5.4: Business and the Bill of Rights

During the debate surrounding the Constitution, there was much discussion about whether an explicit protection of civil liberty was necessary. Some believed that the common law system adequately protected civil liberties, so a written declaration of rights wasn’t necessary. Others believed that a written declaration of rights was necessary to protect the people from government overreach. In 1791, the first ten amendments to the Constitution were ratified and became known as the Bill of Rights.

When we speak of civil liberties protected in the Constitution, we often think of how these liberties apply to people. Although the Constitution does not contain the word “corporation,” Congress has defined “person” to include “corporations” so many civil rights also apply to business entities.

It’s worth making some observations about civil liberties in general. First, there are no absolute rights, in spite of the wording of any specific amendment. For example, the First Amendment states that “Congress shall make no law abridging the freedom of speech.” In fact, there are many laws that limit the freedom of speech. People aren’t allowed to libel or slander someone, for example, or incite a crowd into a riot. Instead of absolute rights, courts have to constantly balance competing interests in deciding where the limits of individual rights lie. The right of the public to know information about the lives of politicians and other high-profile figures, for example, must often be balanced by the right those citizens have to their own privacy.

Second, while the Constitution sets up a system of government based on principles of representative democracy, the Bill of Rights exists to protect the minority, not the majority. Other than the right to vote, the civil liberties protected by the Constitution extend to all persons physically on US soil, not just citizens or legal immigrants. Persons visiting the United States temporarily, such as tourists and students, as well as undocumented aliens, are also entitled to the full protections of the US Constitution.

Third, the extent of civil liberty protections vary from time to time. Society evolves with progress and challenges. The Founders could not contemplate a digital world where an act of defamation on social media can spread to millions of people in a matter of minutes. The Eighth Amendment illustrates how time shifts the meaning of a right. The Eighth Amendment prohibits “cruel and unusual” punishment. The Supreme Court, in defining what “cruel and unusual” is, looks to “evolving standards of decency” in making the determination—in other words, what is cruel and unusual today may have been normal in years past.

Finally, major portions of the Bill of Rights apply equally to the states as they do the federal government. When adopted, the amendments were meant to restrict the federal government only. For example, the First Amendment states “Congress shall make no law respecting an establishment of religion.” States were not similarly restricted, and many states established official churches. After the Civil War, the Constitution was amended to include the Fourteenth Amendment, which prevents any state from depriving citizens of their rights without “due process of law.” Gradually, the Supreme Court developed a doctrine called incorporation, by which the limitations on government behavior in the Bill of Rights were extended to apply to the states as well. While many portions of the Bill of Rights apply to the states, not all of it does. There is no requirement, for example, that states use a grand jury system to indict criminals. There is also no requirement that states provide juries in civil trials.

First Amendment

Figure 5.4 Language of the First Amendment

The First Amendment contains several important clauses pertaining to speech and religion. The two different clauses on religion may conflict with each other in some circumstances. On the one hand, the First Amendment prohibits the government from establishing any religion—this is called the Establishment Clause. On the other hand, the First Amendment prohibits the government from restricting the free exercise of religion—this is called the Free Exercise Clause. In theory, this allows individuals the right to freely practice their religion while prohibiting the government from doing so. Conflict arises when people choose to practice their religion freely and openly on government property, such as in a public school or city hall.

As is often true in Bill of Rights cases, courts have had to fashion a test to draw the line between the Establishment and Free Exercise Clauses. The use of public funds for religious purposes and the public display of religious life is generally acceptable as long as the primary motivation is not to advance a specific religion. A city that wishes to display a Christmas tree or nativity scene, for example, is permitted to do so as part of a general holiday-themed cultural display that also includes a menorah.

The First Amendment also protects the right to freedom of speech. While many nations believe in the right of citizens to think and speak freely, the United States is fairly unique in enshrining those principles into constitutional law.

Not all speech is protected by the First Amendment, and the type of speech drives its level of protection. Political speech, which relates to matters of public interest, receives the most protection. Political dissent, displeasure with the government, party membership, and even speech advocating the overthrow of government, all deserve extraordinary protection under the First Amendment.

Figure 5.5 Spectrum of First Amendment Protection of Speech

On the other end of the spectrum is speech that deserves no protection under the First Amendment at all, such as speech that incites a panic (e.g. yelling “Fire” in a crowded theater when there is no fire). Defamation, libel and slander are all actionable torts. Obscene speech and fighting words are also not protected under the First Amendment.

In the middle of the spectrum is commercial speech, which relates to business transactions. Commercial speech is entitled to some protection under the First Amendment as long as it is not false or misleads consumers. If the information is false or misleading, it is not protected at all. Under an intermediate level of scrutiny test, freedom of commercial speech is not violated as long as (1) there is a substantial government interest in restricting or regulating speech; (2) the restriction directly advances that interest, and (3) the restriction is no more extensive than necessary.

The prior restraint doctrine prohibits formal censorship before the publication of speech. In other words, the government cannot restrict speech or publications before their actual expression. Prior restraints violate the First Amendment unless the speech is obscene, is defamatory, or creates a clear and present danger to society.

The US Supreme Court has ruled that corporations are “persons” entitled to First Amendment rights to speech and religion. In striking down federal and twenty-two state restrictions on corporate spending on political campaigns, the Supreme Court held that corporations are persons and therefore entitled to engage in political speech. Since corporations are unable to literally “speak,” they speak through spending money, and thus restrictions on how corporations may spend money during political campaigns are unconstitutional. Similarly, Congress defined “persons” to include corporations, companies, associations, firms, partnerships, societies, and joint stock companies. As a result, those types of businesses have religious rights that allow them to opt out of providing healthcare insurance to their employees that violates the businesses’ religious beliefs.

Not all protected speech is protected all the time in all places. The government is permitted to place reasonable time, place, and manner restrictions on speech to maintain important governmental functions. These restrictions are generally upheld if they further an important or substantial governmental interest, they are content neutral, and any restriction on First Amendment freedoms is no greater than that necessary to further governmental interests (i.e. the restriction is not overbroad). Thus, for example, courts have upheld restrictions on posting signs on city-owned utility poles, as well as picketing and protest permit requirements.

Fifth Amendment

Figure 5.6 Langue of the Fifth Amendment

Another important restriction on governmental authority actually appears twice in the Constitution. The due process clause appears in both the Fifth Amendment (“No person shall…be deprived of life, liberty or property without due process of law”) and the Fourteenth Amendment (“Nor shall any State deprive any person of life, liberty, or property, without due process of law”). The Fifth Amendment applies to the federal government and to the states. At its core, due process means “fundamental fairness and decency.” The clause requires that all government action that involves the taking of life, liberty, or property be done fairly and for fair reasons. Notice that the due process clause applies only to government action—it does not apply to the actions of private citizens or entities such as corporations.

Due process contains two components. The first is called procedural due process. Procedural due process requires that any government action that takes away life, liberty, or property must be made fairly and using fair procedures. Procedural due process includes: (1) notice that the government is going to act and why; (2) a hearing prior to the governmental action; and (3) the ability to appeal the determination made at the hearing. This ensures those affected by a government action have a fair chance to oppose it.

The second type of the due process is substantive due process. Substantive due process focuses on the content of government legislation itself. Generally speaking, government regulation is justified whenever the government can articulate a rational reason for the regulation. In certain categories, however, the government must articulate a compelling reason for the regulation. This is the case when the regulation affects a fundamental right, which is a right deeply rooted in American history and implicit in the concept of ordered liberty. The government must also set forth compelling reasons for restricting the right to vote or the right to travel. Substantive due process is often used as a basis for any lawsuit challenging government procedures or laws that affect an individual’s or company’s civil liberties.

Governments have the power of eminent domain, which is the power to take privately owned property and convert it for public use. The Takings Clause of the Fifth Amendment prohibits the government from taking private property for public use without just compensation. A law or regulation that denies all beneficial use of property is a taking that requires compensation. A common issue in eminent domain cases is what constitutes “just compensation.” What the value of the property was before the government announces its intent to take the property or after? Property includes land, intellectual property, and personal property.

Fourteenth Amendment

Figure 5.7 Language of the Fourteenth Amendment

The Equal Protection Clause of the Fourteenth Amendment states that “No state shall deny to any person within its jurisdiction the equal protection of the laws.” In other words, it requires the government to treat people equally. This clause incorporates Constitutional protections against the states in addition to the federal government.

The Equal Protection Clause is implicated anytime a law limits the liberty of some people but not others. It scrutinizes government-sponsored discrimination. While the word “discrimination” has a negative connotation, not all discrimination is illegal. For example, a criminal law discriminates against those who steal. The Equal Protection Clause seeks to determine what forms of discrimination are permissible.

To establish a guideline for courts to use in answering equal protection cases, the US Supreme Court has established three standards of review when examining statutes that discriminate: minimal scrutiny, intermediate scrutiny, and strict scrutiny.

Under the minimal scrutiny test, the government needs only a rational basis for the law—the law simply has to be reasonably related to some legitimate government interest. If the law is based on some rational basis, then the law passes equal protection. Thus, a law that imprisons thieves easily passes minimal scrutiny, since there are many rational reasons to imprison thieves. The majority of cases that are scrutinized under minimal scrutiny pass review.

The intermediate scrutiny test applies to cases where the government discriminates on the basis of gender. Under this test, the government has to prove that the law in question is substantially related to an important government interest. Using this test, courts have invalidated gender restrictions on admissions to nursing school, laws that state only wives can receive alimony, and a higher minimum drinking age for men.

The strict scrutiny test is used when the government discriminates against a suspect class. Under this test, the government has to prove that the law is justified by a compelling governmental interest, that the law is narrowly tailored to achieve that goal or interest, and that the law is the least restrictive means to achieve that interest. The standard is reserved for only a few classifications: laws that affect “fundamental rights” such as the rights in the Bill of Rights and any government discrimination that affects a “suspect classification” such as race or national origin. In practice, the government has a hard time meeting this burden.

Test	Relationship	Governmental Interest	Likely Result
Strict Scrutiny	Necessarily relates	Compelling	Governmental action is likely unconstitutional
Intermediate Scrutiny	Substantially relates	Important	Case-by case determination
Rational Basis	Reasonably relates	Legitimate	Governmental action is likely constitutional

There are a few cases where the Supreme Court has held that racial discrimination may be permissible even under strict scrutiny. For example, cases challenging affirmative action policies in higher education have held that admission preferences for underrepresented racial groups does not violate the Constitution. The Supreme Court has found that diversity in higher education is a compelling state interest, and that schools could consider race in deciding whether to admit students, as long as race is a “potential plus factor” considered with other factors.