts to ascertain vital facts as to the nature of the prohibited activity. Plaintiffs contend that various facts set forth in the allegations sought to be stricken, would, if proven, establish the essentially useful and harmless nature of plaintiffs' operations and establish that those operations are entirely intrastate. Thus, plaintiffs urge, evidence must be taken on these allegations prior to any determination of the constitutional questions unless the facts so alleged are conceded or unless this court is prepared to take judicial notice thereof. Plaintiffs thus take the ultimate position that evidence must be taken to determine if there is a rational basis in fact for the law. The Government counters that the legislative record must first be considered; and, if it establishes a rational basis for the act, this court is bound by that record and the legislative pronouncements of the necessity for the questioned legislation.

It is my opinion that the Government finds more than adequate support for its position in the cases brought to our attention. Initially, plaintiffs concede, as they must, that should this court take evidence in this case, it cannot, if it arrives at different conclusions than those reached by Congress, substitute its conclusions for those of Congress. It has been held that a rational factual basis for particular legislation must be held to exist if the question of what the facts establish is a fairly debatable one, i.e., if the existence or nonexistence of a rational factual basis for the legislation is "fairly debatable" or "at least debatable." Clark v. Paul Gray, Inc., 1939, 306 U.S. 583, 594, 59 S.Ct. 744, 83 L.Ed. 1001; United States v. Carolene Products Co., 1938, 304 U.S. 144, 154, 58 S.Ct. 778, 784, 82 L.Ed. 1234; Radice v. People of State of New York, 1923, 264 U.S. 292, 294, 44 S.Ct. 325, 68 L.Ed. 690. In the so-called constitutional-facts case, such as the instant one, therefore, the burden is on the party attacking a statute to establish beyond a reasonable doubt that there are no facts — social, economic or otherwise — which would justify the enactment of the law. The burden of proof thus imposed has the effect of requiring that facts be indisputable in order to render a statute invalid; such "indisputable facts" could properly be the subject of judicial notice. Thus, in United States v. Carolene Products Co., supra, which involved federal legislation prohibiting the sale of "filled milk," the Court upheld the law pointing out that where the existence of a rational basis for legislation depends on facts beyond the sphere of judicial notice, such facts might be made the subject of judicial inquiry, but that:

    "[B]y their very nature such inquiries, where the
  legislative judgment is drawn in question, must be
  restricted to the issue whether any state of facts
  either known or which could reasonably be assumed
  affords support for it." (Emphasis added.) United
  States v. Carolene Products Co., supra, 304 U.S. at
  page 154, 58 S.Ct. at page 784.

The Court added that it was evident from "all the considerations presented to Congress, and those of which we may take judicial notice, that the question is at least debatable whether commerce in filled milk should be left unregulated, or in some measure restricted, or wholly prohibited." Id., 304 U.S. at page 154, 58 S.Ct. at page 784.

The limits upon judicial inquiry in this type of case are thus clearly defined. Upon consideration of the legislative record and of matters of which it may take judicial notice, this court may proceed to take further evidence only if its initial limited inquiry leaves it with the definite conviction that there is no rational factual basis for the challenged legislation.

The binding effect upon the courts of legislative determinations of fact is illustrated in any number of cases. In Board of Trade of City of Chicago v. Olsen, 1923, 262 U.S. 1, 43 S.Ct. 470, 67 L.Ed. 839, the Supreme Court rejected the contention that it must take evidence to determine whether facts or conditions, upon which the exercise of constitutional power depended, actually existed. Congress had enacted the Grains Futures Act to regulate sales of grain on the futures market. In referring to the legislative findings which it held to be binding, the Court said,

    "It is clear from the citations, in the statement
  of the case, of evidence before committees of
  investigation as to manipulations of the futures
  market and their effect, that we would be unwarranted
  in rejecting the finding of Congress as unreasonable,
  and that in our inquiry as to the validity of this
  legislation we must accept the view that such
  manipulation does work to the detriment of producers,
  consumers, shippers and legitimate dealers in
  interstate commerce in grain and that it is a real
  abuse." Id., 262 U.S. at pages 37-38, 43 S.Ct. at
  page 477.

The Supreme Court similarly in Powell v. Commonwealth of Pennsylvania, 1888, 127 U.S. 678, 8 S.Ct. 992, 1257, 32 L.Ed. 253, held it unnecessary for evidence to be taken to prove that the defendant in that case was producing and selling an oleomargarine that was a wholesome and nutritious article of food. A Pennsylvania statute had prohibited the sale of oleomargarine in that state. The Supreme Court in holding the act valid said,

    "Whether the manufacture of oleomargarine, or
  imitation butter, of the kind described in the
  statute, is or may be conducted in such a way, or
  with such skill and secrecy, as to baffle ordinary
  inspection, or whether it involves such danger to the
  public health as to require, for the protection of
  the people, the entire suppression of the business
  rather than its regulation in such manner as to
  permit the manufacture and sale of articles of that
  class that do not contain noxious ingredients, are
  questions of fact and public policy which belong to
  the legislative department to determine." (Emphasis
  added.) Id., 127 U.S. at page 685, 8 S.Ct. at page

More recent statements by the Supreme Court indicate further the position of that Court on this subject. See Galvan v. Press, 1954, 347 U.S. 522, 529, 74 S.Ct. 737, 98 L.Ed. 911; American Communications Association, C.I.O. v. ...

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