1. Chapter 5 Business and the Constitution
MARIANNE M. JENNINGS
7th Ed.
Its Legal, Ethical, and Global Environment
Chapter 5 Business and the Constitution

2. The U.S. Constitution Article I: Legislative Branch.
Congress.
House of Representatives.
Senate.
Article II: Executive Branch.
President.
Vice President.
Article III: Judicial Branch.
Creates U.S. Supreme Court.
Authorizes Congress to create other courts.

3. The U.S. Constitution Creates a System of Checks and Balances.
Each branch has some power check over the others to keep any one from becoming too powerful.
Example: Clinton v. Jones, 520 U.S. 681 (1997), President is accountable for civil wrongs alleged by private citizens.

4. The U.S. Constitution Other Articles in the Constitution.
Article IV: State interrelationships.
Article V: Procedures for amendments.
Article VI: Supremacy Clause.

5. The U.S. Constitution Bill of Rights. Other Amendments.
First: Freedom of speech.
Fourth: Privacy.
Fifth: Due process and self-incrimination.
Sixth: Jury trial.
Other Amendments.
Fourteenth Amendment: Due Process and Equal Protection.

6. Role of Judicial Review
Determines the Rights Afforded by the U.S. Constitution.
Determines of the Scope of Rights.
Plays Unique Role in Checks and Balances.
Determines the appropriateness of the actions of other branches.

7. Limits of Economic Regulation
The Commerce Clause: Article I, Section 8:
Standards for Federal Regulation of Interstate Commerce.
Historical application:
Initially, Court gave a narrow interpretation.
Court held New Deal Legislation unconstitutional.
Roosevelt proposed Court-Packing Plan.
After these political battles, the court responded in NLRB v. Laughlin Steel with the affectation doctrine.

8. Limits of Economic Regulation
Case U.S. v. Morrison (2000).
Victim of assault sued university under the Violence Against Women Act.
Court found the VAWA was non-economic and therefore outside the scope of Congress’ power under the interstate commerce clause.

9. Limits of Economic Regulation
The Commerce Clause: Article I, Section 8:
Standards for state regulation of commerce.
If Congress has regulated, there is an overriding concern about the Supremacy Clause.
If Congress has not acted, there is a benefit/burden analysis.
Balance police power (state’s interest in regulation) with the burden on commerce.
State law cannot give in-state businesses an advantage.

10. Limits of Economic Regulation
Case Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dept. of Natural Resources (1992).
Of what significance is it that the restrictions apply both to outside counties and to other states?
Is economic protectionism involved?

11. Limits of Economic Regulation
Congressional Regulation of Foreign Commerce.
The power of Congress to regulate foreign commerce applies regardless of where it begins and ends.

12. Taxation of Business
Congress’ Power to Tax: Article I, Section 8: The ability of Congress to tax has been consistently upheld.
State and Local Taxation of Interstate Commerce.
Interstate business is not exempt from state and local taxes just because they are interstate businesses.

13. Taxation of Business Requirements for Valid State Tax:
Tax cannot discriminate against interstate commerce.
Tax cannot be an undue burden on interstate commerce.

14. Taxation of Business Requirements for Valid State Tax:
Must be a “sufficient nexus” between the state and the business being taxed.
Examples: Does business there, holds property titles there, manufactures there, inventory stored there.
Must be apportioned fairly.
Example: A corporation doing business in fifty states cannot have all income taxed in all fifty states. Must be apportioned according to its revenues in the states.

15. Taxation of Business Case 5.3 Quill Corp. v. North Dakota (1992).
How did Quill come to have customers in North Dakota?
Is there a difference between pamphlets in a state and salespeople in that state?

16. State vs. Federal Regulation
The Supremacy Clause and Preemption.
Article VI exists to determine which laws control in the event both state and federal governments regulate the same thing.
If state law directly conflicts with federal law, state law is invalid.

17. State vs. Federal Regulation
The Supremacy Clause and Preemption.
Whether there is preemption is controlled by answering several questions:
What does legislative history provide?
What is the level of detail in the federal regulation?
What benefit flows from the federal regulation?
What is the nature of conflict—can the two laws survive?

18. State vs. Federal Regulation
Case Geier v. Honda Motor (2000).
Geier’s car did not have an air bag and she was injured.
She sued claiming negligent manufacture, that Honda owed a duty to include an airbag.
Case was dismissed and Supreme Court affirmed.

19. Bill of Rights First Amendment.
Provides some protection for commercial speech.
Commercial speech is speech used to further the economic interests of the speaker.
Advertising and commercial speech protection
Can regulate advertising.
Substantial government interest must be furthered.
Is the regulation the least restrictive means of accomplishing the interest.

20. Speech on Social Issues and Business: Nike, Professions
Bill of Rights
First Amendment Protections
and Business Speech
First Amendment Full Protection
Speech on Social Issues and Business: Nike, Professions
Governmental Regulation of Commercial Speech
Business Political Speech
Business Advertising

21. Bill of Rights Case 5.5 Nike, Inc. v. Kasky (2003).
What kind of speech was targeted?
Were Nike’s press releases protected by the First Amendment?
What do you think is the impact of this case on other companies?

22. Bill of Rights First Amendment. Corporate political speech.
Corporate participation in campaigns is given full First Amendment protection.

23. Bill of Rights
Case First National Bank of Boston v. Bellotti (1978).
What did the Massachusetts statute regulate?
How does the Court respond to the fact that corporate speech might be more persuasive?

24. Eminent Domain
Eminent domain is the right of government to take private property for public purpose for just compensation.
Public use examples: Highways, schools, urban redevelopment, limits on mining, historical preservation, economic development.

25. Eminent Domain Requirements: Taking or regulating.
Examples: Prohibitions on use, elimination of use.
In Loretto v. Teleprompter Manhattan CATV Corp. et al. (1982).
In Nollan v. California Coastal Commission (1987).
In Lucas v. South Carolina Coastal Council (1992).

26. Eminent Domain Requirement: Procedural Due Process.
Applies to criminal, civil, and administrative proceedings.
Example: Summons and complaint provide notice to defendants.
Right to notice of hearings.
Right to be heard.

27. Eminent Domain Requirement: Substantive Due Process.
State laws cannot substantively eliminate rights without some benefit.
Law must be logically related to legitimate governmental purpose.
Example: Sunday blue laws—stores are closed by law—states must be able to show economic, health, social benefits of such closure.

28. Equal Protection Elements of Protection for Regulation.
Regulation must apply to all businesses.
Example: Courts have struck laws that allow small stores to stay open on Sunday while large stores could not.

29. International Law and Constitutions
General types of constitutions found in the United States and England.
Code Law Countries found in Mexico and many European countries.
Islamic Law: Based on religion, governs all aspect of personal and business life law.