Tag Archive for 'commerce'

Key Provision of Healthcare Reform Law Held Unconstitutional

A federal judge in Virginia just ruled that the “individual mandate” – the cornerstone of the healthcare reform law supported by President Obama – is unconstitutional. The individual mandate is by far the most important part of the Patient Protection and Affordable Care Act (PPACA – the official name of the healthcare reform law). Without it, there’s simply no way the other important provisions can work. As different provisions of the law go into effect over the next few years, the individual mandate is meant to be the final capstone.

It requires that almost everyone in the country who is not covered by some form of public insurance (Medicare, Medicaid, the VA, etc.) must obtain health insurance, either through their employer or by purchasing it for themselves, or pay an annual financial penalty. The government will partially subsidize the premiums for private insurance for those who cannot afford it.

The law also has provisions that will prohibit health insurance companies from denying coverage to people based on pre-existing conditions, and from dropping customers, under almost any circumstances. It also includes other reforms, such as banning annual spending caps.

Obviously, complying with these requirements will be very, very expensive. But it just so happens that a large percentage of America’s 30 million (give or take) uninsured are young, healthy individuals who simply choose to go without health insurance. It happens that this demographic is very cheap to insure, so covering them tends to be extremely profitable for insurance companies. When insurance companies take on millions of these highly profitable customers, the cost of insuring the traditionally “uninsurable” (people with pre-existing conditions, mostly) should be offset.

So, what does this ruling mean for healthcare reform? Well, if it is eventually upheld by the Supreme Court, healthcare reform (in its current incarnation) is effectively dead. Whether that’s a good or bad outcome, I leave up to the reader.

In the short term, however, none of us will see any practical difference, because the provision that the court ruled against isn’t scheduled to go into effect until 2014. Furthermore, this was just one federal trial judge (two others have actually upheld the law, in separate lawsuits challenging it). This ruling won’t mean much until the 4th Circuit Court of Appeals hears the case, after which it’s nearly certain to go to the Supreme Court, which will have the final say.

So, what are the chances that the Supreme Court will sustain this ruling? It’s hard to tell.

The plaintiffs are arguing that Congress lacks the constitutional authority to require individual Americans to buy health insurance. Now, regardless of one’s opinion on the wisdom of this type of healthcare reform, you can make a non-frivolous argument that it exceeds the constitutional scope of the federal government’s power, and there are plenty of good arguments that it does not.

Under the Constitution, the federal government’s powers are limited. Basically, if the power to do something isn’t explicitly granted to the federal government in the Constitution, the federal government can’t do it. However, some of these grants of power are extremely broad and vague, so there’s a lot of disagreement over exactly how far some of these grants of power go.

One of the most expansive federal powers laid out in the constitution is the power to regulate interstate commerce. During this nation’s first 150 years or so, the Supreme Court was pretty clear that “interstate commerce” (and the federal government’s power to regulate it) was limited to the most literal interpretation of the term: the sale and transport of goods and services across state lines.

However, during the Great Depression, Congress, along with the Roosevelt administration, began to implement some extremely ambitious programs, which involved unprecedented expansions of federal power. At first, the Supreme Court shot down a large number of these programs in close 5-4 decisions. But a sudden apparent shift in Justice Owen Roberts’ judicial philosophy led to the Court creating precedents which greatly expanded the federal government’s power under the Commerce Clause.

Now, the general rule is that the federal government can regulate any economic activities which, in the aggregate, have an effect on interstate commerce. Using this rule, the Supreme Court has ruled that the federal government can prohibit a person from growing wheat on his own property for personal use, because if such activity were widespread, it would have an aggregate effect on the nationwide price of wheat, and therefore an effect on interstate commerce.

There’s no question that the millions of uninsured have a significant effect on the national economy: hospitals are required by law to treat and stabilize all patients who come in with an emergency condition, without regard to their insurance status ability to pay. Hospitals incur serious expense in meeting this obligation, which they pass on to patients with the ability to pay out-of-pocket, or to insurance companies.

Furthermore, the uninsured strain public health resources such as Medicare, Medicaid, and the Children’s Health Insurance Program, affecting state and federal budgets.

It’s crystal clear that going without health insurance affects healthcare costs for everyone else, and therefore affects the national economy and interstate commerce. The problem, however, is that there’s no precedent supporting the idea that not doing something (in this case, not purchasing health insurance) is an “activity” that can be regulated by Congress. Of course, there doesn’t seem to be much, if any, precedent refuting that notion, either.

We’re truly headed into uncharted constitutional territory with this one. While one’s opinion on the constitutionality of the PPACA will largely depend on their policy preference, we can all agree that, whatever the final result, it’s going to be a pivotal moment in our legal history, and it’ll be an interesting ride getting there.

Is The Minimum Wage Unconstitutional?

No, and no.Minimum Wage

But, a few candidates (also reported here) for the United States Senate have gone on the record as being of the opinion that it is, despite unambiguous holdings by the U.S. Supreme Court that both state and federal minimum wage laws are perfectly constitutional. The case upholding the federal minimum wage was unanimous, and over the past 70 years or so, under Courts of widely varying political and judicial philosophies, there has been no serious move to overturn either of those cases. Virtually every Supreme Court justice, regardless of their liberal or conservative leanings, views those cases as well-settled law. Even in today’s court, an argument that the minimum wage is unconstitutional is unlikely to fall on sympathetic ears.

I should note that there is some disagreement among economists as to whether or not the minimum wage is good policy, and whether it makes economic sense, but I won’t be discussing that issue here, mainly because I’m not an economist, and this is not an economics blog.

So, what are the possible arguments that the minimum wage is unconstitutional? Well, it boils down to the nature of the federal government, and its constitutional power, compared to the constitutional power of state governments. Basically, the constitution sets up a federal government of enumerated powers. This means that it expressly grants certain powers to the federal government, and denies it the rest. So, in theory, if the federal government does something which it isn’t specifically authorized to do, that’s unconstitutional. Under the 10th Amendment, all other powers not granted to the federal government are granted to the states, unless it specifically prohibits the states from doing something.

So, this means that the federal government can only do that which is expressly permitted. And state governments can do anything which is not expressly forbidden.

Now, if you look through the constitution, you won’t see anything that authorizes the federal government to impose a minimum wage on private employers. So, that’s the end of the debate, right? Not even close. In fact, the federal government does a ton of stuff that isn’t specifically authorized under the constitution. So, what’s the deal?

Many, if not most, of the constitution’s grants of power to the federal government are extremely vague and broad. For example, one of the things Congress is allowed to do is regulated interstate commerce. Unfortunately, the Founding Fathers didn’t see fit to tell us what that means, nor did they think to place a copy of This is What We Meant: A Guide to Constitutional Interpretation from the Authors in the Library of Congress. That would have been nice of them, but alas, it was not to be.

What they did leave us, however, is a Supreme Court whose job it is (among a few other things) to be the final arbiter of what interpretation of the Constitution is the correct one. Since the Great Depression, the Supreme Court has gradually expanded the scope of power granted to the federal government under the Commerce Clause. At this point, it grants the power to regulate virtually any economic activity that might affect something in another state. In this interconnected day and age, that includes basically everything.

With that in mind, there can really be no doubt that establishing a minimum wage is well within the federal government’s power. Some constitutional scholars believe (and their argument is certainly not frivolous) that the Supreme Court has expanded the federal government’s regulatory power far beyond anything that the Founders intended. This may or may not be true, but the fact remains that

I don’t doubt that these Senate candidates are perfectly aware of this fact, and were likely playing to their “Tea Party” base.

But for any employers who want to test the law, they should know that the federal minimum wage is $7.25 per hour (your state may have a higher minimum wage, which you are also bound by), and that LegalMatch case data from the past several months shows that alleged wage and hour violations by employers are still very common. And while these cases might not net plaintiffs a lot of money, typically little more than back wages and possibly attorney’s fees, wage and hour violations are comparatively easier to prove than many of the other common employment causes of action, such as discrimination and harassment.

So, if you’re an employer, and don’t think you should have to pay your employees the minimum wage, you’re certainly entitled to your opinion. And it’s your right to vote for candidates who promise to eliminate or reduce the minimum wage, if you want. But if you decide to make a stand against the minimum wage laws that you view as unjust, prepare to face the likely consequences: a trip to court, a court order requiring you to pay your employees any back pay that they’re owed, their attorney’s fees, and possibly punitive damages.

In the long run, it will probably prove much easier and cheaper to simply pay your employees at least the minimum wage.

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Shortage of Band Names Causing Trademark Disputes

Thankfully, “Rusty Shackleford and the Advantages of Coral” is probably still available, according to the band name generator.

However, millions of bands have come and gone, in the U.S. alone, over the last 50 years or so. Most of them have had pretty basic names, following a few basic naming conventions: “The [Noun]s,” “[Lead Singer’s Name] and the [Noun]s,” and, the relatively recent addition of “[Noun].”

Given that there are a finite number of words in the English language, and a finite number of given names and surnames, it follows that coming up with a distinctive name following those basic naming conventions will become increasingly difficult as time goes by. Thankfully, many bands have figured out that they can simply misspell a common word, and make it their band name, but even that has its limits. These days, coming up with a name that no other band has used is next to impossible, unless you plan on putting a few random words together to create some kind of nonsensical phrase to serve as your band’s name (which certainly works for some bands).

It shouldn’t come as much of a surprise, then, that some band names have given rise to trademark disputes. As a quick primer, trademark law exists to protect both businesses and consumers by giving producers of goods and services exclusive rights to use a certain name, word, phrase, or image to identify their products or services, preventing others from using the same identifier to identify their product or service. It protects consumers by helping to ensure that, when they buy a product based on a brand, they know they’re getting the genuine article. It also helps to protect producers by ensuring that their brands aren’t tarnished by inferior knock-offs.

It should be noted, however, that trademark protection only exists for identifiers that are actually being “used in commerce” – being used to identify products or services that are actually being sold.

With band names, this issue can be complicated by the fact that many bands don’t register their names with the Patent and Trademark Office unless they get signed by a major label employing lawyers to do this for them. Furthermore, many band names are often plays on words, lampooning or referencing something that is generally familiar to the public. For example, one band called itself “Jane Deere,” and actually attempted to register this name with the U.S. Patent and Trademark office. Unfortunately for them, they had to give up on their efforts after the John Deere Corporation objected. Another band called itself “Captain America,” but decided to change its name to avoid being sued by Marvel Comics. The list of examples can go on and on.

Trademark disputes can also occur between bands. For example, one band called “Discovery” had to change its name after another band with the same name threatened a lawsuit. Apparently, even former members of the same band can get tangled up in this: Ozzy Osbourne, former lead singer of Black Sabbath, was involved in a dispute last year with other members of the band over the rights to use the “Black Sabbath” name.

What does all of this mean to you if you’re thinking of forming a band? Well, it means that you have the very unenviable task of coming up with a name that’s (1) original and creative and (2) doesn’t infringe on the intellectual property rights of anyone else, whether they’re another band, or a large corporation.

More broadly, you should remember that, as a band, you’re selling something: your music. Obviously, your band name is intended to identify the particular music that you’re selling. Your band name, therefore, is most definitely a trademark, and all of the legal issues that come with that should be taken into account.