282 U.S. 251 (1930), argued 30 Apr. 1930, reargued 30 Oct. 1930, decided 5 Jan. 1931 by vote of 5 to 4; Brandeis for the Court, Van Devanter, McReynolds, Sutherland, and Butler in dissent. O’Gorman is a turning point case in the field of economic due process. One of the last liberty of contract cases, it involved a New Jersey statute regulating the fees paid to local agents by insurance companies. The statute was challenged as a violation of the Fourteenth Amendment's Due Process Clause. Contending that the facts surrounding its origins and operation should be determinative, Justice Louis Brandeis sustained the statute. He found that the presumption of constitutionality must prevail in the absence of some factual foundation of record for overthrowing the statute” (p. 258). Further, legislative judgment must prevail unless it could be demonstrated that the measure was utterly arbitrary. No such demonstration had been made. The business of insurance, he argued further, is so far affected with a public interest that the state may regulate the rates as a subject clearly within the scope of the police power. He further contended that the Court should cease using the Due Process Clause in a “substantive” manner to second guess the legislature.
The four dissenters vigorously propounded freedom of contract, restrictive alteration of the public interest doctrine, and the pressing obligation to check any legislative interference with property. They particularly objected to the idea that the right to regulate business implied the power to trespass on the duties of private management. The majority opinion, however, made clear that the constitutionality of state regulation of the economy should no longer turn on the question of its unreasonableness.
Paul L. Murphy