Rafique Sheikh CWID: 893776708 MGMT 518: Legal and Ethical Environment of Business Chapter 4 The Constitution Outline

e 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 in Gibbons 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 them specific 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 rules for 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)

Business and Free Speech: Commercial speech is afforded a high level of First Amendment protection. 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 quite controversial. Unreasonable search and Seizure: Since companies have Fourth Amendment guarantees against 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: No person 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 or testimony 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 officials determine 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 against excessive 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 Amendment has been used to extend constitutional protections 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 here is no compelling governmental interest in the law, such as public health or safety (Page 111).