© 2004 West Legal Studies in Business A Division of Thomson Learning 1 Chapter 4 Constitutional Authority to Regulate Business Chapter 4 Constitutional Authority to Regulate Business

© 2004 West Legal Studies in Business A Division of Thomson Learning 2 History Before the Revolutionary War, States wanted a confederation with weak national government and very limited powers. After the war, in 1787, the States voted to amend Articles of Confederation and create a new, federal government that shared power with States. Before the Revolutionary War, States wanted a confederation with weak national government and very limited powers. After the war, in 1787, the States voted to amend Articles of Confederation and create a new, federal government that shared power with States.

© 2004 West Legal Studies in Business A Division of Thomson Learning 3 §1: Constitutional Powers of 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. Privileges and Immunities Clause (Art. IV §2) Full Faith and Credit Clause (Art. IV §1) 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. Privileges and Immunities Clause (Art. IV §2) Full Faith and Credit Clause (Art. IV §1)

© 2004 West Legal Studies in Business A Division of Thomson Learning 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, the Commerce Clause authorizes the national government to regulate virtually any business enterprise, including the internet-based. Limits: U.S. v. Lopez (1995) Case 4.1: Reno v. Condon (2000) Power to regulate interstate commerce defined in Gibbons v. Ogden (1824). Expansion to private businesses began with Wickard v. Fillburn (1942). Today, the Commerce Clause authorizes the national government to regulate virtually any business enterprise, including the internet-based. Limits: U.S. v. Lopez (1995) Case 4.1: Reno v. Condon (2000)

© 2004 West Legal Studies in Business A Division of Thomson Learning 5 State Commerce States possess inherent police powers to regulate health, safety, public order, morals and general welfare. “Dormant” Commerce Clause. Case 4.2: Ferguson v. Friendfinders. Inc. (2002) State laws that substantially interfere with interstate commerce will be struck down. States possess inherent police powers to regulate health, safety, public order, morals and general welfare. “Dormant” Commerce Clause. Case 4.2: Ferguson v. Friendfinders. Inc. (2002) State laws that substantially interfere with interstate commerce will be struck down.

© 2004 West Legal Studies in Business A Division of Thomson Learning 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. Federal Taxing and Spending Powers. 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. Federal Taxing and Spending Powers.

© 2004 West Legal Studies in Business A Division of Thomson Learning 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. 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.

© 2004 West Legal Studies in Business A Division of Thomson Learning 8 Free Speech Afforded highest protection by courts. Symbolic Speech.  Texas v. Johnson (1989).  R.A.V. vs. City of St.Paul (1992). Afforded highest protection by courts. Symbolic Speech.  Texas v. Johnson (1989).  R.A.V. vs. City of St.Paul (1992).

© 2004 West Legal Studies in Business A Division of Thomson Learning 9 Commercial Speech Advertising is protected speech. Restrictions must:  Implement substantial government interest;  Directly advance that interest; and  Go no further than necessary. Case 4.3: Bad Frog Brewery (1998). Advertising is protected speech. Restrictions must:  Implement substantial government interest;  Directly advance that interest; and  Go no further than necessary. Case 4.3: Bad Frog Brewery (1998).

© 2004 West Legal Studies in Business A Division of Thomson Learning 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). 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).

© 2004 West Legal Studies in Business A Division of Thomson Learning 11 Unprotected Speech Certain types of speech are not protected by the First Amendment:  Slander.  Obscenity (Miller v. California).  Fighting Words. Online Obscenity  CDA, COPA, Children’s Internet Protection Act. Certain types of speech are not protected by the First Amendment:  Slander.  Obscenity (Miller v. California).  Fighting Words. Online Obscenity  CDA, COPA, Children’s Internet Protection Act.

© 2004 West Legal Studies in Business A Division of Thomson Learning 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) and Lynch v. Donnelly (1984). 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) and Lynch v. Donnelly (1984).

© 2004 West Legal Studies in Business A Division of Thomson Learning 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). Frazee v. Illinois 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). Frazee v. Illinois

© 2004 West Legal Studies in Business A Division of Thomson Learning 14 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).Marshall v. Barlow’s 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).Marshall v. Barlow’s

© 2004 West Legal Studies in Business A Division of Thomson Learning 15 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. Fifth Amendment guarantees no person can be compelled to testify against himself in a criminal proceeding. Does not apply to corporations or partnerships.

© 2004 West Legal Studies in Business A Division of Thomson Learning 16 §3: Due Process and Equal Protection Fifth and Fourteenth Amendments provide “no person shall be deprived of life, liberty or property without due process of law.” Procedural and Substantive issues. Fifth and Fourteenth Amendments provide “no person shall be deprived of life, liberty or property without due process of law.” Procedural and Substantive issues.

© 2004 West Legal Studies in Business A Division of Thomson Learning 17 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. 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.

© 2004 West Legal Studies in Business A Division of Thomson Learning 18 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.” 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.”

© 2004 West Legal Studies in Business A Division of Thomson Learning 19 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. 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.

© 2004 West Legal Studies in Business A Division of Thomson Learning 20 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). 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).

© 2004 West Legal Studies in Business A Division of Thomson Learning 21 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. 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.

© 2004 West Legal Studies in Business A Division of Thomson Learning 22 §4: Privacy Rights Fundamental right not expressly found in the constitution, but derived from First, Fifth and Fourteenth Amendments. Laws and policies affecting privacy are subject to the compelling interest test. Fundamental right not expressly found in the constitution, but derived from First, Fifth and Fourteenth Amendments. Laws and policies affecting privacy are subject to the compelling interest test.

© 2004 West Legal Studies in Business A Division of Thomson Learning 23 Law on the Web Online Constitution Center See the “Vote-Smart” site on federalism.Vote-Smart Federalist Society.com. Federalist Society.com ACLU.org. ACLU.org Legal Research Exercises on the Web. Legal Research Exercises on the Web Online Constitution Center See the “Vote-Smart” site on federalism.Vote-Smart Federalist Society.com. Federalist Society.com ACLU.org. ACLU.org Legal Research Exercises on the Web. Legal Research Exercises on the Web