1. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning Chapter 5 Constitutional Authority To Regulate Business

2. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 2 The Constitutional Powers of Government The U.S. Constitution established a federal form of government, in which government powers are shared by the national government and the state governments.The U.S. Constitution established a federal form of government, in which government powers are shared by the national government and the state governments. Separation of Powers: At the national level, government powers are divided among the legislative, executive, and judicial branches.Separation of Powers: At the national level, government powers are divided among the legislative, executive, and judicial branches.

3. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 3 The Commerce Clause The breadth of the commerce clause: –The commerce clause expressly permits Congress to regulate commerce. –Over time, courts expansively interpreted this clause, and today the commerce power authorizes the national government, at least theoretically, to regulate virtually every commercial enterprise in the United States.

4. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 4 The Commerce Clause The regulatory powers of the states: –Under their police powers, state governments may regulate private activities to protect or promote the public order, health, safety, morals, and general welfare. –If state regulations substantially interfere with interstate commerce, they will be held to violate the commerce clause of the U.S. Constitution. –Case 5.1 Heart of Atlanta Motel v. United States (1964). –Dormant Commerce Clause.

5. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 5 The Supremacy Clause The U.S. Constitution provides that the Constitution, laws, and treaties of the United States are “the supreme law of the land.”The U.S. Constitution provides that the Constitution, laws, and treaties of the United States are “the supreme law of the land.” Whenever a state law directly conflicts with a federal law, the state law is rendered invalid.Whenever a state law directly conflicts with a federal law, the state law is rendered invalid. Preemption occurs when Congress chooses to act exclusively in a concurrent area.Preemption occurs when Congress chooses to act exclusively in a concurrent area.

6. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 6 The Taxing and Spending Powers Taxing power: Taxing power: “Power to lay and collect taxes…”“Power to lay and collect taxes…” If a tax measure bears some reasonable relationship to revenue production, it is generally held to be within the taxing power.If a tax measure bears some reasonable relationship to revenue production, it is generally held to be within the taxing power. Spending power: Spending power: Power “to pay the debts and provide for the common defense and general welfare…”Power “to pay the debts and provide for the common defense and general welfare…” Congress can spend revenues not only to carry out its enumerated powers but also to promote other objectives so long as it does not violate the Bill of Rights.Congress can spend revenues not only to carry out its enumerated powers but also to promote other objectives so long as it does not violate the Bill of Rights.

7. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 7 Business and the Bill of Rights The Bill of Rights, which consists of the first ten amendments to the U.S. Constitution, was adopted in 1791 and embodies a series of protections for individuals, and in most cases, business entities, against types of interference by the federal government.

8. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 8 Freedoms guaranteed by the Bill of Rights included the following: Freedom of Speech Freedom from Compelled Self-Incrimination Freedom from Unreasonable Searches and Seizures Freedom of Religion Business and the Bill of Rights

9. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 9 Freedom of Speech Other types of speech protected under the First Amendment include:Other types of speech protected under the First Amendment include: –Political speech. –Commercial speech (advertising). Case 5.2 Interactive Digital Software Association v. St. Louis County, Missouri (2003).Case 5.2 Interactive Digital Software Association v. St. Louis County, Missouri (2003). Certain types of speech, such as defamatory speech and lewd or obscene speech, are not protected under the First Amendment.Certain types of speech, such as defamatory speech and lewd or obscene speech, are not protected under the First Amendment.

10. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 10 Free Speech and Unwanted Electronic Mail Although the First Amendment expressly protects persons only from government actions, its protections sometimes extend to conduct involving private facilities (such as distributing leaflets in a shopping mall) because such areas serve a public function.Although the First Amendment expressly protects persons only from government actions, its protections sometimes extend to conduct involving private facilities (such as distributing leaflets in a shopping mall) because such areas serve a public function. What about transmission of “electronic leaflets” over the internet? Should the same principles apply? Is the transmission of such “junk mail” or “spam” significantly different from the distribution of leaflets in a shopping mall or on a public street?What about transmission of “electronic leaflets” over the internet? Should the same principles apply? Is the transmission of such “junk mail” or “spam” significantly different from the distribution of leaflets in a shopping mall or on a public street?

11. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 11 Regulating Online Speech “Obscene” speech is not protected by the First Amendment. However, what standard are we to use when judging whether something is or is not “obscene?”“Obscene” speech is not protected by the First Amendment. However, what standard are we to use when judging whether something is or is not “obscene?” The Communications Decency Act (CDA) made the transmission of “indecent” or “patently offensive” speech or images to minors a criminal offense. Traditionally the relevant standard to be applied was that of the community— but which community?The Communications Decency Act (CDA) made the transmission of “indecent” or “patently offensive” speech or images to minors a criminal offense. Traditionally the relevant standard to be applied was that of the community— but which community? COPA: struck down.COPA: struck down. CIPA: library filtering did not violate the First Amendment.CIPA: library filtering did not violate the First Amendment.

12. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 12 Freedom of Religion Under the First Amendment, the government may neither: –Establish any religion (the establishment clause). –Prohibit the free exercise of religion (the free exercise clause).

13. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 13 Due Process and Equal Protection Two other constitutional guaranties of great significance to Americans are the:  Due process clause contained in both the Fifth and Fourteenth Amendments.  Equal protection clause of the Fourteenth Amendment.

14. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 14 Due Process Both the Fifth and the Fourteenth Amendments provide that no person shall be deprived of “life, liberty, or property, without due process of law.”Both the Fifth and the Fourteenth Amendments provide that no person shall be deprived of “life, liberty, or property, without due process of law.” This due process clause has two components:This due process clause has two components: –Procedural due process. –Substantive due process.

15. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 15 Procedural v. Substantive Due Process Procedural due process: Procedural due process: Requires that any government decision to take life, liberty, or property must be made fairly, using fair procedures.Requires that any government decision to take life, liberty, or property must be made fairly, using fair procedures. Substantive due process: Substantive due process: Focuses on the content of legislation.Focuses on the content of legislation. Generally, a law violates substantive due process unless the law promotes a compelling state interest, such as public safety.Generally, a law violates substantive due process unless the law promotes a compelling state interest, such as public safety.

16. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 16 Equal Protection Under the Fourteenth Amendment, a state may not “deny to any person within its jurisdiction the equal protection of the laws.”Under the Fourteenth Amendment, a state may not “deny to any person within its jurisdiction the equal protection of the laws.” A law or action that limits the liberty of some person, but not others, may violate the Equal Protection clause.A law or action that limits the liberty of some person, but not others, may violate the Equal Protection clause. –Such a law may be deemed valid, however, if there is a rational basis for the discriminatory treatment of a given group or if the law substantially relates to an important government objective.

17. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 17 Depending on the classification courts apply different types of ‘scrutiny’ to determine whether the law violates equal protection clause:Depending on the classification courts apply different types of ‘scrutiny’ to determine whether the law violates equal protection clause: –Minimal Scrutiny (“Rational Basis”). –Intermediate Scrutiny (cases involving gender). –Strict Scrutiny (fundamental rights). Equal Protection

18. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 18 Privacy Rights There is no specific guarantee of a right to privacy in the Constitution, but such a right has been derived from guarantees found in other constitutional amendments, such as the: –First Amendment. –Third Amendment. –Fourth Amendment. –Fifth Amendment. –Ninth Amendment.

19. Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 19 Federal Statutes Protecting Privacy Rights.Federal Statutes Protecting Privacy Rights. –Health Insurance Portability and Accountability Act (HIPAA) of 1996 defines how health information can be used or disclosed. –Driver’s Privacy Protection Act of 1994. Did Congress exceed its authority? Case 5.3 Reno v. Condon (2000). Privacy Rights