78 INSTRUCTOR’S MANUAL TO ACCOMPANY BUSINESS LAW, TWELFTH EDITION
Thus when examining a church document such as the trust document in the Episcopal case to resolve a property
dispute, a secular court must “scrutinize the document in purely secular terms, and not * * * rely on religious precepts
in determining whether the document indicates that the parties have intended to create a trust.” But “there may be
cases where the deed, the corporate charter, or the constitution of the general church incorporates religious concepts
in the provisions relating to the ownership of property. If in such a case the interpretation of the instruments of
ownership would require the civil court to resolve a religious controversy, then the court must defer to the resolution
of the doctrinal issue by the authoritative ecclesiastical body.”
ANSWER TO “THE LEGAL ENVIRONMENT DIMENSION”
QUESTION IN CASE 4.3
Should the court have considered whether the Episcopal Church abandoned or departed from the tenets
of faith and practice that it held at the time of St, James’s affiliation? Why or why not? No. The First Amendment
ANSWER TO “WHAT IF THE FACTS WERE DIFFERENT?” IN CASE 4.3
Suppose that before this property dispute was finally resolved, the church’s general convention had been
changed to declare that “all property is held in trust for the local churches.” Would the result in this case have
been different? Explain. The result most likely would have been different. As the court in the Episcopal case
2. The Free Exercise Clause
Under the free exercise clause, the government cannot prohibit the free exercise of religious practices. In
other words, a person cannot be compelled to do something contrary to his or her religious beliefs.
Another issue involves the accommodation that businesses must make for the religious beliefs of
employees (see Chapter 34).
D. SEARCHES AND SEIZURES
To conduct a search or seizure, law enforcement officers must obtain a search warrant.
2. Searches and Seizures in the Business Context
The standard of probable cause is not the same as in nonbusiness contexts. A general and neutral
80 INSTRUCTOR’S MANUAL TO ACCOMPANY BUSINESS LAW, TWELFTH EDITION
E. SELF-INCRIMINATION
No person can be compelled in any criminal case to be a witness against himself or herself. An accused person
III. Due Process and Equal Protection
A. DUE PROCESS
Both the Fifth and the Fourteenth Amendments provide that no person shall be deprived “of life, liberty, or
property, without due process of law.”
1. Procedural Due Process
2. Substantive Due Process
If a law or other governmental action limits a fundamental right, it will be held to violate substantive due
process unless it promotes a compelling or overriding state interest. Fundamental rights include interstate
B. EQUAL PROTECTION
Under the Fourteenth Amendment, a state may not “deny to any person within its jurisdiction the equal
protection of the laws.” The equal protection clause applies to the federal government through the due process
clause of the Fifth Amendment. Equal protection means that the government must treat similarly situated
individuals in a similar manner. When a law or action distinguishes between or among individuals, the basis for
the distinction (the classification) is examined.
1. Strict Scrutiny
2. Intermediate Scrutiny
3. The “Rational Basis” Test
In matters of economic or social welfare, a classification will be considered valid if there is any conceivable
rational basis on which the classification might relate to any legitimate government interest.
CHAPTER 4: CONSTITUTIONAL AUTHORITY TO REGULATE BUSINESS 81
IV. Privacy Rights
A personal right to privacy is held to be so fundamental as to apply at both the state and the federal level. Although
there is no specific guarantee of a right to privacy in the Constitution, such a right has been derived from guarantees
found in the First, Third, Fourth, Fifth, and Ninth Amendments.
A. FEDERAL STATUTES AFFECTING PRIVACY RIGHTS
ADDITIONAL BACKGROUND—
USA PATRIOT Act Tech Provisions
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act (USA PATRIOT Act) of 2001, which is mentioned in the text, touches on many topics, including
immigration, money laundering, terrorism victim relief, intelligence gathering, and surveillance of Internet
communications. Technology related provisions of the USA PATRIOT Act include the following, as summarized. (Some
of these provisions were due to “sunset” in 2005.)
Wiretap Offenses
Sections 201 and 202—Crimes that can serve as a basis for law enforcement agencies (LEAs) to obtain a wiretap include
crimes relating to terrorism and crimes relating to computer fraud and abuse.
Voice Mail
Section 209—LEAs can seize voice mail messages, with a warrant.
ESP Records
Sections 210 and 211—LEAs can obtain, with a subpoena, such information about e-communications service providers’
number or other subscriber number or identity, including any temporarily assigned network address,” and “means and
Pen Registers, and Trap and Trace Devices
Section 216—LEAs can expand their use of pen registers and trap and trace devices (PR&TTs). A PR records the
numbers that are dialed on a phone. TTs “capture[] the incoming electronic or other impulses which identify the
originating number of an instrument or device from which a wire or electronic communication was transmitted.”
PR&TTs can be used to capture routing, addressing, and other information in e-communications, but not the contents
82 INSTRUCTOR’S MANUAL TO ACCOMPANY BUSINESS LAW, TWELFTH EDITION
Computer Trespassers
Section 217—LEAs can assist companies, universities, and other entities that are subject to distributed denial of service,
or other, Internet attacks by intercepting “computer trespasser’s communications.”
ESP Compensation
Section 222—An ESP “who furnishes facilities or technical assistance pursuant to section 216 shall be reasonably
B. OTHER LAWS AFFECTING PRIVACY
Invasion of another’s privacy is also a civil wrong (Chapter 6). In business, issues of privacy often arise in the
employment context (Chapter 33). Consumers’ privacy rights online are covered further in Chapter 44.
ENHANCING YOUR LECTURE—
CREATING A WEB SITE PRIVACY POLICY
Firms with online business operations realize that to do business effectively with their customers, they need to
have some information about those customers. Yet online consumers are often reluctant to part with personal
of their personal data, as well as to avoid liability under existing laws, most online businesses today are taking steps to
PRIVACY POLICY GUIDELINES
In the last several years, a number of independent, nonprofit organizations have developed model Web site
privacy policies and guidelines for online businesses to use. Web site privacy guidelines are now available from a
number of online privacy groups and other organizations, including the Online Privacy Alliance, the Internet Alliance,
and the Direct Marketing Association. Some organizations, including the Better Business Bureau, have even developed
a “seal of approval” that Web-based businesses can display at their sites if they follow the organization’s privacy
guidelines.
DRAFTING A PRIVACY POLICY
Online privacy guidelines generally recommend that businesses post notices on their Web sites about the type of
information being collected, how it will be used, and the parties to whom it will be disclosed. Other recommendations
CHAPTER 4: CONSTITUTIONAL AUTHORITY TO REGULATE BUSINESS 83
include allowing Web site visitors to access and correct or remove personal information and giving visitors an “opt–in”
or “opt–out” choice. For example, if a user selects an “opt–out” policy, the personal data collected from that user would
be kept private.
CHECKLIST FOR A WEB SITE PRIVACY POLICY
1. Include on your Web site a notice of your privacy policy.
2. Give consumers a choice (such as opt-in or opt-out) with respect to any information collected.
3. Outline the safeguards that you will employ to secure all consumer data.
4. Let consumers know that they can correct and update any personal information collected by your business.
5. State that parental consent is required if a child is involved.
6. Create a mechanism to enforce the policy.
TEACHING SUGGESTIONS
1. The concept of federalism is basic to students’ understanding of the authority of the federal and state
2. The commerce clause has been interpreted as a very broad source of power for the federal government. It also re-
stricts the power of the states to regulate activities that result in an undue burden on interstate commerce.
Determining what constitutes an undue burden can be difficult. A court balances the benefit that the state derives
3. It might be explained to your students that constitutional law is concerned primarily with the exercise of judicial
review. The emphasis is on the way that the courts in general, and the United States Supreme Court in particular,
interpret provisions of the Constitution. Stare decisis does not have as much impact in constitutional law as in other
areas of the law. In this area, the courts are not reluctant to overrule statutes, regulations, precedential case law, or
other law.
Cyberlaw Link
CHAPTER 4: CONSTITUTIONAL AUTHORITY TO REGULATE BUSINESS 85
DISCUSSION QUESTIONS
1. What is the basic structure of the American national government? The basic structure of the American
2. What is the national government’s relation to the states? The relationship between the national and state
3. What is the doctrine of separation of powers and what is its purpose? Each of the three governmental
4. What is the conflict between the states’ police power and the commerce clause? The term police power refers
5. What is preemption? Preemption occurs when Congress chooses to act exclusively in an area of concurrent federal
6. In reviewing tax laws, what does the United States Supreme Court focus on? Taxes must be assessed with geo-
7. What is the distinction between the degrees of regulation that may be imposed on commercial and
noncommercial speech? Commercial speech is not as protected as noncommercial speech. Even if commercial speech
8. Should the First Amendment protect all speech? One argument in support of this suggestion is that all views could
9. What does it mean that under the establishment clause the government cannot establish any religion or
prohibit the free exercise of religious practices? Federal or state regulation that does not promote, or place a significant
10. Would a state law imposing a fifteen-year term of imprisonment without allowing a trial on all businesspersons
who appear in their own television commercials be a violation of substantive due process? Would it violate procedural
due process? Yes, the law would violate both types of due process. The law would be unconstitutional on substantive due pro-
cess grounds, because it abridges freedom of speech. The law would be unconstitutional on procedural due process grounds,
because it imposes a penalty without giving an accused a chance to defend his or her actions.
ACTIVITY AND RESEARCH ASSIGNMENTS
1. Have students look through the local newspaper for current stories about proposed laws. Ask them where the
government would find the authority within the Constitution to adopt a specific law under consideration.
EXPLANATIONS OF SELECTED FOOTNOTES IN THE TEXT
Footnote 7: The regulation in Wickard v. Filburn involved a marketing quota. The Supreme Court upheld the
regulation even though it would be difficult for the farmer alone to affect interstate commerce. Total supply of wheat clearly
affects market price, as does current demand for the product. The marketing quotas were designed to control the price of
wheat. If many farmers raised wheat for home consumption, they would affect both the supply for interstate commerce and
the demand for the product. The Court deferred to congressional judgment concerning economic effects and the relationship
between local activities and interstate commerce. This was a return to the broad view of the commerce power that John
Marshall had defined in Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 6 L.Ed. 23 (1824).
88 INSTRUCTOR’S MANUAL TO ACCOMPANY BUSINESS LAW, TWELFTH EDITION
tempting to secure lodging. This discrimination impeded interstate travel, thus impeding interstate commerce. As for the
owner’s argument that his motel was “of a purely local character,” the Court said, “[I]f it is interstate commerce that feels the
pinch, it does not matter how local the operation that applies the squeeze.” Therefore, under the commerce clause, Congress
has the power to regulate any local activity that has a harmful effect interstate commerce. Does the Civil Rights Act of 1964
actually regulate commerce or was it designed to end the practice of race (and other forms of) discrimination? In this
case, the Supreme Court said, “[T]hat Congress was legislating against moral wrongs . . . rendered its enactments no less valid.”
ANSWERS TO ESSAY QUESTIONS IN
STUDY GUIDE TO ACCOMPANY BUSINESS LAW, TWELFTH EDITION
BY HOLLOWELL & MILLER
1. What is the effect of the supremacy clause? The supremacy clause of the Constitution provides that the
2. What is the significance of the commerce clause? The commerce clause is a provision in the Constitution
authorizing Congress to regulate commerce with foreign nations, commerce between states, and commerce that affects
interstate commerce. The commerce clause has had a greater impact on business than any other provision in the Constitution.
This power ensures uniformity of the law concerning the movement of goods through the states. The breadth of the power
allows the federal government to legislate in areas in which there is no express grant of power to Congress.
REVIEWING—
CONSTITUTIONAL AUTHORITY
TO REGULATE BUSINESS
A state legislature enacted a statute that required any motorcycle operator or passenger on the state’s highways
to wear a protective helmet. Jim Alderman, a licensed motorcycle operator, sued the state to block enforcement of the
law. Alderman asserted that the statute violated the equal protection clause because it placed requirements on
motorcyclists that were not imposed on other motorists. Ask your students to answer the following questions, using
the information presented in the chapter.
1. Why does this statute raise equal protection issues instead of substantive due process concerns? When a
2. What are the three levels of scrutiny that the courts use in determining whether a law violates the equal
CHAPTER 4: CONSTITUTIONAL AUTHORITY TO REGULATE BUSINESS 89
protection clause? The three levels of scrutiny that courts apply to determine whether the law or action violates
3. Which standard, or test, of scrutiny would apply to this situation? Why? The court would likely apply the
4. Applying this standard, or test, is the helmet statute constitutional? Why or why not? The statute is
probably constitutional, because requiring helmets is rationally related to a legitimate government objective (public
health and safety). Under the rational basis test, courts rarely strike down laws as unconstitutional, and this statute
will likely further the legitimate state interest of protecting the welfare of citizens and promoting safety.
DEBATE THIS:
Legislation aimed at “protecting people from themselves” concerns the individual as well as the public in
general. Protective helmet laws are just one example of such legislation. Should individuals be allowed to
engage in unsafe activities if they choose to do so? Certainly many will argue in favor of individual rights. If
he or she was not wearing a protective helmet, society ends up paying in the form of increased medical care
expenses, lost productivity, and even welfare for other family members. Thus, the state has an interest in protecting