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Chapter 5
Constitutional Authority
To Regulate Business
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
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.
• Separation of Powers: At the national level,
government powers are divided among the
legislative, executive, and judicial branches.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
2
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.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
3
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.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
4
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.”
• 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.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
5
The Taxing and
Spending Powers
Taxing power:
• “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.
Miller • Cross 4th Ed.
Spending power:
• 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.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
6
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.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
7
Business and
the Bill of Rights
Freedoms guaranteed by the Bill of Rights
included the following:
Freedom of Speech
Freedom of Religion
Freedom from Compelled
Self-Incrimination
Freedom from Unreasonable
Searches and Seizures
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
8
Freedom of Speech
• 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).
• Certain types of speech, such as defamatory
speech and lewd or obscene speech, are not
protected under the First Amendment.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
9
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.
• 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?
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
10
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?”
• 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.
• CIPA: library filtering did not violate the First Amendment.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
11
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).
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
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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.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
13
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.”
• This due process clause has two
components:
– Procedural due process.
– Substantive due process.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
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Procedural v. Substantive
Due Process
Procedural due
process:
• Requires that any
government decision to
take life, liberty, or
property must be made
fairly, using fair
procedures.
Miller • Cross 4th Ed.
Substantive due
process:
• 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.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
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Equal Protection
• 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.
– 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.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
16
Equal Protection
• 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).
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
17
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.
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
18
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).
Miller • Cross 4th Ed.
© 2005 by West Legal Studies in Business / A Division of Thomson Learning
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