For those interested in the corporate personhood issue, Professor Bainbridge has several posts on the matter:
- Citizens United v FEC: The First Amendment Rights of Corporate “Persons”
- Citizens United, Corporate Personhood, and Nexus of Contracts Theory
- Citizens United v. FEC: Stevens’ Pernicious Version of the Concession Theory
See also this post by Larry Ribstein at Ideoblog. For other perspectives, see Lyle Denniston’s comments on SCOTUSBlog, and this post by C.E. Petit. Matt Bodie also speculates about how shareholders might respond to corporations’ newfound freedom, and Howard Wasserman comments.
Joe says:
If the Democrats want to make an issue of this case (and after Scott Brown, they need to); and if they can find the votes, they could easily overturn Citizens United via legislation. Contrary to some reports yesterday, no constitutional amendment is required (so long as there is a nexus to interstate commerce). The two legislative “fixes” I see: Congress could (1) require all corporations of a certain size to have a federal charter and define such corporations as not legal persons for certain purposes or (2) require shareholder approval of corporate contributions under the federal proxy regulations (which would be limited to public corporations).
Yet, I suppose they will be unable to find 60 votes for this in the Senate.
January 22, 2010, 10:44 ammatth says:
Apparently three months of practice have made me stupid, because I couldn’t figure out what the hell C.E. Petit was talking about.
January 22, 2010, 10:55 amJoe Veenstra says:
I have a sincere hypothetical question about the 1st Amendment rights of corporations. Is the constitutional rule as follows? If a state is going to allow corporations to exist, it must give them 1st Amendment rights? The counter is: If corporations are creatures of state law, and states could simply eliminate corporations and mandate that personal ownership (and responsibility) be the law, how can can corporations be entitled to 1st Amendment rights? A state cannot eliminate personhood (at least after the 14th Amendment) but it can eliminate corporations, so I am having a hard time wrapping my hands around the idea that corporations get equal rights as people.
January 22, 2010, 11:36 amRPT says:
The first Bainbridge post contains a reference to his textbook with the following:
“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).”
That alone reveals the problem. That is not what the case was about, or what it held, etc. That is the headnote added by the railroad president who wrote and added it to the opinion. That is the source of the corporate personhood doctrine: a corporate president’s own fabrication. It would be appropriate to cite the case properly.
January 22, 2010, 11:49 amDjDiverDan says:
Two points here. Yes, as a purely theoretical matter, a State could eliminate the legal protections granted to the corporate form. There almost certainly would have be some phase-out period during which existing corporations could either dissolve or relocate. But as a practical matter, if all corporations were exiled from any state, it wouldn’t take long for that state’s tax and employment base to all but disappear, and no state legislature or Governor is going to be THAT stupid. While I have a fairly low opinion of the intellectual capacity of politicians, even I acknowledge that there is a lower limit, and outlawing corporations (which would amount to economic suicide on a statewide basis)falls way below that limit.
Second, your difficulty in “wrapping your hands around” giving corporations rights seems to arise from your inability to recognize that corporations are, in the end, merely the agent for the collective economic action of all the individual shareholders – whether individual investors directly in the stock, or indirectly through mutual funds, in IRA or Pension Fund accounts, or through other corporations (sometimes in multiple layers). Stop thinking about corporations as “artificial persons” and start thinking about them as a cohesive group of real people, who have voluntarily chosen to associate together and aggregate their economic power to achieve economic goals. If all the members of the NRA can get together to push for greater gun rights, why can’t the individual shareholders of Exxon (disclosure – I’m in that group) do the same, and use that clout to push legislative goals that make the development and marketing of petroleum products easier or more profitable?
January 22, 2010, 11:52 amJoe Veenstra says:
I understand the reality that corporations will not cease to exist. I think the hypothetical speaks to the question of whether a corporation’s rights under the 1st Amendment (and all others?) are (or should be) equivalent to those of persons.
January 22, 2010, 12:19 pmZathras says:
I have an off topic question on Citizens United that I haven’t seen addressed anywhere. When individuals make political contributions to candidates they are generally not tax-deductible. Will political donations from corporations be tax-deductible, and if so on what basis?
January 22, 2010, 12:30 pmAnonsters says:
But why do that, when you can just “get over it?”
Aren’t academic lawyers charming?
January 22, 2010, 12:36 pmmarkH says:
Exxon had plenty of avenues to push legislative goals (lobbying, PAC’s, issue-oriented advertising) without being able to directly purchase candidates. The individual shareholders can make direct payments to the candidate of their choice.
January 22, 2010, 12:42 pmJRinDC says:
This idea that public corporations are mere associations of like-minded people is ridiculous on its face, except perhaps in the MCFL context. I made this point on another thread but Elena Kagen made it even more cogently in the oral argument (as transcribed by Stuart Taylor):
” ‘When corporations use other people’s money to electioneer,’ as Kagan explained, ‘that is a harm not just to the shareholders themselves but a sort of a broader harm to the public,’ because it distorts the political process to inject large sums of individuals’ money in support of candidates whom they may well oppose.
“Roberts sharply challenged this line of argument. ‘Isn’t it extraordinarily paternalistic,’ he asked, ‘for the government to take the position that shareholders are too stupid to keep track of what their corporations are doing and can’t sell their shares or object in the corporate context if they don’t like it? … ‘ “We the government have to protect you naive shareholders.” ‘
“Kagan responded that ‘in a world in which most people own stock through mutual funds [and] through retirement plans … , they have no choice. I think it’s very difficult for individual shareholders to be able to monitor what each company they own assets in is doing.’ “
January 22, 2010, 1:23 pmJRinDC says:
Kagen raises a point I’ve not seen made here. Under longstanding FEC law it is illegal to make a contribution in the name of another. In other words, I, having maxed out my individual contribution limits, cannot hand over another $2400 (for a candidate) to you to give to that candidate in your name. I am deliberately evading the contribution limits in doing so.
What a corporation can now do is take my money as shareholder (probably invested in mutual fund) and spend it, likely without my knowledge, in their name, on candidates I don’t even support.
This is what the First Amendment protects? Seriously??
January 22, 2010, 1:30 pmJust Dropping By says:
Another interesting question is how will foreign ownership of a nominally “American” corporation be treated? 2 U.S.C. § 244e prohibits a “foreign national” from making campaign contributions, but “foreign national” is defined in that section as:
(1) a foreign principal, as such term is defined by section 1(b) of the Foreign Agents Registration Act of 1938 (22 U.S.C. 611(b)), except that the term “foreign national” shall not include any individual who is a citizen of the United States; or
(2) an individual who is not a citizen of the United States or a national of the United States (as defined in section 101(a)(22) of the Immigration and Nationality Act [8 USCS § 1101(a)(22)]) and who is not lawfully admitted for permanent residence, as defined by section 101(a)(20) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(20)).
The term “foreign principal” is then defined in 22 U.S.C. 611(b) (emphasis added) as:
(1) a government of a foreign country and a foreign political party;
(2) a person outside of the United States, unless it is established that such person is an individual and a citizen of and domiciled within the United States, or that such person is not an individual and is organized under or created by the laws of the United States or of any State or other place subject to the jurisdiction of the United States and has its principal place of business within the United States; and
(3) a partnership, association, corporation, organization, or other combination of persons organized under the laws of or having its principal place of business in a foreign country.
It would appear that a group of prominent Chinese industrialists, for example, could form a corporation in Delaware with an office located there and the company would still be considered “American” for purposes of 2 U.S.C. § 244e and thus, per Citizens United, be able to spend money for campaign purposes. Could Congress permissibly ban corporations with more than a certain percentage of foreign ownership from engaging in campaign spending?
January 22, 2010, 2:33 pmtroll_dc2 says:
I have not seen anyone discuss this problem properly. Has the Supreme Court ever explicitly endorsed Santa Clara County? The Detroit Lumber decision makes it clear that a syllabus is not part of the opinion, and the Court at the end of the decision made it clear that it was not deciding anything other than what it wrote. Did the Reporter do what he did with the connivance of the Court? I would be grateful if someone could point me to a book, law-review article, or other discussion that does a good job of exploring this issue.
January 22, 2010, 2:49 pmPendulum says:
I caught that too. The sheer self-righteousness boggles the mind.
As does the incessant conflation of historical pedigree with constitutional legitimacy. Regardless of whether one is using a textualist or non-textualist framework, using a combingation “it’s good because it’s long established” and “it’s long established, so it’s good” doesn’t get one very far.
January 22, 2010, 2:56 pmPendulum says:
DjDiverDan,
Is there no limit to the types of associations that can be created and retain speech rights?
Suppose a state creates a type of entity called a Supercorp, which entitles such Supercorps, to pay only 1/4th the tax rate that other corporations do. Still no ability to impose restrictions on their ability to divert money to political campaigns?
Is there no limit to the special benefits that can be conferred upon corporations which could justify a restriction on speech?
January 22, 2010, 3:03 pmKimberly Houser says:
Santa Clara was just the first case discussing corporation’s rights. There have been a host of others since then. The Citizen’s decision is more than just about campaign finance. It is about the powers corporations have in our current society. See today’s post at http://www.intheeyesofthelaw.com.
January 22, 2010, 3:26 pmtroll_dc2 says:
“Santa Clara was just the first case discussing corporation’s rights. There have been a host of others since then.” Has the Court cited Santa Clara in a way suggesting that it believes that that decision established that corporations are constitutional persons?
January 22, 2010, 3:56 pmDon Miller says:
That is a common misunderstanding of the buying and selling of shares. When corporations issue shares through a public offering, they get Capital to expand their business. But when shares are bought and sold on the open secondary market, Corporations do not benefit at all.
The vast vast majority of shares sold every day are secondary trades that really don’t help or hurt a company in anyway. The price affects how people feel about a company but doesn’t really affect their books.
When your mutual fund buys 10,000 shares of IBM, they don’t buy those shares from IBM, they buy them from someone else.
When you hold shares, you hold an ownership interest in the assets and profits of a company, but they don’t have “your money”.
January 22, 2010, 4:14 pmIleene Crane-Franks says:
The argument that corporations are composed of people who enjoy First Amendment protection, and therefore so should the corporations they are a part of is totally beside the point. Those people have First Amendment protection as individuals. They do not lose that protection when they operate in concert as a corporation. It is precisely this point that leads to the many complications pointed out above — foreign ownership of domestic corporations, making contributions that can be considered in the name of someone other than the contributor (which would still apply in an IPO, would it not?), etc.
BTW, it is my understanding, as someone who has started up several nonprofit and for-profit corporations, that government does not create a corporate entity; its members do. Government merely registers the corporate entity, entitling it to do business in a given jurisdiction.
January 22, 2010, 4:20 pmLN says:
When you hold shares, you hold an ownership interest in the assets and profits of a company, but they don’t have “your money”.
No, the company just has a pile of cash that it can spend on things like bribes to politicians. Who owns that pile of cash? Why, you do, as owner of that company. So why is it so bad to say that the company has “your money”? If it’s not yours, whose money is it?
January 22, 2010, 4:26 pmRPT says:
I would say that Santa Clara was the first case fabricating/inventing/creating corporate rights out of nowhere; not legislation and not some common law variant.
Not unlike CU, where the Court asked the parties to rebrief and reargue an issue not actually raised by the parties, so that the Court could render a decision consistent with certain members policy preferences. What could be more activist?
January 22, 2010, 4:34 pmreadery says:
In U.S. v. Craft, the Supreme Court said that the IRS could simply ignore the existence of a marriage when enforcing a tax lien against one of the spouses on ‘tenancy by the entirety’ property titled to the marriage under state law, because it said that the idea of marriage holding property as a distinct legal entity separate from the spouses is nothing more than a “legal fiction”, a sham that the United States simply doesn’t have to abide by.
As the dissent noted at the time, when state law treats a marriage as a separate entity with independent rights to property separate from the individual spouses, the concept involved isn’t any different from the concept of a corporation. Why should businesses be entitled to the benefit of the concept when dealing with the IRS, but not marriages?
This case puts that question in stark relief. Why should the Supreme Court be entitled to casually diss the concept of a marriage as creating a special legal entity that has legal rights independent of its members, and call it nothing more than a sham and a legal fiction, while at the same time demanding that we treat corporations as if they were something holy under the Constitution, things entitled to the priveleges of citizenship?
Why the huge difference between the result in U.S. v. Craft and this case?
AS Justice Scalia wrote in U.S. v. Craft,
Why diss one as a mere “legal fiction” but enshrine the other as having constitutional significance?
January 24, 2010, 2:29 pmBlawg Review #248 « The Scots Law Student says:
[...] the Supreme Court made up its mind on something called Legal Blog Watch and Jonathan Adler the Volokh Conspiracy provides a set of links providing a number of perspectives on the 5-4 decision. Some “critics [...]
January 24, 2010, 8:10 pmTokyoTom says:
I missed this conversation, while continuing to argue on Jon`s initial thread that CU is radical, nonsensical and dangerous judicial activism: http://volokh.com/2010/01/21/citizens-united/
Let me note a few thoughts:
- the First Amendment was not amended to extend “speech” from humans to nonhumans of any kind;
- as corporations are creatures of the state – with special benefits extended to shareholders in them that are unavailable otherwise via contract or common law – the state has every ability to limit the powers of corporations;
- in the same way, governments routinely condition extensions of benefits, including gag rules on churches and other nonprofits, and on doctors in hospitals that receive federal funding;
- the equation of corporations – which have a legal status distinct from their owners – with individuals and other forms of voluntary organizations that retain unlimited liability is invidious, and blurs the very real distinctions between them. When corporations “speak”, WHO is talking? (The growth of corporations and the lack of shareholder liability has led to a continued attenuation of SH control, for the benefit of managers.)
- if corporations were held to have NO Constitutional speech rights, the real human beings who work at, manage or own them would retain all of their Const rights of speech and redress – but at their own direct expense. All that would be lost would be the ability of some to mask their identity, to claim that they represent all, and to pay for their speech by picking the pockets others (a point one wishes Kagan had better understood and made).
February 4, 2010, 11:45 pm