Chapter 2 Business and the Constitution Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2-2 Functions of the Constitution (1) establishing a structure for the federal government and rules for amending the Constitution; (2) granting specific powers for the different branches of government; (3) providing procedural protections for U.S. citizens from wrongful government actions.

2-3 Overview of Federal Powers Article III – Judicial Powers –Judicial review United States v. Alvarez – Separation of powers Executive Legislative Judicial

2-4 Standards of Review The U.S. Supreme Court has established three standards of review for applying constitutional law. –Rational basis –Intermediate-level scrutiny –Strict scrutiny Brown v. Entertainment Merchants Assoc.

2-5 Supremacy Clause and Preemption U.S. Constitution provides that valid federal laws (those made pursuant to Congress’s constitutional authority and that are constitutionally sound) are always supreme to any conflicting state law.

2-6 Commerce Powers Congress’s broadest power is derived from the Commerce Clause whereby Congress is given the power to “regulate Commerce among the several states.”

2-7 Tax and Spend Power Congress has a far-reaching power to tax the citizenry and to spend the federal government’s money in any way that promotes the common defense and general welfare.

2-8 Necessary and Proper Clause Congress may also place conditions on the use of federal money in order to achieve some public policy objective. Congress generally cites the Necessary and Proper Clause as authorization to set conditions on the spending.

2-9 First Amendment “Congress shall make no law” That allows government encroachment in the areas of religion, press, speech, assembly, and petition of grievances.

2-10 Speech by Corporations Commercial Speech –R.J. Reynolds Tobacco v. Food and Drug Administration. –Bad Frog Brewery, Inc. v. N.Y. State Liquor Authority Political Speech Which can be regulated?

2-11 Fourth Amendment The U.S. Supreme Court has systematically applied a reasonableness test to define the limits of when the government may search without a warrant based on probable cause that criminal activity is possible.

2-12 Fifth Amendment This amendment does not apply to corporate entities when the government is seeking certain business records, individual corporate officers and employees are entitled to Fifth Amendment protection when facing a criminal investigation.

2-13 Due Process Protections Fifth and Fourteenth Amendments These clauses protect individuals from being deprived of “life, liberty, or property” without due process of law.

2-14 Equal Protection under the 14 th Amendment Fundamentally, the clause guarantees that the government will treat people who are similarly situated equally. –What level of scrutiny should be used when a law discriminates based on a suspect classification? –How about a semi-suspect classification?

2-15 Privacy Although not explicitly mentioned in the Constitution, privacy rights play a central role in our legal system. Common law origins Statutory law examples