MERSCORP Holdings, Inc. v. Malloy, 320 Conn. 448

Connecticut amended recording statutes in 2013 to charge "mortgage nominees" (defined to capture MERS) substantially higher recording fees ($116–$159 first-page fees vs. $10 for others) and reallocated proceeds to state and municipal funds.
Plaintiffs MERSCORP Holdings, Inc. and Mortgage Electronic Registration Systems, Inc. sued state officials claiming the two-tier fee scheme violates equal protection, the dormant Commerce Clause, due process, takings, bills of attainder, and 42 U.S.C. § 1983; the trial court granted summary judgment for the state.
MERS operates a national electronic registry and acts as nominee on recorded mortgages so subsequent assignments need not be recorded in local land records, yielding industry cost savings and fewer county/town recordings.
The legislature stated the amendments were revenue-raising and targeted MERS specifically; parties agreed most increased fees are paid by borrowers at closing and that MERS membership/use continued after the amendments.
The court applied rational-basis review for equal protection challenges to taxation/fees and considered dormant Commerce Clause doctrines applicable to taxes/user fees, assuming interstate commerce is implicated by MERS’ national role.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Equal Protection: singling out MERS for higher fees	Statute irrationally discriminates against MERS; no record support for legislature's rationales	Legislature had legitimate revenue and cost-allocation rationales (recoup lost future recording fees; large entities can bear higher fees)	Affirmed: classification survives rational-basis review as plausibly related to legitimate government interests
Dormant Commerce Clause — facial discrimination	Targeting entities operating national databases discriminates against interstate commerce	Statute targets a distinct business model (MERS) and is not protectionist; practical effect is local/regulatory, not protectionist	Affirmed: not facially discriminatory; no evidence of protectionism
Dormant Commerce Clause — undue burden	Triple fees unduly burden interstate secondary mortgage market	Fees compensate for lower local recordings and are unlikely to impair interstate market; courts should defer where state performs traditional function	Affirmed: plaintiffs failed to show burdens clearly outweigh benefits; no undue burden
Other federal claims (due process, bills of attainder, § 1983)	Higher fees are arbitrary/punitive and violate other federal protections	Same rationales defend against these claims	Rejected: court found no merit for these collateral claims (disposition follows equal protection/commerce clause analysis)

Keane v. Fischetti, 300 Conn. 395 (Conn. 2011) (standard for equal protection analysis under Connecticut law)
Heller v. Doe ex rel. Doe, 509 U.S. 312 (U.S. 1993) (legislative classifications need not be supported by trial evidence; rational-basis review allows speculation)
Federal Communications Commission v. Beach Communications, 508 U.S. 307 (U.S. 1993) (courts may hypothesize plausible reasons for legislative classifications)
Kadrmas v. Dickinson Public Schools, 487 U.S. 450 (U.S. 1988) (user-fee equal protection principles)
United Haulers Assn., Inc. v. Oneida-Herkimer Solid Waste Management Authority, 550 U.S. 330 (U.S. 2007) (distinguishing permissible local regulation from discriminatory protectionism under dormant Commerce Clause)
Department of Revenue v. Davis, 553 U.S. 328 (U.S. 2008) (approach to dormant Commerce Clause challenges to state taxation; deference when state performs traditional functions)
Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (U.S. 1977) (test for state taxation affecting interstate commerce)
Pike v. Bruce Church, Inc., 397 U.S. 137 (U.S. 1970) (balancing test for incidental burdens on interstate commerce)
Nordlinger v. Hahn, 505 U.S. 1 (U.S. 1992) (rational-basis tolerance for tax classifications)
Associated Industries v. Lohman, 511 U.S. 641 (U.S. 1994) (hypothetical favoritism does not alone establish unconstitutional discrimination)