In Paidi v. Mills, the key litigated issue was whether a New York law that denied pharmacist licenses to nonimmigrant aliens violates the Equal Protection Clause.

In Paidi, the plaintiffs were a group of nonimmigrant aliens who were admitted to the US to work as pharmacists, and they hold either H-1B or Trade NAFTA (TN) visas. Both the H-1B and TN visa allow an alien to remain in the US for up to three years, subject to a three-year extension. In practice, however, many of these visa holders remain in the US for longer than the six year maximum, because they are often eligible to apply for lawful permanent resident (LPR) status. While waiting for LPR status, the federal government usually grants Employment Authorization Documents to the aliens to allow them to continue working beyond the six year limit. Sixteen plaintiffs had received these documents.

Section 6805(1)(6) of the New York Education Law allows only US citizens and those already granted LPR status to receive a pharmacist's license. Normally, this would preclude the plaintiffs from working as pharmacists in New York. However, the plaintiffs received a limited pharmacy license from New York under a waiver of this law. The waiver was set to expire in 2009; after that point, the plaintiffs would not be allowed to work as pharmacists in the state. (The licenses were renewed pending the outcome of this case.)

The plaintiffs sued state officials who enforced this law in the US District Court for the Southern District of New York, alleging that the law is unconstitutional because it violates the Equal Protection and Supremacy Clauses of the US Constitution. The SDNY held that the law was unconstitutional and granted the plaintiffs' motion for summary judgment, permanently enjoining New York from enforcing the law. The New York officials appealed to the US Court of Appeals for the Second Circuit.

In its July 10, 2012 decision, the Second Circuit affirmed the SDNY's grant of summary judgment, holding that the law violates the Equal Protection Clause.

The Second Circuit rejected New York's argument that rational basis review should apply to the statute. US Supreme Court precedent establishes that legal classifications based on alienage are suspect and subject to strict scrutiny review by the courts. Furthermore, the Court has never distinguished between classes of lawful immigrants.

There are two exceptions to this rule. Strict scrutiny does not apply when states deny:

The Second Circuit refused to create a third exception that would deny the full protection of the Equal Protection Clause to lawfully admitted nonimmigrants who require a visa to remain in the US. Therefore, nonimmigrants who have been lawfully admitted to the US are part of the suspect class and strict scrutiny applies.

Applying strict scrutiny, the Second Circuit held that the New York statute was not narrowly tailored to further a compelling government interest, because:

Therefore, the law violated the Equal Protection Clause of the US Constitution.

The Second Circuit disagreed with the US Courts of Appeal for the Fifth and Sixth Circuits, which have upheld laws prohibiting nonimmigrants from:

The Fifth and Sixth Circuits held that nonimmigrant aliens are not a suspect class because they are admitted to the US temporarily and do not have the same rights as citizens and LPRs. The Second Circuit refused to follow the rationale of these circuits because:

Even though the Second Circuit acknowledged that the statute raises preemption and Supremacy Clause issues, it decided the case on Equal Protection grounds, because the plaintiffs with TN visas cannot argue that the statute is preempted. The NAFTA Implementation Act allows only the US to challenge state laws that are inconsistent with NAFTA.

The Second Circuit's decision in Paidi creates a split among the federal circuits. Alienage cannot be a professional qualification under state licensing laws in the Second Circuit. However, alienage may be used as a qualification for certain licences in the Fifth and Sixth Circuits.