Chapter 1

1. BUSINESS LAW TODAYEssentials 8th Ed.Roger LeRoy Miller - Institute for University Studies, Arlington, TexasGaylord A. Jentz - University of Texas at Austin, Emeritus The Historical and Constitutional Foundations Chapter 1

2. Learning Objectives • What is the common law tradition? • What is a precedent? When might a court depart from precedent? • What is the difference between remedies at law and remedies in equity? • What constitutional clause gives the federal government the power to regulate commercial activities among the various states? • What is the Bill of Rights? What freedoms are guaranteed by the First Amendment?

3. Sources of American Law • Constitutional Law. • Found in text and cases arising from federal and state constitutions. • U.S. Constitution is the supreme law of the land. • Statutory Law. • Laws enacted by federal and state legislatures. • Local ordinances. • Uniform Laws (e.g.,Uniform Commercial Code).

4. Sources of American Law • Administrative Law. • Rulemaking--Rules, orders and decisions of administrative agencies, federal, state and local. • Administrative agencies can be independent regulatory agency such as the Food and Drug Administration. • Adjudication--agencies make rules, then investigate and enforce the rules in administrative hearings.

5. The Common Law Tradition • Early English Courts of Law. • King’s courts started after Norman conquest of 1066. • Established the common law—body of general legal principles applied throughout the English empire. • King’s courts used precedent to build the common law.

6. Stare Decisis • Stare Decisis • Practice of deciding new cases based on precedent. • A higher court’s decision based on certain facts and law, is a binding authority on lower courts. • Helps courts stay efficient.

7. Equitable Remedies & Courts • Remedy: means to enforce a right or compensate for injury to that right. • Remedy at Law: in king’s courts, remedies were restricted to damages in either money or property. • Equitable Remedy: based on justice and fair dealing a chancery court does what is right: specific performance, injunction, rescission. • Plaintiffs (injured party initiating the lawsuit), Defendants (allegedly caused injury).

8. Exhibit 1-1

9. Classifications of Law • Substantive vs. Procedural Law • Substantive: laws that define and regulate rights and duties. • Procedural: laws that establish methods for enforcing and protecting rights. • Civil Law and Criminal Law • Civil: private rights and duties between persons and government. • Criminal: public wrongs against society.

10. Classifications of Law • National and International Law • National: laws of a particular nation. • Civil vs. Common Law: Civil law countries based on Roman code (e.g., Latin America). • International: body of written and unwritten laws observed by nations when dealing with each other.

11. Comparision of Legal Systems

12. Constitutional Powers of Government • A Federal Form of Government: the federal constitution was a political compromise between advocates of state sovereignty and central government. • Separation of Powers: Executive, Legislative and Judicial. Provides checks and balances. • Legislative: enacts laws • Executive: enforces laws • Judicial: declares laws/actions unconstitutional.

13. The Commerce Clause • U.S. Constitution gives Congress the power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” (Art. 1 § 8) • Greatest impact on business than any other Constitutional provision.

14. The Commerce Clause • Gibbons v. Ogden (1824). • To Chief Justice Marshall, commerce meant all business dealings that substantially affected more than one state. • The national government had the exclusive power to regulate interstate commerce. • Today: commerce clause applies to e-commerce internet transactions.

15. Expansion of National Powers • Wickard v. Filburn (1942). • Purely local production, sale and consumption of wheat was subject to federal regulation. • CASE 2.1 Heart of Atlanta Motel v. U.S. (1964). • Motel that provided public accommo-dations to guests from other states was subject to federal civil rights legislation.

16. Commerce Power Today • Theoretically: the federal government has unlimited control over all business transactions since any enterprise (in the aggregate) can have a “substantial effect” on interstate commerce. • Practical Limits: Supreme Court has curbed federal regulatory powers in U.S. v. Lopez (1995) and U.S. v. Morrison (2000).

17. Regulatory Powers of the States • Tenth Amendment reserves all powers to the states that have not been expressly delegated to the national government. • State have inherent “police powers.” • Police powers include right to regulate health, safety, morals and general welfare. • Includes licensing, building codes, parking regulations and zoning restrictions. • “Dormant” Commerce Clause 

18. Dormant Commerce Clause • U.S. Supreme Court has interpreted commerce clause to give national government exclusive power to regulate. • States only have a “dormant” (negative) power to regulate interstate commerce. • Dormant power comes into play when courts balance state’s interest vs. national interest, e.g., internet transactions. • CASE 2.2Granholm v. Heald (2005).

19. The Supremacy Clause • Supremacy Clause: Article VI of the Constitution provides that Constitution, laws and treaties of the United States are the “supreme law of the land.” • Concurrent: in few areas, both states and federal government share powers. • Preemption: when Congress chooses to act in a concurrent area, federal law preempts state law.

20. Taxing and Spending Powers • Article I Section 8: Congress has the power to “lay and collect taxes, duties, imposts and excises.” • Today: if federal tax has a reasonable relationship to revenue production, it will be held constitutional. • Congress can spend tax revenues on any express or implied constitutional power.

21. Business and the Bill of Rights • 1791: Ten written guarantees of protection of individual liberties from government interference. • Originally: Bill of Rights only applied to the federal government. • Today: the Bill of Rights has been “incorporated” and applied to the States as well. • Some protections apply to businesses.

22. First Amendment: Freedom of Speech • Right to Free Speech is the basis for our democratic government. • Free speech also includes “symbolic” speech, including gestures, movements, articles of clothing. • Texas v. Johnson (U.S. 1989). • Hodgkins v. Peterson (7th Cir. 2004).

23. Corporate Speech • Commercial speech (advertising) is given substantial protection. Government restrictions must: • Seek to implement substantial government interest, • Directly advance that interest, and • Must go no further than necessary to accomplish. • Corporations also have protected political speech (although not to the degree of a natural person).

24. Unprotected Speech • U.S. Supreme Court has held that certain speech is NOT protected: • Defamatory speech. • Threatening speech that violates criminal laws. • Fighting Words. • Obscene Speech is patently offensive, violates community standards and has no literary, artistic, political or scientific merit. • CASE 2.3 Lott v. Levitt (2007).

25. Online (Obscene) Speech • Protected or Unprotected? • Some of Congress’ attempts to protect children from online pornography have been ruled unconstitutional restriction on free speech. • Communications Decency Act (1996). • COPA (1998-challenged, in court). • Children’s Internet Protection Act (2000) which requires filters for computers in public libraries and public schools). Challenged, in court. • What about “hate” speech on the web?

26. Freedom of Religion • First Amendment guarantees that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof…” • Establishment clause: no state-sponsored religion or preference for one religion over another. • Free Exercise: person can believe what he wants, but actions may be unconstitutional. • What about freedom of religion and illegal drug use?

27. Due Process • Procedural: any government decision to take life, liberty or property must be fair. Requires: Notice and Fair Hearing. • Substantive: focuses on the content or the legislation (the right itself). • Fundamental Right: requires compelling state interest. • Non-Fundamental: rational relationship to state interest.

28. Equal Protection • 14th Amendment: A state may not “deny to any person within its jurisdiction the equal protection of the laws.” • Government must treat similarly situated individuals (or businesses) in the same manner. • Courts apply different tests: • Minimum scrutiny-economic rights. • Intermediate scrutiny. • Strict Scrutiny – fundamental rights.

29. Privacy Rights • Fourth amendment protects against unreasonable search and seizures. • Griswold v. Connecticut (1965) found a right to personal privacy implied in constitution, expanded in Roe v. Wade (1973). • Website privacy policies. What about private information on the internet? • What about USA PATRIOT ACT (2001)? • HIPAA (1996) (healthcare privacy).

30. Appendix to Chapter 1 • Finding Statutory Law. • United States Code (USC). • State Statutes. • Finding Administrative Law. • Code of Federal Regulations (CFR). • Finding Case Law (Case Citations).

31. Exhibit 1A-1

32. Appendix • Reading & Understanding Case Law • Legal cases are identified by a “legal citation” (or a “cite”) as the example below: Nunez v. Carabba’s Italian Grill, Inc.,448 Mass. 170, 859 N.E.2d 801 (2007). Title: First Party is Plaintiff, second party is Defendant. The parties are either italicized or underlined.

33. Appendix • Reading & Understanding Case Law • Legal cases are identified by a “legal citation” (or a “cite”) as the example below: Nunez v. Carabba’s Italian Grill, Inc., 448 Mass. 170, 859 N.E.2d 801 (2007). This is a 2007 State Supreme Court Case found in volume 448, page 170 of the Massachussets Reports, OR volume 859, page 801 of the NorthEastern Reporter 2nd.