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Chapter 03 - Business and the Constitution
b.
c. What, then, is commercial speech? As noted in the text, the Supreme Court has
normally defined it as speech that proposes a commercial transaction. (Actually, the
Court’s usual formulation refers to commercial speech as “speech that does no more
than propose a commercial transaction.”) This means that ordinary commercial
advertisements for products, services, or businesses are commercial speech. The
Court’s commercial speech decisions may even be read as establishing that ordinary
commercial advertisements are the only examples of commercial speech.
Occasionally, however, the Court has dropped hints that the commercial speech
category may be somewhat broader. In the Kasky case, which appears as Problem #5,
the Supreme Court of California assigned the commercial speech designation to
certain expression by Nike that did not fit the conventional commercial speech mold.
The U.S. Supreme Court granted certiorari in the Kasky case but later dismissed the
writ as improvidently granted (meaning that the Supreme Court did not decide the
case.) The Supreme Court thus passed up an opportunity to clarify what is--and is not--commercial
speech. Because Kasky was previously a text case and remains a good vehicle for discussion, notes to
help guide the discussion appear below.
Kasky v. Nike, Inc., 45 P.3d 243 (Cal Sup. Ct. 2002): The Supreme Court of
California holds that Nike engaged in commercial speech when it made statements
about its overseas labor practices in press releases, press conferences, letters to
newspaper editors, letters to university presidents and athletic directors, and full-page
spots in newspapers. Therefore, if Nike’s statements were misleading (an issue the
court did not decide, given the posture of the case), the First Amendment would not
protect Nike against a California resident’s lawsuit alleging violations of the state’s
laws on misleading advertising and unfair competition. As noted earlier, the U.S.
Supreme Court granted certiorari in this case but later dismissed the writ as
improvidently granted (meaning that the Supreme Court did not decide the case).
Points for Discussion: Note that the speech at issue in this case does not fit neatly
into either the commercial category or the noncommercial category. Nike’s
statements were not in the form of a conventional advertisement for shoes or some
other Nike product. Although it is true that Nike’s statements pertained to social
issues of widespread public concern, there is little doubt that Nike wanted to respond
to potentially damaging charges in a way that would improve the firm’s image--a
consequence that could enhance sales of the firm’s products. Ask the class to identify
the three components of the test employed by the court in its attempt to classify
Nike’s speech as commercial or, instead, noncommercial (first, whether the speaker is
a party engaged in commerce; second, whether the speaker’s statements were made
to potential or actual buyers of the speaker’s goods or services; and third, whether the
content of the speaker’s message was commercial in character, such as through the
inclusion of product references). Note that when it developed this test, the court was
relying at least in part on the U.S. Supreme Court’s 1983 Bolger decision. You might
stimulate discussion by dividing the class into two groups, one of which will argue
Kasky’s positions regarding the three-part test identified above, and the other of
which will argue Nike’s contrasting positions. Then engage in discussion of the
students’ thoughts on whether the Supreme Court of California correctly decided this
case. Note that in labeling Nike’s speech commercial, the California court was going
beyond the conventional commercial speech definition (that such speech “does no
more than propose a commercial transaction”). Although the U.S. Supreme Court
has typically employed that definition, it has occasionally hinted that the commercial
speech classification may be somewhat broader. By not deciding Kasky (see above
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Chapter 03 - Business and the Constitution
comments about the Court's dismissal of a writ of certiorari it had initially granted),
the Supreme Court passed up an opportunity to clarify the definition of commercial
speech and to make clear whether the conventional, narrower definition sets forth the
full extent of the commercial speech classification.
d. Because the Supreme Court has concluded that nonmisleading commercial speech
about a lawful activity merits some (though not “full”) First Amendment protection,
the court has devised a test that amounts to intermediate scrutiny. This test applies
when the government seeks to restrict the content of commercial speech that neither
misleads nor pertains to an unlawful activity. Walk the students through the elements
of the test, as outlined at pp. 79-80 and in the Concept Review at p. 82. Under the
test applied in commercial speech cases, the government is required to show a substantial underlying
interest, which is easier to demonstrate than the compelling interest that the full strict scrutiny test
demands. In addition, according to the test applied in commercial speech cases, the government need not
show that the speech restriction at issue is absolutely necessary to fulfillment of the government’s purpose
(i.e., it need not show what is required under the full strict scrutiny test). Instead, the government must
demonstrate that its commercial speech restriction directly advances the substantial underlying interest in
a way that is no more extensive than necessary. Supreme Court decisions have established that for
purposes of the test applied in commercial speech cases, “no more extensive than necessary” does not
mean what it might seem to mean. In the commercial speech context, “no more extensive than necessary”
means only that there must be a “reasonable fit” (not necessarily a “perfect fit”) between the speech
restriction and the underlying interest. The test applied in commercial speech cases thus is meant to be
easier for the government to pass than is the test in noncommercial speech cases--a logical goal if
commercial speech is supposed to receive a lesser degree of First Amendment protection than
noncommercial speech receives. The 44 Liquormart case furnishes an example of how the elements of the
test are applied. (See the later discussion of that case.)
e. As noted in the text, the Supreme Court has adhered to the same test in commercial
speech cases for more than three decades but has varied, over the years, in the
intensity with which it has applied the test’s elements. The Court has gone through
periods in which it has rigorously applied the elements--making the test hard for the
government to pass and thus effectively narrowing the gap between the levels of First
Amendment protection extended, respectively, to commercial speech and
noncommercial speech. At other times, the Court has applied the elements more
loosely--making the test easier for the government to pass and thus effectively
widening the gap between the respective protection levels. We now appear to be in a
period of rigorous application of the test’s elements. Some members of the Court
have expressed interest in modifying the longstanding test and/or in obscuring--or
even eliminating--the commercial speech vs. noncommercial speech distinction. No
such doctrinal changes had officially occurred as of the time the 16th edition of the
text went to press in 2014.
In 2011, however, the Court decided Sorrell v. IMS Health, Inc., 131 S. Ct. 2653.
There, the Court struck down a Vermont law that imposed restrictions on the sale,
disclosure, and use of prescriber-identifying information gathered by pharmacies.
The law barred pharmacies from selling the information and from using it for
marketing purposes unless the relevant prescribing physicians consented. It also
prohibited pharmaceutical manufacturers from using the information for marketing
purposes. Sale of the information for certain other purposes such as healthcare
research was permitted, however. Even though the case appeared to involve
commercial speech restrictions, the Court devoted much of its opinion to discussion
of First Amendment precedents dealing with noncommercial speech. In particular,
the Court stressed that the Vermont law discriminated among speakers and
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Chapter 03 - Business and the Constitution
discriminated in regard to content of affected speech. Accordingly, the Court
reasoned, “heightened scrutiny” was necessary. It concluded that the statute failed
the test. Eventually, the Court devoted fairly abbreviated attention to the four-part
test for restrictions on commercial speech—a test less stern than the heightened
scrutiny the Court applied elsewhere in the majority opinion. But the Vermont law
failed even the less stern test, as the Court concluded that there was not a reasonable
fit between the law’s specific restrictions and its underlying purposes of protecting
medical privacy, improving public health, and reducing healthcare costs. The
dissenting justices would not have applied any degree of scrutiny more severe than
the four-part test, and would even have favored a lesser degree of scrutiny than that
test afforded on the theory that the Vermont law was an economic regulation with
only an incidental impact on speech. The dissenters expressed concern that the
analysis employed by the majority could imperil certain incidental speech-related
aspects of complex regulatory schemes such as the laws and regulations pertaining to
the Food & Drug Administration. It is too early to determine the full impact of IMS
Health, but it is probably fair to say that the decision sends another signal that formal
doctrinal change may be on the horizon and that the differences between the
respective legal treatments in commercial speech and noncommercial speech cases
may become harder to discern.
f. 44 Liquormart, Inc. v. Rhode Island (p. 80): The Supreme Court strikes down, as an
unconstitutional restriction on commercial speech, a Rhode Island law that prohibited
sellers of alcoholic beverages from advertising the prices they would charge for those
beverages.
Points for Discussion: Note that the opinion appearing in edited form is actually a
plurality opinion. The justices were unanimous in holding that the Rhode Island law
violated the First Amendment, but they disagreed on the particulars of the reasons
why and on the specific analysis that should be employed. Some of the justices
concluded that the four-part test should continue to be applied, others proposed a new
analysis that would furnish even more protection that the four-part test does for
certain types of restrictions, and still others expressed a preference for effectively
treating commercial and noncommercial speech restrictions under the same analysis.
Thus, the familiar four-part test furnished the easiest possible test for Rhode Island to
pass—and it failed that test. Ask the students about how the justices subscribing to
the plurality opinion applied each element of the four-part test. Ask why Rhode
Island lost even though it could point to a substantial government interest in
promoting temperance and thereby advancing public health. (Rhode Island flunked
the last two elements of the test because the supposed connection between a ban on
price advertisements and promoting temperance was very attenuated. Plus, there
were various other things Rhode Island could have done to reduce alcohol
consumption without restricting nearly so much—or any—speech. See the examples
noted in the edited version of the plurality opinion.)
g. Consider discussing some of the following Supreme Court decisions involving
applications of the above-described test to government restrictions on commercial
speech:
1) Central Hudson Gas & Electric Corp. v. Public Service Commission (1980)--
New York agency regulation barring utility companies from advertising to
promote electricity use struck down as restricting far more speech than
reasonably necessary to further government purpose of increasing energy
conservation. (This was the case in which the Court developed the four-part
test.)
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Chapter 03 - Business and the Constitution
2) Bolger v. Youngs Drug Products Co. (1983)--U.S. postal service regulation
banning unsolicited mailing of promotional materials regarding
contraceptives struck down as not directly advancing government interest in
aiding parents in deciding when and how to discuss contraception with their
children, and as prohibiting far more speech than reasonably necessary to
further that interest.
3) Posadas de Puerto Rico Associates v. Tourism Co. (1986)--Puerto Rico law
prohibiting gambling casinos from using advertisements targeted to residents
and citizens of Puerto Rico upheld as valid means of furthering government
interest in protecting residents and citizens from harmful effects of gambling.
4) Board of Trustees v. Fox (1989)--In case in which Court remands with
clarification of meaning of last element of test, Court signals that it probably
would uphold state university regulation prohibiting Tupperware-type parties
in students’ dorm rooms, where university asserted interests in preserving
sound educational environment and in protecting students against being
deceived or manipulated by aggressive salespersons.
5) City of Cincinnati v. Discovery Network (1993)--Court strikes down
Cincinnati ordinance that (a) required removal from city sidewalks of 60
newsracks devoted to publications consisting entirely of commercial
advertising, and (b) allowed 1500 or more newsracks devoted to regular
newspapers to remain on sidewalks. Court holds that ordinance did not
directly advance underlying government interest in promoting aesthetics and
public safety through removal of newsracks from public property.
6) Rubin v. Coors Brewing Co. (1995)--See chapter’s opening
vignette/introductory problem and this manual’s earlier answers to questions
raised in vignette/problem.
7) 44 Liquormart, Inc. v. Rhode Island (1996)--See above discussion.
8) Greater New Orleans Broadcasting Association v. United States (1999)--
Court strikes down federal statute prohibiting broadcaster from airing
advertisements for private casino gambling, a lawful activity in state where
broadcaster was located. Court holds that because Native American tribe-
operated casinos could freely be advertised under federal law, ban on
advertisements for private casino gambling did not directly advance
government interests in reducing social costs associated with casino
gambling and in accommodating interests of states that do not allow casino
gambling. Advertising ban also restricted significantly more speech than
necessary.
9) Lorillard v. Reilly (2001)--Massachusetts restrictions on advertising of
smokeless tobacco products struck down as restricting more speech than
reasonably necessary to further government interest in protecting minors
against harm. (In same case, Massachusetts restrictions on cigarette
advertising struck down on federal preemption grounds, with Court not
reaching First Amendment issue).
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Chapter 03 - Business and the Constitution
10) Thompson v. Western States Medical Center (2002)--Supreme Court strikes
down federal law exempting compounded drugs from FDA’s approval
process only if providers thereof did not advertise the compounding. Court
held that the advertising restriction violated the First Amendment by
restricting more speech than was reasonably necessary to further the
government’s substantial interests in (1) preserving the integrity and
effectiveness of the FDA’s drug approval process and the public health
benefits that process affords, and (2) preserving the availability of
compounded drugs for patients who need them.
11) Sorrell v. IMS Health, Inc. (2011)--See earlier discussion.
3. Due Process
a. Describe procedural due process in general terms, stressing that: 1) cases involving
life aside, the claimant normally must have a liberty interest or property interest in
the first place; 2) the claimant must have been deprived of that interest; 3) where such
a deprivation occurs, procedural due process applies; and 4) the core idea of
procedural due process is the availability of notice and some kind of a fair trial or
hearing. You might also note that procedural due process is a flexible concept and
that its standards of fairness vary depending on the institutional context in which they
are applied. For instance, the Supreme Court held in one case that a public employee
who was suspended without pay was not entitled to notice and a hearing before the
suspension, but probably was entitled to a post-suspension hearing.
b. The range of liberty interests protected by the Fifth and Fourteenth Amendments is
very broad; sometimes, it even includes one's interest in his or her reputation. Even
though due process property interests are usually defined by state law, the range of
interests protected extends beyond commonplace definitions of property. For an
additional example of procedural due process issues, see Problem #1.
c. The keys to most forms of substantive due process are: 1) including some preferred
freedom or freedoms within the liberty and property protected by due process, and
(more importantly) 2) using some kind of means-ends review or other test of
substantive fairness to challenge deprivations of that freedom.
d. The old "economic" form of substantive due process gave enhanced protection to
freedom of contract and other economic liberties such as the right to pursue any
lawful trade or profession. This sometimes led the courts to overturn social
legislation that formally denied freedom of contract. The statement about Lochner in
the text is an example. Note, though, that such legislation often survived the tests of
reasonableness the courts imposed. In addition, point out that the old economic
substantive due process sometimes was used to defeat entrenched business interests.
The main examples are the cases in which the doctrine was used to attack restrictions
on entry to a line of business.
e. Of course, substantive due process lives on in noneconomic areas of life. Note the
fundamental rights mentioned at pp. 84-86. Stress the strictness of the scrutiny given
to laws that restrict fundamental rights. However, when a substantive due process
attack is made on a regulation that the court deems merely economic in nature, the
lenient rational basis test (referred to below) is normally applied--meaning that the
regulation will usually be upheld.
4. Equal Protection
a. Make sure that students understand why the rational basis test rarely imposes much
of a check on economic regulation. The Racing Association case is an example.
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Chapter 03 - Business and the Constitution
Further example: Problem #8.
b. Fitzgerald v. Racing Association of Central Iowa: The U.S. Supreme Court holds
that Iowa’s taxing scheme, which treated riverboats with slot machines differently
from racetracks with slot machines, survives the lenient rational basis test and
therefore does not violate the Equal Protection Clause.
Points for Discussion: Ask why the rational basis test applies here. (Because the
taxation statutes at issue are economic regulations.) Ask why a more rigorous test
doesn’t apply here. (No fundamental rights are at stake, and no suspect classes are in
danger of being adversely affected.) Ask what the rational basis test requires. (That
the government action—here, the different tax treatment—is rationally related to a
legitimate government purpose.) Track Justice Breyer’s discussion of what a
reasonable legislature might have had in mind (including, perhaps, multiple
purposes) when it enacted the differing taxation provisions. Emphasize how easy it
normally is for the government to pass the rational basis test when a court concludes
that it is the test to be used in resolving an equal protection challenge. Finally, note
that if a showing of a law’s different treatment of different groups sufficed to
establish a violation of the Equal Protection Clause, huge numbers of laws would be
unconstitutional. Laws almost invariably make classifications.
c. When a classification involving government action discriminates with regard to the
exercise of a fundamental right, the rational basis test no longer applies. Instead, the
classification is subjected to much more rigorous scrutiny. Why is the list of equal
protection "fundamental rights" so limited? Why, for example, would a statute
restricting the free speech rights of blue-eyed (but not green-eyed) people not be
included? Isn't free speech more "fundamental" than, say, the right to travel? The
answer is that such cases are examined under the relevant "fundamental rights"
provision of the Constitution--in this case, the First Amendment.
d. Equal protection issues regarding the fundamental right to vote served as the major
basis of the Supreme Court’s decision in Bush v. Gore, which ended the disputes
arising from the 2000 presidential election. At pp. 85-86, the text summarizes the
majority’s reasoning and the dissenters’ criticisms thereof in this controversial
decision. More recently, the Supreme Court decided another case in which the
fundamental right to vote was alleged to have been restricted in an unconstitutional
manner. In Crawford v. Marion County Election Board, a 2008 decision, the Court
held that Indiana did not violate the Equal Protection Clause in enacting a law
requiring voters to display a government-issue photo I.D. before they would be
allowed to vote. Crawford receives discussion in the text at p. 86. Note, however,
that as pointed out in the text, courts have sometimes struck down voter-ID laws if
they impose more onerous identification requirements than the measure at issue in
Crawford.
e. When a classification involving government action discriminates with regard to a
suspect class, scrutiny considerably more rigorous than rational basis review is
applied. The Supreme Court has identified the following suspect classes: race and
national origin; alienage; sex; and illegitimacy.
f. Race-based classifications receive full strict scrutiny. Typically, classifications held
to violate equal protection have disadvantaged minority races. The Supreme Court
has held, however, that when a classification discriminates against whites, the same
test--full strict scrutiny--applies. Even so, government-imposed affirmative action
plans have at times been permitted. With controversy brewing--and lower courts
disagreeing--over affirmative action-oriented student admissions policies at state
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Chapter 03 - Business and the Constitution
universities, the U.S. Supreme Court decided two 2003 cases that shed light on
whether state universities may consider race in admission decisions without violating
the Equal Protection Clause. The companion cases, Gratz v. Bollinger and Grutter v.
Bollinger, are discussed in the text at pp. 86-87. Go over the basics of Gratz and
Grutter, which are discussed further in the immediately following subsections.
g. In Gratz, the Supreme Court held that the University of Michigan’s undergraduate
admissions policy violated the Equal Protection Clause by taking race into account in
a way that was not narrowly tailored to achieve the compelling government interest
in assembling a diverse student body. Near the outset of his Gratz majority opinion,
Chief Justice Rehnquist acknowledged the holding in Grutter (the companion case)
that a state university’s goal of achieving a diverse student body is a compelling
government purpose. (That holding in Grutter was significant because a majority of
the Court had not previously so held.) Even so, Michigan lost the case because the
full strict scrutiny test--applicable because the case involved supposed discrimination
on the basis of race--requires that the government action be necessary to the
fulfillment of a compelling government purpose. Michigan’s undergraduate
admissions policy flunked the “necessary” portion of the applicable test by not being
narrowly tailored to the interest at hand. According to the Gratz majority, the
undergraduate admissions policy was not narrowly tailored because the set amount of
extra points automatically assigned to minority applicants had the effect of
guaranteeing admission to any minority applicant who met certain other minimum
criteria, whereas white applicants with similar qualifications had no chance of
admission. The system of automatically assigning a certain number of points to
minority applicants did not allow an individualized assessment of applicants and the
varying characteristics, backgrounds, talents, and skills that different applicants could
bring to a school’s student body. Even though Gratz was a win for those who oppose
consideration of race in the admissions process at state universities, it was not the
total win hoped for by those holding such a viewpoint because the decision did not
completely foreclose the consideration of race in the admissions process. It simply
held that Michigan’s undergraduate admissions policy went about it the wrong way.
Now turn to Grutter, which was either a huge disappointment or a very gratifying
decision, depending upon one’s views regarding affirmative action policies.
h. In Grutter, the Supreme Court held that the University of Michigan’s law school
admissions policy did not violate the Equal Protection Clause because the policy was
narrowly tailored to achieve the compelling government interest in assembling a
diverse student body. Grutter officially resolved an issue that had remained open for
a quarter-century: whether a state university’s goal of achieving diversity in its
student body is a compelling government purpose. Although suggestions to that
effect had been provided, a majority of the Court had never so held. In Grutter, a
five-justice majority (Justices O’Connor, Stevens, Souter, Ginsburg, and Breyer) did
so hold. This was the ruling acknowledged by Chief Justice Rehnquist at the outset
of his Gratz majority opinion. Gratz was also a 5-4 decision, with the Chief Justice
and Justices O’Connor, Scalia, Kennedy, and Thomas in the majority. Note the key
role of Justice O’Connor as the only justice to be in the majority in both decisions. In
providing the fifth vote for striking down the undergraduate admissions policy in
Gratz, she joined a majority that included the four justices who dissented in Grutter.
In providing the fifth vote for the position that achieving a diverse student body is a
compelling purpose and in providing the fifth vote for upholding the law school
admissions policy in Grutter, Justice O’Connor joined a majority that included the
four justices who dissented in Gratz. She was thus the key swing vote. Her 2005
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Chapter 03 - Business and the Constitution
retirement from the Court created potential for change in the future direction of
affirmative action jurisprudence. (See Problem #6 and the decision that furnished the
basis for it.). According to the Grutter majority, the law school’s admissions policy
differed from the undergraduate admissions policy examined in Gratz. The law
school’s policy was narrowly tailored to the compelling government purpose in
achieving a diverse student body because the policy didn’t involve the automatic
assignment of a set number of points to minority applicants. Instead, the law school’s
policy required an individualized assessment in which an applicant’s race was a
permissible “plus” factor but so were other characteristics, talents, and skills that
could help lead to a diverse student body.
i. Note that in the 2013 Fisher decision (discussed at p. 87), the Supreme Court left the
Grutter approach in place even though some commentators had expected the Court to
limit Grutter or to change directions. Note, too, the 2014 Schuette decision (also
discussed at p. 87), in which the Court held that the voters of a state could
constitutionally bar consideration of race-conscious affirmative action in the context
of public education, public employment, and government contracting.
j. Note that alienage discrimination receives careful scrutiny, but it is doubtful whether
this scrutiny is as rigorous as what is given to instances of race discrimination. When
discussing alienage discrimination, be sure to note the broad "political function"
exception. When that exception applies, instances of alienage discrimination receive
only rational basis review.
k. You might note that prior to the 1970s, there were few equal protection cases
involving sex discrimination, and that in such cases the challenged law was almost
always upheld. This situation changed rapidly in the early 1970s. By the end of the
decade, the Supreme Court had agreed upon the intermediate scrutiny test described
in the text. As applied to gender discrimination disadvantaging women, this seems to
be a tough test. The Court has also stated that the same test applies to discrimination
against men. Example: Problem #9. However, this has not prevented the Court from
upholding the two measures mentioned in the text and the statute challenged in the
Nguyen case, which appears as Problem #3.
l. Note the Concept Review at p.88. This feature summarizes the levels of scrutiny
applicable to different equal protection cases, the corresponding tests, and the
circumstances under which the different tests apply.
m. The Ethics in Action box at p. 86 serves as a reminder of a current legal reality: that
sexual orientation is not considered a suspect class for equal protection purposes.
n. Figure 3 deals with a high-profile question: whether it is constitutional for a state to
bar same-sex couples form marrying. Although the Supreme Court had not
specifically ruled on that question as of the time this manual went to press in 2015,
Figure 3 deals with two earlier Supreme Court decisions that lower courts regarded as
relevant as they decided cases directly presenting the same-sex marriage issue. As of
early 2015, approximately 20 federal courts (counting district courts and circuit
courts of appeal) had ruled that states could not constitutionally bar same-sex couples
from marrying). Of the federal courts of appeal that had ruled on the matter, only one
circuit had upheld such a ban. With a circuit split in existence, the Supreme Court
agreed to decide such a case, with a ruling expected in June 2015.
E. Independent Checks Applying only to the States
1. The Contract Clause
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Chapter 03 - Business and the Constitution
a. Emphasize that here, we are concerned with government action that has a retroactive
effect on already-existing contracts.
b. Note that the Contract Clause applies to laws impairing governmental contracts,
grants, and charters, as well as laws impairing private contracts.
c. Note the clause's importance in the 19th century, its decline into insignificance by the
mid-20th century, and its late-1970s revival. In the process, note that the new test for
the impairment of government contracts is stringent. Can this be justified by the
argument that a government's impairment of its own obligations is more serious than
the impairment of private obligations? Finally, note that with one possible exception
in 1978, the Court has continued its deference toward police power measures that
impair private contracts. The exception is Allied Structural Steel Co. v. Spannaus
(1978). Exxon Corporation v. Eagerton (1983), which is discussed in the text, serves
as an example of the usual deference.
2. Burden on, or Discrimination Against, Interstate Commerce
a. Note that this is the other aspect of the Commerce Clause previewed earlier. It
reflects the apparent original purpose of the clause: blocking the many forms of state
protectionism that seemingly were common after the Revolution. However, it does
not follow from the clause's language. Stress that this constitutional restriction
operates regardless of whether there is relevant federal regulation.
b. Note that because of the range of situations in which burden-on-commerce problems
can arise, the "tests" in this area are rather diffuse and have varied over time. Review
the cases noted in the text. Additional example: Problem #4.
3. Federal Preemption
a. Make sure students understand that preemption is based on the supremacy clause, and
that some kind of federal regulation (usually statutory) is needed to trigger a
preemption claim.
b. Some federal statutes include express preemption provision. Especially interesting
problems occur when state law is challenged on preemption grounds even though it
does not expressly conflict with the relevant federal law. Emphasize that such
situations often pose questions of statutory interpretation and that each case is
decided on the basis of its own facts. Note that the last of the preemption reasons
discussed in the text (whether the state law obstructs fulfillment of the ends
underlying the federal law) is similar to the "purpose" technique of statutory
construction discussed in Chapter 1.
c. Work through the preemption questions presented in Arizona v. United States, a 2012
Supreme Court decision discussed at p. 91. Note why one key provision of the
Arizona law at issue was not preempted, but that other provisions were.
d. For a further example of preemption analysis, see Problem #13.
F. The Takings Clause
1. The chapter's treatment of the potentially broad Takings Clause is fairly general. For the
clause's specific application to land use regulation, see Chapter 24.
2. Begin by quoting the clause and noting two things about it: 1) that takings of property are
unconstitutional unless just compensation is provided; and 2) that even if such
compensation is provided, a taking will be unconstitutional if it is not for a public use.
Stress that the clause does not block the government from taking private property;
instead, it requires just compensation when this occurs.
3. Although little has been written on the subject, it seems that the range of "property"
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Chapter 03 - Business and the Constitution
interests covered by the Takings Clause is very broad. The text's listing is probably not
exhaustive. Stress that the clause’s applicability is not restricted to takings of land and
interests in real property.
4. The most obvious sort of "taking" covered by the clause is government's use of formal
condemnation procedures. Potentially more interesting problems arise, however, when
government regulation goes so far that it is challenged as a taking. Note that the courts'
decisions on this question tend to be ad hoc affairs, and that in dealing with this problem
courts consider a wide range of factors on a discretionary basis. Lucas v. South Carolina
Coastal Council, a 1992 Supreme Court decision discussed in the text, is a "regulatory
taking" case in which the plaintiff claimed with some plausibility that he had been denied
all economically viable uses of his land. In such cases, there normally is a taking. Note,
however, that there may sometimes be a taking even when the plaintiff could still make
some economically beneficial use. Additional example: Problem #10.
5. The Supreme Court now applies a very lenient form of rational basis review when
considering whether a taking is for a "public use."
a. Discuss the much-publicized 2005 Supreme Court decision in Kelo, which is
summarized in Figure 4 (pp. 92-93). Your students may have heard of this case. Ask
them what they think of the decision. Note the assessment offered at the end of
Figure 4 (that Kelo broke little, if any, new ground, but that its seemingly egregious
facts led to heavy media coverage and a public outcry). Note, too, that as Justice
Stevens pointed out, state legislatures and Congress are free to enact laws limiting the
ability of the government to use eminent domain for the type of public use present in
Kelo.
b. The text provides little detail on the "just compensation" requirement. Discussion at
a general level should suffice.
IV. RECOMMENDED REFERENCES:
A. L. TRIBE, AMERICAN CONSTITUTIONAL LAW (treatise).
B. J. NOWAK & R. ROTUNDA, CONSTITUTIONAL LAW (hornbook).
C. Any good constitutional law casebook, such as: G. GUNTHER & K SULLIVAN,
CONSTITUTIONAL LAW: CASES AND MATERIALS.
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