The Supreme Court's decision today in Citizens United v. FEC (slip op here) strikes down 2 USC sec. 441b, which "prohibits corporations and unions from usingtheir general treasury funds to make independent expenditures for speech that is an 'electioneering communication' or for speech thatexpressly advocates the election or defeat of a candidate." The syllabus summarizes the majority's analysis:
Although the First Amendment provides that “Congress shall make no law . . . abridging the freedom of speech,” §441b’s prohibition on corporate independent expenditures is an outright ban on speech, backed by criminal sanctions. It is a ban notwithstanding the fact that a PAC created by a corporation can still speak, for a PAC is a separate association from the corporation. Because speech is an essential mechanism of democracy—it is the means to hold officials ac-countable to the people—political speech must prevail against laws that would suppress it by design or inadvertence. ...
The Court has recognized that the First Amendment applies to corporations, e.g., First Nat. Bank of Boston v. Bellotti, 435 U. S. 765, 778, n. 14, and extended this protection to the context of political speech, see, e.g., NAACP v. Button, 371 U. S. 415, 428–429.
We've already discussed the concept of corporate personhood in today's earlier posts The Corporation is a Legal Person. Get Over It. and Citizens United v FEC: The First Amendment Rights of Corporate "Persons".
In the course of his dissenting opinion, Justice Stevens argued that:
... corporations have no consciences,no beliefs, no feelings, no thoughts, no desires. Corporations help structure and facilitate the activities of human beings, to be sure, and their “personhood” often serves as a useful legal fiction. But they are not themselves members of “We the People” by whom and for whom our Constitution was established.
There are a couple of problems with Stevens' argument. First, whatever the views of the original framers may or may not have been (and Scalia and Stevens square off on that issue in an interesting way), the framers of the 14th Amendment included corporations within the meaning of "person" in that provision. See Citizens United v FEC: The First Amendment Rights of Corporate "Persons".
Second, as I note in my book Corporate Law:
As a legal person, a corporation has most of the constitutional rights possessed by natural persons. See, e.g., First Nat’l Bank of Boston v. Bellotti, 435 U.S. 765, 784 (1978) (corporation has First Amendment right of free speech); Hale v. Henkel, 201 U.S. 43 (1906) (corporation gets Fourth Amendment protection against unreasonable searches and seizures but not protected by Fifth Amendment privilege against self-incrimination); Blake v. McClung, 172 U.S. 239 (1898) (corporation not covered by the privileges and immunities clause of the Fourteenth Amendment or of the comity clause of Article IV); Minneapolis & St. Louis Ry. Co. v. Beckwith, 129 U.S. 26, 28 (1888) (corporation entitled to due process of law under the Fifth and Fourteenth Amendments); Santa Clara County v. Southern Pacific Railroad Co., 118 U.S. 394, 416 (1886) (corporation entitled to equal protection of the law under the Fourteenth Amendment).
If Stevens wants to exclude the corporation from having First Amendment rights, he's got to explain why the Corporation gets all these other rights. If he wants to exclude the corporation from having any constitutional rights, he's engaged in a striking act of judicial activism entailing overturning countless precedents handed down over many decades (which, in fairness, is what he accuses the majority of doing).
In a philosophical sense, however, Stevens is at least partly right. Edward, First Baron Thurlow, put it best: "Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and nobody to be kicked?" The corporation is simply a nexus of contracts between factors of production. How do we square the constitutional legal fiction of corporate personhood with that reality?
I addressed that issue in my post, Sonia Sotomayor and the Corporate Personhood, in which I argued that:
Although the corporation’s legal personality obviously is a fiction, it is a very useful one. Consider a large forestry company, owning forest land in many states. If the company were required to list all of its owners—i.e., every shareholder—on every deed recorded in every county in which it owned property, and also had to amend those filings every time a shareholder sold stock, there would be an intolerable burden not only on the firm but also on government agencies that deal with the firm. Hence, for example, it is useful for the law to allow the corporation to sue and be sued in its own name and to own and deal in property in its own name.
Likewise, the corporation's legal personhood is a useful fiction in constitutional law. Government regulation of corporations obviously impacts the people for whose relationships the corporate serves as a nexus. (You see how hard it is to even talk about the corporation without reifying it?) It's useful to allow the corporation to provide those persons with a single voice when seeking constitutional protections.
Indeed, doing so is not just useful, it is necessary to protect the rights of the parties to those various contracts. As Larry Ribstein explains in Corporate Political Speech, 49 Wash. & Lee L. Rev. 109, because "a corporation is a nexus of contracts, these contract rights should be constitutionally protected to the same extent as other contract rights. Thus, the state must show why intervention in the corporate contract is constitutionally justified given the availability of self-protection through private contracting." He continues:
The Court must begin to base its decisions on well-developed modern economic theory rather than on unsupported assertions about corporations and the political process. It is particularly important to understand that any regulation of corporate speech or of the electoral process can have far-reaching consequences in terms of both the costs of governing the firm and the deadweight costs of effecting wealth transfers among interest groups. Until the Court understands these consequences, its decisions may be the proverbial bull in the china shop, particularly as pressure builds for more extensive reform of campaign financing and of corporate political activity.While it may be useful to allow the corporation "person" standing to assert collective rights, however, it is very important to remember that this is still a fiction that we embrace to facilitate protection of the rights of individuals. As Ribstein recently blogged:In a nutshell, viewing the corporation as an entity for First Amendment purposes actually serves to push the speech rights of owners and managers under a rug. Abandoning entity reasoning would focus on what matters for the First Amendment analysis. My article and blog post just linked show that once you do that, and put the arguments for limiting speech rights under an analytical spotlight, they look pretty weak.