Chapter 6Chapter 6

Constitutional Authority Constitutional Authority to Regulate Businessto Regulate Business

Chapter 6Chapter 6

Constitutional Authority Constitutional Authority to Regulate Businessto Regulate Business

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Chapter ObjectivesChapter Objectives1. Describe the form of government created by

the U.S. Constitution.2. Explain the relationship between the national

government and state governments as set forth in the Constitution.

3. Identify the constitutional basis for the regulatory power of the federal government.

4. Summarize the fundamental rights protected by the First Amendment.

5. Give some examples of how other constitutional protections affect business.

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The Constitutional The Constitutional Powers Powers

of Governmentof GovernmentThe U.S. Constitution established a federal form of government, in which government powers are shared by the national government and the state governments.At the national level, government powers are divided among the legislative, executive, and judicial branches.

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The Commerce ClauseThe Commerce ClauseThe 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.

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The Commerce ClauseThe Commerce ClauseThe 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.

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Gibbons v. OgdenGibbons v. Ogden (1824) (1824)This early case, involving a dispute over the rights to operate steamboats between New York and New Jersey, helped define Congress’ power “to regulate commerce … among the several states…”What did the U.S. Supreme Court hold? What does the term “commerce” mean?What might have resulted if the court had held otherwise, that the national government did not have the exclusive power to regulate interstate commerce?

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Case 6.1 Case 6.1 Heart of Atlanta Heart of Atlanta Motel Motel

v. United Statesv. United StatesThe U.S. Supreme Court held that the discrimination practiced by a local Atlanta motel could be prohibited by the federal government under the commerce clause since:“If it is interstate commerce that feels the pinch, it

does not matter how local the operation that applies the squeeze.”

Suppose that only 5% of the motel’s guests, or even 2 or 1%, were from out of state. In such a situation, would the court still have been justified in regulating the motel’s activities?

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Case 6.2 Case 6.2 J.E. Goodenow v. City J.E. Goodenow v. City Council of Maquoketa, IowaCouncil of Maquoketa, Iowa

Two-thirds of the Goodenow family farm is located within the city limits of Maquoketa, Iowa. At one time, the city mowed all the right-of-ways including the grass, weeds, and ditches. When the city enacted an ordinance to require the owners of the adjoining property to mow these strips, the Goodenow family did not perform.The family appealed to the city council but was denied exemption. John Goodenow and the others filed a petition against the city.Should all citizens be considered obligated to render some unpaid service to their states?

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The Supremacy ClauseThe 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.

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The Taxing and Spending The Taxing and Spending PowersPowers

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.

Spending powerPower “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.

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Business and the Bill of Business and the Bill of RightsRights

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.

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Business and the Bill of Business and the Bill of RightsRights

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

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Freedom of SpeechFreedom of SpeechTypes of speech protected under the First Amendment include: Commercial speech Political speech

Certain types of speech, such as defamatory speech and lewd or obscene speech, are not protected under the First Amendment.

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The Constitution asThe Constitution as a “Living Document” a “Living Document”

Because the rights guaranteed by the first ten amendments are described in very general terms, it is often up to the U.S. Supreme Court as interpreter of the Constitution to define our rights and determine their boundaries.Supreme Court justices are not elected by the people but are appointed by the president, with the advice and consent of the Senate. Do you think that the justices exercise too much authority in shaping the rights and liberties of Americans? Can you think of a better alternative?

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Regulating SpeechRegulating Speech on Campus on Campus

Many colleges and universities have issued speech or behavioral codes in an attempt to curb the “hate speech” exchanged between different ethnic groups on campuses.Many contend forcing students to engage only in “politically correct” speech violates the First Amendment, while others argue that hate speech essentially constitutes “fighting words” and thus should not be constitutionally protected.Does hate speech equate with fighting words? Should colleges and universities be permitted to regulate speech on their campuses?

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Free SpeechFree SpeechShould the same rights of free speech apply over the internet that apply in a face to face conversation?The Communications Decency Act made it a criminal offense to transmit “indecent” speech or images or make it available online to minors. What did the the Supreme Court rule when the constitutionality of the CDA was challenged in court?The CDA stated that indecent speech is to be measured by community standards, but what community standards would have to be applied to the internet, which has no geographic boundaries?

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Free Speech and Free Speech and Unwanted Electronic Unwanted Electronic

MailMailAlthough 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?

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Regulating Online Regulating Online ObscenityObscenity

“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?

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Individual Rights vs.Individual Rights vs. Community Interests Community Interests

Traditionally, the courts have protected free speech and other First Amendment freedoms to the fullest extent, even if they were “hate crimes” or “hate speech.” Recently, a few courts have put the welfare and security of the community first.The Supreme Court of Illinois recently upheld a Chicago ordinance to keep gangs from loitering in the streets.Should ordinances prohibiting gangs from assembling on streets be permissible restraints on First Amendment freedoms?

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Case 6.3 Case 6.3 Bad Frog Bad Frog Brewery v. New York Brewery v. New York

State Liquor AuthorityState Liquor AuthorityBad Frog Brewery Inc., makes and sells alcoholic beverages. Some of the labels displayed a frog “giving the finger.” Bad Frog’s authorized NY distributor, Renaissance Beer Co., applied to the New York State Liquor Authority (NYSLA) for brand label approval as required by state law. The NYSLA denied the application because the beer was going to be displayed in public. Bad Frog filed a suit against NYSLA asking for an injunction against the denial.Whose interests are advanced by the banning of certain types of advertising?

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Freedom of ReligionFreedom 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)

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Church and State under Islamic Church and State under Islamic LawLaw

Today, Muslims constitute over one-half of the population in 35 nations. The Muslim faith (Islam) is one of the great religions of the world. Americans protest state-sponsored religion, but the Islamic law does not provide for the separation of church and state. The Islamic religion controls Islamic law and regulates all public and private matters.Is the union of religion and law incompatible with a democratic form of government?

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Other Constitutional Other Constitutional ProtectionsProtections

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

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Due ProcessDue ProcessBoth 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

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Procedural v. Procedural v. SubstantiveSubstantiveDue ProcessDue Process

Procedural due processRequires that any government decision to take life, liberty, or property must be made fairly, using fair procedures.

Substantive due processFocuses on the content of legislation.Generally, a law violates substantive due process unless the law promotes a compelling state interest, such as public safety.

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Equal ProtectionEqual ProtectionUnder 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.

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Case 6.4Case 6.4 Bah v. City of Bah v. City of AtlantaAtlanta

The Atlanta City Council adopted a dress code for cab drivers that required them to wear shoes that covered the entire foot, dark pants or skirts down to the ankle, and solid white or light blue shirts that have sleeves and collars. Hats had to be baseball style with an Atlanta or taxicab theme. Mohamed Bah, a cab driver, was cited for violating the code and and he filed a suit against the city. He accused the code of violating the equal protection clause. An injunction was issued which was later reversed by an appellate court.Would it be constitutional to impose a dress code on others who are licensed by the city and who deal with out-of-town visitors—food servers, bellhops, and outdoor vendors, for example?

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Privacy RightsPrivacy RightsThere 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

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For ReviewFor Review1. What is the basic structure of the U.S.

government?2. What constitutional clause gives the federal

government the power to regulate commercial activities among the various states?

3. What constitutional clause allows laws enacted by the federal government to take priority over conflicting state laws?

4. What is the Bill of Rights? What freedoms are guaranteed by the First Amendment?

5. Where in the Constitution can the due process clause be found?