7/29/2019 Meiners Chapter 4 Outline

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Rafique Sheikh

CWID: 893776708

MGMT 518: Legal and Ethical Environment of Business

Chapter 4 The Constitution Outline

The Commerce Clause and the Necessary and Proper Clause: Clause 18 of Article I, Section

8, gives Congress almost unlimited discretion to regulate and tax business (Page 87).

Federal Supremacy: Another key point made in the McCulloch decision is that when the

federal government has the power to act under the Constitution, its actions are supreme, that is,they take precedence over the actions of other governments per the supremacy clause (Page 88).

Defining Commerce among the Several States: In 1824, Chief Justice Marshall held inGibbons v. Ogden (22 U.S. 1) that commerce among the states means interstate commerce, that

is, business that concerns more than ones state.

Power over Interstate Commerce is Extensive. Congress can regulate almost any form of

commerce, even if the impact on interstate commerce is tiny. Relevant cases: Wickard v. Filburn(Growing extra Wheat) and Katzenbach v. McClung (nondiscrimination requirements of the

1994 Civil Rights Act).

Federal and State Regulatory Relations: States may impose regulations that do not conflict

with federal regulations or may impose regulations in areas in which Congress gives themspecific regulatory authority, but states may not impose burdens on interstate commerce (Pages

88 90).

Numerous state regulatory and taxing schemes have been limited because they violate the

commerce Clause of the Constitution. Relevant cases: Chemical Waste v, Hunt (Alabama),

Rowe v. New Hampshire, Wyoming V. Oklahoma (Page 91)

Imitation is not allowed: The states may not copy federal regulations if such imitation inhibits

interstate commerce.

The Taxing Power: Congress is given the power to lay and collect Taxes, Duties, Imposts, and

Excises by Article I, Section 8, Clause 1, of the Constitution.

Federal Taxation: Since the 16th Amendment gave the federal government the power to impose

income taxes, the Supreme Court has rarely questioned the constitutionality of federal taxing

schemes (Page 93)

State Taxation: The courts have been willing to consider challenges to state taxes because the

Constitution protects interstate commerce from discriminatory state taxes.

Apportioning State Tax Burden: Each state with which a company has a nexus must have rulesfor dividing the companys income into an in-state and an out-of-state portion, a process known

as apportionment.

State Taxes May Not Impede Foreign Trade: Although Congress has nearly unlimited taxing

power, the states may not interfere with interstate commerce through their taxing schemes.

Further, since the Constitution gives Congress the power to regulate international trade as well,the states may not interfere with international commerce through taxation (Pages 95 96)

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Business and Free Speech: Commercial speech is afforded a high level of First Amendmentprotection. Businesses have the right to participate in political discussion whether or not it

concerns an issue that directly affects business.

Restrictions on commercial speech are subject to constitutional guidelines concerning strong

public necessity. Truthful speech about lawful activities may be regulated only if the regulation

would advance a substantial governmental interest and the regulation is no more extensive than

is necessary (pages 96 102.

Right to Bear Arms: A well regulated Militia, being necessary to the security of a free State,

the right of the people to keep and bear Arms, shall not be infringed. those 27 words are quitecontroversial.

Unreasonable search and Seizure: Since companies have Fourth Amendment guaranteesagainst unreasonable searches and seizures, law enforcement authorities can be required top

obtain warrants for most inspections. The main exception is in the case of closely regulated

industries. (Pages 104 105).

Self-Incrimination: The Fifth Amendment protects individuals against self-incrimination: Noperson shall be ..,. compelled in any criminal case to be a witness against himself. This

protection appliers to persons, not to corporations. Companies may not withhold documents ortestimony requested by prosecutors on the grounds that the evidence might incriminate the

company (Page 105).

Just Compensation: The Fifth Amendment states, nor shall property be taken for public

use withot just compensation. Termed the just compensation or takings clause, it requires

governments to pay for property a govt., requires someone to sell because public officialsdetermine that the property should be used for some public purpose, such as for the construction

of a highway, school or military base (Page 106).

When government agencies prevent property from being used in a legitimate manner because of

long, unjustified procedural delays, or if agencies impose rules that substantially change the

property value, compensation may be sought under the just compensation clause of the Fifth

Amendment(Pages 106 107).

Excessive Fines: The Supreme Court has held that large damage awards (including punitive

damages) by juries against businesses do not violate the Eighth Amendment protection againstexcessive fines, nor do they violate Fourteenth Amendment dues process clause protection of fair

play and substantial justice (Pages 108 109).

The due process clause of the 14th

Amendmenthas been used to extend constitutionalprotections to matters subject to state regulation. Economic regulation must be shown to be

related to a legitimate govt. Interest, such as public safety. This clause is also used to ensure

fairness in law enforcement procedures (Page 110).

The equal protection clause of the 14th amendment is used to protect individuals from suffering a

loss of freedom from state laws that discriminate against a particular class of persons when hereis no compelling governmental interest in the law, such as public health or safety (Page 111).