Page 55 BUSINESS AND THE CONSTITUTIONA federal statute and.docx

BUSINESS AND THE CONSTITUTION
A federal statute and related regulations prohibited producers of
beer from listing, on a product label, the alcohol content of the
beer in the container on which the label appeared. The
regulation existed because the U.S. government believed that if
alcohol content could be disclosed on labels, certain producers
of beer might begin marketing their brand as having a higher
alcohol content than competing beers. The government was
concerned that “strength wars” among producers could then
develop, that consumers would seek out beers with higher
alcohol content, and that adverse public health consequences
would follow. Because it wished to include alcohol content
information on container labels for its beers, Coors Brewing Co.
filed suit against the United States government and asked the
court to rule that the statute and regulations violated Coors's
constitutional right to freedom of speech.
Consider the following questions as you read Chapter 3:
On which provision in the U.S. Constitution was Coors relying
in its challenge of the statute and regulations?
Does a corporation such as Coors possess the same
constitutional right to freedom of speech possessed by an
individual human being, or does the government have greater
latitude to restrict the content of a corporation's speech?
The alcohol content disclosures that Coors wished to make with
regard to its product would be classified as commercial speech.
Does commercial speech receive the same degree of
constitutional protection that political or other noncommercial
speech receives?
Which party—Coors or the federal government—won the case,
and why?

Do producers and other sellers of alcoholic beverages have, in
connection with the sale of their products, special ethical
obligations that sellers of other products might not have? If so,
what are those obligations and why do they exist?
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1 Describe the role of courts in interpreting constitutions and
in determining whether statutes or other government actions are
constitutional.
2 Explain the key role of the U.S. Constitution's Commerce
Clause in authorizing action by Congress.
3 Describe the incorporation doctrine's role in making most
guarantees of the Bill of Rights operate to protect persons not
only against certain federal government actions but also against
certain state and local government actions.
4 Explain the differences among the means-ends tests used by
courts when the constitutionality of government action is being
determined (strict scrutiny, intermediate scrutiny, and rational
basis).
5 Describe the differences between noncommercial speech and
commercial speech and the respective levels of First
Amendment protection they receive.
Page 56 6 Explain the difference between procedural due
process and substantive due process.
7 Identify the instances when an Equal Protection Clause–
based challenge to government action triggers more rigorous
scrutiny than the rational basis test.
8 Explain the burden-on-commerce doctrine's role in making
certain state government actions unconstitutional.
9 Identify the major circumstances in which federal law will
preempt state law.
10 Explain the power granted to the government by the Takings
Clause, as well as the limits on that power.

CONSTITUTIONS SERVE TWO general functions. First, they
set up the structure of government, allocating power among its
various branches and subdivisions. Second, they prevent
government from taking certain actions—especially actions that
restrict individual or, as suggested by the Coors scenario with
which this chapter opened, corporate rights. This chapter
examines the U.S. Constitution's performance of these functions
and considers how that performance affects government
regulation of business.
An Overview of the U.S. Constitution
The U.S. Constitution exhibits the principle of separation of
powers by giving distinct powers to Congress, the president,
and the federal courts. Article I of the Constitution establishes a
Congress composed of a Senate and a House of Representatives,
gives it sole power to legislate at the federal level, and sets out
rules for the enactment of legislation. Article I, § 8 also defines
when Congress can make law by stating its legislative powers.
Three of those powers—the commerce, tax, and spending
powers—are discussed later in the chapter.
Article II gives the president the executive power—the power to
execute or enforce the laws passed by Congress. Section 2 of
that article lists other presidential powers, including the powers
to command the nation's armed forces and to make treaties.
Article III gives the judicial power of the United States to the
Supreme Court and the other federal courts later established by
Congress. Article III also determines the types of cases the
federal courts may decide.
Besides creating a separation of powers, Articles I, II, and III
set up a system of checks and balances among Congress, the
president, and the courts. For example, Article I gives the
president the power to veto legislation passed by Congress, but
allows Congress to override such a veto by a two-thirds vote of
each House. Article I and Article II provide that the president,
the vice president, and other federal officials may be impeached
and removed from office by a two-thirds vote of the Senate.

Article II states that treaties agreed to by the president must be
approved by a two-thirds vote of the Senate. Article III gives
Congress some control over the Supreme Court's appellate
jurisdiction.
The Constitution recognizes the principle of federalism in the
way it structures power relations between the federal
government and the states. After listing the powers Congress
holds, Article I lists certain powers that Congress cannot
exercise. The Tenth Amendment provides that those powers the
Constitution neither gives to the federal government nor denies
to the states are reserved to the states or the people.
Article VI, however, makes the Constitution, laws, and treaties
of the United States supreme over state law. As will be seen,
this principle of federal supremacy may cause federal statutes to
preempt inconsistent state laws. The Constitution also puts
limits on the states' lawmaking powers. One example is Article
I's command that states shall not pass laws impairing the
obligation of contracts.
Article V sets forth the procedures for amending the
Constitution. The Constitution has been amended 27 times. The
first 10 of these amendments comprise the Bill of Rights.
Although the rights guaranteed in the first 10 amendments once
restricted only federal government action, most of them now
limit state government action as well. As you will learn, this
results from their incorporation within the Due Process Clause
of the Fourteenth Amendment.
Page 57
Describe the role of courts in interpreting constitutions and in
determining whether statutes or other government actions are
constitutional.
The Evolution of the Constitution and the Role of the Supreme
Court
According to the legal realists discussed in Chapter 1, written
“book law” is less important than what public decision makers

actually do. Using this approach, we discover a Constitution
that differs from the written Constitution just described. The
actual powers of today's presidency, for instance, exceed
anything one would expect from reading Article II. As you will
see, moreover, some constitutional provisions have acquired a
meaning different from their meaning when first enacted.
American constitutional law has evolved rather than being
static.
Many of these changes result from the way one public decision
maker—the nine-member U.S. Supreme Court—has interpreted
the Constitution over time. Formal constitutional change can be
accomplished only through the amendment process. Because
this process is difficult to employ, however, amendments to the
Constitution have been relatively infrequent. As a practical
matter, the Supreme Court has become the Constitution's main
“amender” through its many interpretations of constitutional
provisions. Various factors help explain the Supreme Court's
ability and willingness to play this role. Because of their
vagueness, some key constitutional provisions invite diverse
interpretations. “Due process of law” and “equal protection of
the laws” are examples. In addition, the history surrounding the
enactment of constitutional provisions sometimes is sketchy,
confused, or contradictory. Probably more important, however,
is the perceived need to adapt the Constitution to changing
social conditions. As the old saying goes, Supreme Court
decisions tend to “follow the election returns.” (Regardless of
where one finds himself or herself on the political spectrum, the
old saying has taken on a new twist after Bush v. Gore, the
historic 2000 decision referred to later in this chapter.)
Under the power of judicial review, courts can declare the
actions of other government bodies unconstitutional. How
courts exercise this power depends on how they choose to read
the Constitution. Courts thus have political power—a
conclusion especially applicable to the Supreme Court. Indeed,
the Supreme Court's justices are, to a considerable extent,
public policy makers. Their beliefs are important in the

determination of how America is governed. This is why the
justices' nomination and confirmation often involve so much
political controversy.
Yet even though the Constitution frequently is what the courts
say it is, judicial power to shape the Constitution has limits.
Certain limits spring from the Constitution's language, which
sometimes is quite clear. Others result from the judges'
adherence to the stare decisis doctrine discussed in Chapter 1.
Perhaps the most significant limits on judges' power, however,
stem from the tension between modern judicial review and
democracy. Legislators are chosen by the people, whereas
judges—especially appellate level judges—often are appointed,
not elected. Today, judges exercise political power by declaring
the actions of legislatures unconstitutional under standards
largely of the judiciary's own devising. This sometimes leads to
charges that courts are undemocratic, elitist institutions. Such
charges put political constraints on judges because courts
depend on the other branches of government—and ultimately on
public belief in judges' fidelity to the rule of law—to make their
decisions effective. Therefore, judges sometimes, may be
reluctant to declare statutes unconstitutional because they are
wary of power struggles with a more representative body such
as Congress.
LOG ON
For a great deal of information about the U.S. Supreme Court
and access to the Court's opinions in recent cases, see the
Court's website at http://www.supremecourtus.gov.
The Coverage and Structure of This Chapter
This chapter examines certain constitutional provisions that are
important to business; it does not discuss constitutional law in
its entirety. These provisions help define federal and state
power to regulate the economy. The U.S. Constitution limits
government regulatory power in two general ways. First, it

restricts federal legislative authority by listing the powers
Congress can exercise. These are known as the enumerated
powers. Federal legislation cannot be constitutional if it is not
based on a power specifically stated in the Constitution.
Second, the U.S. Constitution limits both state and federal
power by placing certain independent checks in the path of
each. In effect, the independent checks establish that even if
Congress has an enumerated power to legislate on a particular
matter or a state Page 58constitution authorizes a state to take
certain actions, there still are certain protected spheres into
which neither the federal government nor the state government
may reach.
Accordingly, a federal law must meet two general tests in order
to be constitutional: (1) it must be based on an enumerated
power of Congress, and (2) it must not collide with any of the
independent checks. For example, Congress has the power to
regulate commerce among the states. This power might seem to
allow Congress to pass legislation forbidding women from
crossing state lines to buy or sell goods. Yet such a law, though
arguably based on an enumerated power, surely would be
unconstitutional because it conflicts with an independent
check—the equal protection guarantee discussed later in the
chapter. Today, the independent checks are the main limitations
on congressional power. The most important reason for the
decline of the enumerated powers limitation is the perceived
need for active federal regulation of economic and social life.
Recently, however, the enumerated powers limitation has begun
to assume somewhat more importance, as will be seen.
After discussion of the most important state and federal powers
to regulate economic matters, the chapter explores certain
independent checks that apply to the federal government and the
states. The chapter then examines some independent checks that
affect the states alone. It concludes by discussing a provision—
the Takings Clause of the Fifth Amendment—that both
recognizes a governmental power and limits its exercise.
State and Federal Power to Regulate

State Regulatory Power Although state constitutions may do so,
the U.S. Constitution does not list the powers state legislatures
can exercise. The U.S. Constitution does place certain
independent checks in the path of state lawmaking, however. It
also declares that certain powers (e.g., creating currency and
taxing imports) can be exercised only by Congress. In many
other areas, though, Congress and the state legislatures have
concurrent powers. Both can make law within those areas unless
Congress preempts state regulation under the supremacy clause.
A very important state legislative power that operates
concurrently with many congressional powers is the police
power, a broad state power to regulate for the public health,
safety, morals, and welfare.
Federal Regulatory Power Article I, § 8 of the U.S. Constitution
specifies a number of ways in which Congress may legislate
concerning business and commercial matters. For example, it
empowers Congress to coin and borrow money, regulate
commerce with foreign nations, establish uniform laws
regarding bankruptcies, create post offices, and enact copyright
and patent laws. The most important congressional powers
contained in Article I, § 8, however, are the powers to regulate
commerce among the states, to lay and collect taxes, and to
spend for the general welfare. Because they now are read so
broadly, these three powers are the main constitutional bases for
the extensive federal social and economic regulation that exists
today.
Explain the key role of the U.S. Constitution's Commerce
Clause in authorizing action by Congress.
The Commerce Power Article I, § 8 states that “The Congress
shall have Power … To regulate Commerce … among the
several States.” The original reason for giving Congress this
power to regulate interstate commerce was to nationalize
economic matters by blocking the protectionist state restrictions

on interstate trade that were common after the Revolution. As
discussed later in the chapter, the Commerce Clause serves as
an independent check on state regulation that unduly restricts
interstate commerce. Our present concern, however, is the
Commerce Clause's role as a source of congressional regulatory
power.
The literal language of the Commerce Clause simply empowers
Congress to regulate commerce that occurs among the states.
Supreme Court decisions interpreting the Commerce Clause
have held, however, that it sets up three categories of actions in
which Congress may engage: first, regulating the channels of
interstate commerce; second, regulating and protecting the
instrumentalities of interstate commerce, as well as persons or
things in interstate commerce; and third, regulating activities
that substantially affect interstate commerce. Largely because
of judicial decisions regarding congressional action falling
within the third category, the Commerce Clause has become a
federal power with an extensive regulatory reach. How has this
transformation occurred?
The most important step in the transformation was the Supreme
Court's conclusion that the power to regulate interstate
commerce includes the power to regulate intrastate activities
that affect interstate commerce. For example, in a 1914
decision, the Supreme Court upheld the Interstate Commerce
Commission's regulation of railroad rates within Texas (an
intrastate matter outside the language of the Commerce Clause)
because those rates affected rail traffic between Texas and
Louisiana Page 59(an interstate matter within the clause's
language). This “affecting commerce” doctrine eventually was
used to justify federal police power measures with significant
intrastate reach. For instance, the Supreme Court upheld the
application of the 1964 Civil Rights Act's “public
accommodations” section to a family-owned restaurant in
Birmingham, Alabama. It did so because the restaurant's racial
discrimination affected interstate commerce by reducing the
restaurant's business and limiting its purchases of out-of-state

meat, and by restricting the ability of blacks to travel among the
states.
As the above examples indicate, Congress may constitutionally
regulate many predominantly intrastate activities. By the early
1990s, it was not uncommon for observers to view the
Commerce Clause as having become, through judicial
interpretations, a federal police power with almost unlimited
reach. Yet two Supreme Court decisions from the mid-1990s
offered indications that the commerce power is not as broad-
ranging as many had come to believe. Harmonizing those
decisions with the earlier “affecting commerce” decisions was
the Court's task in a 2005 case, Gonzales v. Raich, which
follows shortly.
When it enacted the Patient Protection and Affordable Care Act
in 2010, Congress relied chiefly on the Commerce Clause as the
source of power to enact the health care reform law. Various
constitutional challenges to the law were initiated, with some
federal courts sustaining the statute as a valid exercise of
congressional power under the Commerce Clause but other
federal courts striking down part or all of it on the ground that
Congress had exceeded its commerce power. As this book went
to press in 2011, the constitutional challenges seemed destined
for resolution in the Supreme Court. Gonzales v. Raich and the
two previously referred to decisions from the mid-1990s will be
leading precedents with which the Supreme Court must wrestle
when it decides the fate of the health care reform law.
Gonzales v. Raich
545 U.S. 1 (U.S. Sup. Ct. 2005)

Although state and federal statutes outlaw marijuana possession
and sale, a 1996, California statute made, California the first of
approximately 10 states to authorize limited use of the drug for
medicinal purposes. The Compassionate Use Act created an
exemption from criminal prosecution for patients and primary
caregivers who possess or cultivate marijuana for medicinal
purposes with a physician's approval.
California residents Angel Raich and Diane Monson suffered
from serious medical conditions. After prescribing numerous
conventional medicines, physicians had concluded that
marijuana was the only effective treatment for Raich and
Monson. Both women had been using marijuana as a medication
pursuant to their doctors' recommendations, and both relied
heavily on marijuana so that they could function without
extreme pain. Monson cultivated her own marijuana. Two
caregivers provided Raich with locally grown marijuana at no
charge.
In 2002, county deputy sheriffs and agents from the federal
Drug Enforcement Administration (DEA) came to Monson's
home. Although the deputies concluded that Monson's use of
marijuana was lawful under California law, the federal agents
seized and destroyed all six of her cannabis plants. Raich and
Monson thereafter sued the Attorney General of the United
States and the head of the DEA in an effort to obtain an
injunction barring enforcement of the federal Controlled
Substances Act (CSA), to the extent that it prevented them from
possessing, obtaining, or manufacturing cannabis for their
personal medical use in accordance with California law. The
CSA classifies marijuana as a controlled substance and
criminalizes its possession and sale. In their complaint, Raich
and Monson claimed that enforcing the CSA against them would
violate the U.S. Constitution's Commerce Clause and the Due
Process Clause of the Fifth Amendment. The federal district
court denied the request for a preliminary injunction. The U.S.
Court of Appeals for the Ninth Circuit, however, agreed with
the Commerce Clause argument and directed the lower court to

issue a preliminary injunction prohibiting enforcement of the
CSA against Raich and Monson (often referred to below as
“respondents”). The U.S. Supreme Court granted the federal
government's petition for a writ of certiorari.
Stevens, Justice
Article I, § 8 of the Constitution [empowers Congress] “to make
all Laws which shall be necessary and proper for carrying into
Execution” [the federal] authority to “regulate Commerce with
foreign Nations, and among the several States.” The question
presented in this case is whether the power vested in Congress
by [the Commerce Clause] includes the power to prohibit the
local cultivation and use of marijuana in compliance with
California law. [This] case is made difficult by respondents'
strong arguments that they will suffer irreparable harm because,
despite a congressional finding to the contrary, marijuana does
have valid therapeutic purposes. The [issue] before us, however,
is not Page 60whether it is wise to enforce the statute in these
circumstances; rather, it is whether Congress' power to regulate
interstate markets for medicinal substances encompasses the
portions of those markets that are supplied with drugs produced
and consumed locally.
[Enacted in 1970 as part of a broader legislative package known
as the Comprehensive Drug Abuse Prevention and Control Act],
the CSA repealed most of the earlier [federal] drug laws in
favor of a comprehensive regime to combat the international
and interstate traffic in illicit drugs. The main objectives of the
CSA [center around monitoring] legitimate and illegitimate
traffic in controlled substances. Congress devised a closed
regulatory system making it unlawful to manufacture, distribute,
dispense, or possess any controlled substance except in a
manner authorized by the CSA, [which] categorizes all
controlled substances into five schedules. The drugs are
grouped together based on their accepted medical uses, the
potential for abuse, and their psychological and physical effects
on the body. Each schedule is associated with a distinct set of

controls regarding the manufacture, distribution, and use of the
substances listed therein.
Congress classified marijuana [in] Schedule I [of the CSA].
Schedule I drugs are categorized as such because of their high
potential for abuse, lack of any accepted medical use, and
absence of any accepted safety for use in medically supervised
treatment. These three factors, in varying gradations, are also
used to categorize drugs in the other four schedules. [As
Congress acknowledged in the CSA, many drugs listed on the
other schedules do have accepted medical uses.] By classifying
marijuana as a Schedule I drug, [Congress made] the
manufacture, distribution, or possession of marijuana … a
criminal offense.
Respondents … do not dispute that passage of the CSA … was
well within Congress' commerce power. Rather, respondents'
challenge is actually quite limited; they argue that the CSA's
categorical prohibition of the manufacture and possession of
marijuana as applied to the intrastate manufacture and
possession of marijuana for medical purposes pursuant to
California law exceeds Congress' authority under the Commerce
Clause.
[This Court's Commerce Clause cases] have identified three
general categories of regulation in which Congress is authorized
to engage under its commerce power. First, Congress can
regulate the channels of interstate commerce. Second, Congress
has authority to regulate and protect the instrumentalities of
interstate commerce, and persons or things in interstate
commerce. Third, Congress has the power to regulate activities
that substantially affect interstate commerce. Only the third
category is implicated in the case at hand.
Our case law firmly establishes Congress' power to regulate
purely local activities that are part of an economic “class of
activities” [having] a substantial effect on interstate commerce.
See, e.g., Wickard v. Filburn, 317 U.S. 111 (1942). As we
stated in Wickard, “even if appellee's activity be local and
though it may not be regarded as commerce, it may still,

whatever its nature, be reached by Congress if it exerts a
substantial economic effect on interstate commerce.” In
Wickard, we upheld the application of regulations promulgated
under the Agricultural Adjustment Act of 1938, which were
designed to control the volume of wheat moving in interstate
and foreign commerce in order to avoid surpluses and
consequent abnormally low prices. The regulations established
an allotment of 11.1 acres for Filburn's 1941 wheat crop, but he
sowed 23 acres, intending to use the excess by consuming it on
his own farm. Filburn argued that even though Congress [had
the] power to regulate the production of goods for commerce,
that power did not authorize “federal regulation [of] production
not intended in any part for commerce but wholly for
consumption on the farm.” Justice Jackson's opinion for a
unanimous Court rejected this submission. He wrote:
The effect of the statute before us is to restrict the amount
which may be produced for market and the extent as well to
which one may forestall resort to the market by producing to
meet his own needs. That [Filburn's] own contribution to the
demand for wheat may be trivial by itself is not enough to
remove him from the scope of federal regulation where, as here,
his contribution, taken together with that of many others
similarly situated, is far from trivial.
Wickard thus establishes that Congress can regulate purely
intrastate activity that is not itself “commercial,” in that it is
not produced for sale, if it concludes that failure to regulate that
class of activity would undercut the regulation of the interstate
market in that commodity.
The similarities between this case and Wickard are striking.
Like the farmer in Wickard, respondents are cultivating, for
home consumption, a fungible commodity for which there is an
established, albeit illegal, interstate market. Just as the
Agricultural Adjustment Act was designed “to control the
volume [of wheat] moving in interstate and foreign commerce in

order to avoid surpluses” and consequently control the market
price, a primary purpose of the CSA is to control the supply and
demand of controlled substances in both lawful and unlawful
drug markets. In Wickard, we had no difficulty concluding that
Congress had a rational basis for believing that … leaving
home-consumed wheat outside the regulatory scheme would
have a substantial influence on price and market conditions.
Here too, Congress had a rational basis for concluding that
leaving home-consumed marijuana outside federal control
would similarly affect price and market conditions.
More concretely, one concern prompting inclusion of wheat
grown for home consumption in the 1938 Act was that rising
Page 61market prices could draw such wheat into the interstate
market, resulting in lower market prices. The parallel concern
making it appropriate to include marijuana grown for home
consumption in the CSA is the likelihood that the high demand
in the interstate market will draw such marijuana into that
market. While the diversion of homegrown wheat tended to
frustrate the federal interest in stabilizing prices by regulating
the volume of commercial transactions in the interstate market,
the diversion of homegrown marijuana tends to frustrate the
federal interest in eliminating commercial transactions in the
interstate market in their entirety. In both cases, the regulation
is squarely within Congress' commerce power because
production of the commodity meant for home consumption, be it
wheat or marijuana, has a substantial effect on supply and
demand in the national market for that commodity.
To support their [argument that applying the CSA to them
would violate the Commerce Clause], respondents rely heavily
on two of our more recent Commerce Clause cases, United
States v. Lopez, 514 U.S. 549 (1995), and United States v.
Morrison, 529 U.S. 598 (2000). [However, respondents]
overlook the larger context of modern-era Commerce Clause
jurisprudence preserved by those cases. [T]he statutory
challenges in Lopez and Morrison were markedly different from
the [statutory] challenge in the case at hand. Here, respondents

ask us to excise individual applications of a concededly valid
statutory scheme. In contrast, in both Lopez and Morrison, the
parties asserted that a particular statute or provision fell outside
Congress' commerce power in its entirety. This distinction is
pivotal, for we have often reiterated that “where the class of
activities is regulated and that class is within the reach of
federal power, the courts have no power ‘to excise, as trivial,
individual instances’ of the class.” [Citations of authority
omitted.]
At issue in Lopez was the validity of the Gun-Free School
Zones Act of 1990, which was a brief, single-subject statute
making it a [federal] crime for an individual to possess a gun in
a school zone. Distinguishing our earlier cases holding that
comprehensive regulatory statutes may be validly applied to
local conduct that does not, when viewed in isolation, have a
significant impact on interstate commerce, we held the statute
invalid. We explained:
[The Gun-Free School Zones Act] is a criminal statute that by
its terms has nothing to do with ‘commerce’ or any sort of
economic enterprise, however broadly one might define those
terms. [The statute] is not an essential part of a larger
regulation of economic activity, in which the regulatory scheme
could be undercut unless the intrastate activity were regulated.
It cannot, therefore, be sustained under our cases upholding
regulations of activities that arise out of or are connected with a
commercial transaction, which viewed in the aggregate,
substantially affects interstate commerce.
The statutory scheme that the government is defending in this
litigation is at the opposite end of the regulatory spectrum. [The
CSA is] a lengthy and detailed statute creating a comprehensive
framework for regulating the production, distribution, and
possession of five classes of controlled substances. [The CSA's
classification of marijuana], unlike the discrete prohibition
established by the Gun-Free School Zones Act of 1990, was

merely one of many “essential parts of a larger regulation of
economic activity, in which the regulatory scheme could be
undercut unless the intrastate activity were regulated.” [Citation
omitted.] Our opinion in Lopez casts no doubt on the validity of
such a program.
Nor does this Court's holding in Morrison. The Violence
Against Women Act of 1994 created a federal civil remedy for
the victims of gender-motivated crimes of violence. The remedy
… generally depended on proof of the violation of a state law.
Despite congressional findings that such crimes had an adverse
impact on interstate commerce, we held the statute
unconstitutional because, like the statute in Lopez, it did not
regulate economic activity.
Unlike those at issue in Lopez and Morrison, the activities
regulated by the CSA are quintessentially economic. The CSA is
a statute that regulates the production, distribution, and
consumption of commodities for which there is an established,
and lucrative, interstate market. Prohibiting the intrastate
possession or manufacture of an article of commerce is a
rational (and commonly utilized) means of regulating commerce
in that product. Because the CSA is a statute that directly
regulates economic, commercial activity, our opinion in
Morrison casts no doubt on its constitutionality.
We acknowledge that evidence proffered by respondents in this
case regarding the effective medical uses for marijuana, if
found credible after trial, would cast serious doubt on the
accuracy of the [congressional] findings that require marijuana
to be listed in Schedule I. But the possibility that the drug may
be reclassified in the future has no relevance to the question
whether Congress now has the power to regulate its production
and distribution. One need not have a degree in economics to
understand why a nationwide exemption for the vast quantity of
marijuana … locally cultivated for personal use (which
presumably would include use by friends, neighbors, and family
members) may have a substantial impact on the interstate
market for this extraordinarily popular substance. The

congressional judgment that an exemption for such a significant
segment of the total market would undermine the orderly
enforcement of the entire regulatory scheme is entitled to a
strong presumption of validity.
[T]hat the California exemptions will have a significant impact
on both the supply and demand sides of the market for
marijuana is … readily apparent. [Although] most prescriptions
for legal drugs … limit the dosage and duration of the usage,
under Page 62California law the doctor's permission to
recommend marijuana use is open-ended. The [California
statute's authorization for the doctor] to grant permission
whenever the doctor determines that a patient is afflicted with
“any other illness for which marijuana provides relief” is broad
enough to allow even the most scrupulous doctor to conclude
that some recreational uses would be therapeutic. And our cases
have taught us that there are some unscrupulous physicians who
overprescribe when it is sufficiently profitable to do so.
The exemption for cultivation by patients and caregivers can
only increase the supply of marijuana in the California market.
The likelihood that all such production will promptly terminate
when patients recover or will precisely match the patients'
medical needs during their convalescence seems remote,
whereas the danger that excesses will satisfy some of the
admittedly enormous demand for recreational use seems
obvious. Moreover, that the national and international narcotics
trade has thrived in the face of vigorous criminal enforcement
efforts suggests that no small number of unscrupulous people
will make use of the California exemptions to serve their
commercial ends whenever it is feasible to do so.
[T]he case for the exemption comes down to the claim that a
locally cultivated product that is used domestically rather than
sold on the open market is not subject to federal regulation.
Given the findings in the CSA and the undisputed magnitude of
the commercial market for marijuana, our decisions in Wickard
v. Filburn and the later [cases] endorsing its reasoning foreclose
that claim.

We do note, however, the presence of another avenue of relief
[for the respondents: the CSA-authorized procedures that can
lead to] reclassification of Schedule I drugs. But perhaps even
more important than these legal avenues is the democratic
process, in which the voices of voters allied with these
respondents may one day be heard in the halls of Congress.
Under the present state of the law, however, the judgment of the
Court of Appeals [cannot stand].
Court of Appeals decision vacated; case remanded for further
proceedings.
The Taxing Power Article I, § 8 of the Constitution states that
“The Congress shall have Power To lay and collect Taxes,
Duties, Imposts and Excises.” The main purpose of this taxing
power is to provide a means of raising revenue for the federal
government. The taxing power, however, may also serve as a
regulatory device. Because the power to tax is the power to
destroy, Congress may choose, for instance, to regulate a
disfavored activity by imposing a heavy tax on it. Although
some past regulatory taxes were struck down, today the reach of
the taxing power is seen as very broad.
The Spending Power If taxing power regulation uses a federal
club, congressional spending power regulation employs a
federal carrot. Article I, § 8 also gives Congress a broad ability
to spend for the general welfare. By basing the receipt of
federal money on the performance of certain conditions,
Congress can use the spending power to advance specific
regulatory ends. Conditional federal grants to the states, for
instance, are common today.
Over the past several decades, congressional spending power
regulation routinely has been upheld. There are limits, however,
on its use. First, an exercise of the spending power must serve
general public purposes rather than particular interests. Second,
when Congress conditions the receipt of federal money on
certain conditions, it must do so clearly. Third, the condition
must be reasonably related to the purpose underlying the federal

expenditure. This means, for instance, that Congress probably
could not condition a state's receipt of federal highway money
on the state's adoption of a one-house legislature.
The Necessary and Proper Clause After listing the commerce
power, the taxing and spending powers, and various other
powers extended to Congress, Article I, § 8 concludes with a
provision granting Congress the further power to “make all laws
which shall be necessary and proper for carrying into execution
the foregoing powers ….” The Necessary and Proper Clause is
dependent upon Article I, § 8's previously listed powers but
augments them by permitting Congress to enact laws that are
useful or conducive to the exercise of those enumerated powers.
For instance, even though the congressional power under the
Commerce Clause focuses on interstate economic activity,
certain instances of noneconomic activity could be regulated by
Congress under the Necessary and Proper Clause if doing so
would be important to the effective operation of federal
legislation dealing with interstate economic activity.
Page 63Independent Checks on the Federal Government and the
States
Even if a regulation is within Congress's enumerated powers or
a state's police power, it still is unconstitutional if it collides
with one of the Constitution's independent checks. This section
discusses three checks that limit federal and state regulation of
the economy: freedom of speech; due process; and equal
protection. Before discussing these guarantees, however, we
must consider three foundational matters.
Describe the incorporation doctrine's role in making most
guarantees of the Bill of Rights operate to protect persons not
only against certain federal government actions but also against
certain state and local government actions.
Incorporation The Fifth Amendment prevents the federal
government from depriving “any person of life, liberty, or

property, without due process of law.” The Fourteenth
Amendment creates the same prohibition with regard to the
states. The literal language of the First Amendment, however,
restricts only federal government action. Moreover, the
Fourteenth Amendment says that no state shall “deny to any
person … the equal protection of the laws.”
Thus, although the due process guarantees clearly apply to both
the federal government and the states, the First Amendment
seems to apply only to the federal government and the Equal
Protection Clause only to the states. The First Amendment's free
speech guarantee, however, has been included within the
“liberty” protected by Fourteenth Amendment due process as a
result of Supreme Court decisions. The free speech guarantee,
therefore, restricts state governments as well as the federal
government. This is an example of the process of incorporation,
by which almost all Bill of Rights provisions now apply to the
states. The criminal procedure-related provisions in the Fourth,
Fifth, and Sixth Amendments (examined in Chapter 5 of this
text) are further examples of Bill of Rights protections that the
federal government must honor but that state and local
governments must respect as well, because of the incorporation
doctrine. The Fourteenth Amendment's equal protection
guarantee, on the other hand, has been made applicable to
federal government action through incorporation of it within the
Fifth Amendment's Due Process Clause.
Government Action People often talk as if the Constitution
protects them against anyone who might threaten their rights.
However, most of the Constitution's individual rights provisions
block only the actions of government bodies, federal, state, and
local.1 Private behavior that denies individual rights, while
perhaps forbidden by statute, is very seldom a constitutional
matter. This government action or state action requirement
forces courts to distinguish between governmental behavior and
private behavior. Judicial approaches to this problem have
varied over time.
Before World War II, only formal arms of government such as

legislatures, administrative agencies, municipalities, courts,
prosecutors, and state universities were deemed state actors.
After the war, however, the scope of government action
increased considerably, with various sorts of traditionally
private behavior being subjected to individual rights limitations.
The Supreme Court, in Marsh v. Alabama (1946), treated a
privately owned company town's restriction of free expression
as government action under the public function theory because
the town was nearly identical to a regular municipality in most
respects. In Shelley v. Kraemer (1948), the Court held that
when state courts enforced certain white homeowners' private
agreements not to sell their homes to blacks, there was state
action that violated the Equal Protection Clause. Later, in
Burton v. Wilmington Parking Authority (1961), the Court
concluded that racial discrimination by a privately owned
restaurant located in a state-owned and state-operated parking
garage was unconstitutional state action, in part because the
garage and the restaurant were intertwined in a mutually
beneficial “symbiotic” relationship. Among the other factors
leading courts to find state action during the 1960s and 1970s
were extensive government regulation of private activity and
government financial aid to a private actor.
The Court, however, severely restricted the reach of state action
during the 1970s and 1980s. Since then, private behavior
generally has not been held to constitute state action unless a
regular unit of government is directly responsible for the
challenged private behavior because it has coerced or
encouraged such behavior. The public function doctrine,
moreover, has been limited to situations in which a private
entity exercises powers that have traditionally been exclusively
reserved to the state; Page 64private police protection is a
possible example. In addition, government regulation and
government funding have become somewhat less important
factors in state action determinations.
In a 2001 decision, however, a six-justice majority of the
Supreme Court concluded that the Tennessee Secondary School

Athletic Association (TSSAA) was a state actor for purposes of
the Constitution's Fourteenth Amendment when it enforced an
association rule against a member school. The TSSAA, a
privately organized, not-for-profit entity, regulated
interscholastic sports competition among public and private
high schools in Tennessee. Although no school was required to
join the TSSAA, nearly all public schools and many private
schools had done so. All members of the association's governing
bodies were school officials, most of whom were from public
schools. Public school systems provided considerable financial
support for the TSSAA, which worked closely with the state
board of education, a governmental body. For many years, the
TSSAA was designated in a state board of education rule as the
regulator of athletics in the state's public schools. Stressing the
“pervasive entwinement of public institutions and public
officials in [the TSSAA's] composition and workings,” the
Supreme Court held in Brentwood Academy v. Tennessee
Secondary School Athletic Association that the TSSAA was a
government actor. Brentwood Academy's “entwinement”
rationale appears to provide an additional way in which state
action can be found, though the Court emphasized that each
decision on the state action issue is highly fact-specific.
Explain the differences among the means-ends tests used by
courts when the constitutionality of government action is being
determined (strict scrutiny, intermediate scrutiny, and rational
basis).
Means-Ends Tests Throughout this chapter, you will see tests of
constitutionality that may seem strange at first glance. One
example is the test for determining whether laws that
discriminate on the basis of sex violate equal protection. This
test says that to be constitutional, such laws must be
substantially related to the achievement of an important
government purpose. The Equal Protection Clause does not

contain such language. It simply says that “No State shall …
deny to any person … the equal protection of the laws.” What is
going on here?
The sex discrimination test just stated is a means-ends test
developed by the Supreme Court. Such tests are judicially
created because no constitutional right is absolute, and because
judges therefore must weigh individual rights against the social
purposes served by laws that restrict those rights. In other
words, means-ends tests determine how courts strike the balance
between individual rights and the social needs that may justify
their suppression. The “ends” component of a means-ends test
specifies how significant a social purpose must be in order to
justify the restriction of a right. The “means” component states
how effectively the challenged law must promote that purpose
in order to be constitutional. In the sex discrimination test, for
example, the challenged law must serve an “important”
government purpose (the significance of the end) and must be
“substantially” related to the achievement of that purpose (the
effectiveness of the means).
Some constitutional rights are deemed more important than
others. Accordingly, courts use tougher tests of constitutionality
in certain cases and more lenient tests in other situations.
Sometimes these tests are lengthy and complicated. Throughout
the chapter, therefore, we will simplify by referring to three
general kinds of means-ends tests:
The rational basis test. This is a very relaxed test of
constitutionality that challenged laws usually pass with ease. A
typical formulation of the rational basis test might say that
government action need only have a reasonable relation to the
achievement of a legitimate government purpose to be
constitutional.
Intermediate scrutiny. This comes in many forms; the sex
discrimination test discussed above is an example.
Full strict scrutiny. Here, the court might say that the
challenged law must be necessary to the fulfillment of a

compelling government purpose. Government action that is
subjected to this rigorous test of constitutionality is usually
struck down.
Describe the differences between noncommercial speech and
commercial speech and the respective levels of the First
Amendment protection they receive.
Business and the First Amendment
The First Amendment provides that “Congress shall make no
law … abridging the freedom of speech.” Despite its absolute
language (“ no law”), the First Amendment does not prohibit
every law that restricts speech. As Justice Oliver Wendell
Holmes famously remarked, the First Amendment does not
protect someone who falsely shouts “Fire!” in a crowded
theater. Although the First Amendment's free speech guarantee
is not absolute, government action restricting the content of
speech usually receives Page 65very strict judicial scrutiny. One
justification for this high level of protection is the
“marketplace” rationale, under which the free competition of
ideas is seen as the surest means of attaining truth. The
marketplace of ideas operates most effectively, according to this
rationale, when restrictions on speech are kept to a minimum
and all viewpoints can be considered.
During recent decades, the First Amendment has been applied to
a wide variety of government restrictions on the expression of
individuals and organizations, including corporations. This
chapter does not attempt a comprehensive discussion of the
many applications of the freedom of speech guarantee. Instead,
it explores basic First Amendment concepts before turning to an
examination of the free speech rights of corporations.
Political and Other Noncommercial Speech Political speech—
expression that deals in some fashion with government,
government issues or policies, public officials, or political

candidates—is often described as being at the “core” of the
First Amendment. Various Supreme Court decisions have held,
however, that the freedom of speech guarantee applies not only
to political speech but also to noncommercial expression that
does not have a political content or flavor. According to these
decisions, the First Amendment protects speech of a literary or
artistic nature, speech dealing with scientific, economic,
educational, and ethical issues, and expression on many other
matters of public interest or concern. Government attempts to
restrict the content of political or other noncommercial speech
normally receive full strict scrutiny when challenged in court.
Unless the government is able to meet the exceedingly difficult
burden of proving that the speech restriction is necessary to the
fulfillment of a compelling government purpose, a First
Amendment violation will be found. Because government
restrictions on political or other noncommercial speech trigger
the full strict scrutiny test, such speech is referred to as
carrying “full” First Amendment protection.
Do corporations, however, have the same First Amendment
rights that individual human beings possess? The Supreme
Court has consistently provided a “yes” answer to this question.
Therefore, if a corporation engages in political or other
noncommercial expression, it is entitled to full First
Amendment protection, just as an individual would be if he or
she engaged in such speech. In the much-publicized Citizens
United case, which follows shortly, a five-justice majority of
the Supreme Court held that a federal restriction on corporate
funding of “electioneering communications” close to the time of
an election failed the strict scrutiny test and therefore violated
the First Amendment. En route to that holding, the Court
overruled earlier decisions indicating that such restrictions on
corporate funding of election-related issues advertisements
should clear the strict scrutiny hurdle.
Although corporate speakers have First Amendment rights, not
all speech of a corporation is fully protected. Some corporate
speech is classified as commercial speech, a category of

expression examined later in the chapter. As will be seen,
commercial speech receives First Amendment protection but not
the full variety extended to political or noncommercial speech.
The mere fact, however, that a profit motive underlies speech
does not make the speech commercial in nature. Books, movies,
television programs, musical works, works of visual art, and
newspaper, magazine, and journal articles are normally
classified as noncommercial speech—and are thus fully
protected—despite the typical existence of an underlying profit
motive. Their informational, educational, artistic, or
entertainment components are thought to outweigh, for First
Amendment purposes, the profit motive.
Citizens United v. Federal Election Commission
130 S. Ct. 876 (U.S. Sup. Ct. 2010)
Citizens United, a nonprofit corporation with a $12 million
annual budget, receives most of its funds in the form of
donations by individuals. A small portion comes from for-profit
corporations. In January 2008, Citizens United released a film
titled Hillary: The Movie (hereinafter Hillary). It is a 90-minute
documentary about then-Senator Hillary Clinton, a candidate in
the Democratic Party's 2008 presidential primary elections.
Hillary depicts interviews with political commentators and other
persons, most of them quite critical of Senator Clinton.
Hillary was released in theaters and on DVD, but Citizens
United wanted to increase distribution by making it available
through video-on-demand. Although video-on-demand services
often require viewers to pay a small fee to view a selected
program, Citizens United planned to pay for the service and to

make Hillary available to viewers free of charge. To promote
the film, Citizens United produced two 10-second
advertisements and one 30-second ad for airing on broadcast
and cable television. Each ad included a pejorative statement
about Senator Clinton, followed by the name of the movie and
the address of a website for the movie.
Page 66Before the Bipartisan Campaign Reform Act of 2002
(BCRA), federal law prohibited corporations and unions from
using general treasury funds for direct contributions to
candidates or as independent expenditures expressly advocating,
through any form of media, the election or defeat of a candidate
in certain qualified federal elections. 2 U.S.C. § 441b. The
BCRA amended § 441b to prohibit any “electioneering
communication” as well. The statute defined “electioneering
communication” as “any broadcast, cable, or satellite
communication” that “refers to a clearly identified candidate for
Federal office” and is made within 30 days of a primary election
or 60 days of a general election. Federal Election Commission
(FEC) regulations further defined “electioneering
communication” as a communication that is “publicly
distributed,” and went on to provide that “[i]n the case of a
candidate for nomination for President … publicly distributed
means” that the communication “[c]an be received by 50,000 or
more persons in a State where a primary election … is being
held within 30 days.”
When combined, the federal law that prexisted the BCRA and
the amendments added by the BCRA barred corporations and
unions from using their general treasury funds for express
advocacy or electioneering communications. However, they
were permitted to establish a “separate segregated fund” (known
as a political action committee, or PAC) for these purposes. The
moneys to be received by the PAC were limited to donations
from the corporation's stockholders and employees of the
corporation or the union's members.
The BCRA also set forth disclaimer and disclosure
requirements. A televised electioneering communication funded

by anyone other than a candidate must include a clearly spoken
and clearly readable statement that “____ is responsible for the
content of this advertising,” as well as a statement that the
communication “is not authorized by any candidate or
candidate's committee.” The electioneering communication must
also display the name and address (or website address) of the
person or group that funded the advertisement. § 441d(a)(3). In
addition, the BCRA requires any person or entity spending more
than $10,000 on electioneering communications within a
calendar year to file a disclosure statement with the FEC. That
statement must identify the person or entity making the
expenditure, the amount of the expenditure, the election to
which the communication was directed, and the names of certain
contributors.
Citizens United wanted to make Hillary available through
video-on-demand within 30 days of the 2008 primary elections.
It feared, however, that both the film and the ads promoting it
would be covered by § 441b's ban on corporate-funded
independent expenditures and could thus subject the corporation
to civil and criminal penalties. Citizens United therefore sought
declaratory and injunctive relief against the FEC, arguing that §
441b was unconstitutional on its face and as applied to Hillary,
and that the BCRA's disclaimer and disclosure requirements
were unconstitutional as applied to Hillary and to the three ads
for the movie. A federal district court granted the FEC's motion
for summary judgment. The court held that § 441b was
constitutional under previous Supreme Court precedents, as
were the statute's disclaimer and disclosure requirements.
Citizens United sought review by the Supreme Court (rather
than a circuit court of appeals) under a review provision in the
challenged law.
Kennedy, Justice
Federal law prohibits corporations and unions from using their
general treasury funds to make independent expenditures for
speech defined as an “electioneering communication” or for

speech expressly advocating the election or defeat of a
candidate. 2 U.S.C. § 441b. Limits on electioneering
communications were upheld in McConnell v. Federal Election
Comm'n, 540 U.S. 93 (2003). The holding of McConnell rested
to a large extent on an earlier case, Austin v. Michigan Chamber
of Commerce, 494 U.S. 652 (1990). In this case we are asked to
reconsider Austin and, in effect, McConnell. Before considering
whether Austin should be overruled, we first address whether
Citizens United's claim that § 441b cannot be applied to Hillary
may be resolved on other, narrower grounds.
[Apart from its arguments regarding constitutional issues,]
Citizens United contends that § 441b does not cover Hillary …
because the film does not qualify as an “electioneering
communication.” Under the definition of electioneering
communication, the video-on-demand showing of Hillary on
cable television would have been a “cable … communication”
that “refer[red] to a clearly identified candidate for Federal
office” and that was made within 30 days of a primary election.
[Moreover,] Citizens United wanted to use a cable video-on-
demand system that had 34.5 million subscribers nationwide.
Thus, Hillary could have been received by 50,000 persons or
more. Section 441b covers Hillary.
Citizens United next argues that § 441b may not be applied to
Hillary under the approach taken in Federal Election Comm'n v.
Wisconsin Right to Life, Inc., 551 U.S. 449 (2007) (WRTL).
McConnell decided that § 441b's definition of an
“electioneering communication” was constitutional insofar as it
restricted speech that was “the functional equivalent of express
advocacy” for or against a specific candidate. WRTL then found
an unconstitutional application of § 441b where the speech was
not “express advocacy or its functional equivalent.” As
explained by the Chief Justice's controlling opinion in WRTL,
the functional-equivalent test is objective: “a court should find
that [a communication] is the functional equivalent of express
advocacy only if Page 67[it] is susceptible of no reasonable
interpretation other than as an appeal to vote for or against a

specific candidate.”
Under this test, Hillary is equivalent to express advocacy. The
movie, in essence, is a feature-length negative advertisement
that urges viewers to vote against Senator Clinton for President.
The narrative may contain more suggestions and arguments than
facts, but there is little doubt that the thesis of the film is that
she is unfit for the Presidency. [T]here is no reasonable
interpretation of Hillary other than as an appeal to vote against
Senator Clinton. Under the standard stated in McConnell and
further elaborated in WRTL, the film qualifies as the functional
equivalent of express advocacy.
Citizens United further contends that § 441b should be
invalidated as applied to movies shown through video-on-
demand, arguing that this delivery system has a lower risk of
distorting the political process than do television ads. While
some means of communication may be less effective than others
at influencing the public in different contexts, any effort by the
judiciary to decide which means of communications are to be
preferred for the particular type of message and speaker [would
be highly questionable]. And in all events, those differentiations
might soon prove to be irrelevant or outdated by technologies
that are in rapid flux. We must decline to draw, and then
redraw, constitutional lines based on the particular media or
technology used to disseminate political speech from a
particular speaker.
As the foregoing analysis confirms, the Court cannot resolve
this case on a narrower ground without chilling political speech,
speech that is central to the meaning and purpose of the First
Amendment. It is not judicial restraint to accept an unsound,
narrow argument just so the Court can avoid another argument
with broader implications. Here, the lack of a valid basis for an
alternative ruling requires full consideration of the continuing
effect of the speech suppression upheld in Austin.
The law before us is an outright ban [on speech], backed by
criminal sanctions. Section 441b makes it a felony for all
corporations—including nonprofit advocacy corporations—

either to expressly advocate the election or defeat of candidates
or to broadcast electioneering communications within 30 days
of a primary election and 60 days of a general election. Thus,
the following acts would all be felonies under § 441b: The
Sierra Club runs an ad, within the crucial phase of 60 days
before the general election, that exhorts the public to
disapprove of a Congressman who favors logging in national
forests; the National Rifle Association publishes a book urging
the public to vote for the challenger because the incumbent U.
S. Senator supports a handgun ban; and the American Civil
Liberties Union creates a website telling the public to vote for a
Presidential candidate in light of that candidate's defense of free
speech. These prohibitions are classic examples of censorship.
Section 441b is a ban on corporate speech notwithstanding the
fact that a PAC created by a corporation can still speak. A PAC
is a separate association from the corporation. So the PAC
exemption from § 441b's expenditure ban does not allow
corporations to speak. Even if a PAC could somehow allow a
corporation to speak—and it does not—the option to form PACs
does not alleviate the First Amendment problems with § 441b.
PACs are burdensome alternatives; they are expensive to
administer and subject to extensive regulations. [Also,] PACs
must file detailed monthly reports with the FEC, which are due
at different times depending on the type of election that is about
to occur. PACs have to comply with these regulations just to
speak. This might explain why fewer than 2,000 of the millions
of corporations in this country have PACs. PACs, furthermore,
must exist before they can speak. Given the onerous
restrictions, a corporation may not be able to establish a PAC in
time to make its views known regarding candidates and issues in
a current campaign.
Speech is an essential mechanism of democracy, for it is the
means to hold officials accountable to the people. The right of
citizens to inquire, to hear, to speak, and to use information to
reach consensus is a precondition to enlightened self-
government and a necessary means to protect it. [P]olitical

speech must prevail against laws that would suppress it,
whether by design or inadvertence. Laws that burden political
speech are “subject to strict scrutiny,” which requires the
Government to prove that the restriction “furthers a compelling
interest and is narrowly tailored to achieve that interest.” [This]
quoted language from WRTL provides a sufficient framework
for protecting the relevant First Amendment interests in this
case.
Premised on mistrust of governmental power, the First
Amendment stands against attempts to disfavor certain subjects
or viewpoints. Prohibited, too, are restrictions distinguishing
among different speakers, allowing speech by some but not
others. As instruments to censor, these categories are
interrelated: Speech restrictions based on the identity of the
speaker are all too often simply a means to control content.
The Court has recognized [in various cases] that First
Amendment protection extends to corporations. [E.g.,] First
National Bank of Boston v. Bellotti, 435 U.S. 765 (1978). This
protection has been extended by explicit holdings to the context
of political speech. Under the rationale of these precedents,
political speech does not lose First Amendment protection
simply because its source is a corporation.
At least since the latter part of the 19th century, the laws of
some states and of the United States imposed a ban on corporate
direct contributions to candidates. Yet not until 1947 did
Congress first prohibit independent expenditures by
corporations and labor unions. For almost three decades
thereafter, the Court did not reach the question whether
restrictions on corporate and union expenditures are
constitutional.
In Buckley v. Valeo, 424 U.S. 1 (1976), the Court addressed
various challenges to the Federal Election Campaign Act of
Page 681971 (FECA), as amended in 1974. [FECA limited
direct contributions to candidates, established] an independent
expenditure ban … that applied to individuals as well as
corporations and labor unions, [and included a separate ban on

corporate and union independent expenditures.] [Buckley
considered only the direct contributions provision and the
broader independent expenditure ban that applied to individuals
as well as corporations and unions. The separate ban on
independent expenditures by corporations and unions was not at
issue in Buckley.]
Before addressing the constitutionality of [the broader]
independent expenditure ban, Buckley first upheld … FECA's
limits on direct contributions to candidates. The Buckley Court
recognized a “sufficiently important” governmental interest in
“the prevention of corruption and the appearance of corruption.”
This followed from the Court's concern that large contributions
could be given “to secure a political quid pro quo. ” The
Buckley Court explained that the potential for quid pro quo
corruption distinguished direct contributions to candidates from
independent expenditures. The Court emphasized that “the
independent expenditure ceiling … fails to serve any substantial
governmental interest in stemming the reality or appearance of
corruption in the electoral process,” because “[t]he absence of
prearrangement and coordination … alleviates the danger that
expenditures will be given as a quid pro quo for improper
commitments from the candidate.” Buckley invalidated [FECA's
broader] restriction on independent expenditures, with only one
Justice dissenting.
Buckley did not consider [FECA's] separate ban [that
specifically applied to] corporate and union independent
expenditures. Had [that specific ban] been challenged in the
wake of Buckley, however, it could not have been squared with
the reasoning and analysis of that precedent. [Nevertheless],
Congress recodified [the] corporate and union expenditure ban
at 2 U.S.C. § 441b four months after Buckley was decided.
Section 441b is the independent expenditure restriction
challenged here.
Less than two years after Buckley, Bellotti reaffirmed the First
Amendment principle that the government cannot restrict
political speech based on the speaker's corporate identity.

Bellotti could not have been clearer when it struck down a state-
law prohibition on corporate independent expenditures related
to referenda issues. Bellotti did not address the constitutionality
of the state's ban on corporate independent expenditures to
support candidates. In our view, however, that restriction would
have been unconstitutional under Bellotti's central principle:
that the First Amendment does not allow political speech
restrictions based on a speaker's corporate identity.
Thus the law stood until Austin, [which] “uph[eld] a direct
restriction on the independent expenditure of funds for political
speech for the first time in [this Court's] history.” (Kennedy, J.,
dissenting in Austin.) [In Austin], the Michigan Chamber of
Commerce sought to use general treasury funds to run a
newspaper ad supporting a specific candidate. Michigan law,
however, prohibited corporate independent expenditures that
supported or opposed any candidate for state office. A violation
of the law was punishable as a felony. The Court sustained the
speech prohibition. To bypass Buckley and Bellotti, the Austin
Court identified a new governmental interest in limiting
political speech: an anti-distortion interest. Austin found a
compelling governmental interest in preventing “the corrosive
and distorting effects of immense aggregations of wealth that
are accumulated with the help of the corporate form and that
have little or no correlation to the public's support for the
corporation's political ideas.”
The Court is thus confronted with conflicting lines of precedent:
a pre-Austin line that forbids restrictions on political speech
based on the speaker's corporate identity and a post-Austin line
that permits them. No case before Austin had held that Congress
could prohibit independent expenditures for political speech
based on the speaker's corporate identity. In its defense of the
corporate-speech restrictions in § 441b, the government notes
the anti-distortion rationale on which Austin and its progeny
rest in part, yet … the government does little to defend it. And
with good reason, for the rationale cannot support § 441b.
If the First Amendment has any force, it prohibits Congress

from fining or jailing citizens, or associations of citizens, for
simply engaging in political speech. If the anti-distortion
rationale were to be accepted, however, it would permit
government to ban political speech simply because the speaker
is an association that has taken on the corporate form. The
government contends that Austin permits it to ban corporate
expenditures for almost all forms of communication stemming
from a corporation. If Austin were correct, the government
could prohibit a corporation from expressing political views in
media beyond those presented here, such as by printing books.
The government responds “that the FEC has never applied this
statute to a book,” and if it did, “there would be quite [a] good
as-applied [constitutional] challenge.” This troubling assertion
of brooding governmental power cannot be reconciled with the
confidence and stability in civic discourse that the First
Amendment must secure.
[As noted in Bellotti,] [p]olitical speech is “indispensable to
decisionmaking in a democracy, and this is no less true because
the speech comes from a corporation rather than an individual.”
This protection for speech is inconsistent with Austin's anti-
distortion rationale. Austin sought to defend the anti-distortion
rationale as a means to prevent corporations from obtaining “‘an
unfair advantage in the political marketplace’” by using
“‘resources amassed in the economic marketplace.’” But
Buckley rejected the premise that the government has an
interest “in equalizing the relative ability of individuals and
groups to influence the outcome of elections.” Buckley was
specific in stating that “the skyrocketing cost of political
campaigns” could not Page 69sustain the governmental
prohibition. The First Amendment's protections do not depend
on the speaker's “financial ability to engage in public
discussion.”
Austin interferes with the open marketplace of ideas protected
by the First Amendment. Most of [the corporations affected by
§ 441b] are small corporations without large amounts of wealth.
This fact belies the government's argument that the statute is

justified on the ground that it prevents the “distorting effects of
immense aggregations of wealth” [quoting Austin.]
The censorship we now confront is vast in its reach. The
government has “muffle[d] the voices that best represent the
most significant segments of the economy” (opinion of Scalia,
J., in McConnell). And “the electorate [has been] deprived of
information, knowledge and opinion vital to its function.”
[Citation omitted.] By suppressing the speech of manifold
corporations, both for-profit and nonprofit, the government
prevents their voices and viewpoints from reaching the public
and advising voters on which persons or entities are hostile to
their interests. Factions will necessarily form in our republic,
but the remedy of “destroying the liberty” of some factions is
“worse than the disease.” The Federalist No. 10, p. 130 (J.
Madison). Factions should be checked by permitting them all to
speak, and by entrusting the people to judge what is true and
what is false.
The purpose and effect of this law is to prevent corporations,
including small and nonprofit corporations, from presenting
both facts and opinions to the public. This makes Austin's anti-
distortion rationale all the more an aberration. When
Government seeks to use its full power, including the criminal
law, to command where a person may get his or her information
or what distrusted source he or she may not hear, it uses
censorship to control thought. This is unlawful. The First
Amendment confirms the freedom to think for ourselves.
What we have said also shows the invalidity of [another
argument] made by the government. For the most part
relinquishing the anti-distortion rationale, the government falls
back on the argument that corporate political speech can be
banned in order to prevent corruption or its appearance. The
Buckley Court … sustained limits on direct contributions in
order to ensure against the reality or appearance of corruption.
That case did not extend this rationale to independent
expenditures, and the Court does not do so here.
[The Court stated in Buckley that] “[t]he absence of

prearrangement and coordination of an expenditure with the
candidate or his agent not only undermines the value of the
expenditure to the candidate, but also alleviates the danger that
expenditures will be given as a quid pro quo for improper
commitments from the candidate.” Limits on independent
expenditures, such as § 441b, have a chilling effect extending
well beyond the government's interest in preventing quid pro
quo corruption. The anti-corruption interest is not sufficient to
displace the speech here in question. Indeed, 26 states do not
restrict independent expenditures by for-profit corporations.
The government does not claim that these expenditures have
corrupted the political process in those states.
Our precedent is to be respected unless the most convincing of
reasons demonstrates that adherence to it puts us on a course
that is sure error. “Beyond workability, the relevant factors in
deciding whether to adhere to the principle of stare decisis
include the antiquity of the precedent, the reliance interests at
stake, and of course whether the decision was well reasoned.”
[Citation omitted.] We have also examined whether “experience
has pointed up the precedent's shortcomings.” [Citation
omitted.]
These considerations counsel in favor of rejecting Austin, which
itself contravened this Court's earlier precedents in Buckley and
Bellotti. For the reasons above, it must be concluded that Austin
was not well reasoned. Austin is [also] undermined by
experience since its announcement. Political speech is so
ingrained in our culture that speakers find ways to circumvent
campaign finance laws. Our nation's speech dynamic is
changing, and informative voices should not have to circumvent
onerous restrictions to exercise their First Amendment rights.
Speakers have become adept at presenting citizens with sound
bites, talking points, and scripted messages that dominate the
24-hour news cycle. Corporations, like individuals, do not have
monolithic views. On certain topics corporations may possess
valuable expertise, leaving them the best equipped to point out
errors or fallacies in speech of all sorts, including the speech of

candidates and elected officials.
Rapid changes in technology—and the creative dynamic
inherent in the concept of free expression—counsel against
upholding a law that restricts political speech in certain media
or by certain speakers. Today, 30-second television ads may be
the most effective way to convey a political message. Soon,
however, it may be that Internet sources, such as blogs and
social networking websites, will provide citizens with
significant information about political candidates and issues.
Yet, § 441b would seem to ban a blog post expressly advocating
the election or defeat of a candidate if that blog were created
with corporate funds. The First Amendment does not permit
Congress to make these categorical distinctions based on the
corporate identity of the speaker and the content of the political
speech.
Due consideration leads to this conclusion: Austin should be
and now is overruled. We return to the principle established in
Buckley and Bellotti that the government may not suppress
political speech on the basis of the speaker's corporate identity.
No sufficient governmental interest justifies limits on the
political speech of nonprofit or for-profit corporations.
Austin is overruled, so it provides no basis for allowing the
government to limit corporate independent expenditures. As the
government appears to concede [in its brief], overruling Austin
Page 70“effectively invalidate[s] not only [the BCRA's
amendments to § 441(b)] but also § 441b's prohibition on the
use of corporate treasury funds for express advocacy.” Section
441b's restrictions on corporate independent expenditures are
therefore invalid and cannot be applied to Hillary. Given our
conclusion, we are further required to overrule the part of
McConnell that upheld [the BCRA's] extension of § 441b's
restrictions on corporate independent expenditures. The
McConnell Court relied on the anti-distortion interest
recognized in Austin to uphold a greater restriction on speech
than the restriction upheld in Austin, and we have found this
interest unconvincing and insufficient. This part of McConnell

is now overruled.
Citizens United next challenges the BCRA's disclaimer and
disclosure provisions as applied to Hillary and the three
advertisements for the movie. [The disclaimer and disclosure
requirements established by the BCRA are described in the
statement of facts.] Disclaimer and disclosure requirements may
burden the ability to speak, but they “impose no ceiling on
campaign-related activities” (quoting Buckley), and “do not
prevent anyone from speaking” (quoting McConnell). In
Buckley, the Court explained that disclosure could be justified
based on a governmental interest in providing the electorate
with information about the sources of election-related spending.
The McConnell Court [relied on] this interest in [upholding the
BCRA's disclosure requirements] on the ground that they would
help citizens “‘make informed choices in the political
marketplace.’”
[D]isclosure permits citizens and shareholders to react to the
speech of corporate entities in a proper way. This transparency
enables the electorate to make informed decisions and give
proper weight to different speakers and messages. [W]e uphold
the application of [the BCRA's disclaimer and disclosure
requirements] to the ads [for Hillary]. We [also] find no
constitutional impediment to the application of [the] disclaimer
and disclosure requirements to [Hillary], a movie [to be]
broadcast via video-on-demand. [T] here has been no showing
that, as applied in this case, these requirements would impose a
chill on speech or expression.
District court's judgment reversed as to constitutionality of
restrictions on corporate independent expenditures but affirmed
as to constitutionality of disclaimer and disclosure
requirements.
Stevens, Justice (joined by Ginsburg, Breyer, and Sotomayor,
Justices), concurring in part and dissenting in part
Although I concur in the Court's decision to sustain the BCRA's
disclaimer and disclosure provisions, I emphatically dissent
from its principal holding.

Citizens United is a wealthy nonprofit corporation that runs a
political action committee (PAC) with millions of dollars in
assets. Under the BCRA, it could have used those assets to
televise and promote Hillary wherever and whenever it wanted
to. It also could have spent unrestricted sums to broadcast
Hillary at any time other than the 30 days before the last
primary election. Neither Citizens United's nor any other
corporation's speech has been “banned.” All that the parties
dispute is whether Citizens United had a right to use the funds
in its general treasury to pay for broadcasts during the 30-day
period. The notion that the First Amendment dictates an
affirmative answer to that question is, in my judgment,
profoundly misguided. Even more misguided is the notion that
the Court must rewrite the law relating to campaign
expenditures by for-profit corporations and unions to decide
this case.
The basic premise underlying the Court's ruling is … the
proposition that the First Amendment bars regulatory
distinctions based on a speaker's identity, including its
“identity” as a corporation. While that glittering generality has
rhetorical appeal, … [t]he conceit that corporations must be
treated identically to natural persons in the political sphere is
not only inaccurate but also inadequate to justify the Court's
disposition of this case. In the context of election to public
office, the distinction between corporate and human speakers is
significant. The financial resources, legal structure, and
instrumental orientation of corporations raise legitimate
concerns about their role in the electoral process. Our
lawmakers have a compelling constitutional basis, if not also a
democratic duty, to take measures designed to guard against the
potentially deleterious effects of corporate spending in local
and national races.
The majority's approach to corporate electioneering [bypasses
narrower grounds of decision and] marks a dramatic break from
our past. Congress has placed special limitations on campaign
spending by corporations ever since the passage of the Tillman

Act in 1907. We have unanimously concluded that this “reflects
a permissible assessment of the dangers posed by those entities
to the electoral process,” and have accepted the “legislative
judgment that the special characteristics of the corporate
structure require particularly careful regulation.” [Citations
omitted.] The Court today rejects a century of history when it
treats the distinction between corporate and individual
campaign spending as an invidious novelty born of Austin.
Relying largely on individual dissenting opinions, the majority
blazes through our precedents, overruling or disavowing a
[large] body of case law. The only thing preventing the majority
from affirming the district court, or adopting a narrower ground
that would retain Austin, is its disdain for Austin. The laws
upheld in Austin and McConnell leave open many additional
avenues for corporations' political speech.
Roaming far afield from the case at hand, the majority worries
that the government will use [the statute at issue] to ban books,
pamphlets, and blogs. Yet by its plain terms, [the statute] does
not apply to printed material. And … we highly doubt Page
71that [§ 441b] could be interpreted to apply to a website or
book that happens to be transmitted at some stage over airwaves
or cable lines, or that the FEC would ever try to do so.
So let us be clear: Neither Austin nor McConnell held or
implied that corporations may be silenced; the FEC is not a
“censor”; and in the years since these cases were decided,
corporations have continued to play a major role in the national
dialogue. Laws such as [§ 441b] target a class of
communications that is especially likely to corrupt the political
process [and] that is at least one degree removed from the views
of individual citizens. Such laws burden political speech, and
that is always a serious matter, demanding careful scrutiny. But
the majority's incessant talk of a “ban” aims at a straw man.
In [our] democratic society, the longstanding consensus on the
need to limit corporate campaign spending [reflects] the
common sense of the American people, who have … fought
against the distinctive corrupting potential of corporate

electioneering since the days of Theodore Roosevelt. It is a
strange time to repudiate that common sense. While American
democracy is imperfect, few outside the majority of this Court
would have thought its flaws included a dearth of corporate
money in politics.
Commercial Speech The exact boundaries of the commercial
speech category are not certain, though the Supreme Court has
usually defined commercial speech as speech that proposes a
commercial transaction. As a result, most cases on the subject
involve advertisements for the sale of products or services or
for the promotion of a business. In 1942, the Supreme Court
held that commercial speech fell outside the First Amendment's
protective umbrella. The Court reversed its position, however,
during the 1970s. It reasoned that informed consumer choice
would be furthered by the removal of barriers to the flow of
commercial information in which consumers would find an
interest. Since the mid-1970s, commercial speech has received
an intermediate level of First Amendment protection if it deals
with a lawful activity and is nonmisleading. Commercial speech
receives no protection, however, if it misleads or seeks to
promote an illegal activity. As a result, there is no First
Amendment obstacle to federal or state regulation of deceptive
commercial advertising. (Political or other noncommercial
speech, on the other hand, generally receives—with very few
exceptions—full First Amendment protection even if it misleads
or deals with unlawful matters.)
CYBERLAW IN ACTION
Some types of speech are classified as wholly outside the
protection of the First Amendment. For instance, expression
that constitutes obscenity under a test developed by the
Supreme Court carries no First Amendment protection—
meaning that the government is free to regulate it on the basis
of its content (including criminalizing the possession or

distribution of obscene material). For more details concerning
the obscenity doctrine, see the discussion in Chapter 5.
Child pornography is another type of speech that carries no
First Amendment protection, in light of the obviously important
public interest in protecting minors against physical and
psychological harm. Thus, there is no First Amendment barrier
to a criminal prosecution against one who possesses or purveys
material that constitutes child pornography. Many such
prosecutions are based on photos or other material stored on
computers or shared online.
Both obscenity and child pornography depend in part upon
graphic depictions of sexual content, though less in that regard
is required for child pornography than for obscenity. What
about speech that contains gratuitous and highly offensive
depictions of violence? May the government prohibit such
depictions and impose adverse consequences on those who
purvey such material? Those were among the key questions in
United States v. Stevens, 130 S. Ct. 1577 (U.S. Sup. Ct. 2010).
A statute enacted by Congress criminalized the creation, sale, or
possession of certain depictions of animal cruelty. For purposes
of the statute, a depiction of “animal cruelty” was defined as
one “in which a living animal is intentionally maimed,
mutilated, tortured, wounded, or killed,” if the depicted conduct
violated federal or state law at the place where the creation,
sale, or possession took place. The legislative history of the
statute indicated that it was prompted by a congressional
objective of eliminating dissemination of so-called crush videos
(videos showing live animals being crushed to death by persons
stomping on them).
Robert Stevens operated a website on which he sold videos of
pit bulls engaging in dogfighting and otherwise attacking
animals. After he was convicted of violating the above
described statute by selling the videos, he appealed on the
ground that the statute violated the First Amendment. The case
made its way to the Supreme Court, which ruled in his favor and
rejected the government's argument that speech containing

gratuitous Page 72depictions of violence against animals should
be added to the list of unprotected types of speech.
In Stevens, the Court seemed disinclined to issue a decision that
might prompt others to ask courts to categorize more and more
types of speech as falling outside the First Amendment
umbrella. In particular, the Court expressed considerable
concern about the statute's potential overbreadth, given the
varying and inconsistent state laws on animal cruelty and the
potential for the statute to apply even to hunting videos if they
depicted an animal being killed outside a state's hunting season
or to videos showing certain humane killings of diseased
animals. (The Court declined to express a view on whether a
more narrowly drawn statute—one that by its terms was
restricted to the sale of crush videos or other depictions of
extreme animal cruelty—might pass First Amendment muster.)
The Court's decision in Stevens serves as a reminder that the
First Amendment protects a great deal of speech that may be
highly offensive to many persons. It bears remembering, too,
that any ability on the part of the Robert Stevenses of the world
to avoid legal liability for the sale of dogfighting videos would
not privilege such persons to participate in the underlying acts
of animal cruelty. The Court's decision in Stevens dealt only
with the videos—i.e, speech—and cast no doubt on the validity
of laws penalizing those who engage in conduct amounting to
animal cruelty.
As this book went to press, the Supreme Court decided Brown
v. Entertainment Merchants Association, 2011 U.S. LEXIS 4802
(2011). There, the Court struck down a California law that
restricted the sale of violent video games to minors. In
declining to hold that expressive depictions of violence should
be classified as unprotected by the First Amendment even when
the government seeks to safeguard minors, the Court relied in
part on its earlier decision in Stevens.
Because nonmisleading commercial speech about a lawful
activity receives intermediate protection, the government has

greater ability to regulate such speech without violating the
First Amendment than when the government seeks to regulate
fully protected political or other noncommercial speech.
Roughly three decades ago, the Supreme Court developed a
still-controlling test that amounts to intermediate scrutiny.
Under this test, a government restriction on protected
commercial speech does not violate the First Amendment if the
government proves each of these elements: that a substantial
government interest underlies the restriction; that the restriction
directly advances the underlying interest; and that the
restriction is no more extensive than necessary to further the
interest (i.e., that the restriction is narrowly tailored). It usually
is not difficult for the government to prove that a substantial
interest supports the commercial speech restriction. Almost any
asserted interest connected with the promotion of public health,
safety, or welfare will suffice. The government is likely to
encounter more difficulty, however, in proving that the
restriction at issue directly advances the underlying interest
without being more extensive than necessary—the elements that
address the “fit” between the restriction and the underlying
interest. If the government fails to prove any element of the
test, the restriction violates the First Amendment.
CONCEPT REVIEW
The First Amendment
Type of Speech
Level of First Amendment Protection
Consequences When Government Regulates Content of Speech
Noncommercial

Full
Government action is constitutional only if action is necessary
to fulfillment of compelling government purpose. Otherwise,
government action violates First Amendment.
Commercial(nonmisleading and about lawful activity)
Intermediate
Government action is constitutional if government has
substantial underlying interest, action directly advances that
interest, and action is no more extensive than necessary to
fulfillment of that interest (i.e., action is narrowly tailored).
Commercial (misleading or about unlawful activity)
None
Government action is constitutional.
Page 73Although the same test has been used in evaluating
commercial speech restrictions for nearly three decades, the
Supreme Court has varied the intensity with which it has
applied the test. From the mid-1980s until 1995, the Court
sometimes applied the test loosely and in a manner favorable to
the government. The Court has applied the test—especially the
“fit” elements—more strictly since 1995, however. For instance,
in Coors v. Rubin (1995), the Court struck down federal
restrictions that kept beer producers from listing the alcohol
content of their beer on product labels. (The Coors case was the
subject of the introductory problem with which this chapter
began.) In 44 Liquormart v. Rhode Island (1996), which follows
shortly, the Court held that Rhode Island's prohibition on price
disclosures in alcoholic beverage advertisements violated the
First Amendment. A 1999 decision, Greater New Orleans

Broadcasting Association v. United States, established that a
federal law barring broadcast advertisements for a variety of
gambling activities could not constitutionally be applied to
radio and television stations located in the same state as the
gambling casino whose lawful activities were being advertised.
In each of the cases just noted, the Court emphasized that the
government's restrictions on commercial speech suffered from
“fit” problems—usually because the restrictions prohibited more
speech than would have been necessary if the government had
adopted available alternative measures that would have
furthered the underlying public health, safety, or welfare
interest just as well, if not better.
Two key conclusions may be drawn from the Court's
commercial speech decisions since 1995: (1) the government
has found it more difficult to justify restrictions on commercial
speech; and (2) the gap between the intermediate protection for
commercial speech and the full protection for political and other
noncommercial speech has effectively become smaller than it
was 20 to 25 years ago. Although the Court has hinted that it
might consider formal changes in commercial speech doctrine
(so as to enhance First Amendment protection for commercial
speech), it had not made formal doctrinal changes as of the time
this book went to press in 2011.
The following case, 44 Liquormart v. Rhode Island, addresses
the four-part test utilized in determining the constitutionality of
commercial speech restrictions, and illustrates the rigor with
which the Supreme Court has applied the third and fourth parts
of the test during the past 15-plus years.
44 Liquormart, Inc. v. Rhode Island
517 U.S. 484 (U.S. Sup. Ct. 1996)

Two Rhode Island statutes prohibited advertising the retail price
of alcoholic beverages. The first applied to vendors licensed in
Rhode Island as well as to out-of-state manufacturers,
wholesalers, and shippers. It prohibited them from “advertising
in any manner whatsoever” the price of any alcoholic beverage
offered for sale in the state. The only exception to the
restriction was for price tags or signs displayed with the
merchandise within licensed premises, if the tags or signs were
not visible from the street. The second statute barred the Rhode
Island news media from publishing or broadcasting
advertisements that made reference to the price of any alcoholic
beverages.
44 Liquormart, Inc., a licensed retailer of alcoholic beverages,
operated a store in Rhode Island. Because it wished to advertise
prices it would charge for alcoholic beverages, 44 Liquormart
filed a declaratory judgment action against the state. 44
Liquormart asked the court to rule that the statutes referred to
above violated the First Amendment. The district court
concluded that the statutes failed the applicable test for
restrictions on commercial speech and therefore struck them
down. The U.S. Court of Appeals for the First Circuit reversed,
determining that the statutes were constitutionally permissible
restrictions on commercial speech. The U.S. Supreme Court
granted 44 Liquormart's petition for a writ of certiorari.
Stevens, Justice
Advertising has been a part of our culture throughout our
history. Even in colonial days, the public relied on “commercial
speech” for vital information about the market. In accord with
the role that commercial messages have long played, the law has
developed to ensure that advertising provides consumers with
accurate information about the availability of goods and
services. In the early years, the common law, and later, statutes,
served the consumers' interest in the receipt of accurate

information in the commercial market by prohibiting fraudulent
and misleading advertising.
It was not until the 1970s, however, that this Court held that the
First Amendment protected the dissemination of truthful and
nonmisleading commercial messages about lawful products and
services. [The Court did so in Virginia Board of Pharmacy v.
Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976).
In that case] we held that [Virginia's] blanket ban on advertising
the price of prescription drugs violated the First Amendment.
Page 74Virginia Board of Pharmacy reflected the conclusion
that the same interest that supports regulation of potentially
misleading advertising, namely, the public's interest in
receiving accurate commercial information, also supports an
interpretation of the First Amendment that provides [an
intermediate level of] protection for the dissemination of
accurate and nonmisleading commercial messages. We
explained:
Advertising, however tasteless and excessive it sometimes may
seem, is nonetheless dissemination of information as to who is
producing and selling what product, for what reason, and at
what price. So long as we preserve a predominantly free
enterprise economy, the allocation of our resources in large
measure will be made through numerous private economic
decisions. It is a matter of public interest that those decisions,
in the aggregate, be intelligent and well informed. To this end,
the free flow of commercial information is indispensable.
On the basis of these principles, our early cases uniformly
struck down several broadly based bans on truthful,
nonmisleading commercial speech. At the same time, our early
cases recognized that the [government] may regulate some types
of commercial advertising more freely than other forms of
protected speech. Virginia Board of Pharmacy attributed the
[government's] authority to impose these regulations in part to
certain “commonsense differences” that exist between

commercial messages and other types of protected expression.
Our opinion noted that the greater “objectivity” of commercial
speech justifies affording the [government] more freedom to
distinguish false commercial advertisements from true ones, and
that the greater “hardiness” of commercial speech, inspired as it
is by the profit motive, likely diminishes the chilling effect that
may attend its regulation.
In Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n of
N. Y., 447 U.S. 557 (1980), … we considered a state regulation
[that banned] all promotional advertising by electric utilities.
[We also announced a four-part test to be applied when the
constitutionality of a commercial speech restriction must be
determined:]
At the outset, we must determine whether the expression is
protected by the First Amendment. For commercial speech to
come within that provision, it at least must concern lawful
activity and not be misleading. Next, we ask whether the
asserted governmental interest is substantial. If both inquiries
yield positive answers, we must determine whether the
regulation directly advances the governmental interest asserted,
and whether it is not more extensive than is necessary to serve
that interest.
[The Central Hudson] Court recognized that the state interest in
the conservation of energy was substantial, and that there was
“an immediate connection between advertising and demand for
electricity.” Nevertheless, [the Court] concluded that the
regulation was invalid because [the state] had failed to make a
showing that a more limited speech regulation would not have
adequately served the state's interest.
[We now apply the Central Hudson test to the advertising
restriction at issue in this case.] [T]here is no question that
Rhode Island's price advertising ban constitutes a blanket
prohibition against truthful, nonmisleading speech about a
lawful product. The state argues that the price advertising

prohibition should nevertheless be upheld because it directly
advances the state's substantial interest in promoting
temperance, and because it is no more extensive than necessary.
Although there is some confusion as to what Rhode Island
means by temperance, we assume that the state asserts an
interest in reducing alcohol consumption.
In evaluating the ban's effectiveness in advancing the state's
interest, we note that a commercial speech regulation “may not
be sustained if it provides only ineffective or remote support for
the government's purpose” (quoting Central Hudson). For that
reason, the state bears the burden of showing not merely that its
regulation will advance its interest, but also that it will do so
“to a material degree.” [Citation omitted.] Accordingly, we
must determine whether the state has shown that the price
advertising ban will significantly reduce alcohol consumption.
We can agree that common sense supports the conclusion that a
prohibition against price advertising, like a collusive agreement
among competitors to refrain from such advertising, will tend to
mitigate competition and maintain prices at a higher level than
would prevail in a completely free market. Despite the absence
of proof on the point, we can even agree with the state's
contention that it is reasonable to assume that demand, and
hence consumption throughout the market, is somewhat lower
whenever a higher, noncompetitive price level prevails.
However, without any findings of fact, or indeed any
evidentiary support whatsoever, we cannot agree with the
assertion that the price advertising ban will significantly
advance the state's interest in promoting temperance.
Although the record suggests that the price advertising ban may
have some impact on the purchasing patterns of temperate
drinkers of modest means, the state has presented no evidence
to suggest that its speech prohibition will significantly reduce
marketwide consumption. Indeed, the district court's considered
and uncontradicted finding on this point is directly to the
contrary. Moreover, the evidence suggests that the abusive
drinker will probably not be deterred by a marginal price

increase, and that the true alcoholic may simply reduce his
purchases of other necessities.
In addition, … the state has not identified what price level
would lead to a significant reduction in alcohol consumption,
nor has it identified the amount that it believes prices would
decrease without the ban. Thus, the state's own showing reveals
that any connection between the ban and a significant change in
alcohol consumption would be purely fortuitous.
Page 75As is evident, any conclusion that elimination of the ban
would significantly increase alcohol consumption would require
us to engage in the sort of “speculation or conjecture” that is an
unacceptable means of demonstrating that a restriction on
commercial speech directly advances the state's asserted
interest. [Citation omitted.]
The state also cannot satisfy the requirement that its restriction
on speech be no more extensive than necessary. It is perfectly
obvious that alternative forms of regulation that would not
involve any restriction on speech would be more likely to
achieve the state's goal of promoting temperance. As the state's
own expert conceded, higher prices can be maintained either by
direct regulation or by increased taxation. Per capita purchases
could be limited as is the case with prescription drugs. Even
educational campaigns focused on the problems of excessive, or
even moderate, drinking might prove to be more effective.
As a result, even under the less than strict standard that
generally applies in commercial speech cases, the state has
failed to establish a “reasonable fit” between its abridgment of
speech and its temperance goal. Board of Trustees of State
Univ. of New York v. Fox, 492 U.S. 469 (1989); see also Rubin
v. Coors Brewing Co., 514 U.S. 476 (1995) (explaining that
defects in a federal ban on alcohol advertising are “further
highlighted by the availability of alternatives that would prove
less intrusive to the First Amendment's protections for
commercial speech”).
[Because] the price advertising ban cannot survive [the review
contemplated by the Central Hudson test, the ban violates the

First Amendment.]
Judgment of First Circuit Court of Appeals reversed.
Figure 1 A Note on Government Speech
“Beef. It's What's for Dinner.” Numerous television
commercials during recent years featured this familiar tagline.
Given the pro-beef messages being communicated, one might
logically assume that a private association of beef marketers
chose to pay for these commercials and selected the content
included in them. Such an assumption would be inaccurate,
however, because the advertisements were government-initiated
and government-approved. The U.S. government has
implemented various industry-specific regulatory regimes that
require advertisements for a particular type of product—for
example, beef, mushrooms, cotton, potatoes, watermelons,
blueberries, pork, and eggs—and levy monetary assessments on
producers or marketers of such products as a means of paying
for the advertisements.
If producers or marketers of the regulated products disagree
with the content of the advertisements but are still compelled by
federal law to help pay for them, are those parties' First
Amendment rights violated? That was the issue in Johanns v.
Livestock Marketing Association, 544 U.S. 550 (2005), in
which the U.S. Supreme Court considered numerous livestock
marketers' First Amendment challenge to the government's beef
advertising program. The “Beef. It's What's for Dinner”
commercials were part of that program. In the Beef Promotion
and Research Act of 1985 (Beef Act), Congress established a
federal policy of promoting the marketing and consumption of
beef. The Beef Act called for the Secretary of Agriculture
(Secretary) to issue an order setting up an advisory board and
operating committee charged with, among other things,
designing a beef advertising program that would be subject to
the Secretary's approval. To fund the advertisements, the Beef
Act directed the Secretary to impose a $1-per-head assessment

on all sales or importations of cattle and a similar assessment
on imported beef products. Although the members of the
advisory board and operating committee were private parties,
the Secretary possessed and exercised final approval rights over
the content of the advertisements.
The beef marketers who challenged the advertising program
objected to its generic pro-beef message, which they saw as
impeding their individual efforts to advertise their particular
beef (e.g., grain-fed, certified Angus, or Hereford) as superior
to other beef. They based their challenge on cases known as the
compelled subsidy decisions, which established that the First
Amendment is implicated when the government requires one
party to fund the speech of another party even though the
subsidizing party disagrees with the speech. A federal district
court and court of appeals both ruled in favor of the beef
marketers, holding on the basis of the compelled subsidy cases
that the beef advertising program violated the First Amendment.
In Johanns v. Livestock Marketing Association, however, the
Supreme Court reversed the lower courts' decisions. The
Supreme Court stressed that the compelled subsidy cases apply
only when the speech being subsidized is private in nature, as
opposed to that of the government. The Court held that when
government speech is involved, there is no First Amendment
barrier to the government's requirement that individuals or
corporations contribute financially—whether through general
tax revenues or targeted assessments—to the communication of
that speech. According to the Court, the advertising program at
issue in Livestock Marketing was government speech because
Congress set up the legal parameters of the beef promotions
initiative, required the Secretary to launch and maintain it, and
gave the Secretary final authority Page 76to approve the content
of the advertisements. Despite the presence of private parties on
the advisory board and the operating committee, the legal
structure just noted made the message of the beef
advertisements “from beginning to end the message established
by the federal government.” The Court further noted that the

pervasive nature of the statutory and administrative regime
made the beef advertisements government speech even though
the advertisements' reference to sponsorship by “America's Beef
Producers” did not send a clear government speech signal to
readers and viewers.
The specifics of each regulatory initiative requiring
subsidization of advertisements for a type of product must be
examined in order to make a clear determination of whether the
advertising at issue is government speech. Nevertheless, the
analysis in Livestock Marketing appears to give the government
considerable latitude to implement such programs without
violating the First Amendment rights of product producers and
marketers who are unhappy with the advertising they must
subsidize.
Due Process The Fifth and Fourteenth Amendments require that
the federal government and the states observe due process when
they deprive a person of life, liberty, or property. Due process
has both procedural and substantive meanings.
Explain the difference between procedural due process and
substantive due process.
Procedural Due Process The traditional conception of due
process, called procedural due process, establishes the
procedures that government must follow when it takes life,
liberty, or property. Although the requirements of procedural
due process vary from situation to situation, their core idea is
that one is entitled to adequate notice of the government action
to be taken against him and to some sort of fair trial or hearing
before that action can occur.
For purposes of procedural due process claims, liberty includes
a very broad and poorly defined range of freedoms. It even
includes certain interests in personal reputation. For example,
the firing of a government employee may require some kind of

due process hearing if it is publicized, the fired employee's
reputation is sufficiently damaged, and her future employment
opportunities are restricted. The Supreme Court has said that
procedural due process property is not created by the
Constitution but by existing rules and understandings that stem
from an independent source such as state law. These rules and
understandings must give a person a legitimate claim of
entitlement to a benefit, not merely some need, desire, or
expectation for it. This definition includes almost all of the
usual forms of property, as well as utility service, disability
benefits, welfare benefits, and a driver's license. It also includes
the job rights of tenured public employees who can be
discharged only for cause, but not the rights of untenured or
probationary employees.
Substantive Due Process Procedural due process does not
challenge rules of substantive law—the rules that set standards
of behavior for organized social life. For example, imagine that
State X makes adultery a crime and allows people to be
convicted of adultery without a trial. Arguments that adultery
should not be a crime go to the substance of the statute, whereas
objections to the lack of a trial are procedural in nature.
Sometimes, the due process clauses have been used to attack the
substance of government action. For our purposes, the most
important example of this substantive due process occurred
early in the 20th century, when courts struck down various
kinds of social legislation as denying due process. They did so
mainly by reading freedom of contract and other economic
rights into the liberty and property protected by the Fifth and
Fourteenth Amendments, and then interpreting “due process of
law” to require that laws denying such rights be subjected to
means-ends scrutiny. The best-known example is the Supreme
Court's 1905 decision in Lochner v. New York, which struck
down a state law setting maximum hours of work for bakery
employees because the statute limited freedom of contract and
did not directly advance the legitimate state goal of promoting
worker health.

Since 1937, however, this “economic” form of substantive due
process has been largely abandoned by the Supreme Court and
has not amounted to a significant check on government
regulation of economic matters. Substantive due process attacks
on such regulations now trigger only a lenient type of rational
basis review and thus have had little chance of success. During
the 1970s and 1980s, however, substantive due process became
increasingly important as a device for protecting noneconomic
rights. The most important example is the constitutional right of
privacy, which consists of several rights that the Supreme Court
regards as fundamental and as entitled to significant
constitutional protection. The Page 77Court has declared that
these include the rights to marry, have children and direct their
education and upbringing, enjoy marital privacy, use
contraception, and, within certain limits, elect to have an
abortion. Laws restricting these rights must be narrowly tailored
to meet a compelling government purpose in order to avoid
being declared unconstitutional.
Identify the instances when an Equal Protection Clause–based
challenge to government action triggers more rigorous scrutiny
than the rational basis test.
Equal Protection The Fourteenth Amendment's Equal Protection
Clause says that “[n]o State shall … deny to any person … the
equal protection of the laws.” Because the equal protection
guarantee has been incorporated within Fifth Amendment due
process, it also restricts the federal government. The equal
protection guarantee potentially applies to all situations in
which government classifies or distinguishes people. The law
inevitably makes distinctions among people, benefiting or
burdening some groups but not others. Equal protection
doctrine, as developed by the Supreme Court, sets the standards
such distinctions must meet in order to be constitutional.
The Basic Test The basic equal protection standard is the

rational basis test described earlier. This is the standard usually
applied to social and economic regulations that are challenged
as denying equal protection. As the following case illustrates,
this lenient test usually does not impede state and federal
regulation of social and economic matters.
Fitzgerald v. Racing Association of Central Iowa
539 U.S. 103 (U.S. Sup. Ct. 2003)
Before 1989, Iowa permitted only one form of gambling:
parimutuel betting at racetracks. A 1989 Iowa statute authorized
other forms of gambling, including slot machines on riverboats.
The 1989 law established that adjusted revenues from riverboat
slot machine gambling would be taxed at graduated rates, with a
top rate of 20 percent. In 1994, Iowa enacted a law that
authorized racetracks to operate slot machines. That law also
imposed a graduated tax upon racetrack slot machine adjusted
revenues, with a top rate that started at 20 percent and would
automatically rise over time to 36 percent. The 1994 enactment
left in place the 20 percent tax rate on riverboat slot machine
adjusted revenues.
Contending that the 1994 legislation's 20 percent versus 36
percent tax rate difference violated the federal Constitution's
Equal Protection Clause, a group of racetracks and an
association of dog owners brought suit against the State of Iowa
(through its state treasurer, Michael Fitzgerald). A state district
court upheld the statute, but the Iowa Supreme Court reversed.
The U.S. Supreme Court granted Iowa's petition for a writ of

certiorari.
Breyer, Justice
We here consider whether a difference in state tax rates violates
the Fourteenth Amendment's mandate that “no State shall …
deny to any person … the equal protection of the laws.” The law
in question does not distinguish on the basis of, for example,
race or gender. It does not distinguish between in-state and out-
of-state businesses. Neither does it favor a State's long-time
residents at the expense of residents who have more recently
arrived from other States. Rather, the law distinguishes for tax
purposes among revenues obtained within the State of Iowa by
two enterprises, each of which does business in the State.
Where that is so, the law is subject to rational-basis review:
The Equal Protection Clause is satisfied so long as there is a
plausible policy reason for the classification, the legislative
facts on which the classification is apparently based rationally
may have been considered to be true by the governmental
decisionmaker, and the relationship of the classification to its
goal is not so attenuated as to render the distinction arbitrary or
irrational.
[Case citation omitted.] [We have also held that] rational-basis
review “is especially deferential in the context of classifications
made by complex tax laws.” [Case citation omitted.]
The Iowa Supreme Court found that the 20 percent/36 percent
tax rate differential failed to meet this standard because, in its
view, that difference frustrated what it saw as the law's basic
objective, namely, rescuing the racetracks from economic
distress. And no rational person, it believed, could claim the
contrary. The Iowa Supreme Court could not deny, however,
that the Iowa law, like most laws, might predominately serve
one general objective, say, helping the racetracks, while
containing subsidiary provisions that seek to achieve other
desirable (perhaps even contrary) ends as well, thereby

producing a law that balances objectives but still serves the
general objective when seen as a whole. After all, if every
subsidiary provision in a law designed Page 78to help
racetracks had to help those racetracks and nothing more, then
(since any tax rate hurts the racetracks when compared with a
lower rate) there could be no taxation of the racetracks at all.
Neither could the Iowa Supreme Court deny that the 1994
legislation, seen as a whole, can rationally be understood to do
what that court says it seeks to do, namely, advance the
racetracks' economic interests. Its grant to the racetracks of
authority to operate slot machines should help the racetracks
economically to some degree—even if its simultaneous
imposition of a tax on slot machine adjusted revenue means that
the law provides less help than respondents might like. At least
a rational legislator might so believe. And the Constitution
grants legislators, not courts, broad authority (within the bounds
of rationality) to decide whom they wish to help with their tax
laws and how much help those laws ought to provide. “The ‘task
of classifying persons for … benefits … inevitably requires that
some persons who have an almost equally strong claim to
favored treatment be placed on different sides of the line,’ and
the fact the line might have been drawn differently at some
points is a matter for legislative, rather than judicial,
consideration.” [Case citation omitted.]
Once one realizes that not every provision in a law must share a
single objective, one has no difficulty finding the necessary
rational support for the 20 percent/36 percent differential here
at issue. That difference, harmful to the racetracks, is helpful to
the riverboats, which, as [those challenging the 1994 statute]
concede, were also facing financial peril. These two
characterizations are but opposite sides of the same coin. Each
reflects a rational way for a legislator to view the matter. And
aside from simply aiding the financial position of the
riverboats, the legislators may have wanted to encourage the
economic development of river communities or to promote
riverboat history, say, by providing incentives for riverboats to

remain in the State, rather than relocate to other States.
Alternatively, they may have wanted to protect the reliance
interests of riverboat operators, whose adjusted slot machine
revenue had previously been taxed at the 20 percent rate. All
these objectives are rational ones, which lower riverboat tax
rates could further and which suffice to uphold the different tax
rates.
We conclude that there is “a plausible policy reason for the
classification,” that the legislature “rationally may have …
considered … true” the related justifying “legislative facts,” and
that the “relationship of the classification to its goal is not so
attenuated as to render the distinction arbitrary or irrational.”
[Case citation omitted.] Consequently the State's differential tax
rate does not violate the Federal Equal Protection Clause.
Iowa Supreme Court decision reversed, and case remanded for
further proceedings.
Stricter Scrutiny The rational basis test is the basic equal
protection standard. Some classifications, however, receive
tougher means-ends scrutiny. According to Supreme Court
precedent, laws that discriminate regarding fundamental rights
or suspect classes must undergo more rigorous review.
Although the list of rights regarded as “fundamental” for equal
protection purposes is not completely clear, it includes certain
criminal procedure protections as well as the rights to vote and
engage in interstate travel. Laws creating unequal enjoyment of
these rights receive full strict scrutiny. In 1969, for instance,
the Supreme Court struck down the District of Columbia's one-
year residency requirement for receiving welfare benefits
because that requirement unequally and impermissibly restricted
the right of interstate travel.
An equal protection claim involving the fundamental right to
vote was addressed in high-profile fashion by the Supreme
Court in Bush v. Gore, 531 U.S. 98 (2000). A five-justice
majority in the historic and controversial decision terminated an
ongoing vote recount in Florida because, in the majority's view,

Florida law's “intent of the voter” test was not a sufficiently
clear standard for determining whether a ballot not counted in
the initial machine count should be counted as valid during the
manual recount. The majority was concerned that in the absence
of a more specific standard, vote counters taking part in the
recount might apply inconsistent standards in determining what
the voter supposedly intended, and might thereby value some
votes over others. The termination of the Florida recount meant
that then-Governor Bush won the state of Florida, giving him
enough Electoral College votes to win the presidency despite
the fact that candidate Gore tallied more popular votes
nationally. The four dissenters in Bush v. Gore faulted the
majority for focusing on the supposed equal protection violation
it identified, when, in the dissenters' view, the Court ignored a
potentially bigger equal protection problem created by
termination of the recount: the prospect that large numbers of
ballots not counted during the machine count would never be
counted, even though they may have been valid votes under
Florida's “intent of the voter” test.
In Crawford v. Marion County Election Board, 553 U.S.181
(2008), the Supreme Court again addressed the fundamental
right to vote. This time, the Court was faced with determining
whether an Indiana law violated the Page 79Equal Protection
Clause by requiring that voters produce a government-issued
photo ID as a precondition to being allowed to vote. Those who
raised the equal protection challenge to the requirement asserted
that its burdens would fall disproportionately on low-income
and elderly voters, who would be less likely than other persons
to have a driver's license or other photo ID and would not be
able to exercise the right to vote if they lacked the necessary
photo ID. The Court upheld the Indiana law, ruling that it did
not violate the Equal Protection Clause. The six justices in the
majority split into two three-justice camps on the details of the
appropriate supporting reasoning. They agreed, however, that
even though voter fraud at the polls had not been a
demonstrated problem in Indiana, the photo ID requirement was

a generally applicable and not excessively burdensome way of
furthering the state's purposes of preventing voter fraud and
preserving voter confidence in the integrity of elections.
Certain “suspect” bases of classification also trigger more
rigorous equal protection review. As of 2011, the suspect
classes and the level of scrutiny they attract are as follows:
1. Race and national origin. Classifications disadvantaging
racial or national minorities receive the most rigorous kind of
strict scrutiny and are almost never constitutional. Still, the
Supreme Court has sometimes upheld government-required
affirmative action plans and what critics have called reverse
racial discrimination—government action that benefits racial
minorities and allegedly disadvantages whites. In 1989,
however, a majority of the Court concluded that state action of
this kind should receive the same full strict scrutiny as
discrimination against racial or national minorities. A 1995
Supreme Court decision held that this is true of federal
government action as well as state action. These developments
have curtailed certain government-created affirmative action
programs but have not eliminated them.
In the companion cases of Gratz v. Bollinger, 539 U.S. 244
(2003), and Grutter v. Bollinger, 539 U.S. 306 (2003), the
Supreme Court considered whether the University of Michigan
violated the Equal Protection Clause by taking minority
students' race into account in its undergraduate and law school
admissions policies. The Court recognized in the two cases that
seeking student diversity in a higher education context is a
compelling government interest. However, in Gratz, a five-
justice majority of the Court held that the university's
undergraduate admissions policy violated the Equal Protection
Clause because the policy's consideration of minority
applicants' race became effectively the automatic determining
factor in admission decisions regarding minority applicants. In
Grutter, on the other hand, a different five-justice majority held
that the university's law school admissions policy did not

violate the Equal Protection Clause. The Grutter majority
reasoned that the law school's policy, in considering minority
applicants' race, did so as part of individualized consideration
of applicants and of various types of diversity, not simply race.
Thus, the law school's policy did not make race the determining
factor in the impermissible way that the undergraduate policy
did.
After the decisions in Gratz and Grutter, one justice's death and
another's retirement led to changes in the composition of the
Supreme Court. In a much-anticipated decision, Parents
Involved in Community Schools v. Seattle School District No.
1, 551 U.S. 701 (2007), the Court ruled on whether public
school districts in Seattle, Washington, and Louisville,
Kentucky, violated the Equal Protection Clause in the ways they
considered race when assigning Page 80students to schools. The
Seattle district, which had neither created segregated schools
nor been subject to court-ordered desegregation, generally
allowed students to choose which high school they wished to
attend. However, the district classified students as white or
nonwhite and used the racial classifications as a “tiebreaker” to
allocate available slots in particular high schools and thereby
seek to achieve racially diverse schools despite the existence of
certain housing patterns that would have produced little racial
diversity at certain schools. The Louisville school district had
been subject to a federal court's desegregation decree during a
two-decades-long period, but the court had lifted the
desegregation order after concluding that the district had
eliminated the vestiges of prior segregation to the greatest
extent feasible. The district then adopted a plan under which
students were classified as black or “other.” Using these
classifications in making elementary school assignments and in
ruling on transfer requests, the district sought to achieve racial
diversity in schools that would have reflected less racial
diversity in light of traditional housing patterns. Cases
challenging the respective districts' policies as supposed
violations of the Equal Protection Clause made their way

through the lower federal courts and were consolidated for
decision in the Supreme Court.
Ethics in Action
As discussion in this chapter reveals, Supreme Court precedent
establishes that when government action discriminates on the
basis of race or sex, the action will receive heightened scrutiny
from the Court in an equal protection case. Sexual orientation,
however, has not been treated by the Supreme Court as a
classification basis that justifies heightened scrutiny. This
means that the lenient rational basis review will be employed by
a court deciding an equal protection case in which the
government is alleged to have discriminated on the basis of
sexual orientation. In a legal sense, then, the government has
more latitude to regulate in ways that draw lines on the basis of
persons' sexual preference than in ways that classify on the
basis of persons' race or gender. Now view this set of issues
from an ethical perspective. Should the government be any more
free to take actions that discriminate against homosexuals—or,
for that matter, against heterosexuals—than it is to take actions
that discriminate on the basis of race or sex? As you consider
this question, you may wish to examine Chapter 4's discussion
of ethical theories and ethical decision making.
In Parents Involved, five justices agreed that the above-
described policies violated the Equal Protection Clause. Four of
those five subscribed to the plurality opinion authored by Chief
Justice Roberts. He stressed that the use of racial classifications
called for the application of the strict scrutiny test, but that the

school districts were unable to rely on government interests
previously held to be held to be compelling in nature:
remedying the effects of past intentional discrimination
(inapplicable because the Seattle schools had never been subject
to a desegregation order and the desegregation order formerly in
effect for the Louisville schools had been lifted); and the
Grutter-recognized interest in achieving broad-ranging diversity
in a higher education setting (inapplicable because the
consolidated cases did not involve higher education and the
school districts sought only racial diversity as opposed to
diversity in other senses as well). The Chief Justice's opinion
rejected the notion that achieving racial balancing per se could
be a compelling government objective, and concluded by
invoking language from the landmark 1954 decision in Brown v.
Board of Education—language that condemned the use of racial
classifications in schools.
Justice Kennedy provided the fifth vote for the holding that the
Seattle and Louisville districts had committed an equal
protection violation, but he authored a concurring opinion in
which he rejected much of the Chief Justice's reasoning and
suggested ways in which school districts might still take race
into account in an effort to achieve diversity in a broader sense
that was not restricted to racial diversity. The four dissenters,
led by Justice Breyer, would have upheld the policies
implemented by the school districts. For the dissenters, the
plurality opinion's reliance on language from Brown v. Board of
Education was too much. Given Brown's ruling in favor of
discriminated-against black students and the decision's rejection
of the school systems' separate-but-equal argument for
maintaining whites-only and blacks-only schools, the dissenters
thought it inappropriate for the plurality to rely on language
from Brown as a supposed reason to reject policies that were
designed to bring the races together and keep schools from
drifting in the direction of segregation.
2. Alienage. Classifications based on one's status as an alien
also receive strict scrutiny of some kind, but this standard

almost certainly is not as tough as the full strict scrutiny
normally used in race discrimination cases. Under the “political
function” exception, moreover, laws restricting aliens from
employment in positions that are intimately related to
democratic self-government only receive rational basis review.
This exception has been read broadly to allow the upholding of
laws that exclude aliens from being state troopers, public school
teachers, and probation officers.
3. Sex. Although the Supreme Court has been hesitant to make a
formal declaration that sex is a suspect class, for roughly four
decades laws discriminating on the basis of gender have been
subjected to a fairly rigorous form of intermediate scrutiny. As
the Court has said, such laws require an “exceedingly
persuasive” justification. The usual test is that government
action discriminating on the basis of sex must be substantially
related to the furtherance of an important government purpose.
Under this test, measures discriminating against women have
almost always been struck down. The Supreme Court has said
that laws disadvantaging men receive the same scrutiny as those
disadvantaging women, but this has not prevented the Court
from upholding men-only draft registration and a law making
statutory rape a crime for men alone.
4. Illegitimacy. Classifications based on one's having been born
to unmarried parents receive a form of intermediate scrutiny
that probably is less strict than the scrutiny given gender-based
classifications. Under this vague standard, the Court has struck
down state laws discriminating against so-called “illegitimate”
offspring in areas such as recovery for wrongful death, workers'
compensation benefits, Social Security payments, inheritance,
and child support.
Page 81
CONCEPT REVIEW
Equal Protection and Levels of Scrutiny

Type of Government Action
Controlling Test
Operation and Effect of Test
Government action that discriminates but neither affects
exercise of fundamental right nor discriminates against suspect
class (e.g., most social and economic regulation)
Rational basis
Lenient test—government action is constitutional if rationally
related to legitimate government purpose.
Government action that discriminates concerning ability to
exercise fundamental right
Full strict scrutiny
Very rigorous test—government action is unconstitutional
unless necessary to fulfillment of compelling government
purpose.
Government action that discriminates on basis of race or
national origin
Full strict scrutiny
Very rigorous test—government action is unconstitutional
unless necessary to fulfillment of compelling government
purpose.
Government action that discriminates on basis of alienage
Less than full strict scrutiny as general rule; rational basis when
public function exception applies
Rigorous test—though softer application of full strict scrutiny

requirements. When public function exception applies, test is
lenient.
Government action that discriminates on basis of sex (gender)
Intermediate scrutiny
Moderately rigorous test—government action is unconstitutional
unless substantially related to fulfillment of important
government purpose.
Government action that discriminates on basis of illegitimacy
Intermediate scrutiny, but to lesser degree than in gender
discrimination cases
Moderately rigorous test—though softer application of
intermediate scrutiny requirements.
Independent Checks Applying Only to the States
The Contract Clause Article I, § 10 of the Constitution states:
“No State shall … pass any … Law impairing the Obligation of
Contracts.” Known as the Contract Clause, this provision deals
with state laws that change the parties' performance obligations
under an existing contract after that contract has been made.2
The original purpose of the Contract Clause was to strike down
the many debtor relief statutes passed by the states after the
Revolution. These statutes impaired the obligations of existing
private contracts by relieving debtors of what they owed to
creditors. In two early 19th-century cases, however, the
Contract Clause also was held to protect the obligations of
governmental contracts, charters, and grants.
The Contract Clause probably was the most important
constitutional check on state regulation of the economy for
much of the 19th century. Beginning in the latter part of that

century, the clause gradually became subordinate to legislation
based on the states' police powers. By the mid-20th century,
most observers treated the clause as being of historical interest
only. In 1977, however, the Supreme Court gave the Contract
Clause new life by announcing a fairly strict constitutional test
governing situations in which a state impairs its own contracts,
charters, and grants. Such impairments, the Court said, must be
“reasonable and necessary to serve an important public
purpose.”
During recent decades, the Court has continued its deference
toward state regulations that impair the obligations Page 82of
private contracts. Consider, for instance, Exxon Corp. v.
Eagerton (1983). For years, Exxon had paid a severance tax
under Alabama law on oil and gas it drilled within the state. As
the tax increased, appropriate provisions in Exxon's contracts
with the purchasers of its oil and gas allowed Exxon to pass on
the amounts of the increases to the purchasers. Alabama,
however, enacted a law that not only increased the severance
tax but also forbade producers of oil and gas from passing on
the increase to purchasers. Exxon filed suit, seeking a
declaration that the law's pass-on prohibition violated the
Contract Clause. Affirming Alabama's highest court, the U.S.
Supreme Court observed that the Contract Clause allows the
states to adopt broad regulatory measures without having to be
concerned that private contracts will be affected. The pass-on
prohibition was designed to advance a broad public interest in
protecting consumers against excessive prices and was
applicable to all oil and gas producers regardless of whether
they were then parties to contracts containing pass-on
provisions. Therefore, the Court reasoned, the Alabama statute
did not violate the Contract Clause.
Explain the burden-on-commerce doctrine's role in making
certain state government actions unconstitutional.

Burden on, or Discrimination against, Interstate Commerce In
addition to empowering Congress to regulate interstate
commerce, the Commerce Clause limits the states' ability to
burden or discriminate against such commerce. This limitation
is not expressly stated in the Constitution. Instead, it arises by
implication from the Commerce Clause and reflects that clause's
original purpose of blocking state protectionism and ensuring
free interstate trade. (Because this limitation arises by
implication, it is often referred to as the “dormant” Commerce
Clause.) The burden-on-commerce limitation and the
nondiscrimination principle operate independently of
congressional legislation under the commerce power or other
federal powers. If appropriate federal regulation is present, the
preemption questions discussed in the next section may also
arise.
Many different state laws can raise burden-on-commerce
problems. For example, state regulation of transportation (e.g.,
limits on train or truck lengths) has been a prolific source of
litigation. The same is true of state restrictions on the
importation of goods or resources, such as laws forbidding the
sale of out-of-state food products unless they meet certain
standards. Such restrictions sometimes benefit local economic
interests and reflect their political influence. Burden-on-
commerce issues also arise if states try to aid their own
residents by blocking the export of scarce or valuable products,
thus denying out-of-state buyers access to those products.
In part because of the variety of state regulations it has had to
consider, the Supreme Court has not adhered to one consistent
test for determining when such regulations impermissibly
burden interstate commerce. In a 1994 case, the Court said that
if a state law discriminates against interstate commerce, the
strictest scrutiny will be applied in the determination of the
law's constitutionality. Discrimination is express when state
laws treat local and interstate commerce unequally on their
face.
State laws might also discriminate even though on their face,

they seem neutral regarding interstate commerce. This occurs
when their effect is to burden or hinder such commerce. In one
case, for example, the Supreme Court considered a North
Carolina statute that required all closed containers of apples
sold within the state to bear only the applicable U.S. grade or
standard. The State of Washington, the nation's largest apple
producer, had its own inspection and grading system for
Washington apples. This system generally was regarded as
superior to the federal system. The Court struck down the North
Carolina statute because it benefited local apple producers by
forcing Washington sellers to regrade apples sold in North
Carolina (thus raising their costs of doing business) and by
undermining the competitive advantage provided by
Washington's superior grading system.
On the other hand, state laws that regulate evenhandedly and
have only incidental effects on interstate commerce are
constitutional if they serve legitimate state interests and their
local benefits exceed the burden they place on interstate
commerce. There is no sharp line between such regulations and
those that are almost always unconstitutional under the tests
discussed above. In a 1981 Supreme Court case, a state truck-
length limitation that differed from the limitations imposed by
neighboring states failed to satisfy the tests for
constitutionality. The Court concluded that the measure did not
further the state's legitimate interest in highway safety because
the trucks banned by the state generally were as safe as those it
allowed. In addition, whatever marginal safety advantage the
law provided was outweighed by the numerous problems it
posed for interstate trucking companies.
Laws may also unconstitutionally burden interstate commerce
when they directly regulate that commerce. This can occur, for
example, when state price regulations require firms to post the
prices at which they will sell within the state and to promise
that they will not sell Page 83below those prices in other states.
Because they affect prices in other states, such regulations
directly regulate interstate commerce and usually are

unconstitutional.
Identify the major circumstances in which federal law will
preempt state law.
Federal Preemption The constitutional principle of federal
supremacy dictates that when state law conflicts with valid
federal law, the federal law is supreme. In such a situation, the
state law is said to be preempted by the federal regulation. The
central question in most federal preemption cases is the intent
of Congress. Thus, such cases often present complex questions
of statutory interpretation.
Federal preemption of state law generally occurs for one or
more of these reasons:
There is a literal conflict between the state and federal
measures, so that it is impossible to follow both simultaneously.
The federal law specifically states that it will preempt state
regulation in certain areas. Similar statements may also appear
in the federal statute's legislative history. Courts sometimes
find such statements persuasive even when they appear only in
the legislative history and not in the statute itself.
The federal regulation is pervasive. If Congress has “occupied
the field” by regulating a subject in great breadth and/or in
considerable detail, such action by Congress may suggest an
intent to displace state regulation of the subject. This may be
especially likely where Congress has given an administrative
agency broad regulatory power in a particular area.
The state regulation is an obstacle to fulfilling the purposes of
the federal law. Here, the party challenging the state law's
constitutionality typically claims that the state law interferes
with the purposes she attributes to the federal measure
(purposes usually found in its legislative history). In Chamber
of Commerce v. Whiting, which follows, the Supreme Court
decides whether a federal law dealing with employment of

illegal immigrants preempts a state law dealing with the same
subject.
Chamber of Commerce v. Whiting
2011 U.S. LEXIS 4018 (U.S. Sup. Ct. 2011)
A federal law, the Immigration Reform and Control Act (IRCA),
makes it “unlawful for a person or other entity … to hire, or to
recruit or refer for a fee, for employment in the United States an
alien knowing the alien is an unauthorized alien.” Employers
that violate this prohibition may be subjected to federal civil
and criminal sanctions. IRCA also restricts the ability of states
to combat employment of unauthorized workers. It does so by
expressly preempting “any state or local law imposing civil or
criminal sanctions (other than through licensing and similar
laws) upon those who employ, or recruit or refer for a fee for
employment, unauthorized aliens.”
In addition, IRCA requires employers to take steps to verify an
employee's eligibility for employment. Seeking to improve that
verification process in the Illegal Immigration Reform and
Immigrant Responsibility Act (IIRIRA), Congress created E-
Verify, an Internet-based system employers can use to check the
work authorization status of employees. Federal law does not
make the use of E-Verify mandatory, however.
Arizona is among several states that have enacted laws
attempting to impose sanctions for the employment of
unauthorized aliens through, among other things, “licensing and
similar laws.” According to the Legal Arizona Workers Act, the
licenses of state employers that knowingly or intentionally

employ unauthorized aliens may be, and in certain
circumstances must be, suspended or revoked. The Arizona law
also requires that all Arizona employers use E-Verify.
The Chamber of Commerce of the United States and various
business and civil rights organizations (collectively referred to
here as “the Chamber”) filed suit against those charged with
administering the Arizona law. The Chamber argued that the
state law's license suspension and revocation provisions were
both expressly and impliedly preempted by federal immigration
law, and that the mandatory use of E-Verify was impliedly
preempted. A federal district court held that the plain language
of IRCA's preemption clause did not invalidate the Arizona law
because the law did no more than impose licensing conditions
on businesses operating within the state. The court also held
that federal law did not preempt the state law's provision
making E-Verify use mandatory, because when Congress made
the use of the program voluntary at the national level, it
expressed no intent to prevent states from requiring its use.
After the U.S. Court of Appeals for the Ninth Circuit affirmed,
the Supreme Court agreed to decide the case.
Page 84Roberts, Chief Justice
When a federal law contains an express preemption clause, we
“focus on the plain wording of the clause, which necessarily
contains the best evidence of Congress' preemptive intent.”
[Citation omitted.]
IRCA expressly preempts states from imposing “civil or
criminal sanctions” on those who employ unauthorized aliens,
“other than through licensing and similar laws.” The Arizona
law, on its face, purports to impose sanctions through licensing
laws. The state law authorizes state courts to suspend or revoke
an employer's business licenses if that employer knowingly or
intentionally employs an unauthorized alien. The Arizona law
defines “license” as “any agency permit, certificate, approval,
registration, charter or similar form of authorization that is
required by law and that is issued by any agency for the

purposes of operating a business in” the state. That definition
largely parrots the definition of “license” that Congress codified
in the Administrative Procedure Act (APA).
Apart from that general definition, the Arizona law specifically
includes within its definition of “license” documents such as
articles of incorporation, certificates of partnership, and grants
of authority to foreign companies to transact business in the
state. These examples have clear counterparts in the APA
definition just quoted.
A license is “a right or permission granted in accordance with
law … to engage in some business or occupation, to do some
act, or to engage in some transaction which but for such license
would be unlawful.” [Dictionary citation omitted.] Articles of
incorporation and certificates of partnership allow the formation
of legal entities and permit them as such to engage in business
and transactions which but for such authorization would be
unlawful. As for state-issued authorizations for foreign
businesses to operate within a state, we have repeatedly referred
to those as “licenses.” Moreover, even if a law regulating
articles of incorporation, partnership certificates, and the like is
not itself a “licensing law,” it is at the very least “similar” to a
licensing law, and therefore comfortably within the [IRCA's]
savings clause.
Justice Breyer's primary concern [, as set forth in his dissent,]
appears to be that state permissions such as articles of
incorporation and partnership certificates are treated as
“licensing and similar laws.” Because myriad other licenses are
required to operate a business [, including a “privilege license”
required by Arizona law], that concern is largely academic.
Suspending or revoking an employer's articles of incorporation
will often be entirely redundant.
The Chamber and the United States as amicus [i.e., friend of the
Court] argue that the Arizona law is not a “licensing” law
because it operates only to suspend and revoke licenses rather
than to grant them. Again, this construction of the term runs
contrary to the definition that Congress itself has codified [in

federal law]. It is also contrary to common sense. There is no
basis in law, fact, or logic for deeming a law that grants
licenses a licensing law, but a law that suspends or revokes
those very licenses something else altogether.
The Chamber asserts that … Congress meant to allow state
licensing sanctions only after a federal IRCA adjudication. But
the text of IRCA's savings clause says nothing about state
licensing sanctions being contingent on prior federal
adjudication, or indeed about state licensing processes at all.
The simple fact that federal law creates procedures for federal
investigations and adjudications culminating in federal civil or
criminal sanctions does not indicate that Congress intended to
prevent States from establishing their own procedures for
imposing their own sanctions through licensing.
In much the same vein, the Chamber argues [in its brief] that
Congress [did not mean in IRCA] “to authorize each of the 50
states … to impose its own separate prohibition,” and that
Congress instead wanted uniformity in immigration law
enforcement. Justice Breyer also objects [in his dissent] to the
departure from “one centralized enforcement scheme” under
federal law. But Congress expressly preserved the ability of the
states to impose their own sanctions through licensing; that—
like our federal system in general—necessarily entails the
prospect of some departure from homogeneity. And as for
“separate prohibition[s],” it is worth recalling that the Arizona
licensing law is based exclusively on the federal prohibition—a
court reviewing a complaint under the Arizona law may
“consider only the federal government's determination” with
respect to “whether an employee is an unauthorized alien.”
The Chamber argues that its textual and structural arguments
are bolstered by IRCA's legislative history. We have already
concluded that Arizona's law falls within the plain text of
IRCA's savings clause. And, as we have said before, Congress's
“authoritative statement is the statutory text, not the legislative
history.” [Citation omitted.] Whatever the usefulness of relying
on legislative history materials in general, the arguments

against doing so are particularly compelling here. Beyond
verbatim recitation of the statutory text, all of the legislative
history documents related to IRCA save one fail to discuss the
savings clause at all. The Senate Judiciary Committee Report on
the Senate version of the law does not comment on it. Only one
of the four House Reports on the law touches on the licensing
exception, and we have previously dismissed that very report as
“a rather slender reed” from “one House of a politically divided
Congress.” [Citation omitted.] And the Conference Committee
Report does not discuss the scope of IRCA's preemption
provision in any way.
Page 85[In his dissent,] Justice Breyer poses several rhetorical
questions challenging our reading of IRCA and then goes on to
propose two seemingly alternative views of the phrase
“licensing and similar laws”—that it was meant to refer to
“employment-related licensing systems,” or, even more
narrowly, to “the licensing of firms in the business of recruiting
or referring workers for employment, such as … state
agricultural labor contractor licensing schemes.” If we are
asking questions, a more telling one may be why, if Congress
had intended such limited exceptions to its prohibition on state
sanctions, it did not simply say so, instead of excepting
“licensing and similar laws” generally?
Justice Sotomayor takes a different tack [in her dissent].
Invoking arguments that resemble those found in our implied
preemption cases, she concludes that the Arizona law “falls
outside” the savings clause and is expressly preempted because
it allows “state courts to determine whether a person has
employed an unauthorized alien.” While Justice Breyer would
add language to the statute narrowly limiting the phrase
“licensing and similar laws” to specific types of licenses,
Justice Sotomayor creates an entirely new statutory
requirement: She would allow states to impose sanctions
through “licensing and similar laws” only after a federal
adjudication. Such a requirement is found nowhere in the text,
and Justice Sotomayor does not even attempt to link it to a

specific textual provision. It should not be surprising that the
two dissents have sharply different views on how to read the
statute. That is the sort of thing that can happen when statutory
analysis is so untethered from the text.
IRCA expressly preempts some state powers dealing with the
employment of unauthorized aliens and it expressly preserves
others. We hold that Arizona's licensing law falls well within
the confines of the authority Congress chose to leave to the
States and therefore is not expressly preempted.
As an alternative to its express preemption argument, the
Chamber contends that Arizona's law is impliedly preempted
because it conflicts with federal law. At its broadest level, the
Chamber's argument is that Congress intended the federal
system to be exclusive, and that any state system therefore
necessarily conflicts with federal law. But Arizona's procedures
simply implement the sanctions that Congress expressly allowed
Arizona to pursue through licensing laws. Given that Congress
specifically preserved such authority for the states, it stands to
reason that Congress did not intend to prevent the states from
using appropriate tools to exercise that authority.
[T]he Chamber argues more generally that the law is preempted
because it upsets the balance that Congress sought to strike
when enacting IRCA. In the Chamber's view, IRCA reflects
Congress's careful balancing of several policy considerations—
deterring unauthorized alien employment, avoiding burdens on
employers, protecting employee privacy, and guarding against
employment discrimination. According to the [Chamber's brief],
the harshness of Arizona's law “‘exert[s] an extraneous pull on
the scheme established by Congress’” that impermissibly upsets
that balance.
License suspension and revocation are significant sanctions. But
they are typical attributes of a licensing regime. Numerous
Arizona laws provide for the suspension or revocation of
licenses for failing to comply with specified state laws. It
makes little sense to preserve state authority to impose
sanctions through licensing, but not allow states to revoke

licenses when appropriate as one of those sanctions.
Of course Arizona hopes that its law will result in more
effective enforcement of the prohibition on employing
unauthorized aliens. But in preserving to the states the authority
to impose sanctions through licensing laws, Congress did not
intend to preserve only those state laws that would have no
effect. The balancing process that culminated in IRCA resulted
in a ban on hiring unauthorized aliens, and the state law here
simply seeks to enforce that ban.
Implied preemption analysis does not justify a “free-wheeling
judicial inquiry into whether a state statute is in tension with
federal objectives”; such an endeavor “would undercut the
principle that it is Congress rather than the courts that preempts
state law.” [Citation omitted.] Our precedents “establish that a
high threshold must be met if a state law is to be pre-empted for
conflicting with the purposes of a federal Act.” [Citation
omitted.] That threshold is not met here.
The Chamber also argues that Arizona's requirement that
employers use the federal E-Verify system to determine whether
an employee is authorized to work is impliedly preempted. In
the Chamber's view, “Congress wanted to develop a reliable and
non-burdensome system of work-authorization verification” that
could serve as an alternative to the I-9 procedures, and the
“mandatory use of E-Verify impedes that purpose.”
We begin again with the relevant text. The provision of IIRIRA
setting up the program that includes E-Verify contains no
language circumscribing state action. Arizona's use of E-Verify
does not conflict with the federal scheme. The Arizona law
requires that “every employer, after hiring an employee, shall
verify the employment eligibility of the employee” through E-
Verify. That requirement is entirely consistent with the federal
law. And the consequences of not using E-Verify under the
Arizona law are the same as the consequences of not using the
system under federal law. In both instances, the only result is
that the employer forfeits the otherwise available rebuttable
presumption that it complied with the law.

Congress's objective in authorizing the development of E-Verify
was to ensure reliability in employment authorization
verification, combat counterfeiting of identity documents, and
Page 86protect employee privacy. Arizona's requirement that
employers operating within its borders use E-Verify in no way
obstructs achieving those aims.
In fact, the Federal Government has consistently expanded and
encouraged the use of E-Verify. When E-Verify was created in
1996, it was meant to last just four years and it was made
available in only six states. Congress since has acted to extend
the E-Verify program's existence on four separate occasions.
And in 2003 Congress directed the Secretary of Homeland
Security to make E-Verify available in all 50 States. The
Department of Homeland Security has even used billboard and
radio advertisements to encourage greater participation in the E-
Verify program.
[We conclude that] Arizona's unauthorized alien employment
law fits within the confines of IRCA's savings clause and does
not conflict with federal immigration law.
Judgment of Ninth Circuit Court of Appeals affirmed.
Explain the power granted to the government by the Takings
Clause, as well as the limits on that power.
The Takings Clause
The Fifth Amendment states that “private property [shall not] be
taken for public use, without just compensation.” Because this
Takings Clause has been incorporated within Fourteenth
Amendment due process, it applies to the states. Traditionally,
it has come into play when the government formally condemns
land through its power of eminent domain,3 but it has many
other applications as well.
The Takings Clause both recognizes government's power to take
private property and limits the exercise of that power. It does so

by requiring that when property is subjected to a governmental
taking, the taking must be for a public use and the property
owner must receive just compensation. We now consider these
four aspects of the Takings Clause in turn.
Property. The Takings Clause protects other property interests
besides land and interests in land. Although its full scope is
unclear, the clause has been held to cover takings of personal
property, liens, trade secrets, and contract rights.
Taking. Because of the range of property interests it may cover,
the Takings Clause potentially has a broad scope. Another
reason for the clause's wide possible application is the range of
government activities that may be considered takings. Of
course, the government's use of formal condemnation
procedures to acquire private property is a taking. There also
may be a taking when the government physically invades
private property or allows someone else to do so.
It has long been recognized, moreover, that overly extensive
land use regulation may so diminish the value of property or the
owner's enjoyment of it as to constitute a taking. Among the
factors courts consider in such “regulatory taking” cases are the
degree to which government deprives the owner of free
possession, use, and disposition of his property; the overall
economic impact of the regulation on the owner; and how much
the regulation interferes with the owner's reasonable
investment-backed expectations regarding the future use of the
property. In Lucas v. South Carolina Coastal Council (1992),
the Supreme Court held that there is an automatic taking when
the government denies the owner all economically beneficial
uses of the land. When this is not the case, courts tend to apply
some form of means-ends scrutiny in determining whether land
use regulation has gone too far and thus amounts to a regulatory
taking.
Public use. Once a taking of property has occurred, it is
unconstitutional unless it is for a public use. The public use
element took center stage in a widely publicized 2005 Supreme

Court decision, Kelo v. City of New London. For discussion of
Kelo, see Figure 2.
Just compensation. Even if a taking of property is for a public
use, it still is unconstitutional if the property owner does not
receive just compensation. Although the standards for
determining just compensation vary with the circumstances, the
basic test is the fair market value of the property (or of the lost
property right) at the time of the taking.
Page 87
Figure 2 Economic Development as Public Use?
Does the government's taking of private property for the
purpose of economic development satisfy the public use
requirement set forth in the Fifth Amendment's Takings Clause?
In Kelo v. City of New London, 545 U.S. 469 (2005), the U.S.
Supreme Court answered “yes.”
New London, Connecticut, experienced economic decline for a
considerable number of years. The city therefore made
economic revitalization efforts, which included a plan to
acquire 115 parcels of real estate in a 90-acre area and create,
in collaboration with private developers, a multifaceted zone
that would combine commercial, residential, and recreational
elements. The planned development was designed to increase
tax revenue, create jobs, and otherwise capitalize on the
economic opportunities that city officials expected would flow
from a major pharmaceutical company's already-announced plan
to construct a large facility near the area the city wished to
develop.
The city was able to negotiate the purchase of most parcels of
property in the 90-acre area, but some property owners refused
to sell. The latter group included Susette Kelo and Wilhelmina
Dery. Kelo had lived in her home for several years, had made
substantial improvements to it, and especially enjoyed the water
view it afforded. Dery had lived her entire life in the home the
city sought to acquire. Both homes were well maintained. After

the city decided to use its eminent domain power to acquire the
properties of those owners who refused to sell, Kelo, Dery, and
the other nonselling owners filed suit. They contended that the
city's plan to take their property for the purpose of economic
development did not involve a public use and thus would violate
the Fifth Amendment's Takings Clause. The dispute made its
way through the Connecticut courts and then to the U.S.
Supreme Court, where a five-justice majority ruled in favor of
the city.
Writing for the majority in Kelo v. City of New London, Justice
Stevens noted that earlier decisions had identified three types of
eminent domain settings in which the government's acquisition
of private property satisfied the constitutional public use
element: first, when the government planned to develop a
government-owned facility (e.g., a military base); second, when
the government planned to construct, or allow others to
construct, improvements to which the public would have broad
access (e.g., highways or railroads); and third, when the
government sought to further some meaningful public purpose.
Justice Stevens observed that precedents had recognized the
public purpose type of public use even if the government would
not ultimately retain legal title to the acquired property (unlike
the military base example) and the acquired property would not
be fully opened up for public access (unlike the highway and
railroad examples). The Court acknowledged that the public use
requirement clearly would not be satisfied if the government
took private party A's property simply to give it to private party
B. However, the Court stressed, the prospect that private parties
might ultimately own or control property the government had
acquired through eminent domain would not make the taking
unconstitutional if an overriding public purpose prompted the
government's use of eminent domain. Similarly, even if certain
private parties (e.g., the pharmaceutical company and private
developers in the Kelo facts) would stand to benefit from the
government's exercise of eminent domain, such a fact would not
make the taking unconstitutional if a public purpose supported

the taking.
The Kelo majority stressed the particular relevance of two
earlier Supreme Court decisions, Berman v. Parker, 348 U.S. 26
(1954), and Hawaii Housing Authority v. Midkiff, 467 U.S. 299
(1984). In Berman, the Court sustained Washington, D.C.'s use
of eminent domain to take property that included businesses and
“blighted” dwellings in order to construct a low-income housing
project and new streets, schools, and public facilities. In
Midkiff, the Court upheld Hawaii's use of eminent domain to
effectuate a legislative determination that Hawaii's long-
standing land oligopoly, under which property ownership was
highly concentrated among a small number of property owners,
had to be broken up for social and economic reasons. The Kelo
majority concluded that significant public purposes were
present in both Berman and Midkiff and that those decisions led
logically to the conclusion that economic development was a
public purpose weighty enough to constitute public use for
purposes of the Takings Clause. Therefore, the Court upheld the
city's exercise of eminent domain in Kelo.
In his majority opinion, Justice Stevens was careful to point out
that because the constitutional question was whether a public
use existed, it was not the Court's job to determine the wisdom
of the government's attempt to exercise eminent domain.
Neither should the Court allow its decision to be guided by the
undoubted hardship that eminent domain places on unwilling
property owners who must yield their homes to the state (albeit
in return for “just compensation”). Justice Stevens emphasized
that if state legislatures believed an economic development
purpose such as the one the City of New London had in mind
should not be used to support an exercise of eminent domain,
the legislatures were free to specify, in their state statutes, that
eminent domain could not be employed for an economic
development purpose. The Court's determination of what is a
public use for purposes of the Takings Clause sets a protective
floor for property owners, with states being free to give greater
protection against takings by the government.

The four dissenting justices in Kelo issued sharply worded
opinions expressing their disagreement with the majority's
characterization of Berman and Midkiff as having led logically
to the conclusion that economic development was a public use.
In emotional terms, the dissenters accused the majority of
having effectively erased the public use Page 88requirement
from the Takings Clause. The Kelo decision drew considerable
media attention, perhaps more because of what appeared to be
considerable hardship to property owners such as Kelo and Dery
than because of new legal ground—if any—broken in the
decision. For many observers, the case's compelling facts led to
a perception that the city had engaged in overreaching. The
Court's decision in Kelo meant that in a legal sense, there was
no overreaching on the part of the city. Was there, however,
overreaching in an ethical sense? How would utilitarians answer
that question? What about rights theorists? (As you consider the
questions, you may wish to consult Chapter 4.)
Problems and Problem Cases
In 1967, Gary Jones purchased a house on North Bryan Street in
Little Rock, Arkansas. He and his wife lived in the house until
they separated in 1993. Jones then moved into an apartment in
Little Rock, and his wife continued to live in the house. Jones
paid his mortgage each month for 30 years. The mortgage
company paid the property taxes on the house. After Jones paid
off his mortgage in 1997, the property taxes went unpaid. In
April 2000, the Arkansas Commissioner of State Lands
(Commissioner) attempted to notify Jones of his tax
delinquency and his right to redeem the property by paying the
past-due taxes. The Commissioner sought to provide this notice
by mailing a certified letter to Jones at the North Bryan Street
address. Arkansas law approved the use of such a method of
providing notice. The packet of information sent by the
Commissioner stated that unless Jones redeemed the property, it

would be subject to public sale two years later. No one was at
home to sign for the letter. No one appeared at the post office to
retrieve the letter within the next 15 days. The post office then
returned the unopened packet to the Commissioner with an
“unclaimed” designation on it. In the spring of 2002, a few
weeks before the public sale scheduled for Jones's house, the
Commissioner published a notice of public sale in a local
newspaper. No bids were submitted, meaning that under
Arkansas law, the state could negotiate a private sale of the
property.
Several months later, Linda Flowers submitted a purchase offer.
The Commissioner then mailed another certified letter to Jones
at the North Bryan Street address, attempting to notify him that
his house would be sold to Flowers if he did not pay his
delinquent taxes. As with the first letter, the second letter was
returned to the Commissioner with an “unclaimed” designation.
Flowers purchased the house. Immediately after the expiration
of the 30-day period in which Arkansas law would have allowed
Jones to make a post-sale redemption of the property by paying
the past-due taxes, Flowers had an eviction notice delivered to
the North Bryan Street property. The notice was served on
Jones's daughter, who contacted Jones and notified him of the
tax sale. Jones then filed a lawsuit in Arkansas state court
against the Commissioner and Flowers. In his lawsuit, Jones
contended that the Commissioner's failure to provide notice of
the tax sale and of Jones's right to redeem resulted in the taking
of his property without due process. The trial court ruled in
favor of the Commissioner and Flowers, and the Arkansas
Supreme Court affirmed. The U.S. Supreme Court agreed to
decide the case and its central question of whether Jones was
afforded due process. How did the U.S. Supreme Court rule?
Nevada is alone among the states in making prostitution legal.
Under Nevada law, brothels may be operated in certain counties
in the state. In other counties in the state, they are unlawful.
Where brothels may lawfully be operated, they are subject to
licensing requirements, requirements that sex workers undergo

health testing, and other requirements. In addition, Nevada law
restricts advertisements by brothels. They cannot advertise in
counties where prostitution is not permitted by law, even if they
are located in a county where prostitution is lawful. Brothels are
permitted to advertise in counties where prostitution is allowed,
but such advertisements cannot appear in any public theater or
on any public street or highway. Brothel operators and
newspapers initiated legal action, arguing that the advertising
restrictions violated the First Amendment. What type of speech
is at issue here? Do the advertising restrictions violate the First
Amendment?
A federal statute, 8 U.S.C. § 1409, sets requirements for
acquisition of U.S. citizenship by a child born outside the
United States to unwed parents, only one of whom is a U.S.
citizen. If the mother is the U.S. citizen, the child acquires
citizenship at birth. Section Page 891409(a) states that when the
father is the citizen parent, the child acquires citizenship only
if, before the child reaches the age of 18, the child is
legitimized under the law of the child's residence or domicile,
the father acknowledges paternity in writing under oath, or
paternity is established by a competent court. Tuan Anh Nguyen
was born in Vietnam to a Vietnamese mother and a U.S. citizen
father, Joseph Boulais. At six years of age, Nguyen came to the
United States, where he became a lawful permanent resident and
was raised by his father. When Nguyen was 22, he pleaded
guilty in a Texas court to two counts of sexual assault. The U.S.
Immigration and Naturalization Service initiated deportation
proceedings against Nguyen, and an immigration judge found
him deportable. While Nguyen's appeal to the U.S. Board of
Immigration Appeals was pending, Boulais obtained from a
state court an order of parentage that was based on DNA
testing. The board dismissed Nguyen's appeal, denying his
citizenship claim on the ground that he had not established
compliance with § 1409(a). Nguyen and Boulais appealed to the
U.S. Court of Appeals for the Fifth Circuit, which rejected their
contention that § 1409 discriminated on the basis of gender and

thus violated the Constitution's equal protection guarantee. Was
the Fifth Circuit's decision correct?
As most other states do, the Commonwealth of Kentucky taxes
its residents' income. Kentucky law establishes that interest on
bonds issued by Kentucky and its political subdivisions is
exempt from Kentucky's income tax, whereas interest on bonds
issued by other states and their political subdivisions is taxable.
The tax exemption for Kentucky bonds helps make those bonds
attractive to in-state purchasers even if they carry somewhat
lower rates of interest than other states' bonds or those issued
by private companies. Most other states have differential tax
schemes that resemble Kentucky's. Kentucky residents George
and Catherine Davis paid state income tax on interest from out-
of-state municipal bonds, and then sued the Department of
Revenue of Kentucky in an effort to obtain a refund. The
Davises contended that Kentucky's differential taxation of
municipal bond interest impermissibly discriminates against
interstate commerce in violation of the U.S. Constitution's
Commerce Clause. Were the Davises correct?
Nike, Inc., mounted a public relations campaign in order to
refute news media allegations that its labor practices overseas
were unfair and unlawful. The campaign involved the use of
press releases, letters to newspapers, a letter to university
presidents and athletic directors, and full-page advertisements
in leading newspapers. Relying on California statutes designed
to curb false and misleading advertising and other forms of
unfair competition, California resident Mark Kasky filed suit in
a California court on behalf of the general public of the state.
Kasky contended that Nike had made false statements in its
campaign and that the court should therefore grant the legal
relief contemplated by the California statutes. In terms of Nike's
potential liability, why would it make a difference whether the
speech in which Nike engaged was commercial or, instead,
noncommercial? What are the arguments in favor of a
conclusion that Nike was engaged in commercial speech? What
are the arguments in favor of a conclusion that Nike was

engaged in noncommercial speech? How did the court rule on
the speech classification issue—i.e., whether Nike's speech was
commercial or, instead, that is noncommercial?
On August 26, while employed as a policeman at a state
university, Richard Homar was arrested by the state police and
charged with a drug felony. University officials then suspended
Homar without pay. Although the criminal charges were
dismissed on September 1, Homar's suspension remained in
effect. On September 18, he finally was provided the
opportunity to tell his side of the story to university officials.
Subsequently, he was demoted to grounds-keeper. He then filed
suit under a federal civil rights statue, claiming that university
officials' failure to provide him with notice and a hearing before
suspension without pay had violated due process. Was Homar
correct?
In the Violence Against Women Act, Congress provided a
federal civil remedy for victims of gender-motivated violence.
A female student who had attended a Virginia university
brought a claim under the Violence Against Women Act against
two male students who allegedly had sexually assaulted her and
caused her to experience severe emotional distress. The
defendants challenged the Violence Against Women Act on
constitutional grounds, arguing that the statute did not fall
within the power granted to Congress by the U.S. Constitution's
Commerce Clause. Were the defendants correct in this
argument?
The Minnesota legislature passed a statute banning the sale of
milk in plastic nonrefillable, nonreusable containers. However,
it allowed sales of milk in other nonrefillable, nonreusable
containers such as paperboard cartons. One of the justifications
for this ban Page 90on plastic jugs was that it would ease the
state's solid waste disposal problems because plastic jugs
occupy more space in landfills than other nonreturnable milk
containers. A group of dairy businesses challenged the statute,
arguing that its distinction between plastic containers and other
containers was unconstitutional under the Equal Protection

Clause. What means-ends test or level of scrutiny applies in this
case? Under that test, is easing the state's solid waste disposal
problems a sufficiently important end? Under that test, is there
a sufficiently close “fit” between the classification and that end
to make the statutory means constitutional? In answering the
last question, assume for the sake of argument that there
probably were more effective ways of alleviating the solid
waste disposal problem than banning plastic jugs while allowing
paperboard cartons.
Oklahoma statutes set the age for drinking 3.2 beer at 21 for
men and 18 for women. The asserted purpose behind the statutes
(and the sex-based classification that they established) was
traffic safety. The statutes were challenged as a denial of equal
protection by male residents of Oklahoma. What level of
scrutiny would this measure receive if women had been denied
the right to drink 3.2 beer until they were 21 but men had been
allowed to consume it at age 18? Should this standard change
because the measure discriminates against men? Is the male
challenge to the statute likely to be successful?
While it was preparing a comprehensive land use plan in the
area, the Tahoe Regional Planning Agency (TRPA) imposed two
moratoria on development of property in the Lake Tahoe Basin.
The moratoria together lasted 32 months. A group of property
developers affected by the moratoria filed suit in federal court
alleging that the moratoria constituted an unconstitutional
taking without just compensation. Were the developers correct?
For the past 20 years, the congregation of the Westboro Baptist
Church has picketed military funerals to communicate its belief
that God hates the United States for its tolerance of
homosexuality, particularly in America's military. The church's
picketing has also condemned the Catholic Church for scandals
involving its clergy. Westboro Baptist founder Fred Phelps and
six parishioners (all relatives of Phelps) traveled from Kansas
to Maryland to picket the funeral of Marine Lance Corporal
Matthew Snyder, who was killed in Iraq in the line of duty. The
picketing took place on public land approximately 1,000 feet

from the church where the funeral was held, in accordance with
guidance from local law enforcement officers. For
approximately 30 minutes before the funeral began, the
picketers peacefully displayed their signs, which stated “Thank
God for Dead Soldiers,” “Fags Doom Nations,” “America is
Doomed,” “Priests Rape Boys,” and “You're Going to Hell.”
Matthew Snyder's father (Snyder), saw the tops of the picketers'
signs when driving to the funeral, but did not learn what was
written on the signs until watching a news broadcast later that
night. Snyder sued Phelps, his daughters (who participated in
the picketing), and Westboro Baptist, raising tort claims of
intentional infliction of emotional distress, intrusion upon
seclusion, and civil conspiracy. A jury held the defendants
liable for millions of dollars in compensatory and punitive
damages. The defendants sought judgment as a matter of law on
the ground that the First Amendment fully protected their
speech. Did the First Amendment protect the defendants against
liability?
In the Motor Carrier Act of 1980, Congress deregulated trucking
by eliminating federal regulations that had previously applied to
the trucking industry. Fourteen years later, Congress sought to
preempt trucking regulation at the state level by enacting a law
providing that “a State … may not enact or enforce a law …
related to a price, route, or service of any motor carrier … with
respect to the transportation of property.” After the enactment
of the 1994 federal statute just quoted, the State of Maine
enacted a statute titled “An Act To Regulate the Delivery and
Sales of Tobacco Products and To Prevent the Sale of Tobacco
Products to Minors.” One section of the Maine statute forbade
anyone other than a Maine-licensed tobacco retailer to accept an
order for delivery of tobacco. The statute went on to state that
when a licensed retailer accepted an order and shipped tobacco,
the retailer had to “utilize a delivery service” that provided a
special kind of recipient-verification service. The statute
required the delivery service to make certain that (1) the person
who bought the tobacco was the person to whom the package

was addressed; (2) the person to whom the package was
addressed was of legal age to purchase tobacco; (3) the person
to whom the package was addressed had himself or herself
signed for the package; and (4) the person to whom the package
was addressed, if under the age of 27, had produced a valid
government-issued photo identification with proof of age.
Violations of the statute were punishable by civil penalties of a
monetary nature. Another Page 91section of the Maine statute
forbade any person “knowingly” to “transport” a “tobacco
product” to “a person” in Maine unless either the sender or the
receiver had a Maine license. It further stated that a “person is
deemed to know that a package contains a tobacco product” (1)
if the package was marked as containing tobacco and displayed
the name and license number of a Maine-licensed tobacco
retailer, or (2) if the person received the package from someone
whose name appeared on a list of unlicensed tobacco retailers
that Maine's Attorney General made available to various
package-delivery companies. Violations again were made
punishable by civil penalties of a monetary nature. Various
trucking associations sued in federal court, claiming that the
1994 federal statute quoted earlier preempted the Maine statute.
Were the trucking associations correct in this claim?
Online Research
The First Amendment
Using an online legal research tool, locate and read the U.S.
Supreme Court's 2002 decision in Ashcroft v. Free Speech
Coalition. In that case, the Court struck down a statute on First
Amendment grounds. Six years later, in United States v.
Williams, the Supreme Court upheld a seemingly similar statute
and rejected the argument that the statute violated the First
Amendment. Locate and read the Williams decision, compare it
with Free Speech Coalition, and prepare a one-page discussion
and analysis of what led the Court to rule as it did in Williams

despite the similarities between the statute at issue there and the
one invalidated in Free Speech Coalition.
1However, the Thirteenth Amendment, which bans slavery and
involuntary servitude throughout the United States, does not
have a government action requirement. Some state constitutions,
moreover, have individual rights provisions that lack a state
action requirement.
2Under the Fifth Amendment's Due Process Cause, standards
similar to those described in this section apply to the federal
government.
3Eminent domain and the Takings Clause's application to land
use problems are discussed in Chapter 24.
Page 2
THE NATURE OF LAW
Assume that you have taken on a management position at MKT
Corp. If MKT is to make sound business decisions, you and
your management colleagues must be aware of a broad array of
legal considerations. These may range, to use a nonexhaustive
list, from issues in contract, agency, and employment law to
considerations suggested by tort, intellectual property,
securities, and constitutional law. Sometimes legal principles
may constrain MKT's business decisions; at other times, the law
may prove a valuable ally of MKT in the successful operation of
the firm's business.
Of course, you and other members of the MKT management
group will rely on the advice of in-house counsel (an attorney
who is an MKT employee) or of outside attorneys who are in
private practice. The approach of simply “leaving the law to the
lawyers,” however, is likely to be counterproductive. It often
will be up to nonlawyers such as you to identify a potential

legal issue or pitfall about which MKT needs professional
guidance. If you fail to spot the issue in a timely manner and
legal problems are allowed to develop and fester, even the most
skilled attorneys may have difficulty rescuing you and the firm
from the resulting predicament. If, on the other hand, your
failure to identify a legal consideration means that you do not
seek advice in time to obtain an advantage that applicable law
would have provided MKT, the corporation may lose out on a
beneficial opportunity. Either way—that is, whether the relevant
legal issue operates as a constraint or offers a potential
advantage—you and the firm cannot afford to be unfamiliar
with the legal environment in which MKT operates.
This may sound intimidating, but it need not be. The process of
acquiring a working understanding of the legal environment of
business begins simply enough with these basic questions:
What major types of law apply to the business activities and
help shape the business decisions of firms such as MKT?
What ways of examining and evaluating law may serve as useful
perspectives from which to view the legal environment in which
MKT and other businesses operate?
What role do courts play in making or interpreting law that
applies to businesses such as MKT and to employees of those
firms, and what methods of legal reasoning do courts utilize?
What is the relationship between legal standards of behavior
and notions of ethical conduct?
LEARNING OBJECTIVES
After you have studied this chapter, you should be able to:
1 Identify the respective makers of the different types of law
(constitutions, statutes, common law, and administrative
regulations and decisions).
2 Identify the type of law that takes precedence when two
types of law conflict.

3 Explain the basic differences between the criminal law and
civil law classifications.
4 Describe key ways in which the major schools of
jurisprudence differ from each other.
Page 3 5 Describe the respective roles of adhering to precedent
(stare decisis) and distinguishing precedent in case law
reasoning.
6 Identify what courts focus on when applying the major
statutory interpretation techniques (plain meaning, legislative
purpose, legislative history, and general public purpose).
Types and Classifications of Law
The Types of Law
Identify the respective makers of the different types of law
(constitutions, statutes, common law, and administrative
regulations and decisions).
Constitutions Constitutions, which exist at the state and federal
levels, have two general functions.1 First, they set up the
structure of government for the political unit they control (a
state or the federal government). This involves creating the
branches and subdivisions of the government and stating the
powers given and denied to each. Through its separation of
powers, the U.S. Constitution establishes the Congress and
gives it power to make law in certain areas, provides for a chief
executive (the president) whose function is to execute or
enforce the laws, and helps create a federal judiciary to
interpret the laws. The U.S. Constitution also structures the
relationship between the federal government and the states. In
the process, it respects the principle of federalism by
recognizing the states' power to make law in certain areas.
The second function of constitutions is to prevent other units of
government from taking certain actions or passing certain laws.
Constitutions do so mainly by prohibiting government action

that restricts certain individual rights. The Bill of Rights to the
U.S. Constitution is an example.
Statutes Statutes are laws created by elected representatives in
Congress or a state legislature. They are stated in an
authoritative form in statute books or codes. As you will see,
however, their interpretation and application are often difficult.
Throughout this text, you will encounter state statutes that were
originally drafted as uniform acts. Uniform acts are model
statutes drafted by private bodies of lawyers and scholars. They
do not become law until a legislature enacts them. Their aim is
to produce state-by-state uniformity on the subjects they
address. Examples include the Uniform Commercial Code
(which deals with a wide range of commercial law subjects), the
Revised Uniform Partnership Act, and the Revised Model
Business Corporation Act.
Identify the type of law that takes precedence when two types of
law conflict.
Common Law The common law (also called judgemade law or
case law) is law made and applied by judges as they decide
cases not governed by statutes or other types of law. Although
common law exists only at the state level, both state courts and
federal courts become involved in applying it. The common law
originated in medieval England and developed from the
decisions of judges in settling disputes. Over time, judges began
to follow the decisions of other judges in similar cases, called
precedents. This practice became formalized in the doctrine of
stare decisis (let the decision stand). As you will see later in the
chapter, stare decisis is not completely rigid in its requirement
of adherence to precedent. It is flexible enough to allow the
common law to evolve to meet changing social conditions. The
common law rules in force today, therefore, often differ
considerably from the common law rules of earlier times.
The common law came to America with the first English

settlers, was applied by courts during the colonial period, and
continued to be applied after the Revolution and the adoption of
the Constitution. It still governs many cases today. For
example, the rules of tort, contract, and agency discussed in this
text are mainly common law rules. In some instances, states
have codified (enacted into statute) some parts of the common
law. States and the federal government also have passed statutes
superseding the common law in certain situations. As discussed
in Chapter 9, for example, the states have established special
rules for contract cases involving the sale of goods by enacting
Article 2 of the Uniform Commercial Code.
Page 4This text's torts, contracts, and agency chapters often
refer to the Restatement—or Restatement (Second) or (Third)—
rule on a particular subject. The Restatements are collections of
common law (and occasionally statutory) rules covering various
areas of the law. Because they are promulgated by the American
Law Institute rather than by courts, the Restatements are not
law and do not bind courts. However, state courts often find
Restatement rules persuasive and adopt them as common law
rules within their states. The Restatement rules usually are the
rules followed by a majority of the states. Occasionally,
however, the Restatements stimulate changes in the common
law by suggesting new rules that the courts later decide to
follow.
Because the judge-made rules of common law apply only when
there is no applicable statute or other type of law, common law
fills in gaps left by other legal rules if sound social and public
policy reasons call for those gaps to be filled. Judges thus serve
as policy makers in formulating the content of the common law.
In Young v. Beck, which follows shortly, the Court surveys the
relevant legal landscape and concludes that a longstanding
common law rule should remain in effect. A later section in the
chapter will focus on the process of case law reasoning, in
which courts engage when they make and apply common law
rules.

Young v. Beck
2011 Ariz. LEXIS 19 (Ariz. Sup. Ct. 2011)
Kenneth and Barbara Beck furnished a sport utility vehicle
(SUV) to their seventeen-year-old son, Jason, who lived with
them in Arizona. Although the Becks owned the SUV, Jason
was the primary driver of the vehicle. He used it for travel to
and from school, church, and work. With his parents'
permission, Jason could also drive the SUV for social and
recreational purposes. After he was involved in an accident
while driving the vehicle, however, the Becks specifically
instructed him not to “taxi” his friends and not to drive their
girlfriends home.
About a month later, Jason asked to use the SUV to drive to a
friend's house after work. Jason's mother permitted him to do
so, with the understanding that Jason would drive to his friend's
house, spend the night there, and then drive home the next day.
Jason neither requested nor received permission to use the
vehicle for any other purpose. After going to his friend's house,
however, Jason drove around in the SUV with several friends as
they threw eggs at houses and parked cars. He then drove his
friend's girlfriend home. While Jason was on his way to drop off
another friend, the SUV was involved in a collision with a
vehicle driven by Amy Young, who was seriously injured.
Jason's negligence in operating the SUV caused the accident.
(You will learn about negligence in Chapter 7.)
Young sued Jason because his negligence made him legally
liable for the accident. However, Young also named the Becks
(Jason's parents) as defendants, alleging that they were liable
for Jason's negligence under the family purpose doctrine. The

family purpose doctrine exists by common law in a number of
states (including Arizona), but not all states follow it. In states
that still recognize it, the doctrine subjects a vehicle's owner to
liability for a family member's negligence in operating the
vehicle if the owner has provided the vehicle for family use and
if the negligent driver was using the vehicle for a family
purpose at the time of the accident.
After a lower court ruled in Young's favor, the Becks appealed
to the Arizona Court of Appeals. There, they contended that the
family purpose doctrine did not apply because Jason violated
their restriction against transporting friends. Alternatively, they
argued that the doctrine should be abolished. When the court of
appeals rejected those arguments and upheld the lower court's
decision holding them liable, the Becks appealed to the Supreme
Court of Arizona.
Pelander, Justice
We adopted the family purpose doctrine nearly a century ago in
Benton v. Regeser, 179 P. 966 (1919). In this case we address
its continued validity and application, [and] whether this court
should abolish it. Finally, we consider whether the doctrine was
properly applied in this case.
[In] adopt[ing] the doctrine in Benton, [this court] upheld a
judgment holding a parent vicariously liable for his minor son's
negligent driving. Finding the doctrine supported by “sound
reason” and “the great weight of authority,” we framed the rule
as follows:
[A parent] who furnishes an automobile for the pleasure and
convenience of the members of his family makes the use of the
machine for the above purposes his affair or business….
Arizona courts have applied the family purpose doctrine in
various contexts in the nine decades since Benton. [T]he
doctrine imputes liability not because of the head of the family's
independent fault or breach of a legal duty, but because of

“the… relationship Page 5that is deemed to exist between the
head of the household and the driver of the family car.” [Case
citation omitted.] [T]he doctrine… serves “a practical purpose”
of “provid[ing] reparation for an injured party from the closest
financially responsible party to the wrongdoing minor.” [Case
citation omitted.]
We [now] consider the Becks' argument that this court should
abandon the family purpose doctrine. The Becks contend the
doctrine lacks a viable legal basis or public policy justification,
is “grossly unfair to any parent [of] a young driver,” and
functions as “solely a penalty against wealthy parents.”
“Just as the common law is court-made law based on the
circumstances and conditions of the time, so can the common
law be changed by the court when conditions and circumstances
change.” [Case citation omitted.] But stare decisis commands
that precedents of the court should not lightly be overruled, and
mere disagreement with those who preceded us is not enough.
[O]ur prior case law “should be adhered to unless the reasons of
the prior decisions have ceased to exist or the prior decision
was clearly erroneous or manifestly wrong.” [Case citation
omitted.]
The family purpose doctrine “represents a social policy
generated in response to the problem presented by massive use
of the automobile.” [Citation of treatise omitted.] The doctrine's
primary justification is to provide “for an injured party's
recovery from the financially responsible person—the family
head—deemed most able to control to whom the car is made
available.” Jacobson v. Superior Court, 743 P.2d 410, 411(Ariz.
App. 1987). As Benton explained, when a vehicle “is placed in
the hands of his family by a [parent], for the family's pleasure,
comfort, and entertainment,… justice should require that the
owner should be responsible for its negligent operation.”
The Becks contend that the family purpose doctrine's
compensatory purpose was rendered moot by [state law
requiring drivers to have insurance in force]. [We] are not
convinced that a law requiring minimum liability coverage of

only $15,000 per person and $30,000 per occurrence guarantees
that victims of serious accidents caused by young,
inexperienced, and financially insecure drivers will be fully
compensated. Nor is it clear that the doctrine's policy goals of
providing compensation to such accident victims and
encouraging parents to ensure that their children operate motor
vehicles safely and obediently are any less important today than
ninety-two years ago.
The Becks also describe the doctrine as an “anachronism” that a
“great majority” of jurisdictions have rejected. A number of
courts (but none recently) have declined to adopt the family
purpose doctrine. But many states continue to apply the doctrine
either as a matter of common law or through statutes holding
parents liable for the negligent driving of their children. Thus,
contrary to the Becks' assertion, Arizona is neither alone nor
clinging to an antiquated doctrine.
We are not here writing on a clean slate, but rather on an
established common law backdrop. Nor has the family purpose
doctrine been eroded by the development of Arizona's common
law. If the legislature wants to abrogate the doctrine, it may do
so explicitly. [It has not done so, however.] In sum, although
policy arguments can be made for and against the doctrine, it is
firmly entrenched in our common law and has been repeatedly
applied by Arizona courts. Given the doctrine's long history,
social utility in compensating injured victims, and conflicting
policy considerations, we find no compelling reason to abrogate
the doctrine. Nothing indicates that the rule has overburdened
our courts or produced manifestly unjust results.
Finally, we consider the Becks' argument that the superior court
misapplied the family purpose doctrine [to this case]. The Becks
contend that Jason's use of the vehicle when the accident
occurred was neither for a family purpose nor with their express
or implied permission. According to the Becks, the doctrine
does not apply as a matter of law because Jason was driving the
vehicle for his own pleasure and convenience and in violation
of their specific restrictions on its use. We disagree.

In Benton, we held that the doctrine applied because, when the
accident occurred, the defendant's son was driving the family
vehicle “in the very business for which the [parent] kept and
maintained the vehicle, viz., the pleasure and convenience of
the members of [the] family.” The doctrine does not require that
the vehicle be furnished for a parental or communal errand.
Rather, when a car is driven for the pleasure and convenience of
a family member, a family purpose generally is served.
Moreover, the doctrine does not require that a parent give
permission for every possible route taken or deviation made by
a family member while operating the vehicle. Therefore, a
deviation from the terms of consent will not necessarily relieve
a head of the family from liability. To hold otherwise would
enable parents to immunize themselves from liability by
imposing general, unrealistic, or unenforced limitations on their
child's use of the vehicle.
Here, it is undisputed that the Becks maintained and furnished
the vehicle for Jason's general use and that, on the night of the
accident, Jason's mother permitted him to use the vehicle for
certain purposes. Although the permission did not extend to
transporting friends, the courts below correctly concluded that
Jason's deviation from his parents' limitation on his use of the
vehicle did not [make the family purpose doctrine inapplicable].
Court of Appeals decision affirmed.
Page 6Equity The body of law called equity historically
concerned itself with accomplishing “rough justice” when
common law rules would produce unfair results. In medieval
England, common law rules were technical and rigid and the
remedies available in common law courts were too few. This
meant that some deserving parties could not obtain adequate
relief. As a result, separate equity courts began hearing cases
that the common law courts could not resolve fairly. In these
equity courts, procedures were flexible, and rigid rules of law
were deemphasized in favor of general moral maxims.
Equity courts also provided several remedies not available in

the common law courts (which generally awarded only money
damages or the recovery of property). The most important of
these equitable remedies was—and continues to be—the
injunction, a court order forbidding a party to do some act or
commanding him to perform some act. Others include the
contract remedies of specific performance (whereby a party is
ordered to perform according to the terms of her contract),
reformation (in which the court rewrites the contract's terms to
reflect the parties' real intentions), and rescission (a
cancellation of a contract and a return of the parties to their
precontractual position).
As was the common law, equity principles were brought to the
American colonies and continued to be used after the
Revolution and the adoption of the Constitution. Over time,
however, the once-sharp line between law and equity has
become blurred. Nearly all states have abolished separate equity
courts and have enabled courts to grant whatever relief is
appropriate, whether it be the legal remedy of money damages
or one of the equitable remedies discussed above. Equitable
principles have been blended together with common law rules,
and some traditional equity doctrines have been restated as
common law or statutory rules. An example is the doctrine of
unconscionability discussed in Chapter 15.
Administrative Regulations and Decisions As Chapter 47
reveals, the administrative agencies established by Congress
and the state legislatures have acquired considerable power,
importance, and influence over business. A major reason for the
rise of administrative agencies was the collection of social and
economic problems created by the industrialization of the
United States that began late in the 19th century. Because
legislatures generally lacked the time and expertise to deal with
these problems on a continuing basis, the creation of
specialized, expert agencies was almost inevitable.
Administrative agencies obtain the ability to make law through
a delegation (or grant) of power from the legislature. Agencies
normally are created by a statute that specifies the areas in

which the agency can make law and the scope of its power in
each area. Often, these statutory delegations are worded so
broadly that the legislature has, in effect, merely pointed to a
problem and given the agency wide-ranging powers to deal with
it.
The two types of law made by administrative agencies are
administrative regulations and agency decisions. As do statutes,
administrative regulations appear in a precise form in one
authoritative source. They differ from statutes, however,
because the body enacting regulations is not an elected body.
Many agencies have an internal courtlike structure that enables
them to hear cases arising under the statutes and regulations
they enforce. The resulting agency decisions are legally
binding, though appeals to the judicial system are sometimes
allowed.
Treaties According to the U.S. Constitution, treaties made by
the president with foreign governments and approved by two-
thirds of the U.S. Senate become “the supreme Law of the
Land.” As will be seen, treaties invalidate inconsistent state
(and sometimes federal) laws.
Ordinances State governments have subordinate units that
exercise certain functions. Some of these units, such as school
districts, have limited powers. Others, such as counties,
municipalities, and townships, exercise various governmental
functions. The enactments of counties and municipalities are
called ordinances; zoning ordinances are an example.
Executive Orders In theory, the president or a state's governor
is a chief executive who enforces the laws but has no law-
making powers. However, these officials sometimes have
limited power to issue laws called executive orders. This power
normally results from a legislative delegation.
Identify the type of law that takes precedence when two types of
law conflict.

Priority Rules Because the different types of law conflict, rules
for determining which type takes priority are necessary. Here,
we briefly describe the most important such rules.
According to the principle of federal supremacy, the U.S.
Constitution, federal laws enacted pursuant to it, and treaties
are the supreme law of the land. This means that federal law
defeats conflicting state law.
Page 7Constitutions defeat other types of law within their
domain. Thus, a state constitution defeats all other state laws
inconsistent with it. The U.S. Constitution, however, defeats
inconsistent laws of whatever type.
When a treaty conflicts with a federal statute over a purely
domestic matter, the measure that is later in time usually
prevails.
Within either the state or the federal domain, statutes defeat
conflicting laws that depend on a legislative delegation for their
validity. For example, a state statute defeats an inconsistent
state administrative regulation.
Statutes and any laws derived from them by delegation defeat
inconsistent common law rules. Accordingly, either a statute or
an administrative regulation defeats a conflicting common law
rule. Trentadue v. Gorton, which follows, illustrates the
application of this principle. In addition, the Trentadue court
utilizes a statutory interpretation technique addressed later in
this chapter.
Trentadue v. Gorton
738 N.W.2d 664 (Mich. Sup. Ct. 2007)

Margarette Eby rented a Flint, Michigan, home from Ruth Mott.
In 1986, Eby was murdered at the residence. The murder
remained unsolved until 2002, when DNA evidence established
that Jeffrey Gorton had committed the crime. At the time of the
murder, Gorton was an employee of his parents' corporation,
which serviced the sprinkler system on the grounds surrounding
the residence where Eby lived. Gorton was convicted of murder
and was sentenced to life imprisonment.
In August 2002, Dayle Trentadue, Eby's daughter and the
personal representative of her estate, sued Gorton and various
other defendants. The other defendants included Gorton's
parents, their corporation, the personal representative of Mott's
estate (Mott having died in 1999), the property management
company that provided services to Mott, and two of Mott's
employees. The claim against Gorton alleged battery resulting
in death. Trentadue's claims against the other defendants
alleged negligent hiring and monitoring of Gorton, negligence
in allowing access to the area that led to Eby's residence, and
negligence in failing to provide adequate security at the
residence.
Each defendant except Gorton sought dismissal of the claims
against them on the theory that the plaintiff's action was barred
by Michigan's three-year statute of limitations for wrongful
death actions. (Statutes of limitations require that a plaintiff
who wishes to make a legal claim must file her lawsuit within a
designated length of time after her claim accrues. Normally a
claim accrues at the time the legal wrong was committed. The
length of time set forth in statutes of limitation varies,
depending upon the type of claim and the state whose law
controls. If the plaintiff does not file her lawsuit within the time
specified by the applicable statute of limitations, her claim
cannot lawfully be pursued.) In particular, the defendants other
than Gorton argued that Trentadue's case should be dismissed
because her claim accrued when Eby was killed in 1986—
meaning that the 2002 filing of the lawsuit occurred long after

the three-year limitations period had expired. Trentadue
asserted, on the other hand, that a common law rule known as
the “discovery rule” should be applied so as to suspend the
running of the limitations period until 2002, when she learned
the identity of Eby's killer. Under the discovery rule, the 2002
filing of the lawsuit would be seen as timely because the
running of the limitations period would have been tolled—in
other words, suspended—until the 2002 discovery that Gorton
was the killer.
The trial court held that the common law discovery rule applied
to the case and that, accordingly, Trentadue's lawsuit was filed
in a timely manner. The Michigan Court of Appeals affirmed.
The defendants other than Gorton appealed to the Supreme
Court of Michigan.
Corrigan, Judge
This wrongful death case requires us to consider whether the
common-law discovery rule, which allows tolling of the
statutory period of limitations when a plaintiff could not have
reasonably discovered the elements of a cause of action within
the limitations period, can operate to toll the period of
limitations, or whether Michigan Compiled Laws (MCL)
600.5827, which has no such provision, alone governs the time
of accrual of the plaintiff's claims. The applicable statute of
limitations in a wrongful death case is MCL 600.5805(10),
which states: “The period of limitations is three years after the
time of the death or injury for all other actions to recover
damages for the death of a person, or for injury to a person or
property.” Thus, the period of limitations runs three years from
“the death or injury.”
Moreover, MCL 600.5827 defines the time of accrual for
actions subject to the limitations period in MCL 600.5805(10).
It provides: “Except as otherwise expressly provided, the period
of limitations runs from the time the claim accrues. The claim
accrues at the time provided in sections 5829 to 5838, and in
cases not covered by these sections the claim accrues at the time

the wrong upon which the claim is based was done
regardless of the time when damage results.” This is consistent
with MCL 600.5805(10) because it indicates that the claim
accrues “at the time the wrong upon which the claim is based
was done.”
[Other MCL sections provide] for tolling of the period of
limitations in certain specified situations. These are actions
alleging professional malpractice, actions alleging medical
malpractice, actions brought against certain defendants alleging
injuries from unsafe property, and actions alleging that a person
who may be liable for the claim fraudulently concealed the
existence of the claim or the identity of any person who is liable
for the claim. Significantly, none of these tolling provisions
covers this situation—tolling until the identity of the tortfeasor
is discovered.
Trentadue contends, however, that, notwithstanding these
statutes, when the claimant was unaware of any basis for an
action, the harsh result of barring any lawsuit because the
period of limitations has expired can be avoided by the
operation of a court-created discovery rule, sometimes
described as a common-law rule. Under a discovery-based
analysis, a claim does not accrue until a plaintiff knows, or
objectively should know, that he has a cause of action and can
allege it in a proper complaint. Accordingly, Trentadue argues
that her claims did not accrue until she discovered that Gorton
was the killer because, before that time, she could not have
known of and alleged each element of the claims. We reject this
contention because the statutory scheme is exclusive and thus
precludes this common law practice of tolling accrual based on
discovery in cases where none of the statutory tolling provisions
apply.
It is axiomatic that the Legislature has the authority to abrogate
the common law. Further, if a statutory provision and the
common law conflict, the common law must yield.
As we have explained, the relevant sections of the [Michigan
statutes] comprehensively establish limitations periods, times of

accrual, and tolling for civil cases. MCL 600.5827 explicitly
states that a limitations period runs from the time a claim
accrues “[e]xcept as otherwise expressly provided.”
Accordingly, the statutes designate specific limitations and
exceptions for tolling based on discovery, as exemplified by
[the sections dealing with malpractice claims and claims
regarding unsafe property]. The [statutory] scheme also
explicitly supersedes the common law, as can be seen in the
area of medical malpractice, for instance, where this court's pre-
statutory applications of the common-law discovery rule were
superseded by MCL 600.5838a, in which the legislature codified
the discovery rule for medical malpractice cases.
Finally, MCL 600.5855 is a good indication that the legislature
intended the scheme to be comprehensive and exclusive. MCL
600.5855 provides for essentially unlimited tolling based on
discovery when a claim is fraudulently concealed. If we may
simply apply an extra-statutory discovery rule in any case not
addressed by the statutory scheme, we will render § 5855
effectively meaningless. For, under a general extra-statutory
discovery rule, a plaintiff could toll the limitations period
simply by claiming that he reasonably had no knowledge of the
tort or the identity of the tortfeasor. He would never need to
establish that the claim or tortfeasor had been fraudulently
concealed.
Since the legislature has exercised its power to establish tolling
based on discovery under particular circumstances, but has not
provided for a general discovery rule that tolls or delays the
time of accrual if a plaintiff fails to discover the elements of a
cause of action during the limitations period, no such tolling is
allowed. Therefore, we conclude that courts may not employ an
extra-statutory discovery rule to toll accrual in avoidance of the
plain language of MCL 600.5827. Because the statutory scheme
here is comprehensive, the legislature has undertaken the
necessary task of balancing plaintiffs' and defendants' interests
and has allowed for tolling only where it sees fit. This is a
power the legislature has because such a statute of limitations

bears a reasonable relationship to the permissible legislative
objective of protecting defendants from stale or fraudulent
claims. Accordingly, the lower courts erred when they applied
an extra-statutory discovery rule to allow plaintiff to bring her
claims 16 years after the death of her decedent. When the death
occurred, the “wrong upon which the claim is based was done.”
We hold that the plain language of MCL 600.5827 precludes the
use of a broad common-law discovery rule to toll the accrual
date of claims to which this statute applies. Here, the wrong was
done when Eby was murdered in 1986. Accordingly, plaintiff's
claims accrued at the time of Eby's death. The legislature has
evinced its intent that, despite this tragedy, the defendants
[other than Gorton] may not face the threat of litigation 16
years later, merely because the plaintiff alleges she could not
reasonably discover the facts underlying their potential
negligence until 2002.
Judgment of Court of Appeals reversed and case remanded for
Classifications of Law Three common classifications of law cut
across the different types of law. These classifications involve
distinctions between (1) criminal law and civil law; (2)
substantive law and procedural law; and (3) public law and
private law. One type of law might be classified in each of these
ways. For example, a burglary statute would be criminal,
substantive, and public; a rule of contract law would be civil,
substantive, and private.
Page 9
Explain the basic differences between the criminal law and civil
law classifications.
Criminal and Civil Law Criminal law is the law under which the
government prosecutes someone for committing a crime. It
creates duties that are owed to the public as a whole. Civil law
mainly concerns obligations that private parties owe to each

other. It is the law applied when one private party sues another.
The government, however, may also be a party to a civil case.
For example, a city may sue, or be sued by, a construction
contractor. Criminal penalties (e.g., imprisonment or fines)
differ from civil remedies (e.g., money damages or equitable
relief). Although most of the legal rules in this text are civil law
rules, Chapter 5 deals specifically with the criminal law.
Even though the civil law and the criminal law are distinct
bodies of law, the same behavior will sometimes violate both.
For instance, if A commits an intentional act of physical
violence on B, A may face both a criminal prosecution by the
state and B's civil suit for damages.
Substantive Law and Procedural Law Substantive law sets the
rights and duties of people as they act in society. Procedural
law controls the behavior of government bodies (mainly courts)
as they establish and enforce rules of substantive law. A statute
making murder a crime, for example, is a rule of substantive
law. The rules describing the proper conduct of a trial, however,
are procedural. This text focuses on substantive law. Chapters 2
and 5, however, examine some of the procedural rules
governing civil and criminal cases.
Public and Private Law Public law concerns the powers of
government and the relations between government and private
parties. Examples include constitutional law, administrative
law, and criminal law. Private law establishes a framework of
legal rules that enables parties to set the rights and duties they
owe each other. Examples include the rules of contract,
property, and agency.
Jurisprudence
Describe key ways in which the major schools of jurisprudence
differ from each other.
The various types of law sometimes are called positive law.
Positive law comprises the rules that have been laid down by a

recognized political authority. Knowing the types of positive
law is essential to an understanding of the American legal
system and the topics discussed in this text. Yet defining law by
listing these different kinds of positive law is no more complete
or accurate than defining “automobile” by describing all the
vehicles going by that name. To define law properly, some say,
we need a general description that captures its essence.
The field known as jurisprudence seeks to provide such a
description. Over time, different schools of jurisprudence have
emerged, each with its own distinctive view of law.
Legal Positivism One feature common to all types of law is
their enactment by a governmental authority such as a
legislature or an administrative agency. This feature underlies
the definition of law adopted by the school of jurisprudence
known as legal positivism. Legal positivists define law as the
command of a recognized political authority. As the British
political philosopher Thomas Hobbes observed, “Law properly,
is the word of him, that by right hath command over others.”
The commands of recognized political authorities may be good,
bad, or indifferent in moral terms. To legal positivists, such
commands are valid law regardless of their “good” or “bad”
content. In other words, positivists see legal validity and moral
validity as entirely separate questions. Some (but not all)
positivists say that every properly enacted positive law should
be enforced and obeyed, whether just or unjust. Similarly,
positivist judges usually try to enforce the law as written,
excluding their own moral views from the process.
Natural Law At first glance, legal positivism's “law is law, just
or not” approach may seem to be perfect common sense. It
presents a problem, however, for it could mean that any positive
law—no matter how unjust—is valid law and should be enforced
and obeyed so long as some recognized political authority
enacted it. The school of jurisprudence known as natural law
takes issue with legal positivism by rejecting the positivist
separation of law and morality.
Natural law adherents usually contend that some higher law or

set of universal moral rules binds all human beings in all times
and places. The Roman statesman Marcus Cicero described
natural law as “the highest reason, implanted in nature, which
commands what ought to be done and forbids the opposite.”
Because this higher law determines what is ultimately good and
ultimately bad, it serves as a criterion for evaluating positive
law. To Saint Thomas Aquinas, for example, “every human law
has just so much of the nature of law, as it is derived from the
law Page 10of nature.” To be genuine law, in other words,
positive law must resemble the law of nature by being “good”—
or at least by not being “bad.”
Unjust positive laws, then, are not valid law under the natural
law view. As Cicero put it: “What of the many deadly, the many
pestilential statutes which are imposed on peoples? These no
more deserve to be called laws than the rules a band of robbers
might pass in their assembly.” An “unjust” law's supposed
invalidity does not translate into a natural law defense that is
recognized in court, however.
Although a formal natural law defense is not recognized in
court, judges may sometimes take natural law-oriented views
into account when interpreting the law. As compared with
positivist judges, judges influenced by natural law ideas may be
more likely to read constitutional provisions broadly in order to
strike down positive laws they regard as unjust. They also may
be more likely to let morality influence their interpretation of
the law. Of course, neither judges nor natural law thinkers
always agree about what is moral and immoral—a major
difficulty for the natural law position. This difficulty allows
legal positivists to claim that only by keeping legal and moral
questions separate can we obtain stability and predictability in
the law.
American Legal Realism To some, the debate between natural
law and legal positivism may seem unreal. Not only is natural
law unworkable, such people might say, but sometimes positive
law does not mean much either. For example, juries sometimes
pay little attention to the legal rules that are supposed to guide

their decisions, and prosecutors have discretion concerning
whether to enforce criminal statutes. In some legal proceedings,
moreover, the background, biases, and values of the judge—and
not the positive law—determine the result. An old joke reminds
us that justice sometimes is what the judge ate for breakfast.
Remarks such as these typify the school of jurisprudence known
as American legal realism. Legal realists regard the law-in-the-
books as less important than the law in action—the conduct of
those who enforce and interpret the positive law. American
legal realism defines law as the behavior of public officials
(mainly judges) as they deal with matters before the legal
system. Because the actions of such decision makers—and not
the rules in the books—really affect people's lives, the realists
say, this behavior is what deserves to be called law.
It is doubtful whether the legal realists have ever developed a
common position on the relation between law and morality or on
the duty to obey positive law. They have been quick, however,
to tell judges how to behave. Many realists feel that the modern
judge should be a social engineer who weighs all relevant
values and considers social science findings when deciding a
case. Such a judge would make the positive law only one factor
in her decision. Because judges inevitably base their decisions
on personal considerations, the realists assert, they should at
least do this honestly and intelligently. To promote this kind of
decision making, the realists have sometimes favored fuzzy,
discretionary rules that allow judges to decide each case
according to its unique facts.
Sociological Jurisprudence Sociological jurisprudence is a
general label uniting several different approaches that examine
law within its social context. The following quotation from
Justice Oliver Wendell Holmes is consistent with such
approaches:
The life of the law has not been logic: it has been experience.
The felt necessities of the time, the prevalent moral and
political theories, intuitions of public policy, avowed or

unconscious, even the prejudices which judges share with their
fellow-men, have had a good deal more to do than the syllogism
in determining the rules by which men should be governed. The
law embodies the story of a nation's development through many
centuries, and it cannot be dealt with as if it contained only the
axioms and corollaries of a book of mathematics.2
Despite these approaches' common outlook, there is no
distinctive sociological definition of law. If one were attempted,
it might go as follows: Law is a process of social ordering
reflecting society's dominant interests and values.
Different Sociological Approaches By examining examples of
sociological legal thinking, we can add substance to the
definition just offered. The “dominant interests” portion of the
definition is exemplified by the writings of Roscoe Pound, an
influential 20th-century American legal philosopher. Pound
developed a detailed and changing catalog of the social interests
that press on government and the legal system and thus shape
positive law. An example of the definition's “dominant values”
component is the historical school of jurisprudence identified
with the 19thcentury German legal philosopher Friedrich Karl
von Savigny. Savigny saw law as an unplanned, almost
unconscious, reflection of the collective spirit of a particular
society. In his view, legal change could only be explained
historically, as a slow response to social change.
Page 11By emphasizing the influence of dominant social
interests and values, Pound and Savigny undermine the legal
positivist view that law is nothing more than the command of
some political authority. The early 20th-century Austrian legal
philosopher Eugen Ehrlich went even further in rejecting
positivism. He did so by identifying two different “processes of
social ordering” contained within our definition of sociological
jurisprudence. The first of these is positive law. The second is
the “living law,” informal social controls such as customs,
family ties, and business practices. By regarding both as law,
Ehrlich sought to demonstrate that positive law is only one

element within a spectrum of social controls.
The Implications of Sociological Jurisprudence Because its
definition of law includes social values, sociological
jurisprudence seems to resemble natural law. Most sociological
thinkers, however, are concerned only with the fact that moral
values influence the law, and not with the goodness or badness
of those values. Thus, it might seem that sociological
jurisprudence gives no practical advice to those who must
enforce and obey positive law.
Sociological jurisprudence has at least one practical
implication, however: a tendency to urge that the law must
change to meet changing social conditions and values. In other
words, the law should keep up with the times. Some might stick
to this view even when society's values are changing for the
worse. To Holmes, for example, “[t]he first requirement of a
sound body of law is, that it should correspond with the actual
feelings and demands of the community, whether right or
wrong.”
Other Schools of Jurisprudence During approximately the past
40 years, legal scholars have fashioned additional ways of
viewing law, explaining why legal rules are as they are, and
exploring supposed needs for changes in legal doctrines. For
example, the law and economics movement examines legal rules
through the lens provided by economic theory and analysis. This
movement's influence has extended beyond academic literature,
with law and economics-oriented considerations, factors, and
tests sometimes appearing in judicial opinions dealing with such
matters as contract, tort, or antitrust law.
The critical legal studies (CLS) movement regards law as
inevitably the product of political calculation (mostly of the
right-wing variety) and long-standing class biases on the part of
lawmakers, including judges. Articles published by CLS
adherents provide controversial assessments and critiques of
legal rules. Given the thrust of CLS and the view it takes of
lawmakers, however, one would be hard-pressed to find CLS
adherents in the legislature or the judiciary.

Other schools of jurisprudence that have acquired notoriety in
recent years examine law and the legal system from the vantage
points of particular groups of persons or sets of ideas. Examples
include the feminist legal studies perspective and the gay legal
studies movement.
The Functions of Law
In societies of the past, people often viewed law as unchanging
rules that deserved obedience because they were part of the
natural order of things. Most lawmakers today, however, treat
law as a flexible tool or instrument for the accomplishment of
chosen purposes. For example, the law of negotiable
instruments discussed later in this text is designed to stimulate
commercial activity by promoting the free movement of money
substitutes such as promissory notes, checks, and drafts.
Throughout the text, moreover, you see courts manipulating
existing legal rules to achieve desired results. One strength of
this instrumentalist attitude is its willingness to adapt the law to
further the social good. A weakness, however, is the legal
instability and uncertainty those adaptations often produce.
Just as individual legal rules advance specific purposes, law as
a whole serves many general social functions. Among the most
important of those functions are:
Peacekeeping. The criminal law rules discussed in Chapter 5
further this basic function of any legal system. Also, as Chapter
2 suggests, the resolution of private disputes serves as a major
function of the civil law.
Checking government power and promoting personal freedom.
Obvious examples are the constitutional restrictions examined
in Chapter 3.
Facilitating planning and the realization of reasonable
expectations. The rules of contract law discussed in Chapters 9–
18 help fulfill this function of law.
Promoting economic growth through free competition. The
antitrust laws discussed in Chapters 48–50 are among the many
legal rules that help perform this function.

Promoting social justice. Throughout this century, government
has intervened in private social and economic affairs to correct
perceived injustices and give all citizens equal access to life's
basic goods. Examples include the employment laws addressed
in Chapter 51.
Protecting the environment. The most important federal
environmental statutes are discussed in Chapter 52.
Page 12
Ethics in Action
Some schools of jurisprudence discussed in this chapter—most
notably natural law and the various approaches lumped under
the sociological jurisprudence heading—concern themselves
with the relationship between law and notions of morality.
These schools of jurisprudence involve considerations related to
key aspects of ethical theories that will be explored in Chapter
4, which addresses ethical issues arising in business contexts.
Natural law's focus on rights thought to be independent of
positive law has parallels in ethical theories that are classified
under the rights theory heading. In its concern over unjust laws,
natural law finds common ground with the ethical theory known
as justice theory. When subscribers to sociological
jurisprudence focus on the many influences that shape law and
the trade-offs involved in a dynamic legal system, they may
explore considerations that relate not only to rights theory or
justice theory but also to two other ethical theories,
utilitarianism and profit maximization. As you study Chapter 4
and later chapters, keep the schools of jurisprudence in mind.
Think of them as you consider the extent to which a behavior's

probable legal treatment and the possible ethical assessments of
it may correspond or, instead, diverge.
Obviously, the law's various functions can conflict. The familiar
clash between economic growth and environmental protection is
an example. Chapter 5's cases dealing with the constitutional
aspects of criminal cases illustrate the equally familiar conflict
between effective law enforcement and the preservation of
personal rights. Only rarely does the law achieve one end
without sacrificing others. In law, as in life, there generally is
no such thing as a free lunch. Where the law's objectives
conflict, lawmakers may try to strike the best possible balance
among those goals. This suggests limits on the law's usefulness
as a device for promoting particular social goals.
Legal Reasoning
This text seeks to describe important legal rules affecting
business. As texts generally do, it states those rules in what
lawyers call “black letter” form, using sentences saying that
certain legal consequences will occur if certain events happen.
Although it provides a clear statement of the law's commands,
this black letter approach can be misleading. It suggests
definiteness, certainty, permanence, and predictability—
attributes the law frequently lacks. To illustrate, and to give you
some idea how lawyers and judges think, we now discuss the
two most important kinds of legal reasoning: case law reasoning
and statutory interpretation.3 However, we first must examine
legal reasoning in general.
Legal reasoning is basically deductive, or syllogistic. The legal
rule is the major premise, the facts are the minor premise, and
the result is the product of combining the two. Suppose a state
statute says that a driver operating an automobile between 55
and 70 miles per hour must pay a $50 fine (the rule or major
premise) and that Jim Smith drives his car at 65 miles per hour
(the facts or minor premise). If Jim is arrested, and if the
necessary facts can be proved, he will be required to pay the
$50 fine. As you will now see, however, legal reasoning often is

more difficult than this example would suggest.
Describe the respective roles of adhering to precedent (stare
decisis) and distinguishing precedent in case law reasoning.
Case Law Reasoning In cases governed by the common law,
courts find the appropriate legal rules in prior cases called
precedents. The standard for choosing and applying prior cases
to decide present cases is the doctrine of stare decisis, which
states that like cases should be decided alike. That is, the
present case should be decided in the same way as past cases
presenting the same facts and the same legal issues. If no
applicable precedent exists, the court is free to develop a new
common law rule to govern the case, assuming the court
believes that sound public policy reasons call for the
development of a new rule. When an earlier case may seem
similar enough to the present case to constitute a precedent but
the court deciding the present case nevertheless identifies a
meaningful difference between the cases, the court distinguishes
the earlier decision.
Because every present case differs from the precedents in some
respect, it is always possible to spot a factual distinction. For
example, one could attempt to distinguish a prior case because
both parties in that case had black hair, whereas one party in the
present case has brown hair. Of course, such a distinction would
be ridiculous, because the difference it identifies is
insignificant in moral or social Page 13policy terms. A valid
distinction involves a widely accepted ethical or policy reason
for treating the present case differently from its predecessor.
Because people disagree about moral ideas, public policies, and
the degree to which they are accepted, and because all these
factors change over time, judges may differ on the wisdom of
distinguishing a prior case. This is a source of uncertainty in the
common law, but it gives the common law the flexibility to
adapt to changing social conditions. 4

When a precedent has been properly distinguished, the common
law rule it stated does not control the present case. The court
deciding the present case may then fashion a new common law
rule to govern the case. Consider, for instance, an example
involving the employment-at-will rule, the prevailing common
law rule regarding employees in the United States. Under this
rule, an employee may be fired at any time—and without any
reason, let alone a good one—unless a contract between the
employer and the employee guaranteed a certain duration of
employment or established that the employee could be fired
only for certain recognized legal causes. Most employees are
not parties to a contract containing such provisions. Therefore,
they are employees-at-will. Assume that in a precedent case, an
employee who had been doing good work challenged his firing,
and that the court hearing the case ruled against him on the
basis of the employment-at-will rule. Also assume that in a later
case, a fired employee has challenged her dismissal. Although
the fired employee would appear to be subject to the
employment-at-will rule applied in the seemingly similar
precedent case, the court deciding the later case nevertheless
identifies an important difference: that in the later case, the
employee was fired in retaliation for having reported to law
enforcement authorities that her employer was engaging in
seriously unlawful business-related conduct. A firing under
such circumstances appears to offend public policy,
notwithstanding the general acceptance of the employment-at-
will rule. Having properly distinguished the precedent, the court
deciding the later case would not be bound by the employment-
at-will rule set forth in the precedent and would be free to
develop a public policy–based exception under which the
retaliatory firing would be deemed wrongful. (Chapter 51 will
reveal that courts in a number of states have adopted such an
exception to the employment-at-will rule.)
The Hagan case, which follows, provides a further illustration
of the process of case law reasoning. In Hagan, the Florida
Supreme Court scrutinizes various precedents as it attempts to

determine whether Florida's courts should retain, modify, or
abolish a common law rule under which a plaintiff in a
negligence case could not recover damages for emotional harm
unless she also sustained some sort of impact that produced
physical injuries—that is, injuries to her body. (Negligence law
is discussed in depth in Chapter 7.) Ultimately, the court
determines that under circumstances of the sort presented in the
case, damages for emotional distress should be recoverable even
in the absence of a physical injury–producing impact.
Hagan v. Coca-Cola Bottling Co.
776 So. 2d 275 (Fla. Sup. Ct. 2000)
Linda Hagan and her sister Barbara Parker drank from a bottle
of Coke which they both agreed tasted flat. Hagan then held the
bottle up to a light and observed what she and Parker thought
was a used condom with “oozy stringy stuff coming out of the
top.” Both women were distressed that they had consumed some
foreign material, and Hagan immediately became nauseated. The
bottle was later delivered to Coca-Cola for testing. Concerned
about what they had drunk, the women went to a health care
facility the next day and were given shots. The medical
personnel at the facility told them they should be tested for
HIV. Hagan and Parker were then tested and informed that the
results were negative. Six months later, both women were again
tested for HIV, and the results were again negative.
Hagan and Parker brought a negligence action against Coca-
Cola. Coca-Cola's beverage analyst testified at trial that he had
initially thought, as Hagan and Parker had, that the object in the
bottle was a condom. However, upon closer examination, he

concluded that the object was a mold, and that, to a “scientific
certainty,” the item floating in the Coke bottle was not a
condom. At the conclusion of the trial, the jury returned a
verdict in favor of the plaintiffs, awarding $75,000 each to
Hagan and Parker. The trial court reduced the jury award to
$25,000 each to Hagan and Parker. Both sides appealed to the
Fifth District Court of Appeal.
The appellate court reversed the jury awards and concluded that
under case law concerning the impact rule, Hagan and Parker
had not established a claim because neither had suffered a
physical injury. Under a special procedure allowed by Florida
law, certain dissenting and concurring appellate court judges
sent a certified question to the state Supreme Court asking
whether the impact rule should be abolished or amended in
Florida.
Page 14Anstead, Judge
We have for review a decision from the Fifth District Court of
Appeal in which the court certified a question to be of great
public importance: Should the impact rule be abolished or
amended in Florida? Because we conclude that there was an
impact here and the impact rule does not bar the claim, we
rephrase the certified question [to ask whether] the impact rule
preclude[s] a claim for damages for emotional distress caused
by the consumption of a foreign substance in a beverage product
where the plaintiff suffers no accompanying physical injuries[.]
Hagan and Parker (hereinafter “appellants”) assert that a person
should not be barred from recovering damages for emotional
distress caused by the consumption of a beverage containing a
foreign substance simply because she suffered distress but did
not suffer any additional physical injury at the time of
consumption. Therefore, appellants contend that the “impact
rule” should not operate to preclude relief under the
circumstances of this case. We agree with appellants and hold
that the impact rule does not apply to cases where a plaintiff
suffers emotional distress as a direct result of the consumption

of a contaminated beverage.
We begin by acknowledging that although many states have
abolished the “impact rule,” several states, including Florida,
still adhere to the rule. This court, while acknowledging
exceptions, has accepted the impact rule as a limitation on
certain claims as a means for “assuring the validity of claims
for emotional or psychic damages.” R. J. v. Humana of Florida,
Inc. (1995). Generally stated, the impact rule requires that
before a plaintiff may recover damages for emotional distress,
she must demonstrate that the emotional stress suffered flowed
from injuries sustained in an impact. Notwithstanding our
adherence to the rule, this Court has noted several instances
where the impact rule should not preclude an otherwise viable
claim.
For example, this Court modified the impact rule in bystander
cases by excusing the lack of a physical impact. In such cases,
recovery for emotional distress would be permitted where one
person suffers “death or significant discernible physical injury
when caused by psychological trauma resulting from a negligent
injury imposed on a close family member within the sensory
perception of the physically injured person.” Champion v. Gray
(1985). We also have held that the impact rule does not apply to
claims for intentional infliction of emotional distress, wrongful
birth, negligence claims involving stillbirth, and bad faith
claims against an insurance carrier.
We believe that public policy dictates that a cause of action for
emotional distress caused by the ingestion of a contaminated
food or beverage should be recognized despite the lack of an
accompanying physical injury. In Doyle v. Pillsbury Co. (1985),
for example, this Court observed that the impact rule would not
bar a cause of action for damages caused by the ingestion of a
contaminated food or beverage. There, the plaintiffs, Mr. and
Mrs. Doyle, opened a can of peas and observed an insect
floating on top of the contents. Mrs. Doyle jumped back in
alarm, fell over a chair and suffered physical injuries. The
plaintiffs sued the Pillsbury Company, Green Giant Company,

and Publix Supermarkets, alleging negligence, strict liability,
and breach of warranty. The trial court granted summary
judgment in favor of the defendants, finding that the impact rule
barred the plaintiffs' cause of action, and the intermediate
appellate court affirmed.
On review, this Court approved of the outcome but disapproved
of the application of the impact rule. We initially recognized
that ingestion of a food or drink product is a necessary
prerequisite to a cause of action against restaurants,
manufacturers, distributors and retailers of food. In doing so,
we impliedly found that ingestion of a foreign food or substance
constitutes an impact. [We wrote:]
This ingestion requirement is grounded upon foreseeability
rather than the impact rule. The public has become accustomed
to believing in and relying on the fact that packaged foods are
fit for consumption. A producer or retailer of food should
foresee that a person may well become physically or mentally
ill after consuming part of a food product and then discovering
a deleterious foreign object, such as an insect or rodent, in
presumably wholesome food or drink. The manufacturer or
retailer must expect to bear the costs of the resulting injuries.
The same foreseeability is lacking where a person simply
observes the foreign object and suffers injury after the
observation. The mere observance of unwholesome food cannot
be equated to consuming a portion of the same. We should not
impose virtually unlimited liability in such cases. When a claim
is based on an inert foreign object in a food product, we
continue to require ingestion of a portion of the food before
liability arises. Because Mrs. Doyle never ingested any portion
of the canned peas, the trial court properly granted summary
judgment against the Doyles.
Other jurisdictions have reached a similar conclusion, one, in
fact, involving virtually the same facts presented here. In
Wallace v. Coca-Cola Bottling Plants, Inc., [Me. (1970)], the

plaintiff drank from a Coke bottle which contained an
unwrapped condom. The plaintiff became ill after he returned
home and thought about his experience. The Maine Supreme
Court held that where the plaintiff demonstrates a causal
relationship between the negligent act and the reasonably
foreseeable mental and emotional suffering by a reasonably
foreseeable plaintiff, damages for emotional suffering are
recoverable despite the lack of a “discernable trauma from
external causes.” The court found that such requirements had
been met: “The foreign object was of such a loathsome nature it
was reasonably foreseeable its presence would cause nausea and
mental distress upon being discovered… The mental distress
was manifested by the vomiting.”
Page 15Several years later [in Culbert v. Sampson Supermarkets
Inc., 444 A.2d 433 [Me. (1982)], the Maine Supreme Court
overruled Wallace to the extent that it had required a plaintiff to
demonstrate actual physical manifestations of the mental injury.
In overruling any physical injury requirement, the court noted
that it could have permitted recovery in Wallace even under the
impact rule because the condom had come in contact with the
plaintiff. We find the reasoning of the Maine Supreme Court to
be instructive, and consistent with our analysis in Doyle, to the
extent it concludes that a plaintiff may recover for emotional
injuries caused by the consumption of a contaminated food or
beverage despite the lack of an additional physical injury.
As this Court [has] recognized [before], the impact rule does
not apply where emotional damages are a “consequence of
conduct that itself is a freestanding tort apart from any
emotional injury.” Tanner v. Hartog, (1997). [W]e hold that a
plaintiff need not prove the existence of a physical injury in
order to recover damages for emotional injuries caused by the
consumption of a contaminated food or beverage. [T]hose who
market foodstuffs should foresee and expect to bear
responsibility for the emotional and physical harm caused by
someone consuming a food product that is contaminated by a
foreign substance. Further, since we have concluded that there

was an impact in the case at hand by the ingestion of a
contaminated substance, and the impact rule does not bar the
action, we decline to rule on the broader question posed by the
district court's certified question.
Intermediate appellate court decision reversed, and case
remanded.
CYBERLAW IN ACTION
Section 230 of the Communications Decency Act (CDA), a
federal statute, provides that “[n]o provider or user of an
interactive computer service shall be treated as the publisher or
speaker of any information provided by another information
content provider.” Although § 230 appears in a statute
otherwise designed to protect minors against online exposure to
indecent material, the broad language of § 230 has caused
courts to apply it in contexts having nothing to do with indecent
expression.
For instance, various courts have held that § 230 protects
providers of an interactive computer service (ICS) against
liability for defamation when a user of the service creates and
posts false, reputation-harming statements about someone else.
(ICS is defined in the statute as “any information service,
system, or access software provider that provides or enables
computer access by multiple users to a computer server.”) With
courts so holding, § 230 has the effect of superseding a common
law rule of defamation that anyone treated as a publisher or
speaker of defamatory material is liable to the same extent as
the original speaker or writer of that material. Absent § 230,
ICS providers could sometimes face defamation liability under
the theory that they are publishers of statements made by
someone else. (You will learn more about defamation in Chapter
6.) This application of § 230 illustrates two concepts noted
earlier in the chapter: first, that federal law overrides state law
when the two conflict; and second, that an applicable statute

supersedes a common law rule.
Cases in other contexts have required courts to utilize statutory
interpretation techniques discussed in this chapter as they
determine whether § 230's shield against liability applies. For
example, two cases presented the question whether § 230
protects website operators against liability for alleged Fair
Housing Act (FHA) violations based on material that appears on
their sites. The FHA states that it is unlawful to “make, print or
publish,” or to “cause” the making, printing, or publishing of,
notices, statements, or advertisements that “with respect to the
sale or rental of a dwelling[,]…indicate[] any preference,
limitation, or discrimination based on race, color, religion, sex,
handicap, familial status, or national origin, or an intention to
make any such preference, limitation, or discrimination.” A
civil rights organization sued Craigslist, Inc., which operates a
well-known electronic forum for those who wish to buy, sell, or
rent housing and miscellaneous goods and services. The
plaintiff alleged that Craigslist users posted housing-related
statements such as “No minorities” and “No children,” and that
those statements constituted FHA violations on the part of
Craigslist.
In Chicago Lawyers Committee for Civil Rights Under Law,
Inc. v. Craigslist, Inc., 519 F.3d 666 (7th Cir. 2008), the U.S.
Court of Appeals for the Seventh Circuit affirmed the district
court's dismissal of the plaintiff's complaint. The Seventh
Circuit held that a “natural reading” of § 230 of the CDA
protected Craigslist against liability. The statements that
allegedly violated the FHA were those of users of the electronic
forum—meaning that Craigslist would be liable only if it were
treated as a publisher or speaker of the users' statements. The
plain language of § 230, however, prohibited classifying
Craigslist, Inc., as a publisher or speaker of the content posted
by the users. Neither did Craigslist “cause” users to make
statements of the sort prohibited by the FHA. Using a
commonsense interpretation of the word “cause,” the court
concluded that merely furnishing Page 16the electronic forum

was not enough to implicate Craigslist in having “cause[d]” the
users' statements. There were no facts indicating that Craigslist
suggested or encouraged statements potentially running afoul of
the FHA.
Very shortly after the Craigslist decision, a different federal
court of appeals decided Fair Housing Council v.
Roommates.com, LLC. That case presented the question
whether § 230 of the CDA protected Roommates.com against
FHA liability for allegedly discriminatory housing-related
statements posted by users of Roommates.com's electronic
forum. The case's basic facts appear in Problem Case #10 at the
end of this chapter. Review those facts and compare them to the
facts of the Craigslist case. Then determine whether § 230
protected Roommates.com against liability (as it protected
Craigslist), or whether the facts of the Roommates.com case
warranted a different outcome.
Statutory Interpretation Because statutes are written in one
authoritative form, their interpretation might seem easier than
case law reasoning. However, this is not so. The natural
ambiguity of language serves as one reason courts face
difficulties when interpreting statutes. The problems become
especially difficult when statutory words are applied to
situations the legislature did not fore-see. In some instances,
legislators may deliberately use ambiguous language when they
are unwilling or unable to deal specifically with each situation
the statute was enacted to regulate. When this happens, the
legislature expects courts and/or administrative agencies to fill
in the details on a case-by-case basis. Other reasons for
deliberate ambiguity include the need for legislative
compromise and legislators' desire to avoid taking controversial
positions.
Identify what courts focus on when applying the major statutory
interpretation techniques (plain meaning, legislative purpose,

legislative history, and general public purpose).
To deal with the problems just described, courts use various
techniques of statutory interpretation. As you will see shortly,
different techniques may dictate different results in a particular
case. Sometimes judges employ the techniques in an
instrumentalist or result-oriented fashion, emphasizing the
technique that will produce the result they want and
downplaying the others. It is therefore unclear which technique
should control when different techniques yield different results.
Judges have considerable latitude in this regard.
Plain Meaning Courts begin their interpretation of a statute with
its actual language. If the statute's words have a clear, common,
accepted meaning, courts often employ the plain meaning rule.
This approach calls for the court to apply the statute according
to the usual meaning of its words, without concerning itself
with anything else.
Legislative History and Legislative Purpose Courts sometimes
refuse to follow a statute's plain meaning when its legislative
history suggests a different result. Almost all courts resort to
legislative history when the statute's language is ambiguous. A
statute's legislative history includes the following sources:
reports of investigative committees or law revision commissions
that led to the legislation; transcripts or summaries of hearings
of legislative committees that originally considered the
legislation; reports issued by such committees; records of
legislative debates; reports of conference committees
reconciling two houses' conflicting versions of the law;
amendments or defeated amendments to the legislation; other
bills not passed by the legislature but proposing similar
legislation; and discrepancies between a bill passed by one
house and the final version of the statute.
Sometimes a statute's legislative history provides no
information or conflicting information about its meaning, scope,
or purposes. Some sources prove to be more authoritative than
others. The worth of debates, for instance, may depend on

which legislator (e.g., the sponsor of the bill or an uninformed
blowhard) is quoted. Some sources are useful only in particular
situations; prior unpassed bills and amendments or defeated
amendments are examples. Consider, for instance, whether
mopeds are covered by an air pollution statute applying to
“automobiles, trucks, buses, and other motorized passenger or
cargo vehicles.” If the statute's original version included
mopeds but this reference was removed by amendment, it is
unlikely that the legislature wanted mopeds to be covered. The
same might be true if six similar unpassed bills had included
mopeds but the bill that was eventually passed did not, or if one
house had passed a bill including mopeds but mopeds did not
appear in the final version of the legislation.
Courts use legislative history in two overlapping but
distinguishable ways. They may use it to determine what the
legislature thought about the specific meaning of statutory
language. They may also use it to determine the overall aim,
end, or goal of the legislation. In this second case, they then ask
whether a particular interpretation of Page 17the statute is
consistent with this legislative purpose. To illustrate the
difference between these two uses of legislative history,
suppose that a court is considering whether our pollution
statute's “other motorized passenger or cargo vehicles” language
includes battery-powered vehicles. The court might scan the
legislative history for specific references to battery-powered
vehicles or other indications of what the legislature thought
about their inclusion. However, the court might also use the
same history to determine the overall aims of the statute, and
then ask whether including battery-powered vehicles is
consistent with those aims. Because the history probably would
reveal that the statute's purpose was to reduce air pollution from
internal combustion engines, the court might well conclude that
battery-powered vehicles should not be covered.
Statutory interpretation issues dominate the two cases that
follow. In Federal Communications Commission v. AT&T, the
U.S. Supreme Court focuses on whether a federal statute's

reference to “personal privacy” applies to corporations. Then, in
the Kasten case, the Supreme Court interprets language in a
federal law in light of the law's purpose and historical context.
Federal Communications Commission v. AT&T, Inc.
131 S. Ct. 1177 (U.S. Sup. Ct. 2011)
A federal statute known as the Freedom of Information Act
(FOIA) establishes a general rule that federal agencies must
make records and documents publicly available upon
submission of a proper request. However, if federal records and
documents fall within certain exemptions set forth in FOIA,
they need not be made publicly available.
After the Enforcement Bureau (Bureau) of the Federal
Communications Commission (FCC) conducted an investigation
of AT&T, Inc., regarding AT&T's possible overbilling of the
government under an FCC-administered program, the FCC and
AT&T entered into a settlement agreement in which AT&T,
without admitting wrongdoing, agreed to pay $500,000 to the
government. Later, a trade association representing some of
AT&T's competitors made a FOIA request for documents in the
Bureau's files concerning the AT&T investigation. The Bureau
concluded that certain information provided by AT&T and
included in the files was exempt from disclosure under a FOIA
exemption dealing with trade secrets. However, the Bureau
determined that other information in the investigation files
regarding AT&T had to be made available because it did not fall
within the trade secrets exemption and was not protected against

disclosure under a separate exemption known as Exemption
7(C). According to Exemption 7(C), “records or information
compiled for law enforcement purposes” need not be made
available if the records or information “could reasonably be
expected to constitute an unwarranted invasion of personal
privacy.” The Bureau reasoned that this exemption did not apply
because corporations such as AT&T, unlike human beings, do
not possess “personal privacy” interests.
On initial review, the FCC agreed with the Bureau's conclusion
that Exemption 7(C) did not apply with regard to AT&T.
However, AT&T appealed to the U.S. Court of Appeals for the
Third Circuit, which overturned the decisions of the Bureau and
the FCC. Noting that elsewhere in federal law Congress had
defined the word “person” to include corporations as well as
individuals, the court of appeals held that Exemption 7(C)
extends to the “personal privacy” of corporations because the
word “personal” has as its root the defined term “person.” When
the FCC and the trade association appealed the decision of the
court of appeals, the U.S. Supreme Court granted certiorari.
Roberts, Chief Justice
The Freedom of Information Act requires federal agencies to
make records and documents publicly available upon request,
unless they fall within one of several statutory exemptions.
[Exemption 7(C)] covers law enforcement records, the
disclosure of which “could reasonably be expected to constitute
an unwarranted invasion of personal privacy.” The question
presented is whether corporations have “personal privacy” for
the purposes of this exemption.
Like the Court of Appeals below, AT&T relies on the argument
that the word “personal” in Exemption 7(C) incorporates the
statutory definition of the word “person.” [According to that
statutory definition, “person” includes] “an individual,
partnership, corporation, association, or public or private
organization other than an agency.” Because that definition
applies here, the argument goes, “personal” must mean relating

to those “person[s]”: namely, corporations and other entities as
well as individuals. This reading, we are told, is dictated by a
basic principle of grammar and usage.
We disagree. Adjectives typically reflect the meaning of
corresponding nouns, but not always. Sometimes they acquire
distinct meanings of their own. [According to Webster's Third
New International Dictionary,] the noun “crab” refers variously
to a crustacean and a type of apple, while the related adjective
“crabbed” can refer to handwriting that is “difficult to read”;
“corny” can mean “using familiar and stereotyped formulas
believed to appeal to the unsophisticated,” which has little to do
Page 18with [the crop known as corn]; and while “crank” is “a
part of an axis bent at right angles,” “cranky” can mean “given
to fretful fussiness.”
“Person” is a defined term in the statute; “personal” is not.
When a statute does not define a term, we typically give the
phrase its ordinary meaning. “Personal” ordinarily refers to
individuals. We do not usually speak of personal characteristics,
personal effects, personal correspondence, personal influence,
or personal tragedy as referring to corporations or other
artificial entities. This is not to say that corporations do not
have correspondence, influence, or tragedies of their own, only
that we do not use the word “personal” to describe them.
Certainly, if the chief executive officer of a corporation
approached the chief financial officer and said, “I have
something personal to tell you,” we would not assume the CEO
was about to discuss company business. Responding to a request
for information, an individual might say, “that's personal.” A
company spokesman, when asked for information about the
company, would not. In fact, we often use the word “personal”
to mean precisely the opposite of business-related: We speak of
personal expenses and business expenses, personal life and
work life, personal opinion and a company's view.
Dictionaries also suggest that “personal” does not ordinarily
relate to artificial “persons” such as corporations. See, e.g.,
Oxford English Dictionary (“of, pertaining to … the individual

person or self,” “individual; private; one's own,” “of or
pertaining to one's person, body, or figure,” [and] “of,
pertaining to, or characteristic of a person or self-conscious
being, as opposed to a thing or abstraction”).
The construction of statutory language often turns on context,
which certainly may include the definitions of related words.
But here the context to which AT&T points does not dissuade us
from the ordinary meaning of “personal.” When it comes to the
word “personal,” there is little support for the notion that it
denotes corporations, even in the legal context. [Moreover],
when interpreting a statute we construe language in light of the
terms surrounding it. Exemption 7(C) refers not just to the word
“personal,” but to the term “personal privacy.” AT&T's
argument treats the term “personal privacy” as simply the sum
of its two words: the privacy of a person. Under that view, the
defined meaning of the noun “person,” or the asserted
specialized legal meaning, takes on greater significance.
But two words together may assume a more particular meaning
than those words in isolation. We understand a golden cup to be
a cup made of or resembling gold. A golden boy, on the other
hand, is one who is charming, lucky, and talented. A golden
opportunity is one not to be missed. “Personal” in the phrase
“personal privacy” conveys more than just “of a person.” It
suggests a type of privacy evocative of human concerns—not
the sort usually associated with an entity like, say, AT&T.
We reject the argument that because “person” is defined for
purposes of FOIA to include a corporation, the phrase “personal
privacy” in Exemption 7(C) reaches corporations as well. The
protection in FOIA against disclosure of law enforcement
information on the ground that it would constitute an
unwarranted invasion of personal privacy does not extend to
corporations. We trust that AT&T will not take it personally.
Judgment of Court of Appeals reversed.

Kasten v. Saint-Gobain Performance Plastics Corp.
131 S. Ct. 1325 (U.S. Sup. Ct. 2011)
The Fair Labor Standards Act of 1938 (Act) sets forth
employment rules concerning minimum wages, maximum hours,
and overtime pay. The Act contains an anti-retaliation provision
that forbids employers from
discharg[ing] or in any other manner discriminat[ing] against
any employee because such employee has filed any complaint or
instituted or caused to be instituted any proceeding under or
related to [the Act], or has testified or is about to testify in such
proceeding, or has served or is about to serve on an industry
committee. (Emphasis added.)
Kevin Kasten brought an anti-retaliation lawsuit (the case at
issue here) against his former employer, Saint-Gobain
Performance Plastics Corp. In that lawsuit and in a separate
case, Kasten asserted that Saint-Gobain located its timeclocks
between the area where Kasten and other workers put on (and
took off) their work-related protective gear and the area where
they carried out their assigned tasks. That location prevented
workers from receiving credit for the time they spent putting on
and removing their required protective gear. In the separate
case, a federal court agreed with Kasten, finding that Saint-
Gobain violated the Act by not compensating employees for
time spent in putting on and taking off the required protective
gear and in walking to and from work areas. In the case at issue
here, Kasten contended that Saint-Gobain violated the Act's

anti-retaliation provision by discharging him because he orally
complained to Saint-Gobain officials about the timeclocks.
Kasten alleged that Page 19he repeatedly called the unlawful
location of the timeclocks to Saint-Gobain's attention, in
accordance with Saint-Gobain's grievance procedure. He also
alleged that he complained to his shift supervisor and company's
operations and human resources managers about the timeclock
problem and the related unlawful noncompensation practice.
These oral complaints, Kasten alleged, led the company to
discipline him and later fire him.
Concluding that the Act's anti-retaliation provision did not
protect makers of oral, as opposed to written, complaints, a
federal district court granted summary judgment in favor of
Saint-Gobain. The U.S Court of Appeals for the Seventh Circuit
affirmed. The U.S. Supreme Court granted Kasten's petition for
certiorari.
Breyer, Justice
The sole question presented is whether an oral complaint of a
violation of the Fair Labor Standards Act is protected conduct
under the Act's anti-retaliation provision. The Act protects
employees who have “filed any complaint,” and interpretation
of this phrase “depends upon reading the whole statutory text,
considering the purpose and context of the statute, and
consulting any precedents or authorities that inform the
analysis.” Dolan v. Postal Service, 546 U.S. 481, 486 (2006).
This analysis leads us to conclude that the language of the
provision, considered in isolation, may be open to competing
interpretations. But considering the provision in conjunction
with the purpose and context leads us to conclude that only one
interpretation is permissible.
We begin with the text of the statute. The word “filed” has
different relevant meanings in different contexts. Some
dictionary definitions of the word contemplate a writing. But
other dictionaries provide different definitions that permit the
use of the word “file” in conjunction with oral material. In

addition, … state statutes sometimes contemplate oral filings.
Regulations promulgated by various federal agencies sometimes
permit complaints to be filed orally. And a review of
contemporaneous judicial usage shows that oral filings were a
known phenomenon when the Act was passed.
Filings may more often be made in writing. But we are
interested in the filing of “ any complaint.” So even if the word
“filed,” considered alone, might suggest a narrow interpretation
limited to writings, the phrase “ any complaint” suggests a
broad interpretation that would include an oral complaint. The
bottom line is that the text, taken alone, cannot provide a
conclusive answer to our interpretive question. The phrase
“filed any complaint” might, or might not, encompass oral
complaints. We must look further.
Several functional considerations indicate that Congress
intended the anti-retaliation provision to cover oral, as well as
written, “complaint[s].” First, an interpretation that limited the
provision's coverage to written complaints would undermine the
Act's basic objectives. The Act seeks to prohibit “labor
conditions detrimental to the maintenance of the minimum
standard of living necessary for health, efficiency, and general
well-being of workers.” It does so in part by setting forth
substantive wage, hour, and overtime standards. It relies for
enforcement of these standards, not upon continuing detailed
federal supervision or inspection of payrolls, but upon
information and complaints received from employees seeking to
vindicate rights claimed to have been denied. And its anti-
retaliation provision makes this enforcement scheme effective
by preventing fear of economic retaliation from inducing
workers quietly to accept substandard conditions.
Why would Congress want to limit the enforcement scheme's
effectiveness by inhibiting use of the Act's complaint procedure
by those who would find it difficult to reduce their complaints
to writing, particularly illiterate, less educated, or overworked
workers? President Franklin Roosevelt pointed out at the time
[the Act was under congressional consideration] that these were

the workers most in need of the Act's help. See Message to
Congress, May 24, 1937 (seeking a bill to help the poorest of
“those who toil in factory”). In the years prior to the passage of
the Act, illiteracy rates were particularly high among the poor.
Those rates remained high in certain industries for many years
after the Act's passage.
To limit the scope of the anti-retaliation provision to the filing
of written complaints would also take needed flexibility from
those charged with the Act's enforcement. It could prevent
government agencies from using hotlines, interviews, and other
oral methods of receiving complaints. And … it would
discourage the use of desirable informal workplace grievance
procedures to secure compliance with the Act.
Saint-Gobain replies that worker protection is not the only
relevant statutory objective. The Act also seeks to establish an
enforcement system that is fair to employers. To do so, the
employer must have fair notice that an employee is making a
complaint that could subject the employer to a later claim of
retaliation. If oral complaints suffice, Saint-Gobain adds,
employers too often will be left in a state of uncertainty about
whether an employee (particularly an employee who seems
unusually angry at the moment) is in fact making a complaint
about an Act violation or just letting off steam.
We agree with Saint-Gobain that the statute requires fair notice.
Although the dictionary definitions, statutes, regulations, and
judicial opinions we considered do not distinguish between
writings and oral statements, they do suggest that a “filing” is a
serious occasion, rather than a triviality. As such, Page 20the
phrase “filed any complaint” contemplates some degree of
formality, certainly to the point where the recipient has been
given fair notice that a grievance has been lodged and does, or
should, reasonably understand the matter as part of its business
concerns.
Moreover, the statute prohibits employers from discriminating
against an employee “because such employee has filed any
complaint.” And it is difficult to see how an employer who does

not (or should not) know an employee has made a complaint
could discriminate because of that complaint. But we also
believe that a fair notice requirement does not necessarily mean
that notice must be in writing.
At oral argument, the government [maintained] that a complaint
is “filed” when “a reasonable, objective person would have
understood the employee” to have “put the employer on notice
that [the] employee is asserting statutory rights under the
[Act].” We agree. To fall within the scope of the anti-retaliation
provision, a complaint must be sufficiently clear and detailed
for a reasonable employer to understand it, in light of both
content and context, as an assertion of rights protected by the
statute and a call for their protection. This standard can be met,
however, by oral complaints, as well as by written ones.
We conclude that the Court of Appeals erred in determining that
oral complaints cannot fall within the scope of the phrase “filed
any complaint” in the Act's anti-retaliation provision. We leave
it to the lower courts to decide whether Kasten will be able to
satisfy the Act's notice requirement.
Judgment of Court of Appeals vacated, and case remanded for
General Public Purpose Occasionally, courts construe statutory
language in the light of various general public purposes. These
purposes are not the purposes underlying the statute in question;
rather, they are widely accepted general notions of public
policy. For example, the Supreme Court once used the general
public policy against racial discrimination in education as an
argument for denying tax-exempt status to a private university
that discriminated on the basis of race.
Prior Interpretations Courts sometimes follow prior cases and
administrative decisions interpreting a statute, regardless of the
statute's plain meaning or legislative history. The main
argument for following these prior interpretations is to promote
stability and certainty by preventing each successive court that
considers a statute from adopting its own interpretation. The

courts' willingness to follow a prior interpretation depends on
such factors as the number of past courts adopting the
interpretation, the authoritativeness of those courts, and the
number of years that the interpretation has been followed.
Maxims Maxims are general rules of thumb employed in
statutory interpretation. There are many maxims, which courts
tend to use or ignore at their discretion. One example of a
maxim is the ejusdem generis rule, which says that when
general words follow words of a specific, limited meaning, the
general language should be limited to things of the same class
as those specifically stated. Suppose that the pollution statute
quoted earlier listed 12 types of gas-powered vehicles and
ended with the words “and other motorized passenger or cargo
vehicles.” In that instance, ejusdem generis probably would
dictate that battery-powered vehicles not be included.
Limits on the Power of Courts By now, you may think that
anything goes when courts decide common law cases or
interpret statutes. Many factors, however, discourage courts
from adopting a freewheeling approach. Their legal training and
mental makeup cause judges to be likely to respect established
precedents and the will of the legislature. Many courts issue
written opinions, which expose judges to academic and
professional criticism if the opinions are poorly reasoned.
Lower court judges may be discouraged from innovation by the
fear of being overruled by a higher court. Finally, political
factors inhibit judges. For example, some judges are elected,
and even judges with lifetime tenure can sometimes be removed.
An even more fundamental limit on the power of courts is that
they cannot make or interpret law until parties present them
with a case to decide. In addition, any such case must be a real
dispute. That is, courts generally limit themselves to genuine,
existing “cases or controversies” between real parties with
tangible opposing interests in the lawsuit. Courts generally do
not issue advisory opinions on abstract legal questions unrelated
to a genuine dispute, and do not decide feigned controversies
that parties concoct to seek answers to such questions. Courts

may also refuse to decide cases that are insufficiently ripe to
have matured into a genuine controversy, or that are moot
because there no longer is a real dispute between the parties.
Expressing similar ideas is the doctrine of standing to sue,
which normally requires that the plaintiff have some direct,
tangible, and substantial stake in the outcome of the litigation.
Page 21
The Global Business Environment
Just as statutes may require judicial interpretation when a
dispute arises, so may treaties. The techniques that courts use in
interpreting treaties correspond closely to the statutory
interpretation techniques discussed in this chapter. Olympic
Airways v. Husain, 540 U.S. 644 (U.S. Sup. Ct. 2004), furnishes
a useful example.
In Olympic Airways, the U.S. Supreme Court was faced with an
interpretation question regarding a treaty, the Warsaw
Convention, which deals with airlines' liability for passenger
deaths or injuries on international flights. Numerous nations
(including the United States) subscribe to the Warsaw
Convention, a key provision of which provides that in regard to
international flights, the airline “shall be liable for damages
sustained in the event of the death or wounding of a passenger
or any other bodily injury suffered by a passenger, if the
accident which caused the damage so sustained took place on
board the aircraft or in the course of any of the operations of
embarking or disembarking.” A separate provision imposes
limits on the amount of money damages to which a liable airline
may be subjected.

The Olympic Airways case centered around the death of Dr.
Abid Hanson, a severe asthmatic, on an international flight
operated by Olympic. Smoking was permitted on the flight.
Hanson was given a seat in the nonsmoking section, but his seat
was only three rows in front of the smoking section. Because
Hanson was extremely sensitive to secondhand smoke, he and
his wife, Rubina Husain, requested various times that he be
allowed, for health reasons, to move to a seat farther away from
the smoking section. Each time, the request was denied by an
Olympic flight attendant. When smoke from the smoking
section began to give Hanson difficulty, he used a new inhaler
and walked toward the front of the plane to get some fresher air.
Hanson went into respiratory distress, whereupon his wife and a
doctor who was on board gave him shots of epinephrine from an
emergency kit that Hanson carried. Although the doctor
administered CPR and oxygen when Hanson collapsed, Hanson
died. Husain, acting as personal representative of her late
husband's estate, sued Olympic in federal court on the theory
that the Warsaw Convention made Olympic liable for Hanson's
death. The federal district court and the court of appeals ruled
in favor of Husain.
In considering Olympic's appeal, the U.S. Supreme Court noted
that the key issue was one of treaty interpretation: whether the
flight attendant's refusals to reseat Hanson constituted an
“accident which caused” the death of Hanson. Noting that the
Warsaw Convention itself did not define “accident” and that
different dictionary definitions of “accident” exist, the Court
looked to a precedent case, Air France v. Saks, 470 U.S. 392
(U.S. Sup. Ct. 1985), for guidance. In the Air France case, the
Court held that the term “accident” in the Warsaw Convention
means “an unexpected or unusual event or happening that is
external to the passenger.” Applying that definition to the facts
at hand, the Court concluded in Olympic Airways that the
repeated refusals to reseat Hanson despite his health concerns
amounted to unexpected and unusual behavior for a flight
attendant. Although the refusals were not the sole reason why

Hanson died (the smoke itself being a key factor), the refusals
were nonetheless a significant link in the causation chain that
led to Hanson's death. Given the definition of “accident” in the
Court's earlier precedent, the phrasing, the Warsaw Convention,
and the underlying public policies supporting it, the Court
concluded that the refusals to reseat Hanson constituted an
“accident” covered by the Warsaw Convention. Therefore, the
Court affirmed the decision of the lower courts.
State and federal declaratory judgment statutes, however, allow
parties to determine their rights and duties even though their
controversy has not advanced to the point where harm has
occurred and legal relief may be necessary. This enables them
to determine their legal position without taking action that
could expose them to liability. For example, if Darlene believes
that something she plans to do would not violate Earl's
copyright on a work of authorship but she recognizes that he
may take a contrary view, she may seek a declaratory judgment
on the question rather than risk Earl's lawsuit by proceeding to
do what she had planned. Usually, a declaratory judgment is
awarded only when the parties' dispute is sufficiently advanced
to constitute a real case or controversy.
APPENDIX
Reading and Briefing Cases Throughout this text, you will
encounter cases—the judicial opinions accompanying court
decisions. These cases are highly edited versions of their much
longer originals. What follows are explanations and pointers to
assist you in studying cases.
Each case has a case name that includes at least some of the
parties to the case. Because the order of the parties may change
when a case is appealed, do not assume that the first party listed
is the plaintiff (the party suing) and the second the defendant
(the party being sued). Also, because some cases have many
plaintiffs and/or many defendants, the parties Page 22discussed

in the court's opinion sometimes differ from those found in the
case name.
Each case also has a citation, which includes the volume and
page number of the legal reporter in which the full case appears,
plus the year the case was decided. Kasten v. Saint-Gobain
Performance Plastics Corp., for instance, begins on page 1325
of volume 131 of the Supreme Court Reporter (one of the
reporters for U.S. Supreme Court decisions) and was decided in
2011. (Each of the many different legal reporters has its own
abbreviation. The list is too long to include here.) In the
parenthesis accompanying the date, we also give you some
information about the court that decided the case. For example,
“U.S. Sup. Ct.” is the United States Supreme Court, “3d Cir.” is
the U.S. Court of Appeals for the Third Circuit, “S.D.N.Y.” is
the U.S. District Court for the Southern District of New York,
“Minn. Sup. Ct.” is the Supreme Court of Minnesota, and
“Mich. Ct. App.” is the Michigan Court of Appeals (a Michigan
intermediate appellate court). Chapter 2 describes the various
kinds of courts.
At the beginning of each case, there is a statement of facts
containing the most important facts that gave rise to the case.
As part of the statement of facts, we give you the case's
procedural history. This history tells you what courts previously
handled the case you are reading, and how they dealt with it.
Next comes your major concern: the body of the court' opinion.
Here, the court determines the applicable law and applies it to
the facts to reach a conclusion. The court's discussion of the
relevant law may be elaborate; it may include prior cases,
legislative history, applicable public policies, and more. The
court's application of the law to the facts usually occurs after it
has arrived at the applicable legal rule(s), but also may be
intertwined with its legal discussion.
At the very end of the case, we complete the procedural history
by stating the court's decision. For example, “Judgment
reversed in favor of Smith” says that a lower court judgment
against Smith was reversed on appeal. This means that Smith's

appeal was successful and Smith wins.
The cases' main function is to provide concrete examples of
rules stated in the text. (Frequently, the text tells you what
point the case illustrates.) In studying law, it is easy to
conclude that your task is finished once you have memorized a
black letter rule. Real-life legal problems, however, seldom
present themselves as abstract questions of law; instead, they
are hidden in particular situations one encounters or particular
actions one takes. Without some sense of a legal rule's real-life
application, your knowledge of that rule is incomplete. The
cases help provide this sense.
You may find it helpful to brief the cases. There is no one
correct way to brief a case, but most good briefs contain the
following elements: (1) a short statement of the relevant facts;
(2) the case's prior history; (3) the question(s) or issue(s) the
court had to decide; (4) the answer(s) to those question(s); (5)
the reasoning the court used to justify its decision; and (6) the
final result. A brief of Young v. Beck (a case included earlier)
might look this way:
Young v. Beck
Facts Kenneth and Barbara Beck (the Becks) owned a motor
vehicle that they permitted their seventeen-year-old son, Jason,
to drive to and from school and for general social purposes.
While he was driving the car, Jason negligently caused an
accident in which Young was injured. Young sued not only
Jason but also the Becks on the theory that they were liable for
Jason's negligence under the family purpose doctrine, an
Arizona common law rule. The family purpose doctrine
provides that if a vehicle owner furnishes it to family members
for their use, the owner is liable for the negligent driving of a
family member if the negligence resulted in an accident and the
negligent driver was operating the vehicle for a family purpose
at the time of the accident. The Becks argued (1) that the family
purpose doctrine should be abolished; and (2) that even if the
family purpose doctrine were maintained in force, the Becks

should not be held liable because at the time of the accident
Jason was driving the vehicle for a social purpose that was
inconsistent with instructions and limitations communicated to
him by the Becks. (Although they permitted Jason to use the
vehicle for general social purposes, they had instructed him not
to “taxi” his friends around. At the time of the accident, he had
friends in the vehicle with him.)
History An Arizona trial court ruled in Young's favor. The
Arizona Court of Appeals affirmed. The Becks appealed to the
Supreme Court of Arizona.
Issues Should the family purpose doctrine be abolished? If not,
should the Becks be held liable under it?
Holdings The family purpose doctrine should remain a part of
Arizona's common law. The Becks should be held liable under it
even though the particular social purpose Jason was engaged in
at the time of the accident was inconsistent with instructions
and limitations communicated to him by his parents.
Page 23Reasoning Although not all states recognize the family
purpose doctrine as part of their common law, many states still
do. The doctrine has existed as part of Arizona's common law
for nearly 100 years. The doctrine continues to serve the
important purpose of allowing an injured party to take action
against the party who presumably is in a better financial
position to compensate the injured party than the negligent
driver would be (especially if that driver is a minor), and who
decides which drivers are permitted to use the vehicle.
Therefore, the doctrine should remain in effect.
The Becks should be held liable under the family purpose
doctrine. Even though he violated his parents' directive not to
transport friends, the fact remains that they had furnished the
vehicle to Jason for use in general social purposes—and
therefore family purposes. Allowing them to avoid liability on
the ground that Jason violated a particular instruction would
undermine the objective underlying the family purpose doctrine
and would make that doctrine's effect too easy to evade.
Result The Supreme Court of Arizona upheld the lower courts'

decisions in favor of Young.
Problems and Problem Cases
Law enforcement officers arrived at a Minnesota residence in
order to execute arrest warrants for Andrew Hyatt. During the
officers' attempt to make the arrest, Hyatt yelled something
such as “Go ahead, just shoot me, shoot me,” and struck one of
the officers. Another officer then called for assistance from City
of Anoka, Minnesota, police officer Mark Yates, who was
elsewhere in the residence with his leashed police dog, Chips.
Yates entered the room where Hyatt was, saw the injured
officer's bloodied face, and observed Hyatt standing behind his
wife (Lena Hyatt). One of the officers acquired the impression
that Lena may have been serving as a shield for her husband.
When Andrew again yelled “Shoot me, shoot me” and ran
toward the back of the room, Yates released Chips from the
leash. Instead of pursuing Andrew, Chips apprehended Lena,
taking her to the ground and performing a “bite and hold” on
her leg and arm. Yates then pursued Andrew, who had fled
through a window. When Yates later re-entered the room, he
released Chips from Lena and instructed another officer to
arrest her on suspicion of obstruction of legal process. Lena was
taken by ambulance to a hospital and treated for lacerations on
her elbow and knee. She later sued the City of Anoka, seeking
compensation for medical expenses and pain and suffering. Her
complaint alleged liability on the basis of Minnesota's dog bite
statute, which read as follows:
“If a dog, without provocation, attacks or injures any person
who is acting peaceably in any place where the person may
lawfully be, the owner of the dog is liable in damages to the
person so attacked or injured to the full amount of the injury
sustained. The term “owner” includes any person harboring or
keeping a dog but the owner shall be primarily liable. The term

“dog” includes both male and female of the canine species.”
In defense, the city argued that the dog bite statute does not
apply to police dogs and municipalities that own them. Was the
city correct?
As part of its collective bargaining agreement with the United
Steelworkers of America, the Kaiser Aluminum and Chemical
Company established an on-the-job craft training program at its
Gramercy, Louisiana, plant. The selection of trainees for the
program was generally based on seniority, but the selection
guidelines included an affirmative action feature under which at
least 50 percent of the new trainees had to be black until the
percentage of black skilled craft workers in the plant
approximated the percentage of blacks in the local labor force.
The purposes of the affirmative action feature were to break
down old patterns of racial segregation and hierarchy, and to
open up employment opportunities for blacks in occupations
that had traditionally been closed to them. Kaiser employee
Brian Weber, who was white, applied for the program but was
rejected. He would have qualified for the program had the
affirmative action feature not existed. Weber sued Kaiser and
the union in federal district court, arguing that the racial
preference violated Title VII of the Civil Rights Act of 1964.
Section 703(a) of the Act states: “It shall be an unlawful
employment practice for an employer… to discriminate against
any individual with respect to his compensation, terms,
conditions, or privileges of employment, because of such
individual's race, color, religion, sex, or national origin.”
Section 703(d) includes a similar provision specifically
forbidding racial discrimination in admission to apprenticeship
or other training programs. Weber won his case in the federal
district court and in the federal court of appeals. Kaiser and the
union appealed to the U.S. Page 24Supreme Court. Did the
affirmative action feature of the training program violate Title
VII's prohibition of employment discrimination on the basis of
race?

The Freedom of Access to Clinic Entrances Act (FACE), a
federal statute, provides for penalties against anyone who “by
force or threat of force or by physical
obstruction…intentionally injures, intimidates, or
interferes…with any person…in order to intimidate such
person…from obtaining or providing reproductive health
services.” Two persons, Lynch and Moscinski, blocked access
to a clinic that offered such services. The federal government
sought an injunction barring Lynch and Moscinski from
impeding access to, or coming within 15 feet of, the clinic. In
defense, the defendants argued that FACE protects the taking of
innocent human life, that FACE is therefore contrary to natural
law, and that, accordingly, FACE should be declared null and
void. A federal district court issued the injunction after finding
that Lynch and Moscinski had violated FACE by making
entrance to the clinic unreasonably difficult. On appeal, the
defendants maintained that the district court erred in not
recognizing their natural law argument as a defense. Were the
defendants correct?
Title VII of the Civil Rights Act of 1964 prohibits employment
discrimination on the basis of race, color, sex, religion, and
national origin. Persons seeking legal relief because they were
subjected to such employment discrimination must first file a
charge with the Equal Employment Opportunity Commission
(EEOC). If the EEOC declines to pursue the case, the
employment discrimination victim may sue in federal court. In
what is known as the anti-retaliation provision, Title VII makes
it “an unlawful employment practice for an employer to
discriminate against any of his employees … because he has
made a charge” under Title VII. The statute also permits “a
person claiming to be aggrieved” to file a charge with the EEOC
alleging that the employer committed an unlawful employment
practice. If the EEOC declines to sue the employer, Title VII
permits a lawsuit to be “brought … by the person claiming to be
aggrieved … by the alleged unlawful employment practice.”
Miriam Regalado and her fiancé, Eric Thompson, were

employees of North American Stainless, LP (NAS). Three
weeks after the EEOC notified NAS that Regalado had filed a
charge alleging that NAS had discriminated against her on the
basis of sex, NAS fired Thompson. He then filed a charge with
the EEOC. After conciliation efforts failed, Thompson sued
NAS under Title VII, claiming that NAS had fired him in order
to retaliate against Regalado for filing her charge with the
EEOC. A federal district court ruled in favor of NAS, reasoning
that Thompson's claim should be rejected because Title VII's
anti-retaliation provision does not permit “third-party”
retaliation claims. After a federal court of appeals upheld the
lower court's decision, the U.S. Supreme Court agreed to decide
the case. How did the Supreme Court rule? Did NAS's firing of
Thompson constitute unlawful retaliation? If it did, was
Thompson entitled to sue under Title VII?
The federal Age Discrimination in Employment Act (ADEA)
makes it unlawful for employers “to fail or refuse to hire or to
discharge any individual or otherwise discriminate against any
individual with respect to his compensation, terms, conditions,
or privileges of employment, because of such individual's age.”
The ADEA also provides that the statute's protection against
discrimination applies only when the affected individual is at
least 40 years of age. A pre-1997 collective bargaining
agreement between the United Auto Workers (UAW) and
General Dynamics Land Systems, Inc. (GDLS) called for GDLS
to furnish health benefits to retired employees who had worked
for the company for a qualifying number of years. In 1997,
however, the UAW and GDLS entered into a new collective
bargaining agreement that eliminated the obligation of GDLS to
provide health benefits to employees who retired after the
effective date of the new agreement, except for then-current
workers who were at least 50 years old at the time of the
agreement. Employees in that 50-and-over category would still
receive health benefits when they retired.
Dennis Cline and certain other GDLS employees objected to the
new collective bargaining agreement because they were under

50 years of age when the agreement was adopted, and thus
would not receive health benefits when they retired. Cline and
the other objecting employees were all at least 40 years of age.
In a proceeding before the Equal Employment Opportunity
Commission (EEOC), Cline and the similarly situated
employees asserted that the 1997 agreement violated the ADEA
because they were within the ADEA's protected class of persons
(those at least 40 years of age) and because the agreement
discriminated against them “with respect to … compensation,
terms, conditions, or privileges of employment, because of
[their] age” (quoting the ADEA). They contended that age
discrimination occurred when their Page 25under-50 age served
as the basis for denying them the more favorable treatment to be
received by persons 50 years of age or older. After no
settlement occurred despite the EEOC's encouragement, Cline
and the similarly situated employees sued GDLS for a supposed
violation of the ADEA. In asserting that they had been
discriminated against in favor of older workers, did Cline and
the other plaintiffs state a valid claim under the ADEA?
The Federal Tort Claims Act (FTCA) waives the federal
government's sovereign immunity concerning claims arising out
of torts committed by federal employees. This waiver of
sovereign immunity allows tort claims based on wrongful
actions by federal employees, except when an exception to the
waiver applies (in which event a tort claim cannot be brought or
pursued against the government). One of the exceptions to the
sovereign immunity waiver is set forth in FTCA §2680(b). This
exception is for “loss, miscarriage, or negligent transmission of
letters or postal matter.” Barbara Dolan was injured when she
tripped and fell over packages and letters that a U.S. Postal
Service (USPS) mail carrier left on the porch of her home.
Dolan sued the USPS under the FTCA on the theory that the
USPS mail carrier had been negligent—in other words, had
failed to use reasonable care—in leaving the items of mail on
the porch. The USPS argued that the case should be dismissed
because it fell within §2680(b)'s reference to claims arising out

of “negligent transmission of letters or postal matter.” Agreeing
with this argument, the district court dismissed the case. The
U.S. Court of Appeals for the Third Circuit affirmed. Dolan
appealed to the U.S. Supreme Court, arguing that the lower
courts had erroneously interpreted §2680(b). Were the lower
courts correct in their interpretation of § 2680(b)? Was Dolan's
claim barred by the “negligent transmission of letters or postal
matter” language?
Many states and localities used to have so-called Sunday
Closing laws—statutes or ordinances forbidding certain
business from being conducted on Sunday. A few may still have
such laws. Often, these laws have not been obeyed or enforced.
What would an extreme legal positivist tend to think about the
duty to enforce and obey such laws? What would a natural law
exponent who strongly believes in economic freedom tend to
think about this question? What about a natural law adherent
who is a Christian religious traditionalist? What observation
would almost any legal realist make about Sunday Closing
laws? With these laws looked at from a sociological
perspective, finally, what social factors help explain their
original passage, their relative lack of enforcement today, and
their continued presence on the books despite their lack of
enforcement?
When Indiana's legislature legalized riverboat gambling in the
early 1990s, it adopted laws setting forth a broad-ranging
regulatory regime. The legislature established the Indiana
Gaming Commission as the administrative agency responsible
for licensing providers of riverboat gambling and for otherwise
regulating the riverboat gambling system (including the taking
of disciplinary action against licensees when necessary). The
legislature also directed the Commission to adopt regulations
consistent with the authority delegated to it by statute. In
accordance with one such statutory directive, the Commission
created a voluntary exclusion program. Under this program, any
person could request to have his or her name placed on a
voluntary exclusion list by providing contact information, a

physical description, and a desired time period of exclusion
from casinos—one year, five years, or lifetime. Casinos must
have procedures by which excluded individuals are not allowed
to gamble, do not receive direct marketing, and are not extended
check-cashing or credit privileges. A casino's failure to comply
with the exclusion program regulations makes it subject to
disciplinary action.
Caesars Riverboat Casino, LLC (“Caesars”) was a licensed
operator of a riverboat casino in Elizabeth, Indiana. Genevieve
Kephart, a Tennessee resident who was addicted to gambling,
traveled to Caesars after receiving an offer of free
transportation, hotel room, food, and alcohol from Caesars. In a
single night of gambling, Kephart lost $125,000 through the use
of six counter checks provided to her by Caesars. When the
counter checks were returned to Caesars for insufficient funds,
Caesars sued Kephart to collect what she owed. Kephart
counterclaimed, alleging that Caesars knew of her gambling
addiction and had taken advantage of that addiction. She sought
damages for the consequences resulting from the $125,000 loss,
including damages for mental, emotional, and psychological
injury. Kephart, who had not sought to invoke the voluntary
exclusion program described above, contended that Caesars
owed her a common law duty to protect her from its enticements
to gamble because it knew she was addicted to gambling.
Caesars moved to dismiss Kephart's counterclaim. Caesars
argued that in light of the statutes and Page 26regulations
referred to above, no such common law cause of action should
be recognized. Was Caesars correct?
One wheel of a pre-1916 automobile manufactured by the Buick
Motor Company was made of defective wood. Buick could have
discovered the defect had it made a reasonable inspection after
it purchased the wheel from another manufacturer. Buick sold
the car to a retail dealer, who then sold it to MacPherson. While
MacPherson was driving his new Buick, the defective wheel
collapsed and he was thrown from the vehicle. Was Buick,
which did not deal directly with MacPherson, liable for his

injuries?
Roommates.com, LLC (“Roommates”) operated a widely used
website designed to match people renting out spare rooms with
people looking for a place to live. Before subscribers to
Roommates could search listings or post housing opportunities
on the website, they had to create profiles by answering a series
of questions. Besides requesting basic information such as
name, location, and e-mail address, Roommates required each
subscriber to disclose his or her sex and sexual orientation, and
whether he or she would bring children to a household. Each
subscriber was further required to describe his or her roommate
preferences with respect to the same three criteria (sex, sexual
orientation, and whether children would be brought to the
household). Roommates also encouraged subscribers to provide
“Additional Comments” describing themselves and their desired
roommate in an open-ended essay. After a new subscriber
completed the application, Roommates would assemble his or
her answers into a profile page. Subscribers to Roommates were
entitled to view their own profile pages and those of others,
send personal e-mail messages through the site, and receive
notices from Roommates regarding available housing
opportunities matching their preferences.
The Fair Housing Councils of the San Fernando Valley and San
Diego (“Councils”) sued Roommates, alleging that its activities
violated the federal Fair Housing Act (“FHA”). The FHA
prohibits discrimination in the sale or rental of housing on the
basis of “race, color, religion, sex, familial status, or national
origin.” The FHA also bars
mak[ing], print[ing], or publish[ing], or caus[ing] to be made,
printed, or published, any notice, statement, or advertisement,
with respect to the sale or rental of a dwelling that indicates any
preference, limitation, or discrimination based on race, color,
religion, sex, handicap, familial status, or national origin, or an
intention to make any such preference, limitation, or
discrimination.

Roommates argued, however, that it was immune from liability
under § 230 of the federal Communications Decency Act, which
provides that “[n]o provider … of an interactive computer
service shall be treated as the publisher or speaker of any
information provided by another information content provider.”
Did § 230 protect Roommates against liability?
Online Research
Common Law
In Gribben v. Wal-Mart Stores, Inc., a 2005 decision, the
Supreme Court of Indiana ruled on whether a certain legal claim
should be recognized as part of Indiana common law. Using an
online source, locate and read Gribben. Then prepare a case
brief of the sort described in Chapter 1's appendix on “Reading
and Briefing Cases.”
1Chapter 3 discusses constitutional law as it applies to
government regulation of business.
2Holmes. The Common Law (1881).
3The reasoning courts employ in constitutional cases resembles
that used in common law cases, but often is somewhat looser.
See Chapter 3.
4Also, though they exercise the power infrequently, courts
sometimes completely overrule their own prior decisions.

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