Discussion 8

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Business and the Constitution

Chapter 2

Chapter Overview

The structure of the U.S. Constitution and its role in the American legal system.

The specific powers granted to the three branches of the federal government under the Constitution.

The main constitutional rights and protections afforded to individuals and business entities in the Bill of Rights and the Fourteenth Amendment.

Functions of the Constitution

Establishes a structure for the federal government; that is, it creates three coequal branches

Delegates enumerated and limited powers to each coequal branch of the federal government.

Provides procedural protections to citizens, persons, and business firms

Structure of the Constitution

Preamble

Seven articles

first three articles establish a system of government with three coequal branches: the legislative branch, the executive branch, and the judicial branch.

27 amendments

Bill of Rights (The first 10 amendments)

Articles of the Constitution Article I—Congressional Powers

Among the powers of Congress that generally impact business are

the power to regulate commerce (Commerce Clause);

the power to tax and the power to spend government funds (tax and spend provisions); and

the power to regulate bankruptcy, patents, and copyrights.

Congress has a general implied power to make all laws necessary for carrying out its enumerated powers

Article II—Executive Powers

Presidential powers that affect business include:

the power to carry out laws made by Congress;

the power to enter into treaties (subject to Senate approval) and carry out foreign policy; and

the power to appoint federal officers and judges

Executive orders have the force of law and are typically issued by the president as a method to carry out executive functions of government.

Article III—Judicial Powers

The federal judiciary adjudicates (decides) cases and controversies that fall within its authority

Jurisdiction is the legal authority of a court to decide a specific case.

Judicial review

the notion that federal courts have the right to invalidate state or federal laws that are inconsistent with the U.S. Constitution in some way.

Separation of Powers

The Constitution’s creation of three coequal branches and its enumeration of government powers are part of an overall framework that is designed to ensure that no one branch exceeds its constitutional authority

Based on a separation of powers, ensuring that no one branch becomes overly dominant over the other branches.

Applying the Constitution: Standards of Judicial Review

The Supreme Court classifies the action into one of three categories of scrutiny:

the rational basis category

intermediate-level scrutiny

strict scrutiny

Rational Basis Review

The government need only show:

that its action advanced a legitimate government objective (such as public welfare, health, or safety) and

that the action was somehow related to the government’s objective.

Intermediate-Level Scrutiny

Courts will uphold government actions as constitutional so long as the government can prove:

that its action advanced an important government objective (a higher level than the “legitimate” criterion used in the rational basis test) and

that the action is substantially related to the government’s objective.

Strict Scrutiny

Courts will uphold the law only if:

the government’s objective is compelling,

the means chosen by the government to advance that objective are necessary to achieve that compelling end, and

no less restrictive alternatives exist.

Supremacy Clause and Preemption

Supremacy Clause

Article VI of the U.S. Constitution provides that federal laws are always supreme to any conflicting state law.

invalidates any state law that is in direct conflict with federal law

Preemption

The power granted by the supremacy clause to override a state law

Commerce Powers

Congress’s broadest power is derived from the Commerce Clause whereby Congress is given the power to “regulate Commerce among the several states.”

Application of Commerce Powers

Congress has the express constitutional authority to regulate:

channels of interstate commerce such as railways and highways,

the instrumentalities of interstate commerce such as vehicles used in shipping,

the articles moving in interstate commerce.

Constitutional Restrictions on State Regulation of Commerce

The U.S. Supreme Court has ruled that the mere existence of congressional commerce powers restricts the states from discriminating against or unduly burdening interstate commerce.

Tax and Spend Power

Congress has the textual power to impose taxes and to spend federal tax revenues in any way that promotes the common defense and general welfare of the United States.

It is an independent source of federal authority.

Necessary and Proper Clause

Congress may also place conditions on the use of federal money in order to achieve some public policy objective.

Congress generally cites the Necessary and Proper Clause as authorization to set conditions on federal spending.

Necessary and Proper Clause

Four-part test for evaluating the constitutionality of conditions attached to federal spending programs:

the spending power must be exercised in pursuit of the general welfare,

grant conditions must be clearly stated,

the conditions must be related to a federal interest in the national program or project, and

the spending power cannot be used to induce states to do things that would themselves be unconstitutional.

Constitutional Protections

The Constitution confers on persons and businesses many constitutional rights.

Most of these rights are contained in the first 10 amendments to the Constitution (the Bill of Rights).

Corporations and other business entities do not always receive the same level of constitutional protection as individuals

First Amendment

The First Amendment contains the important introductory phrase “Congress shall make no law” and then articulates several specific protections against government encroachment in the areas of religion, press, speech, assembly, and petition of grievances.

Demonstrates that the framers intended the Constitution to function as a limit on federal government actions.

Explain free speech – the concept that it relates to government interference and may not exist in private setting.

Commercial Speech

Part One: So long as the commercial speech concerns lawful activities and is not misleading, the speech qualifies for protection under the First Amendment.

Part Two: The government must show that it has a substantial government interest in regulating the speech.

Fourth Amendment

A search or seizure conducted by the government is illegal without a warrant from a judge or magistrate.

To obtain a warrant, the government must first demonstrate probable cause to a judge or a magistrate that the proposed search or seizure is justified under the law.

Use example such as OSHA or EPA.

Fourth Amendment

The government, for example, does not need a warrant if there are “exigent circumstances” and if it is acting with probable cause and obtaining a warrant is impractical.

Due Process

First, due process imposes certain procedural requirements on federal and state governments when they impair life, liberty, or property.

Secondly, due process limits the substantive power of the states to regulate certain areas related to individual liberty

Equal Protection

The Equal Protection Clause is part of the Fourteenth Amendment and prohibits state governments from denying their citizens equal protection of the laws.

Fundamentally, equal protection requires the government to treat people who are similarly situated equally.

Does not mean that everyone must be treated exactly the same.

The Right to Privacy

Although not explicitly mentioned in the Constitution, the right to privacy use to play a central role in constitutional law.

The U.S. Supreme Court formally recognized a constitutional right to privacy in 1965 in the landmark case of Griswold v. Connecticut.

The U.S. Supreme Court threw out our previously recognized constitution right to privacy in 2022 in the Dobbs v. Jackson Women’s Health Organization when 5 political hacks, all catholic took away the right for a woman to control her personal medical treatment.

Federal Statutes

Health Insurance Portability and Accountability Act (HIPAA)

regulates health care providers, health plans, and plan administrators in gathering, storing, and disclosing medical information about individuals.

requires that specific policies and record-keeping practices be used in order to ensure the privacy of any medical information, such as diagnoses, tests, medications,

Workplace Privacy

Most privacy rights afforded by the U.S. Constitution do not extend to the workplace.

Nonetheless, privacy rights have become increasingly important to business owners and managers as Congress and state legislatures seek to clarify workplace privacy rights by statute.

Discussion 8

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