1. Chapter 5 – The Constitution and the Regulation of Business Copyright © 2011 by Jeffrey Pittman

2. Section 1 – The Constitutional Powers of Government

3. History of the Constitution  After our war of independence, the U.S. operated under the Articles of Confederation, adopted in 1781  The Articles conferred little power on the federal government  For example, the federal government could not tax or raise an army  A convention was held in Philadelphia, in 1787, to consider amending the Articles of Confederation  The convention delegates eventually proposed a new constitution, a legal document that would need ratification by the states Jeffrey Pittman - Legal Environment of Business 3

4. History of the Constitution  The greatest fear about the proposed Constitution was the creation of a strong central government  The Constitution debate, as captured in the Federalist Papers, identified protections against a strong central government Jeffrey Pittman - Legal Environment of Business 4

5. The Constitution Preamble - ["We the people...."]  Article I - The Legislative Branch  Article II -The Presidency  Article III -The Judiciary  Article IV - The States  Article V - The Amendment Process  Article VI - Legal Status of the Constitution  Article VII - Ratification Jeffrey Pittman - Legal Environment of Business 5

6. Proposed Forces Limiting the Federal Government  Separation of powers, Articles I to III  Separation of powers is accomplished by dividing powers of government, expecting that each branch of government will act as a check on the other branches Jeffrey Pittman - Legal Environment of Business 6

7. Proposed Forces Limiting the Federal Government  Enumerated legislative powers, Article I, Section 8  The federal legislature under the Constitution is “limited” by possessing only powers enumerated in Article I, Section 8  Eventually, the Ninth and Tenth Amendments Jeffrey Pittman - Legal Environment of Business 7

8. Protecting the States and the People Amendment IX The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people. Amendment X The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people. Jeffrey Pittman - Legal Environment of Business 8

9. The Constitution The U.S. Constitution, as ratified in 1789 and amended in 1791, has two functions:  Create a system of government  This is accomplished by the Constitution, Articles I to VII  Establish individual rights in relation to the government  This is accomplished by the Bill of Rights and other amendments Jeffrey Pittman - Legal Environment of Business 9

10. Commerce Clause  The majority of federal power today over the business community comes from the Article 1, Section 8, the commerce clause  “The Congress shall have power to regulate commerce... among the several states”  State control over activities within the state comes in part through the state police powers Jeffrey Pittman - Legal Environment of Business 10

11. Commerce Clause  Note the national expansion of powers under the commerce clause, state actions and the “dormant” clause Jeffrey Pittman - Legal Environment of Business 11

12. Constitutional Clauses  The Supremacy Clause  Full Faith and Credit Clause  Privileges and Immunities Clause Jeffrey Pittman - Legal Environment of Business 12

13. Section 2 – Business and the Bill of Rights

14. The Role of the Amendments  As we examine the Constitutional Amendments, note that the protections found there only provide protection from the government  Private (nongovernmental) action is not regulated by the Constitution Jeffrey Pittman - Legal Environment of Business 14

15. The Bill of Rights Amendment I Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances. Jeffrey Pittman - Legal Environment of Business 15

16. First Amendment - Speech “Congress shall make no law... abridging the freedom of speech”  The Supreme Court provides political speech the highest level of protection  Note the possibility of symbolic speech Jeffrey Pittman - Legal Environment of Business 16

17. First Amendment - Speech  Unprotected speech includes obscenity, child pornography, and defamation, for example  See Lott v. Levitt  Partially protected speech includes commercial speech (advertising) – this is protected but not as highly as political speech  Regarding Bad Frog Brewery v. New York, see the Bad Frog Website)Bad Frog Website  The government may regulate commercial speech following the test identified in the next slide Jeffrey Pittman - Legal Environment of Business 17

18. The First Amendment and Commercial Speech Jeffrey Pittman - Legal Environment of Business 18 False or Misleading Commercial Speech  The government may ban or restrict speech here at the discretion of the government “True” Commercial Speech  The government may ban or restrict speech here only after showing the ban 1) goes no further than necessary to 2) directly advance 3) a substantial government interest

19. Freedom of Religion  Congress shall make no law respecting an establishment of religion (establishment clause), or prohibiting the free exercise thereof (free exercise clause)...  Remember that this only protects religion regarding public (government) action and not private action  Religion in private employment is regulated by the 1964 Civil Rights Act, textbook Chapter 21 Jeffrey Pittman - Legal Environment of Business 19

20. The Bill of Rights Amendment IV The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. Jeffrey Pittman - Legal Environment of Business 20

21. The Fourth Amendment Jeffrey Pittman - Legal Environment of Business 21 If the searching party is a government employee:  US Constitution – The Fourth Amendment applies, protecting against unreasonable searches and seizures  See U.S. v. Moon If the searching party is not a government employee:  No federal law is applicable; look to state law

22. Fifth Amendment  The protections against self incrimination from the Fifth Amendment only apply in criminal cases  Only people are protected by the Fifth, not businesses Jeffrey Pittman - Legal Environment of Business 22

23. Section 3 – Due Process and Equal Protection

24. Due Process Amendment V No person shall be... deprived of life, liberty, or property, without due process of law...  The above language provides protections for procedural due process and substantive due process Jeffrey Pittman - Legal Environment of Business 24

25. Equal Protection  The Fourteenth Amendment provides all persons “equal protection of the laws.”  Note the different levels of scrutiny, that is, strict, intermediate, and rational basis Jeffrey Pittman - Legal Environment of Business 25

26. Section 4 – Privacy Rights

27. Privacy  Privacy is not directly mentioned in the Constitution; the courts have inferred privacy protection from other Constitutional protections  Remember that the Constitution only provides protection from government action  Other privacy laws like HIPPA do apply to the private sector Jeffrey Pittman - Legal Environment of Business 27