Constitutional authority to regulate history

1. Constitutional Authority to
Regulate Business
History
Before the Revolutionary War, States wanted a confederation with weak national
government and very limited powers. After the war, in 1787, the States voted to amend
Articles of Confederation and create a new, federal government that shared power with
States.
Constitutional Powers of Government
Constitution established a federal form of government with checks and balances among
three branches: executive, legislative and judicial. National government has limited,
enumerated powers delegated from States. Privileges and Immunities Clause. Full Faith
and Credit Clause.
U.S. Commerce Clause
Power to regulate interstate commerce defined in Gibbons v.Ogden (1824). Expansion to
private businesses began with Wickard v. Fillburn (1942). Today, Commerce Clause it
authorizes the national government to regulate virtually any business enterprise, including
internet. Limits: U.S. v. Lopez (1995)
Case 4.1: Reno v. Condon (2000)
State Commerce
States possess inherent police powers to regulate health, safety, public order, morals and
general welfare. “Dormant” Commerce Clause.
Case 4.2: Ferguson v. Friend finders. Inc.(2002) State laws that substantially interfere with
interstate commerce will be struck down.
U.S. Supremacy Clause
 Article VI of the Constitution “Supreme Law of the Land.”
 In case of direct conflict between state and federal law, state law is invalid.
 Congress can preempt states.
 Federal Taxing and Spending Powers.
Business and the Bill of Rights
Bills of Rights are not absolute. Originally the Bill of Rights was a limit on the national
government’s powers. During the early 1900’s, the Supreme Court applied the Bill of Rights
to the States via the “due process” clause of the 14th
amendment.
Free Speech
Afforded highest protection by courts. Symbolic Speech.

2.  Texas v. Johnson (1989).
 R.A.V. vs. City of St.Paul(1992).
Commercial Speech
Advertising is protected speech. Restrictions must:
 Implement substantial government interest;
 Directly advance that interest; and
 Go no further than necessary.
Case 4.3: Bad Frog Brewery (1998).
Corporate Political Speech
Afforded significant protection by the first amendment but not to the degree of speech of
natural persons.
First National v. Bellotti(1978).
Consolidated Edison v. Public Service Commission (1980).
Unprotected Speech
Certain types of speech are not protected by the first amendment:
Slander.
Obscenity (Miller v. California).
Fighting Words.
Online Obscenity CDA, COPA, Children’s Internet Protection Act.
Freedom of Religion
First amendment many neither prohibit the “establishment” nor prohibit the “free exercise” of
religion.
The first amendment does not require complete “separation of church and state.”
First amendment mandates accommodation of all religions and forbids hostility toward any.
Zorach v. Clauson(1952) and Lynch v. Donnelly (1984).
First amendment guarantees the “free exercise” of religion. Employers must reasonably
accommodate beliefs as long as employee has sincerely held beliefs.
Frazee v. Illinois(1989).
Searches and Seizures
Fourth amendment requires warrant with “probable cause.” Warrantless exceptions exist
for “evanescent” evidence.
Searches of Business:
Generally business inspectors must have a warrant.
Marshall v. Barlow’s (1978).

3. Self-Incrimination
Fifth Amendment guarantees no person can be compelled to testify against himself in a
criminal proceeding. Does not apply to corporations or partnerships.
Due Process and Equal Protection
5th
and 14th
amendments provide “no person shall be deprived of life, liberty or property
without due process of law.”
Procedural and Substantive issues.
Procedural Due Process
Procedures depriving an individual of her rights must be fair and equitable.
Constitution requires adequate notice and a fair and impartial hearing before a disinterested
magistrate.
Substantive Due Process
Focuses on the content or substance of legislation. Laws limiting fundamentalrights
(speech, privacy, religion) must have a “compelling state interest.” Laws limiting non-
fundamental rights require only a “rational basis.”
Equal Protection
Strict Scrutiny.
Laws that affect the fundamental rights of similarly situated individuals in a different manner
are subject to the “strict scrutiny” test.
Any “suspect class” (race, national origin) must serve a “compelling state interest” which
includes remedying past discrimination.
Intermediate Scrutiny.
Applied to laws involving gender or legitimacy.
To be constitutional laws must be substantially related to important government
objectives. EXAMPLE:
Illegitimate teenage pregnancy).
Rational Basis Test.
Applied to matters of economic or social welfare. Laws will be constitutional if there is a
rational basis relating to legitimate government interest.
Privacy Rights
Fundamental right not expressly found in the constitution, but derived from 1st, 5thand
14th
amendments. Laws and policies affecting privacy are subject to the compelling interest
test.