Solution Manual For Contemporary Business Law, 8/E by Henry R. Cheeseman

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Constitutional Law for Business and E-Commerce
Chapter 2

Constitutional Law for Business and
E-Commerce

Learning Objectives

1. Describe the concept of federalism and the doctrine of separation of powers.

2. Define and apply the Supremacy Clause of the U.S. Constitution.

3. Explain the federal government’s authority to regulate interstate commerce and foreign

commerce.

4. Explain how the freedoms of speech, assembly, religion, and the press are protected by the
First Amendment and how commercial speech may be limited.

5. Explain the doctrines of equal protection and due process.
Teacher-to-Teacher Dialogue
For many legal academics, constitutional law is not only the reason why they love to teach
but also an ultimate challenge in illustrating the constant balance of competing but legitimate
rights of the individual vis-à-vis the larger society. The only major drawback to this material is
the frustration of having the time constraints inherent in a survey course.
Because of these time limitations, teaching efforts might best be concentrated on achieving
two main objectives:
 The concepts of federalism, dual sovereignty, and the balancing of rights among the oftencompeting sovereigns of federal and state government.
 The enumeration of key individual civil liberties protections listed in the Bill of Rights
with an extrapolation of those same theories to business.
The most impressive fact that surfaces in the study of the Constitution is that it never
changes but it always changes. This underscores the importance of the courts. To watch students
as they uncover the mysteries found in this document is well worth the effort.
The key objective of this chapter is to introduce students to the role of the U.S. Constitution
and its pivotal role in the ultimate distribution of powers between the federal government and the
states vis-à-vis the control of business conduct in the United States. This aspect of the chapter
will introduce students to key terms which they will be using throughout the rest of the course,
such as substantive and procedural due process and the like. In all likelihood, because of the
breadth of materials covered, the lecture/discussion format will work best for purposes of
illustrating as much of the material as possible in the time allowed.
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Text Materials
I. Introduction to Constitutional Law for Business and E-Commerce
Prior to the American Revolution, each of the 13 original colonies operated as a separate
sovereignty under the rule of England. In September 1774, representatives of the colonies met as
a Continental Congress. In 1776, the colonies declared independence from England, and the
American Revolution ensued. The Declaration of Independence was the document that declared
the American colonies’ independence from England.
II. Constitution of the United States of America
In 1778, the Continental Congress formed a federal government and adopted the Articles of
Confederation. The Articles of Confederation created a federal Congress composed of
representatives of the 13 new states. The Articles of Confederation was a particularly weak
document that gave limited power to the newly created federal government.
The Constitutional Convention was convened in Philadelphia in May 1787. The primary
purpose of the convention was to strengthen the federal government. After substantial debate, the
delegates agreed to a new U.S. Constitution.
The U.S. Constitution, as amended, serves two major functions:
 It creates the three branches of government (executive, legislative, and judicial) and
allocates powers to these branches.
 It protects individual rights by limiting the government’s ability to restrict those rights.
A. Federalism and Delegated Powers
The form of government in the U.S. is referred to as federalism. That means that the federal
government and the 50 state governments share powers. When the states ratified the
Constitution, they delegated certain powers—called enumerated powers—to the federal
government.
Any powers that are not specifically delegated to the federal government by the Constitution
are reserved to the state governments. These are called reserved powers. State governments
are empowered to deal with local affairs.
B. Doctrine of Separation of Powers
The federal government is divided into three branches:
 Article I: Legislative branch—Article I of the Constitution establishes the legislative
branch of the federal government.
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o The legislative branch is responsible for making federal law. This branch is
bicameral; that is, it consists of the U.S. Senate and the U.S. House of
Representatives.
o Collectively, they are referred to as U.S. Congress, or simply Congress.
o Each state has two senators in the U.S. Senate.
o The number of representatives to the U.S. House of Representatives is
determined according to the population of each state.
 Article II: Executive branch—Article II of the Constitution establishes the executive
branch of the federal government by providing for the election of the president and
vice-president.
The president is not elected by popular vote, but instead is selected by the Electoral
College, whose representatives are appointed by state delegations.
 Article III: Judicial branch—Article III of the Constitution establishes the judicial
branch of the federal government by establishing the U.S. Supreme Court and
providing for the creation of other federal courts by Congress.
C. Checks and Balances
Certain checks and balances are built into the Constitution to ensure that no one branch of the
federal government becomes too powerful.
III. Supremacy Clause
The Supremacy Clause establishes that the U.S. Constitution and federal treaties, laws, and
regulations are the supreme law of the Land. The concept of federal law taking precedence over
state or local law is commonly called the preemption doctrine.
Congress may expressly provide that a particular federal statute exclusively regulate a specific
area or activity. No state or local law regulating the area or activity is valid if there is such a
statute. Often, though, federal statutes do not expressly provide for exclusive jurisdiction. In these
instances, state and local governments have concurrent jurisdiction to regulate the area or
activity.
III. Commerce Clause
The Commerce Clause of the U.S. Constitution grants Congress the power “to regulate
commerce with foreign nations, and among the several states, and with Indian tribes.” Among
other things, this clause is intended to foster the development of a national market and free trade
among the states.
The U.S. Constitution grants the federal government the power to regulate three types of
commerce:
 Commerce with Native American tribes
 Foreign commerce
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 Interstate commerce
A. Commerce with Native Americans
Before Europeans arrived in the “New World,” the land had been occupied for thousands of
years by people we now refer to as Native Americans. There were many different Native
American tribes, each having its own independent and self-governing system of laws.
When the United States was first founded more than 200 years ago, it consisted of the original
13 colonies, all located in the east, primarily on the Atlantic Ocean. Under its Commerce
Clause powers, the federal government entered into treaties with many Native American
nations. Most tribes, in the face of white settlers’ encroachment on their land and federal
government pressure, were forced to sell their lands to the federal government. The Native
Americans received money and goods for land. The federal government obtained many
treaties through unscrupulous means, cheating the Native Americans of their land. These
tribes were then relocated to other, smaller, pieces of land called reservations, often outside
their typical tribal lands.
Once Native Americans came under U.S. authority, they lost much of their political power.
Most tribes were allowed to keep their own governments but were placed under the
“protection” of the U.S. government. Today, many Native Americans live on reservations set
aside for various tribes. Others live and work outside reservations.
Indian Gaming Regulatory Act
In the late 1980s, the federal government authorized Native American tribes to operate
gaming facilities. Congress passed the Indian Gaming Regulatory Act, a federal statute
that establishes the requirements for conducting casino gambling and other gaming
activities on tribal land.
B. Foreign Commerce
The Commerce Clause of the U.S. Constitution gives the federal government the exclusive
power to regulate commerce with foreign nations. This is called the Foreign Commerce
Clause. Direct and indirect regulation of foreign commerce by state or local governments that
unduly burdens foreign commerce violates the Commerce Clause and is therefore
unconstitutional.
C. Interstate Commerce
The Commerce Clause gives the federal government the authority to regulate interstate
commerce. Originally, the courts interpreted this clause to mean that the federal government
could only regulate commerce that moved in interstate commerce, that is, commerce that is
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conducted across state borders. Under the effects on interstate commerce test, the regulated
activity does not itself have to be in interstate commerce.
In the famous case Wickard, Secretary of Agriculture v. Filburn, a federal statute limited the
amount of wheat that a farmer could plant and harvest for home consumption. Filburn, a
farmer, violated the law. The U.S. Supreme Court upheld the federal statute on the grounds
that it involved interstate commerce because the statute was designed to prevent nationwide
surpluses and shortages of wheat. The Court reasoned that wheat grown for home
consumption would affect the supply of wheat available in interstate commerce.
Landmark U.S. Supreme Court Case—Heart of Atlanta Motel v. United States
Congress enacted the Civil Rights Act of 1964, which made it illegal for motels, hotels, and
other public accommodations to discriminate against guests based on their race. After the act
was passed, the Heart of Atlanta Motel continued to refuse to rent rooms to blacks. The
owner-operator of the motel brought a declaratory relief action in U.S. district court, Heart of
Atlanta Motel v. United States, to have the Civil Rights Act of 1964 declared unconstitutional.
The plaintiff argued that Congress, in passing the act, had exceeded its powers to regulate
interstate commerce under the Commerce Clause of the U.S. Constitution.
D. State Police Power
The states did not delegate all power to regulate business to the federal government. They
retained the power to regulate intrastate commerce and much of the interstate commerce that
occurs within their borders. This is commonly referred to as states’ police power. Police
power permits states (and, by delegation, local governments) to enact laws to protect or
promote the public health, safety, morals, and general welfare.
E. Dormant Commerce Clause
If the federal government has chosen not to regulate an area of interstate commerce that it has
the power to regulate under its Commerce Clause powers, this area of commerce is subject to
what is referred to as the Dormant Commerce Clause. However, if a state enacts laws to
regulate commerce that the federal government has the power to regulate but has chosen not to
regulate, the Dormant Commerce Clause prohibits the state’s regulation from unduly
burdening interstate commerce.
IV. E-Commerce and the Constitution
The Internet and other computer networks permit parties to obtain website domain names and
conduct business electronically. This is usually referred to as electronic commerce or ecommerce. Because e-commerce is commerce, it is subject to the Commerce Clause of the U.S.
Constitution.
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Digital Law: E-Commerce and the Commerce Clause
In this Information Age, federal and state governments have had to grapple with how to
regulate the Internet and e-commerce. The federal government seems to be taking the upper
hand in passing laws that regulate business conducted in cyberspace, thus creating laws that
apply uniformly across the country. However, states have also enacted laws that regulate the
Internet and e-commerce. State laws that unduly burden interstate e-commerce are
unconstitutional.
V. Bill of Rights and other Amendments to the U.S. Constitution
The U.S. Constitution provides that it may be amended. Currently, there are 27 amendments to
the U.S. Constitution. In 1791, the 10 amendments that are commonly referred to as the Bill of
Rights were approved by the states and became part of the U.S. Constitution. The Bill of Rights
guarantees certain fundamental rights to natural persons and protects these rights from intrusive
government action. Fundamental rights guaranteed in the First Amendment include freedom of
speech, freedom to assemble, freedom of the press, and freedom of religion.
Originally, the Bill of Rights limited intrusive action by the federal government only. Intrusive
actions by state and local governments were not limited until the Due Process Clause of the
Fourteenth Amendment was added to the Constitution in 1868. The Supreme Court has applied
the incorporation doctrine and held that most of the fundamental guarantees contained in the
Bill of Rights are applicable to state and local government action.
VI. Freedom of Speech
One of the most honored freedoms guaranteed by the Bill of Rights is the freedom of speech of
the First Amendment. The U.S. Supreme Court places speech into three categories:
 Fully protected speech
 Limited protected speech
 Unprotected speech
A. Fully Protected Speech
Fully protected speech is speech that the government cannot prohibit or regulate. The
government cannot prohibit or regulate the content of fully protected speech. The First
Amendment protects oral, written, and symbolic speech.
B. Limited Protected Speech
The Supreme Court has held that certain types of speech have only limited protection under
the First Amendment. The government cannot forbid this type of speech, but it can subject this
speech to time, place, and manner of restrictions. Two major forms of limited protected
speech are offensive speech and commercial speech.
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 Offensive speech is speech that offends many members of society.
 Commercial speech, such as advertising, was once considered unprotected by the First
Amendment.
C. Unprotected Speech
The U.S. Supreme Court has held that certain speech is unprotected speech that is not
protected by the First Amendment and may be totally forbidden by the government. The
Supreme Court has held that the following types of speech are unprotected speech:
 Dangerous speech
 Fighting words that are likely to provoke a hostile or violent response from an
average person
 Speech that incites the violent or revolutionary overthrow of the government
o However, the mere abstract teaching of the morality and consequences of such
action is protected.
 Defamatory language
 Child pornography
 Obscene speech
o If speech is considered obscene speech, it has no protection under the Freedom
of Speech Clause of the First Amendment and can be banned by the government.
The definition of obscenity has plagued the courts. The definition of obscene speech is quite
subjective. In Miller v. California, the U.S. Supreme Court determined that speech is obscene
when:
 The average person, applying contemporary community standards, would find that the
work, taken as a whole, appeals to the prurient interest.
 The work depicts or describes, in a patently offensive way, sexual conduct specifically
defined by the applicable state law.
 The work, taken as a whole, lacks serious literary, artistic, political, or scientific value.
States are free to define what constitutes obscene speech. Over the years, the content of
material that has been found to be obscene has shifted to a more liberal view as the general
norms of society have become more liberal. Today, fewer obscenity cases are brought than
have been in the past.
V. Freedom of Religion
Freedom of religion is a key concept addressed by the First Amendment. The First Amendment
contains two separate religion clauses, the Establishment Clause and the Free Exercise Clause.
A. Establishment Clause
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The U.S. Constitution requires federal, state, and local governments to be neutral toward
religion. The Establishment Clause prohibits the government from either establishing a
government-sponsored religion or promoting one religion over another.
B. Free Exercise Clause
The Free Exercise Clause prohibits the government from interfering with the free exercise of
religion in the United States. Generally, this clause prevents the government from enacting
laws that either prohibit or inhibit individuals from participating in or practicing their chosen
religions.
VI. Equal Protection
The Fourteenth Amendment was added to the U.S. Constitution in 1868. Its original purpose
was to guarantee equal rights to all persons after the Civil War. The Equal Protection Clause of
the Fourteenth Amendment provides that a state cannot “deny to any person within its jurisdiction
the equal protection of the laws.”
This clause prohibits state, local, and federal governments from enacting laws that classify and
treat “similarly situated” persons differently. Artificial persons, such as corporations, are also
protected.
A. Standards of Review
The Supreme Court has adopted three different standards of review for deciding whether the
government’s different treatment of people or businesses violates or does not violate the Equal
Protection Clause:
 Strict scrutiny test—any government activity or regulation that classifies persons
based on a suspect class (e.g., race, national origin, and citizenship) or involves
fundamental rights (e.g., voting) is reviewed for lawfulness using a strict scrutiny
test.
 Intermediate scrutiny test—the lawfulness of government classifications based on a
protected class other than race (e.g., gender) is examined using an intermediate
scrutiny test.
 Rational basis test—the lawfulness of all government classifications that do not
involve suspect or protected classes is examined using a rational basis test.
B. Due Process
The Fifth and Fourteenth Amendments to the U.S. Constitution both contain a Due Process
Clause. The Due Process Clause of the Fifth Amendment applies to federal government
action; that of the Fourteenth Amendment applies to state and local government action.
However, the government must follow due process to do so. There are two categories of due
process: substantive and procedural.
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C. Substantive Due Process
The substantive due process category of due process requires that government statutes,
ordinances, regulations, and other laws be clear on their face and not overly broad in scope.
Laws that do not meet this test are declared void for vagueness.
D. Procedural Due Process
The procedural due process form of due process requires that the government give a person
proper notice and hearing of legal action before that person is deprived of his or her life,
liberty, or property.
VII. Privileges and Immunities
The purpose of the U.S. Constitution is to promote nationalism. Article IV of the Constitution
contains the Privileges and Immunities Clause, which provides that “The Citizens of each State
shall be entitled to all Privileges and Immunities of Citizens in the several states.” The Fourteenth
Amendment contains the Privileges or Immunities Clause, which provides that “No State shall
make or enforce any law that shall abridge the privileges or immunities of the citizens of the
United States.” Collectively, the clauses prohibit states from enacting laws that unduly
discriminate in favor of their residents.
Global Law: Human Rights Violations in Myanmar
The country of Myanmar (also called Burma) is ruled by a junta composed of its military
generals. The country has been accused of human rights violations, including using child labor
and forced labor, eliminating political dissidents, and following strict censorship. The United
Nations has consistently censured Myanmar for human rights violations. Recently, because of
improved conditions in Myanmar, the United States lifted some sanctions against trading with
Myanmar.
Case 2.1—U.S. Supreme Court Case
Supremacy Clause
Mutual Pharmaceutical Company, Inc. v. Bartlett
133 S.Ct. 2466 (2013)
Supreme Court of the United States
Facts: In 1978, the Food and Drug Administration (FDA), a federal government agency,
approved a nonsteroidal anti-inflammatory pain reliever called “sulindac” under the brand name
Clinoril. At the time, the FDA approved the labeling of the prescription drug, which contained
warnings of specific side-effects of the drug. When the Clinoril patent expired, the law permitted
other pharmaceutical companies to sell generic versions of sulindac under their own brand names.
Federal law requires that genetic sellers of drugs use the exact labeling as required on the original
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drug, without alteration. Mutual Pharmaceutical Company, Inc. (Mutual) manufactured and sold a
generic brand of sulindac. Karen L. Bartlett was prescribed sulindac for shoulder pain and the
pharmacist dispensed Mutual’s generic brand of sulindac to her. Bartlett soon developed an acute
case toxic epidermal necrolysis. She is now severely disfigured, has a number of physical
disabilities, and is nearly blind. The original patented drug’s label, and therefore Mutual’s generic
brand label, did not refer to the possible side-effect toxic epidermal necrolysis. Bartlett sued
Mutual for product liability under New Hampshire law. The jury of the U.S. district court found
Mutual liable and awarded Bartlett more than $21 million in damages, and the U.S. court of
appeals affirmed the award. Mutual appealed to the U.S. Supreme Court, asserting that the federal
labeling law preempted New Hampshire law under the Supremacy Clause.
Issue: Does the federal drug labeling law preempt a stricter state drug labeling law?
Decision: The Supreme Court reversed the U.S. court of appeal’s decision that was in favor of
Bartlett.
Reason: The U.S. Supreme Court held that federal drug labeling law preempted New
Hampshire’s stricter labeling law under the Supremacy Clause of the U.S. Constitution.
Case 2.2—U.S. Supreme Court Case
Free Speech and Violent Video Games
Brown, Governor of California v. Entertainment Merchants Association
131 S.Ct. 2729, 180 L.Ed.2d 708, Web 2011 U.S. Lexis 4802 (2011)
Supreme Court of the United States
Facts: Video games are played by millions of youth and adults. Some of the games contain
violent content. The state of California enacted a state statute that prohibits the sale or rental of
“violent video games” to minors. The act covers games “in which the range of options available
to a player includes killing, maiming, dismembering, or sexually assaulting an image of a human
being, if those acts are depicted” in a manner that “a reasonable person, considering the game as a
whole, would find appeals to a deviant or morbid interest of minors,” that is “patently offensive to
prevailing standards in the community as to what is suitable for minors,” and that “causes the
game, as a whole, to lack serious literary, artistic, political, or scientific value for minors.”
Violation of the act is punishable by a civil fine of up to $1,000. Members of the video game and
software industries challenged the enforcement of the act. The U.S. district court concluded that
the act violated the First Amendment and permanently enjoined its enforcement. The U.S. court
of appeals affirmed the decision. California appealed to the U.S. Supreme Court.
Issue: Does the California act that restricts violent video games violate the First Amendment?
Decision: The U.S. Supreme Court held that the California Act violated the First Amendment to
the U.S. Constitution.
Reason: The court found that even where the protection of children is the object, the
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constitutional limits on governmental action apply.
Case 2.3—U .S. Supreme Court Case
Free Speech
Snyder v. Phelps
131 S.Ct. 1207, 179 L.Ed.2d 172, Web 2011 U.S. Lexis 1903 (2011)
Supreme Court of the United States
Facts: Fred Phelps founded the Westboro Baptist Church in Topeka, Kansas. The church’s
congregation believes that God hates and punishes the United States for its tolerance of
homosexuality, particularly in America’s military. The church frequently communicates its views
by picketing at military funerals. In more than 20 years, the members of Westboro Baptist have
picketed at nearly 600 funerals. Lance Corporal Matthew Snyder, a member of the U.S. Marines,
was killed in Iraq in the line of duty. Lance Corporal Snyder’s father, Albert Snyder, selected the
Catholic Church in the Snyders’ hometown of Westminster, Maryland, as the site for his son’s
funeral. The Westboro congregation members picketed while standing on public land adjacent to
a public street approximately 1,000 feet from the church. Albert Snyder filed a lawsuit against
Phelps, Phelps’s daughters, and the Westboro Baptist Church (collective “Westboro”) in U.S.
district court. Snyder alleged intentional infliction of emotional distress and other state law tort
claims. Westboro argued that their speech was protected by the First Amendment. The jury found
for Snyder and held Westboro liable for $2.9 million in compensatory damages and $8 million in
punitive damages. The U.S. district court remitted the punitive damages to $2.1 million. The U.S.
court of appeals held that the First Amendment protected Westboro’s speech and reversed the
judgment. Snyder appealed to the U.S. Supreme Court.
Issue: Does the Free Speech Clause of the First Amendment shield church members from tort
liability for their funeral picketing speech?
Decision: The U.S. Supreme Court held that Mr. Snyder could not recover tort damages for the
emotional distress he suffered because of Westboro’s speech.
Reason: The U.S. Supreme Court held that the First Amendment protected Westboro’s speech in
this case.
Case 2.4—U.S. Supreme Court Case
Equality
United States v. Windsor
133 S.Ct. 2675 (2013)
Supreme Court of the United States
Facts: Edith Windsor and Thea Spyer were same-sex partners who resided in the state of New
York. They began their long-term relationship in 1963. In 2007, Windsor and Spyer made a trip
to Canada where they were lawfully married. The state of New York recognized the marriage of
Windsor and Spyer. Spyer died in 2009, and left her entire estate to Windsor. In 1996, Congress
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enacted the Defense of Marriage Act (DOMA). Section 3 of this federal statute defined
“marriage” as a legal union between a husband and wife, and defined “spouse” as a person of the
opposite sex who is a husband or wife. Because of these definitions, DOMA denies same-sex
married partners benefits allowed to heterosexual married couples in more than 1,000 federal
statues and thousands of federal regulations. When Spyer died, Windsor sought to claim the
federal tax exemption for surviving spouses. This would have saved Windsor $363,053 in federal
estate taxes. DOMA barred her from obtaining this exemption. Windsor paid the taxes but filed a
lawsuit in U.S. district court alleging that Section 3 of DOMA violated the guarantee of equal
protection provided by the U.S. Constitution. The U.S. district court and the U.S. court of appeals
ruled that the challenged provision of DOMA was unconstitutional and ordered the United States
to pay Windsor a tax refund. The U.S. Supreme Court agreed to hear the appeal.
Issue: Is Section 3 of DOMA unconstitutional?
Decision: The U.S. Supreme Court held that Section 3 of DOMA was unconstitutional because it
violated the Equal Protection Clause and that federal benefits are available to same-sex married
couples equally with heterosexual married couples.
Reason: The court stated that the equal protection guarantee of the Fourteenth Amendment
makes that Fifth Amendment right all the more specific and all the better understood and
preserved.
Answers to Critical Legal Thinking Cases
2.1. Supremacy Clause
Yes. The U.S. Supreme Court held that the Massachusetts’ anti-Myanmar law conflicted with
federal law and was therefore preempted by the Supremacy Clause of the U.S. Constitution. The
Supreme Court stated, “Within the sphere defined by Congress, then, the federal statute has
placed the president in a position with as much discretion to exercise economic leverage against
Burma, with an eye toward national security, as our law will admit. It is simply implausible that
Congress would have gone to such lengths to empower the president if it had been willing to
compromise his effectiveness by deference to every provision of state statute or local ordinance
that might, if enforced, blunt the consequences of discretionary presidential action.” The court
stated that it was unlikely that Congress intended both to enable the president to protect national
security by giving him the flexibility to suspend or terminate federal sanctions and
simultaneously to allow Massachusetts to act at odds with the president’s judgment of what
national security requires. And that is just what the Massachusetts Burma law would do in
imposing a different, state system of economic pressure against the Burmese political regime. The
U.S. Supreme Court held that the Massachusetts anti-Myanmar law conflicted with federal law
and was therefore preempted by the Supremacy Clause of the Constitution. The Supreme Court
ruled in favor of the National Foreign Trade Council. Crosby, Secretary of Administration and
Finance of Massachusetts v. National Foreign Trade Council, 530 U.S. 363, 120 S.Ct. 2288, 147
L.Ed.2d 352, Web 2000 U.S. Lexis 4153 (Supreme Court of the United States)
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2.2. Establishment Clause
Yes, the display of the Ten Commandments in the courthouses violates the Establishment Clause.
The First Amendment’s Establishment Clause mandates governmental neutrality regarding
religion, that is, a government cannot promote religion. However, the U.S. Supreme Court has
held that in some instances the display of a religious item may have obtained a secular purpose
and therefore does not violate the Establishment Clause. Here, the Ten Commandments were not
part of an historical display that may have taken on a secular meaning. Instead, the Ten
Commandments were recently hung in the courtrooms, and were hung alone. Although the
counties later added historical documents to the display—such as the Declaration of
Independence and the Bill of Rights—this did not create a secular purpose. Here, the hanging of
the additional material was a sham to hide the real purpose, which was to promote religion. The
U.S. Supreme Court held that the Counties’ display of the Ten Commandments violated the
Establishment Clause. McCreary County, Kentucky v. American Civil Liberties Union of
Kentucky, 545 U.S. 844, 125 S.Ct. 2722, 162 L.Ed.2d 729, Web 2005 U.S. Lexis 5211 (Supreme
Court of the United States)
2.3. Supremacy Clause
Yes, South Coast’s fleet emission standards are preempted by federal environmental protection
law. The Supremacy Clause of the U.S. Constitution stipulates that federal law is the supreme law
of the United States, and that any conflicting state or local law is preempted by the relevant
federal law. Congress enacted the Clean Air Act, a federal law that sets air pollution standards for
vehicles and other sources of pollution. The South Coast Air Quality Management District (South
Coast), which is a political entity of the state of California, adopted air pollution standards for
fleets of vehicles, such as those operated by trucking companies, that were more stringent than
federal air pollution standards. The U.S. Supreme Court held that South Coast’s more stringent
pollution law conflicted with the federal pollution law and was therefore preempted by the Clean
Air Act. The Supreme Court stated, “Clearly, Congress contemplated the enforcement of
emission standards. But if one state or political subdivision may enact such rules, then so may any
other, and the end result would undo Congress’s carefully calibrated regulatory scheme. What is
the use of imposing such a limitation if the states are entirely free to impose their own fleet
purchase standards with entirely different specifications?” The U.S. Supreme Court held that the
federal Clean Air Act preempted South Coast’s more stringent fleet emission standards. Engine
Manufacturers Association v. South Coast Air Quality Management District, 541 U.S. 246, 124
S.Ct. 1756, 158 L.Ed.2d 529, Web 2004 U.S. Lexis 3232 (Supreme Court of the United States)
2.4. Privileges and Immunities Clause
No, the Alaska Hire statute is not constitutional. The Privileges and Immunities Clause of the
U.S. Constitution provides that “the citizens of each state shall be entitled to all privileges and
immunities of citizens in the several states.” With few exceptions, this clause prohibits a state
from favoring its residents over residents of other states in granting privileges or rights. The U.S.
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Supreme Court held that the Alaska Hire statute that required that employers give preference to
hiring Alaska residents over residents of other states violated the Privileges and Immunities
Clause. In so holding the court stated that the Constitution “was framed upon the theory that
peoples of the several states must sink or swim together, and that in the long run prosperity and
salvation are in union and not division.” The Supreme Court held that the Alaska Hire statute
cannot withstand constitutional scrutiny. Hicklin v. Orbeck, Commissioner of the Department of
Labor of Alaska, 437 U.S. 518, 98 S.Ct. 2482, 57 L.Ed.2d 397 (1978), Web 1978 U.S. Lexis 36
(Supreme Court of the United States)
2.5. Commercial Speech
Yes, the City of San Diego’s zoning ordinance which prohibits commercial billboards within the
city is lawful. What is involved in this case is commercial speech. The U.S. Supreme Court held
that although commercial speech such as advertising is protected by the Freedom of Speech
Clause of the First Amendment to the U.S. Constitution, it is accorded a lesser protection than
other constitutionally guaranteed expressions. The Supreme Court held that commercial speech is
subject to proper time, place, and manner restrictions.
In this case, the Supreme Court held that the twin goals of the zoning ordinance—traffic safety
and aesthetic values—advanced the city’s interests and justified the prohibition on commercial
billboards within the city. The court reasoned that advertisers had other forms of speech to reach
consumers, such as print media, handbills, television, and radio commercials. The Supreme Court
held that the San Diego zoning ordinance was a proper time, place and manner restriction on
commercial speech and did not violate the First Amendment. Metromedia, Inc. v. City of San
Diego, 453 U.S. 490, 101 S.Ct. 2882, 69 L.Ed.2d 800 (1981), Web 1981 U.S. Lexis 50 (Supreme
Court of the United States)
Answers to Ethics Cases
2.6. Ethics Case
Yes, the federal Driver’s Privacy Protection Act (DPPA) was properly enacted by the U.S.
Congress pursuant to the Commerce Clause power granted to the federal government by the U.S.
Constitution. The DPPA is a proper exercise of Congress’s authority to regulate interstate
commerce under the Commerce Clause. The personal, identifying information that the DPPA
regulates is a thing in interstate commerce, and that the sale or release of that information in
interstate commerce is therefore a proper subject of congressional regulation. The motor vehicle
information that the states have historically sold is used by insurers, manufacturers, direct
marketers, and others engaged in interstate commerce to contact automobile owners and drivers
via customized solicitations. The information is also used in the stream of interstate commerce by
various public and private entities for matters related to interstate motoring. Because automobile
owners’ and drivers’ information is an article of commerce, its sale or release into the interstate
stream of business is sufficient to support federal regulation. The U.S. Supreme Court held that
Congress had the authority under the Commerce Clause of the U.S. Constitution to enact the
Constitutional Law for Business and E-Commerce
15
federal Driver’s Privacy Protection Act. Therefore, a state cannot sell or otherwise distribute the
personal information of registered drivers unless the state obtains that person’s affirmative
consent to do so.
Was it ethical for state governments to sell the personal information of parties who obtained
driver’s licenses or registered vehicles with the state to advertisers, businesses, and others of
parties? Most persons who provide personal information to a state would expect that the
information would be kept confidential. The government has an implied duty not to breach this
confidentiality. Reno, Attorney General of the United States v. Condon, Attorney General of
South Carolina, 528 U.S. 141, 120 S.Ct. 666, 145 L.Ed.2d 587, Web 2000 U.S. Lexis 503
(Supreme Court of the United States)
2.7. Ethics Case
Appellees’ prosecution for burning a flag in violation of the Act is inconsistent with the First
Amendment. While flag desecration, like virulent ethnic