Do Nexuses of Contracts Have Constitutional Rights?

A friend emails:

I understand that -- ignoring the nuances for a moment -- you believe that the best model for a corporation's res (such as it is) is as a nexus of contracts. This leads to another question, though: Does the corporation per se, if it is only a nexus of contracts, qualify as a First Amendment "person" for purposes of having free speech rights _independent of its officers and directors_? The current National Association of Manufacturers controversy does not directly confront this question, but directly confronting it would be the simplest way to resolve it.

I come down slightly against the nexus-as-First-Amendment-person view, but only slightly. I'm more than willing to be convinced... but I'm not willing to assume, either way.

The best treatment of this issue is The Corporation and the Constitution by Henry N. Butler and Larry E. Ribstein.

In his article, Corporate Political Speech, 49 Wash. & Lee L. Rev. 109 (1992), Ribstein explained:

The corporation, as a nexus of contracts, obviously cannot be ?speaking.? Accordingly, corporate speech should be constitutionally protected only to the extent necessary to protect the rights of individuals connected with the corporation. In closely held corporations with decentralized management, the owner-managers usually are speaking for the corporation. In publicly held corporations, however, there is some question as to who the speakers are, and therefore who, if anyone, should be protected by the First Amendment. Before considering the extent of constitutional protection that should be accorded corporate speech, it is necessary first to consider precisely whose First Amendment interests are at stake, particularly in publicly traded corporations. ...

In a publicly held corporation with centralized management, corporate speech, like other corporate conduct, originates from the managers rather than the shareholders. If the managers speak as agents of the shareholders or others in the corporation, the relevant protected interest belongs to the shareholders the managers represent. If managers speak on their own behalf, their own speech interest should be constitutionally protected. This is clearest when managers' speech is supported by their compensation paid directly in money or indirectly by the corporation's authorization of the authorizing managers' use of corporate funds for ?personal? speech. Moreover, managers' speech should be protected even if they are spending shareholders' money without authority. First Amendment protection does not depend on the legitimacy of the source of the funds used to support the speech. Such a distinction would be impossible to make, because even direct compensation may be ?excessive? in the sense that it results from managers' abuse of their power to fix their own pay. In any event, this is strictly a matter of contracting within the firm. Perhaps, to aid contracting between shareholders and managers, the state should be able to regulate this activity notwithstanding the First Amendment. But that relates to government interests justifying the regulation, and not to determining whether there is any constitutionally protected interest. ...

Thus, in light of both the attenuated shareholder responsibility for corporate speech and the managers' emerging responsibilities to ?stakeholders,? corporate speech may represent the views primarily of managers rather than of any particular nonmanagerial participants in the corporate enterprise.

However, it does not follow from shareholders' attenuated role as corporate speakers that corporate speech deserves only weak First Amendment protection. Such a result could be based only on a strong regulatory theory of the corporation under which agency problems merit mandatory rules. Instead, any such agency problems should be analyzed from the standpoint of justifying state interference with a constitutionally protected interest, rather than negating the existence of that interest.

I would argue that, as a nexus of contracts, corporations are a collection of people and, as such, possess the same rights as their various constituencies. One of which is free speech. Not speech by the fictional entity, but rather speech by the managers of the corporation who can use corporate assets to finance their own speech just as they use corporate funds for any other purpose (up to and including financing their own reelection bid when faced with a proxy contest). To be sure, as in any other managerial action, using corporate funds to finance managerial speech creates a principal-agent problem, but campaign finance laws strike me as a bad way of regulating that problem.