Economic Freedom Lawsuits Filed in Lincoln Court

The public interest law firm the Institute for Justice (IJ) has filed two lawsuits in Lancaster County court related to policies recently debated in the Nebraska Legislature.

While the Platte Institute is not party to either lawsuit, they clearly intersect with our work, since both challenge the constitutionality of state and local economic policies we’ve weighed in on.

One lawsuit, representing home care business owner Marc N’Da, takes issue with the state’s current Certificate of Need policy for non-emergency medical transportation providers. I’ve written elsewhere on the law, which allows existing businesses to protest the applications of qualified potential competitors.

To this point, the Unicameral has declined to pass legislation that would address the problem Marc brought to their attention last year, where he was denied by the Nebraska Public Service Commission; despite being told he was qualified to operate his business.

The other suit, brought by Lincoln-area home baker Cindy Harper (who I also interviewed here) relates to the new cottage food law the Legislature succeeded in passing last year.

Under the new law, Nebraskans now have a lot of opportunities to start home-based businesses offering a variety of baked goods and confections that are not time/temperature controlled for food safety.

Basically, as long as you’re making an allowable food item, all a cottage food producer has to do is register with the state, take an online food safety course, and disclose to customers that the products are not made in a regulated and inspected kitchen. They can’t be sold at a restaurant or store. Just from your home, online, or a farmers market.

But not long after this new law passed, the City of Lincoln created its own cottage food ordinance that requires additional inspections of your home-based kitchen and a permitting fee. In the process of these rules being implemented, Cindy’s home-based business was shut down back in December, even though the state had already said she was OK to begin selling sugar cookies and pound cakes for the holidays.

Not everyone is going to agree with Marc and Cindy’s positions. Some may find the policies they’re challenging to be sensible or useful. But it will be up to the court to decide if the laws or policies are also lawful.

The legal process is never guaranteed to produce results, of course, but I wouldn’t bet against IJ. According to their website, they win 72% of the time on their legislative and legal campaigns.

And notably, one of their most famous and successful cases was actually a legal loss. You may remember the U.S. Supreme Court case, Kelo v. New London. In that decision, a Connecticut homeowner was fighting her city’s use of eminent domain, which involved taking her property for use in a private development. IJ represented Susette Kelo, the homeowner.

While the Supreme Court ruled against Kelo, the decision launched a nationwide response in state legislatures, leading to reforms to prevent eminent domain abuses.

Here in Nebraska, the case of Marc N’Da brings scrutiny to a long-standing law that has benefited a few businesses at the expense of workers, entrepreneurs, and consumers. Cindy Harper is shining more light on regulation in the City of Lincoln, which has demonstrated a pattern over the years of using ordinances to favor established businesses over newcomers like food trucks and short-term residential rental owners.

Both cases also have new relevance given COVID-19. A cottage food business is an income-earning opportunity almost anyone can launch from their kitchen,  and while practicing social distancing. Marc N’Da’s desire to provide non-emergency medical transportation for home care clients comes as many vulnerable Nebraskans need additional assistance to meet their daily needs.

Lawsuits often invite skepticism for all sorts of reasons, and not every point of disagreement should result in legal action. But litigation is still a very necessary tool for those times when policymakers fall short and there are no other remedies.

Some issues are more fundamental than who wins the election or has the votes in a legislative body. Sometimes governments simply don’t follow the laws they pass, or the laws or constitutions of the states they live in, and the judicial branch must step in to correct an injustice.