Chapter 4 Constitutional Authority to Regulate Business
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.
§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)
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)
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.
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.
§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.
Free Speech • Afforded highest protection by courts. • Symbolic Speech. • Texas v. Johnson (1989). • R.A.V. vs. City of St.Paul (1992).
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).
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).
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.
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).
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).
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).
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.
§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.
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.
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.”
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.
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).
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.
§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.
Law on the Web • Online Constitution Center • See the “Vote-Smart” site on federalism. • Federalist Society.com. • ACLU.org. • Legal Research Exercises on the Web.