Legal analysis of the personhood granted to corporations
scotusblog.com
scotusblog.com
Only real people can think and act as individuals but there are all sorts of situations when they want to associate with one another, form groups, and act in some coordinated fashion through the group. All sorts of business associations fit within this category: corporations, LLCs, partnerships, limited partnerships, business trusts, trade associations, etc.
All sorts of other entities are not directly business-related but otherwise constitute groups formed for various important associational purposes: labor unions, non-profit organizations, political organizations, etc.
With respect to all such entities, somewhere in the law books one will always find some form of formal authorization recognizing that the entity can be established under law and that it has legal rights and responsibilities. It can take certain prescribed organizational forms. It can admit or exclude real persons as owners, principals, or beneficiaries of the entity. It can appoint real persons to manage its affairs within the rules and confines of what the law prescribes it can do. It can enter into contracts. It can sue. It can be sued. It has certain compliance responsibilities necessary to meet minimum requirements to begin and to continue its status as the particular type of entity that it is.
In giving these entities the power to act in this manner, the law effectively recognizes them as fictional "persons" for legal purposes only. This is short-hand way of saying that they have the same rights as individuals would have in a like situation. For example, if my corporation sells you a product and you refuse to pay, "it" (as a legal "person" acting through its lawfully recognized representatives) can file suit in a court of law to get a judgment against you and can exercise all available legal rights to enforce that judgment and collect its money. Similarly, "it" can go to a bank and open an account in "its" name. Or it can file "its" charter document giving it birth as an entity. Or file "its" dissolution papers signifying its legal death. In all such cases, "it" can only act through real individuals who do these things in some manner that the law recognizes as being in a proper representative capacity. They act as its agents and bind it legally in its affairs.
Can such entities commit torts or crimes? Absolutely. In such cases, the entity itself may be hit with money judgments or fines and its authorized agents who participated in the actions constituting the tort or crime may have direct liabilities of their own for their conduct, or even face criminal sanctions, including imprisonment.
Corporations are "persons" in the sense just described. As readily appears from this analysis, though, there is nothing at all strange about recognizing them as such. They are "persons" in the same way as, e.g., labor unions are "persons" - that is, the law recognizes their power to act lawfully as entities in the society and to do the things they are allowed to do under the charter and statutes authorizing them to be formed in the first place.
Against this background, a few observations about this piece:
1. It is hardly correct to suggest that the Supreme Court does not know what it is doing by recognizing the "personhood" of corporations because, given this logic, the next step is to give General Motors a right to vote. Throughout decades if not centuries of experience in the law's dealings with entities, it has always been clear that the legal rights given to entities must be appropriate to the form of entity involved and need not extend to all rights held by living individuals. It is perfectly sensible to say that a corporation (or a labor union, for that matter) has protectable free speech rights but does not have things such as a right to vote. A vote represents the suffrage rights of the citizenry and inherently applies to individuals only. Speech can be done by real individuals acting as individuals or by entities acting through their authorized representatives advocating on behalf of the entity.
2. All sorts of corporations have been routinely accorded free speech rights in an unbroken chain right up through this recent decision - they are called the "press," and everywhere we look we find the New York Times, the Wall Street Journal, and myriad other corporations exercising unquestioned free speech rights as organizations. What the Supreme Court did 20 years ago, and what was reversed in the recent decision, was to say that any corporation not acting as part of the press did not have protectable speech rights.
3. The above constitutes a legitimate debate about the proper scope of the First Amendment. But the recent decision does nothing radical in this respect. It pretty much restores the politics of American issue-advocacy to the state it has always been in prior to the last decade or so.
4. Nothing radical has been decreed with respect to the "personhood" of corporations. This is a long-established and non-controversial legal concept that has now been applied to a particular question of constitutional law over which various factions have vigorously fought. The application of the concept might be disputed, as it was in this case and by the majority and dissenting justices, but the concept itself can hardly be disputed unless we are to strip all entities of their power to function in our modern society.
You need a publisher, you need an ISP. The government might very well grant you freedom of speech. If they can limit the rights of corporations however they damn well please that freedom of speech is not worth very much.
Corporations are how humans do stuff. Corporations are important. Corporations have to be protected from the government.
I think that you can't judge corporations the way you can judge humans. You have to apply a different "personhood" to a company, since corporations are not natural. They don't consist of what a human being consists, but of what human beings contributed to that consistence.
Considering a society, we allready have an entity that has to be maneuvered in the least stupid way possible. Adding new entities to that process doen't help if it creates new layers of hierachy. It's a matter o preferences I think: Is it for the 'greater good' (thing at the top of hierarchy) or is the greater good to serve the smallest entity (i.e. a human being).
Equating corporations with humans could deprive humans of their liberties, since corporations can speak, cry and lie louder. If the law is there to protect our liberties, I don't see how this aim is archieved more effectively by putting additional entities/hierarchies (i.e. corporations) in between.
I have seen several references to "natural persons" as opposed to corporation or other entities, in various legal documents.
So I suppose that if corporations are "persons", then at the least they are (by inference) "unnatural" persons :)
What Citizens United has done is to return to "corporations" (including the non-profit Citizens United that successfully sued the FEC) the rights to free speech and freedom of association they enjoyed prior to Austin v. Michigan Chamber of Commerce and McCain-Feingold. No longer can governments censor (in the real meaning of the world) their speech in elections.
In both these examples, campaign finance and election period speech, there are still "reasonable" regulations, like various sorts of disclosure (although Thomas disagreed, based on the nasty retaliation that's been seen lately against people making small contributions to causes that many don't like; I expect this will be revisited after the first murder that comes from this disturbing trend).
For those who think this is a bad thing, I say that the answer to speech you don't like is more speech, not government censorship of the speech you don't like. (Need I mention the slippery slope the latter presents?)
excerpted from the article: In vivid contrast, the majority overruled a 19-year-old precedent (Austin v. Michigan Chamber of Commerce) that had lambasted the corporation, when it entered the political arena, because of ”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 suport for the corporation’s political ideas.”
The problem with treating corporations as if they have a "right" to free speech and freedom of association is that they have a disproportionate amount of influence arising from their sheer size and aggregated wealth. We have other mechanisms to ensure that size and wealth do not override the voices of the small and poor in elections (look at how the Senate is constructed versus the House or how we have the electoral college to ensure that wealthier coastal states do not decide presidential elections).
And also, the fact that we grant any rights to corporations at all arises from a court stenographer's foot-note that later opened up loopholes for clever (although might I add shortsighted) lawyers in subsequent cases that eventually snowballed into granting rights to this nebulous entity. As Justice Stevens noted in his dissent to the Citizens United ruling, "A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it.” And yet, we worried that limiting the financial power of corporations will potentially infringe upon OUR (human) 1st Amendment rights. That is the problem for me. We created the corporate entity like a machine to serve our purposes; it does not exist with unalienable rights as we human beings do.
Who donates the most to campaigns, 501(3)(c) non-profits and charities or Fortune 1000 corporations whose explicit purpose is to generate profits for stakeholders?
Or, let's say, take your position to an extreme: that would entail forbidding the New York Times Corporation from publishing on politics. I'll note that they are the plaintiffs in two important First Amendment cases, New York Times Co. v. Sullivan (http://en.wikipedia.org/wiki/New_York_Times_Co._v._Sullivan) and New York Times Co. v. United States (http://en.wikipedia.org/wiki/New_York_Times_Co._v._United_St...), the first defined modern era libel case law and the second was WRT the Pentagon Papers.
Or does the provision for freedom of the press somehow carve out an exception for these "immense aggregations of wealth" (well, before the decline and fall of the MSM really got started).
As for donations, both 501 (c) (3) non-profits and companies are explicitly forbidden from donating to campaigns, they have to have individuals do it through a PAC.
It's simplistic to say that Citizens United ruling is simply a matter of suppression vs. free speech, as Buckley v. Valeo has nuanced to what extent "money" constitutes speech. As Justice Stevens writes in his dissent, "At bottom, the Court's opinion is thus a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self government since the founding, and 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."
Several people have cited examples of free speech and the press. The Citizens United ruling lifts restrictions of corporate spending in political ads during election campaigns with in-house corporate treasury funds, i.e. unfettered free speech at any time. Rather than looking at NYT Co v. Sullivan, look Austin v. Michigan Chamber of Commerce's interpretation. http://www.moresoftmoneyhardlaw.com/updates/the_supreme_cour...
Excerpted: "Austin’s critics aspire to dissolve all this complexity into a simplistic choice between speech and suppression. In attacking the "political support" language of Austin, they take it to be something strange, an import into the jurisprudence of a notion at odds with core First Amendment values. What they miss is its surprising ordinariness. The Austin case was getting at something important, even—one could say—basic to the mechanisms within the campaign finance laws for isolating the corruptive threat of aggregated group or associational spending."
I'm not arguing that corporations be denied their political speech via spending, which was outside of the case ruling anyway.
Free speech is controlled in very specific cases because of its potential injurious impacts - libel, safety, individuals versus entities, etc. What I take issue with is the extent of power given to special interest groups and lobbyists that override the interests of individual citizens. Is there a difference between groups of people coming together and pooling their money to form a PAC and group of people expressing political views of an entire corporation using corporation treasury funds?
And if you want to go into fringe, extreme positions: what about tax-paying subsidiaries in the US headed by groups of American citizens, but owned by foreign corporations? Should they not then be entitled to equal free speech in our elections?
In any case, it will be interesting to see what comes of the ruling, and thanks for highlighting those two cases.
As for the foreign corporations, yes, that's an interesting question not touched up on in Citizens United. As a matter of policy, those US citizens working for a "foreign master" (to put it in the worst way) are nonetheless affected by legislation, and I find it hard to justify completely excluding such a corporation from the arena of politics ... especially since full disclosure in this case is not as problematic for a company.
Pat Buchanan had an interesting/amusing proposal for dealing with foreign influences that I like, except that I don't see how to put it into practice: outlaw (in whatever method needed) lobbying by them unless done by foreign nationals.
What I wanted to refute was your initial statement that a majority of Supreme Court justice leads to a clear interpretation of the law. What I meant by bringing up judicial activism is to say that one's opinion on judicial activism can influence how one views Supreme Court decisions. Dred Scott v. Sanford is an example of a majority Supreme Court decision, that in my opinion, was undesirable, despite its "fair" albeit narrow reading of the law.
I can't help add, and this will be the last rebuttal I make since we're not going to sway each other's opinion, and I do feel like I messed up by adding something political to HN:
As for foreign corporations, again, I want to emphasize, as I did previously, that free speech is not black/white of merely include them carte blanche or else our rights will be infringed upon. Free speech is not that simplistic although it is sacrosanct.
Why not overturn Morse v. Frederick then, which I believe had such free-speech loving justices as Alito and Scalia from the Citizens United ruling also in the majority of that case. In Morse v. Frederick, free speech could be limited by "important—indeed, perhaps compelling interests" (taken from Justice Roberts writing the decision for the majority). Granted, it limits only illegal drug-promoting student speech, but it is again another example where the justices limited free speech and justified it on grounds of public interest that did not include immediate violence. The kid could still hang his "bong hits 4 Jesus" sign on his private residence or yell it on the streets. Corporations before Citizens United could still runs ads, as could PACs and the corporate executives _individually_ donating them. They just couldn't use corporate treasury funds nor could they run the ads a certain number of days before the date of the election.
Therein, lies the question of what one considers best for public interest. Blue-collar wages of workers have remained stagnant over the last 30 years while white-collar and executive salaries have seen a nice rate of growth. The Chicago School of Economics elegant theories towards markets have not been substantiated by the uglier, noisier empirical evidence. Having studied psychological/behavioral economics and interned for a government official as well as interned with a non-profit lobbying group, I have a more skeptical view of the "well-informed" voter and the "public" servant. So this largely explains why I think differently than you do.
If you cannot become eligible to vote, you cannot donate to any campaign.
All donations must be reported online with 24 hours.
I have the right to free speech and and I can use my possessions to exercise this right. I can criticize Obama verbally, in a document on my computer or I can publish that document to my website. Why can't I use my corporation to pursue the same goal?
I also have the right to vote. I don't get a second vote for my computer, however. Similarly, my corporation doesn't give me another vote.
Corporations don't have free speech. Their owners have free speech, and they can use their corporation to exercise those free speech rights.
Five guys sit in a room and decide to use their poker profits to run a political commercial. It's all fine.
Same five guys sit in a board room and vote to use company money to run a political commercial. It's all bad.
I must be missing something.
Some history: Back in 2000, a bunch of guys decided to use their money to run political commercials. These commercials persuaded people vote against McCain in the Republican primary. 2 years later, McCain pushes a law which tries to prevent this.
The goal of political speech limitations is to prevent anyone besides certain elites (and not other elites) from affecting an election. Since spending money is necessary to get a message out, they try to restrict spending money on political speech.
With any luck this ruling will eventually result in an environment where people like the above who are merely expressing their dislike of powerful politicians will find it easy to follow a straightforward set of disclosure rules (and only that) and therefore the establishment won't be able to then ruin their lives.
I'm with you on reporting donations. Sunlight is still the best disinfectant.