Chapter 06 – The Constitution
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Chapter 6
The Constitution
Learning Objectives
This chapter introduces the basic concepts of the Constitution and how they create authority for
the framework of the federal government. Emphasis is placed on the role of the Contracts Clause
in business. It then introduces the student to the major amendments to the Constitution. Finally,
the chapter analyzes the basic protections created in the First, Second, and Fourteenth
Amendments.
References
The Declaration of Independence and the Constitution of the United States. Georgetown
University Press (2003).
Aman, A.C., Aman and Mayton’s Handbook on Administrative Law, 2nd Edition. West
Publishing (2001).
Barendt, E.M., Freedom of Speech. Oxford University Press (2005).
Labunski, R.E., James Madison and the Struggle for the Bill of Rights. Oxford University
Press (2006).
Levinson, N., Outspoken: Free Speech Stories. University of California Press (2003).
Levy, L.L., Origins of the Bill of Rights. Yale University Press (1999).
Meyer, H.N., The Amendment that Refused to Die: Equality and Justice Deferred: The
Schuck, P., Schuck’s Foundation of Administrative Law, 2nd Edition. West Publishing
(2003).
Stillman, R.J., The American Bureaucracy: The Core of Modern Government.
Wadsworth/Thompson Learning (2004).
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Stoner, J.R., Common-Law Liberty: Rethinking American Constitutionalism. University
Press of Kansas (2003).
listing of federal administrative agencies.
Teaching Outline
I. Basic Concepts
A. Separation of Powers (LO 6-1)
Emphasize:
Emphasize:
That Article VI makes it clear that the Constitution is supreme under all laws and that
federal law is supreme over a state law or local ordinance.
The reasons behind federal supremacy.
That the Supremacy Clause is not a source of federal rights. Rather it secures federal
Sidebar 6.1—“Examples of State Laws Preempted by Federal Law.”
The example regarding Watters v. Wachovia Bank NA, 127 S.Ct. 1559 (2007).
Cases for Discussion:
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1. Geier v. American Honda Motor Company, Inc., 120 S.Ct. 1913 (2000).
Geier sued American Honda Motor Company, Inc. after she sustained injuries when
her 1987 Honda collided with a tree. Geier’s car had shoulder and lap belts but no
airbags. Geier claims that Honda should have equipped the car with airbags and is
liable because it did not. Honda relies on federal statutes and regulations to absolve it
from liability since the federal authorities did not require, but permitted, the
2. Barnett Bank of Marion County, N.A. v. Nelson, 116 S.Ct. 1103 (1996).
Barnett Bank bought a Florida licensed insurance agency. The State of Florida
Insurance Commissioner ordered Barnett Bank to stop selling insurance. Florida law
prohibits any bank which is affiliated with other banks from selling insurance.
Barnett Bank sought a declaratory judgment that the federal law preempts Florida’s
law. A 1916 federal law allows banks in small towns (with less than 5,000 in
population) to sell insurance.
Issue: Does the federal law preempt the Florida law?
3. New York Blue Cross Plans v. Travelers Inc., 115 S.Ct. 1671 (1995).
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this action contending that the Employee Retirement Income Security Act of 1974
(ERISA) preempted the area of health insurance when such coverage is purchased by
an employee health-care plan governed by ERISA.
Issue: Are the health plans subject to the New York law sufficiently related to
employee benefit plans to fall within ERISA’s preemption?
eliminate all of these areas of regulation.
4. Garcia v. San Antonio Metropolitan Transit Authority, 105 S.Ct. 1005 (1985).
The U.S. Labor Department sought to enforce minimum wage and overtime pay
standards against the mass transit system in San Antonio, Texas. The case sought a
reversal of National League of Cities.
Issue: Does the federal law apply to these employees of a local transit system?
provisions of federal law pursuant to congressional power to regulate interstate
commerce.
5. Capital Cities Cable, Inc. v. Crisp, 104 S.Ct. 2694 (1984).
The FCC regulates cable television. Oklahoma prohibited the broadcasting of
advertisements for alcoholic beverages.
Issue: Does the FCC preempt state regulation of TV advertising?
thereby left no room for states to supplement federal law, and, finally, when
compliance with both state and federal law is impossible or when state law stands as
an obstacle to accomplishment and execution of full purposes and objectives of
Congress.
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6. Perez v. Campbell, 91 S.Ct. 1704 (1971).
Arizona had a statute which provided for the suspension of licenses of drivers who
were unable to satisfy judgments even if bankrupt. P had filed a voluntary petition in
bankruptcy and had duly scheduled a judgment debt arising out of a traffic accident.
The court in bankruptcy discharged P. P filed a complaint seeking to retain a driver’s
license.
Issue: Is the Arizona law in conflict with the federal bankruptcy law?
state statute stands as an obstacle to the accomplishment and execution of the full
purposes and objectives of Congress.
II. Federal Government’s Authority to Regulate Business—The Commerce Clause (LO 6-3)
Emphasize:
That the commerce clause can be found in Article 1, Section 8, of the United States
Constitution.
A. Regulation of Foreign Commerce
Emphasize:
That the power to regulate foreign commerce is vested exclusively in the federal
government, and it extends to all aspects of foreign trade.
B. Regulation of Interstate Commerce
Emphasize:
That the Commerce Clause prohibits one state from interfering with commerce that
crosses state lines.
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it great or small.
D. Limitation on Federal Authority
Emphasize:
The two perspectives from which this topic requires examination.
Sidebar 6.2—“Constitutionality of Health Insurance Mandate?”
E. Contract Clause
Emphasize:
That the clause does not apply to actions by the federal government that impair the
obligation of contracts.
That under the contract clause, states cannot enact laws that impact rights and duties
under existing contracts.
That the limitation on state action impairing contracts has not been given a literal
application.
Additional Matters for Discussion:
Factors that may justify a state law that impairs private contract rights are:
o The law is enacted in an emergency situation.
o The law is broad to protect basic societal interests.
o The relief is properly tailored to meet those interests.
o The conditions of the law are reasonable.
o The law is limited to the duration of an emergency.
Cases for Discussion:
1. Pension Ben. Guar. Corp. v. R.A. Gray & Co., 104 S.Ct. 2709 (1984).
In 1980, Congress amended ERISA to require employers withdrawing from a
multiemployer pension plan to pay a fixed amount to cover unfunded benefits. The law
was made retroactive.
Issue: Is this application constitutional under the contract clause?
historical evidence, to actions of the national government.
2. Energy Reserves Group, Inc. v. Kansas Power & Light Co., 103 S.Ct. 697 (1983).
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A state regulation restricted the income of a utility.
Issue: Is this state regulation a violation of the contract clause?
purpose has been identified, the adjustment of the contracting parties’ rights and
responsibilities must be based upon reasonable conditions and must be of a character
appropriate to the public purpose justifying the legislation’s adoption.
III. Amendments and Basic Protections (LO 6-4)
Emphasize:
Table 6.1 showing the first fourteen amendments to the U.S. constitution.
The four basic characteristics of constitutional guarantees, and give examples:
A. First Amendment Protections (LO 6-5)
Freedom of Religion
Emphasize:
That the First Amendment of freedom of religion has two aspects: the establishment
clause and the free exercise clause.
That if a law is based on economic considerations, it may be upheld if its
classifications are reasonable and in the public interest.
Sidebar 6.3 regarding how the IRS defines churches.
Sidebar 6.4 showing examples of freedom of religion issues affecting business.
Cases for Discussion:
1. Frazee v. Illinois Department of Employment Security, 109 S.Ct. 1514 (1989)
Frazee refused a temporary position offered to him by Kelly Services because the job
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would have required him to work on Sunday. He was denied unemployment
compensation benefits since he was not a member of an established religious sect or
church and did not claim that his refusal to work resulted from a tenet, belief, or
teaching of an established religious body.
Issue: Does the denial of compensation constitute a violation of the Free Exercise
Clause?
rejected. The fact that Sunday work has become a way of life does not constitute a
state interest sufficiently compelling to override a legitimate free exercise claim,
since there is no evidence that there will be a mass movement away from Sunday
employment if appellant succeeds on his claim.
2. Thomas v. Review Bd. of Indiana Employment Sec., 100 S.Ct. 1425 (1981).
Plaintiff, a Jehovah witness, was initially hired to work in his employer’s roll
foundry, but when the foundry was closed, he was transferred to a department that
fabricated turrets for military tanks. The plaintiff asserted that his religious beliefs
prevented him from participating in the production of weapons. His employer offered
no other non-war production jobs. The plaintiff requested to be laid off, but when his
request was denied, he quit. The plaintiff subsequently applied for but was denied
unemployment compensation. Indiana state law requires applicants for
unemployment compensation to show that they left work for a good cause in
connection with the work.
Issue: Is the denial a violation of the First Amendment?
the highest order can overbalance legitimate claims to the free exercise of religion.
The interests advanced by the state to avoid widespread unemployment and to avoid
a detailed probing by employers into job applicant’s religious beliefs do not justify
the burden placed on free exercise of religion.
Other Important Freedom of Religion Cases:
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1. Jimmy Swaggart Industries v. Board of Equalization of California, 110 S.Ct. 688
(1990)
California’s imposition of its general 6 percent sales and use taxes on religious
merchandise sold in the state by religious organizations does not violate the First
Amendment. A generally applicable sales and use tax, which is not a flat license tax,
which constitutes only a small part of the sale price, and which is applied neutrally
without regard to the nature of the seller or purchaser, does not place an onerous
burden on religious activity.
2. Hobbie v. Unemployment Appeals of Florida, 107 S.Ct. 1046 (1987).
When a state denies the receipt of a benefit because of conduct mandated by religious
belief, a burden on the exercise of religion exists. Not only is it apparent that
3. Thornton v. Caldor, 105 S.Ct. 2914 (1985).
A Connecticut statute which provided Sabbath observers with absolute and
unqualified right not to work on their Sabbath, violated the establishment clause. It
imposed on employers and employees an absolute duty to conform their business
practices to a particular religious practice of the employee by enforcing observances
of the Sabbath the employee unilaterally designated.
4. United States v. Lee, 102 S.Ct. 1051 (1982).
The payment of social security taxes and the receipt of benefits does not interfere
with the Free Exercise rights of the Amish.
Freedom of Speech
Emphasize:
That the Amendment protection does not apply to private action.
That free speech also covers conduct or actions considered symbolic speech.
That “fighting words” are not protected speech.
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The difficulty in defining obscenity. The proper inquiry, in deciding whether
allegedly obscene materials have any “literary, artistic, political, or scientific value.”
Sidebar 6.5—“Art and Obscenity”
Sidebar 6.6—“The FCC is Not Amused”
Sidebar 6.7—“Picketing as Free Speech”
Sidebar 6.8—“Free Speech and an Individual’s Right of Privacy”
Case 6.1: Snyder v. Phelps. 131 S.CT. 1207 (2011)
Commercial Speech
Emphasize:
That the protection of commercial speech was a major constitutional development
during the latter part of the 20th century (since 1970).
Sidebar 6.6—“The FCC Is Not Amused”
Sidebar 6.9 concerning Cigarette warning labels.
Case 6.2: Brown v. Entertainment Merchants Association, 564 U.S. ____ (2011).
Cases for Discussion:
1. Greater New Orleans Broadcasting Association, Inc. v. United States, 119 S.Ct.
1923 (1999).
The Federal Communications Commission (FCC) seeks to prohibit the advertising of
lotteries by radio and television stations in Louisiana since these ads may be heard or
seen in neighboring Texas and Arkansas where lotteries are illegal. The Greater New
2. 44 Liquormart, Inc. v. Rhode Island, 116 S.Ct. 1495 (1996).
The State of Rhode Island allows advertising of alcoholic beverages prices only in