Roger is a director of a major car manufacturer. This is one of the few remaining car companies yet to introduce a sport utility vehicle. Roger convinces the board to investigate forming a new division to design, build, and market a sport utility vehicle. Roger also convinces the board that the first sport utility vehicle that the division introduces should be the largest yet sold to the general public.
The board set up a committee to do some research, and this committee hired a marketing consulting firm. The committee and the consulting firm both had a few reservations about such a large vehicle, but the data showed that the market could most likely support it. After much discussion, the board of directors voted in favor of creating the new division and the huge sport utility vehicle as its first product. The vote was 9 to 6 in favor of the plan.
Shortly before this vehicle was introduced, there was a major oil supply disruption that caused the price of crude oil to nearly triple. Few purchasers were found for the huge new sport utility vehicle and the company lost considerable money. A shareholder files suit against Roger claiming he violated his duty to the corporation by convincing the board to build and market the large SUV.
CLTCA One 4
Running Head: CRITICAL LEGAL THINKING CASE ASSIGNMENT 1
Critical Legal Thinking Case Assignment One Samuel Student
Florida State College at Jacksonville
Business Law and Ethics
September 9, 2009
The federal government has power to regulate interstate commerce under the Commerce Clause of the U.S. Constitution. States may regulate interstate commerce pursuant to their police powers. Such state regulation is invalid if it unduly burdens interstate commerce, or if it conflicts with valid federal regulation. The factual scenario presents a conflict between federal and state regulation of the dimensions of oil tanker ships entering Puget Sound. Analysis of the principles of law and key facts determines that the state regulation is invalid and the federal regulation is valid.
Critical Legal Thinking Case Assignment One
Analysis of the principles of law and key facts determine that the state of Washington’s regulation of the dimensions of oil tankers entering Puget Sound is unconstitutional.
Areas and Principles of Law
The areas of law applicable to the factual scenario are the Interstate Commerce Clause; state police power to regulate interstate commerce; and the Supremacy Clause
The Interstate Commerce Clause permits Congress to regulate interstate commerce—commerce between the states, foreign nations or Indian nations. States can also regulate interstate commerce as part of their police power to protect or promote public health, safety, morals and general welfare. However, if the state regulation is unduly burdensome on interstate commerce it will be unconstitutional because it violates the Interstate Commerce Clause. Further, if Congress has regulated in the area: the Supremacy Clause prohibits conflicting regulation of the same area by the states; and if Congress has expressly provided that its regulation is exclusive, then the states are prohibited from any regulation in the affected area. (Bagley, C., & Savage, D., 2006).
Congress has regulated the design, length, and size of oil tankers in inland waterways. This regulation is also in coordination with foreign countries. There is no federal expression that its regulation is to be exclusive. The state of Washington has enacted conflicting regulations regarding the size of oil tankers traveling in its territorial waters. ARCO’s oil tankers used to bring oil into Washington’s inland waterways comply with the federal regulation, but not with the Washington regulation. ARCO filed suit against Washington to have the state regulation declared unconstitutional.
Argument: Congress has the power, under the Interstate Commerce Clause to regulate the size of oil tankers to conform to international standards (pinpoint citation). In this instance, the commerce of transporting oil affects commerce both with other nations, and between states. The state of Washington also has the right pursuant to its police power to regulate the size of oil tankers traveling in its territorial waters because it is related to safety. Counterargument: However, such regulation must not impose an undue burden on interstate commerce. The Washington regulation violates the Supremacy Clause because it conflicts with valid federal regulation. An argument can also be made that the state regulation is an undue burden on interstate commerce because it requires a smaller size vessel than allowed by international standards (pinpoint citation).
The Washington regulation is unconstitutional because it violates the Supremacy Clause. It is also likely unconstitutional because it violates the Commerce clause by creating an undue burden on interstate commerce.
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