Commercial Law (Mgmt 348)

1. Commercial Law (Mgmt 348) Constitutional Authority to Regulate Business (Chapter 4) Professor Charles H. Smith Spring 2011

2. Introduction to Constitutional Law • U.S. Constitution specifies powers/structure of federal government and guarantees individual rights. • 10th Amendment reserves to states all powers not delegated to federal government. • Every state has its own constitution which often mirrors the U.S. Constitution but may also provide additional rights; e.g., right of privacy in the California Constitution.

3. Commerce Clause • U.S. Constitution, Article I, Section 8 gives Congress the power to “regulate Commerce . . . among the several states.” • This has been interpreted to empower Congress to regulate activities that “substantially affect interstate commerce” which is not limited to commerce that crosses state lines. • “Dormant” Commerce Clause – state regulation impinges on interstate commerce; court weighs state’s interest in regulating subject matter vs. burden state regulation puts on interstate commerce.

4. Commerce Clause cont. • Case studies • Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964) (page 79 and footnote 10) – broad scope of “interstate commerce.” • Gonzales v. Raich, 545 U.S. 1 (2005) (page 80 and footnote 14) – medical marijuana case. • Granholm v. Heald, 544 U.S. 460 (2005) (pages 80-82) – state regulation of direct sales by out-of-state winemakers. • Does State Regulation of Internet Prescription Transactions Violate the Dormant Commerce Clause?(pages 84-85).

5. Supremacy Clause – Preemption of State Law • U.S. Constitution, Article VI says federal law is “the supreme Law of the land.” • Therefore, federal law “preempts” state law – two applications • State regulation in area of law is completely barred; case study – Case Problem 4-8 (page 97) based on Chamber of Commerce v. Brown, 128 S.Ct. 2408 (2008). • State regulation not barred unless in conflict with federal law; case studies – state statute regulating arbitration will be preempted if in conflict with Federal Arbitration Act’s policy of enforcing arbitration agreements.

6. Free Speech • U.S. Constitution, 1st Amendment provides for freedom of speech, but not all “speech” (which can include oral, written and even symbolic communications) gets the same protection. • Different types of “speech” include • Political speech – protected even if outrageous or offensive; free exchange of ideas will allow good ideas to prevail and bad ideas to be exposed. • Commercial speech – may or may not be protected; see three-step analysis on page 86. • Unprotected speech – examples include defamation or fraud.

7. Free Speech cont. • Case studies • Bad Frog Brewery, Inc. v. New York State Liquor Authority, 134 F.3d 87 (2d Cir. 1998) (pages 87-88) – commercial speech. • Lott v. Levitt, 469 F.Supp.2d 575 (N.D.Ill. 2007) (pages 88-89) – defamation alleged. • Case Problem 4-5 – www.taubmansucks.com (page 96). • Case Problem 4-9 – ban on sales of graffiti implements (page 97). • Case Problem 4-10 – “A Question of Ethics” (page 97).

8. Religion - Establishment Clause • Intended to protect people from government imposition of or interference with religion. • Case study – Singh v. Singh, 114 Cal.App.4th 1264 (2004).

9. Religion – Free Exercise Clause • Intended to provide freedom to practice chosen religion. • Case studies – Case Problem 4-3 (page 96); FLDS Church compound raid by Texas children’s services in 2008.

10. Due Process • U.S. Constitution, 5th and 14th Amendments. • Procedural due process – requires government to act fairly before deprivation of life, liberty or property; e.g., notice, opportunity to be heard, decision by neutral. • Substantive due process – protects life, liberty and property against government action no matter what procedure used; e.g., if statute impacts fundamental right such as voting, marriage and family, compelling government interest must be shown. • Case study – Case Problem 4-7 (pages 96-97).

11. Equal Protection • U.S. Constitution, 5th and 14th Amendments – government cannot enact laws that treat similarly situated individuals differently. • Case studies – Perry v. Schwarzenegger, 704 F.Supp.2d 921 (N.D. Cal. 2010); Varnum v. Brien, 763 N.W.2d 862 (Iowa 2009); In re Marriage Cases, 43 Cal.4th 757 (2008).

12. Due Process vs. Equal Protection • Due Process works to invalidate laws that prohibit anyone from doing something or would deprive anyone of basic procedural rights. • On the other hand, Equal Protection works to invalidate laws providing rights to some but not to others who are similarly situated.

13. Privacy Rights • No express mention in U.S. Constitution; however, various provisions interpreted to afford privacy rights; e.g., 4thAmendment. • California Constitution does specifically provide for “right of privacy.” • Privacy rights usually provided by host of statutes and cases dealing with varied topics of confidentiality of • Certain subjects; e.g., medical or academic records. • Relationships; e.g., marital or attorney-client privileges.

14. Privacy Issues in the Workplace • Privacy issues in the workplace include drug testing as requirement for getting or keeping job • Generally cannot be required. • Exceptions include public safety jobs, pre-employment testing, and testing per employment or union contract.