BUSINESS AND THE CONSTITUTION Chapter 2

Constitutional Impact on Business The Constitution applies only to GOVERNMENT action. The Constitution gives the federal government the authority to regulate business The Constitution also restricts the use of those powers

CONSTITUTIONAL CLAUSES ESPECIALLY IMPORTANT TO BUSINESS Supremacy Clause Commerce Clause Free Speech in the First Amendment Due Process Clause Equal Protection Clause

Commerce Clause Gives the federal government the authority to regulate interstate commerce. Interstate v. intrastate commerce. “Affect” interstate commerce.

See Gonzales v. Angel McClary Raich, 545 U.S. 1 (2005).

Commerce Clause also restricts the ability of the states to regulate commerce. This is referred to as the Dormant Commerce Clause. Most commerce can be regulated by the state AND federal governments. If federal regulation exists, state regulation cannot conflict with it due to the Supremacy Clause. Some federal laws are said to “pre-empt” the field.

State Regulation of Business (State Police Power) Dormant Commerce Clause The Commerce Clause limits the authority of the states to interfere with the flow of interstate commerce in two ways: It prohibits discrimination aimed directly at interstate commerce It prohibits state legislation that unduly burdens interstate commerce

Examples: Florida outlawed out-of-state milk purchased at prices below those set in the local market. What do you think Florida argued? Wisconsin banned trucks longer than 55 feet from traveling in-state without a permit, and banned 65 feet double-wide trailers from their highways. What do you think Wisconsin argued?

Yamaha Motor Corporation v. Jim’s Motorcycle, Inc. A Virginia law provided that no new motorcycle dealer franchise could be established in any county, city, or town unless advance notice is given to any existing franchised dealers of the same line- make. Existing dealers could then file a protest. The law was challenged under the dormant Commerce Clause.

Constitutional Checks on Governmental Power The Due Process Clause The Fifth Amendment Due Process Clause prohibits the federal government from depriving any person “of life, liberty, or property, without due process of law” Procedural Due Process Substantive Due Process The 14 th Amendment Due Process Clause applies to the states Selective Incorporation of the Bill of Rights

Constitutional Checks on Governmental Power Equal Protection (14 th Amendment) Neither the states nor the federal government may unfairly discriminate Due Process and Equal Protection Scrutiny Rational Basis Analysis Strict Scrutiny Analysis

Strict Scrutiny Where there is a classification based on “suspect” classes: race, color, creed, national origin, gender (intermediate scrutiny) or a Fundamental Right is involved Government must show it has a compelling interest for the law. Law is presumed to be unconstitutional.

Rational (reasonable) basis Law is presumed constitutional Will be classified as unconstitutional only if there is “no rational basis” for the law. Does the classification really accomplish its purpose?

Constitutional Checks on Governmental Power The First Amendment The First Amendment to the U.S. Constitution prohibits the government from abridging freedom of speech Noncommercial Speech Compelling governmental interest Least intrusive means Unprotected Speech Dangerous speech Fighting words Incites the violent or revolutionary overthrow of govt Defamatory speech Child pornography Obscene speech Offensive speech can be restricted as to time, place or manner

Constitutional Checks on Governmental Power Commercial Speech Must concern a lawful activity & not be misleading Subject to proper time, place, & manner restrictions Intermediate Scrutiny Substantial interest Directly advancing interest in manner no more extensive than necessary to serve that interest

44 Liquormart v. R.I. R.I. banned the advertisement of retail liquor prices except inside the stores.

Eminent Domain The power possessed by the government over all property within the state, specifically its power to appropriate property for a public use Under the Fifth Amendment to the Constitution, the owner of any appropriated land is entitled to reasonable compensation, usually defined as the fair market value of the property

The following steps (or a similar procedure) are followed: The government attempts to negotiate the purchase of the property for fair value. If the owner does not wish to sell, the government files a court action to exercise eminent domain, and serves or publishes notice of the hearing as required by law. A hearing is scheduled, at which the government must demonstrate that it engaged in good faith negotiations to purchase the property, but that no agreement was reached. The government must also demonstrate that the taking of the property is for a public use, as defined by law. The property owner is given the opportunity to respond to the government's claims.

Procedure Continued If the government is successful in its petition, proceedings are held to establish the fair market value of the property. Any payment to the owner is first used to satisfy any mortgages, liens and encumbrances on the property, with any remaining balance paid to the owner. The government obtains title. If the government is not successful, or if the property owner is not satisfied with the outcome, either side may appeal the decision.

Takings Complete Taking - In a complete taking, all of the property at issue is appropriated. Partial Taking - If the taking is of part of a piece of property, such as the condemnation of a strip of land to expand a road, the owner should be compensated both for the value of the strip of land and for any effect the condemnation of that strip has on the value of the owner's remaining property.

Takings Temporary Taking - Part or all of the property is appropriated for a limited period of time. The property owner retains title, is compensated for any losses associated with the taking, and regains complete possession of the property at the conclusion of the taking. For example, it may be necessary to temporarily use a portion of an adjacent parcel of property to complete a construction or highway project. Easments and Rights of Way - It is also possible to bring an eminent domain action to obtain an easement or right of way. For example, a utility company may obtain an easement over private land install and maintain power lines. The property owner remains free to use the property for any purpose which does interfere with the right of way or easement.

In recent years there have been concerns of abuse. Why? Can you think of examples? 2/eminent_domaini_99.htmlhttp:// 2/eminent_domaini_99.html