1. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 4: Constitutional Authority to Regulate Business © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

2. The Constitutional Powers of Government  Before the Revolutionary War, States wanted a confederation with a weak national government and very limited powers. After the war ended, the States voted to create a new, federal government that shared power with States. 2

3. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Constitutional Powers of Government  Federal Form of Government: Shares power between national and state governments. National government has limited, enumerated powers delegated from States. 3

4. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Constitutional Powers of Government  Federal Form of Government (cont’d). 10 th Amendment: powers reserved to the states and to the people. Police Powers: order, safety, morals. 4

5. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Constitutional Powers of Government  The Separation of Powers. Three branches that provide checks and balances: Legislative (Congress): Creates laws. Executive (President/Agencies): Enforce laws. Judicial (Federal Courts): Interprets laws. 5

6. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The Commerce Clause. Power to regulate interstate commerce defined in Gibbons v. Ogden (1824): activities that “substantially affect interstate commerce.”  6 The Constitutional Powers of Government

7. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The Commerce Clause. Expansion of National Powers. In 1942, Supreme Court expanded commerce clause to purely interstate businesses (Wickard v. Filburn). In 1964, Supreme Court prohibited racial discrimination in interstate commerce (Heart of Atlanta Motel v. U.S.). 7 The Constitutional Powers of Government

8. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The Commerce Clause. Commerce Clause Today. National government can regulate virtually any business enterprise, including those that are internet-based. Limits: U.S. v. Lopez (1995). What about medical marijuana and the commerce clause? 8 The Constitutional Powers of Government

9. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The Commerce Clause. The “Dormant” Commerce Clause. Generally, federal government has exclusive authority to regulate commerce that substantially affects trade among the states. States possess inherent police powers to regulate health, safety, public order, morals and general welfare.  9 The Constitutional Powers of Government

10. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The Commerce Clause. The “Dormant” Commerce Clause. State police powers or regulations that substantially interfere with interstate commerce will be struck down. CASE 4.1 F AMILY W INEMAKERS OF C ALIFORNIA V. J ENKINS (2010). CASE 4.1 F AMILY W INEMAKERS OF C ALIFORNIA V. J ENKINS (2010). Did the State of Massachusetts discriminate against out-of-state wineries? 10 The Constitutional Powers of Government

11. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The Supremacy Clause. In case of direct conflict between state and federal law, state law is invalid. A valid federal statute or regulation will take precedence over a conflicting state or local statute.  11 The Constitutional Powers of Government

12. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The Supremacy Clause. Preemption occurs when Congress chooses to act exclusively when national and state governments have concurrent powers. 12 The Constitutional Powers of Government

13. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Business and the Bill of Rights  First Ten Amendments to the United States Constitution are called the Bill of Rights.  All apply to natural persons and most apply to business entities as well. 13

14. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Bill of Rights 14

15. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Business and the Bill of Rights  Limits on Federal and State Government Actions. Bill of Rights was originally intended as a limit on national government powers. Today, Bill of Rights is applied to States via the “due process” clause of the 14th Amendment. 15

16. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The First Amendment – Freedom of Speech. Afforded highest protection by courts. Symbolic Speech: Texas v. Johnson (1989), the “flag burning” case.  Business and the Bill of Rights 16

17. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The First Amendment – Freedom of Speech. Reasonable Restrictions. Balance must be struck between a government’s obligation to protect its citizens versus a citizen’s right to speech. If restriction is content neutral, restrictions must target some societal problem – not to primarily suppress the message. Business and the Bill of Rights 17

18. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The First Amendment – Freedom of Speech. Corporate Political Speech. Political speech by corporations is protected by the First Amendment. In Citizens United v. Federal Election Commission (2010) the Supreme Court ruled that corporations can spend freely to support or oppose candidates for President and Congress. Business and the Bill of Rights 18

19. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The First Amendment – Freedom of Speech. Commercial Speech. Courts give substantial protection to commercial speech (advertising). Restrictions must: Implement substantial government interest; directly advance that interest; and go no further than necessary.  Business and the Bill of Rights 19

20. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The First Amendment – Freedom of Speech. Commercial Speech. CASE 4.2: B AD F ROG B REWERY, I NC. V. N EW Y ORK S TATE L IQUOR A UTHORITY (1998). CASE 4.2: B AD F ROG B REWERY, I NC. V. N EW Y ORK S TATE L IQUOR A UTHORITY (1998). Did the State unconstitutionally restrict commercial speech when it prohibited a certain gesture (illustration) on beer labels? Business and the Bill of Rights 20

21. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The First Amendment – Freedom of Speech. Unprotected Speech: certain types of speech are not protected by the First Amendment: slander, fighting words, pornography. – Obscenity (see Miller v. California). – Online Obscenity: CDA, COPA, Children’s Internet Protection Act, Children’s Internet Protection Act (2000). Business and the Bill of Rights 21

22. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The First Amendment – Freedom of Religion. Government may not “establish” a religion or prohibit the “free exercise” of religion. The Establishment Clause: prohibits government from establishing a state- sponsored religion, or passing laws that favor one over the other.  Business and the Bill of Rights 22

23. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The First Amendment – Freedom of Religion. The Establishment Clause. CASE 4.3 T RUNK V. C ITY OF S AN D IEGO (2011). CASE 4.3 T RUNK V. C ITY OF S AN D IEGO (2011). What was the Supreme Court’s rationale for ordering the cross removed? Business and the Bill of Rights 23

24. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  The First Amendment – Freedom of Religion. Free Exercise Clause: First Amendment guarantees the “free exercise” of religion. Employers must reasonably accommodate beliefs as long as employee has sincerely held beliefs. Business and the Bill of Rights 24

25. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Fifth and Fourteenth Amendments provide “no person shall be deprived of life, liberty or property without due process of law.”  Due Process: Procedural and Substantive issues.  Due Process and Equal Protection 25

26. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Due Process and Equal Protection  Due Process. Procedural Due Process: p rocedures 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. 26

27. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Due Process and Equal Protection  Due Process. Substantive Due Process: focuses on content or substance of legislation. Laws limiting fundamental rights (speech, privacy, religion) must have a “compelling state interest.” Laws limiting non-fundamental rights require a “rational basis.” 27

28. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Due Process and Equal Protection  Equal Protection. Similarly situated individuals must be treated in the same manner. Strict Scrutiny Test. Suspect trait (race, national origin) must serve a “compelling state interest” which includes remedying past discrimination.  28

29. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Due Process and Equal Protection  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). 29

30. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Due Process and Equal Protection  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. 30

31. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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. 31

32. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Privacy Rights  Federal Statutes Affecting Privacy Rights. “Pretexting” for financial information is illegal under Gramm-Leach-Bliley. Privacy Act of 1974. Medical Information: HIPAA of 1996. Court Records. USA PATRIOT Act of 2001. 32