Chapter 4: Constitutional Authority to Regulate Business

1. Chapter 4:Constitutional Authority to Regulate Business

2. History Before Revolutionary War, States wanted a confederation with weak national government and very limited powers. After the war, in 1787, States voted to amend Articles of Confederation and create a new, federal government that shared power with States.

3. §1: Constitutional Powers of the Federal Government • Constitution established a federal form of government with checks and balances among three branches: executive, legislative and judicial. • National government has limited, enumerated powers delegated from States.

4. U.S. Commerce Clause • Power to regulate interstate commerce defined in Gibbons v. Ogden(1824). • Expansion to private businesses began with Wickard v. Fillburn(1942). • Today, Commerce Clause it authorizes the national government to regulate virtually any business enterprise, including internet. • Limits: U.S. v. Lopez(1995), Alden v. Maine(1999).

5. State Commerce • States possess inherent police powers to regulate health, safety, public order, morals and general welfare. • State laws that substantially interfere with interstate commerce will be struck down. • Raymond Motor v. Rice (1978).

6. U.S. Supremacy Clause • Article VI of the Constitution “Supreme Law of the Land.” • In case of direct conflict between state and federal law, state law is invalid. • Congress can preempt states. • Taxing Powers (Emerging Trends).

7. §2: Business and the Bill of Rights • Bill of Rights are not absolute. • Originally the Bill of Rights was a limit on the national government’s powers. • During the early 1900’s, the Supreme Court applied the Bill of Rights to the States via the “due process” clause of the 14th amendment.

8. Free Speech • Afforded highest protection by courts. • Symbolic Speech. • Texas v. Johnson(1989). • R.A.V. vs. City of St.Paul(1992).

9. Commercial Speech • Advertising is protected speech. Restrictions must: • Implement substantial government interest; • Directly advance that interest; and • Go no further than necessary. • Case 4.1: Bad Frog Brewery(1998).

10. Corporate Political Speech Afforded significant protection by the first amendment but not to the degree of speech of natural persons. • First National v. Bellotti(1978). • Consolidated Edison v. Public Service Commission(1980).

11. Unprotected Speech • Certain types of speech are not protected by the first amendment: • Slander. • Pornography, Obscenity. • Fighting Words. • What about “Hate Speech”? • Doe v. University of Michigan (1989).

12. Freedom of Religion • First amendment many neither prohibit the “establishment” nor prohibit the “free exercise” of religion. • The first amendment does not require complete “separation of church and state.” • First amendment mandates accommodation of all religions and forbids hostility toward any. Zorach v. Clauson(1952).

13. Freedom of Religion • First amendment guarantees the “free exercise” of religion. • Employers must reasonably accommodate beliefs as long as employee has sincerely held beliefs. • Frazee v. Illinois(1989).

14. Self-Incrimination • Fifth amendment guarantees no person can be compelled to testify against himself in a criminal proceeding. • Does not apply to corporations or partnerships. • Verniero v. Beverly Hills Ltd (1998).

15. Searches and Seizures • Fourth amendment requires warrant with “probable cause.” • Warrantless exceptions exist for “evanescent” evidence. • Searches of Business: generally business inspectors must have a warrant. Marshall v. Barlow’s(1978).

16. Equal Protection Strict Scrutiny. • Laws that affect the fundamental rights of similarly situated individuals in a different manner are subject to the “strict scrutiny” test. • Any “suspect class” (race, national origin) must serve a “compelling state interest” which includes remedying past discrimination.

17. Equal Protection • Intermediate Scrutiny. • Applied to laws involving gender or legitimacy. • To be constitutional laws must be substantially related to important government objectives. • (EXAMPLE: Illegitimate teenage pregnancy).

18. Equal Protection Rational Basis Test. • Applied to matters of economic or social welfare. • Laws will be constitutional if there is a rational basis relating to legitimate government interest. • Case 4.3: WHS Realty v. Morristown (1999).

19. Due Process • 5th and 14th amendments provide “no person shall be deprived of life, liberty or property without due process of law.” • Procedural and Substantive issues.

20. Procedural Due Process • Procedures depriving an individual of her rights must be fair and equitable. • Constitution requires adequate notice and a fair and impartial hearing before a disinterested magistrate.

21. Substantive Due Process • Focuses on the content or substance of legislation. • Laws limiting fundamental rights (speech, privacy, religion) must have a “compelling state interest.” • Laws limiting non-fundamental rights require only a “rational basis.”

22. Privacy • Fundamental right not expressly found in the constitution, but derived from 1st, 5th and 14th amendments. • Laws and policies affecting privacy are subject to the compelling interest test.

23. Law on the Web • Online Constitution at Cornell U. • See the “Vote-Smart” site on federalism. • Federalist Society.com. • ACLU.org. • Official U.S. Supreme Court site. • Legal Research Exercises on the Web.

24. Emerging Trends: Taxing Cyberspace • States sales tax-sufficient “nexus”? • Quill v. North Dakota(1992). • Internet Tax Freedom Act • http://www.house.gov/chriscox/nettax/lawsums.html Return