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

  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. • 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 5.1U.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 5.2Fort 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 5.3Quill 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 5.4Geier 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. First Amendment Full Protection Bill of Rights First Amendment Protections and Business Speech Speech on Social Issues and Business: Nike, Professions Governmental Regulation of Commercial Speech Business Political Speech Business Advertising

  21. Bill of Rights • Case 5.5Nike, 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 5.7First 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.