The Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq.Chapter Four:The ConstitutionI. The Commerce Clause- Article I, Section 8, “The Congress shall have Power … To regulate Commerce with foreign Nations, and among the several States …” Gives Congress the power to enact most of the federal regulation of business.A. The Necessary and Proper Clause- Clause 18 of Article I, Section 81. McCulloch v. Maryland-a. The clause is placed among the powers of Congress, not among the limitations of those powers.b. Its terms purport to enlarge, not diminish the powers vested in the government.2. Federal Supremacy- when the federal government has the power to act under the Constitution, its actions are supreme.B. Defining “Commerce among the Several States”- a. Gibbons v. Ogden- Interstate commerce is business that concerns more than one state.b. Wichard v. Filburn-C. Federal and State Regulatory Relations-1. When State law impedes interstate commerce-a. Chemical Waste Management v. Hunt-b. Rowe v. New Hampshire Motor Transport-c. Wyoming v. Oklahoma-2. Imitation Not Allowed-II. The Taxing Power- Article I, Section 8, Clause 1 gives Congress thepower to “lay and collect Taxes, Duties, Imposts and Excises”A. Federal Taxation- Challenges to federal taxation are rarely heard given the broad taxing authority conveyed by the Constitution.B. State Taxation- Challenges to state taxation are more often heard because of the Constitutional protection of interstate commerce from discriminatory state taxes.The Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq.1. Apportioning State Tax Burden- Business income may be taxed by the states as long as they use formulas that divide a company’s income fairly into the portion attributable to their state with two limitations:a. Nexus- States can only tax profits if a multistate business does at least a minimal amount of business in that state. There must be a “nexus” between the business and the state.b. Apportionment by the Business- Each state with which a company has a nexus must have rules for how the companies income is divided by in-state and out-of-state portions. c. UDITPA Adopted by Half the States- Formula based on: i. The percentage of the corporation’s nationwide propertylocated in the state. ii. The percentage of a corporations nationwide sales madeto residents of the state; and iii. The percentage of a corporation’s nationwide payroll paid to residents of the state.2. State Taxes may not Impede Foreign Trade- III. Business and Free Speech- The First Amendment provides that “Congress shall make no law … abridging the freedom of speech…”however, this does not restrict all laws regarding speech especially when involving the welfare of the community.A. Business and Political Speech-1. BCRA-2. Citizens United v. Federal Elections Commission- Allows businesses to engage in electioneering communications otherwise restricted by McCain- Feingold.3. US v. Danielczyk- Recent Federal Court decision that may pave the wayThe Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq. for businesses to make outright contributions to political campaigns.B. Business and Commercial Speech-1. Bigelow v. Virginia- speech related to legal products or services is okay.2. Central Hudson Gas and Electric Corporation v. Public Service Commission of New York- Established a four part test that must be met to justify restrictions on commercial speech. a. Is the expression protected by the First Amendment? b. Is the government interest in regulating the speech substantial? c. Does the limitation advance the government interest? d. Is the regulation more extensive than necessary to advance the government interest?3. Shapero v. Kentucky Bar Association- First Amendment violation may occur when restrictions are imposed on professional advertisementsIV. Key Parts of the Bill of Rights-A. Unreasonable Search and Seizure- The Fourth Amendment protects against unreasonable search and seizure.1. Limits on Searches and Inspections- Warrantless searches are generally unreasonable and that this rule applies to commercial premises as well as homes. 2. Warrantless Searches- Allowed for closely regulated businesses, i.e., the sale of medical gases, junk yards. 3. Gathering Evidence- Evidence improperly collected and any evidence later obtained by improperly collected evidence, “fruit of the poisonous tree”, is inadmissible in court. This is the exclusionary rule.The Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq.B. Self-Incrimination- The Fifth Amendment provides that an individual cannot be compelled to be a witness against himself in a criminal proceedingC. Just Compensation- The Fifth Amendment also provides that private property shall not be taken for public use without just compensation.1. Eminent Domain- When government takes private property for a public use. Also known as the taking clause. a. Is there a public use? b. What is just compensation?2. Regulatory Takings- When regulations that effect private property are so extensive as to amount to a taking in the there is no longer any viable use for the property, i.e., the Endangered Species Act and RCWs.D. Right to Trial- The Sixth Amendment addresses the right of persons to a jury trial in criminal cases.E. Excessive Fines- The Eighth Amendment restricts the use of cruel and unusual punishment but also hold that no excessive fines may be imposed.F. Right to Bear Arms- Businesses must comply with city or state regulations as to the use or possession of firearms.V. Fourteenth Amendment- “No State shall… deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” The Fourteenth Amendment incorporates protections from the Bill of Rights and applies them to the states. A. Due Process- A due process claim may exist when:1. The state infringes on a fundament liberty interest without narrowly tailoring that infringement to serve a compelling state interest; or2. When state action either shocks the conscience or offends judicial notions of fairness and human dignity.The Legal Environment of BusinessFINA 2244