Chapter 5 - BUSINESS AND THE CONSTITUTION

Bill of Rights

First 10 amendments to the US Constitution providing individual freedom and protection of individual rights

legislative branch

a branch of government, such as the two houses of Congress-the House of Representatives and the Senate- that passes statutory law

nexus

a link between people, places, and things (such as a connection between the state and the business being taxed)

Maine's requirement that out-of-state tobacco sellers have a licensed Maine agent sign for moving tobacco into Maine was a. declared unconstitutional because it is an undue burden on interstate commerce. b. valid because it addressed a public health issue. c. valid because the regulation only applied within the state and did not prohibit the import of tobacco. d. constitutional if out-of-state dealers got their Maine licenses.

a.

Which of the following is required under procedural due process protections? a. An opportunity to be heard b. Compensation c. A lawsuit d. The right to a lawyer

a.

Which of the following types of speech is subject to the greatest amount of regulation? a. Commercial speech b. Individual speech c. Political speech d. Corporate political speech

a.

just compensation

compensation provided by the government to a property owner for taking the private property for public use or for use in a governmental project

the u.s constitution - bill of rights

first amendment: freedom of speech fourth amendment: privacy fifth amendment: due process and self-incrimination sixth amendment: jury trial *OTHER AMENDMENTS*: fourtheenth amendment: due process and equal protection

limits of economic regulations - commerce clause article I, section 8

*standards for fed. regulation of interstate commerce* -historical application: court gave narrow interpretation, court held new deal unconstitutional -roosevelt proposed COURT PACKING PLAN -court responded in NLRB v Laughlin Steel with the affectation doctrine

limits of economic regulations - commerce clause article I, section 8 (continued)

*standards for state regulation of interstate commerce* - if congress regulated=overriding concern about supremacy clause -if congress not acted=benefit/burden analysis -balance police power (state's interest in regulation) w/ burden on commerce -state law cannot give in-state businesses an advtge

role of judicial review

-Determines the Rights Afforded by the U.S. Constitution -Determines the Scope of Rights -Plays Unique Role in Checks and Balances (Determines the appropriateness of the actions of other branches)

state vs federal regulation- supremacy clause and preemption

-article VI determines which laws control in the event both state and fed. gov regulate the same thing - if a state law directly conflicts with federal law, the state law is invalid - whether there is preemption is controlled by answering several questions: *what does legislative history provide?**what is lvl of detail in the fed regulation?** what benefit flows from the federal regulation?* * what benefit flows from the federal regulation?** what is the nature of conflict - can two laws survive?*

Taxation of Business

-congress power to tax - article I, section 8: ability of congress to tax has been consistently upheld -state and local taxation of interstate commerce: interstate businesses are not exempt from state and local taxes just bc they are interstate businesses -requirements: tax cannot discriminate against interstate commerce, tax cannot be an undue burden on interstate commerce, must be "sufficient nexus" btwn state and business being taxed, must be apportioned fairly

Bill of Rights: First Amendment - corporate political speech

-corporate participation in campaigns is full first amendment protection

the u.s constitution -*creates a system of checks and balances*

-each branch has some power check over the others to keep any one from becoming too powerful

international law and constitutions

-general types found in US and England - code law found in Mexico and many EU countries -Islamic law: based on religion; governs all aspects of personal and business life

Bill of Rights: First Amendment - commercial speech protections

-gov. regulations of commercial speech is permitted -*three prong test*: is there a substantial gov. interest in restricting speech? does the restriction accomplish the gov. goal? is there any other way to accomplish the gov. objectives? -evolving area: company political speech

Bill of Rights: First Amendment

-provides some protection for commercial speech *commercial speech*: speech used to further economic interests of the speaker -advertising and commercial speech protection: can regulate advertising, substantial gov. interest must be furthered, is the regulation the least restrictive means of accomplishing the interest

ARTICLE I

Legislative Branch (Congress - House of Representatives and Senate)

ARTICLE II

Executive Branch (President-VICE PRESIDENT)

Preemption

In state and local laws conflict with federal laws federal laws displace the state and local laws

ARTICLE III

Judicial Branch (Supreme Court) -AUTHORIZES CONGRESS TO CREAT OTHER COURTS

Jock tax

Special taxes that apply to professional athletes' income earned in a particular city, county, or state.

corporate political speech

Speech in business ads or positions on candidates or referenda

commercial speech

Speech of business where different forms of communication, such as advertising, are used to further the economic interests of the speaker

Substantive law

System of laws that describes rights and responsibilities

Commerce clause

The part of the US Constitution that controls federal regulation of business; limits Congress to regulating interstate and international commerce

police power

The states' power to pass laws and promote the public welfare and protect public health and safety

U.S. Constitution

The supreme law of America that contains the entire structure of the federal government, its powers, powers of the states, and the rights of all citizens

per curium

Unsigned opinion that comes from the majority of the court

RTX Inc. is a business located in Spain. The company is involved in a lawsuit regarding mistreatment of its employees. The attorneys for the company have presented previous court decisions to the judge and requested the judge to rule accordingly. The judge in Spain is most likely to base the decision on: a. the written law, regardless of precedent. b. the precedent from other decisions, regardless of the law. c. Islamic law that is followed by approximately 78 countries. d. globally established standards for international commerce.

a. In countries such as France, Germany, and Spain, a system of law that is dependent on code law exists that attempts to be all-inclusive and covers each circumstance that could arise. They do not rely on precedent.

If Idaho enacted a law that lowered the minimum wage to $5 per hour because the businesses in the state could not afford to pay the higher wage and, at the same time, Maine raised its minimum wage to $9 per hour, both these laws would be in conflict with the federal minimum wage law. Which of the following would be the likely result? a. Maine could have a higher wage, but Idaho could not have a lower wage. b. Neither of the state laws would be allowed to set their own minimum wage. c. The state laws would be allowed if the citizens voted for them. d. Both state laws would be allowed to set their own minimum wage.

a. When possible, state and federal laws are allowed to coexist. In this case, Maine is paying more than the minimum so it would be allowed but Idaho law would be preempted by federal law.

Congress passed a law prohibiting any organization from spending money on advertisements against ballot propositions. The legislative history shows that Congress found that organizations spend far too much money on these advertisements and regular citizens' voices cannot be heard and disseminated against such powerful communication. Which of the following statements is true of this scenario? a. The statute is an unconstitutional violation of the First Amendment. b. The statute is constitutional so long as the factual findings are adequate. c. The statute is unconstitutional because it violates the right to equal protection. d. The statute is constitutional if it applies to corporations as well as nonprofits.

a. The statute is an unconstitutional violation of the First Amendment. b. The statute is constitutional so long as the factual findings are adequate. c. The statute is unconstitutional because it violates the right to equal protection. d. The statute is constitutional if it applies to corporations as well as nonprofits. a. The statute is an unconstitutional violation of the First Amendment. Businesses also have the right to corporate political speech.

Select all of the following that are factors in a judicial analysis of federal preemption of state laws. a. Level of federal regulation detail b. Extent of the conflict c. Legislative history d. Presidential veto

a. b. c.

Select all of the following activities by a business that could subject the business to taxation within a state. a. Selling goods to residents of that state b. Online advertising to residents in that state c. Location of a warehouse in that state d. Residents bringing the business's products back to the state

a. b. d.

Article _____ of the U.S. Constitution establishes the judicial branch of the federal government.

article III

the u.s constitution - other articles

articles iv: state interrelationships articles v: procedures for amendments articles vi: supremacy clause articles vii: state ratification of the constitution

Which of the following statements is true about the regulation of international commerce? a. States can regulate international commerce once it is within their borders. b. Only Congress has the authority to regulate international commerce. c. The states and Congress have joint authority to regulate international commerce. d. The executive branch has exclusive authority to regulate international commerce.

b.

Courtney has a lot of friends and she invites them to her apartment regularly for parties. Her landlord does not like this situation because her friends take up a lot of parking spots, and he has occasionally received complaints about the noise from other tenants. While Courtney is at work, her landlord changes the locks and tells her that she has violated the lease agreement and can no longer live there. Courtney demands due process and the right to be heard, but the landlord refuses. Which of the following statements is true of this scenario? a. Courtney has no rights if she was in violation of the rental agreement. b. Courtney has a right to procedural due process, even if she was in violation of the agreement. c. Courtney can claim a violation of substantive due process in this case. d. The landlord does not have to respond to Courtney's request and can unilaterally lock her out.

b. Courtney has the right to procedural due process. Even if she was in violation of the agreement, she has the right to be heard and to present defenses for the violations.

Janis Hoffman, a student, was involved in a tailgate brawl that took place in the parking lot of a state university just prior to one of the university's football games. Janis and others have charges pending with the county attorney. The university has filed charges against Janis and the others for violation of the state university's code of conduct that prohibits disorderly conduct on university property. She has been suspended for a semester. When she requested a hearing, she was told that the charges by the county were sufficient proof for her university misconduct charges. Which of the following statements is true of this scenario? a. The university officials are correct; the criminal charges will give Janis her due process. b. The university officials must still provide Janis with a hearing on the university charges. c. The university charges will not stand until Janis is not convicted. d. Janis can be discharged from the university without a hearing if she is convicted of the criminal charges.

b. The university officials must provide Janis with a hearing on the university charges.

The city of Mesa has developed a street improvement plan for adding lanes to one of the major north-south corridors. Because of the addition of the lanes, property owners along the corridor will lose frontage. However, none of the businesses will be required to move. Which of the following statements is true of this scenario? a. The city need not compensate the property owners because they will still remain intact. b. The city must compensate the property owners for the taking. c. The city cannot legally take land for this purpose. d. The city can attach a minimal affordable value to the frontage.

b. The government is required to reimburse property owners in the event of a taking.

The state of Montana, in response to "outsiders" controlling ranch properties, has passed a statute that requires 6 months of residency before an individual can purchase 40 or more acres of land. The statute is: a. a legitimate exercise of state powers. b. an unconstitutional burden on interstate commerce. c. constitutional because the statute applies only to intrastate lands. d. constitutional because all buyers must be residents.

b. This statute is an unconstitutional burden on interstate commerce.

A tax on apples is lower for apples produced within a state than for apples that are shipped in from neighboring states. Which of the following taxation standards does this interstate business fail to meet? a. The tax must be apportioned fairly. b. The tax cannot unduly burden interstate commerce. c. The tax cannot discriminate against interstate commerce. d. A sufficient nexus between the state and the business being taxed must be established.

c.

Congressional regulation of local commercial activity is now permitted: a. at any time for any purpose because of the U.S. Constitution. b. if there is a direct and immediate effect on interstate commerce. c. if there is a pinch of interstate economic commerce by a local rule or law. d. if Congress states there is an impact on interstate commerce by the problem it is addressing in regulation.

c.

In the context of corporate political speech, PAC is an acronym for: a. political activist convention. b. public action communication. c. political action committee. d. public accountability curb.

c.

What did the court decide about the product liability litigation in the Mutual Pharmaceutical case? a. State product defects laws and liability do not apply to pharmaceutical companies. b. Pharmaceutical companies are immune from product liability laws. c. Pharmaceutical companies cannot be held to a higher state standard than the one required by federal law. d. Pharmaceutical companies are subject to liability under state product defect and liability laws.

c.

The state of Arizona has just passed a mandatory seat belt law that will require everyone traveling in Arizona to put on their seat belt. Several travelers from other states that do not have such seat belt laws have brought suit challenging the constitutionality of the Arizona law as an undue burden on interstate commerce. What test will the court apply in reviewing the statute? a. The apportionment test b. The impairment test c. The balancing test d. The commerce test

c. The balancing test determines whether a state's interest in protecting health, safety, and welfare outweighs the federal government's interest in regulating interstate commerce.

A branch of government cannot pass laws but can prevent a law that has been passed from taking effect by interpreting the law as unconstitutional. Identify the branch of government described in this statement. a. The legislative branch b. The executive branch c. The judicial branch d. The financial branch

c. The judicial branch, or the court system, is tasked with interpreting the law and applying it to specific cases, thus giving them the ability to rule a law unconstitutional

intrastate commerce

commerce occurring within one state which cannot be regulated by the federal government

State statutes that prohibit convicted criminals from profiting from their stories a. are unconstitutional. b. are preempted by federal law. c. are a violation of the Commerce Clause. d. are constitutional if tailored to accomplish a public purpose.

d.

Which of the following terms is defined as the right of a governmental body to take title to property for a public use? a. Disparate treatment b. Regulatory taking c. Due process d. Eminent domain

d.

JBT Food Services owns a production facility in Georgia. The products are then transported to their distribution warehouse in Mississippi by truck on a route through Alabama. In which states can the business be taxed? a. Only in Georgia b. Only in Mississippi c. In all the states: Georgia, Mississippi, and Alabama d. Only in Georgia and Mississippi

d. The company can be taxed in both Georgia and Mississippi because there is a sufficient nexus between the state and the business.

LOR Inc. has a catalog merchandise return facility in Nevada. LOR employs phone operators for processing return requests, and merchandise is returned to the facility and stored there for later dispatch. The state of Nevada has proposed taxing LOR's full inventory based on the theory that it could have passed through the Nevada facility. LOR's main warehouse is in Chicago, Illinois. Which of the following statements is true of this scenario? a. Nevada has the power to tax LOR's full inventory because of its location in the state. b. Nevada has the power to tax LOR so long as all merchants in Nevada are taxed the same way. c. Nevada does not have the authority to tax LOR's inventory because its main warehouse is in Illinois. d. Nevada does not have the authority under the U.S. Constitution to tax LOR's full inventory.

d. Nevada does not have the power to tax LOR's full inventory because the full inventory is not stored in the state. This type of tax unduly burdens interstate commerce.

disparate treatment

distinctions made between groups and individuals that result in different treatments or rights

All commercial speeches are some form of advertising.

false

All countries follow a system of governance similar to that in the United States.

false

Preemption expands the ability of the states to regulate in those areas already regulated by federal law.

false

Substantive due process is synonymous to procedural due process.

false

The U.S. Constitution itself is a long and complex document.

false

The purpose of the court-packing plan by President Roosevelt was to limit the expansion of the Commerce Clause.

false

fourtheenth amendment

grants citizens the right to the equal protection of the law

eminent domain

it is the right of a governmental body to take ownership of a private property for public use -*requirements*: taking or regulating - just compensation -public purpose -new issue is a question of taking property for economic development or revitalization or just new projects

Supremacy Clause

part of the U.S. Constitution that requires that when state and local laws conflict with federal statutes, regulations, executive orders, or treaties, those federal provisions control over the state or local law

limits of economic regulations - congressional regulation of foreign commerce

power of congress to regulate foreign commerce applies regardless of where it begins and ends

procedural due process

required steps of notice and the opportunity to be heard before rights or properties are taken away from in individual or business *requirements* -applies to criminal, civil, and admin proceedings -right to notice of hearings -right to be heard

equal protection

the constitutional protection offered to the US citizens against disparate treatment -regulation must apply to all businesses -vague statutes and regulation violate substantive due process standards

substantive due process

the right to have laws that not deprive businesses or citizens of property or other rights without justification, clarity, or reason *requirements*: -state laws cannot substantively eliminate rights w/o some benefits (laws be logically related to a legitimate gov. purpose)

interstate commerce

trade between two or more states

Each branch of the federal government has the ability to limit the powers of the other branches.

true

The Fourteenth Amendment to the U.S. Constitution extended the Bill of Rights to apply to the states.

true

The U.S. Supreme Court has the responsibility of determining the extent and scope of the rights and protections afforded by the U.S. Constitution.

true

The balancing test is used to determine the constitutionality of state regulation of commerce.

true