BADM 537 University of the Cumberlands Types of Laws Discussion

Readings:

Chapter 5. Business and the Constitution.

Chapter 6. Administrative Law.

Chapter 7. International Law.

Initial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.

Also, provide a graduate-level response to each of the following questions:

Beets R Us, LLC is a medium-sized farm in Iowa that grows beets that are only sold in Iowa.  It does not export its beets outside of Iowa, though sometimes customers from out of state buy its beets while visiting Iowa.  Is Beets R Us, LLC’s business practices subject to federal jurisdiction under Article I, Section 8 of the United States Constitution?  Why or why not?

Peter Plaintiff’s son is killed while working overseas for a United States corporation that deals in proprietary petroleum extraction and production.  Peter Plaintiff brings a wrongful death lawsuit on behalf of his son’s estate against this corporation and requests a wide scope of business documents related to the corporation and its overseas operations under the Freedom of Information Act (FOIA).  What defenses, if any, does the corporation have against revealing the requested information under the FOIA?

Define expropriation, explain how it effects a county’s investments in foreign counties,and how counties respond to it.

Marianne M. Jennings
BUSINESS
Its Legal, Ethical, and
Global Environment
11th Ed.
Chapter 5
Business and the
Constitution
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The U.S. Constitution
• Article I: Legislative Branch
– Congress
• House of Representatives
• Senate
• Article II: Executive Branch
– President
– Vice President
• Article III: Judicial Branch
– Creates U.S. Supreme Court
– Authorizes Congress to create other courts
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5-1
The U.S. Constitution
• Creates a System of Checks and
Balances
– Each branch has some power check over
the others to keep any one from
becoming too powerful
– Examples
• Nixon v. Administrator of General Services
• Clinton v. Jones
• Obama v. Alito
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5-2
The U.S. Constitution
• Other Articles in the Constitution
– Article IV: State Interrelationships
– Article V: Procedures for Amendments
– Article VI: Supremacy Clause
– Article VII: State Ratification of the
Constitution
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5-3
The U.S. Constitution
• Bill of Rights
– First: Freedom of speech
– Fourth: Privacy
– Fifth: Due process and selfincrimination
– Sixth: Jury trial
• Other Amendments
– Fourteenth Amendment: Due Process
and Equal Protection
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5-4
Role of Judicial Review
• Determines the Rights Afforded by
the U.S. Constitution
• Determines the Scope of Rights
• Plays Unique Role in Checks and
Balances
– Determines the appropriateness of the
actions of other branches
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5-5
Limits of Economic Regulation
• The Commerce Clause: Article I, Section 8
– Standards for Federal Regulation of Interstate
Commerce
– Historical application
• Initially, Court gave a narrow interpretation
• Court held New Deal Legislation unconstitutional
• Roosevelt proposed Court-Packing Plan
• After these political battles, the court responded in
NLRB v. Laughlin Steel with the affectation
doctrine
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5-6
Limits of Economic Regulation
A. Economic Activity
is an Economic
Setting
B. Economic Activity
in a Non-Economic
Setting
e.g., Price Fixing by
Multinationals
e.g., Loan Sharking on the
Street Corner
C. Non-Economic
Activity in an
Economic Setting
e.g., Race Discrimination by
a Hotel
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D. Non-Economic
Activity in a NonEconomic Setting
e.g., VAWA and Morrison?
5-7
Table One – Part A
A. COMPARISON OF CONGRESSIONAL
JURISDICTION FACTORS
CHILD LABOR
1. AWFUL; HORRIBLE
2. PERVASIVE
3. INSUFFICIENT
STATE ACTION
4. BUSINESSES
WERE DOING IT
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WOMEN AND VIOLENCE
1. AWFUL; HORRIBLE
2. PERVASIVE
3. INSUFFICIENT
STATE ACTION
4. MEN ARE DOING IT
5-8
Table One – Part B
B. CIVIL RIGHTS (LACK THEREOF)
CHILD LABOR
GUNS IN SCHOOLS
1. DISPARATE
2. UNSAFE–VIOLENCE
3. INSUFFICIENT
STATE ACTION
4. BUSINESSES
WERE DOING IT
1. VIOLENCE IS AWFUL
2. UNSAFE–VIOLENCE
3. INSUFFICIENT
STATE ACTION
4. HIGH SCHOOL
STUDENTS DOING IT
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5-9
Table Two
The Factors of Wickard v. Filburn
Local Farmers
Individuals, But Still in Business
Local Commerce Affects Prices in National Market
National Economic Interest in Farm Products/Pricing
Combining Wickard with the decisions in Lopez and Morrison,
we are able to develop a clear matrix on the Commerce Clause as
depicted by Response to Razook Figure One and the specific
examples listed in Razook Figure Two.
In the Lopez case, the court held that the act of having a gun on
school property had no economic/commerce base and that federal
laws could not regulate local school.
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5-10
Response to Razook Figure One
Jennings Figure R-1
Examples of Congressional Authority/Non-Authority After
Morrison and Lopez
Congress May
Regulate
Congress May
Not Regulate
Regulated conduct
is economic
Regulated conduct
is performed by an
(commercial
character)
(commercial
character to actor)
Regulated conduct
is non-economic
Regulated conduct
is not performed by
an economic entity
(non-commercial
character)
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Congress
may
regulate
Congress
may not
regulate
Congress
may
regulate
5-11
Table Three
Application of the Economic/Non-Economic Actor/
Activity Test to Specific Regulations
Gun Possession
Gun possessor (actor) – non-commercial, Congress may not regulate
Act of gun possession – non-commercial, Congress may not regulate
Violence Against Women
Abuser (actor) – non-commercial, Congress may not regulate
Act of abusing – non-commercial, Congress may not regulate
Farm Regulation (Wickard v. Filburn)
Farmer (actor) – commercial (livelihood), Congress may regulate
Act of selling – commercial, Congress may regulate
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5-12
Table Three (cont’d)
Title VII Civil Rights Discrimination
Hotel/Restaurant Owner (actor) – commercial, Congress may
regulate
Act of discrimination – non-commercial, Congress may regulate
Labor/Unions/OSHA
Actors are business – commercial, Congress may regulate
Or Unions Engaged in Business – commercial, Congress may
regulate
Act of Work/Employment – commercial, Congress may regulate
Lending (loan sharking)
Actors are loan sharks – commercial, Congress may regulate
(Facilities are not great, but they are a source of loans)
Act of lending – commercial, Congress may regulate
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5-13
Limits of Economic Regulation
• Case 5.1 National Federation of
Independent Business v. Sebelius
(2012)
– The court found that the individual
mandate violated the Commerce Clause
– Court upheld the law on other grounds
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5-14
Limits of Economic Regulation
• The Commerce Clause: Article I, Section 8
– Standards for state regulation of commerce
• If Congress has regulated, there is an overriding
concern about the Supremacy Clause
• If Congress has not acted, there is a benefit/burden
analysis
• Balance police power (state’s interest in regulation)
with the burden on commerce
• State law cannot give in-state businesses an
advantage
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5-15
Limits of Economic Regulation
• Case 5.2 Rowe v. New Hampshire Motor
Transport Association (2008)
₋ Maine passed a law that prohibited anyone other than a
Maine-licensed retailer from accepting an order of
tobacco
₋ The law required a special receipt, signed by someone
over the age of 18 that showed a Maine-licensed dealer
had received the tobacco
₋ Out-of-state shippers and tobacco sellers challenged the
Maine law as favoring Maine sellers
₋ Court grapples with the purpose of the law and the
burden on commerce
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5-16
Limits of Economic Regulation
• Congressional Regulation of
Foreign Commerce
– The power of Congress to regulate
foreign commerce applies
regardless of where it begins and
ends
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5-17
Taxation of Business
• Congress’ Power to Tax – Article I,
Section 8: The Ability of Congress to
Tax Has Been Consistently Upheld
• State and Local Taxation of Interstate
Commerce
– Interstate business is not exempt from
state and local taxes just because they
are interstate businesses
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5-18
Taxation of Business
• Requirements for Valid State Tax
– Tax cannot discriminate against
interstate commerce
– Tax cannot be an undue burden on
interstate commerce
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5-19
Taxation of Business
• Requirements for Valid State Tax
– Must be a “sufficient nexus” between the state
and the business being taxed
• Examples: Does business there, holds property titles
there, manufactures there, inventory stored there
– Must be apportioned fairly
• Example: A corporation doing business in fifty
states cannot have all income taxed in all fifty states
– must be apportioned according to its revenues in
the states
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5-20
Taxation of Business
• Case 5.3 New Mexico Taxation &
Revenue Department v.
BarnesandNoble.com LLC (2012)
– Explain Barnes and Noble’s operations
– Is there a physical presence sufficient for
taxation?
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5-21
The “Jock Tax”
• Discuss the allocation of athletes’
income tax among cities and states
and the formulas used.
• What constitutional issues do you see?
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5-22
State vs. Federal Regulation
• The Supremacy Clause and
Preemption
– Article VI exists to determine which
laws control in the event both state and
federal governments regulate the same
thing
– If state law directly conflicts with
federal law, state law is invalid
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5-23
State vs. Federal Regulation
• The Supremacy Clause and Preemption
– Whether there is preemption is controlled
by answering several questions:
• What does legislative history provide?
• What is the level of detail in the federal
regulation?
• What benefit flows from the federal
regulation?
• What is the nature of conflict − can the two
laws survive?
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5-24
State vs. Federal Regulation
• Case 5.4 Mutual Pharmaceutical Co., Inc. v.
Bartlett (2013)
– Federal law regulates labels for prescription drugs
– State law provides product liability rights of recovery
for failure to warn
– Federal law does not allow generic producers to
change label by manufacturer, so they cannot include
additional disclosures
– State law was pre-empted by federal regulation – no
product liability
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5-25
Bill of Rights
• First Amendment
– Provides some protection for commercial
speech
• Commercial speech is speech used to further the
economic interests of the speaker
– Advertising and commercial speech protection
• Can regulate advertising
• Substantial government interest must be furthered
• Is the regulation the least restrictive means of
accomplishing the interest
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5-26
Bill of Rights
First Amendment Protections
and Business Speech
First
Amendment
Full Protection
Business
Political
Speech
Speech
on Social
Issues and
Business:
Nike,
Professions
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Governmental
Regulation of
Commercial
Speech
Business
Advertising
5-27
Bill of Rights
• First Amendment
– Commercial Speech Protections
• Government regulation of commercial speech is
permitted
• Three-prong test:
– Is there a substantial government interest in restricting
speech?
– Does the restriction accomplish the government goal?
– Is there any other way to accomplish the government’s
objectives?
– Evolving area: Company political speech –
Nike example
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5-28
Bill of Rights
• First Amendment
– Corporate political speech
• Corporate participation in campaigns is given full
First Amendment protection
• Nike case was never fully litigated to determine
whether advertising regulation could be applied to,
for example, letters to the editor or columns by
corporate executives about controversial issues that
affect the company, such as Nike’s labor practices
in other countries
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5-29
Bill of Rights
• Case 5.5 Citizens United v. Federal
Election Commission (2010)
‒ Case returns to holding in Belotti case that First
Amendment rights are not contingent on how
much money or power the speaker holds
‒ Some limits on campaign contributions are
appropriate
‒ Controls on time, place, and manner of speech
in the lead-up to elections have too chilling an
effect on speech and dissemination of
information
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5-30
Eminent Domain
• Eminent domain is the right of
government to take private property
for public purpose for just
compensation
• Public use examples: Highways,
schools, urban redevelopment, limits
on mining, historical preservation,
economic development
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5-31
Eminent Domain
• Requirements
– Taking or regulating
• Examples: Prohibitions on use, elimination
of use
• In Loretto v. Teleprompter Manhattan
CATV Corp. et al. (1982)
• In Nollan v. California Coastal Commission
(1987)
• In Lucas v. South Carolina Coastal Council
(1992)
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5-32
Eminent Domain
• Just Compensation
• Public Purpose
• New issue is question of taking
property for economic development or
revitalization or just new projects
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5-33
Eminent Domain
• Case 5.6 Kelo v. City of New London
(2005)
– Issue of taking for economic development
– Who owned the land?
– Who would get the land under the city’s
plan?
– What question in eminent domain was a
problem for the court?
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5-34
Procedural Due Process
• Requirement: Procedural Due Process
– Applies to criminal, civil, and
administrative proceedings
• Example: Summons and complaint
provide notice to defendants
– Right to notice of hearings
– Right to be heard
– The Raisin Farmers case: Horne v. U.S.
Dept. of Agriculture
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5-35
Substantive Due Process
• Requirement: Substantive Due
Process
– State laws cannot substantively
eliminate rights without some benefit
• Law must be logically related to legitimate
governmental purpose
• Example: Sunday blue laws − stores are
closed by law − states must be able to show
economic, health, social benefits of such
closure
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5-36
Equal Protection
• Elements of Protection for Regulation
– Regulation must apply to all businesses
• Example: Courts have struck laws that
allow small stores to stay open on Sunday
while large stores could not
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5-37
Substantive Due Process
• Vague statutes and regulation violate
substantive due process standards
– FCC v. Fox Television Stations
– Needed clearer standards for obscenity
– The Cookie Monster case and
substantive due process and free speech
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5-38
International Law and
Constitutions
• General Types of Constitutions Found
in the United States and England
• Code Law Countries Found in Mexico
and Many European Countries
• Islamic Law: Based on Religion,
Governs All Aspect of Personal and
Business Life Law
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5-39
Marianne M. Jennings
BUSINESS
Its Legal, Ethical, and
Global Environment
11th Ed.
Chapter 6
Administrative Law
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What Are Administrative
Agencies?
• Nonlegislative/Nonjudicial Body
– Exist at every level of government
– They make, interpret, and enforce
regulations
– Legislatures pass enabling acts
• Sets up basic law, purpose, penalties
• Sets up administrative agencies to handle
the enforcement
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6-1
What Are Administrative
Agencies?
• Examples of Federal Administrative
Agencies
– Department of Agriculture
– Department of the Interior
– Federal Maritime Commission
– Veterans Administration
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6-2
The SEC
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6-3
Role of Administrative
Agencies
• Specialization
– Needed to deal with complexities of
legislation
– Agencies can hire the necessary
expertise
• Examples: Environmental, occupational
safety, nuclear, securities − regulation in
these areas requires special expertise
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6-4
Role of Administrative
Agencies
• Protect Small Interests and Small Business
– Examples: Corrective advertising, consumer
complaints
• Provide for More Rapid Enforcement and Relief
– Do not have to use court system for enforcement
– Licensing and permits can be done quickly
• Achieve Social Goals
– Examples: Environmental Protection Agency; Federal
Home Loan Bank Board; Resolution Trust Corporation
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6-5
Laws Governing Administrative
Agencies
• Administrative Procedures Act (APA)
– Established uniform procedures for
agencies to follow in promulgating rules
– Other acts have separate names but are
amendments to the APA
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6-6
Laws Governing Administrative
Agencies
• Freedom of Information Act (FOIA)
– APA amendment passed in 1966
– Purpose was to allow public access to agency
records
– Types of information required to be published
• Location of offices
• Names of responsible individuals
• Rules and regulations
• Reports
• Policy statements
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6-7
Laws Governing Administrative
Agencies
• Freedom of Information Act (FOIA)
– Types of information not published
• Hearing orders
• Non-published interpretations
• Personnel policies and procedures
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-8
Laws Governing Administrative
Agencies
• Freedom of Information Act (FOIA)
– Unpublished information can be
obtained through an FOIA request
• Must be written
• Must describe the information and/or
documents sought
• Agency can charge for time and copy costs
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-9
Laws Governing Administrative
Agencies
• Freedom of Information Act (FOIA)
– Wrongful refusal to supply information
allows requester to bring suit and obtain
court order for release as well as
recovering cost
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-10
Laws Governing Administrative
Agencies
• Freedom of Information Act (FOIA)
– Exemptions from disclosure
• National defense or foreign
policy matter
• Internal personnel rules of
the agency
• Statutorily protected
information
• Trade secrets
• Inter- and intra-agency
memos
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
• Personnel and medical
files
• Records of
investigations
• Banking audits
• Geological
information on well
sites
6-11
Laws Governing Administrative
Agencies
• Federal Privacy Act
– Passed in 1974 as an APA amendment
– Intended to cut down on the pervasive
and casual exchange of information
about individuals between and among
agencies
– Agencies cannot obtain individuals’
records from other agencies without the
consent of that person
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-12
Laws Governing Administrative
Agencies
• Government in Sunshine Act
– Open meeting law passed in 1976
• Federal Register Act
– Authorizes a formal record of agency actions
called the Federal Register
• Regulatory Flexibility Act
– Requires publication of proposed rulemaking
in trade publications
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-13
Functions of Administrative
Agencies
• Promulgating Regulations −
Business Input
– Formal rulemaking
• Congress passes Enabling Act
• Agency researches a problem
• Proposed regulations
• Public comment period
• Action on rules is taken
• Challenges to adopted agency rules
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-14
Steps in Rulemaking
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-15
Notice of Proposed Rulemaking
•
•
•
•
•
•
Notice of Proposed Rulemaking Expanding Access to Mobile Wireless Services
Onboard Aircraft
A Proposed Rule by the Federal Communications
ACTION: Proposed Rules
AGENCY: Federal Communications Commission
SUMMARY: In this Notice of Proposed Rulemaking (NPRM), the Commission
proposes to revise outdated rules and adopt consistent new rules governing mobile
communications services aboard airborne aircraft. These rule changes would give
airlines, subject to applicable Federal Aviation Administration (FAA) and
Department of Transportation (DoT) rules, the choice of whether to enable mobile
communications services using an Airborne Access System and, if so, which
specific services to enable. The proposed rules would also replace an existing
patchwork of regulatory prohibitions on airborne use of mobile services in some,
but not all, of the heavily used mobile wireless bands with a consistent regulatory
framework that explicitly forbids airborne use of mobile services in those bands
unless they are operating on an aircraft equipped with an Airborne Access System.
Synopsis
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-16
Notice of Proposed Rulemaking
(cont.)
I. Introduction and Background
II. Discussion
A. Changes to Current Rules Restricting Airborne Mobile Broadband Use
B. Airborne Access Systems
1. Potential Harmful Interference From Uncontrolled Airborne Mobile Devices
2. Benefits of Airborne Access Systems
3. Technical Requirements
C. Airborne Commercial Mobile Use
D. Other Issues
1. Service Below 3,048 Meters (10,000 Feet)
2. Voice Service Onboard Aircraft
Dates
Submit comments on or before February 14, 2014. Submit reply comments on or before March 17, 2014.
Paperwork Reduction Act (PRA) comments should be submitted March 17, 2014.
Addresses
You may submit comments, identified by WT Docket No. 13-301 or FCC 13-157, by any of the following
methods:
Federal Communications Commission’s Web site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for
submitting comments.
Mail: FCC Headquarters, 445 12th St. SW., Washington, DC 20554.
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-17
Activity During Comment
Period
• Legislative process and lobbying and
donations are different from executive
branch participation
• Businesses can provide
information/comments, but providing
favors for regulators creates a fine line
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-18
Interacting with the Executive
Branch
• Case 6.1 McDonnell v. U.S. (2016)
₋ What kinds of favors and gifts were
given by Jonnie Williams?
₋ What action did Governor McDonnell
take in exchange?
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-19
Agency Options Following
Comments
• Promulgate the new rule
• Modify and promulgate
• Modify and request additional
comments
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-20
Authority of Administrative
Agencies: Court Challenges
• Case 6.2 Hornbeck Offshore
Services, L.L.C. et al., v. Salazar
(2010)
– What was done with the regulation to
result in this judicial decision and why?
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-21
Proactive Business Strategies in
Regulation
• Sunset Laws
– Agency created for a limited time
– Must justify its existence within that
time
• Zero-Base Budgeting
– Ongoing budget for agency is not
assumed
– Must justify its budget each year
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-22
Enforcement Actions
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-23
Enforcement Actions
• Licensing and Inspection
– Enforcement and Inspection
• Up-front approval
• Some checks imposed
– Enforcement by inspection
• Health Code violation, Occupational Safety
and Health Administration (OSHA) safety
inspections
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-24
Enforcement Actions
• Prosecution of Business
– Enforcement by prosecution
• Complaint is filed
• Injunction can be obtained for this period
– Consent decree
• Like a plea bargain in a criminal case
• Like a nolo contendere plea in a criminal
case
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-25
Enforcement Actions
• Prosecution of Business
– Can go to hearing without an agreements
• Administrative law judge (ALJ) hears the
case
• ALJ is like a judge at trial
• Intervenors can appear in the case
• Rules of evidence are relaxed
• Must allow for due process
• Exhaust administrative authority before
appeal
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-26
Enforcement Actions
• Prosecution of Business
– Penalties
• Fines
• Injunctions
• Repayment to buyers
• Corrective advertising
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-27
Enforcement Actions
• Prosecution and Business
– Go to court of appeals
• Appeals of decisions go to agency heads
exhausting administrative authority (unless
it would be futile) before court or appeals
will consider
• State court appeals also go to court of
appeals; however, some states require new
trail in state trial court
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-28
Roles of Administrative
Agencies
Activity
Steps
Parties
Results
Passing Rules
Rule Proposed
Comments
Modification,
Withdrawal
Promulgation
Agency
Consumers
Business
Congress
Agency
New Rules
Modified Rule
Withdrawn Rules
Enforcement
Licensing
Agency
Business
Inspections
Agency
Courts (if
Warranty is
Required)
Business
Search and
Inspection
Complaints
Agency
Fines
Penalties
Injunctions
Consent decrees
Hearings
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-29
Administrative Agencies in the
International Market
• The United States is Heavily
Regulated
– Some businesses have argued that
regulations hinders them in the
international marketplace
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
6-30
Complexity of Federal
Regulations
Documents and Populations
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Love Story
Reading Level of U.S. Population over Age 65
Playboy
Reading Level of General U.S. Population
Sports Illustrated
Your Medicare Handbook
ERISA Summary Plan Description
The Wall Street Journal
Social Security Handbook
Reading Level of Lawyers
Albermarle (U.S. Supreme Court Ruling)
Occupational Safety and Health Act
Employment Retirement Income Safety Act
Section 18 of the Social Security Act
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
Grade Level
7.64
9.71
11.46
11.68
12.82
14.94
15.29
16.34
17.51
19.00
20.30
30.79
32.10
41.04
6-31
Marianne M. Jennings
BUSINESS
Its Legal, Ethical, and
Global Environment
11th Ed.
Chapter 7
International Law
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
Sources of International Law
• Common Law
– England
– United States
• Civil or Code Law
– Statutes or codes are very detailed; little
reliance on precedent
– France, Germany, Spain
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-1
Sources of International Law
• Islamic Law
– Religious tenets integrated
– Combination of Islamic law and
colonizers’ laws
• Former Communist Countries
– In transition
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-2
Sources of International Law
• Nonstatutory Sources
– Language
– Environment and Technology
– Authority
– Nonverbal behavior
– Time Concept
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-3
Sources of International Law
• Contracts for the International Sale of
Goods (CISG)
– Governs the sale of goods internationally
– Currently adopted by 53 countries,
including the United States
– Similar to Article 2 of the Uniform
Commercial Code
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-4
Sources of International Law
• Tax Law
– Tax laws of different countries provide
widely varying rates
– Companies go through mergers,
acquisitions, and headquarter changes to
obtain the most favorable rates
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-5
Sources of International Law
• Tariffs
– Fees paid for imports and exports
– Processing controls (raw materials)
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-6
Sources of International Law
• European Union (EU)
– Created by treaty of Rome
– Purpose was open trade, unified
monetary and fiscal policies, and
creation of the Euro
– Created European Parliament
– Created European Court of Justice
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-7
Sources of International Law
• Treaties
– General Agreement on Tariffs and Trade
(GATT)
– Multilateral treaty with 150 member nations
that created the Work Trade Organization
(WTO)
– MFN status
– Dispute Settlement Body for trade disputes
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-8
Sources of International Law
• North American Free Trade
Agreement (NAFTA)
– Became effective in 1994
– Treaty between Canada, Mexico and
the United States
– Eliminated most tariffs between
member countries
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-9
Sources of International Law
• Prohibition on Trade: Individual
Nation Sanctions (Iran and Cuba lifts
of prohibitions)
– Primary and secondary boycotts
• International Monetary Fund
• The Hague Convention (litigation)
• Climate Agreements
• OPEC
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-10
Sources of International Law
• International Monetary Fund (IMF) and
the World Bank
– IMF is designed to foster international
trade through currency stability
– IMF creates the International Bank for
Reconstruction and Development (The
World Bank) which allows members to
draw on line of credit to stabilize currency
exchange rates
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
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7-11
Trust, Corruption, Trade, and
Economics
• Focus on Reducing Bribery
• OECD
• FCPA
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-12
Foreign Corrupt Practices Act
• Applies to all 1934 Act companies
• Making, authorizing, promising payments
or gifts of money or anything of value with
intent to corrupt
• Applies to gifts to government officials,
parties, candidates, NGOs and anyone who
transmits money to these persons/entities
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-13
FCPA
• Use of agents
• Companies need to screen
• Follow “four eyes” rule – two people
must sign off on payments
• Obtaining or directing business
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-14
FCPA
• Grease or facilitation payments under
FCPA
– Securing a permit or license
– Obtaining paper processing
– Securing police protection
– Providing phone, water or power
services
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-15
FCPA
• Enforcement and Penalties
– OECD countries apply FCPA statutes to
their citizens acting outside the native
country
– In U.S., fines of up to $250,000 per
violation
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-16
Principles
• Expropriation: Act of State Doctrine
– Act of foreign governments are recognized as
valid whether or not such actions would be
legal in the United States
• Sovereign Immunity
– Each nation is sovereign
– Other nations do not take jurisdiction over a
country’s internal operations, laws, and people
– Does not apply to contractual relations
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-17
Case 7.1
• Case 7.1 In re Yukos Oil Securities
Litigation (2006)
– Issue of representations about income and
tax laws in Russia
– Securities fraud claimed
– Can you claim sovereign immunity if the
actions and decisions of the government
affect your business?
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-18
Principles of International Law
• Hickenlooper Amendment to Foreign
Assistance Act of 1962
– Allows president to sanction countries that
take property of U.S. companies
• Treaties Afford Protections
• Overseas Private Investment Corporation
(OPIC) − federal agency that provides
insurance for U.S. businesses against
expropriation
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publicly accessible website, in whole or in part, except for use as permitted in a license
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7-19
Repatriation
• Repatriation
– Limits on removal of profits from
country where they are earned
• Considered acts of state; cannot be litigated
• Forum Non Conveniens
– Dismisses cases brought in wrong court
• Example: India was proper forum to bring
suit against Union Carbide for what
happened in Bhopal, India
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-20
Checklist for Doing Business In
Another Country
1.
2.
3.
What is the economic climate?
What is the government structure?
What are the cultural attitudes about economic
development?
4. What are the feelings of the indigenous peoples
toward U.S. businesses?
5. What is the legal structure of the country?
6. How are laws passed?
7. How are disputes resolved?
8. What is the structure of the court system?
9. What commercial laws do they have?
10. What have been the experiences of other companies
working there?
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-21
Conflicts of Law
• Conflicts of Law
– No two countries have the exact same
commercial laws
– Some countries have no commercial codes
• Uniform Commercial Code is widely used
• Resolving Conflicts of Law
– If the parties agree, autonomy controls
– If parties have not agreed, law of country
where the contract is performed will apply
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
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7-22
Case 7.2
• Case 7.2 Tiffany and Company v.
Andrew (2012)
– What is the impact of counterfeiting?
– How can banks help in preventing
counterfeiting?
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-23
International Protections
• Antitrust Laws
– All firms doing business here are
subject to antitrust jurisdiction
– Export Trading Company Act
• Allows joint ventures among competitors
• For business in other countries
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publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-24
International Protections
• Protections for Intellectual Property
– International protections of
intellectual property are constantly
being refined
– Worldwide registration of patents,
trademarks and copyrights may be
within reach
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
or school-approved learning management system for classroom use.
7-25
International Protections
• Criminal Law Protections
– All those present in a country are
subject to that country’s criminal law
– Subject to all regulations as well
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a
publicly accessible website, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website
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7-26