United States v. Carolene Products Co.

United States v. Carolene Products Company, 304 U.S. 144 (1938), was a case of the United States Supreme Court that upheld the federal government's power to prohibit filled milk from being shipped in interstate commerce. In his majority opinion for the Court, Associate Justice Harlan F. Stone wrote that economic regulations were "presumptively constitutional" under a deferential standard of review known as the "rational basis test". 
The case is most notable for "Footnote Four", wherein Stone wrote that the Court would exercise a stricter standard of review when a law appears on its face to violate a provision of the United States Constitution, restricts the political process in a way that could impede the repeal of an undesirable law, or discriminates against "discrete and insular" minorities. Footnote Four would influence later Supreme Court decisions, and the higher standard of review is now known as "strict scrutiny".
Background.
The case dealt with a federal law that prohibited filled milk (skimmed milk compounded with any fat or oil other than milk fat to resemble milk or cream) from being shipped in interstate commerce. The defendant, a company that traded in a form of filled milk consisting of condensed skim milk and coconut oil, argued that the law was unconstitutional because of both the Commerce Clause and the Due Process Clause.
The previous term, the Court had dramatically enlarged the activities that were considered to be in or to affect interstate commerce. It had also altered its settled jurisprudence in the area of substantive due process, the doctrine dealing with rights not specifically enumerated in the Constitution. The changes meant that many New Deal programs that the Court would previously have struck down as unconstitutional would now be found constitutional.
The defendant company, charged with breaking the law, at trial filed a motion to dismiss on the grounds that the law was unconstitutional. The United States District Court for the Southern District of Illinois granted the defendant's motion, and the Seventh Circuit Court of Appeals affirmed the District Court's ruling.
Decision.
Justice Harlan Stone, writing for the Court, held that the law was "presumptively constitutional" properly within legislative discretion. It was not for the courts to overrule because it was supported by substantial public-health evidence and was not arbitrary or irrational. In other words, the Court applied a "rational basis" test.
Footnote Four.
"Carolene Products" is best known for its fourth footnote, considered to be "the most famous footnote in constitutional law." Although the Court had applied minimal scrutiny (rational basis review) to the economic regulation in this case, Footnote Four reserved for other types of cases other, stricter standards of review.
Stone said that legislation aimed at "discrete and insular minorities" without the normal protections of the political process would be one exception to the presumption of constitutionality and justify a heightened standard of judicial review. The idea has greatly influenced jurisprudence on the Equal Protection Clause jurisprudence and judicial review. It recapitulated common law jurisprudence by which evidence of fraud or other significant legal defects in the transaction, such as self-dealing or other impropriety, may justify overturning a rule.
The constitutional law scholar John Hart Ely based his major work, "Democracy and Distrust," on Footnote Four's second and third paragraphs, which correspond to the "Democracy" and "Distrust" of his title.
Significance.
In keeping with the New Deal Revolution, "Carolene Products" applies the "rational basis test" to economic legislation. An extremely low standard of judicial review, there is a presumption that the legislation in question is constitutional and the challenging party must show that the law fails the test. Most legislation enacted by Congress or state legislatures that deals with economic regulation falls under rational basis review and, therefore, must only be rationally related to a legitimate state interest. However, "Carolene Products" is most famous for Footnote Four. 
Footnote Four describes certain legislative acts that might give rise to a higher level of scrutiny. If a law: 
This higher level of scrutiny, now called "strict scrutiny", was applied to strike down an inmate forced sterilization law in "Skinner v. Oklahoma" (1942) and in Justice Black's infamous opinion in "Korematsu v. U.S." (1944) in which Japanese internment was upheld despite being subject to heightened scrutiny. Under strict scrutiny, a law will be struck down unless it serves a compelling governmental interest and is necessary to achieve that end, which means that less restrictive alternatives to the law must be considered by the government even if there is a compelling interest. Therefore, the law must be narrowly tailored to serve the governmental interest and employ the least restrictive alternative. 
Intermediate scrutiny, which is often applied in gender discrimination cases, did not arise until decades later. When applied, the law must serve an important governmental interest and be substantially related to that end. 
Some argue that the "most famous footnote" was in fact written by not Stone but his law clerk, Louis Lusky. In fact, the cited work above, while quite useful on the origin and growth of the footnote, does not claim that the law clerk was the author, and it implies the opposite, based on letters between the justices. In his later work, "Our Nine Tribunes: The Supreme Court in Modern America", however, Lusky includes facsimiles of the original drafts of the footnote, the first of which is in his own hand. Stone edited the second, typed draft, and at the behest of the Chief Justice, he added certain passages.