The State of Texas Tried to Strip Away a Man's Livelihood....So He Fought Back

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Subscribe now to Variety Confidential wherever you get your podcasts. And we return to our American stories. And now it's time for another rule of law story as a part of our rule of law series where we show what happens when there's either an absence or presence of the rule of law in our lives. Here's a story about a landmark case on economic freedom in the state of Texas. My name is Wesley Hoddett. I'm a senior attorney with the Institute for Justice. I've worked at IJ since I graduated from law school in 2008. And my first job was at IJ's then new Texas office in Austin. I was working there a little bit late one night.

I think it was around 630. And a couple of guys came into the office after everyone else had left. I didn't know them, but I went out to the front and introduced myself.

They were Ash Patel and Anveralee Satani to business owners who said that they had a problem with the state and they wanted to know if I would agree to talk to them about it. From there, I learned that their business was being threatened with being shut down because they employed eyebrow threaders. These are typically South Asian women who use a beauty technique involving nothing but a single strand of cotton thread. They put tension on that, form a kind of lasso, and it allows you to precisely remove hair around the eyebrows for beautification. And when Ash and Anveralee had set up their business, they told me they looked at Texas's cosmetology laws and saw nothing specifically about threading.

They plowed ahead like all good entrepreneurs do without asking permission. And it turned out that the Texas Department of Licensing and Regulation had, after the fact, decided that they thought threading was cosmetology. It followed that everyone that worked for Ash and Anveralee needed a cosmetology license. None of them had one, and as we later discovered, the cosmetology schools weren't teaching threading or testing anyone. They were going to go learn other people's cosmetology techniques. They were going to go learn other people's jobs just to qualify to continue doing their jobs. And you're talking about women that had been doing this professionally for 30 years, discovering at the age of 40 that the state expected them to go back to school.

Now, we all understand that that could be impossible for a variety of reasons. We're talking nine months of schooling in a licensed cosmetology school. There are almost always private businesses at a minimum. For some people, it takes two years, depending on what license they're trying to get. You've got to pay that private business quite a bit of money.

It usually ranges from like $7,000 to $15,000. You can't work while you're going to this school because, again, you've got to be there full time. You probably will, however, work for the private cosmetology school, which has people come in and pay for cosmetology services, but they keep the money. At the end of all of that, you have to take a couple of exams. There's almost always a practical component where you have to show that you know how to do the basic techniques.

Then there's almost always a written component, like a test you would take in school about how bacteria grow, where different styles originated from, what people mean when they say things like a beehive or cornrows. This is an example of what we call occupational licensing. It's the requirement that before you can do something to pursue a living, even though we all consider that thing to be legal, you need the government's permission. Now, there are a lot of professions that automatically come to mind when we think about occupational licensing. Doctors, lawyers, engineers, and indeed the licensing of those professionals has been around for a long time. But in the 1950s in this country, it was about 5% of the American workforce that required some form of occupational licensing.

Today, it's much closer to 20%. And that has profound social and economic impacts, particularly for people who are on the margins of society and on the margins of where it makes sense to begin licensing people for things. Cosmetology is a good example of this because it's often the first rung of the entrepreneurship ladder, especially for people from other countries who don't have a lot of language skills and a lot of other opportunities, right? This is perhaps why you see recent Asian immigrants predominating in places like nail salons, or why you see recent African immigrants predominating in places like hair braiding salons. It's because they have a marketable skill that people will pay for.

It's just they've really only got one. And cosmetology licensing in the 20s might have been about basic sanitation, but as time has gone on, it's become more about incumbent control of the industry. I mean, in every state, there's a committee who has jurisdiction over an executive agency whose responsibility it is to regulate the cosmetology industry. Usually by law, that agency has to be run by cosmetologists. You know, everyone that's on the board of the Texas Department of Licensing and Regulation, there's supposed to be at least some people who are cosmetologists, and some people who represent other walks of life. And so that agency will go to the relevant lawmaking committee and say, we think there need to be more restrictions on, for example, this new practice of threading that we're only beginning to see in our state. And the people who will be in the audience to sort of provide public comment will be, you know, beauty school owners and other cosmetologists.

And that means that the people who control the policy outcomes are the people who stand to gain or lose the most. And I mean, the motivation is obvious. You want to keep new competition out of the market so that you can charge more.

So their basic question that night was, can you help us? And, you know, I sort of gleefully said we might be able to, because I had been studying up on the Texas Constitution and was familiar with a line of cases on the one hand that provided very robust constitutional protection against irrational regulations like this. And on the other hand, I was aware of another line of cases that hewed much more closely to the federal constitutional standard for economic regulations, namely the rational basis test. Is there any conceivable justification? And if there is, the economic regulation is constitutional. So I was aware of the tension between these two lines of cases, and I wanted a case involving an economic regulation that would allow us to tease them out.

And I immediately saw the potential in Ash and Anver's predicament. And when we come back, more with our American stories and with Wesley Huddit, and he's an attorney with the Institute for Justice, defending Ash Patel, who runs an eyebrow threading business in Texas. Okay, round two. Name something that's not boring. Laundry?

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When we last left off, Ash Patel, a man who employed eyebrow threaders, had been told he'd have to shut down his operation and send all of his threaders back to cosmetology school for anywhere between nine months and two years of courses that didn't have anything to do with their craft. It seemed burdensome, and there was a disconnect between Texas' laws and the federal laws on economic freedom. So Wesley thought he might have a case.

Let's continue with the story. There was an uncertainty in Texas law. There was one line of cases that seemed to say, we do something more than what the federal government does when a person complains about a regulation that's making it too difficult or impossible to support themselves. And one line said that the government needed to have robust reasons that lined up with the real world. In other words, under Texas' culture and traditions and laws, the government had to have a good reason for requiring a restriction on someone's economic rights, and that reason had to make sense in the real world.

I'll give you an example. There was a case from the 60s where a small Texas town had restricted the size of fuel tanker trucks that could come through the town. Their justification for that was that they were concerned about fires. What that required in practical terms was that the large tanker trucks that operate everywhere else had to stop outside of the town and transfer into two smaller tanker trucks, which the court recognized based on testimony at a trial was a huge risk of fire.

And having two trucks on the road that could go boom was worse than having one truck on a road that could go boom. So the court in that case, it's called Humble Oil, ruled that under the Texas Constitution, the law was unconstitutional. You couldn't require that sort of irrational justification. Now, under federal law, the story has been quite different since around the New Deal period. Under federal law, we currently have an understanding of the U.S. Constitution's protections for economic liberty as being very anemic, almost worthless. The federal Constitution, the Supreme Court has told us, requires only some conceivable justification for a law. And so I think if we compare that to the Humble Oil case, the government's going to get a lot of leeway in determining the size of fuel tanker trucks because fuel tanker trucks go boom. And indeed, the federal case law bears out that kind of government-may-do-anything reasoning.

So that is why when Ash and Anver came into my office and described their problem and said, can you help, that is why I was so confident that there was a there there. Because state supreme courts exist to resolve those kinds of conflicts within their own case law. Lower courts are supposed to know what the law is before they can apply it correctly. And if, as in Texas, you have these two lines of cases, some of them hewing to federal constitutional standards and some of them hewing to the more robust Texas standards, then there's confusion that can lead to inconsistent results depending on who your judge ends up being and where you end up filing your case. The whole point of bringing this case was to establish that under the Texas Constitution, there has to be a real and substantial connection between what the government is trying to do and how the regulation works in the real world.

And even if that connection exists, courts still ask, is the regulation unduly burdensome in light of what the state is trying to achieve? It seems maybe like there could be a real and substantial connection to health and safety. If you go to cosmetology school, you do admittedly learn things like washing your hands. But what Texas was requiring was 750 hours of instruction.

That's about nine months of a full-time job. Two tests, neither of which had any material about eyebrow threading specifically or about sanitation specific to eyebrow threading. And so our argument all along was, it takes about an hour to learn the sanitation that you need to learn to be a safe threader.

You need to wash your hands, use new thread with every customer, and keep the work area clean. So it's just inconceivable that that could take 750 hours to learn. We never disputed that there could be a license for threading. It was just that this license, the 750-hour two-examination requirement that didn't involve any instruction in threading, was obviously unconstitutional. . So, like so much of public interest law, this case started out with a loss. The state won. We appealed, and we lost. The state won in the Intermediate Court of Appeals. And then we had to ask the Texas Supreme Court for what lawyers call discretionary review.

And they agreed to take the case. We won in the Texas Supreme Court by a vote of six to three. Now, five of those justices agreed with our argument that the state constitution requires a real and substantial relationship between a regulation and how it functions in the real world and also can't be unduly burdensome. They struck the law down based on that Texas test. One justice agreed that this law was unconstitutional but didn't think that there needed to be an independent Texas test to make that ruling.

He thought the law violated the federal rational basis test because it was just so inconceivably justified. But, you know, there were three dissenters who were very vocal about the fact that they did not want to be reviewing economic regulations, did not take seriously Texas being different from the federal government in terms of its protections for economic liberty, and thought that it was perfectly fine that threaters were being required to spend nine months in a private beauty school learning nothing about their own jobs. Now, this was a huge landmark victory for IJ. It was obviously life-changing for the clients in the case. It's an incredible feeling to have the patience to wait years from, you know, we launched this case in 2009, and we got a decision from the Texas Supreme Court in 2015.

It's about five and a half years from beginning to end, and it was mostly losing. So, you know, it's an incredible feeling to have that victory call with your client. But there's so much more work that needs to be done. I mean, this is one case in a sea of burdensome economic regulations that really require court intervention, and it's very difficult to get, you know, at least judges of the current generation to unlearn what they were taught in law school, that there's no economic regulation that a court can strike down. You know, what is needed here is like what is needed in so many other aspects of American life today.

Nuance. Of course, it's true that the political branches have the right to decide who should get to practice what occupations, but it is also true that we should not allow them to do that at the behest of the regulated industry and only for their benefit. In the American constitutional order, courts are there to ensure that individuals' rights are being honored in the lawmaking process, right? And it's absolutely essential that there be more cases like Patel where particularly state courts, but ultimately federal courts as well, take seriously the time-honored individual right to use your own labor, your own hands, to support yourself free of any restrictions that aren't justified by a need that the public has, not a need that a particular lobbyist or lobby might have. And a special thanks to Monty Montgomery for his great work on the piece, and a special thanks to Wesley Huddett, the Institute for Justice attorney, who you heard tell this remarkable story, this important story, another rule of law story in a part of our rule of law series here on Our American Story. We navigate the tangled web of Hollywood's secret history of sex, money, and murder.

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