ORIGINAL 5 Page Paper-App of International Law

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BUSINESS AND THE CONSTITUTION

A federal statute and related regulations prohibited producers of beer from listing, on a product label, the alcohol content of the beer in the container on which the label appeared. The regulation existed because the U.S. government believed that if alcohol content could be disclosed on labels, certain producers of beer might begin marketing their brand as having a higher alcohol content than competing beers. The government was concerned that “strength wars” among producers could then develop, that consumers would seek out beers with higher alcohol content, and that adverse public health consequences would follow. Because it wished to include alcohol content information on container labels for its beers, Coors Brewing Co. filed suit against the United States government and asked the court to rule that the statute and regulations violated Coors's constitutional right to freedom of speech.

Consider the following questions as you read Chapter 3:

On which provision in the U.S. Constitution was Coors relying in its challenge of the statute and regulations?

Does a corporation such as Coors possess the same constitutional right to freedom of speech possessed by an individual human being, or does the government have greater latitude to restrict the content of a corporation's speech?

The alcohol content disclosures that Coors wished to make with regard to its product would be classified as commercial speech. Does commercial speech receive the same degree of constitutional protection that political or other noncommercial speech receives?

Which party—Coors or the federal government—won the case, and why?

Do producers and other sellers of alcoholic beverages have, in connection with the sale of their products, special ethical obligations that sellers of other products might not have? If so, what are those obligations and why do they exist?

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1 Describe the role of courts in interpreting constitutions and in determining whether statutes or other government actions are constitutional.

2 Explain the key role of the U.S. Constitution's Commerce Clause in authorizing action by Congress.

3 Describe the incorporation doctrine's role in making most guarantees of the Bill of Rights operate to protect persons not only against certain federal government actions but also against certain state and local government actions.

4 Explain the differences among the means-ends tests used by courts when the constitutionality of government action is being determined (strict scrutiny, intermediate scrutiny, and rational basis).

5 Describe the differences between noncommercial speech and commercial speech and the respective levels of First Amendment protection they receive.

Page 56 6 Explain the difference between procedural due process and substantive due process.

7 Identify the instances when an Equal Protection Clause–based challenge to government action triggers more rigorous scrutiny than the rational basis test.

8 Explain the burden-on-commerce doctrine's role in making certain state government actions unconstitutional.

9 Identify the major circumstances in which federal law will preempt state law.

10 Explain the power granted to the government by the Takings Clause, as well as the limits on that power.

CONSTITUTIONS SERVE TWO general functions. First, they set up the structure of government, allocating power among its various branches and subdivisions. Second, they prevent government from taking certain actions—especially actions that restrict individual or, as suggested by the Coors scenario with which this chapter opened, corporate rights. This chapter examines the U.S. Constitution's performance of these functions and considers how that performance affects government regulation of business.

An Overview of the U.S. Constitution

The U.S. Constitution exhibits the principle of separation of powers by giving distinct powers to Congress, the president, and the federal courts. Article I of the Constitution establishes a Congress composed of a Senate and a House of Representatives, gives it sole power to legislate at the federal level, and sets out rules for the enactment of legislation. Article I, § 8 also defines when Congress can make law by stating its legislative powers. Three of those powers—the commerce, tax, and spending powers—are discussed later in the chapter.

Article II gives the president the executive power—the power to execute or enforce the laws passed by Congress. Section 2 of that article lists other presidential powers, including the powers to command the nation's armed forces and to make treaties. Article III gives the judicial power of the United States to the Supreme Court and the other federal courts later established by Congress. Article III also determines the types of cases the federal courts may decide.

Besides creating a separation of powers, Articles I, II, and III set up a system of checks and balances among Congress, the president, and the courts. For example, Article I gives the president the power to veto legislation passed by Congress, but allows Congress to override such a veto by a two-thirds vote of each House. Article I and Article II provide that the president, the vice president, and other federal officials may be impeached and removed from office by a two-thirds vote of the Senate. Article II states that treaties agreed to by the president must be approved by a two-thirds vote of the Senate. Article III gives Congress some control over the Supreme Court's appellate jurisdiction.

The Constitution recognizes the principle of federalism in the way it structures power relations between the federal government and the states. After listing the powers Congress holds, Article I lists certain powers that Congress cannot exercise. The Tenth Amendment provides that those powers the Constitution neither gives to the federal government nor denies to the states are reserved to the states or the people.

Article VI, however, makes the Constitution, laws, and treaties of the United States supreme over state law. As will be seen, this principle of federal supremacy may cause federal statutes to preempt inconsistent state laws. The Constitution also puts limits on the states' lawmaking powers. One example is Article I's command that states shall not pass laws impairing the obligation of contracts.

Article V sets forth the procedures for amending the Constitution. The Constitution has been amended 27 times. The first 10 of these amendments comprise the Bill of Rights. Although the rights guaranteed in the first 10 amendments once restricted only federal government action, most of them now limit state government action as well. As you will learn, this results from their incorporation within the Due Process Clause of the Fourteenth Amendment.

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Describe the role of courts in interpreting constitutions and in determining whether statutes or other government actions are constitutional.

The Evolution of the Constitution and the Role of the Supreme Court

According to the legal realists discussed in Chapter 1, written “book law” is less important than what public decision makers actually do. Using this approach, we discover a Constitution that differs from the written Constitution just described. The actual powers of today's presidency, for instance, exceed anything one would expect from reading Article II. As you will see, moreover, some constitutional provisions have acquired a meaning different from their meaning when first enacted. American constitutional law has evolved rather than being static.

Many of these changes result from the way one public decision maker—the nine-member U.S. Supreme Court—has interpreted the Constitution over time. Formal constitutional change can be accomplished only through the amendment process. Because this process is difficult to employ, however, amendments to the Constitution have been relatively infrequent. As a practical matter, the Supreme Court has become the Constitution's main “amender” through its many interpretations of constitutional provisions. Various factors help explain the Supreme Court's ability and willingness to play this role. Because of their vagueness, some key constitutional provisions invite diverse interpretations. “Due process of law” and “equal protection of the laws” are examples. In addition, the history surrounding the enactment of constitutional provisions sometimes is sketchy, confused, or contradictory. Probably more important, however, is the perceived need to adapt the Constitution to changing social conditions. As the old saying goes, Supreme Court decisions tend to “follow the election returns.” (Regardless of where one finds himself or herself on the political spectrum, the old saying has taken on a new twist after Bush v. Gore, the historic 2000 decision referred to later in this chapter.)

Under the power of judicial review, courts can declare the actions of other government bodies unconstitutional. How courts exercise this power depends on how they choose to read the Constitution. Courts thus have political power—a conclusion especially applicable to the Supreme Court. Indeed, the Supreme Court's justices are, to a considerable extent, public policy makers. Their beliefs are important in the determination of how America is governed. This is why the justices' nomination and confirmation often involve so much political controversy.

Yet even though the Constitution frequently is what the courts say it is, judicial power to shape the Constitution has limits. Certain limits spring from the Constitution's language, which sometimes is quite clear. Others result from the judges' adherence to the stare decisis doctrine discussed in Chapter 1. Perhaps the most significant limits on judges' power, however, stem from the tension between modern judicial review and democracy. Legislators are chosen by the people, whereas judges—especially appellate level judges—often are appointed, not elected. Today, judges exercise political power by declaring the actions of legislatures unconstitutional under standards largely of the judiciary's own devising. This sometimes leads to charges that courts are undemocratic, elitist institutions. Such charges put political constraints on judges because courts depend on the other branches of government—and ultimately on public belief in judges' fidelity to the rule of law—to make their decisions effective. Therefore, judges sometimes, may be reluctant to declare statutes unconstitutional because they are wary of power struggles with a more representative body such as Congress.

LOG ON

For a great deal of information about the U.S. Supreme Court and access to the Court's opinions in recent cases, see the Court's website at http://www.supremecourtus.gov.

The Coverage and Structure of This Chapter

This chapter examines certain constitutional provisions that are important to business; it does not discuss constitutional law in its entirety. These provisions help define federal and state power to regulate the economy. The U.S. Constitution limits government regulatory power in two general ways. First, it restricts federal legislative authority by listing the powers Congress can exercise. These are known as the enumerated powers. Federal legislation cannot be constitutional if it is not based on a power specifically stated in the Constitution. Second, the U.S. Constitution limits both state and federal power by placing certain independent checks in the path of each. In effect, the independent checks establish that even if Congress has an enumerated power to legislate on a particular matter or a state Page 58constitution authorizes a state to take certain actions, there still are certain protected spheres into which neither the federal government nor the state government may reach.

Accordingly, a federal law must meet two general tests in order to be constitutional: (1) it must be based on an enumerated power of Congress, and (2) it must not collide with any of the independent checks. For example, Congress has the power to regulate commerce among the states. This power might seem to allow Congress to pass legislation forbidding women from crossing state lines to buy or sell goods. Yet such a law, though arguably based on an enumerated power, surely would be unconstitutional because it conflicts with an independent check—the equal protection guarantee discussed later in the chapter. Today, the independent checks are the main limitations on congressional power. The most important reason for the decline of the enumerated powers limitation is the perceived need for active federal regulation of economic and social life. Recently, however, the enumerated powers limitation has begun to assume somewhat more importance, as will be seen.

After discussion of the most important state and federal powers to regulate economic matters, the chapter explores certain independent checks that apply to the federal government and the states. The chapter then examines some independent checks that affect the states alone. It concludes by discussing a provision—the Takings Clause of the Fifth Amendment—that both recognizes a governmental power and limits its exercise.

State and Federal Power to Regulate

State Regulatory Power Although state constitutions may do so, the U.S. Constitution does not list the powers state legislatures can exercise. The U.S. Constitution does place certain independent checks in the path of state lawmaking, however. It also declares that certain powers (e.g., creating currency and taxing imports) can be exercised only by Congress. In many other areas, though, Congress and the state legislatures have concurrent powers. Both can make law within those areas unless Congress preempts state regulation under the supremacy clause. A very important state legislative power that operates concurrently with many congressional powers is the police power, a broad state power to regulate for the public health, safety, morals, and welfare.

Federal Regulatory Power Article I, § 8 of the U.S. Constitution specifies a number of ways in which Congress may legislate concerning business and commercial matters. For example, it empowers Congress to coin and borrow money, regulate commerce with foreign nations, establish uniform laws regarding bankruptcies, create post offices, and enact copyright and patent laws. The most important congressional powers contained in Article I, § 8, however, are the powers to regulate commerce among the states, to lay and collect taxes, and to spend for the general welfare. Because they now are read so broadly, these three powers are the main constitutional bases for the extensive federal social and economic regulation that exists today.

Explain the key role of the U.S. Constitution's Commerce Clause in authorizing action by Congress.

The Commerce Power Article I, § 8 states that “The Congress shall have Power … To regulate Commerce … among the several States.” The original reason for giving Congress this power to regulate interstate commerce was to nationalize economic matters by blocking the protectionist state restrictions on interstate trade that were common after the Revolution. As discussed later in the chapter, the Commerce Clause serves as an independent check on state regulation that unduly restricts interstate commerce. Our present concern, however, is the Commerce Clause's role as a source of congressional regulatory power.

The literal language of the Commerce Clause simply empowers Congress to regulate commerce that occurs among the states. Supreme Court decisions interpreting the Commerce Clause have held, however, that it sets up three categories of actions in which Congress may engage: first, regulating the channels of interstate commerce; second, regulating and protecting the instrumentalities of interstate commerce, as well as persons or things in interstate commerce; and third, regulating activities that substantially affect interstate commerce. Largely because of judicial decisions regarding congressional action falling within the third category, the Commerce Clause has become a federal power with an extensive regulatory reach. How has this transformation occurred?

The most important step in the transformation was the Supreme Court's conclusion that the power to regulate interstate commerce includes the power to regulate intrastate activities that affect interstate commerce. For example, in a 1914 decision, the Supreme Court upheld the Interstate Commerce Commission's regulation of railroad rates within Texas (an intrastate matter outside the language of the Commerce Clause) because those rates affected rail traffic between Texas and Louisiana Page 59(an interstate matter within the clause's language). This “affecting commerce” doctrine eventually was used to justify federal police power measures with significant intrastate reach. For instance, the Supreme Court upheld the application of the 1964 Civil Rights Act's “public accommodations” section to a family-owned restaurant in Birmingham, Alabama. It did so because the restaurant's racial discrimination affected interstate commerce by reducing the restaurant's business and limiting its purchases of out-of-state meat, and by restricting the ability of blacks to travel among the states.

As the above examples indicate, Congress may constitutionally regulate many predominantly intrastate activities. By the early 1990s, it was not uncommon for observers to view the Commerce Clause as having become, through judicial interpretations, a federal police power with almost unlimited reach. Yet two Supreme Court decisions from the mid-1990s offered indications that the commerce power is not as broad-ranging as many had come to believe. Harmonizing those decisions with the earlier “affecting commerce” decisions was the Court's task in a 2005 case, Gonzales v. Raich, which follows shortly.

When it enacted the Patient Protection and Affordable Care Act in 2010, Congress relied chiefly on the Commerce Clause as the source of power to enact the health care reform law. Various constitutional challenges to the law were initiated, with some federal courts sustaining the statute as a valid exercise of congressional power under the Commerce Clause but other federal courts striking down part or all of it on the ground that Congress had exceeded its commerce power. As this book went to press in 2011, the constitutional challenges seemed destined for resolution in the Supreme Court. Gonzales v. Raich and the two previously referred to decisions from the mid-1990s will be leading precedents with which the Supreme Court must wrestle when it decides the fate of the health care reform law.

Gonzales v. Raich

545 U.S. 1 (U.S. Sup. Ct. 2005)

Although state and federal statutes outlaw marijuana possession and sale, a 1996, California statute made, California the first of approximately 10 states to authorize limited use of the drug for medicinal purposes. The Compassionate Use Act created an exemption from criminal prosecution for patients and primary caregivers who possess or cultivate marijuana for medicinal purposes with a physician's approval.

California residents Angel Raich and Diane Monson suffered from serious medical conditions. After prescribing numerous conventional medicines, physicians had concluded that marijuana was the only effective treatment for Raich and Monson. Both women had been using marijuana as a medication pursuant to their doctors' recommendations, and both relied heavily on marijuana so that they could function without extreme pain. Monson cultivated her own marijuana. Two caregivers provided Raich with locally grown marijuana at no charge.

In 2002, county deputy sheriffs and agents from the federal Drug Enforcement Administration (DEA) came to Monson's home. Although the deputies concluded that Monson's use of marijuana was lawful under California law, the federal agents seized and destroyed all six of her cannabis plants. Raich and Monson thereafter sued the Attorney General of the United States and the head of the DEA in an effort to obtain an injunction barring enforcement of the federal Controlled Substances Act (CSA), to the extent that it prevented them from possessing, obtaining, or manufacturing cannabis for their personal medical use in accordance with California law. The CSA classifies marijuana as a controlled substance and criminalizes its possession and sale. In their complaint, Raich and Monson claimed that enforcing the CSA against them would violate the U.S. Constitution's Commerce Clause and the Due Process Clause of the Fifth Amendment. The federal district court denied the request for a preliminary injunction. The U.S. Court of Appeals for the Ninth Circuit, however, agreed with the Commerce Clause argument and directed the lower court to issue a preliminary injunction prohibiting enforcement of the CSA against Raich and Monson (often referred to below as “respondents”). The U.S. Supreme Court granted the federal government's petition for a writ of certiorari.

Stevens, Justice

Article I, § 8 of the Constitution [empowers Congress] “to make all Laws which shall be necessary and proper for carrying into Execution” [the federal] authority to “regulate Commerce with foreign Nations, and among the several States.” The question presented in this case is whether the power vested in Congress by [the Commerce Clause] includes the power to prohibit the local cultivation and use of marijuana in compliance with California law. [This] case is made difficult by respondents' strong arguments that they will suffer irreparable harm because, despite a congressional finding to the contrary, marijuana does have valid therapeutic purposes. The [issue] before us, however, is not Page 60whether it is wise to enforce the statute in these circumstances; rather, it is whether Congress' power to regulate interstate markets for medicinal substances encompasses the portions of those markets that are supplied with drugs produced and consumed locally.

[Enacted in 1970 as part of a broader legislative package known as the Comprehensive Drug Abuse Prevention and Control Act], the CSA repealed most of the earlier [federal] drug laws in favor of a comprehensive regime to combat the international and interstate traffic in illicit drugs. The main objectives of the CSA [center around monitoring] legitimate and illegitimate traffic in controlled substances. Congress devised a closed regulatory system making it unlawful to manufacture, distribute, dispense, or possess any controlled substance except in a manner authorized by the CSA, [which] categorizes all controlled substances into five schedules. The drugs are grouped together based on their accepted medical uses, the potential for abuse, and their psychological and physical effects on the body. Each schedule is associated with a distinct set of controls regarding the manufacture, distribution, and use of the substances listed therein.

Congress classified marijuana [in] Schedule I [of the CSA]. Schedule I drugs are categorized as such because of their high potential for abuse, lack of any accepted medical use, and absence of any accepted safety for use in medically supervised treatment. These three factors, in varying gradations, are also used to categorize drugs in the other four schedules. [As Congress acknowledged in the CSA, many drugs listed on the other schedules do have accepted medical uses.] By classifying marijuana as a Schedule I drug, [Congress made] the manufacture, distribution, or possession of marijuana … a criminal offense.

Respondents … do not dispute that passage of the CSA … was well within Congress' commerce power. Rather, respondents' challenge is actually quite limited; they argue that the CSA's categorical prohibition of the manufacture and possession of marijuana as applied to the intrastate manufacture and possession of marijuana for medical purposes pursuant to California law exceeds Congress' authority under the Commerce Clause.

[This Court's Commerce Clause cases] have identified three general categories of regulation in which Congress is authorized to engage under its commerce power. First, Congress can regulate the channels of interstate commerce. Second, Congress has authority to regulate and protect the instrumentalities of interstate commerce, and persons or things in interstate commerce. Third, Congress has the power to regulate activities that substantially affect interstate commerce. Only the third category is implicated in the case at hand.

Our case law firmly establishes Congress' power to regulate purely local activities that are part of an economic “class of activities” [having] a substantial effect on interstate commerce. See, e.g., Wickard v. Filburn, 317 U.S. 111 (1942). As we stated in Wickard, “even if appellee's activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce.” In Wickard, we upheld the application of regulations promulgated under the Agricultural Adjustment Act of 1938, which were designed to control the volume of wheat moving in interstate and foreign commerce in order to avoid surpluses and consequent abnormally low prices. The regulations established an allotment of 11.1 acres for Filburn's 1941 wheat crop, but he sowed 23 acres, intending to use the excess by consuming it on his own farm. Filburn argued that even though Congress [had the] power to regulate the production of goods for commerce, that power did not authorize “federal regulation [of] production not intended in any part for commerce but wholly for consumption on the farm.” Justice Jackson's opinion for a unanimous Court rejected this submission. He wrote:

The effect of the statute before us is to restrict the amount which may be produced for market and the extent as well to which one may forestall resort to the market by producing to meet his own needs. That [Filburn's] own contribution to the demand for wheat may be trivial by itself is not enough to remove him from the scope of federal regulation where, as here, his contribution, taken together with that of many others similarly situated, is far from trivial.

Wickard thus establishes that Congress can regulate purely intrastate activity that is not itself “commercial,” in that it is not produced for sale, if it concludes that failure to regulate that class of activity would undercut the regulation of the interstate market in that commodity.

The similarities between this case and Wickard are striking. Like the farmer in Wickard, respondents are cultivating, for home consumption, a fungible commodity for which there is an established, albeit illegal, interstate market. Just as the Agricultural Adjustment Act was designed “to control the volume [of wheat] moving in interstate and foreign commerce in order to avoid surpluses” and consequently control the market price, a primary purpose of the CSA is to control the supply and demand of controlled substances in both lawful and unlawful drug markets. In Wickard, we had no difficulty concluding that Congress had a rational basis for believing that … leaving home-consumed wheat outside the regulatory scheme would have a substantial influence on price and market conditions. Here too, Congress had a rational basis for concluding that leaving home-consumed marijuana outside federal control would similarly affect price and market conditions.

More concretely, one concern prompting inclusion of wheat grown for home consumption in the 1938 Act was that rising Page 61market prices could draw such wheat into the interstate market, resulting in lower market prices. The parallel concern making it appropriate to include marijuana grown for home consumption in the CSA is the likelihood that the high demand in the interstate market will draw such marijuana into that market. While the diversion of homegrown wheat tended to frustrate the federal interest in stabilizing prices by regulating the volume of commercial transactions in the interstate market, the diversion of homegrown marijuana tends to frustrate the federal interest in eliminating commercial transactions in the interstate market in their entirety. In both cases, the regulation is squarely within Congress' commerce power because production of the commodity meant for home consumption, be it wheat or marijuana, has a substantial effect on supply and demand in the national market for that commodity.

To support their [argument that applying the CSA to them would violate the Commerce Clause], respondents rely heavily on two of our more recent Commerce Clause cases, United States v. Lopez, 514 U.S. 549 (1995), and United States v. Morrison, 529 U.S. 598 (2000). [However, respondents] overlook the larger context of modern-era Commerce Clause jurisprudence preserved by those cases. [T]he statutory challenges in Lopez and Morrison were markedly different from the [statutory] challenge in the case at hand. Here, respondents ask us to excise individual applications of a concededly valid statutory scheme. In contrast, in both Lopez and Morrison, the parties asserted that a particular statute or provision fell outside Congress' commerce power in its entirety. This distinction is pivotal, for we have often reiterated that “where the class of activities is regulated and that class is within the reach of federal power, the courts have no power ‘to excise, as trivial, individual instances’ of the class.” [Citations of authority omitted.]

At issue in Lopez was the validity of the Gun-Free School Zones Act of 1990, which was a brief, single-subject statute making it a [federal] crime for an individual to possess a gun in a school zone. Distinguishing our earlier cases holding that comprehensive regulatory statutes may be validly applied to local conduct that does not, when viewed in isolation, have a significant impact on interstate commerce, we held the statute invalid. We explained:

[The Gun-Free School Zones Act] is a criminal statute that by its terms has nothing to do with ‘commerce’ or any sort of economic enterprise, however broadly one might define those terms. [The statute] is not an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated. It cannot, therefore, be sustained under our cases upholding regulations of activities that arise out of or are connected with a commercial transaction, which viewed in the aggregate, substantially affects interstate commerce.

The statutory scheme that the government is defending in this litigation is at the opposite end of the regulatory spectrum. [The CSA is] a lengthy and detailed statute creating a comprehensive framework for regulating the production, distribution, and possession of five classes of controlled substances. [The CSA's classification of marijuana], unlike the discrete prohibition established by the Gun-Free School Zones Act of 1990, was merely one of many “essential parts of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.” [Citation omitted.] Our opinion in Lopez casts no doubt on the validity of such a program.

Nor does this Court's holding in Morrison. The Violence Against Women Act of 1994 created a federal civil remedy for the victims of gender-motivated crimes of violence. The remedy … generally depended on proof of the violation of a state law. Despite congressional findings that such crimes had an adverse impact on interstate commerce, we held the statute unconstitutional because, like the statute in Lopez, it did not regulate economic activity.

Unlike those at issue in Lopez and Morrison, the activities regulated by the CSA are quintessentially economic. The CSA is a statute that regulates the production, distribution, and consumption of commodities for which there is an established, and lucrative, interstate market. Prohibiting the intrastate possession or manufacture of an article of commerce is a rational (and commonly utilized) means of regulating commerce in that product. Because the CSA is a statute that directly regulates economic, commercial activity, our opinion in Morrison casts no doubt on its constitutionality.

We acknowledge that evidence proffered by respondents in this case regarding the effective medical uses for marijuana, if found credible after trial, would cast serious doubt on the accuracy of the [congressional] findings that require marijuana to be listed in Schedule I. But the possibility that the drug may be reclassified in the future has no relevance to the question whether Congress now has the power to regulate its production and distribution. One need not have a degree in economics to understand why a nationwide exemption for the vast quantity of marijuana … locally cultivated for personal use (which presumably would include use by friends, neighbors, and family members) may have a substantial impact on the interstate market for this extraordinarily popular substance. The congressional judgment that an exemption for such a significant segment of the total market would undermine the orderly enforcement of the entire regulatory scheme is entitled to a strong presumption of validity.

[T]hat the California exemptions will have a significant impact on both the supply and demand sides of the market for marijuana is … readily apparent. [Although] most prescriptions for legal drugs … limit the dosage and duration of the usage, under Page 62California law the doctor's permission to recommend marijuana use is open-ended. The [California statute's authorization for the doctor] to grant permission whenever the doctor determines that a patient is afflicted with “any other illness for which marijuana provides relief” is broad enough to allow even the most scrupulous doctor to conclude that some recreational uses would be therapeutic. And our cases have taught us that there are some unscrupulous physicians who overprescribe when it is sufficiently profitable to do so.

The exemption for cultivation by patients and caregivers can only increase the supply of marijuana in the California market. The likelihood that all such production will promptly terminate when patients recover or will precisely match the patients' medical needs during their convalescence seems remote, whereas the danger that excesses will satisfy some of the admittedly enormous demand for recreational use seems obvious. Moreover, that the national and international narcotics trade has thrived in the face of vigorous criminal enforcement efforts suggests that no small number of unscrupulous people will make use of the California exemptions to serve their commercial ends whenever it is feasible to do so.

[T]he case for the exemption comes down to the claim that a locally cultivated product that is used domestically rather than sold on the open market is not subject to federal regulation. Given the findings in the CSA and the undisputed magnitude of the commercial market for marijuana, our decisions in Wickard v. Filburn and the later [cases] endorsing its reasoning foreclose that claim.

We do note, however, the presence of another avenue of relief [for the respondents: the CSA-authorized procedures that can lead to] reclassification of Schedule I drugs. But perhaps even more important than these legal avenues is the democratic process, in which the voices of voters allied with these respondents may one day be heard in the halls of Congress. Under the present state of the law, however, the judgment of the Court of Appeals [cannot stand].

Court of Appeals decision vacated; case remanded for further proceedings.

The Taxing Power Article I, § 8 of the Constitution states that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.” The main purpose of this taxing power is to provide a means of raising revenue for the federal government. The taxing power, however, may also serve as a regulatory device. Because the power to tax is the power to destroy, Congress may choose, for instance, to regulate a disfavored activity by imposing a heavy tax on it. Although some past regulatory taxes were struck down, today the reach of the taxing power is seen as very broad.

The Spending Power If taxing power regulation uses a federal club, congressional spending power regulation employs a federal carrot. Article I, § 8 also gives Congress a broad ability to spend for the general welfare. By basing the receipt of federal money on the performance of certain conditions, Congress can use the spending power to advance specific regulatory ends. Conditional federal grants to the states, for instance, are common today.

Over the past several decades, congressional spending power regulation routinely has been upheld. There are limits, however, on its use. First, an exercise of the spending power must serve general public purposes rather than particular interests. Second, when Congress conditions the receipt of federal money on certain conditions, it must do so clearly. Third, the condition must be reasonably related to the purpose underlying the federal expenditure. This means, for instance, that Congress probably could not condition a state's receipt of federal highway money on the state's adoption of a one-house legislature.

The Necessary and Proper Clause After listing the commerce power, the taxing and spending powers, and various other powers extended to Congress, Article I, § 8 concludes with a provision granting Congress the further power to “make all laws which shall be necessary and proper for carrying into execution the foregoing powers ….” The Necessary and Proper Clause is dependent upon Article I, § 8's previously listed powers but augments them by permitting Congress to enact laws that are useful or conducive to the exercise of those enumerated powers. For instance, even though the congressional power under the Commerce Clause focuses on interstate economic activity, certain instances of noneconomic activity could be regulated by Congress under the Necessary and Proper Clause if doing so would be important to the effective operation of federal legislation dealing with interstate economic activity.

Page 63Independent Checks on the Federal Government and the States

Even if a regulation is within Congress's enumerated powers or a state's police power, it still is unconstitutional if it collides with one of the Constitution's independent checks. This section discusses three checks that limit federal and state regulation of the economy: freedom of speech; due process; and equal protection. Before discussing these guarantees, however, we must consider three foundational matters.

Describe the incorporation doctrine's role in making most guarantees of the Bill of Rights operate to protect persons not only against certain federal government actions but also against certain state and local government actions.

Incorporation The Fifth Amendment prevents the federal government from depriving “any person of life, liberty, or property, without due process of law.” The Fourteenth Amendment creates the same prohibition with regard to the states. The literal language of the First Amendment, however, restricts only federal government action. Moreover, the Fourteenth Amendment says that no state shall “deny to any person … the equal protection of the laws.”

Thus, although the due process guarantees clearly apply to both the federal government and the states, the First Amendment seems to apply only to the federal government and the Equal Protection Clause only to the states. The First Amendment's free speech guarantee, however, has been included within the “liberty” protected by Fourteenth Amendment due process as a result of Supreme Court decisions. The free speech guarantee, therefore, restricts state governments as well as the federal government. This is an example of the process of incorporation, by which almost all Bill of Rights provisions now apply to the states. The criminal procedure-related provisions in the Fourth, Fifth, and Sixth Amendments (examined in Chapter 5 of this text) are further examples of Bill of Rights protections that the federal government must honor but that state and local governments must respect as well, because of the incorporation doctrine. The Fourteenth Amendment's equal protection guarantee, on the other hand, has been made applicable to federal government action through incorporation of it within the Fifth Amendment's Due Process Clause.

Government Action People often talk as if the Constitution protects them against anyone who might threaten their rights. However, most of the Constitution's individual rights provisions block only the actions of government bodies, federal, state, and local.1 Private behavior that denies individual rights, while perhaps forbidden by statute, is very seldom a constitutional matter. This government action or state action requirement forces courts to distinguish between governmental behavior and private behavior. Judicial approaches to this problem have varied over time.

Before World War II, only formal arms of government such as legislatures, administrative agencies, municipalities, courts, prosecutors, and state universities were deemed state actors. After the war, however, the scope of government action increased considerably, with various sorts of traditionally private behavior being subjected to individual rights limitations. The Supreme Court, in Marsh v. Alabama (1946), treated a privately owned company town's restriction of free expression as government action under the public function theory because the town was nearly identical to a regular municipality in most respects. In Shelley v. Kraemer (1948), the Court held that when state courts enforced certain white homeowners' private agreements not to sell their homes to blacks, there was state action that violated the Equal Protection Clause. Later, in Burton v. Wilmington Parking Authority (1961), the Court concluded that racial discrimination by a privately owned restaurant located in a state-owned and state-operated parking garage was unconstitutional state action, in part because the garage and the restaurant were intertwined in a mutually beneficial “symbiotic” relationship. Among the other factors leading courts to find state action during the 1960s and 1970s were extensive government regulation of private activity and government financial aid to a private actor.

The Court, however, severely restricted the reach of state action during the 1970s and 1980s. Since then, private behavior generally has not been held to constitute state action unless a regular unit of government is directly responsible for the challenged private behavior because it has coerced or encouraged such behavior. The public function doctrine, moreover, has been limited to situations in which a private entity exercises powers that have traditionally been exclusively reserved to the state; Page 64private police protection is a possible example. In addition, government regulation and government funding have become somewhat less important factors in state action determinations.

In a 2001 decision, however, a six-justice majority of the Supreme Court concluded that the Tennessee Secondary School Athletic Association (TSSAA) was a state actor for purposes of the Constitution's Fourteenth Amendment when it enforced an association rule against a member school. The TSSAA, a privately organized, not-for-profit entity, regulated interscholastic sports competition among public and private high schools in Tennessee. Although no school was required to join the TSSAA, nearly all public schools and many private schools had done so. All members of the association's governing bodies were school officials, most of whom were from public schools. Public school systems provided considerable financial support for the TSSAA, which worked closely with the state board of education, a governmental body. For many years, the TSSAA was designated in a state board of education rule as the regulator of athletics in the state's public schools. Stressing the “pervasive entwinement of public institutions and public officials in [the TSSAA's] composition and workings,” the Supreme Court held in Brentwood Academy v. Tennessee Secondary School Athletic Association that the TSSAA was a government actor. Brentwood Academy's “entwinement” rationale appears to provide an additional way in which state action can be found, though the Court emphasized that each decision on the state action issue is highly fact-specific.

Explain the differences among the means-ends tests used by courts when the constitutionality of government action is being determined (strict scrutiny, intermediate scrutiny, and rational basis).

Means-Ends Tests Throughout this chapter, you will see tests of constitutionality that may seem strange at first glance. One example is the test for determining whether laws that discriminate on the basis of sex violate equal protection. This test says that to be constitutional, such laws must be substantially related to the achievement of an important government purpose. The Equal Protection Clause does not contain such language. It simply says that “No State shall … deny to any person … the equal protection of the laws.” What is going on here?

The sex discrimination test just stated is a means-ends test developed by the Supreme Court. Such tests are judicially created because no constitutional right is absolute, and because judges therefore must weigh individual rights against the social purposes served by laws that restrict those rights. In other words, means-ends tests determine how courts strike the balance between individual rights and the social needs that may justify their suppression. The “ends” component of a means-ends test specifies how significant a social purpose must be in order to justify the restriction of a right. The “means” component states how effectively the challenged law must promote that purpose in order to be constitutional. In the sex discrimination test, for example, the challenged law must serve an “important” government purpose (the significance of the end) and must be “substantially” related to the achievement of that purpose (the effectiveness of the means).

Some constitutional rights are deemed more important than others. Accordingly, courts use tougher tests of constitutionality in certain cases and more lenient tests in other situations. Sometimes these tests are lengthy and complicated. Throughout the chapter, therefore, we will simplify by referring to three general kinds of means-ends tests:

The rational basis test. This is a very relaxed test of constitutionality that challenged laws usually pass with ease. A typical formulation of the rational basis test might say that government action need only have a reasonable relation to the achievement of a legitimate government purpose to be constitutional.

Intermediate scrutiny. This comes in many forms; the sex discrimination test discussed above is an example.

Full strict scrutiny. Here, the court might say that the challenged law must be necessary to the fulfillment of a compelling government purpose. Government action that is subjected to this rigorous test of constitutionality is usually struck down.

Describe the differences between noncommercial speech and commercial speech and the respective levels of the First Amendment protection they receive.

Business and the First Amendment

The First Amendment provides that “Congress shall make no law … abridging the freedom of speech.” Despite its absolute language (“ no law”), the First Amendment does not prohibit every law that restricts speech. As Justice Oliver Wendell Holmes famously remarked, the First Amendment does not protect someone who falsely shouts “Fire!” in a crowded theater. Although the First Amendment's free speech guarantee is not absolute, government action restricting the content of speech usually receives Page 65very strict judicial scrutiny. One justification for this high level of protection is the “marketplace” rationale, under which the free competition of ideas is seen as the surest means of attaining truth. The marketplace of ideas operates most effectively, according to this rationale, when restrictions on speech are kept to a minimum and all viewpoints can be considered.

During recent decades, the First Amendment has been applied to a wide variety of government restrictions on the expression of individuals and organizations, including corporations. This chapter does not attempt a comprehensive discussion of the many applications of the freedom of speech guarantee. Instead, it explores basic First Amendment concepts before turning to an examination of the free speech rights of corporations.

Political and Other Noncommercial Speech Political speech—expression that deals in some fashion with government, government issues or policies, public officials, or political candidates—is often described as being at the “core” of the First Amendment. Various Supreme Court decisions have held, however, that the freedom of speech guarantee applies not only to political speech but also to noncommercial expression that does not have a political content or flavor. According to these decisions, the First Amendment protects speech of a literary or artistic nature, speech dealing with scientific, economic, educational, and ethical issues, and expression on many other matters of public interest or concern. Government attempts to restrict the content of political or other noncommercial speech normally receive full strict scrutiny when challenged in court. Unless the government is able to meet the exceedingly difficult burden of proving that the speech restriction is necessary to the fulfillment of a compelling government purpose, a First Amendment violation will be found. Because government restrictions on political or other noncommercial speech trigger the full strict scrutiny test, such speech is referred to as carrying “full” First Amendment protection.

Do corporations, however, have the same First Amendment rights that individual human beings possess? The Supreme Court has consistently provided a “yes” answer to this question. Therefore, if a corporation engages in political or other noncommercial expression, it is entitled to full First Amendment protection, just as an individual would be if he or she engaged in such speech. In the much-publicized Citizens United case, which follows shortly, a five-justice majority of the Supreme Court held that a federal restriction on corporate funding of “electioneering communications” close to the time of an election failed the strict scrutiny test and therefore violated the First Amendment. En route to that holding, the Court overruled earlier decisions indicating that such restrictions on corporate funding of election-related issues advertisements should clear the strict scrutiny hurdle.

Although corporate speakers have First Amendment rights, not all speech of a corporation is fully protected. Some corporate speech is classified as commercial speech, a category of expression examined later in the chapter. As will be seen, commercial speech receives First Amendment protection but not the full variety extended to political or noncommercial speech. The mere fact, however, that a profit motive underlies speech does not make the speech commercial in nature. Books, movies, television programs, musical works, works of visual art, and newspaper, magazine, and journal articles are normally classified as noncommercial speech—and are thus fully protected—despite the typical existence of an underlying profit motive. Their informational, educational, artistic, or entertainment components are thought to outweigh, for First Amendment purposes, the profit motive.

Citizens United v. Federal Election Commission

130 S. Ct. 876 (U.S. Sup. Ct. 2010)

Citizens United, a nonprofit corporation with a $12 million annual budget, receives most of its funds in the form of donations by individuals. A small portion comes from for-profit corporations. In January 2008, Citizens United released a film titled Hillary: The Movie (hereinafter Hillary). It is a 90-minute documentary about then-Senator Hillary Clinton, a candidate in the Democratic Party's 2008 presidential primary elections. Hillary depicts interviews with political commentators and other persons, most of them quite critical of Senator Clinton.

Hillary was released in theaters and on DVD, but Citizens United wanted to increase distribution by making it available through video-on-demand. Although video-on-demand services often require viewers to pay a small fee to view a selected program, Citizens United planned to pay for the service and to make Hillary available to viewers free of charge. To promote the film, Citizens United produced two 10-second advertisements and one 30-second ad for airing on broadcast and cable television. Each ad included a pejorative statement about Senator Clinton, followed by the name of the movie and the address of a website for the movie.

Page 66Before the Bipartisan Campaign Reform Act of 2002 (BCRA), federal law prohibited corporations and unions from using general treasury funds for direct contributions to candidates or as independent expenditures expressly advocating, through any form of media, the election or defeat of a candidate in certain qualified federal elections. 2 U.S.C. § 441b. The BCRA amended § 441b to prohibit any “electioneering communication” as well. The statute defined “electioneering communication” as “any broadcast, cable, or satellite communication” that “refers to a clearly identified candidate for Federal office” and is made within 30 days of a primary election or 60 days of a general election. Federal Election Commission (FEC) regulations further defined “electioneering communication” as a communication that is “publicly distributed,” and went on to provide that “[i]n the case of a candidate for nomination for President … publicly distributed means” that the communication “[c]an be received by 50,000 or more persons in a State where a primary election … is being held within 30 days.”

When combined, the federal law that prexisted the BCRA and the amendments added by the BCRA barred corporations and unions from using their general treasury funds for express advocacy or electioneering communications. However, they were permitted to establish a “separate segregated fund” (known as a political action committee, or PAC) for these purposes. The moneys to be received by the PAC were limited to donations from the corporation's stockholders and employees of the corporation or the union's members.

The BCRA also set forth disclaimer and disclosure requirements. A televised electioneering communication funded by anyone other than a candidate must include a clearly spoken and clearly readable statement that “____ is responsible for the content of this advertising,” as well as a statement that the communication “is not authorized by any candidate or candidate's committee.” The electioneering communication must also display the name and address (or website address) of the person or group that funded the advertisement. § 441d(a)(3). In addition, the BCRA requires any person or entity spending more than $10,000 on electioneering communications within a calendar year to file a disclosure statement with the FEC. That statement must identify the person or entity making the expenditure, the amount of the expenditure, the election to which the communication was directed, and the names of certain contributors.

Citizens United wanted to make Hillary available through video-on-demand within 30 days of the 2008 primary elections. It feared, however, that both the film and the ads promoting it would be covered by § 441b's ban on corporate-funded independent expenditures and could thus subject the corporation to civil and criminal penalties. Citizens United therefore sought declaratory and injunctive relief against the FEC, arguing that § 441b was unconstitutional on its face and as applied to Hillary, and that the BCRA's disclaimer and disclosure requirements were unconstitutional as applied to Hillary and to the three ads for the movie. A federal district court granted the FEC's motion for summary judgment. The court held that § 441b was constitutional under previous Supreme Court precedents, as were the statute's disclaimer and disclosure requirements. Citizens United sought review by the Supreme Court (rather than a circuit court of appeals) under a review provision in the challenged law.

Kennedy, Justice

Federal law prohibits corporations and unions from using their general treasury funds to make independent expenditures for speech defined as an “electioneering communication” or for speech expressly advocating the election or defeat of a candidate. 2 U.S.C. § 441b. Limits on electioneering communications were upheld in McConnell v. Federal Election Comm'n, 540 U.S. 93 (2003). The holding of McConnell rested to a large extent on an earlier case, Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990). In this case we are asked to reconsider Austin and, in effect, McConnell. Before considering whether Austin should be overruled, we first address whether Citizens United's claim that § 441b cannot be applied to Hillary may be resolved on other, narrower grounds.

[Apart from its arguments regarding constitutional issues,] Citizens United contends that § 441b does not cover Hillary … because the film does not qualify as an “electioneering communication.” Under the definition of electioneering communication, the video-on-demand showing of Hillary on cable television would have been a “cable … communication” that “refer[red] to a clearly identified candidate for Federal office” and that was made within 30 days of a primary election. [Moreover,] Citizens United wanted to use a cable video-on-demand system that had 34.5 million subscribers nationwide. Thus, Hillary could have been received by 50,000 persons or more. Section 441b covers Hillary.

Citizens United next argues that § 441b may not be applied to Hillary under the approach taken in Federal Election Comm'n v. Wisconsin Right to Life, Inc., 551 U.S. 449 (2007) (WRTL). McConnell decided that § 441b's definition of an “electioneering communication” was constitutional insofar as it restricted speech that was “the functional equivalent of express advocacy” for or against a specific candidate. WRTL then found an unconstitutional application of § 441b where the speech was not “express advocacy or its functional equivalent.” As explained by the Chief Justice's controlling opinion in WRTL, the functional-equivalent test is objective: “a court should find that [a communication] is the functional equivalent of express advocacy only if Page 67[it] is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.”

Under this test, Hillary is equivalent to express advocacy. The movie, in essence, is a feature-length negative advertisement that urges viewers to vote against Senator Clinton for President. The narrative may contain more suggestions and arguments than facts, but there is little doubt that the thesis of the film is that she is unfit for the Presidency. [T]here is no reasonable interpretation of Hillary other than as an appeal to vote against Senator Clinton. Under the standard stated in McConnell and further elaborated in WRTL, the film qualifies as the functional equivalent of express advocacy.

Citizens United further contends that § 441b should be invalidated as applied to movies shown through video-on-demand, arguing that this delivery system has a lower risk of distorting the political process than do television ads. While some means of communication may be less effective than others at influencing the public in different contexts, any effort by the judiciary to decide which means of communications are to be preferred for the particular type of message and speaker [would be highly questionable]. And in all events, those differentiations might soon prove to be irrelevant or outdated by technologies that are in rapid flux. We must decline to draw, and then redraw, constitutional lines based on the particular media or technology used to disseminate political speech from a particular speaker.

As the foregoing analysis confirms, the Court cannot resolve this case on a narrower ground without chilling political speech, speech that is central to the meaning and purpose of the First Amendment. It is not judicial restraint to accept an unsound, narrow argument just so the Court can avoid another argument with broader implications. Here, the lack of a valid basis for an alternative ruling requires full consideration of the continuing effect of the speech suppression upheld in Austin.

The law before us is an outright ban [on speech], backed by criminal sanctions. Section 441b makes it a felony for all corporations—including nonprofit advocacy corporations—either to expressly advocate the election or defeat of candidates or to broadcast electioneering communications within 30 days of a primary election and 60 days of a general election. Thus, the following acts would all be felonies under § 441b: The Sierra Club runs an ad, within the crucial phase of 60 days before the general election, that exhorts the public to disapprove of a Congressman who favors logging in national forests; the National Rifle Association publishes a book urging the public to vote for the challenger because the incumbent U. S. Senator supports a handgun ban; and the American Civil Liberties Union creates a website telling the public to vote for a Presidential candidate in light of that candidate's defense of free speech. These prohibitions are classic examples of censorship.

Section 441b is a ban on corporate speech notwithstanding the fact that a PAC created by a corporation can still speak. A PAC is a separate association from the corporation. So the PAC exemption from § 441b's expenditure ban does not allow corporations to speak. Even if a PAC could somehow allow a corporation to speak—and it does not—the option to form PACs does not alleviate the First Amendment problems with § 441b. PACs are burdensome alternatives; they are expensive to administer and subject to extensive regulations. [Also,] PACs must file detailed monthly reports with the FEC, which are due at different times depending on the type of election that is about to occur. PACs have to comply with these regulations just to speak. This might explain why fewer than 2,000 of the millions of corporations in this country have PACs. PACs, furthermore, must exist before they can speak. Given the onerous restrictions, a corporation may not be able to establish a PAC in time to make its views known regarding candidates and issues in a current campaign.

Speech is an essential mechanism of democracy, for it is the means to hold officials accountable to the people. The right of citizens to inquire, to hear, to speak, and to use information to reach consensus is a precondition to enlightened self-government and a necessary means to protect it. [P]olitical speech must prevail against laws that would suppress it, whether by design or inadvertence. Laws that burden political speech are “subject to strict scrutiny,” which requires the Government to prove that the restriction “furthers a compelling interest and is narrowly tailored to achieve that interest.” [This] quoted language from WRTL provides a sufficient framework for protecting the relevant First Amendment interests in this case.

Premised on mistrust of governmental power, the First Amendment stands against attempts to disfavor certain subjects or viewpoints. Prohibited, too, are restrictions distinguishing among different speakers, allowing speech by some but not others. As instruments to censor, these categories are interrelated: Speech restrictions based on the identity of the speaker are all too often simply a means to control content.

The Court has recognized [in various cases] that First Amendment protection extends to corporations. [E.g.,] First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978). This protection has been extended by explicit holdings to the context of political speech. Under the rationale of these precedents, political speech does not lose First Amendment protection simply because its source is a corporation.

At least since the latter part of the 19th century, the laws of some states and of the United States imposed a ban on corporate direct contributions to candidates. Yet not until 1947 did Congress first prohibit independent expenditures by corporations and labor unions. For almost three decades thereafter, the Court did not reach the question whether restrictions on corporate and union expenditures are constitutional.

In Buckley v. Valeo, 424 U.S. 1 (1976), the Court addressed various challenges to the Federal Election Campaign Act of Page 681971 (FECA), as amended in 1974. [FECA limited direct contributions to candidates, established] an independent expenditure ban … that applied to individuals as well as corporations and labor unions, [and included a separate ban on corporate and union independent expenditures.] [Buckley considered only the direct contributions provision and the broader independent expenditure ban that applied to individuals as well as corporations and unions. The separate ban on independent expenditures by corporations and unions was not at issue in Buckley.]

Before addressing the constitutionality of [the broader] independent expenditure ban, Buckley first upheld … FECA's limits on direct contributions to candidates. The Buckley Court recognized a “sufficiently important” governmental interest in “the prevention of corruption and the appearance of corruption.” This followed from the Court's concern that large contributions could be given “to secure a political quid pro quo. ” The Buckley Court explained that the potential for quid pro quo corruption distinguished direct contributions to candidates from independent expenditures. The Court emphasized that “the independent expenditure ceiling … fails to serve any substantial governmental interest in stemming the reality or appearance of corruption in the electoral process,” because “[t]he absence of prearrangement and coordination … alleviates the danger that expenditures will be given as a quid pro quo for improper commitments from the candidate.” Buckley invalidated [FECA's broader] restriction on independent expenditures, with only one Justice dissenting.

Buckley did not consider [FECA's] separate ban [that specifically applied to] corporate and union independent expenditures. Had [that specific ban] been challenged in the wake of Buckley, however, it could not have been squared with the reasoning and analysis of that precedent. [Nevertheless], Congress recodified [the] corporate and union expenditure ban at 2 U.S.C. § 441b four months after Buckley was decided. Section 441b is the independent expenditure restriction challenged here.

Less than two years after Buckley, Bellotti reaffirmed the First Amendment principle that the government cannot restrict political speech based on the speaker's corporate identity. Bellotti could not have been clearer when it struck down a state-law prohibition on corporate independent expenditures related to referenda issues. Bellotti did not address the constitutionality of the state's ban on corporate independent expenditures to support candidates. In our view, however, that restriction would have been unconstitutional under Bellotti's central principle: that the First Amendment does not allow political speech restrictions based on a speaker's corporate identity.

Thus the law stood until Austin, [which] “uph[eld] a direct restriction on the independent expenditure of funds for political speech for the first time in [this Court's] history.” (Kennedy, J., dissenting in Austin.) [In Austin], the Michigan Chamber of Commerce sought to use general treasury funds to run a newspaper ad supporting a specific candidate. Michigan law, however, prohibited corporate independent expenditures that supported or opposed any candidate for state office. A violation of the law was punishable as a felony. The Court sustained the speech prohibition. To bypass Buckley and Bellotti, the Austin Court identified a new governmental interest in limiting political speech: an anti-distortion interest. Austin found a compelling governmental interest in preventing “the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public's support for the corporation's political ideas.”

The Court is thus confronted with conflicting lines of precedent: a pre-Austin line that forbids restrictions on political speech based on the speaker's corporate identity and a post-Austin line that permits them. No case before Austin had held that Congress could prohibit independent expenditures for political speech based on the speaker's corporate identity. In its defense of the corporate-speech restrictions in § 441b, the government notes the anti-distortion rationale on which Austin and its progeny rest in part, yet … the government does little to defend it. And with good reason, for the rationale cannot support § 441b.

If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech. If the anti-distortion rationale were to be accepted, however, it would permit government to ban political speech simply because the speaker is an association that has taken on the corporate form. The government contends that Austin permits it to ban corporate expenditures for almost all forms of communication stemming from a corporation. If Austin were correct, the government could prohibit a corporation from expressing political views in media beyond those presented here, such as by printing books. The government responds “that the FEC has never applied this statute to a book,” and if it did, “there would be quite [a] good as-applied [constitutional] challenge.” This troubling assertion of brooding governmental power cannot be reconciled with the confidence and stability in civic discourse that the First Amendment must secure.

[As noted in Bellotti,] [p]olitical speech is “indispensable to decisionmaking in a democracy, and this is no less true because the speech comes from a corporation rather than an individual.” This protection for speech is inconsistent with Austin's anti-distortion rationale. Austin sought to defend the anti-distortion rationale as a means to prevent corporations from obtaining “‘an unfair advantage in the political marketplace’” by using “‘resources amassed in the economic marketplace.’” But Buckley rejected the premise that the government has an interest “in equalizing the relative ability of individuals and groups to influence the outcome of elections.” Buckley was specific in stating that “the skyrocketing cost of political campaigns” could not Page 69sustain the governmental prohibition. The First Amendment's protections do not depend on the speaker's “financial ability to engage in public discussion.”

Austin interferes with the open marketplace of ideas protected by the First Amendment. Most of [the corporations affected by § 441b] are small corporations without large amounts of wealth. This fact belies the government's argument that the statute is justified on the ground that it prevents the “distorting effects of immense aggregations of wealth” [quoting Austin.]

The censorship we now confront is vast in its reach. The government has “muffle[d] the voices that best represent the most significant segments of the economy” (opinion of Scalia, J., in McConnell). And “the electorate [has been] deprived of information, knowledge and opinion vital to its function.” [Citation omitted.] By suppressing the speech of manifold corporations, both for-profit and nonprofit, the government prevents their voices and viewpoints from reaching the public and advising voters on which persons or entities are hostile to their interests. Factions will necessarily form in our republic, but the remedy of “destroying the liberty” of some factions is “worse than the disease.” The Federalist No. 10, p. 130 (J. Madison). Factions should be checked by permitting them all to speak, and by entrusting the people to judge what is true and what is false.

The purpose and effect of this law is to prevent corporations, including small and nonprofit corporations, from presenting both facts and opinions to the public. This makes Austin's anti-distortion rationale all the more an aberration. When Government seeks to use its full power, including the criminal law, to command where a person may get his or her information or what distrusted source he or she may not hear, it uses censorship to control thought. This is unlawful. The First Amendment confirms the freedom to think for ourselves.

What we have said also shows the invalidity of [another argument] made by the government. For the most part relinquishing the anti-distortion rationale, the government falls back on the argument that corporate political speech can be banned in order to prevent corruption or its appearance. The Buckley Court … sustained limits on direct contributions in order to ensure against the reality or appearance of corruption. That case did not extend this rationale to independent expenditures, and the Court does not do so here.

[The Court stated in Buckley that] “[t]he absence of prearrangement and coordination of an expenditure with the candidate or his agent not only undermines the value of the expenditure to the candidate, but also alleviates the danger that expenditures will be given as a quid pro quo for improper commitments from the candidate.” Limits on independent expenditures, such as § 441b, have a chilling effect extending well beyond the government's interest in preventing quid pro quo corruption. The anti-corruption interest is not sufficient to displace the speech here in question. Indeed, 26 states do not restrict independent expenditures by for-profit corporations. The government does not claim that these expenditures have corrupted the political process in those states.

Our precedent is to be respected unless the most convincing of reasons demonstrates that adherence to it puts us on a course that is sure error. “Beyond workability, the relevant factors in deciding whether to adhere to the principle of stare decisis include the antiquity of the precedent, the reliance interests at stake, and of course whether the decision was well reasoned.” [Citation omitted.] We have also examined whether “experience has pointed up the precedent's shortcomings.” [Citation omitted.]

These considerations counsel in favor of rejecting Austin, which itself contravened this Court's earlier precedents in Buckley and Bellotti. For the reasons above, it must be concluded that Austin was not well reasoned. Austin is [also] undermined by experience since its announcement. Political speech is so ingrained in our culture that speakers find ways to circumvent campaign finance laws. Our nation's speech dynamic is changing, and informative voices should not have to circumvent onerous restrictions to exercise their First Amendment rights. Speakers have become adept at presenting citizens with sound bites, talking points, and scripted messages that dominate the 24-hour news cycle. Corporations, like individuals, do not have monolithic views. On certain topics corporations may possess valuable expertise, leaving them the best equipped to point out errors or fallacies in speech of all sorts, including the speech of candidates and elected officials.

Rapid changes in technology—and the creative dynamic inherent in the concept of free expression—counsel against upholding a law that restricts political speech in certain media or by certain speakers. Today, 30-second television ads may be the most effective way to convey a political message. Soon, however, it may be that Internet sources, such as blogs and social networking websites, will provide citizens with significant information about political candidates and issues. Yet, § 441b would seem to ban a blog post expressly advocating the election or defeat of a candidate if that blog were created with corporate funds. The First Amendment does not permit Congress to make these categorical distinctions based on the corporate identity of the speaker and the content of the political speech.

Due consideration leads to this conclusion: Austin should be and now is overruled. We return to the principle established in Buckley and Bellotti that the government may not suppress political speech on the basis of the speaker's corporate identity. No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations.

Austin is overruled, so it provides no basis for allowing the government to limit corporate independent expenditures. As the government appears to concede [in its brief], overruling Austin Page 70“effectively invalidate[s] not only [the BCRA's amendments to § 441(b)] but also § 441b's prohibition on the use of corporate treasury funds for express advocacy.” Section 441b's restrictions on corporate independent expenditures are therefore invalid and cannot be applied to Hillary. Given our conclusion, we are further required to overrule the part of McConnell that upheld [the BCRA's] extension of § 441b's restrictions on corporate independent expenditures. The McConnell Court relied on the anti-distortion interest recognized in Austin to uphold a greater restriction on speech than the restriction upheld in Austin, and we have found this interest unconvincing and insufficient. This part of McConnell is now overruled.

Citizens United next challenges the BCRA's disclaimer and disclosure provisions as applied to Hillary and the three advertisements for the movie. [The disclaimer and disclosure requirements established by the BCRA are described in the statement of facts.] Disclaimer and disclosure requirements may burden the ability to speak, but they “impose no ceiling on campaign-related activities” (quoting Buckley), and “do not prevent anyone from speaking” (quoting McConnell). In Buckley, the Court explained that disclosure could be justified based on a governmental interest in providing the electorate with information about the sources of election-related spending. The McConnell Court [relied on] this interest in [upholding the BCRA's disclosure requirements] on the ground that they would help citizens “‘make informed choices in the political marketplace.’”

[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages. [W]e uphold the application of [the BCRA's disclaimer and disclosure requirements] to the ads [for Hillary]. We [also] find no constitutional impediment to the application of [the] disclaimer and disclosure requirements to [Hillary], a movie [to be] broadcast via video-on-demand. [T] here has been no showing that, as applied in this case, these requirements would impose a chill on speech or expression.

District court's judgment reversed as to constitutionality of restrictions on corporate independent expenditures but affirmed as to constitutionality of disclaimer and disclosure requirements.

Stevens, Justice (joined by Ginsburg, Breyer, and Sotomayor, Justices), concurring in part and dissenting in part

Although I concur in the Court's decision to sustain the BCRA's disclaimer and disclosure provisions, I emphatically dissent from its principal holding.

Citizens United is a wealthy nonprofit corporation that runs a political action committee (PAC) with millions of dollars in assets. Under the BCRA, it could have used those assets to televise and promote Hillary wherever and whenever it wanted to. It also could have spent unrestricted sums to broadcast Hillary at any time other than the 30 days before the last primary election. Neither Citizens United's nor any other corporation's speech has been “banned.” All that the parties dispute is whether Citizens United had a right to use the funds in its general treasury to pay for broadcasts during the 30-day period. The notion that the First Amendment dictates an affirmative answer to that question is, in my judgment, profoundly misguided. Even more misguided is the notion that the Court must rewrite the law relating to campaign expenditures by for-profit corporations and unions to decide this case.

The basic premise underlying the Court's ruling is … the proposition that the First Amendment bars regulatory distinctions based on a speaker's identity, including its “identity” as a corporation. While that glittering generality has rhetorical appeal, … [t]he conceit that corporations must be treated identically to natural persons in the political sphere is not only inaccurate but also inadequate to justify the Court's disposition of this case. In the context of election to public office, the distinction between corporate and human speakers is significant. The financial resources, legal structure, and instrumental orientation of corporations raise legitimate concerns about their role in the electoral process. Our lawmakers have a compelling constitutional basis, if not also a democratic duty, to take measures designed to guard against the potentially deleterious effects of corporate spending in local and national races.

The majority's approach to corporate electioneering [bypasses narrower grounds of decision and] marks a dramatic break from our past. Congress has placed special limitations on campaign spending by corporations ever since the passage of the Tillman Act in 1907. We have unanimously concluded that this “reflects a permissible assessment of the dangers posed by those entities to the electoral process,” and have accepted the “legislative judgment that the special characteristics of the corporate structure require particularly careful regulation.” [Citations omitted.] The Court today rejects a century of history when it treats the distinction between corporate and individual campaign spending as an invidious novelty born of Austin. Relying largely on individual dissenting opinions, the majority blazes through our precedents, overruling or disavowing a [large] body of case law. The only thing preventing the majority from affirming the district court, or adopting a narrower ground that would retain Austin, is its disdain for Austin. The laws upheld in Austin and McConnell leave open many additional avenues for corporations' political speech.

Roaming far afield from the case at hand, the majority worries that the government will use [the statute at issue] to ban books, pamphlets, and blogs. Yet by its plain terms, [the statute] does not apply to printed material. And … we highly doubt Page 71that [§ 441b] could be interpreted to apply to a website or book that happens to be transmitted at some stage over airwaves or cable lines, or that the FEC would ever try to do so.

So let us be clear: Neither Austin nor McConnell held or implied that corporations may be silenced; the FEC is not a “censor”; and in the years since these cases were decided, corporations have continued to play a major role in the national dialogue. Laws such as [§ 441b] target a class of communications that is especially likely to corrupt the political process [and] that is at least one degree removed from the views of individual citizens. Such laws burden political speech, and that is always a serious matter, demanding careful scrutiny. But the majority's incessant talk of a “ban” aims at a straw man.

In [our] democratic society, the longstanding consensus on the need to limit corporate campaign spending [reflects] the common sense of the American people, who have … fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt. It is a strange time to repudiate that common sense. While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics.

Commercial Speech The exact boundaries of the commercial speech category are not certain, though the Supreme Court has usually defined commercial speech as speech that proposes a commercial transaction. As a result, most cases on the subject involve advertisements for the sale of products or services or for the promotion of a business. In 1942, the Supreme Court held that commercial speech fell outside the First Amendment's protective umbrella. The Court reversed its position, however, during the 1970s. It reasoned that informed consumer choice would be furthered by the removal of barriers to the flow of commercial information in which consumers would find an interest. Since the mid-1970s, commercial speech has received an intermediate level of First Amendment protection if it deals with a lawful activity and is nonmisleading. Commercial speech receives no protection, however, if it misleads or seeks to promote an illegal activity. As a result, there is no First Amendment obstacle to federal or state regulation of deceptive commercial advertising. (Political or other noncommercial speech, on the other hand, generally receives—with very few exceptions—full First Amendment protection even if it misleads or deals with unlawful matters.)

CYBERLAW IN ACTION

Some types of speech are classified as wholly outside the protection of the First Amendment. For instance, expression that constitutes obscenity under a test developed by the Supreme Court carries no First Amendment protection—meaning that the government is free to regulate it on the basis of its content (including criminalizing the possession or distribution of obscene material). For more details concerning the obscenity doctrine, see the discussion in Chapter 5.

Child pornography is another type of speech that carries no First Amendment protection, in light of the obviously important public interest in protecting minors against physical and psychological harm. Thus, there is no First Amendment barrier to a criminal prosecution against one who possesses or purveys material that constitutes child pornography. Many such prosecutions are based on photos or other material stored on computers or shared online.

Both obscenity and child pornography depend in part upon graphic depictions of sexual content, though less in that regard is required for child pornography than for obscenity. What about speech that contains gratuitous and highly offensive depictions of violence? May the government prohibit such depictions and impose adverse consequences on those who purvey such material? Those were among the key questions in United States v. Stevens, 130 S. Ct. 1577 (U.S. Sup. Ct. 2010). A statute enacted by Congress criminalized the creation, sale, or possession of certain depictions of animal cruelty. For purposes of the statute, a depiction of “animal cruelty” was defined as one “in which a living animal is intentionally maimed, mutilated, tortured, wounded, or killed,” if the depicted conduct violated federal or state law at the place where the creation, sale, or possession took place. The legislative history of the statute indicated that it was prompted by a congressional objective of eliminating dissemination of so-called crush videos (videos showing live animals being crushed to death by persons stomping on them).

Robert Stevens operated a website on which he sold videos of pit bulls engaging in dogfighting and otherwise attacking animals. After he was convicted of violating the above described statute by selling the videos, he appealed on the ground that the statute violated the First Amendment. The case made its way to the Supreme Court, which ruled in his favor and rejected the government's argument that speech containing gratuitous Page 72depictions of violence against animals should be added to the list of unprotected types of speech.

In Stevens, the Court seemed disinclined to issue a decision that might prompt others to ask courts to categorize more and more types of speech as falling outside the First Amendment umbrella. In particular, the Court expressed considerable concern about the statute's potential overbreadth, given the varying and inconsistent state laws on animal cruelty and the potential for the statute to apply even to hunting videos if they depicted an animal being killed outside a state's hunting season or to videos showing certain humane killings of diseased animals. (The Court declined to express a view on whether a more narrowly drawn statute—one that by its terms was restricted to the sale of crush videos or other depictions of extreme animal cruelty—might pass First Amendment muster.)

The Court's decision in Stevens serves as a reminder that the First Amendment protects a great deal of speech that may be highly offensive to many persons. It bears remembering, too, that any ability on the part of the Robert Stevenses of the world to avoid legal liability for the sale of dogfighting videos would not privilege such persons to participate in the underlying acts of animal cruelty. The Court's decision in Stevens dealt only with the videos—i.e, speech—and cast no doubt on the validity of laws penalizing those who engage in conduct amounting to animal cruelty.

As this book went to press, the Supreme Court decided Brown v. Entertainment Merchants Association, 2011 U.S. LEXIS 4802 (2011). There, the Court struck down a California law that restricted the sale of violent video games to minors. In declining to hold that expressive depictions of violence should be classified as unprotected by the First Amendment even when the government seeks to safeguard minors, the Court relied in part on its earlier decision in Stevens.

Because nonmisleading commercial speech about a lawful activity receives intermediate protection, the government has greater ability to regulate such speech without violating the First Amendment than when the government seeks to regulate fully protected political or other noncommercial speech. Roughly three decades ago, the Supreme Court developed a still-controlling test that amounts to intermediate scrutiny. Under this test, a government restriction on protected commercial speech does not violate the First Amendment if the government proves each of these elements: that a substantial government interest underlies the restriction; that the restriction directly advances the underlying interest; and that the restriction is no more extensive than necessary to further the interest (i.e., that the restriction is narrowly tailored). It usually is not difficult for the government to prove that a substantial interest supports the commercial speech restriction. Almost any asserted interest connected with the promotion of public health, safety, or welfare will suffice. The government is likely to encounter more difficulty, however, in proving that the restriction at issue directly advances the underlying interest without being more extensive than necessary—the elements that address the “fit” between the restriction and the underlying interest. If the government fails to prove any element of the test, the restriction violates the First Amendment.

CONCEPT REVIEW

The First Amendment

Type of Speech

Level of First Amendment Protection

Consequences When Government Regulates Content of Speech

Noncommercial

Full

Government action is constitutional only if action is necessary to fulfillment of compelling government purpose. Otherwise, government action violates First Amendment.

Commercial(nonmisleading and about lawful activity)

Intermediate

Government action is constitutional if government has substantial underlying interest, action directly advances that interest, and action is no more extensive than necessary to fulfillment of that interest (i.e., action is narrowly tailored).

Commercial (misleading or about unlawful activity)

None

Government action is constitutional.

Page 73Although the same test has been used in evaluating commercial speech restrictions for nearly three decades, the Supreme Court has varied the intensity with which it has applied the test. From the mid-1980s until 1995, the Court sometimes applied the test loosely and in a manner favorable to the government. The Court has applied the test—especially the “fit” elements—more strictly since 1995, however. For instance, in Coors v. Rubin (1995), the Court struck down federal restrictions that kept beer producers from listing the alcohol content of their beer on product labels. (The Coors case was the subject of the introductory problem with which this chapter began.) In 44 Liquormart v. Rhode Island (1996), which follows shortly, the Court held that Rhode Island's prohibition on price disclosures in alcoholic beverage advertisements violated the First Amendment. A 1999 decision, Greater New Orleans Broadcasting Association v. United States, established that a federal law barring broadcast advertisements for a variety of gambling activities could not constitutionally be applied to radio and television stations located in the same state as the gambling casino whose lawful activities were being advertised. In each of the cases just noted, the Court emphasized that the government's restrictions on commercial speech suffered from “fit” problems—usually because the restrictions prohibited more speech than would have been necessary if the government had adopted available alternative measures that would have furthered the underlying public health, safety, or welfare interest just as well, if not better.

Two key conclusions may be drawn from the Court's commercial speech decisions since 1995: (1) the government has found it more difficult to justify restrictions on commercial speech; and (2) the gap between the intermediate protection for commercial speech and the full protection for political and other noncommercial speech has effectively become smaller than it was 20 to 25 years ago. Although the Court has hinted that it might consider formal changes in commercial speech doctrine (so as to enhance First Amendment protection for commercial speech), it had not made formal doctrinal changes as of the time this book went to press in 2011.

The following case, 44 Liquormart v. Rhode Island, addresses the four-part test utilized in determining the constitutionality of commercial speech restrictions, and illustrates the rigor with which the Supreme Court has applied the third and fourth parts of the test during the past 15-plus years.

44 Liquormart, Inc. v. Rhode Island

517 U.S. 484 (U.S. Sup. Ct. 1996)

Two Rhode Island statutes prohibited advertising the retail price of alcoholic beverages. The first applied to vendors licensed in Rhode Island as well as to out-of-state manufacturers, wholesalers, and shippers. It prohibited them from “advertising in any manner whatsoever” the price of any alcoholic beverage offered for sale in the state. The only exception to the restriction was for price tags or signs displayed with the merchandise within licensed premises, if the tags or signs were not visible from the street. The second statute barred the Rhode Island news media from publishing or broadcasting advertisements that made reference to the price of any alcoholic beverages.

44 Liquormart, Inc., a licensed retailer of alcoholic beverages, operated a store in Rhode Island. Because it wished to advertise prices it would charge for alcoholic beverages, 44 Liquormart filed a declaratory judgment action against the state. 44 Liquormart asked the court to rule that the statutes referred to above violated the First Amendment. The district court concluded that the statutes failed the applicable test for restrictions on commercial speech and therefore struck them down. The U.S. Court of Appeals for the First Circuit reversed, determining that the statutes were constitutionally permissible restrictions on commercial speech. The U.S. Supreme Court granted 44 Liquormart's petition for a writ of certiorari.

Stevens, Justice

Advertising has been a part of our culture throughout our history. Even in colonial days, the public relied on “commercial speech” for vital information about the market. In accord with the role that commercial messages have long played, the law has developed to ensure that advertising provides consumers with accurate information about the availability of goods and services. In the early years, the common law, and later, statutes, served the consumers' interest in the receipt of accurate information in the commercial market by prohibiting fraudulent and misleading advertising.

It was not until the 1970s, however, that this Court held that the First Amendment protected the dissemination of truthful and nonmisleading commercial messages about lawful products and services. [The Court did so in Virginia Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976). In that case] we held that [Virginia's] blanket ban on advertising the price of prescription drugs violated the First Amendment. Page 74Virginia Board of Pharmacy reflected the conclusion that the same interest that supports regulation of potentially misleading advertising, namely, the public's interest in receiving accurate commercial information, also supports an interpretation of the First Amendment that provides [an intermediate level of] protection for the dissemination of accurate and nonmisleading commercial messages. We explained:

Advertising, however tasteless and excessive it sometimes may seem, is nonetheless dissemination of information as to who is producing and selling what product, for what reason, and at what price. So long as we preserve a predominantly free enterprise economy, the allocation of our resources in large measure will be made through numerous private economic decisions. It is a matter of public interest that those decisions, in the aggregate, be intelligent and well informed. To this end, the free flow of commercial information is indispensable.

On the basis of these principles, our early cases uniformly struck down several broadly based bans on truthful, nonmisleading commercial speech. At the same time, our early cases recognized that the [government] may regulate some types of commercial advertising more freely than other forms of protected speech. Virginia Board of Pharmacy attributed the [government's] authority to impose these regulations in part to certain “commonsense differences” that exist between commercial messages and other types of protected expression. Our opinion noted that the greater “objectivity” of commercial speech justifies affording the [government] more freedom to distinguish false commercial advertisements from true ones, and that the greater “hardiness” of commercial speech, inspired as it is by the profit motive, likely diminishes the chilling effect that may attend its regulation.

In Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n of N. Y., 447 U.S. 557 (1980), … we considered a state regulation [that banned] all promotional advertising by electric utilities. [We also announced a four-part test to be applied when the constitutionality of a commercial speech restriction must be determined:]

At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.

[The Central Hudson] Court recognized that the state interest in the conservation of energy was substantial, and that there was “an immediate connection between advertising and demand for electricity.” Nevertheless, [the Court] concluded that the regulation was invalid because [the state] had failed to make a showing that a more limited speech regulation would not have adequately served the state's interest.

[We now apply the Central Hudson test to the advertising restriction at issue in this case.] [T]here is no question that Rhode Island's price advertising ban constitutes a blanket prohibition against truthful, nonmisleading speech about a lawful product. The state argues that the price advertising prohibition should nevertheless be upheld because it directly advances the state's substantial interest in promoting temperance, and because it is no more extensive than necessary. Although there is some confusion as to what Rhode Island means by temperance, we assume that the state asserts an interest in reducing alcohol consumption.

In evaluating the ban's effectiveness in advancing the state's interest, we note that a commercial speech regulation “may not be sustained if it provides only ineffective or remote support for the government's purpose” (quoting Central Hudson). For that reason, the state bears the burden of showing not merely that its regulation will advance its interest, but also that it will do so “to a material degree.” [Citation omitted.] Accordingly, we must determine whether the state has shown that the price advertising ban will significantly reduce alcohol consumption.

We can agree that common sense supports the conclusion that a prohibition against price advertising, like a collusive agreement among competitors to refrain from such advertising, will tend to mitigate competition and maintain prices at a higher level than would prevail in a completely free market. Despite the absence of proof on the point, we can even agree with the state's contention that it is reasonable to assume that demand, and hence consumption throughout the market, is somewhat lower whenever a higher, noncompetitive price level prevails. However, without any findings of fact, or indeed any evidentiary support whatsoever, we cannot agree with the assertion that the price advertising ban will significantly advance the state's interest in promoting temperance.

Although the record suggests that the price advertising ban may have some impact on the purchasing patterns of temperate drinkers of modest means, the state has presented no evidence to suggest that its speech prohibition will significantly reduce marketwide consumption. Indeed, the district court's considered and uncontradicted finding on this point is directly to the contrary. Moreover, the evidence suggests that the abusive drinker will probably not be deterred by a marginal price increase, and that the true alcoholic may simply reduce his purchases of other necessities.

In addition, … the state has not identified what price level would lead to a significant reduction in alcohol consumption, nor has it identified the amount that it believes prices would decrease without the ban. Thus, the state's own showing reveals that any connection between the ban and a significant change in alcohol consumption would be purely fortuitous.

Page 75As is evident, any conclusion that elimination of the ban would significantly increase alcohol consumption would require us to engage in the sort of “speculation or conjecture” that is an unacceptable means of demonstrating that a restriction on commercial speech directly advances the state's asserted interest. [Citation omitted.]

The state also cannot satisfy the requirement that its restriction on speech be no more extensive than necessary. It is perfectly obvious that alternative forms of regulation that would not involve any restriction on speech would be more likely to achieve the state's goal of promoting temperance. As the state's own expert conceded, higher prices can be maintained either by direct regulation or by increased taxation. Per capita purchases could be limited as is the case with prescription drugs. Even educational campaigns focused on the problems of excessive, or even moderate, drinking might prove to be more effective.

As a result, even under the less than strict standard that generally applies in commercial speech cases, the state has failed to establish a “reasonable fit” between its abridgment of speech and its temperance goal. Board of Trustees of State Univ. of New York v. Fox, 492 U.S. 469 (1989); see also Rubin v. Coors Brewing Co., 514 U.S. 476 (1995) (explaining that defects in a federal ban on alcohol advertising are “further highlighted by the availability of alternatives that would prove less intrusive to the First Amendment's protections for commercial speech”).

[Because] the price advertising ban cannot survive [the review contemplated by the Central Hudson test, the ban violates the First Amendment.]

Judgment of First Circuit Court of Appeals reversed.

Figure 1 A Note on Government Speech

“Beef. It's What's for Dinner.” Numerous television commercials during recent years featured this familiar tagline. Given the pro-beef messages being communicated, one might logically assume that a private association of beef marketers chose to pay for these commercials and selected the content included in them. Such an assumption would be inaccurate, however, because the advertisements were government-initiated and government-approved. The U.S. government has implemented various industry-specific regulatory regimes that require advertisements for a particular type of product—for example, beef, mushrooms, cotton, potatoes, watermelons, blueberries, pork, and eggs—and levy monetary assessments on producers or marketers of such products as a means of paying for the advertisements.

If producers or marketers of the regulated products disagree with the content of the advertisements but are still compelled by federal law to help pay for them, are those parties' First Amendment rights violated? That was the issue in Johanns v. Livestock Marketing Association, 544 U.S. 550 (2005), in which the U.S. Supreme Court considered numerous livestock marketers' First Amendment challenge to the government's beef advertising program. The “Beef. It's What's for Dinner” commercials were part of that program. In the Beef Promotion and Research Act of 1985 (Beef Act), Congress established a federal policy of promoting the marketing and consumption of beef. The Beef Act called for the Secretary of Agriculture (Secretary) to issue an order setting up an advisory board and operating committee charged with, among other things, designing a beef advertising program that would be subject to the Secretary's approval. To fund the advertisements, the Beef Act directed the Secretary to impose a $1-per-head assessment on all sales or importations of cattle and a similar assessment on imported beef products. Although the members of the advisory board and operating committee were private parties, the Secretary possessed and exercised final approval rights over the content of the advertisements.

The beef marketers who challenged the advertising program objected to its generic pro-beef message, which they saw as impeding their individual efforts to advertise their particular beef (e.g., grain-fed, certified Angus, or Hereford) as superior to other beef. They based their challenge on cases known as the compelled subsidy decisions, which established that the First Amendment is implicated when the government requires one party to fund the speech of another party even though the subsidizing party disagrees with the speech. A federal district court and court of appeals both ruled in favor of the beef marketers, holding on the basis of the compelled subsidy cases that the beef advertising program violated the First Amendment.

In Johanns v. Livestock Marketing Association, however, the Supreme Court reversed the lower courts' decisions. The Supreme Court stressed that the compelled subsidy cases apply only when the speech being subsidized is private in nature, as opposed to that of the government. The Court held that when government speech is involved, there is no First Amendment barrier to the government's requirement that individuals or corporations contribute financially—whether through general tax revenues or targeted assessments—to the communication of that speech. According to the Court, the advertising program at issue in Livestock Marketing was government speech because Congress set up the legal parameters of the beef promotions initiative, required the Secretary to launch and maintain it, and gave the Secretary final authority Page 76to approve the content of the advertisements. Despite the presence of private parties on the advisory board and the operating committee, the legal structure just noted made the message of the beef advertisements “from beginning to end the message established by the federal government.” The Court further noted that the pervasive nature of the statutory and administrative regime made the beef advertisements government speech even though the advertisements' reference to sponsorship by “America's Beef Producers” did not send a clear government speech signal to readers and viewers.

The specifics of each regulatory initiative requiring subsidization of advertisements for a type of product must be examined in order to make a clear determination of whether the advertising at issue is government speech. Nevertheless, the analysis in Livestock Marketing appears to give the government considerable latitude to implement such programs without violating the First Amendment rights of product producers and marketers who are unhappy with the advertising they must subsidize.

Due Process The Fifth and Fourteenth Amendments require that the federal government and the states observe due process when they deprive a person of life, liberty, or property. Due process has both procedural and substantive meanings.

Explain the difference between procedural due process and substantive due process.

Procedural Due Process The traditional conception of due process, called procedural due process, establishes the procedures that government must follow when it takes life, liberty, or property. Although the requirements of procedural due process vary from situation to situation, their core idea is that one is entitled to adequate notice of the government action to be taken against him and to some sort of fair trial or hearing before that action can occur.

For purposes of procedural due process claims, liberty includes a very broad and poorly defined range of freedoms. It even includes certain interests in personal reputation. For example, the firing of a government employee may require some kind of due process hearing if it is publicized, the fired employee's reputation is sufficiently damaged, and her future employment opportunities are restricted. The Supreme Court has said that procedural due process property is not created by the Constitution but by existing rules and understandings that stem from an independent source such as state law. These rules and understandings must give a person a legitimate claim of entitlement to a benefit, not merely some need, desire, or expectation for it. This definition includes almost all of the usual forms of property, as well as utility service, disability benefits, welfare benefits, and a driver's license. It also includes the job rights of tenured public employees who can be discharged only for cause, but not the rights of untenured or probationary employees.

Substantive Due Process Procedural due process does not challenge rules of substantive law—the rules that set standards of behavior for organized social life. For example, imagine that State X makes adultery a crime and allows people to be convicted of adultery without a trial. Arguments that adultery should not be a crime go to the substance of the statute, whereas objections to the lack of a trial are procedural in nature.

Sometimes, the due process clauses have been used to attack the substance of government action. For our purposes, the most important example of this substantive due process occurred early in the 20th century, when courts struck down various kinds of social legislation as denying due process. They did so mainly by reading freedom of contract and other economic rights into the liberty and property protected by the Fifth and Fourteenth Amendments, and then interpreting “due process of law” to require that laws denying such rights be subjected to means-ends scrutiny. The best-known example is the Supreme Court's 1905 decision in Lochner v. New York, which struck down a state law setting maximum hours of work for bakery employees because the statute limited freedom of contract and did not directly advance the legitimate state goal of promoting worker health.

Since 1937, however, this “economic” form of substantive due process has been largely abandoned by the Supreme Court and has not amounted to a significant check on government regulation of economic matters. Substantive due process attacks on such regulations now trigger only a lenient type of rational basis review and thus have had little chance of success. During the 1970s and 1980s, however, substantive due process became increasingly important as a device for protecting noneconomic rights. The most important example is the constitutional right of privacy, which consists of several rights that the Supreme Court regards as fundamental and as entitled to significant constitutional protection. The Page 77Court has declared that these include the rights to marry, have children and direct their education and upbringing, enjoy marital privacy, use contraception, and, within certain limits, elect to have an abortion. Laws restricting these rights must be narrowly tailored to meet a compelling government purpose in order to avoid being declared unconstitutional.

Identify the instances when an Equal Protection Clause–based challenge to government action triggers more rigorous scrutiny than the rational basis test.

Equal Protection The Fourteenth Amendment's Equal Protection Clause says that “[n]o State shall … deny to any person … the equal protection of the laws.” Because the equal protection guarantee has been incorporated within Fifth Amendment due process, it also restricts the federal government. The equal protection guarantee potentially applies to all situations in which government classifies or distinguishes people. The law inevitably makes distinctions among people, benefiting or burdening some groups but not others. Equal protection doctrine, as developed by the Supreme Court, sets the standards such distinctions must meet in order to be constitutional.

The Basic Test The basic equal protection standard is the rational basis test described earlier. This is the standard usually applied to social and economic regulations that are challenged as denying equal protection. As the following case illustrates, this lenient test usually does not impede state and federal regulation of social and economic matters.

Fitzgerald v. Racing Association of Central Iowa

539 U.S. 103 (U.S. Sup. Ct. 2003)

Before 1989, Iowa permitted only one form of gambling: parimutuel betting at racetracks. A 1989 Iowa statute authorized other forms of gambling, including slot machines on riverboats. The 1989 law established that adjusted revenues from riverboat slot machine gambling would be taxed at graduated rates, with a top rate of 20 percent. In 1994, Iowa enacted a law that authorized racetracks to operate slot machines. That law also imposed a graduated tax upon racetrack slot machine adjusted revenues, with a top rate that started at 20 percent and would automatically rise over time to 36 percent. The 1994 enactment left in place the 20 percent tax rate on riverboat slot machine adjusted revenues.

Contending that the 1994 legislation's 20 percent versus 36 percent tax rate difference violated the federal Constitution's Equal Protection Clause, a group of racetracks and an association of dog owners brought suit against the State of Iowa (through its state treasurer, Michael Fitzgerald). A state district court upheld the statute, but the Iowa Supreme Court reversed. The U.S. Supreme Court granted Iowa's petition for a writ of certiorari.

Breyer, Justice

We here consider whether a difference in state tax rates violates the Fourteenth Amendment's mandate that “no State shall … deny to any person … the equal protection of the laws.” The law in question does not distinguish on the basis of, for example, race or gender. It does not distinguish between in-state and out-of-state businesses. Neither does it favor a State's long-time residents at the expense of residents who have more recently arrived from other States. Rather, the law distinguishes for tax purposes among revenues obtained within the State of Iowa by two enterprises, each of which does business in the State. Where that is so, the law is subject to rational-basis review:

The Equal Protection Clause is satisfied so long as there is a plausible policy reason for the classification, the legislative facts on which the classification is apparently based rationally may have been considered to be true by the governmental decisionmaker, and the relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational.

[Case citation omitted.] [We have also held that] rational-basis review “is especially deferential in the context of classifications made by complex tax laws.” [Case citation omitted.]

The Iowa Supreme Court found that the 20 percent/36 percent tax rate differential failed to meet this standard because, in its view, that difference frustrated what it saw as the law's basic objective, namely, rescuing the racetracks from economic distress. And no rational person, it believed, could claim the contrary. The Iowa Supreme Court could not deny, however, that the Iowa law, like most laws, might predominately serve one general objective, say, helping the racetracks, while containing subsidiary provisions that seek to achieve other desirable (perhaps even contrary) ends as well, thereby producing a law that balances objectives but still serves the general objective when seen as a whole. After all, if every subsidiary provision in a law designed Page 78to help racetracks had to help those racetracks and nothing more, then (since any tax rate hurts the racetracks when compared with a lower rate) there could be no taxation of the racetracks at all.

Neither could the Iowa Supreme Court deny that the 1994 legislation, seen as a whole, can rationally be understood to do what that court says it seeks to do, namely, advance the racetracks' economic interests. Its grant to the racetracks of authority to operate slot machines should help the racetracks economically to some degree—even if its simultaneous imposition of a tax on slot machine adjusted revenue means that the law provides less help than respondents might like. At least a rational legislator might so believe. And the Constitution grants legislators, not courts, broad authority (within the bounds of rationality) to decide whom they wish to help with their tax laws and how much help those laws ought to provide. “The ‘task of classifying persons for … benefits … inevitably requires that some persons who have an almost equally strong claim to favored treatment be placed on different sides of the line,’ and the fact the line might have been drawn differently at some points is a matter for legislative, rather than judicial, consideration.” [Case citation omitted.]

Once one realizes that not every provision in a law must share a single objective, one has no difficulty finding the necessary rational support for the 20 percent/36 percent differential here at issue. That difference, harmful to the racetracks, is helpful to the riverboats, which, as [those challenging the 1994 statute] concede, were also facing financial peril. These two characterizations are but opposite sides of the same coin. Each reflects a rational way for a legislator to view the matter. And aside from simply aiding the financial position of the riverboats, the legislators may have wanted to encourage the economic development of river communities or to promote riverboat history, say, by providing incentives for riverboats to remain in the State, rather than relocate to other States. Alternatively, they may have wanted to protect the reliance interests of riverboat operators, whose adjusted slot machine revenue had previously been taxed at the 20 percent rate. All these objectives are rational ones, which lower riverboat tax rates could further and which suffice to uphold the different tax rates.

We conclude that there is “a plausible policy reason for the classification,” that the legislature “rationally may have … considered … true” the related justifying “legislative facts,” and that the “relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational.” [Case citation omitted.] Consequently the State's differential tax rate does not violate the Federal Equal Protection Clause.

Iowa Supreme Court decision reversed, and case remanded for further proceedings.

Stricter Scrutiny The rational basis test is the basic equal protection standard. Some classifications, however, receive tougher means-ends scrutiny. According to Supreme Court precedent, laws that discriminate regarding fundamental rights or suspect classes must undergo more rigorous review.

Although the list of rights regarded as “fundamental” for equal protection purposes is not completely clear, it includes certain criminal procedure protections as well as the rights to vote and engage in interstate travel. Laws creating unequal enjoyment of these rights receive full strict scrutiny. In 1969, for instance, the Supreme Court struck down the District of Columbia's one-year residency requirement for receiving welfare benefits because that requirement unequally and impermissibly restricted the right of interstate travel.

An equal protection claim involving the fundamental right to vote was addressed in high-profile fashion by the Supreme Court in Bush v. Gore, 531 U.S. 98 (2000). A five-justice majority in the historic and controversial decision terminated an ongoing vote recount in Florida because, in the majority's view, Florida law's “intent of the voter” test was not a sufficiently clear standard for determining whether a ballot not counted in the initial machine count should be counted as valid during the manual recount. The majority was concerned that in the absence of a more specific standard, vote counters taking part in the recount might apply inconsistent standards in determining what the voter supposedly intended, and might thereby value some votes over others. The termination of the Florida recount meant that then-Governor Bush won the state of Florida, giving him enough Electoral College votes to win the presidency despite the fact that candidate Gore tallied more popular votes nationally. The four dissenters in Bush v. Gore faulted the majority for focusing on the supposed equal protection violation it identified, when, in the dissenters' view, the Court ignored a potentially bigger equal protection problem created by termination of the recount: the prospect that large numbers of ballots not counted during the machine count would never be counted, even though they may have been valid votes under Florida's “intent of the voter” test.

In Crawford v. Marion County Election Board, 553 U.S.181 (2008), the Supreme Court again addressed the fundamental right to vote. This time, the Court was faced with determining whether an Indiana law violated the Page 79Equal Protection Clause by requiring that voters produce a government-issued photo ID as a precondition to being allowed to vote. Those who raised the equal protection challenge to the requirement asserted that its burdens would fall disproportionately on low-income and elderly voters, who would be less likely than other persons to have a driver's license or other photo ID and would not be able to exercise the right to vote if they lacked the necessary photo ID. The Court upheld the Indiana law, ruling that it did not violate the Equal Protection Clause. The six justices in the majority split into two three-justice camps on the details of the appropriate supporting reasoning. They agreed, however, that even though voter fraud at the polls had not been a demonstrated problem in Indiana, the photo ID requirement was a generally applicable and not excessively burdensome way of furthering the state's purposes of preventing voter fraud and preserving voter confidence in the integrity of elections.

Certain “suspect” bases of classification also trigger more rigorous equal protection review. As of 2011, the suspect classes and the level of scrutiny they attract are as follows:

1. Race and national origin. Classifications disadvantaging racial or national minorities receive the most rigorous kind of strict scrutiny and are almost never constitutional. Still, the Supreme Court has sometimes upheld government-required affirmative action plans and what critics have called reverse racial discrimination—government action that benefits racial minorities and allegedly disadvantages whites. In 1989, however, a majority of the Court concluded that state action of this kind should receive the same full strict scrutiny as discrimination against racial or national minorities. A 1995 Supreme Court decision held that this is true of federal government action as well as state action. These developments have curtailed certain government-created affirmative action programs but have not eliminated them.

In the companion cases of Gratz v. Bollinger, 539 U.S. 244 (2003), and Grutter v. Bollinger, 539 U.S. 306 (2003), the Supreme Court considered whether the University of Michigan violated the Equal Protection Clause by taking minority students' race into account in its undergraduate and law school admissions policies. The Court recognized in the two cases that seeking student diversity in a higher education context is a compelling government interest. However, in Gratz, a five-justice majority of the Court held that the university's undergraduate admissions policy violated the Equal Protection Clause because the policy's consideration of minority applicants' race became effectively the automatic determining factor in admission decisions regarding minority applicants. In Grutter, on the other hand, a different five-justice majority held that the university's law school admissions policy did not violate the Equal Protection Clause. The Grutter majority reasoned that the law school's policy, in considering minority applicants' race, did so as part of individualized consideration of applicants and of various types of diversity, not simply race. Thus, the law school's policy did not make race the determining factor in the impermissible way that the undergraduate policy did.

After the decisions in Gratz and Grutter, one justice's death and another's retirement led to changes in the composition of the Supreme Court. In a much-anticipated decision, Parents Involved in Community Schools v. Seattle School District No. 1, 551 U.S. 701 (2007), the Court ruled on whether public school districts in Seattle, Washington, and Louisville, Kentucky, violated the Equal Protection Clause in the ways they considered race when assigning Page 80students to schools. The Seattle district, which had neither created segregated schools nor been subject to court-ordered desegregation, generally allowed students to choose which high school they wished to attend. However, the district classified students as white or nonwhite and used the racial classifications as a “tiebreaker” to allocate available slots in particular high schools and thereby seek to achieve racially diverse schools despite the existence of certain housing patterns that would have produced little racial diversity at certain schools. The Louisville school district had been subject to a federal court's desegregation decree during a two-decades-long period, but the court had lifted the desegregation order after concluding that the district had eliminated the vestiges of prior segregation to the greatest extent feasible. The district then adopted a plan under which students were classified as black or “other.” Using these classifications in making elementary school assignments and in ruling on transfer requests, the district sought to achieve racial diversity in schools that would have reflected less racial diversity in light of traditional housing patterns. Cases challenging the respective districts' policies as supposed violations of the Equal Protection Clause made their way through the lower federal courts and were consolidated for decision in the Supreme Court.

Ethics in Action

As discussion in this chapter reveals, Supreme Court precedent establishes that when government action discriminates on the basis of race or sex, the action will receive heightened scrutiny from the Court in an equal protection case. Sexual orientation, however, has not been treated by the Supreme Court as a classification basis that justifies heightened scrutiny. This means that the lenient rational basis review will be employed by a court deciding an equal protection case in which the government is alleged to have discriminated on the basis of sexual orientation. In a legal sense, then, the government has more latitude to regulate in ways that draw lines on the basis of persons' sexual preference than in ways that classify on the basis of persons' race or gender. Now view this set of issues from an ethical perspective. Should the government be any more free to take actions that discriminate against homosexuals—or, for that matter, against heterosexuals—than it is to take actions that discriminate on the basis of race or sex? As you consider this question, you may wish to examine Chapter 4's discussion of ethical theories and ethical decision making.

In Parents Involved, five justices agreed that the above-described policies violated the Equal Protection Clause. Four of those five subscribed to the plurality opinion authored by Chief Justice Roberts. He stressed that the use of racial classifications called for the application of the strict scrutiny test, but that the school districts were unable to rely on government interests previously held to be held to be compelling in nature: remedying the effects of past intentional discrimination (inapplicable because the Seattle schools had never been subject to a desegregation order and the desegregation order formerly in effect for the Louisville schools had been lifted); and the Grutter-recognized interest in achieving broad-ranging diversity in a higher education setting (inapplicable because the consolidated cases did not involve higher education and the school districts sought only racial diversity as opposed to diversity in other senses as well). The Chief Justice's opinion rejected the notion that achieving racial balancing per se could be a compelling government objective, and concluded by invoking language from the landmark 1954 decision in Brown v. Board of Education—language that condemned the use of racial classifications in schools.

Justice Kennedy provided the fifth vote for the holding that the Seattle and Louisville districts had committed an equal protection violation, but he authored a concurring opinion in which he rejected much of the Chief Justice's reasoning and suggested ways in which school districts might still take race into account in an effort to achieve diversity in a broader sense that was not restricted to racial diversity. The four dissenters, led by Justice Breyer, would have upheld the policies implemented by the school districts. For the dissenters, the plurality opinion's reliance on language from Brown v. Board of Education was too much. Given Brown's ruling in favor of discriminated-against black students and the decision's rejection of the school systems' separate-but-equal argument for maintaining whites-only and blacks-only schools, the dissenters thought it inappropriate for the plurality to rely on language from Brown as a supposed reason to reject policies that were designed to bring the races together and keep schools from drifting in the direction of segregation.

2. Alienage. Classifications based on one's status as an alien also receive strict scrutiny of some kind, but this standard almost certainly is not as tough as the full strict scrutiny normally used in race discrimination cases. Under the “political function” exception, moreover, laws restricting aliens from employment in positions that are intimately related to democratic self-government only receive rational basis review. This exception has been read broadly to allow the upholding of laws that exclude aliens from being state troopers, public school teachers, and probation officers.

3. Sex. Although the Supreme Court has been hesitant to make a formal declaration that sex is a suspect class, for roughly four decades laws discriminating on the basis of gender have been subjected to a fairly rigorous form of intermediate scrutiny. As the Court has said, such laws require an “exceedingly persuasive” justification. The usual test is that government action discriminating on the basis of sex must be substantially related to the furtherance of an important government purpose. Under this test, measures discriminating against women have almost always been struck down. The Supreme Court has said that laws disadvantaging men receive the same scrutiny as those disadvantaging women, but this has not prevented the Court from upholding men-only draft registration and a law making statutory rape a crime for men alone.

4. Illegitimacy. Classifications based on one's having been born to unmarried parents receive a form of intermediate scrutiny that probably is less strict than the scrutiny given gender-based classifications. Under this vague standard, the Court has struck down state laws discriminating against so-called “illegitimate” offspring in areas such as recovery for wrongful death, workers' compensation benefits, Social Security payments, inheritance, and child support.

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CONCEPT REVIEW

Equal Protection and Levels of Scrutiny

Type of Government Action

Controlling Test

Operation and Effect of Test

Government action that discriminates but neither affects exercise of fundamental right nor discriminates against suspect class (e.g., most social and economic regulation)

Rational basis

Lenient test—government action is constitutional if rationally related to legitimate government purpose.

Government action that discriminates concerning ability to exercise fundamental right

Full strict scrutiny

Very rigorous test—government action is unconstitutional unless necessary to fulfillment of compelling government purpose.

Government action that discriminates on basis of race or national origin

Full strict scrutiny

Very rigorous test—government action is unconstitutional unless necessary to fulfillment of compelling government purpose.

Government action that discriminates on basis of alienage

Less than full strict scrutiny as general rule; rational basis when public function exception applies

Rigorous test—though softer application of full strict scrutiny requirements. When public function exception applies, test is lenient.

Government action that discriminates on basis of sex (gender)

Intermediate scrutiny

Moderately rigorous test—government action is unconstitutional unless substantially related to fulfillment of important government purpose.

Government action that discriminates on basis of illegitimacy

Intermediate scrutiny, but to lesser degree than in gender discrimination cases

Moderately rigorous test—though softer application of intermediate scrutiny requirements.

Independent Checks Applying Only to the States

The Contract Clause Article I, § 10 of the Constitution states: “No State shall … pass any … Law impairing the Obligation of Contracts.” Known as the Contract Clause, this provision deals with state laws that change the parties' performance obligations under an existing contract after that contract has been made.2 The original purpose of the Contract Clause was to strike down the many debtor relief statutes passed by the states after the Revolution. These statutes impaired the obligations of existing private contracts by relieving debtors of what they owed to creditors. In two early 19th-century cases, however, the Contract Clause also was held to protect the obligations of governmental contracts, charters, and grants.

The Contract Clause probably was the most important constitutional check on state regulation of the economy for much of the 19th century. Beginning in the latter part of that century, the clause gradually became subordinate to legislation based on the states' police powers. By the mid-20th century, most observers treated the clause as being of historical interest only. In 1977, however, the Supreme Court gave the Contract Clause new life by announcing a fairly strict constitutional test governing situations in which a state impairs its own contracts, charters, and grants. Such impairments, the Court said, must be “reasonable and necessary to serve an important public purpose.”

During recent decades, the Court has continued its deference toward state regulations that impair the obligations Page 82of private contracts. Consider, for instance, Exxon Corp. v. Eagerton (1983). For years, Exxon had paid a severance tax under Alabama law on oil and gas it drilled within the state. As the tax increased, appropriate provisions in Exxon's contracts with the purchasers of its oil and gas allowed Exxon to pass on the amounts of the increases to the purchasers. Alabama, however, enacted a law that not only increased the severance tax but also forbade producers of oil and gas from passing on the increase to purchasers. Exxon filed suit, seeking a declaration that the law's pass-on prohibition violated the Contract Clause. Affirming Alabama's highest court, the U.S. Supreme Court observed that the Contract Clause allows the states to adopt broad regulatory measures without having to be concerned that private contracts will be affected. The pass-on prohibition was designed to advance a broad public interest in protecting consumers against excessive prices and was applicable to all oil and gas producers regardless of whether they were then parties to contracts containing pass-on provisions. Therefore, the Court reasoned, the Alabama statute did not violate the Contract Clause.

Explain the burden-on-commerce doctrine's role in making certain state government actions unconstitutional.

Burden on, or Discrimination against, Interstate Commerce In addition to empowering Congress to regulate interstate commerce, the Commerce Clause limits the states' ability to burden or discriminate against such commerce. This limitation is not expressly stated in the Constitution. Instead, it arises by implication from the Commerce Clause and reflects that clause's original purpose of blocking state protectionism and ensuring free interstate trade. (Because this limitation arises by implication, it is often referred to as the “dormant” Commerce Clause.) The burden-on-commerce limitation and the nondiscrimination principle operate independently of congressional legislation under the commerce power or other federal powers. If appropriate federal regulation is present, the preemption questions discussed in the next section may also arise.

Many different state laws can raise burden-on-commerce problems. For example, state regulation of transportation (e.g., limits on train or truck lengths) has been a prolific source of litigation. The same is true of state restrictions on the importation of goods or resources, such as laws forbidding the sale of out-of-state food products unless they meet certain standards. Such restrictions sometimes benefit local economic interests and reflect their political influence. Burden-on-commerce issues also arise if states try to aid their own residents by blocking the export of scarce or valuable products, thus denying out-of-state buyers access to those products.

In part because of the variety of state regulations it has had to consider, the Supreme Court has not adhered to one consistent test for determining when such regulations impermissibly burden interstate commerce. In a 1994 case, the Court said that if a state law discriminates against interstate commerce, the strictest scrutiny will be applied in the determination of the law's constitutionality. Discrimination is express when state laws treat local and interstate commerce unequally on their face.

State laws might also discriminate even though on their face, they seem neutral regarding interstate commerce. This occurs when their effect is to burden or hinder such commerce. In one case, for example, the Supreme Court considered a North Carolina statute that required all closed containers of apples sold within the state to bear only the applicable U.S. grade or standard. The State of Washington, the nation's largest apple producer, had its own inspection and grading system for Washington apples. This system generally was regarded as superior to the federal system. The Court struck down the North Carolina statute because it benefited local apple producers by forcing Washington sellers to regrade apples sold in North Carolina (thus raising their costs of doing business) and by undermining the competitive advantage provided by Washington's superior grading system.

On the other hand, state laws that regulate evenhandedly and have only incidental effects on interstate commerce are constitutional if they serve legitimate state interests and their local benefits exceed the burden they place on interstate commerce. There is no sharp line between such regulations and those that are almost always unconstitutional under the tests discussed above. In a 1981 Supreme Court case, a state truck-length limitation that differed from the limitations imposed by neighboring states failed to satisfy the tests for constitutionality. The Court concluded that the measure did not further the state's legitimate interest in highway safety because the trucks banned by the state generally were as safe as those it allowed. In addition, whatever marginal safety advantage the law provided was outweighed by the numerous problems it posed for interstate trucking companies.

Laws may also unconstitutionally burden interstate commerce when they directly regulate that commerce. This can occur, for example, when state price regulations require firms to post the prices at which they will sell within the state and to promise that they will not sell Page 83below those prices in other states. Because they affect prices in other states, such regulations directly regulate interstate commerce and usually are unconstitutional.

Identify the major circumstances in which federal law will preempt state law.

Federal Preemption The constitutional principle of federal supremacy dictates that when state law conflicts with valid federal law, the federal law is supreme. In such a situation, the state law is said to be preempted by the federal regulation. The central question in most federal preemption cases is the intent of Congress. Thus, such cases often present complex questions of statutory interpretation.

Federal preemption of state law generally occurs for one or more of these reasons:

There is a literal conflict between the state and federal measures, so that it is impossible to follow both simultaneously.

The federal law specifically states that it will preempt state regulation in certain areas. Similar statements may also appear in the federal statute's legislative history. Courts sometimes find such statements persuasive even when they appear only in the legislative history and not in the statute itself.

The federal regulation is pervasive. If Congress has “occupied the field” by regulating a subject in great breadth and/or in considerable detail, such action by Congress may suggest an intent to displace state regulation of the subject. This may be especially likely where Congress has given an administrative agency broad regulatory power in a particular area.

The state regulation is an obstacle to fulfilling the purposes of the federal law. Here, the party challenging the state law's constitutionality typically claims that the state law interferes with the purposes she attributes to the federal measure (purposes usually found in its legislative history). In Chamber of Commerce v. Whiting, which follows, the Supreme Court decides whether a federal law dealing with employment of illegal immigrants preempts a state law dealing with the same subject.

Chamber of Commerce v. Whiting

2011 U.S. LEXIS 4018 (U.S. Sup. Ct. 2011)

A federal law, the Immigration Reform and Control Act (IRCA), makes it “unlawful for a person or other entity … to hire, or to recruit or refer for a fee, for employment in the United States an alien knowing the alien is an unauthorized alien.” Employers that violate this prohibition may be subjected to federal civil and criminal sanctions. IRCA also restricts the ability of states to combat employment of unauthorized workers. It does so by expressly preempting “any state or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens.”

In addition, IRCA requires employers to take steps to verify an employee's eligibility for employment. Seeking to improve that verification process in the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), Congress created E-Verify, an Internet-based system employers can use to check the work authorization status of employees. Federal law does not make the use of E-Verify mandatory, however.

Arizona is among several states that have enacted laws attempting to impose sanctions for the employment of unauthorized aliens through, among other things, “licensing and similar laws.” According to the Legal Arizona Workers Act, the licenses of state employers that knowingly or intentionally employ unauthorized aliens may be, and in certain circumstances must be, suspended or revoked. The Arizona law also requires that all Arizona employers use E-Verify.

The Chamber of Commerce of the United States and various business and civil rights organizations (collectively referred to here as “the Chamber”) filed suit against those charged with administering the Arizona law. The Chamber argued that the state law's license suspension and revocation provisions were both expressly and impliedly preempted by federal immigration law, and that the mandatory use of E-Verify was impliedly preempted. A federal district court held that the plain language of IRCA's preemption clause did not invalidate the Arizona law because the law did no more than impose licensing conditions on businesses operating within the state. The court also held that federal law did not preempt the state law's provision making E-Verify use mandatory, because when Congress made the use of the program voluntary at the national level, it expressed no intent to prevent states from requiring its use. After the U.S. Court of Appeals for the Ninth Circuit affirmed, the Supreme Court agreed to decide the case.

Page 84Roberts, Chief Justice

When a federal law contains an express preemption clause, we “focus on the plain wording of the clause, which necessarily contains the best evidence of Congress' preemptive intent.” [Citation omitted.]

IRCA expressly preempts states from imposing “civil or criminal sanctions” on those who employ unauthorized aliens, “other than through licensing and similar laws.” The Arizona law, on its face, purports to impose sanctions through licensing laws. The state law authorizes state courts to suspend or revoke an employer's business licenses if that employer knowingly or intentionally employs an unauthorized alien. The Arizona law defines “license” as “any agency permit, certificate, approval, registration, charter or similar form of authorization that is required by law and that is issued by any agency for the purposes of operating a business in” the state. That definition largely parrots the definition of “license” that Congress codified in the Administrative Procedure Act (APA).

Apart from that general definition, the Arizona law specifically includes within its definition of “license” documents such as articles of incorporation, certificates of partnership, and grants of authority to foreign companies to transact business in the state. These examples have clear counterparts in the APA definition just quoted.

A license is “a right or permission granted in accordance with law … to engage in some business or occupation, to do some act, or to engage in some transaction which but for such license would be unlawful.” [Dictionary citation omitted.] Articles of incorporation and certificates of partnership allow the formation of legal entities and permit them as such to engage in business and transactions which but for such authorization would be unlawful. As for state-issued authorizations for foreign businesses to operate within a state, we have repeatedly referred to those as “licenses.” Moreover, even if a law regulating articles of incorporation, partnership certificates, and the like is not itself a “licensing law,” it is at the very least “similar” to a licensing law, and therefore comfortably within the [IRCA's] savings clause.

Justice Breyer's primary concern [, as set forth in his dissent,] appears to be that state permissions such as articles of incorporation and partnership certificates are treated as “licensing and similar laws.” Because myriad other licenses are required to operate a business [, including a “privilege license” required by Arizona law], that concern is largely academic. Suspending or revoking an employer's articles of incorporation will often be entirely redundant.

The Chamber and the United States as amicus [i.e., friend of the Court] argue that the Arizona law is not a “licensing” law because it operates only to suspend and revoke licenses rather than to grant them. Again, this construction of the term runs contrary to the definition that Congress itself has codified [in federal law]. It is also contrary to common sense. There is no basis in law, fact, or logic for deeming a law that grants licenses a licensing law, but a law that suspends or revokes those very licenses something else altogether.

The Chamber asserts that … Congress meant to allow state licensing sanctions only after a federal IRCA adjudication. But the text of IRCA's savings clause says nothing about state licensing sanctions being contingent on prior federal adjudication, or indeed about state licensing processes at all. The simple fact that federal law creates procedures for federal investigations and adjudications culminating in federal civil or criminal sanctions does not indicate that Congress intended to prevent States from establishing their own procedures for imposing their own sanctions through licensing.

In much the same vein, the Chamber argues [in its brief] that Congress [did not mean in IRCA] “to authorize each of the 50 states … to impose its own separate prohibition,” and that Congress instead wanted uniformity in immigration law enforcement. Justice Breyer also objects [in his dissent] to the departure from “one centralized enforcement scheme” under federal law. But Congress expressly preserved the ability of the states to impose their own sanctions through licensing; that—like our federal system in general—necessarily entails the prospect of some departure from homogeneity. And as for “separate prohibition[s],” it is worth recalling that the Arizona licensing law is based exclusively on the federal prohibition—a court reviewing a complaint under the Arizona law may “consider only the federal government's determination” with respect to “whether an employee is an unauthorized alien.”

The Chamber argues that its textual and structural arguments are bolstered by IRCA's legislative history. We have already concluded that Arizona's law falls within the plain text of IRCA's savings clause. And, as we have said before, Congress's “authoritative statement is the statutory text, not the legislative history.” [Citation omitted.] Whatever the usefulness of relying on legislative history materials in general, the arguments against doing so are particularly compelling here. Beyond verbatim recitation of the statutory text, all of the legislative history documents related to IRCA save one fail to discuss the savings clause at all. The Senate Judiciary Committee Report on the Senate version of the law does not comment on it. Only one of the four House Reports on the law touches on the licensing exception, and we have previously dismissed that very report as “a rather slender reed” from “one House of a politically divided Congress.” [Citation omitted.] And the Conference Committee Report does not discuss the scope of IRCA's preemption provision in any way.

Page 85[In his dissent,] Justice Breyer poses several rhetorical questions challenging our reading of IRCA and then goes on to propose two seemingly alternative views of the phrase “licensing and similar laws”—that it was meant to refer to “employment-related licensing systems,” or, even more narrowly, to “the licensing of firms in the business of recruiting or referring workers for employment, such as … state agricultural labor contractor licensing schemes.” If we are asking questions, a more telling one may be why, if Congress had intended such limited exceptions to its prohibition on state sanctions, it did not simply say so, instead of excepting “licensing and similar laws” generally?

Justice Sotomayor takes a different tack [in her dissent]. Invoking arguments that resemble those found in our implied preemption cases, she concludes that the Arizona law “falls outside” the savings clause and is expressly preempted because it allows “state courts to determine whether a person has employed an unauthorized alien.” While Justice Breyer would add language to the statute narrowly limiting the phrase “licensing and similar laws” to specific types of licenses, Justice Sotomayor creates an entirely new statutory requirement: She would allow states to impose sanctions through “licensing and similar laws” only after a federal adjudication. Such a requirement is found nowhere in the text, and Justice Sotomayor does not even attempt to link it to a specific textual provision. It should not be surprising that the two dissents have sharply different views on how to read the statute. That is the sort of thing that can happen when statutory analysis is so untethered from the text.

IRCA expressly preempts some state powers dealing with the employment of unauthorized aliens and it expressly preserves others. We hold that Arizona's licensing law falls well within the confines of the authority Congress chose to leave to the States and therefore is not expressly preempted.

As an alternative to its express preemption argument, the Chamber contends that Arizona's law is impliedly preempted because it conflicts with federal law. At its broadest level, the Chamber's argument is that Congress intended the federal system to be exclusive, and that any state system therefore necessarily conflicts with federal law. But Arizona's procedures simply implement the sanctions that Congress expressly allowed Arizona to pursue through licensing laws. Given that Congress specifically preserved such authority for the states, it stands to reason that Congress did not intend to prevent the states from using appropriate tools to exercise that authority.

[T]he Chamber argues more generally that the law is preempted because it upsets the balance that Congress sought to strike when enacting IRCA. In the Chamber's view, IRCA reflects Congress's careful balancing of several policy considerations—deterring unauthorized alien employment, avoiding burdens on employers, protecting employee privacy, and guarding against employment discrimination. According to the [Chamber's brief], the harshness of Arizona's law “‘exert[s] an extraneous pull on the scheme established by Congress’” that impermissibly upsets that balance.

License suspension and revocation are significant sanctions. But they are typical attributes of a licensing regime. Numerous Arizona laws provide for the suspension or revocation of licenses for failing to comply with specified state laws. It makes little sense to preserve state authority to impose sanctions through licensing, but not allow states to revoke licenses when appropriate as one of those sanctions.

Of course Arizona hopes that its law will result in more effective enforcement of the prohibition on employing unauthorized aliens. But in preserving to the states the authority to impose sanctions through licensing laws, Congress did not intend to preserve only those state laws that would have no effect. The balancing process that culminated in IRCA resulted in a ban on hiring unauthorized aliens, and the state law here simply seeks to enforce that ban.

Implied preemption analysis does not justify a “free-wheeling judicial inquiry into whether a state statute is in tension with federal objectives”; such an endeavor “would undercut the principle that it is Congress rather than the courts that preempts state law.” [Citation omitted.] Our precedents “establish that a high threshold must be met if a state law is to be pre-empted for conflicting with the purposes of a federal Act.” [Citation omitted.] That threshold is not met here.

The Chamber also argues that Arizona's requirement that employers use the federal E-Verify system to determine whether an employee is authorized to work is impliedly preempted. In the Chamber's view, “Congress wanted to develop a reliable and non-burdensome system of work-authorization verification” that could serve as an alternative to the I-9 procedures, and the “mandatory use of E-Verify impedes that purpose.”

We begin again with the relevant text. The provision of IIRIRA setting up the program that includes E-Verify contains no language circumscribing state action. Arizona's use of E-Verify does not conflict with the federal scheme. The Arizona law requires that “every employer, after hiring an employee, shall verify the employment eligibility of the employee” through E-Verify. That requirement is entirely consistent with the federal law. And the consequences of not using E-Verify under the Arizona law are the same as the consequences of not using the system under federal law. In both instances, the only result is that the employer forfeits the otherwise available rebuttable presumption that it complied with the law.

Congress's objective in authorizing the development of E-Verify was to ensure reliability in employment authorization verification, combat counterfeiting of identity documents, and Page 86protect employee privacy. Arizona's requirement that employers operating within its borders use E-Verify in no way obstructs achieving those aims.

In fact, the Federal Government has consistently expanded and encouraged the use of E-Verify. When E-Verify was created in 1996, it was meant to last just four years and it was made available in only six states. Congress since has acted to extend the E-Verify program's existence on four separate occasions. And in 2003 Congress directed the Secretary of Homeland Security to make E-Verify available in all 50 States. The Department of Homeland Security has even used billboard and radio advertisements to encourage greater participation in the E-Verify program.

[We conclude that] Arizona's unauthorized alien employment law fits within the confines of IRCA's savings clause and does not conflict with federal immigration law.

Judgment of Ninth Circuit Court of Appeals affirmed.

Explain the power granted to the government by the Takings Clause, as well as the limits on that power.

The Takings Clause

The Fifth Amendment states that “private property [shall not] be taken for public use, without just compensation.” Because this Takings Clause has been incorporated within Fourteenth Amendment due process, it applies to the states. Traditionally, it has come into play when the government formally condemns land through its power of eminent domain,3 but it has many other applications as well.

The Takings Clause both recognizes government's power to take private property and limits the exercise of that power. It does so by requiring that when property is subjected to a governmental taking, the taking must be for a public use and the property owner must receive just compensation. We now consider these four aspects of the Takings Clause in turn.

Property. The Takings Clause protects other property interests besides land and interests in land. Although its full scope is unclear, the clause has been held to cover takings of personal property, liens, trade secrets, and contract rights.

Taking. Because of the range of property interests it may cover, the Takings Clause potentially has a broad scope. Another reason for the clause's wide possible application is the range of government activities that may be considered takings. Of course, the government's use of formal condemnation procedures to acquire private property is a taking. There also may be a taking when the government physically invades private property or allows someone else to do so.

It has long been recognized, moreover, that overly extensive land use regulation may so diminish the value of property or the owner's enjoyment of it as to constitute a taking. Among the factors courts consider in such “regulatory taking” cases are the degree to which government deprives the owner of free possession, use, and disposition of his property; the overall economic impact of the regulation on the owner; and how much the regulation interferes with the owner's reasonable investment-backed expectations regarding the future use of the property. In Lucas v. South Carolina Coastal Council (1992), the Supreme Court held that there is an automatic taking when the government denies the owner all economically beneficial uses of the land. When this is not the case, courts tend to apply some form of means-ends scrutiny in determining whether land use regulation has gone too far and thus amounts to a regulatory taking.

Public use. Once a taking of property has occurred, it is unconstitutional unless it is for a public use. The public use element took center stage in a widely publicized 2005 Supreme Court decision, Kelo v. City of New London. For discussion of Kelo, see Figure 2.

Just compensation. Even if a taking of property is for a public use, it still is unconstitutional if the property owner does not receive just compensation. Although the standards for determining just compensation vary with the circumstances, the basic test is the fair market value of the property (or of the lost property right) at the time of the taking.

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Figure 2 Economic Development as Public Use?

Does the government's taking of private property for the purpose of economic development satisfy the public use requirement set forth in the Fifth Amendment's Takings Clause? In Kelo v. City of New London, 545 U.S. 469 (2005), the U.S. Supreme Court answered “yes.”

New London, Connecticut, experienced economic decline for a considerable number of years. The city therefore made economic revitalization efforts, which included a plan to acquire 115 parcels of real estate in a 90-acre area and create, in collaboration with private developers, a multifaceted zone that would combine commercial, residential, and recreational elements. The planned development was designed to increase tax revenue, create jobs, and otherwise capitalize on the economic opportunities that city officials expected would flow from a major pharmaceutical company's already-announced plan to construct a large facility near the area the city wished to develop.

The city was able to negotiate the purchase of most parcels of property in the 90-acre area, but some property owners refused to sell. The latter group included Susette Kelo and Wilhelmina Dery. Kelo had lived in her home for several years, had made substantial improvements to it, and especially enjoyed the water view it afforded. Dery had lived her entire life in the home the city sought to acquire. Both homes were well maintained. After the city decided to use its eminent domain power to acquire the properties of those owners who refused to sell, Kelo, Dery, and the other nonselling owners filed suit. They contended that the city's plan to take their property for the purpose of economic development did not involve a public use and thus would violate the Fifth Amendment's Takings Clause. The dispute made its way through the Connecticut courts and then to the U.S. Supreme Court, where a five-justice majority ruled in favor of the city.

Writing for the majority in Kelo v. City of New London, Justice Stevens noted that earlier decisions had identified three types of eminent domain settings in which the government's acquisition of private property satisfied the constitutional public use element: first, when the government planned to develop a government-owned facility (e.g., a military base); second, when the government planned to construct, or allow others to construct, improvements to which the public would have broad access (e.g., highways or railroads); and third, when the government sought to further some meaningful public purpose. Justice Stevens observed that precedents had recognized the public purpose type of public use even if the government would not ultimately retain legal title to the acquired property (unlike the military base example) and the acquired property would not be fully opened up for public access (unlike the highway and railroad examples). The Court acknowledged that the public use requirement clearly would not be satisfied if the government took private party A's property simply to give it to private party B. However, the Court stressed, the prospect that private parties might ultimately own or control property the government had acquired through eminent domain would not make the taking unconstitutional if an overriding public purpose prompted the government's use of eminent domain. Similarly, even if certain private parties (e.g., the pharmaceutical company and private developers in the Kelo facts) would stand to benefit from the government's exercise of eminent domain, such a fact would not make the taking unconstitutional if a public purpose supported the taking.

The Kelo majority stressed the particular relevance of two earlier Supreme Court decisions, Berman v. Parker, 348 U.S. 26 (1954), and Hawaii Housing Authority v. Midkiff, 467 U.S. 299 (1984). In Berman, the Court sustained Washington, D.C.'s use of eminent domain to take property that included businesses and “blighted” dwellings in order to construct a low-income housing project and new streets, schools, and public facilities. In Midkiff, the Court upheld Hawaii's use of eminent domain to effectuate a legislative determination that Hawaii's long-standing land oligopoly, under which property ownership was highly concentrated among a small number of property owners, had to be broken up for social and economic reasons. The Kelo majority concluded that significant public purposes were present in both Berman and Midkiff and that those decisions led logically to the conclusion that economic development was a public purpose weighty enough to constitute public use for purposes of the Takings Clause. Therefore, the Court upheld the city's exercise of eminent domain in Kelo.

In his majority opinion, Justice Stevens was careful to point out that because the constitutional question was whether a public use existed, it was not the Court's job to determine the wisdom of the government's attempt to exercise eminent domain. Neither should the Court allow its decision to be guided by the undoubted hardship that eminent domain places on unwilling property owners who must yield their homes to the state (albeit in return for “just compensation”). Justice Stevens emphasized that if state legislatures believed an economic development purpose such as the one the City of New London had in mind should not be used to support an exercise of eminent domain, the legislatures were free to specify, in their state statutes, that eminent domain could not be employed for an economic development purpose. The Court's determination of what is a public use for purposes of the Takings Clause sets a protective floor for property owners, with states being free to give greater protection against takings by the government.

The four dissenting justices in Kelo issued sharply worded opinions expressing their disagreement with the majority's characterization of Berman and Midkiff as having led logically to the conclusion that economic development was a public use. In emotional terms, the dissenters accused the majority of having effectively erased the public use Page 88requirement from the Takings Clause. The Kelo decision drew considerable media attention, perhaps more because of what appeared to be considerable hardship to property owners such as Kelo and Dery than because of new legal ground—if any—broken in the decision. For many observers, the case's compelling facts led to a perception that the city had engaged in overreaching. The Court's decision in Kelo meant that in a legal sense, there was no overreaching on the part of the city. Was there, however, overreaching in an ethical sense? How would utilitarians answer that question? What about rights theorists? (As you consider the questions, you may wish to consult Chapter 4.)

Problems and Problem Cases

In 1967, Gary Jones purchased a house on North Bryan Street in Little Rock, Arkansas. He and his wife lived in the house until they separated in 1993. Jones then moved into an apartment in Little Rock, and his wife continued to live in the house. Jones paid his mortgage each month for 30 years. The mortgage company paid the property taxes on the house. After Jones paid off his mortgage in 1997, the property taxes went unpaid. In April 2000, the Arkansas Commissioner of State Lands (Commissioner) attempted to notify Jones of his tax delinquency and his right to redeem the property by paying the past-due taxes. The Commissioner sought to provide this notice by mailing a certified letter to Jones at the North Bryan Street address. Arkansas law approved the use of such a method of providing notice. The packet of information sent by the Commissioner stated that unless Jones redeemed the property, it would be subject to public sale two years later. No one was at home to sign for the letter. No one appeared at the post office to retrieve the letter within the next 15 days. The post office then returned the unopened packet to the Commissioner with an “unclaimed” designation on it. In the spring of 2002, a few weeks before the public sale scheduled for Jones's house, the Commissioner published a notice of public sale in a local newspaper. No bids were submitted, meaning that under Arkansas law, the state could negotiate a private sale of the property.

Several months later, Linda Flowers submitted a purchase offer. The Commissioner then mailed another certified letter to Jones at the North Bryan Street address, attempting to notify him that his house would be sold to Flowers if he did not pay his delinquent taxes. As with the first letter, the second letter was returned to the Commissioner with an “unclaimed” designation. Flowers purchased the house. Immediately after the expiration of the 30-day period in which Arkansas law would have allowed Jones to make a post-sale redemption of the property by paying the past-due taxes, Flowers had an eviction notice delivered to the North Bryan Street property. The notice was served on Jones's daughter, who contacted Jones and notified him of the tax sale. Jones then filed a lawsuit in Arkansas state court against the Commissioner and Flowers. In his lawsuit, Jones contended that the Commissioner's failure to provide notice of the tax sale and of Jones's right to redeem resulted in the taking of his property without due process. The trial court ruled in favor of the Commissioner and Flowers, and the Arkansas Supreme Court affirmed. The U.S. Supreme Court agreed to decide the case and its central question of whether Jones was afforded due process. How did the U.S. Supreme Court rule?

Nevada is alone among the states in making prostitution legal. Under Nevada law, brothels may be operated in certain counties in the state. In other counties in the state, they are unlawful. Where brothels may lawfully be operated, they are subject to licensing requirements, requirements that sex workers undergo health testing, and other requirements. In addition, Nevada law restricts advertisements by brothels. They cannot advertise in counties where prostitution is not permitted by law, even if they are located in a county where prostitution is lawful. Brothels are permitted to advertise in counties where prostitution is allowed, but such advertisements cannot appear in any public theater or on any public street or highway. Brothel operators and newspapers initiated legal action, arguing that the advertising restrictions violated the First Amendment. What type of speech is at issue here? Do the advertising restrictions violate the First Amendment?

A federal statute, 8 U.S.C. § 1409, sets requirements for acquisition of U.S. citizenship by a child born outside the United States to unwed parents, only one of whom is a U.S. citizen. If the mother is the U.S. citizen, the child acquires citizenship at birth. Section Page 891409(a) states that when the father is the citizen parent, the child acquires citizenship only if, before the child reaches the age of 18, the child is legitimized under the law of the child's residence or domicile, the father acknowledges paternity in writing under oath, or paternity is established by a competent court. Tuan Anh Nguyen was born in Vietnam to a Vietnamese mother and a U.S. citizen father, Joseph Boulais. At six years of age, Nguyen came to the United States, where he became a lawful permanent resident and was raised by his father. When Nguyen was 22, he pleaded guilty in a Texas court to two counts of sexual assault. The U.S. Immigration and Naturalization Service initiated deportation proceedings against Nguyen, and an immigration judge found him deportable. While Nguyen's appeal to the U.S. Board of Immigration Appeals was pending, Boulais obtained from a state court an order of parentage that was based on DNA testing. The board dismissed Nguyen's appeal, denying his citizenship claim on the ground that he had not established compliance with § 1409(a). Nguyen and Boulais appealed to the U.S. Court of Appeals for the Fifth Circuit, which rejected their contention that § 1409 discriminated on the basis of gender and thus violated the Constitution's equal protection guarantee. Was the Fifth Circuit's decision correct?

As most other states do, the Commonwealth of Kentucky taxes its residents' income. Kentucky law establishes that interest on bonds issued by Kentucky and its political subdivisions is exempt from Kentucky's income tax, whereas interest on bonds issued by other states and their political subdivisions is taxable. The tax exemption for Kentucky bonds helps make those bonds attractive to in-state purchasers even if they carry somewhat lower rates of interest than other states' bonds or those issued by private companies. Most other states have differential tax schemes that resemble Kentucky's. Kentucky residents George and Catherine Davis paid state income tax on interest from out-of-state municipal bonds, and then sued the Department of Revenue of Kentucky in an effort to obtain a refund. The Davises contended that Kentucky's differential taxation of municipal bond interest impermissibly discriminates against interstate commerce in violation of the U.S. Constitution's Commerce Clause. Were the Davises correct?

Nike, Inc., mounted a public relations campaign in order to refute news media allegations that its labor practices overseas were unfair and unlawful. The campaign involved the use of press releases, letters to newspapers, a letter to university presidents and athletic directors, and full-page advertisements in leading newspapers. Relying on California statutes designed to curb false and misleading advertising and other forms of unfair competition, California resident Mark Kasky filed suit in a California court on behalf of the general public of the state. Kasky contended that Nike had made false statements in its campaign and that the court should therefore grant the legal relief contemplated by the California statutes. In terms of Nike's potential liability, why would it make a difference whether the speech in which Nike engaged was commercial or, instead, noncommercial? What are the arguments in favor of a conclusion that Nike was engaged in commercial speech? What are the arguments in favor of a conclusion that Nike was engaged in noncommercial speech? How did the court rule on the speech classification issue—i.e., whether Nike's speech was commercial or, instead, that is noncommercial?

On August 26, while employed as a policeman at a state university, Richard Homar was arrested by the state police and charged with a drug felony. University officials then suspended Homar without pay. Although the criminal charges were dismissed on September 1, Homar's suspension remained in effect. On September 18, he finally was provided the opportunity to tell his side of the story to university officials. Subsequently, he was demoted to grounds-keeper. He then filed suit under a federal civil rights statue, claiming that university officials' failure to provide him with notice and a hearing before suspension without pay had violated due process. Was Homar correct?

In the Violence Against Women Act, Congress provided a federal civil remedy for victims of gender-motivated violence. A female student who had attended a Virginia university brought a claim under the Violence Against Women Act against two male students who allegedly had sexually assaulted her and caused her to experience severe emotional distress. The defendants challenged the Violence Against Women Act on constitutional grounds, arguing that the statute did not fall within the power granted to Congress by the U.S. Constitution's Commerce Clause. Were the defendants correct in this argument?

The Minnesota legislature passed a statute banning the sale of milk in plastic nonrefillable, nonreusable containers. However, it allowed sales of milk in other nonrefillable, nonreusable containers such as paperboard cartons. One of the justifications for this ban Page 90on plastic jugs was that it would ease the state's solid waste disposal problems because plastic jugs occupy more space in landfills than other nonreturnable milk containers. A group of dairy businesses challenged the statute, arguing that its distinction between plastic containers and other containers was unconstitutional under the Equal Protection Clause. What means-ends test or level of scrutiny applies in this case? Under that test, is easing the state's solid waste disposal problems a sufficiently important end? Under that test, is there a sufficiently close “fit” between the classification and that end to make the statutory means constitutional? In answering the last question, assume for the sake of argument that there probably were more effective ways of alleviating the solid waste disposal problem than banning plastic jugs while allowing paperboard cartons.

Oklahoma statutes set the age for drinking 3.2 beer at 21 for men and 18 for women. The asserted purpose behind the statutes (and the sex-based classification that they established) was traffic safety. The statutes were challenged as a denial of equal protection by male residents of Oklahoma. What level of scrutiny would this measure receive if women had been denied the right to drink 3.2 beer until they were 21 but men had been allowed to consume it at age 18? Should this standard change because the measure discriminates against men? Is the male challenge to the statute likely to be successful?

While it was preparing a comprehensive land use plan in the area, the Tahoe Regional Planning Agency (TRPA) imposed two moratoria on development of property in the Lake Tahoe Basin. The moratoria together lasted 32 months. A group of property developers affected by the moratoria filed suit in federal court alleging that the moratoria constituted an unconstitutional taking without just compensation. Were the developers correct?

For the past 20 years, the congregation of the Westboro Baptist Church has picketed military funerals to communicate its belief that God hates the United States for its tolerance of homosexuality, particularly in America's military. The church's picketing has also condemned the Catholic Church for scandals involving its clergy. Westboro Baptist founder Fred Phelps and six parishioners (all relatives of Phelps) traveled from Kansas to Maryland to picket the funeral of Marine Lance Corporal Matthew Snyder, who was killed in Iraq in the line of duty. The picketing took place on public land approximately 1,000 feet from the church where the funeral was held, in accordance with guidance from local law enforcement officers. For approximately 30 minutes before the funeral began, the picketers peacefully displayed their signs, which stated “Thank God for Dead Soldiers,” “Fags Doom Nations,” “America is Doomed,” “Priests Rape Boys,” and “You're Going to Hell.” Matthew Snyder's father (Snyder), saw the tops of the picketers' signs when driving to the funeral, but did not learn what was written on the signs until watching a news broadcast later that night. Snyder sued Phelps, his daughters (who participated in the picketing), and Westboro Baptist, raising tort claims of intentional infliction of emotional distress, intrusion upon seclusion, and civil conspiracy. A jury held the defendants liable for millions of dollars in compensatory and punitive damages. The defendants sought judgment as a matter of law on the ground that the First Amendment fully protected their speech. Did the First Amendment protect the defendants against liability?

In the Motor Carrier Act of 1980, Congress deregulated trucking by eliminating federal regulations that had previously applied to the trucking industry. Fourteen years later, Congress sought to preempt trucking regulation at the state level by enacting a law providing that “a State … may not enact or enforce a law … related to a price, route, or service of any motor carrier … with respect to the transportation of property.” After the enactment of the 1994 federal statute just quoted, the State of Maine enacted a statute titled “An Act To Regulate the Delivery and Sales of Tobacco Products and To Prevent the Sale of Tobacco Products to Minors.” One section of the Maine statute forbade anyone other than a Maine-licensed tobacco retailer to accept an order for delivery of tobacco. The statute went on to state that when a licensed retailer accepted an order and shipped tobacco, the retailer had to “utilize a delivery service” that provided a special kind of recipient-verification service. The statute required the delivery service to make certain that (1) the person who bought the tobacco was the person to whom the package was addressed; (2) the person to whom the package was addressed was of legal age to purchase tobacco; (3) the person to whom the package was addressed had himself or herself signed for the package; and (4) the person to whom the package was addressed, if under the age of 27, had produced a valid government-issued photo identification with proof of age. Violations of the statute were punishable by civil penalties of a monetary nature. Another Page 91section of the Maine statute forbade any person “knowingly” to “transport” a “tobacco product” to “a person” in Maine unless either the sender or the receiver had a Maine license. It further stated that a “person is deemed to know that a package contains a tobacco product” (1) if the package was marked as containing tobacco and displayed the name and license number of a Maine-licensed tobacco retailer, or (2) if the person received the package from someone whose name appeared on a list of unlicensed tobacco retailers that Maine's Attorney General made available to various package-delivery companies. Violations again were made punishable by civil penalties of a monetary nature. Various trucking associations sued in federal court, claiming that the 1994 federal statute quoted earlier preempted the Maine statute. Were the trucking associations correct in this claim?

Online Research

The First Amendment

Using an online legal research tool, locate and read the U.S. Supreme Court's 2002 decision in Ashcroft v. Free Speech Coalition. In that case, the Court struck down a statute on First Amendment grounds. Six years later, in United States v. Williams, the Supreme Court upheld a seemingly similar statute and rejected the argument that the statute violated the First Amendment. Locate and read the Williams decision, compare it with Free Speech Coalition, and prepare a one-page discussion and analysis of what led the Court to rule as it did in Williams despite the similarities between the statute at issue there and the one invalidated in Free Speech Coalition.

1However, the Thirteenth Amendment, which bans slavery and involuntary servitude throughout the United States, does not have a government action requirement. Some state constitutions, moreover, have individual rights provisions that lack a state action requirement.

2Under the Fifth Amendment's Due Process Cause, standards similar to those described in this section apply to the federal government.

3Eminent domain and the Takings Clause's application to land use problems are discussed in Chapter 24.