One of the standard arguments put forward by critics of the Supreme Court’s decision protecting corporate political speech in Citizens United is that people aren’t entitled to constitutional rights when they use corporate resources because corporations are “state-created entities.” If the state can create an entity, it supposedly also has the power to define its rights any way it pleases. This is slightly different from the argument that people using corporate resources don’t deserve constitutional protection because corporations aren’t “real people.” But it has many of the same weaknesses, and some additional ones as well.
I. Media Corporations are “State-Created Entities” Too.
The first problem is that, like the “real people” argument, it applies to media corporations as well. On this view, the government would be free to censor the New York Times, Fox News, the Nation, National Review, and so on. Nearly every newspaper and political journal in the country is a corporation. If the Supreme Court accepted this view, it would have to overturn decisions like New York Times v. Sullivan and the Pentagon Papers case.
II. The Impact on Other Constitutional Rights.
A second issue is that this logic applies not only to corporate free speech rights, but to all other constitutional rights exercised through the use of corporate resources. If people using state-created entities don’t have free speech rights, they don’t have any other constitutional rights either. After all, the supposed power to define the rights of state-created entities isn’t limited to free speech rights. Thus, government would not be bound by the Fourth Amendment in searching corporate property (including employee offices). It could take corporate property for private use without paying compensation because the Fifth Amendment would no longer apply. It could forbid religious services on corporate property (including that owned by churches, most of which are after all nonprofit corporations). If the Free Speech Clause of the First Amendment doesn’t apply to corporate property, neither does the Free Exercise Clause. And so on.
III. Nearly Everyone and Everything is Probably a “State-Created Entity.”
Third, it’s important to consider what is meant by “state-created entity.” If the term refers only to institutions that literally would not exist absent state authorization, it does not accurately characterize many, perhaps most corporations. If the federal government passed a statute abolishing corporate status tomorrow, most actual corporations would still exist and still continue to engage in the same business or nonprofit activities. They just would do so under different and perhaps less efficient legal rules (maybe as LLCs, partnerships, or sole proprietorships). But they wouldn’t all just collapse or go away. There would still be a demand for most of the products produced by corporations.
If “state-created entity” doesn’t refer to the mere existence of organizations currently defined as corporations but to the particular bundle of legal rights currently attached to the corporate form, then it turns out that virtually all other organizations are state-created entities as well. Universities, schools, charities, churches, political parties, partnerships, sole proprietorships, and many other private organizations all have official definitions under state and federal law. And all have special government-created privileges and obligations that don’t apply to other types of organizations.
Even individual citizens might be considered “state-created” entities under this logic. After all, the status of “citizen” is a government-created legal entitlement that carries various rights and privileges, many of which the government could alter by legislation, just as it can with those of corporations (e.g. — the right to receive Social Security benefits, which the Supreme Court has ruled can be altered by legislation any time Congress wants). In that sense, “citizens” are no less “state-created” entities than corporations are.
So government could enact laws requiring citizens to limit their political speech in exactly the same ways in which corporate speech can be limited (or at least condition their continued status as citizens on obedience to the government’s censorship rules). It’s true, of course, that the physical person who has the legal status of “citizen” would still exist even if that status did not. But the physical property and other assets of the legal entities known as corporations would also continue to exist if corporate status were abolished. Indeed, as noted above, many of the entities themselves would also continue to exist under different legal forms. Perhaps you want to argue that native-born citizens aren’t “state-created” entities because the Constitution requires that they be granted citizenship at birth. If so, naturalized citizens are still “state-created” since Congress has the discretion to decide which if any foreigners will get citizenship rights.
By now, the main point should be clear. If you define “state-created entity” narrowly, then it won’t include most corporations. But if you define it broadly as any legally defined status that carries government-granted rights or privileges, then pretty much every important private organization is a state-created entity. Individual citizens may be “state-created entities” as well, and naturalized citizens certainly are. Going down this road would destroy constitutional rights for just about everyone. That may be why even the liberal justices most enthusiastic about campaign finance regulation have been unwilling to really bite this particular bullet. True, Justice Stevens’ dissent does note that “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.” Yet even Stevens stops short of stating that this by itself proves that corporations don’t have free speech rights. I doubt that Stevens and the other liberal justices are willing to really follow that logic. For example, they’re not going to overrule New York Times v. Sullivan or conclude that the government has the power to search corporate property unconstrained by the Fourth Amendment. Yet that is where the “creature of law” argument inexorably leads. The better approach is the common sense conclusion that people are entitled to full constitutional rights whenever they use their privately owned resources to exercise them, whether those resources are legally assigned to “state-created entities” or not.
UPDATE: I should clarify that in this post, as before, I’m not arguing that corporations themselves are “persons” with constitutional rights. Rather, I’m asserting that their owners and employees are such persons and that that status enables them to use corporations to exercise their constitutional rights. Similarly, partnerships, universities, schools, and sole proprietorships aren’t people either. But people can use them to exercise their constitutional rights, and the government can’t forbid it on the sole ground that they are using assets assets assigned to “state-created entities.” This distinction was unfortunately obscured in the current post by my shorthand references to “corporations’” rights. I only used that terminology because it’s cumbersome to always write something like “people exercising their constitutional rights through corporations.”
Anon21 says:
Some serious unclosed tags here.
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January 22, 2010, 4:58 pmIlya Somin says:
Unclosed tags have now been fixed.
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January 22, 2010, 5:04 pmUgh says:
Ilya — so you’re saying that if, from day one, the Delaware corporate law and the corporate law of all the other states had read that “a corporation may be formed for the purpose of conducting any lawful act, except that a corporation may not expend funds or in any other manner, including by means of speech or press, attempt to influence an election, government official, or any other government policy”, it would be unconstitutional?
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January 22, 2010, 5:07 pmSecurityGeek says:
I still haven’t seen anybody who’s a fan of Citizens United really address the China/Saudi Arabia/[favorite overseas bogeyman] problem:
If corporations are US citizens based upon being created by one of the 50 states, is there any exception to the ability of non-US owners to exercise that corporation’s “rights as a citizen”? Does the Saudi Royal family have the inalienable right to create “Americans For Mid-East Peace, Inc.”, a subsidiary of a dozen shell corporations that the Saudis control, and spend $1B blanketing local television in support of congressional candidates who are less friendly to Israel?
IANAL, so I would love to see an answer to this.
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January 22, 2010, 5:11 pmRecovering Law Grad says:
Prof. Somin —
It’s Day 1 of East State’s existence, a state under the federal constitution. East State decides that it wants to create a legal status called “corporation.” Corporations have one privilege that individuals don’t have: limited liability. To become a corporation, and maintain corporate status, the corporation’s owners have to (1) pay $500/year, and (2) refrain from using any corporate money for political advertising.
Are you saying that East State can’t do that, but that it can refrain from creating corporations?
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January 22, 2010, 5:11 pmIlya Somin says:
Ilya — so you’re saying that if, from day one, the Delaware corporate law and the corporate law of all the other states had read that “a corporation may be formed for the purpose of conducting any lawful act, except that a corporation may not expend funds or in any other manner, including by means of speech or press, attempt to influence an election, government official, or any other government policy”, it would be unconstitutional?
No, it was unconstitutional only after the Supreme Court ruled that the Bill of Rights applied to the states. Before that time, state governments engaged in all sorts of censorship of political speech, including noncorporate speech.
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January 22, 2010, 5:11 pmIlya Somin says:
It’s Day 1 of East State’s existence, a state under the federal constitution. East State decides that it wants to create a legal status called “corporation.” Corporations have one privilege that individuals don’t have: limited liability. To become a corporation, and maintain corporate status, the corporation’s owners have to (1) pay $500/year, and (2) refrain from using any corporate money for political advertising.
Are you saying that East State can’t do that, but that it can refrain from creating corporations?
Precisely. Just as it can refrain from “creating” partnerships, sole proprietorships, universities, and political parties (all of which are state-defined legal statuses), but can’t censor their speech if it does create them.
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January 22, 2010, 5:14 pmSecurityGeek says:
BTW, will the USSC be vacating the convictions of Johnny Chung and the other folks who laundered money from the PRC to influence US Elections? Obviously they were only exercising the free speech rights of their corporations.
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January 22, 2010, 5:14 pmChris Travers says:
Marriages are state-created entities.....
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January 22, 2010, 5:15 pmChris Travers says:
Because there’s a first amendment right to commit bank fraud.....
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January 22, 2010, 5:18 pmSuperSkeptic says:
But they have, in essence, made the argument that you intimate that they have not. The Dissenters believe First Amendment rights (admittedly in existence) can be “infringed” under corporate circumstances. It also points out the hypocrisy in the Majority’s position, i.e., albeit not as egregious, “disclaimer” and “disclosure” requirements are “infringe[ments]” too.
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January 22, 2010, 5:18 pmIlya Somin says:
If corporations are US citizens based upon being created by one of the 50 states, is there any exception to the ability of non-US owners to exercise that corporation’s “rights as a citizen”? Does the Saudi Royal family have the inalienable right to create “Americans For Mid-East Peace, Inc.”, a subsidiary of a dozen shell corporations that the Saudis control, and spend $1B blanketing local television in support of congressional candidates who are less friendly to Israel?
IANAL, so I would love to see an answer to this.
I’m happy to oblige. The argument for Citizens United is not that corporations themselves are US citizens, but that their owners and stockholders (and sometimes employees) are citizens entitled to use them to exercise their constitutional rights. Whether foreigners are entitled to do the same thing is a different question. It’s part of the broader issue of which constitutional rights foreigners have. If you believe that foreign speech generally is not protected by the First Amendment, then neither is the speech of foreign-owned corporations. The key point is the foreign status of the owners, not whether the speech goes through a corporation or not (notice that by this logic, their noncorporate political speech would be unprotected as well).
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January 22, 2010, 5:19 pmUgh says:
But much of your post consists of “well, if X is considered a state created entity, what if the gov’t took X’s rights away,” parade of horribles, for which there may be other constitutional reasons that would keep the gov’t from being able to do undo previously granted rights and privileges. Your argument, it seems to me, amounts to “if the state creates a corporation or other institution as a separate legal entity, then it must have first amendment rights,” no? I’m not sure that follows.
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January 22, 2010, 5:20 pmpc says:
Good point. Prof. Somin, does my marriage have the right to free speech beyond the individual rights my wife and I possess?
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January 22, 2010, 5:20 pmMark N. says:
I think the “creature of law” intuition is that the government ought to be able to create limited statuses contingent on agreeing to certain conditions. For example, a special Trash Disposal Corporation status with favorable treatment, conditioned a requirement that the corporation do nothing except: 1) engage in the trash-disposal business; and 2) conduct activities absolutely required as part of the conduct of that business.
Would creating that status be unconstitutional, because it would, for example, prohibit that corporation from publishing books about politicians, unless they were somehow related to the trash-disposal business? I think it probably wouldn’t be.
I do agree that the current dispute is rather different, because it’s more of an opt-out than opt-in. It isn’t a special status with very limited scope, with the default being that any non-included activities are prohibited. Rather, it’s a general status with very broad scope, with the default being that any non-prohibited activities are permitted. But I’m curious whether that’s your position, or if you’d hold that the creation of any legal status where the entity has less than full speech rights is impermissible.
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January 22, 2010, 5:24 pmIlya Somin says:
But they have, in essence, made the argument that you intimate that they have not. The Dissenters believe First Amendment rights (admittedly in existence) can be “infringed” under corporate circumstances.
Yes, but not for the sole reason that they are “state-created entities.”
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January 22, 2010, 5:24 pmCrazyTrain says:
Regardless of whether it is correct or not that corporations have first amendment rights as a matter of constitutional interpretation, there are numerous problems with your arguments. In particular, you are treating this as an all-or-nothing issue — either corporations have all constitutional rights or they have none. For example, this quote “For example, they’re not going to overrule New York Times v. Sullivan or conclude that the government has the power to search corporate property unconstrained by the Fourth Amendment. Yet that is where the “creature of law” argument inexorably leads.”
No, it does not. Do you believe that corporations have a right to vote in state and federal elections? Yes or no. Assuming you agree with me that they don’t, please explain how that too does not “inexorably lead” to the parade of horribles you laid out.
Again, I have very ambivalent feelings about whether the Court was right in Citizens United, but your arguments are just not that good — this all-or-nothing approach is a straw-man. There are constitutional rights — such as the right to vote — that corporations clearly do not have. Thus, there has to be some line-drawing here — that’s why we have courts in the first place. You need to argue that the Court drew the correct line, not that line-drawing itself is bad.
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January 22, 2010, 5:24 pmUgh says:
Ilya: The key point is the foreign status of the owners, not whether the speech goes through a corporation or not (notice that by this logic, their noncorporate political speech would be unprotected as well).
Well, many U.S. organized corporations have hundreds, if not thousands, of foreign owners, is there some constitutional threshold where all of a sudden the U.S. corporation cannot exercise its free speech rights? 10% foreign ownership? 20%? 50%? Does it matter if its a single foreign owner that owns 10/20/50% or many? Is the % by vote or value?
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January 22, 2010, 5:24 pmSecurityGeek says:
That’s true, those folks are screwed. The next set of PRC agents don’t need to commit bank fraud, thanks to their ability to send $500 to the Nevada SoS and create a US citizen from thin air. Look for this big yellow Nolo Press binder at a book store near you: “How To Start Your Own Corporation and Influence America’s Democracy in 30 Days!”
Obviously we should also start counting these new US citizens in the Census for reapportionment, thereby adding 17 House seats to Delaware’s delegation.
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January 22, 2010, 5:25 pmIlya Somin says:
Marriages are state-created entities.....
Good point. Prof. Somin, does my marriage have the right to free speech beyond the individual rights my wife and I possess?
It’s not my point, it’s a commenter’s. But it’s a good one nonetheless. You and your wife most certainly have the right to use marital property to finance your free speech, even though the definition of that property as such is a function of state law. Similarly, the fact that a state can choose not to create the status of marriage doesn’t mean that it can condition entry into that status on limitations on free speech.
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January 22, 2010, 5:26 pmIlya Somin says:
Regardless of whether it is correct or not that corporations have first amendment rights as a matter of constitutional interpretation, there are numerous problems with your arguments. In particular, you are treating this as an all-or-nothing issue — either corporations have all constitutional rights or they have none. For example, this quote “For example, they’re not going to overrule New York Times v. Sullivan or conclude that the government has the power to search corporate property unconstrained by the Fourth Amendment. Yet that is where the “creature of law” argument inexorably leads.”
You misunderstand my point. I’m saying that the “state-created entity” rationale for denying corporations free speech rights also justifies denying them all other constitutional rights. I’m not addressing (in this post) every other possible rationale for doing so.
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January 22, 2010, 5:28 pmIlya Somin says:
No, it does not. Do you believe that corporations have a right to vote in state and federal elections? Yes or no. Assuming you agree with me that they don’t, please explain how that too does not “inexorably lead” to the parade of horribles you laid out.
It’s not corporations that have rights. It’s the people who own and operate them (see my very first post in this series). If the corporation were an effective tool for exercising their right to vote, they could use it for that purpose. Obviously, it isn’t. That does not mean they don’t have the right to use the corporation to exercise those constitutional rights that corporate property can be used for.
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January 22, 2010, 5:30 pmUgh says:
Could a state condition a corporation’s limited liability status on it not influencing elections?
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January 22, 2010, 5:30 pmChris says:
Ilya: The first problem is that, like the “real people” argument it applies to media corporations as well. On this view, the government would be free to censor the New York Times, Fox News, the Nation, National Review, and so on. Nearly every newspaper and political journal in the country is a corporation. If the Supreme Court accepted this view, it would have to overturn decisions like New York Times v. Sullivan and the Pentagon Papers case.
But isn’t there at least an argument that media corporations are accorded separate treatment in the text of the First Amendment? For First Amendment purposes, the NYT, Fox News, etc., are (or were, at any rate) collectively referred to as “the press” (regardless of the exact medium), and the Constitution specifically protects “the press” from Congressional interference: “Congress shall make no law ... abridging the freedom ... of the press.”
It’s a minor point, but I do think you can reasonably draw a line between “media corporations” acting in their journalistic capacities and other “state-created entities” engaging in speech. In other words, I’m not sure the “state-created entities” argument is necessarily inimical to NYT v. Sullivan.
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January 22, 2010, 5:34 pmIlya Somin says:
Could a state condition a corporation’s limited liability status on it not influencing elections?
No more than it could condition it on forbidding religious services on its property, giving up Fourth Amendment rights, etc.
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January 22, 2010, 5:35 pmB.D. says:
I would like to add that this analogy somewhat misses the point. Even if the First Amendment did not apply to the states, the campaign finance laws here are federal. Congress did not create corporations, the states did.
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January 22, 2010, 5:41 pmcorneille1640 says:
Mr. Somin:
Not exactly, it is still true, it seems to me, that corporations, qua corporations, would not have come into existence without state authorization. Once created, and once they reach a certain size, it’s probably impractical to dissolve them. But state authorization is necessary for their creation.
What about the notion of “ultra vires”? My understanding is that at least in the 19th century, if a corporation didn’t adhere to the powers enumerated in its articles of incorporation, it was susceptible to dissolution by the state. Of course, since the advent of general incorporation laws in the mid-1800s, perhaps “ultra vires” is less actionable. I don’t know.
You mention corporations would continue to exist under less efficient legal rules. Wouldn’t the very lack of “efficiency” mean that they are substantially different entities from what they were before? Perhaps, I would think. Couldn’t the state revise its requirements for what constitutes an LLC or partnership?
(I’m not sure that the Supreme Court ever ruled that the Bill of Rights applied to the states, but no bother.) Isn’t this a bit of a dodge to the question that was asked? In fact, it seems to beg the very question of pershonhood as a standard for the protection of constitutional rights. It’s my understanding (perhaps mistaken) that any rights from the bill of rights applied to the states are done so by the 14th amendment clause that no person shall be denied life, liberty or property without due process of law. If this is the case, then it does, contra your other arguments, come down to the pershonhood of corporations.
Perhaps I’m stuck in the 19th century. Of course I realize things have changed. But the analysis you offer might do well to at least consider what corporations used to be, and how they became what they now are.
Edited to add: P.S., I, too, am sympathetic to your opposition to campaign finance laws. I just believe the thinking is a bit muddled and your argument is stronger when you stress how finance reforms operate against equality.
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January 22, 2010, 5:42 pmJoeSixpack says:
It’s been a while since I took corporate law but I am pretty sure that ultra vires actions by a corporation are not crimes that are punishable by force of government.
I find Prof. Somin ‘s argument compelling and am not convinced by the dissenters attempts to dance around the other constitutional rights that we tend not to question when applied to corporations. Certainly corporations (through their owners) have a right to remain silent, right to counsel, due process, search & seizure, etc. Even on the media corporation point, my initial thought was that these entities can hide behind freedom of the press even if they don’t have freedom of speech, but there is no reasonable basis to say that entities have some constitutional rights but not others. If the government CAN restrict the freedom of speech of corporations, it also CAN restrict freedom of press and all other constitutional rights.
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January 22, 2010, 5:43 pmB.D. says:
The best part of all this is that people are hopefully learning something about the Free Press Clause. It doesn’t mean what 99 percent of people think it means.
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January 22, 2010, 5:44 pmIlya Somin says:
much of your post consists of “well, if X is considered a state created entity, what if the gov’t took X’s rights away,” parade of horribles, for which there may be other constitutional reasons that would keep the gov’t from being able to do undo previously granted rights and privileges.
Except that there can’t be any “other constitutional reasons” under the logic of the “state-created entity” argument, which holds that government has unconstrained authority to define the scope of the entity’s legal rights. If, on the other hand, you want to argue that the power to constrain state-created legal entities relates to the exercise of some constitutional rights but not others, you must explain which ones those are, especially since the COnstitution itself nowhere mentions any such distinction. And even if free speech rights are the only ones that can’t be exercised through state-created entities, that still leaves the problem of media corporations.
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January 22, 2010, 5:45 pmSuperSkeptic says:
No, but your First Amendment rights cannot be infringed moreso because you are now married. Actually, scratch that — I guess the feds could still demand (with the criminal law) that you, have to “disclose” and “disclaim” who you are when you speak through certain mediums before an election because you are married. (Assuming everybody fears the immense aggregation of wealth arising from your marriage.)
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January 22, 2010, 5:46 pmIlya Somin says:
Not exactly, it is still true, it seems to me, that corporations, qua corporations, would not have come into existence without state authorization. Once created, and once they reach a certain size, it’s probably impractical to dissolve them. But state authorization is necessary for their creation.
It may be necessary for their creation as legal entities, but not for their existence as physical organizations (which in many cases could have occurred under other legal rules). But if mere legal status is the criterion for a “state-created entity,” then partnerships, sole proprietorships, universities, etc. are state-created entities and likewise subject to government censorship.
What about the notion of “ultra vires”? My understanding is that at least in the 19th century, if a corporation didn’t adhere to the powers enumerated in its articles of incorporation, it was susceptible to dissolution by the state. Of course, since the advent of general incorporation laws in the mid-1800s, perhaps “ultra vires” is less actionable. I don’t know.
The content of the articles of incorporation is decided by the private owners, not by the government. They can, if they wish, deny their corporation any ability to engage in political speech. That’s very different from the government doing so. If the government established a law requiring that all articles contain such a prohibition, it would be unconstitutional.
You mention corporations would continue to exist under less efficient legal rules. Wouldn’t the very lack of “efficiency” mean that they are substantially different entities from what they were before? Perhaps, I would think.
They would be different to some degree. But the same point applies to virtually all other private organizations with government-defined legal statuses whose attributes could be changed by legislation (i.e. — schools, universities, charities, partnerships, and so on). The government could alter the legal definition of partnerships or universities, but that doesn’t give it the power to censor speech or restrict other constitutional rights exercised through those entities.
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January 22, 2010, 5:52 pmIlya Somin says:
But isn’t there at least an argument that media corporations are accorded separate treatment in the text of the First Amendment? For First Amendment purposes, the NYT, Fox News, etc., are (or were, at any rate) collectively referred to as “the press” (regardless of the exact medium), and the Constitution specifically protects “the press” from Congressional interference: “Congress shall make no law ... abridging the freedom ... of the press.”
THere is such an argument, but it’s wrong for reasons that I discussed in this post. If media corporations don’t have free speech rights because they are state-created entities, they don’t have “press” rights for exactly the same reasons. The right to freedom of the press is not a right extended to a particular group of people (such as “the media”). It’s a right of all people to engage in particular set of activities (such as publishing newspapers).
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January 22, 2010, 5:57 pmJoe Veenstra says:
So a majority of shareholders (perhaps even foreign shareholders) determine what free speech is expressed by the corporate entity and minority shareholders are stuck with their lame blogs to make political points? snark.
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January 22, 2010, 6:01 pmAlex S. says:
Could a state condition a corporation’s limited liability status on it not influencing elections?
No more than it could condition it on forbidding religious services on its property, giving up Fourth Amendment rights, etc.
If that is the case, then why can tax exempt status be granted contingent on not influencing elections where 501(3)(c) organizations “may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.”?
Or is that rule at risk in the wake of this ruling? (Sorry if that has been addressed; so many comments I can’t keep up.)
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January 22, 2010, 6:01 pmMCM says:
Our representative government now is perhaps more representative than it has ever been before in history. It is not necessarily representative per capita, but it most surely is ad valorem.
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January 22, 2010, 6:03 pmcorneille1640 says:
Mr Somin,
Thank you for the thoughtful reply to my post. Still, the following statement, while true now may not have always been true, especially in the 19th century:
I don’t intend to J.-Albridge-jack this thread. But if a corporation is designed for a specific purpose and if the state were more restrictive in the purposes for which corporations are granted their charters, political campaigning might violate their charters and it would not be content-specific censorship, only action that did not reasonably advance the end for which the corporation was created. (I sure hope that sentence was clear!) At any rate, I suppose you are right that nowadays corporations, for most but the formal intents and purposes, are agreements among the shareholders.
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January 22, 2010, 6:07 pmJ. Aldridge says:
Bingham argued the P&I’s of United States citizens does not extend to corporation and of course the judicial power of the United States says nothing about corporations.
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January 22, 2010, 6:08 pmdc says:
Freedom of speech and the press is frequently abrogated in the United States. Making this a black-and-white issue, as many of these arguments seem to do, feels a bit disingenuous. An easy example is the recent Morse v. Frederick: high school students do not possess unlimited freedom of expression on certain topics or in certain contexts. (Or, say, theatregoers.)
The question should not be “do corporations have the unlimited right to freedom of speech”, since in our current legal system no one does. Maybe, if you’re a really strict constructionist, that’s wrong, and maybe we should be able to cuss out cops/proselytize pot at school/engage in slander/donate unlimited volumes of cash to political candidates, etc. But in America, we have come to recognize that in practice, such rights must be tempered by social considerations.
Limiting monetary contributions to political candidates to curb corruption and preserve the autonomy of representative government is a legitimate exception to the first amendment, as was the recently struck-down proscription on political advertising.
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January 22, 2010, 6:08 pmIlya Somin says:
The question should not be “do corporations have the unlimited right to freedom of speech”, since in our current legal system no one does.
I agree. The question is, rather, whether people using corporations to speak can be denied all free speech protection on the ground that corporations are “state-created entities.” There are lots of speech restrictions that could potentially be justified irrespective of whether the speaker is speaking through a corporation or not.
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January 22, 2010, 6:12 pmanon says:
“Should People Acting through Corporations be Denied Constitutional Rights Because Corporations are “State-Created Entities”?”
I just find this whole characterization of a corporation as nothing more than a bag of people to be specious.
How does “corporate veil” or “legal person” comport with “nothing more than a bag of people acting through the corporation”?
I’ve always thought lawyers were the ultimate particle physicists because you could so frequently split a particle into two cases and delineate between them. But suddenly, there is no difference between a state created corporation and a person.
If a corporation is nothing more than a bag of people, you don’t make it clear how eliminating the rights of the bag takes any rights away from the individuals.
I don’t think you should get to double dip like that. A corporation is not a quantum particle. It doesn’t get both to be a legal person with corporate veil and other rights of individuals at some times, and then at others vanish to become just a bag of the underlying people.
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January 22, 2010, 6:15 pmJoeSixpack says:
So when President Palin orders the justice department to storm the offices of ACORN without a warrant and imposes criminal penalties on it without affording it a right to counsel and trial by jury, people like “anon” will be on record that this is a completely legitimate exercise of government power under the constitution (not that the government SHOULD do it, but that it CAN do it). After all, corporations have limited liability.
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January 22, 2010, 6:23 pmRPT says:
Yet another hyper-theoretical discussion thread justifying the activist result. The theory is all well and good, but will there be any consideration of the actual real world effects of the decision? In fact, some participants seem to pretend that the decision will have no such effect; like listening to Hans Von Spakovsky of POTUS earlier today.
Re the “media corporation” issue, this is another red herring. The rights of media corporations to do what they do were not at issue in the case and have not been threatened since NY Times v. Sullivan. there are plenty of cases explaining these principles.
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January 22, 2010, 6:25 pmKen Arromdee says:
The “rights of a corporation” is just a shorthand for “the rights of people, who are exercising their rights through the corporation”. You have a right to vote. You could exercise it through a corporation if you wish, though I can’t think of many ways to do that short of driving to the polls in a corporate car.
You don’t get permission to vote more times with the help of a corporation than without one, of course–but when you think about it, you don’t really get permission to create more speech using a corporation than without one, either. It’s just that you don’t need such permission for free speech, since you’re already allowed to produce an unlimited amount of it.
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January 22, 2010, 6:29 pmIlya Somin says:
Re the “media corporation” issue, this is another red herring. The rights of media corporations to do what they do were not at issue in the case and have not been threatened since NY Times v. Sullivan. there are plenty of cases explaining these principles.
It would not be a “red herring” if the Supreme Court had accepted the logic that I criticized in this post. NY Times v. Sullivan rests on the notion that media corporations at least can exercise First Amendment rights. Under the “state-created entity” argument, however, they wouldn’t.
The theory is all well and good, but will there be any consideration of the actual real world effects of the decision?
This post deals with a very commonly made logical and legal argument used to justify restrictions on corporate speech. If you want to argue that “real world” policy effects are the only aspects of legal decisions that matter, then I can understand that you might have little interest in either that argument or my criticism of it. However, you might still consider the “real world” significance of the fact that, if the Court were to accept the “state-created entity” argument, it would open the door to wide-ranging restriction of all sorts of constitutional rights.
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January 22, 2010, 6:47 pmzuch says:
The media has a different freedom, with a different bundle of rights, under “freedom of the press”.
I don’t see any problems with saying that newspapers and TV shouldn’t be covered by the same election laws covering express advocacy; their primary business is news, not advocacy, and if they want to support a candidate themselves, it ought to be covered under “donations in kind”.
Cheers,
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January 22, 2010, 6:47 pmSeamus says:
No they don’t. Because there is no constitutional “right to vote.” There is only the right not to be denied the vote on grounds of race, color, previous condition of servitude, sex, or age (provided that you’re at least 18 years old). Oh, yes, you also have the right to vote for U.S. Senate and House of Representatives if you are eligible under state law to vote for the largest house of the state legislature, but there is no constitutional right to vote for that house in the first place.
You might raise an argument under the equal protection clause against discrimination in voting qualifications (as the Supreme Court did when it struck down the poll tax requirement in Harper v. Virginia State Board of Elections), but I don’t think you’re going to get very far with an argument that discrimination against corporations fails a strict scrutiny test. Or an intermediate scrutiny test. Or, come to think of it, a rational basis test.
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January 22, 2010, 7:14 pmTatil says:
Prof Somin,
The rest of your arguments are easier to follow, but I have to disagree with the first one. Press is specifically mentioned in the first amendment. Wouldn’t that allow media corporations broader rights than other corporations?
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January 22, 2010, 7:22 pmSeamus says:
What exactly do the “journalistic capacities” of “media corporations” extend to? Is it just to news gathering and dissemination? If so, then you seem to concede that it’s OK to restrict media corporations when they express political opinions. If you argue that “journalistic capacities” also extend to political advocacy, then how can it be legitimate to restrict such activities by Citizens United, which, after all, was only carrying out what, at the time of the adoption of the 1st Amendment, was the primary function of “the press”?
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January 22, 2010, 7:23 pmpc says:
Are members of the military now free to speak their minds? Is “the military” free to speak its mind? The questions may be completely orthogonal to the current discussion, but I’m still trying to digest the ramifications of this decision.
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January 22, 2010, 7:24 pmTatil says:
Based on the previous blog posts here, it seems it is fairly easy to get around these restrictions through PACs. Apparently, they require a lot of paperwork and overhead expenses. That is not a big impediment for big corporations who may stand to gain substantial financial benefits through favorable government action, but a much bigger obstacle for smaller businesses. This decision may actually level the playing field. Trying to stop big money from influencing elections are a bit like “war on drugs.” There is demand from politicians, there is supply from corporations. The less government affects corporations, the less money corporations will supply. Any other solution is bound to be ineffective.
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January 22, 2010, 7:31 pmtired of blogs says:
There’s a real elision of the internal politics of corporations when you assert that their speech represents speech by their “owners and employees.”
In practice, I suspect that corporations’ speech represents speech by their (highest) managers, with a tenuous veto available for their owners (which ownership is itself typically strongly mediated through the managers of other corporations). This decision tremendously magnifies the impact of particular individuals: corporate managers and union bosses, for example. It hardly represents “owners and employees” speaking with a collective voice.
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January 22, 2010, 7:32 pmRPT says:
Professor, you are a very smart man, but this comment is exactly what I referred to earlier. It is an ivory tower analysis. This decision, and the advocacy of behalf of CU, is about gaining access to and the use of large amounts of money, that is, the right of the person or persons in charge of the corporation, and with control of its assets, to use those assets to influence elections. It’s called “OPM” (Other People’s Money) in various areas of commerce. To suggest that it is some idealized use of a “tool” by a person who is simply exercising their individual rights is disingenuous after a time. The decision is about the power of corporations to influence elections.
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January 22, 2010, 7:35 pmCrazyTrain says:
Well, I guess this issue is settled. Why didn’t Stevens just point that out?
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January 22, 2010, 7:37 pmRPT says:
But no one asked the Court to accept the logic you criticized. Corporations engaged in protected first amendment activities–as historically understood and precedentially determined–were never at risk by the challenged statute. This is an after the fact rationalization for a very meaningful and impacting practical result; to permit corporate managers to influence and control elections with corporate assets.
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January 22, 2010, 7:41 pmCrazyTrain says:
Professor, you really are better than this. The fact that corporations may be an “effective tool for exercising” free speech rights is hardly the issue. A bullhorn in the middle of the night in a residential area is a very, very effective tool for exercising my personal free speech rights. However, content-neutral time, place and manner restrictions can forbid me from exercising my free speech rights with a bullhorn in the middle of the night in a residential neighborhood. So, again, you need to explain how restricting certain corporations’ campaign contribution rights leads to this parade of horribles you continue to lay out in all your posts. Of course, the “state created entity” argument does not completely resolve the issue. No one argues that it does; rather, some argue that it is one of many relevant things to consider.
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January 22, 2010, 7:43 pmDouglas Weber says:
To get some understanding of the media issue, ask yourself what is the “Press” status of volokh.com and even this thread. Neither Gene Volokh nor Ilya Somin is a “member of the press”, even though both have provided commentary at times. Is “The Volohk Conspiracy” a “press”? Is this comment thread a “press”. Can the government impose restrictions on either of these. If Mr. Volokh were, for liability reasons say, to form a corporation to manage and own “The Volokh Conspiracy”, does the government have the authority to restrict what is said there? In the current technological environment, the definition of the “press” is not clear. One hopeful benefit of this decision is that the restriction of speech to only those entities recognized by the government as “press” will be seen as a restriction of freedom, even though its worst possible uses have not yet occurred.
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January 22, 2010, 7:45 pmRPT says:
Thank you.
Fox News as a first amendment actor is well protected. While it is a partisan actor, there is no serious contention that its partisan broadcast activities could be restricted.
News Corporation as a buyer of elections is something else all together. That is what’s coming; some of the beneficiaries may be D’s but the majority will probably be R’s. None will be justifiable.
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January 22, 2010, 7:47 pmCrazyTrain says:
Again, this is a blatant strawman and you have to know it. No one is saying that people who use corporations to speak “can be denied all free speech protections.” You know that is incorrect. The argument is that those people cannot use the corporate form to speak. There are tons of other forms those people could use. Now maybe denying the right of corporations to speak is indeed an undue infringement of those persons’ free speech rights, but that is the argument to make (and it is the argument the majority made), not this silly assertion that people who use corporations to speak are being denied “all free speech protecitons.”
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January 22, 2010, 7:52 pmzuch says:
Not exactly. The 15th and 19th Amendments both begin with:
That’s the subject of the sentence.
They do not say that “the right not to be denied the vote [...] shall be respected....”
It could get even worse under your strained parsing. You might need to say then that:
“the right of not being denied the ‘the right not to be denied the vote [...] being respected....’ shall be respected”,
and so on and so on, until it’s turtles all the way down and we have infinite numbers of turt.... — umm, “rights”.
Cheers,
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January 22, 2010, 7:58 pmyankee says:
If the members of management are faithfully executing their fiduciary duties, it’s not even the managers’ speech. The CEO of Yahoo may very well think that Google has a better search engine and that’s why Yahoo’s market share is so small. But the company’s advertising has to that Yahoo has the best product on the market even if she thinks it doesn’t. The company has become something distinct from the various people who own and run it, and so has its message.
This is completely different from the argument Ilya is criticizing; I agree with him that the “creation of the state” argument is not very good. Where I disagree with him is that a business corporation’s speech is the collective speech of the people who own and run it. Once the business reaches a certain size, the corporation (or other structure) speaks through individuals rather than the other way around.
The matter is different with media corporations, whose products are means individuals use to speak. When Paul Krugman writes a column, it’s not “The New York Times, Inc.” speaking, it’s Krugman. Same with news articles, which represent the view of the author, not just of the corporation. Even unsigned editorials represent the view of the members of the editorial board, not the view of “The New York Times, Inc.”
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January 22, 2010, 8:02 pmShelbyC says:
Folks, “freedom of the press” does not mean “freedom for and limited to the institution we now call the press”. It protectes the ability of people to print and publish, just like freedom of speech protects the ability to speak. So it’s tought to argue that corporations have the right to freedom of the press, but not freedom of speech.
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January 22, 2010, 8:08 pmzuch says:
Prof. Somin:
The respondents in N.Y. Times v. Sullivan were the folks that bought the ad, with the Times tossed in for their “deep pockets”. This was a free speech case, and applies to anyone who is making a libelous statement (as indeed the pastors that bought the ad were likewise let off from liability). There was no magic here in the corporate nature of the Times or in their identity as part of the “press”.
The Pentagon Papers case was a “freedom of the press”/prior restraint case, not a free speech case.
I don’t see why you think either of these would need to be overturned.
Cheers,
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January 22, 2010, 8:12 pmzuch says:
Where do you get that?!?!? Cites. Page numbers if possible.
Cheers,
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January 22, 2010, 8:17 pmAk Mike says:
The main area of disagreement seems to be between those who focus on who has a “right” to print or speak (and conclude that individuals do but some or all organizations don’t), and those who focus on what conduct the government is allowed to suppress (which does not include speech or printing).
The constitution does not provide for a right to free speech. It provides the Congress is prohibited from infringing freedom of speech [that is, to talk] or of the press [that is, to print]. It is a limit on Congress — it can’t stop anyone from speaking or printing. It does not appear to me that the kind of entity that is doing the speaking or printing is of any consequence.
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January 22, 2010, 8:37 pmJ. Aldridge says:
Like a good liberal he still loves baseless precedent.
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January 22, 2010, 8:39 pmKirk Parker says:
Chris, sorry but that meaning of “the press” is a complete anachronism.
Stop for a moment, and think of what “freedom of the press” might mean if it weren’t synonymous with “freedom to publish”. Could it really mean that Congress could make no law that had any effect on a media corporation? Hello, tax-free existence! Where can I invest???
And J.A.–thanks, it’s been a long week, but now it’s Friday evening and I needed a drink! :-)
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January 22, 2010, 8:43 pmShelbyC says:
Er, isn’t that what the whole fargin case was about? That application of a libel judgement to the Times would violate the Time’s first amendment rights?
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January 22, 2010, 8:43 pmArthurKirkland says:
Why “certainly?” Why could not the state that creates a corporation, and grants extraordinary benefits to that corporation, compel a corporation to answer questions on pain of forfeiture of assets, withdrawal of corporation license, etc.? Given appropriate safeguards for the rights of human beings associated with the corporation, I believe that arrangement would be neither unwise nor unlawful, neither unprecedented (not even uncommon) nor immoral.
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January 22, 2010, 8:53 pmbyomtov says:
Ilya,
The trouble with your argument is that you continue to assume that corporate speech merely channels individual speech.
This is not true. The problem is not that those using corporate resources are not entitled to First Amendment protecion. It’s that they are not entitled to use corporate resources to begin with.
Let the CEO’s speak as freely as they like. But don’t let them use my money to do so.
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January 22, 2010, 9:12 pmrpt says:
Really, Prof. Somin, the quote Zuch excerpts is a complete misstatement fo the holding. It is all about standards of proof. This is like watching a game of twister. How convoluted can the rationalizations get.
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January 22, 2010, 9:21 pmAk Mike says:
byomtov — so let’s see if I get this straight — the CEO can use your money (assuming you’re a shareholder) to buy lavish art for her office — to take junkets to Hawaii for business conferences — to hire whomever she wants — and only the board of directors can control that (or the shareholders electing the board). But if she wants to put an ad in the paper supporting a candidate — then the government needs to step in, so she doesn’t “use my money to do so.” Is that right? And that’s because corporate officers “are not entitled to use corporate resources to begin with.” Right?
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January 22, 2010, 9:23 pmMr L says:
Assuming a bizarro SC that ruled that corporations don’t have any rights, would a Sedition Act that only applied to corporate speech pass muster? Or, hey, what if it only applied to speech that disparages [my preferred political party]? First Amendment doesn’t apply here, right?
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January 22, 2010, 9:25 pmMark Field says:
You’re not the first to make this argument on these threads. As has been pointed out in response on the other occasions, the argument doesn’t work because Congress does, in fact, make all kinds of laws “abridging” speech (e.g., obscenity, fraud, etc.). This train left the station long ago, and even the most ardent supporters of free speech don’t deny it.
“The” trouble? I think the reason you see him flailing about with multiple posts is that there are so many problems with his position. If there were just one he’d have an easier time.
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January 22, 2010, 9:29 pmShelbyC says:
The government can keep everybody off of the sidewalk, or not create a sidewalk to begin with. Therefore people are not entitled to use sidewalks. But they can’t condition your use of the sidewalk on you not engaging in political speech.
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January 22, 2010, 9:30 pmrpt says:
Not even close. Read the case.
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January 22, 2010, 9:31 pmsanta clara says:
Very good post Ilya. It’s a hard case, and I find myself ambivalent about whether the correct result was reached — but I think you’ve answered pretty comprehensively one of the main arguments trotted out by “the critics.”
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January 22, 2010, 9:34 pmShelbyC says:
The holding is that application of a libel judgement to the Times, a corporation, without a showing of malice, violates the first amendment rights of said corporation. If you see a game of twister you must be looking in a mirror, bud.
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January 22, 2010, 9:35 pmrpt says:
Nope. The corporate status of the Times as a defendant is not the key. It’s the public figure standard of constitution malice proof that is the key.
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January 22, 2010, 9:39 pmShelbyC says:
Of course. The corporate status of the Times is not even discussed. But the corporate entity was before the court and was granted relief based on a violation of the corporations’s first amendment rights. It is, as Ilya says, and example of a corporation exercising first amendment rights.
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January 22, 2010, 9:43 pmScott Eudaley says:
Ilya, good post. Your analysis is spot on. Two related points:
First, what exactly is a “media corporation”? The dissent seems particularly oblivious about modern organizational and technological realities. How do you separate “media corporations”, which presumably have full free speech rights, and corporations which do not? Is a large conglomerate like GE a “media corporation” because it is part-owner of NBC and MSNBC? Is GE allowed to opine via the NBC/MSNBC TV channels and websites, but prohibited from doing so through its GE-branded website? Why? Is Comcast (now also a part-owner of NBC/MSNBC) a “media corporation”? What about a smaller cable company which doesn’t own a TV station or cable channel? They are certainly providing “media”–what makes them different? What about a small, incorporated medical practice with a website which covers medical issues in the news–are they a media corporation? How do you legally distinguish between something like The Drudge Report (which presumably is protected) and Amazon.com (which presumably is not)?
In truth, it is simply impossible to draw a bright line distinguishing between corporations which are protected and those which are not. There is no longer any magical formula, if there ever was, which determines what is a “media corporation” and what is not. Such a situation practically begs for political manipulation and administrative bias.
Second, I would love for the dissenters to justify book banning. That is exactly what the Solicitor General tried to do, not once, but twice in oral arguments. In March, Scalia (I believe) asked the SG if a book published by a corporation could be banned during the black-out period. She answered affirmatively. In September, Ginsburg (perhaps recognizing the danger) asked the same question again. Again, the answer was affirmative. Does that mean that an author who conducts business through a one-man corporation or LLC can be censored during certain times of the year? Many authors do their work precisely in this manner. What about Random House or Amazon.com, both of which are incorporated? Again, what legally distinguishes a one-man corporation or LLC from a larger one? Are Barnes and Noble and Amazon.com supposed to remove certain books (which ones?) from their shelves and catalogs during certain parts of the year? If we followed the dissent, that would seem to be a logical conclusion. Certainly, the SG thought so.
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January 22, 2010, 9:45 pmrpt says:
Exactly; exercising rights to print the news, not buy elections.
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January 22, 2010, 9:50 pmShelbyC says:
And citizens united was about a corporation exercising its right to show a movie about Hillary.
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January 22, 2010, 9:54 pmAk Mike says:
Mark Field — The argument does indeed work. Your response seems to be that the fact that some limitations have been upheld means that the first amendment is a dead letter, and that Congress can impose whatever restrictions it wants on whomever it wants. Your claim is a non sequitur. Is it the same for the free exercise clause? Is it true that because you can’t sing hymns in a courtroom, congress can decide who gets to give money to churches?
The point is not whether the courts have allowed some restrictions on conduct that impact free speech. When we do not have such restrictions on conduct, can congress prohibit the speech itself based on whose speech it is?
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January 22, 2010, 9:56 pmsounds better in writing says:
Not if “press” refers to a means of publishing (the printing press) rather than the institutional press qua media corporations. At the time of the framing, “no definition of ‘press’ included journalists or news reporters as a collective group or institution.” See Lee, Freedom of the Press 2.0, 42 Ga. L. Rev. 308, 339–40 (2008).
The “fundamental difficulty with interpreting the Press Clause as conferring special status on a limited group is one of definition. . . . [t]he very task of including some entities within the ‘institutional press’ while excluding others, whether undertaken by legislature, court, or administrative agency, is reminiscent of the abhorred licensing system of Tudor and Stuart England — a system the First Amendment was intended to ban from this country.” First Nat’l Bank of Boston v. Bellotti, 435 U.S. 765, 800–801 (1978) (Burger, C.J., concurring).
How do you square this with your assumption that “press” simply means the institutional press?
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January 22, 2010, 10:02 pmbyomtov says:
the CEO can use your money (assuming you’re a shareholder) to buy lavish art for her office — to take junkets to Hawaii for business conferences — to hire whomever she wants — and only the board of directors can control that (or the shareholders electing the board). But if she wants to put an ad in the paper supporting a candidate — then the government needs to step in, so she doesn’t “use my money to do so.” Is that right? And that’s because corporate officers “are not entitled to use corporate resources to begin with.” Right?
Right. First, the activities you describe are clearly an abuse of power, and the board should prevent them. But suppose it doesn’t. At worst, all the CEO is doing is wasting my money. But when she uses corporate money to support a candidate I oppose she is doing more than wasting my money. She is using it against my interests.
I’m not trying to shut the CEO up. If she wants to support Senator X let her use her own money. That’s all.
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January 22, 2010, 10:12 pmrpt says:
Yes, in order to influence the election. This comes down to a question of whether you like the result of potentially overwhelming corporate electoral power or not. You do, I don’t. Thus, you will rationalize why you do, but it has nothing at all to do with decades of 1A law.
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January 22, 2010, 10:14 pmwehted says:
Supposedly the CEO would be using corporate money in the political forum in the interest of the corporation, and you, were you a shareholder.
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January 22, 2010, 10:20 pmsounds better in writing says:
A hyperbolic claim given that the majority opinion parsed decades of 1A law.
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January 22, 2010, 10:20 pmMark Field says:
There are 2 separate and distinct arguments at play here:
1. That Congress can’t pass this particular law regarding free speech because it can’t pass any such law under a literal view of the 1A.
2. That this particular law would violate the rights of persons under the 1A.
The first argument is the one that won’t work; Congress passes lots of laws affecting speech.
The second argument is true (at least in my view), but it doesn’t reach the issue of whether the 1A protects corporations.
As I understood your original post, you were trying to make argument #1.
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January 22, 2010, 10:33 pmElliot says:
Does anyone know if the political parties themselves are incorporated? If they are not, what is their organizational structure.
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January 22, 2010, 10:38 pmrpt says:
Here’s one of your real Citizen’s United winners:
“This week, Prince Alwaleed bin Talal al-Saud of Saudi Arabia — the largest shareholder of News Corp outside the Murdoch family — endorsed Rupert Murdoch’s son James to succeed the elder Murdoch when he retires. Alwaleed, King Abdullah’s nephew, is Saudi Arabia’s richest person and the world’s 22nd wealthiest (Murdoch is number 132). He holds large stakes in many American companies, including Citi. The prince met with Murdoch last week to discuss a “future potential alliance with News Corp,” and he told Charlie Rose Wednesday about his respect for the Murdoch dynasty.”
Thanks.
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January 22, 2010, 10:44 pmSuperSkeptic says:
I do not deny that the train left the station, but this ardent supporter of free speech denies the propriety of this state of affairs, as my comments have indicated. Undergirding the Majority’s holding is the proposition that you do not have to blindly follow and/or extend poorly reasoned and incorrect precedent. Stare decisis is a “principle of policy” IIRC. (emphasis added). Too much of this debate is centered around what people think is or might be a good (or the best) policy, when this is not (or should not be, at least) the central inquiry.
I thought you would have liked to Majority opinion, particularly in light of the Madisonian logic employed (pgs. 38–39)...
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January 22, 2010, 10:44 pmbyomtov says:
Supposedly the CEO would be using corporate money in the political forum in the interest of the corporation, and you, were you a shareholder.
Too broad. My interests as a shareholder are financial, but I have other interests as well, including political ones. So long as the objective pursued by the CEO is limited to financial matters, it has to be allowed, as a practical matter.
But supporting a candidate is not narrow political action. It’s very broad. A candidate has positions on lots of issues, and the ones that favor me financially may not outweigh the ones I disagree with on other grounds. In fact, if I am a relatively small shareholder it’s doubtful that I would be much influenced by the financial benefit of electing Smith instead of Jones.
This is the fundamental error in the argument that corporate speech is simply shareholder speech aggregated. It’s not clear to me why this is difficult to grasp.
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January 22, 2010, 10:56 pmrpt says:
SS: Stare decisis means never having to say you’re sorry when overturning precedents you don’t like (because they are “poorly reasoned”). At you’re transparent about what happened here. Thanks for that.
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January 22, 2010, 10:59 pmwehted says:
you’ve narrowed the scope too much: this isn’t only shareholder speech aggregated; the employees, board, and CEOs are included as well, of whom we presume have self-preservation in mind. even the employees who aren’t shareholders have an interest in the well being of their company, presuming they desire job security.
besides, this isn’t just about the election of candidates. this could be about zoning codes or other sorts of propositions in localities. why shouldn’t local corporations be able to pool their resources to sway the public in favor of codes that would keep a wal-mart out of their town?
“My interests as a shareholder are financial, but I have other interests as well, including political ones.”
I believe you state here that, as a shareholder, your interests are also political. although, maybe i’m not reading this sentence correctly. on its face this seems to support my position: that political and financial interests go hand in hand and corporations ought to be protected in expressing political views. i suppose if your political interests in the corporation and the majority political interest were at odds, then you would just have to sell your shares. unless of course the financial benefits outweigh your political interests. however, i am unsure which is more important to you: politics or financial gain. please explain.
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January 22, 2010, 11:20 pmSuperSkeptic says:
Nobody is hiding what happened, they published the Majority opinion for the public. They stated what I just did, more eloquently, of course. As your comment from 10:14 indicates, to you this is all about policy outcomes; not so to me, at least.
I will acknowledge that the stare decisis can be abused (in both directions).
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January 22, 2010, 11:22 pmAlanDownunder says:
Yes. Because:
1. There is no denial of their constitutional rights to act personally;
2. Corporations’ legitimate financial interests are too narrow to bear any relationship to human shareholders’ political interests.
It’s initially puzzling that this is a decision of an “originalist”-tinted majority, but one comes to understand that “originalist” means “highly original”. To save further confusion, we should describe the majority’s jurisprudence as “corporatist”.
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January 22, 2010, 11:36 pmrpt says:
Indeed. But to CU and the majority, it is all about policy outcomes. The proof will be manifest when we see the David Bossie spring slate of releases:
“The Real Connections between ACORN and Al Queda”
“The Health Benefits Of Carbon Monoxide”
“Rush Limbaugh: Our Greatest Hero”
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January 22, 2010, 11:45 pmuberVU - social comments says:
Social comments and analytics for this post...
This post was mentioned on Twitter by willwilkinson: RT @politicalmath Ilya Somin looks at consequences if corporations don’t get constitutional protections http://bit.ly/4VM8bO...
AlanDownunder says:
What a muddle-headed question! Of course “people using corporations to speak” cannot “be denied all free speech protection on the ground that corporations are “state-created entities.””. Denial on that ground is incapable of denying “all free speech protection” while ever the alternative of personal speech is available.
Is this incoherence a bug or a feature, Ilya?
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January 23, 2010, 12:19 amWilly Wonka says:
What has become of America?
http://www.craigslist.org/about/best/pdx/1442403975.html
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January 23, 2010, 12:27 amAaron says:
One of the (many) prices of a First Amendment in a free society is that, on many occasions, those that we don’t want to speak do so often and many times to the exclusions of others. It’s the worst informational system for popular sovereignty — except for all the others.
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January 23, 2010, 1:38 ampc says:
rpt, stare decisis is a convenient fiction.
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January 23, 2010, 2:33 amLior says:
1. I think the following seems to have been forgotten by some commenters, and bears repeating: in “freedom of speech, and of the press” the first is the freedom to express one’s self (that is, to be free of content-based regulation) and the second is the freedom to use tools (literally, the printing press) to communicate that expression. The “press” that the text refers to is the common machine. In later times times “the press” has taken the meaning “the news media” and thus the expression “freedom of the press” has taken a secondary meaning specific to news media.
2. Can those who think the ruling was wrong (briefly, that “corporations have no free speech right”) detail their thought on the NYT editorial page endorsing candidates (or on Fox News endorsing candidates)? Why should Fox News be able to advise its viewers which candidates to vote for, but Microsoft prohibited from doing the same? Should Microsoft be able to direct MSNBC to endorse candidates favoured by Microsoft?
3. On the other hand, those of us who think that corporations can be attributed a right to “free speech” as a shorthand standing for the right of the owners of the corporation to speak through it need to address the situation of corporations which are owned by people without such rights. In particular, the “ownership” of a corporation can be quite complicated when some of the direct and indirect owners may be corporations themselves.
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January 23, 2010, 4:35 amChris says:
So would a law reinstating 441b for corporations with more than 1% foreign ownership be OK? It seems to me the first thing the congress critters are going to do is freak out about foreign controlled corps influencing US elections and this will sell pretty well to the public.
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January 23, 2010, 4:37 amJack Diederich says:
People who say they are against “corporations” use that as a proxy for any organization that is out of democratic, right thinking, control. The MoveToAmend.org folks link to a bunch of articles that argue for vague control of business and property by workers and the community. In short they enjoy the idea of a dreamy socialist Utopia (the endorsements from marxists like Zinn is a tipoff).
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January 23, 2010, 4:50 amPlugInMonster says:
Nice troll attempt, socialist fool.
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January 23, 2010, 5:16 amAnonsters says:
Best thing about this thread:
A slight majority appears to think Ilya’s (continuing and multiple) arguments related to this topic don’t work, miss key points, erect straw men, etc. The remainder think Ilya’s analysis is “spot on” and “excellent.”
Thank God our law is so easy to construe...
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January 23, 2010, 6:09 amShelbyC says:
There are ways in which viewing corporate speech as shareholder speech aggregated is accurate and ways in which it is not. However I’m not sure it matters. Punishing shareholders for their own aggregated speech violates the first amendment, but so does punishing them for the speech of others. No mater how you slice it, somebody is being punished for the constitutionally protected speech of somebody, and that is a 1A violation.
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January 23, 2010, 7:01 amrpt says:
Apparently so.
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January 23, 2010, 9:23 amPragmaticist says:
Corporations need not be creatures of the state in the sense that individuals may form an association that limits their contractual liability. Non-contractual or tort liability should not be limited. See this from Wikipedia below:
http://en.wikipedia.org/wiki/Limited_liability#Economic_and_social_justification_and_criticism
The anarcho-capitalist libertarian and Austrian economist Murray N. Rothbard, in his Power and Market (1970), attacked limited-liability laws, but argued it was possible similar arrangements may emerge in a free market, stating,
Finally, the question may be raised: Are corporations themselves mere grants of monopoly privilege? Some advocates of the free market were persuaded to accept this view by Walter Lippmann’s The Good Society. It should be clear from previous discussion, however, that corporations are not at all monopolistic privileges; they are free associations of individuals pooling their capital. On the purely free market, such individuals would simply announce to their creditors that their liability is limited to the capital specifically invested in the corporation, and that beyond this their personal funds are not liable for debts, as they would be under a partnership arrangement. It then rests with the sellers and lenders to this corporation to decide whether or not they will transact business with it. If they do, then they proceed at their own risk. Thus, the government does not grant corporations a privilege of limited liability; anything announced and freely contracted for in advance is a right of a free individual, not a special privilege. It is not necessary that governments grant charters to corporations.
In the U.S. lawyers have suggested that, while limited liability towards creditors is socially beneficial in facilitating investment, the privilege ought not to extend to liability in tort for environmental disasters or personal injury.
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January 23, 2010, 9:48 amSeamus says:
You need to read more closely. I said there was no *constitutional* right to vote. The references in the 15th, 19th, and 26th amendments to the “right to vote” are references to a right created, not by the constitution, but by state law.
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January 23, 2010, 9:52 amBrian Macker says:
Don’t we have a right of freedom of association? Thinking from the ground up I don’t think we should have to get a license or state sanction to form some kind of partnership. So it’s wrong to even think of such associations as “state created”.
Now it might be true that organizations given special privileges, like limited immunity, are state created, and perhaps one could package limitations on speech with that, however what gives the state the right to do that in the first place. I’m not sure under what theory the state has the right to limit damages by sought by harmed parties against organized groups who have harmed them.
I’m sure there is some legal theory, but that doesn’t mean it’s right. Currently the civil forfeiture laws are “legal” by are based on dubious reasoning.
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January 23, 2010, 10:05 amSteveMG says:
Thank you, Professor Somin for the excellent posts on this decision.
I appreciate it.
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January 23, 2010, 10:08 amDoDoGuRu says:
More pertinent question: being married and a state-created entity, are you able to use your shared resources to exercise your individual rights?
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January 23, 2010, 10:20 amBrian Macker says:
Pragmacist,
I can see how limited liability can arise in the free market for things like debts. Maybe also for product liability with customers if the sign a contract. However, the corporation can commit criminal and civil acts that go beyond these bounds. If a corporation dumps radioactive waste on a neighbors property that exceeds it’s assets I see no reason why the stockholders shouldn’t be gone after for all their assets too.
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January 23, 2010, 10:24 amDoDoGuRu says:
This is an anachronistic understanding of “the press” considering the language is being drafted in the late 18th century. The “freedom of the press” is a freedom of publication, a stipulation growing out of frequent struggles of literal control of printing presses in England.
“News” organizations don’t occupy any hallowed ground as “the press”... Any body that wants to publish something — including corporations wanting to publish within 30 days of an election — enjoys freedom of “the press”.
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January 23, 2010, 10:29 amStephen says:
Marriages are state-created entities.....
Good point. Prof. Somin, does my marriage have the right to free speech beyond the individual rights my wife and I possess?
Does the state have a right to prevent you and your spouse from speaking jointly, as a pre-condition of recognizing your marriage?
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January 23, 2010, 10:33 amDoug says:
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January 23, 2010, 11:27 amLexington Green says:
F.W. Maitland taught us that private organizations which held their assets as trusts were the foundation of modern civil society. He objected to the rise of corporations as the main means to organize private businesses for this very reason: The pernicious idea would arise that private initiative is allowed at the sufferance of the state.
Maitland’s analysis of this issue is summarized and elaborated in a brilliant long essay by Alan Macfarlane, which may be found here
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January 23, 2010, 11:41 amScott Eudaley says:
I strongly encourage all who are interested in this topic to read Robert Hessen’s book In Defense of the Corporation (it is available on Amazon.com for less than $15.00). He offers a short history of the development of general incorporation statues (the first was in Connecticut in 1837). He discusses in detail the question of whether corporations are “state created entities”, or as he calls it “the concession theory of corporations”. It is a very readable book, even for the layman. Note that the book was published in 1979, so it does not directly address the current controversy.
He argues that the concession theory is an unwelcome and unnecessary holdover from the days of absolute monarchy where all organizations required special dispensation from the crown, lest it intrude on the kingly perogative to control everyone and everything. Such a theory is utterly incompatible with the laws of a free republic which respects individual rights. Relevant quote:
The beginnings of the modern corporate form can be traced back to the development of joint stock companies in the 1600’s. Hessen also notes that more modern forms of corporations predate the formal legal recognition of them in the form of incorporation statues.
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January 23, 2010, 11:44 amJaimeInTexas (Jam) says:
No they aren’t. Marriage was instituted by the Creator.
And as to how funds, in a marriage, could be used that is an issue that can be addressed with such things as a pre-nuptial agreement.
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January 23, 2010, 11:46 ambyomtov says:
wheted,
Yes. But no one is suggesting that those people don’t have a right to speak as individuals. Certainly I’m not. And if some of them want to form a group, incorporated or otherwise, to specifically promote a candidate that’s fine too. That’s my idea of a “voluntary association.”
I might add, as a quibble, that what management wants does not always match the employees’ interests.
I don’t object to action on a narrow financial issue. The example I give is that a corporation can lobby for a tax break, but shouldn’t back a candidate because he supports the tax break. That’s because the candidate is also for or against lots of other things. It’s tricky, maybe, to draw an exact line, but supporting candidates ought to be out of bounds. (Or, from a constitutional point of view, it ought to be OK to pass legislation restricting corporations from supporting candidates.)
That was not my intended meaning. My political interests are not related, in general, to my financial interests as a shareholder.
First, both are important. But I might well be willing to give up some financial gain to support my political views. Isn’t that what we do when we make political contributions? Yet no one claims that we should donate all our assets to political causes. Neither should we have to sell our shares to keep the company from spending our money against our interests.
Second, why should the onus be on me to go to the trouble and expense of selling what may be an attractive investment. Remember, other shareholders who differ with me politically are free to contribute out of their money (Or to form “XYZ shareholders for Senator Foghorn”). I don’t propose to stop them from spending their money to pursue their political goals. Why should they force me to spend mine?
Finally, of course, and much overlooked, is the fact that many shareholders don’t know who they are. If you own shares in a mutual fund your portfolio changes often, and you only get a list once a quarter.And the list is out of date before you get it. Similarly, pension fund participants are not in general aware of the holdings of their fund, and couldn’t sell if they wanted to. What is a fact about these indirect holdings is that the funds have large numbers of participants, so it is a certainty that there will be a fair percentage on either side of the election campaign.
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January 23, 2010, 11:47 amHugh says:
An entity that violate this rule would fall outside the definition of Section 501(c)(3) and would lose its exempt status. It would also fall outside the defintion of Section 170(c)(2) and no longer be eligible to receive “charitable contributions.” These code sections are probably not going to be affected by the court’s ruling.
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January 23, 2010, 11:57 amAndrew says:
I also have trouble with the contention that the government, after creating a legal benefit such as limited liability, must allow the use of that benefit for any purpose. Suppose (to continue your tradition of hypotheticals in the original post) that Congress created a nation-wide emergency alert system employable by national security corporations in a national emergency. Since the owners of those corporations have free speech, and since that emergency alert system is now a privilege of the corporations, would Congress have any power to limit the use of such a system to legitimate emergencies?
It seems to me that the idea of rights automatically being conferred to an aggregate group is in and of itself a fallacy. Earlier, you responded to another commenter’s question about corporate voting rights by saying:
However, the corporate form could feasibly be used as “an effective tool for exercising their right to vote.” Companies could have as many votes as they have owners (or owners’ vote could in some way be distributed between the corporations that they have stock in) and the votes could then be cast by corporations rather than individuals. On a smaller level, people could form pacts. Say that ten people get together and agree to cast all of their votes the way that the majority of them decide. Such pacts would not be enforceable under US law, unless I am mistaken, even though they confer a constitutional right from individuals to a group. It is as reasonable an argument as the ones you employed with relation to other constitutional rights.
It seems to me that the proper way to find the proper way to give individual rights to a group is through the First Amendment’s protection of association. Under this, one could see the theory that the government can limit the rights of state-created entities, but only to the point that it does not unreasonably burden people’s ability to associate for purposes of speech.
Firstly, this would deal with your media corporation point: I don’t believe that there is a equally feasible way to run an association for the mass employment of the press than through the modern corporation. (If there is, let me know). Therefore, since no analog exists, government restriction of media corporations would unreasonably limit citizens’ ability to associate for purposes of the press.
I don’t see such an issue with companies such as Coca-Cola or Shell, though. If shareholders in those companies want to associate for purposes of speech, there’s no reason they can’t form affiliated organizations, like PACs (perhaps with much less onerous requirements), in order to speak. I don’t see how that would unreasonably limit the citizens’ right to associate for purposes of speech.
So, Professor Somin (or others): is there another theory one could use to justify giving individual rights to a group? Or is there some way that requiring people to form separate but affiliated organizations from corporations in order to speak unfairly limits their ability to associate for speech?
And, one more question, this one out of a genuine lack of knowledge: how are “media corporations” defined/differentiated for purposes of the First Amendment? Are there cases about that?
http://source4politics.blogspot.com/2010/01/do-corporations-have-free-speech.html
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January 23, 2010, 11:58 amJaimeInTexas (Jam) says:
I do not think that we should have corporations. But I do not think they are going away any time soon.
An officer/agent in a corporation retains all of his individual rights but he is liable if he uses his rights in a way that violates his fiduciary duties. In other words, by virtue of his position in the corporation he agreed to limit his own rights. Similarly, agreeing to organize in a particular way, exchanging liability for restrictions.
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January 23, 2010, 11:59 amA. Criminal says:
Here’s one of your real Citizen’s United winners:
“This week, Prince Alwaleed bin Talal al-Saud of Saudi Arabia — the largest shareholder of News Corp outside the Murdoch family —
I don’t think that anyone seriously claimed that freedoms never have any negative repercussions.
All this talk about state created entities, etc, is a load of fluff created to make something that’s very simple sound every-so subtle and complicated, and/or as an flimsy excuse to shut-up other people. Read the 1st amendment: it doesn’t grant speech rights of any kind to anyone at all, whether “natural persons”, “state created corporations” or talking dogs. It just prohibits Congress from passing a certain type of law. Congress passed that type of law and the law was unconstitutional. Doubleplus Duh.
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January 23, 2010, 12:00 pmA. Criminal says:
Here’s one of your real Citizen’s United winners:
“This week, Prince Alwaleed bin Talal al-Saud of Saudi Arabia — the largest shareholder of News Corp outside the Murdoch family — ...
I don’t think that anyone seriously claimed that freedoms never have any negative repercussions.
All this talk about state created entities, etc, is a load of fluff created to make something that’s very simple sound every-so subtle and complicated, and/or as an flimsy excuse to shut-up other people. Read the 1st amendment: it doesn’t grant speech rights of any kind to anyone at all, whether “natural persons”, “state created corporations” or talking dogs. It just prohibits Congress from passing a certain type of law. Congress passed that type of law and the law was unconstitutional. Doubleplus Duh.
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January 23, 2010, 12:04 pmHugh says:
Let’s look at the goals for the campaign finance reform and discuss whether the statutes that were overturned were effective at achieving those goals.
By spending lots of money on political campaigns, corporations may try to (1) buy influence with politicians and (2) flood the debate with their message and overwhelm the discussion.
I don’t know if the overturned statutes were effectively achieving those goals. Ever increasing amounts of money were finding their way into political expenditures. The big corporations are always going to be able to spend more resources for compliance (and for finding legal ways to avoid the restrictions) than the government personnel will have for enforcing those restrictions.
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January 23, 2010, 12:11 pmAndrew says:
Does Congress really have no power to limit the speech of entities it creates? What about the Congressional Budget Office–can Congress forbid it (in its official capacity, not its employees on their own) from publishing estimates without a request from Congress? Can Congress block an executive agency from releasing a certain kind of statement without preclearance? I think that Congress can do those things, as it should be able to.
So if shareholders, at the advent of incorporation, can provide limits on corporate actions, why can’t Congress? Congress also plays a part in the creation of the corporation, so unless Congress’ restrictions on the corporation unduly limit the citizens...I don’t see the problem.
There are many areas where Congress has the power to limit speech, so long as the ability to speak in general is not burdened. For instance, Congress can forbid someone from protesting in the middle of the street, so long as they are allowed to protest on the sidewalk. The means of speech are regulatable up to a point, so long as the speech is not duly burdened. Bans on corporate speech do not discriminate based on content (as others here at Volokh have pointed out, corporations are very diverse). Congress has merely prohibited one means of speaking that does not unduly burden speech itself.
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January 23, 2010, 12:12 pmMartin L. Shoemaker says:
Let’s quote the full amendment for context (emphasis added):
First, to state the obvious, there’s no mention of corporations in there, neither supportive nor restrictive. The idea that the amendment somehow grants special privilege to “media corporations” is a fantasy created by those media corporations.
But there’s something I seldom see mentioned by those who argue for special privilege for media corporations: in the highlighted text, freedom of speech and freedom of the press are granted exactly the same weight. There is no way to read “or abridging the freedom of speech, or of the press” in such a way that freedom of the press is somehow superior to freedom of speech.
And therefore, if we accept (which I emphatically do not) that citizens acting through corporations have limited freedom of speech, then citizens acting through corporations have limited freedom of the press. In other words, the “media corporations” argument means that the news media (virtually all corporations, after all) have less freedom of the press than do individuals.
This argument would no doubt delight the blogosphere, consisting primarily of individuals exercising their freedom of the press; but I doubt it will thrill the New York Times to realize that their own arguments lead to government control of their freedom.
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January 23, 2010, 12:21 pmmuffler says:
The entire comparison of freedom of the press to corporate person hood and free speech is a diversion as the press have a separate right. We run a very bad highway when we do not bring all the mitigating variables into comparisons. Marriage serves the well being of society and is a “human” desire. It serves citizens and the yes the state by creating stability. There are two marriages — one religious and holy and the other state licensed. You can have one or the other or both, but the state one gives you legal protections in the state which a holy marriage may not. It doesn’t prevent the holy one.
When it comes to “corporate” personage the corporate charter was created by “we the people” to grant individuals special rights and capabilities to provide goods and services to “we the people” as an enterprise. It isn’t a person and it was never to be granted the wealth of rights it has gathered. The constitution is a contract between “we the people” and our government. It was partially prompted by foreign influence on our political social lives. We have now through generalization (and SCOTUS using unsophisticated selective review of what a corporation is) given back foreign influence to our political destiny. Corporations are shells.. the don’t breathe, eat, die, or have souls (depends on your view) — but thats the point. They are phantoms and figments of human imagination.
SCOTUStm has been bought and has done their job as corporate employees. I guess they will all (the 5) get good reviews this year and nice bonuses.
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January 23, 2010, 12:29 pmPaul says:
One simple question for those that think this decision is wrong.
How do you define what corporations get freedom of the press and what don’t?
The NYT gets to endorse specific candidates.
Why not citizens united?
How was citizens united desired action different than Dan Rather and CBS,
using a fraudulent forged memo about George Bush for a hit piece, did just days before the election?
How can CBS have the right and Citizens united not have the right?
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January 23, 2010, 12:32 pmScott Eudaley says:
And, one more question, this one out of a genuine lack of knowledge: how are “media corporations” defined/differentiated for purposes of the First Amendment? Are there cases about that?
Very good question and one that the proponents of the ban continue to skate around. See my very first post. I’d like to see at least one person take that on.
Congress also plays a part in the creation of the corporation, so unless Congress’ restrictions on the corporation unduly limit the citizens...I don’t see the problem.
See my last post.
Bans on corporate speech do not discriminate based on content (as others here at Volokh have pointed out, corporations are very diverse).
But they do, in fact, “discriminate based on content”. The rationale always presented for such prohibitions is that organizations will promote their narrow, special interest at the expense of the general interest. Although very broad, it is nonetheless discrimination based on the presumed content. Otherwise, the ban makes no sense.
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January 23, 2010, 12:40 pmmemomachine says:
Hmmmm.
1. In Forfeiture your property has a completely different level of rights aside from yours. Which makes abuses so very common since the bar is so much lower. So this makes the idea of restricting corporate free speech utterly idiotic.
2. Sooooooo. Corporations have the right of Free Speech from 1776 to 2002 but from 2002 to 2009 they don’t?
So much for a “Right”.
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January 23, 2010, 12:41 pmAndrew says:
Citizens United does not have the right to do what it wanted to do because our political system has decided that corporations of that sort should not have that right. That decision is OK because (unless I’m very much mistaken) there are other ways that the people in Citizens United could have organized in order to create and promote the movie.
CBS and the New York Times can do what they did because the political system has chosen to let them. Whether or not the political system had to, it chose to. That is a distinction that Congress is allowed to make. Just because it grants privileges it does not have to to one group does not mean it has to to all groups.
Also, it could very well be that there is no equally effective way of organizing companies like CBS and the New York Times besides the corporate form. If there is no such other way, then Congress wouldn’t have the power to limit their speech.
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January 23, 2010, 12:43 pmAndrew says:
No, they discriminate based the fact that the corporations will have more ability to flood their opinion or monopolize the debate, not because of the specific views of the corporation. It would be content-based discrimination to ban the NRA but not the ACLU from speaking using the corporate form. It would not be content-based discrimination to ban all corporations.
As an analogy, a public university can ban people from standing in the middle of the dining hall with a microphone and loud amp, because they can drown out dissenting opinions. However, the university cannot ban only liberal (or only conservative) people from standing in the middle of that dining hall with a microphone.
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January 23, 2010, 12:47 pmPaul says:
Andrew,
Your argument basically says congress can make arbitrary rules deciding who gets to speak?
If they can do that then what meaning does the first amendment have?
How is citizens united different from Michael Moore?
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January 23, 2010, 12:50 pmArthurKirkland says:
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January 23, 2010, 12:51 pmmemomachine says:
Hmmmm.
“The history of mankind speaks, but superstition screams.”
So much for the Preamble then.
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January 23, 2010, 12:53 pmAndrew says:
I looked at it. However, even if corporations can trace their history back to a time when they were not state-created, they are now.
Plenty of options exist for people who want to form associations for creating films like Hillary without using the corporate form. A simple person-to-person contract, for instance. Those things, while recognized as legally binding by the state, do not depend on state creation. A contract exists solely between contracting parties, whereas the modern corporate status includes action and approval by the state.
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January 23, 2010, 12:53 pmRobert Bloomfield says:
Ilya, your argument suggests that people have absolute rights to free speech through any government-sanctioned form of association. I don’t understand why the government couldn’t argue that certain sanctioned forms of association should face free-speech barriers because the particular privileges they are granted make give the state a compelling interest to do so. Of course, the state would have to make a compelling case that (1) there is a substantive link between that form of assembly and the need for limitations, and (2) that the restriction is not so burdensome as to overly limit the free speech of individuals.
Certain features of corporations (including limited liability, unlimited life and imperfections in corporate governance seem to make (1) a plausible case, though not necessarily a strong one. Part (2) seems like a much harder case to make, given the importance of the corporate form in the US.
Note that this line of argument does not in any way suggest that limiting corporate speech limits the speech of every government entity, and it surprises me that a law professor would seriously make the argument that it must. I am also unconvinced by arguments that it is hard to distinguish between one type of association and another (corporation vs. limited partnership, media vs. other company). Lawyers and accountants make these distinctions every day, despite the difficulty.
Perhaps the supreme court ruling will lead to laws that make these distinctions easier.
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January 23, 2010, 12:54 pmmemomachine says:
Hmmmm.
@ Andrew
“Citizens United does not have the right to do what it wanted to do because our political system has decided that corporations of that sort should not have that right. That decision is OK because (unless I’m very much mistaken) there are other ways that the people in Citizens United could have organized in order to create and promote the movie.”
1. They weren’t being restricted on –advertising– the movie. They were restricted in –showing– the movie. A vastly different subject.
2. What color is the sky in your world?
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January 23, 2010, 12:54 pmScott Eudaley says:
CBS and the New York Times can do what they did because the political system has chosen to let them. Whether or not the political system had to, it chose to. That is a distinction that Congress is allowed to make. Just because it grants privileges it does not have to to one group does not mean it has to to all groups.
You just put all rights at the mercy of Congress. The very concept of a “right” is something that the government, including Congress, can not infringe. So I guess you think Marbury vs. Madison was decided wrongly? Bye, bye Bill of Rights!
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January 23, 2010, 12:55 pmmemomachine says:
Hmmmm.
@ Andrew
“Plenty of options exist for people who want to form associations for creating films like Hillary without using the corporate form. A simple person-to-person contract, for instance. Those things, while recognized as legally binding by the state, do not depend on state creation. A contract exists solely between contracting parties, whereas the modern corporate status includes action and approval by the state.”
Sooooo.
A married couple could also be restricted under your definition since their marriage is a “state creation”.
You must be a lawyer.
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January 23, 2010, 12:56 pmAndrew says:
As I explained in my earlier comment, they can make restrictions on the form of speech only where it does not actually inhibit the speech itself. I’m relatively sure that’s a pretty settled aspect of First Amendment law. As Ilya and others here have pointed out many times, the “corporate right to speak” is actually the right to speak of the owners of the corporation. Any limit on Citizens United’s speech is really more accurately looked at as a limit on its shareholders’ speech.
Congress can limit the methods of speech (bans on unlicensed protests, requiring people to be a certain number of feet away from a private business, preventing people from using a limited liability structure to put together funds for speech) up until such limits actually limit the speech itself. I don’t see why the corporate form was necessary for the Citizens United shareholders in order to express their views, or express them effectively.
Whether or not Congress is correct in its evaluation of the dangers of corporate spending in elections is another debate, and one I’m not sure I would disagree with your (at least that heavily) on. However, Congress has the authority to do so unless the corporate form is necessary for the speech to be effective.
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January 23, 2010, 1:00 pmAndrew says:
I didn’t, actually. Where there is a right, Congress must respect it. But if there is no right for either media or non-media corporations, it is a political question, not a judicial one, whether the media corporations should have the privilege (not right).
The married couple could not, no. The only thing that could possibly be restricted under my argument is the use of things granted only by the status of marriage. I’m not sure what any of those would be (not shared property, because that can be established outside of marriage and without state approval). What aspect of the marriage could be used for speech that you’re concerned about being limited? It’s possible that such a limitation would be legal, but I doubt it. However, I can’t say for sure unless you specify.
And thank you for the compliment, but no, I’m not a lawyer.
P.S. At this point I think I’m going to have to bow out. I have other things I have to get done. I’ll try and talk more about this later tonight.
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January 23, 2010, 1:08 pmKarl K says:
I find it a delicious irony in this week of exquisite ironies that the New York Times, which rails against the decision in yesterday’s editorial, is nonetheless in thrall to a Mexican loan shark, who bailed them out of severe financial distress — foreign influence on corporations, alas, being one of the key “arguments” against this ruling.
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January 23, 2010, 1:17 pmScott Eudaley says:
However, even if corporations can trace their history back to a time when they were not state-created, they are now.
No, they are not. They are state recognized, which is a very different thing. Individuals form corporations, not the state. Corporations would exist, and did historically, even if the state has no incorporation statute. Incorporation statutes primarily exist to simplify and reduce the cost of forming a corporate organization. Individuals can, and do, form other types of organizations, by contract, not formally recognized in statute. It is more time-consuming and costly to do so, of course. Incorporation statutes are simply a standardized form of contractual arrangement.
Plenty of options exist for people who want to form associations for creating films like Hillary without using the corporate form. A simple person-to-person contract, for instance. Those things, while recognized as legally binding by the state, do not depend on state creation. A contract exists solely between contracting parties, whereas the modern corporate status includes action and approval by the state.
Why does the form of my contractual arrangement with others affect my rights?
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January 23, 2010, 1:17 pmBob says:
Isn’t my marriage a State created entity in the same way a corp is? I mean the state had nothing to do with choosing my mate, the time or place of our wedding, the vows we would take or the future plans we had. but they required we obtain a marriage license solely from them, and meet certain requirements, blood test, witness, authorized personnel to perform and certify the wedding, in order for the state to permit and recognize our marriage.
Is this not all the state does for a corp? they do not choose the shareholders that form the Corp, the business plan or purpose. They does require basic requirements to be met in order to be a duly formed Corp. And it is by the STATE, not the federal govt.
So if the State can say it has created each Corp and thus regulate it’s speech, why don;t they have the same restrictions over their “creation” of my marriage and the speech of wife wife and me?
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January 23, 2010, 1:21 pmArthurKirkland says:
107.
ArthurKirkland: Why “certainly?”Why could not the state that creates a corporation, and grants extraordinary benefits to that corporation, compel a corporation to answer questions on pain of forfeiture of assets, withdrawal of corporation license, etc.?Given appropriate safeguards for the rights of human beings associated with the corporation, I believe that arrangement would be neither unwise nor unlawful, neither unprecedented (not even uncommon) nor immoral.
PlugInMonster: Nice troll attempt, socialist fool.
An entity that wishes to sell alcohol beverages (lawfully), in exchange for a liquor license granted by the government, relinquishes, by operation of statute, its Fourth Amendment freedom from warrantless searches and seizures. I suspect similar exchanges occur with respect to nuclear energy, foodstuffs, and many other contexts.
Why would it be less proper for a state, in exchange for a limited-liability license, to restrict the use of treasury funds with respect to partisan political activity?
I gather PlugInMonster is not a lawyer (nor even, given the recent conclusion of the first semester, a law student). Can anyone else identify a sensible distinction?
At the practical level, I expect this situation to self-correct. Freedom isn’t free, and corporations, after recognizing the cost of this particular freedom, may be begging for relief from Citizens United relatively soon.
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January 23, 2010, 1:22 pmApple says:
Ilya,
Your post reaches near the heart of the issue. Is the modern for-profit corporation a state-created entity? It is not. Defined by its essence, a corporation is a voluntary association among two or more individuals to pool resources for the purpose of enterprise. The genus is not on the side of a government agency (with the power of coercion) but on the side of human industry (by consent) and would include partnerships, general and limited.
It is high time rational men defend the morality of the business corporation. Whether small or big, it is a virtuous endeavor and not something to be apologized for nor to be antagonistic against.
For more on this issue, I highly recommend you read In Defense of the Corporation by Robert Hessen (Hoover Institution Press, Stanford University, 1979).
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January 23, 2010, 2:11 pmRobert Bloomfield says:
Arthers 1:22 co
This is dead on. It doesn’t seem far-fetched for corporations who wish to exercise this particular freedom of speech to be subjected to disclosure requirements that make it not worth the cost. After all, people don’t always have the right to anonymous speech, so why shouldn’t I be given a complete description of all investors, and in fact a complete list of business arrangements, including salaries paid to all employees, etc. Claims that this is proprietary business information (which often works in response to SEC/FASB disclosure requirements) would be met by “well, then simply don’t fund this form of political speech.” Back to 527s after all...
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January 23, 2010, 2:17 pmPragmaticist says:
Brian Macker,
I think the way crimes can be handled is to make any corporate resolution or directive or decision that is criminal to be legally null and void. For example, if a corporation “decides” to dump toxic radioactive wastes on the kindergarten backyard, all of the individuals involved would be criminally liable.
I think that it’s historically true that in England when business associations put the word “Limited” or “Ltd” in their names that they were putting the world on notice that their liability in all of their contractual relationships was limited to the assets of the association. No intervention by the government needed.
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January 23, 2010, 2:34 pmArthurKirkland says:
If a corporation-owned, poorly maintained truck kills my children on a sidewalk, did I consent to limited liability that prevents me from holding those responsible for the harm fully accountable for their misconduct?
A corporation insulates wrongdoers from accountability; it’s a heads-we-win, tails-you-lose arrangement. The losers sometimes consent (when contracting with a corporation) and sometimes do not (when observing their children crushed by a truck owned by a corporation that saved money by refraining from repairing brakes).
Corporations benefit to society. But they also harm society. In general, corporate owners benefit at others’ expense.
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January 23, 2010, 2:39 pmtarpon says:
So blogs are free speech too ^_^ ... Just like in the days of the pamphleteers. You have the right to speak your mind, anywhere, anyhow, but you do not have a right that someone must listen.
Disclosure is fine with me, and is the very reason that most corporations will choose not to speak freely, for it may adversely effect their sales to those who do not share their opinions.
Now we just need a few more decisions which get us pointed back in the right direction of the Constitution being the supreme law of the land.
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January 23, 2010, 2:40 pmScott Eudaley says:
As an analogy, a public university can ban people from standing in the middle of the dining hall with a microphone and loud amp, because they can drown out dissenting opinions. However, the university cannot ban only liberal (or only conservative) people from standing in the middle of that dining hall with a microphone.
Actually, no. The university can ban such activities because it interferes with the proper use of the facilities. Much in the same way, it is OK to carry a sign on a sidewalk, but not OK to block traffic in the street or the entrance to a building.
No where in the First Amendment does it carve out an exception for those occasions where one voice dominates all others.
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January 23, 2010, 2:44 pmHMI says:
If, on the other hand, you want to argue that the power to constrain state-created legal entities relates to the exercise of some constitutional rights but not others, you must explain which ones those are, especially since the COnstitution itself nowhere mentions any such distinction.
So, given this reasoning and, say, the 2nd amendment and Heller, would we want to allow some large, well-financed corporation (Black Rock? Black Panthers?) to amass many thousands of weapons and trained wielders of same, effectively a private army? But that’s OK, because the corporation is merely doing en masse what its members do as individuals? Perhaps one could even maintain that they constitute a well-trained potential militia. Is there no point at which quantitative difference becomes qualitative?
Finally, to wildly overstate the problem (I would hope): I can’t help but remember of all those fair-minded, rational, democratic principles that eventually rearmed the SA and brought Weimar to its grave. Do we ignore “real world” considerations entirely, standing on principle even if it kills us? Somehow, I have a difficult time seeing Madison, or even Jackson, cheering from the sidelines.
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January 23, 2010, 2:48 pmLN says:
Does the First Amendment ban restrictions on bribery?
Isn’t a bribe just a particular form of speech act?
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January 23, 2010, 3:04 pmAnonsters says:
Anyone see that
WaPo orNYT article about 25 [edit: 40] or so CEOs sending a letter to Congress saying that they want Congress to do something about election financing because they’re tired of being shaken down by pols? I lol’d.[edit: link: http://www.nytimes.com/2010/01/23/us/politics/23letter.html ]
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January 23, 2010, 3:07 pmScott Eudaley says:
If a corporation-owned, poorly maintained truck kills my children on a sidewalk, did I consent to limited liability that prevents me from holding those responsible for the harm fully accountable for their misconduct?
A corporation insulates wrongdoers from accountability; it’s a heads-we-win, tails-you-lose arrangement. The losers sometimes consent (when contracting with a corporation) and sometimes do not (when observing their children crushed by a truck owned by a corporation that saved money by refraining from repairing brakes).
Corporations benefit to society. But they also harm society. In general, corporate owners benefit at others’ expense.
This is simply factually inaccurate. Corporations are routinely held liable for exactly these kinds of incidents.
In fact, in the modern era of “deep-pockets” liability, corporations are routinely held liable for damages (to the tune of millions of dollars) that are only remotely related to the actions of the corporation itself.
Yes, there are cases where individuals have used the limited liability of corporations to shield themselves from adverse judgements for their actions. That is an abuse of the system and there are mechanisms for “piercing the veil” of corporations to deal with that. Such cases are not relevant to the issue of whether corporations have First Amendment rights.
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January 23, 2010, 3:07 pmArthurKirkland says:
People act far more recklessly — exposing others to the consequences of such recklessness, often without their consent — in the corporate context than they do outside that context.
Ask any banker why he pursues personal guarantees.
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January 23, 2010, 3:22 pmScott Eudaley says:
People act far more recklessly — exposing others to the consequences of such recklessness, often without their consent — in the corporate context than they do outside that context.
Prove that.
Have you ever actually worked, at the executive level, in a corporation? Executives routinely make decisions based on liability risk, often eschewing perfectly reasonable lines of business precisely because of the perceived risk.
As an example of that, look at the IUD (intra-uterine device) industry in the post Dalkon Shield era. It is only after several decades of further development and much research indicating that IUDs are, in fact, relatively safe, that businesses are starting to offer such devices again. The Dalkon Shield was a particularly bad design, but it crippled an otherwise relatively safe industry.
In another example, I am currently investigating a franchising opportunity. One of the lines of business might expose me to substantial liability risk. That one single factor may be the decisive one in whether I pursue what is otherwise an excellent opportunity.
There is simply no organizational or structural form which magically prevents recklessness.
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January 23, 2010, 3:51 pmAndrew says:
Scott Eudaley: No, they are not. They are state recognized, which is a very different thing. Individuals form corporations, not the state. Corporations would exist, and did historically, even if the state has no incorporation statute. Incorporation statutes primarily exist to simplify and reduce the cost of forming a corporate organization. Individuals can, and do, form other types of organizations, by contract, not formally recognized in statute. It is more time-consuming and costly to do so, of course. Incorporation statutes are simply a standardized form of contractual arrangement.
Not really true. The state grants rights to corporations that can’t be obtained merely through contracts because they don’t belong to the individual parties in the first place. Again, the most obvious example is limited liability. That cannot be obtained through a mere contract, the state must choose to give it to an organization.
Scott Eudaley: Why does the form of my contractual arrangement with others affect my rights?
Because when the form of your organization depends on society giving you certain allowances, society can demand that you give up some rights in return.
Bob: So if the State can say it has created each Corp and thus regulate it’s speech, why don;t they have the same restrictions over their “creation” of my marriage and the speech of wife wife and me?
That’s a false analogy. In the corporation, the shareholders’ individual speech is not limited, just their corporate speech. What “corporate speech” could a marriage have? Until someone identifies that, the marriage analogy is not a good one.
Apple: Defined by its essence, a corporation is a voluntary association among two or more individuals to pool resources for the purpose of enterprise.
Which is also granted substantial rights and privileges by the government. “Corporation” in its modern usage is not synonmous with “contractual association”.
Scott Eudaley: Actually, no. The university can ban such activities because it interferes with the proper use of the facilities. Much in the same way, it is OK to carry a sign on a sidewalk, but not OK to block traffic in the street or the entrance to a building.
No where in the First Amendment does it carve out an exception for those occasions where one voice dominates all others.
Unless I’m very much mistaken, “disruptive” speech is considered an exception to the First Amendment. Dominating the fora of discussion and preventing other from having their opinions heard could certainly be considered disruptive.
Scott Eudaley: This is simply factually inaccurate. Corporations are routinely held liable for exactly these kinds of incidents....
Yes, there are cases where individuals have used the limited liability of corporations to shield themselves from adverse judgements for their actions. That is an abuse of the system and there are mechanisms for “piercing the veil” of corporations to deal with that. Such cases are not relevant to the issue of whether corporations have First Amendment rights.
I believe the previous poster’s point was that the people ultimately responsible are the owners of the company, and they are protected by limited liability. It illustrates the fact that corporations are something more than just the conglomerate of their members, and that corporations are granted protection by society not obtainable through mere contractual arrangements. If the corporation were not a state-created entity, then each owner of the company, not just the company itself, would be liable in the truck case.
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January 23, 2010, 4:04 pmScott Eudaley says:
The state grants rights to corporations that can’t be obtained merely through contracts because they don’t belong to the individual parties in the first place. Again, the most obvious example is limited liability. That cannot be obtained through a mere contract, the state must choose to give it to an organization.
Not true. In fact, the concept of limited liability for a corporation existed prior to the development of incorporation statutes. The development of incorporation statutes happened in order to recognize a pre-existing contractual form, including limited liability.
There is nothing in law to prevent a contractual arrangement which involves limited liability that is entirely independent of incorporation statutes from being recognized and enforced in a court of law.
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January 23, 2010, 4:12 pmSuperSkeptic says:
“THE great political superstition of the past was the divine right of kings. The great political superstition of the present is the divine right of parliaments. The oil of anointing seems unawares to have dripped from the head of the one on to the heads of the many, and given sacredness to them also and to their decrees.” — Herbert Spencer, The Great Political Superstition (1884). There is a definite correlation here between those who oppose this decision those still subscribing to the superstition Spencer noted over 100 years ago.
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January 23, 2010, 4:16 pmPlugInMonster says:
Yeah because I feel so oppressed by corporations man.... *takes another bong hit*
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January 23, 2010, 4:16 pmScott Eudaley says:
Unless I’m very much mistaken, “disruptive” speech is considered an exception to the First Amendment. Dominating the fora of discussion and preventing other from having their opinions heard could certainly be considered disruptive.
But the mere fact that someone else may have a greater ability to promulgate their views does not prevent me from speaking. To interpret “disruptive” in this fashion is to twist it into meaninglessness. The First Amendment does not guarantee that I will be heard or listened to, only that I will not be silenced by action of the government.
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January 23, 2010, 4:32 pmmemomachine says:
Hmmmm.
@ Andrew
Excuse me!?
Since when has Congress that power? States have that power not Congress!
Maybe because American tax law basically requires it? Otherwise it gets incredibly messy as how to divide income, profits, report to federal & state, file taxes etc etc etc.
Your suggestion that a group of shareholders work in concert without the structure of a corporation in order to bypass a Congressional anti-Constitutional imposition of restrictions on Freedom of Speech is frankly astonishing.
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January 23, 2010, 5:34 pmBruce B says:
If government created entities are not entitled to Constitutional rights, then are people who become citizens via statute — or legal residents who enter the country through statutory processes — also not entitled to Constitutional rights?
The question answers itself.
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January 23, 2010, 5:34 pmLN says:
BruceB, I don’t understand this analogy — do corporations become American citizens via statute? Are corporations mentioned anywhere in the Constitution? Do corporations have the right to vote? Do they have the right to bear arms? How many Congresspeople is Delaware entitled to?
Running with your analogy further, what exactly entitles the government to prevent illegal residents from enjoying the rights of citizens? Who exactly determines if a resident is illegal or not? (The government? Whoa...)
The “corporations are government created entities” argument is not meant to imply that any particular course of action with regard to treatment of corporations is wise, prudent, sensible, or fair. The point is that it is incorrect to think of corporations as being blessed with god-given inalienable rights.
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January 23, 2010, 6:43 pmLee Moore says:
It’s perhaps worth pointing out that corporations may be, and indeed are, formed under the laws of other states than those which constitute the United States. The argument that the United States may justify restricting the behaviour of a corporation formed under Mexican law, because that corporation owes its existence to United States law doesn’t quite work. Because the Mexican corporation obviously doesn’t owe its existence to United States law. Hence, if there is an argument at all connecting the corporation’s status under United States law, with its rights under United States law, it must be to do with state recognition, not state creation.
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January 23, 2010, 6:57 pmHal O'Brien says:
...and thus, you’ve demolished the distinction between “public sector” and “private sector,” and invalidated most strict laissez-faire arguments.
I guess we really are all socialists now. Well done.
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January 23, 2010, 7:14 pmArthurKirkland says:
I have not smoked marijuana for more than 20 years, largely because of the anti-freedom efforts of nanny-state conservatives and liberty-hating Republicans (some of whom are dumb enough to call themselves libertarians).
Other than that, your advocacy is remarkable.
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January 23, 2010, 7:22 pmdcp says:
So let me get this straight. You want to sue the driver of the truck or the mechanic who serviced it (both of whom will now be unemployed and unemployable and were probably dirt poor and stupid to begin with) instead of the general corporation itself, with deep pocket asset funds, a large insurance policy, etc?
Good luck finding a single plaintiffs attorney who will buy into your little theory of corporate invisibility. I mean I’m sure they are just chomping at the bit to spend all that time and litigation expense to get chance to slap a lien on Larry the Lazy Mechanic’s $30,000 trailer home and his beat-up Camaro before the bank forecloses on them.
The corporate form cuts both ways my friend.
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January 23, 2010, 7:52 pmDan says:
Ilya,
Your post seems willfully naive about how corporations act and ‘speak.’ Your central point in this series of posts is that “their owners and employees are . . . persons and that that status enables them to use corporations to exercise their constitutional rights.”
This simplistic formula ignores how corporations really work — in fact, their acts are required by law to maximize profits, regardless of the political opinions of their “owners or employees”.
Consider:
1. corporate boards owe shareholders a duty to manage the corporation according to their good faith judgment on how to give the shareholders the best return on their investment. Anything else subjects them to liability.
2. shareholders have very little power over corporate acts, except to elect board members.
Thus, corporate board members are not free to ‘speak’ through the corporation — in fact, to the extent that their speech might conflict with their duty to shareholders, they are completely muzzled in the corporate context. And shareholders can’t speak through the corporation either — they can only elect board members.
In reality, corporations are designed by law as pure profit-maximizing actors. They will “speak” whatever speech will give them profit. Regardless of the wishes of their “owners or employees.”
Your idea that “owners and employees” of corporations “speak” through the corporations acts simply ignores how corporations actually work.
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January 23, 2010, 8:23 pmAri Tai says:
Seems most of the anxiety people have about citizens speaking through a group (politically or for any purpose) could be addressed through one or two mechanisms. (1) Never write a law or regulation that discriminates between businesses and groups, that favors one over another, or picks a winner – note that one of the reason foreign entities contribute so much (legally and not) is because our government has and will tilt the playing field — stop this and this particular graft will go away. (2) Require every individual participating in a group to “opt-in” to their contribution, share-of-ownership, benefit-from-profits, etc. being used for speech (political, advertising, charity, etc.).
I know as a shareholder I’d opt-in to management exercising their discretion when (political or other) speech was necessary to protect our common interests — else I wouldn’t have contributed my capital to the firm. In other settings I’m not so sure. If I had to join a union and that union was politically active, it’s unlikely I’d opt in. The best answer is to get politics out of business, rather than business out of politics. Return to a simpler time of uniform, affecting-all citizens (and their enterprise) regulation. e.g. rather than emissions regulations “just” require the senior management and board of directors to live and educate their children close to their manufacturing plants, etc.
Remember that McCain was a victim of Keating getting politically involved because of government meddling that led to the Savings and Loan fiasco. If there were no expectations of government interference in an individual business sector, there would have been no scandal or straight-arrow McCain being embarrassed into writing foolish laws.
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January 23, 2010, 8:46 pmreadery says:
Corporations have limited liability. Since when do people have a constitutional right to limited liability? Since when are people entitled to do whatever they want while shielded by limited liability?
Why can’t states say that it’s OK to campaign, but one has to take off the limited liability shield first?
Would you object to a law that says that wading into political speech pierces the corporate veil and makes the corporation’s participants individually liable for any legal consequences of the activity?
After all, if corporations are just the people that make them up, one can’t exactly object to treating them legally as if they are exactly that, can one?
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January 23, 2010, 9:15 pmSeamus says:
You have every right to sue the negligent driver who drove the truck, the negligent mechanic who maintained it poorly, the reckless supervisor who told the mechanic to stint on maintenance. The one thing that you can’t do is go after the owners of the corporation (as you might have gone after the owner of a sole proprietorship) under a theory of respondeat superior. But since the doctrine of respondeat superior is just as much a creation of the state (in the form of the common-law courts) as is a corporation, it’s just a case of the state giving with one hand and taking away with the other.
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January 23, 2010, 9:15 pmLior says:
@Andrew:
You have things exactly backwards. You believe Congress has the general authority to burden the ability to speak unless the limitations amount to a total ban (i.e. some necessary element speaking is eliminated). Instead, Congress generally cannot limit the freedom of speech except in unusual circumstances.
To me, speaking through a corporation is not merely a “manner” of speaking (time, place, and manner may be regulated more easily). Prohibiting people from pooling their resources together in order to send a more effective message is not the same as, say, prohibiting the use of megaphones in residential neighbourhoods. This is important since effective advertizing is expensive, often out of reach for all but the richest individuals.
This is especially so if you believe that certain groups people (the shareholders of a newspaper, the members of a labour union) do have the right the speak collectively through the corporation they formed, using their pooled resources.
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January 23, 2010, 9:19 pmOren says:
Just to add to Seamus’ very excellent response, you can recover against the corporation’s assets and income.
If anything, this makes it easier for your to collect than if you had to sue “those responsible” and establish each defendant’s individual responsibility. I’m not even sure how you would establish the responsibility of an owner for such an accident (“I was in Florida the entire time, I never spoke to the driver or maintenance guy in my life, that was all handled by the managers.” seems like a rather ironclad defense.)
Finally (and perhaps most obviously) the government remove all tort liability from auto accidents. That would not a good policy, IMO, but I don’t think there is a constitutional right to it.
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January 23, 2010, 9:29 pmLior says:
Dan: you miss the point. First, a profit-maximizing sugar-growing corporation should lobby for higher sugar tariffs while a profit-maximizing candy-making corporation should lobby for lower sugar tariffs. In other words, government regulation means that corporations often derive monetary benefits from government actions, and hence from the election and defeat of politicians who influence those government actions. More importantly, certain corporations are formed for the express purpose of facilitating the speech of their owners or employees, or members. For example, Fox News makes money by speaking on political issues, including by having its employees advocate the election and defeat of candidates on-air. The New York Times makes money, in part, by endorsing political candidates in its editorial column and then selling ad space on the opposite page. Separately, one of the core functions of the NRA and the Brady Campaign is to advocate for particular views of the right to arms. The directors and officers of these two organizations are specifically charged with taking contributions of the membership, pooling the overall resources, and using them to best achieve certain policy goals. This most certainly entails trying to convince the public that politicians of the “right” persuasion need to be elected — a mere aggregation of the right of every individual contributor to do so.
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January 23, 2010, 9:30 pmOren says:
It is most certainly a manner of speaking. The problem is that no one here that wants to regulate corporate speech wants to do so based on the manner but rather based on the content of that speech.
Any TPM restrictions would have to apply equally to a billboard for toothpaste as they did for advertisements for a candidate for office. Otherwise it’s not TPM but content-based.
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January 23, 2010, 9:31 pmShelbyC says:
That depends on their charter. They can be profit making or not profit. They can certainly put in the charter that no assets will be used for political speech. But if I invest in a corporation, I expect them to lobby for whatever they need to make money, and not let the government regulate away my investment.
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January 23, 2010, 11:48 pmAndrew says:
Scott Eudaley: There is nothing in law to prevent a contractual arrangement which involves limited liability that is entirely independent of incorporation statutes from being recognized and enforced in a court of law.
I’d be interested to see some actual case law supporting that. I can’t see how a person can, through their own power, forbid others from suing them. Has a court ever upheld that?
Scott Eudaley: But the mere fact that someone else may have a greater ability to promulgate their views does not prevent me from speaking. To interpret “disruptive” in this fashion is to twist it into meaninglessness. The First Amendment does not guarantee that I will be heard or listened to, only that I will not be silenced by action of the government.
You’re right, the First Amendment does not protect you from disruptive speech. It does, however, allow the government to protect you from disruptive speech. The point of that example, though, was how the government can discriminate based upon the form of speech but not based on content. I do not claim, nor do I need to, that corporate speech fits neatly into the disruptive category.
Maybe because American tax law basically requires it? Otherwise it gets incredibly messy as how to divide income, profits, report to federal & state, file taxes etc etc etc.
I’m no expert on tax law, I’ll freely admit. If the barriers in that area were indeed sufficient to prevent the production of Hillary: The Movie except through the use of the corporate form, then under my rule Congress would have to allow the corporate form to speak. However, the Court did not address that, which is really the point. The rule created by the conservative majority is incorrect.
Bruce B: If government created entities are not entitled to Constitutional rights, then are people who become citizens via statute — or legal residents who enter the country through statutory processes — also not entitled to Constitutional rights?
The question answers itself.
The question indeed answers itself: those people would be entitled to rights. For one thing, the protections of the First Amendment are not limited to citizens of this country. For another, citizenship is linked so inexorably with other facets of life that the government cannot require you to give up rights in order to obtain it.
It’s perhaps worth pointing out that corporations may be, and indeed are, formed under the laws of other states than those which constitute the United States. The argument that the United States may justify restricting the behaviour of a corporation formed under Mexican law, because that corporation owes its existence to United States law doesn’t quite work. Because the Mexican corporation obviously doesn’t owe its existence to United States law. Hence, if there is an argument at all connecting the corporation’s status under United States law, with its rights under United States law, it must be to do with state recognition, not state creation.
At this level, the difference between “state recognition” (in the sense of granting rights) and “state creation” is non-existant. The government can link regulation to the granting of privileges whether it is around at the original conception or a later point.
But since the doctrine of respondeat superior is just as much a creation of the state (in the form of the common-law courts) as is a corporation, it’s just a case of the state giving with one hand and taking away with the other.
I wouldn’t agree with your assertion that respondeat superior is a state creation. Unless you accept that all aspects of responsibility are just state creations, that is. The idea that we should be responsible for the actions of people we hire is about as basic as being responsible for things we do ourselves. And, from an American Constitutional standpoint, respondeat superior predates the Constitution from our common law and is thus not really a creation of the state: it came into the American system premade.
Lior: To me, speaking through a corporation is not merely a “manner” of speaking (time, place, and manner may be regulated more easily). Prohibiting people from pooling their resources together in order to send a more effective message is not the same as, say, prohibiting the use of megaphones in residential neighbourhoods. This is important since effective advertizing is expensive, often out of reach for all but the richest individuals.
I never advocated “prohibiting people from pooling their resources together in order to send a more effective message.” In fact, I pretty explicitly said that people do have the right to pool their resorces to speak. What I said is that they have no fundamental right to use the state-granted rights of corporations to do so. They can associate in any way they choose, but they cannot expect to get any protections from the state (such as limited liability).
Say, for instance, that people wanted to organize into groups that could not be sued at all by people outside of the group in order to speak. They would have no power to do that, even though there are indeed groups like that (states, under the 11th Amendment). The existence of a particular form of association does not automatically bestow upon people the right to use that form of association in order to advance political speech.
(I should note here that I’ve been focusing on limited liability because it’s the most obvious one for someone like me who’s relatively unversed in corporate law. There are, of course, many other legal benefits gained from the corporate form that people do not have the innate right to.)
Any TPM restrictions would have to apply equally to a billboard for toothpaste as they did for advertisements for a candidate for office. Otherwise it’s not TPM but content-based.
I’m not sure that’s true. Commercial and political advertisement are completely different fields, and thus can be dealt with legitimately as separate without raising content-discrimination concerns. It becomes content discrimination when they ban political advertisement for one position or another.
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January 24, 2010, 12:29 amsounds better in writing says:
The Court’s unconstitutional conditions doctrine says otherwise. See, e.g., Speiser v. Randall.
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January 24, 2010, 12:55 amApple says:
Now that I have had some time to read the comments, I see that Scott Eudaley (at 11:44 a.m., Jan. 23rd) has beaten me to the suggestion (at 2:11 p.m.) that you read Robert Hessen’s 1979 book In Defense of the Corporation. I second this recommendation.
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January 24, 2010, 3:02 amalligator says:
I’m sure that’s true. “Commercial” and “political” are the content of the speech. I think you’re confusing content-based discrimination with viewpoint-based discrimination. The First Amendment permits greater regulation of commercial speech because it is considered to be of lesser value than than political speech, not because the distinction isn’t content-based.
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January 24, 2010, 1:04 pmDan says:
The point that you and Ilya both miss is that a corporate board cannot take actions inconsistent with the charter of the corporation. Thus, a corporation acts like a machine to effectuate the purposes of the corporation (usually to generate profit). It cannot express the opinions of its “owners or employees” if those opinions are contrary to the purpose of the charter.
Thus, it is wrong to say that “owners and employees” “speak” through a corporation.
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January 24, 2010, 1:16 pmDan says:
precisely. And neither of them can legally express any opinion that is not in line with those profit motives. For instance, neither of these corporations can express the political opinion that there should be a higher minimum wage, even if all the employees and owners believe that to be true.
Thus, the corporations do not “speak for” their employees or owners.
Not true. These corporations create whatever speech they believe will earn them money. If their owners or employees hold an opinion that would be likely to hurt the profits of the company (e.g. Lou Dobbs), that opinion has to be muzzled for in order to protect shareholder profits.
Thus, it is simply not true that owners and employees are free to “speak” through a corporation.
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January 24, 2010, 1:24 pmAndrew says:
Speiser v. Randall only applies if the method actually limits or restrains the speech of the individuals. It hasn’t been shown (or decided by the Court, as far as I’ve seen in the opinion) that requiring people to use other forms of association besides corporations to speak would actually limit their ability to do so.
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January 24, 2010, 1:36 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?
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January 24, 2010, 1:45 pmreadery says:
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?
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January 24, 2010, 2:26 pmScott Eudaley says:
I’m going to repeat a set of questions that the proponents of the pre–Citizen United ban simply have refused to answer. I suspect the reason is that they cannot be answered in any consistent way. Does anyone have the courage to step up to the plate?
All of these questions revolve around around what is and is not a “media corporation”.
1) Is a large conglomerate like GE a “media corporation” because it is part-owner of NBC and MSNBC?
2) Is GE allowed to opine via the NBC/MSNBC TV channels and websites, but prohibited from doing so through its GE-branded website or GE-branded commercials? Why? What is the distinction?
3) Is Comcast (now also a part-owner of NBC/MSNBC) a “media corporation”? What about a smaller cable company which doesn’t own a TV station or cable channel, but does carry news channels?
4) Is a corporation which covers issues in the news on their website a “media corporation”?
Please provide a legal formulation which distinguishes a “media corporation” from one which is not. “I know it when I see it” is not good enough.
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January 24, 2010, 2:37 pmAk Mike says:
Dan — I don’t see any legal basis for your claims that a corporation is legally prohibited from expressing any opinion not related to profits. Most articles of incorporation or organization (“charters”) allow the entity to conduct any and all lawful activities. So do most corporate statutes — e.g., Delaware says “all the powers and privileges granted by this chapter or by any other law or by its certificate of incorporation, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes set forth in its certificate of incorporation.”
Now, if the shareholders don’t like the political activities of the corporation, they can throw out the management or even bring a derivative action. So the shareholders can (and should) ultimately control the political activities of the entity. But that’s a long way from saying that the corporation is legally prohibited from engaging in political activity, even if that activity is antithetical to the financial interest of the company.
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January 24, 2010, 2:43 pmAndrew says:
Scott Eudaley: I’m going to repeat a set of questions that the proponents of the pre–Citizen United ban simply have refused to answer. I suspect the reason is that they cannot be answered in any consistent way. Does anyone have the courage to step up to the plate?
All of these questions revolve around around what is and is not a “media corporation”.
As I suspect you’ve realized, I don’t think there’s a constitutional distinction between the two. However, since you’re referring to the previous law, I assume you’re asking for a legislative distinction, not a constitutional one. I’ll answer your challenge once you identify the portions of the BCRA that created this distinction between media and non-media corporations.
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January 24, 2010, 2:43 pmScott Eudaley says:
Just to elaborate slightly. Clearly, even the dissent agrees that some corporations are entitled to full protection (see NY Times vs. Sullivan) while others are not (see Austin). What distinguishes these two classes? How can you define these in a way that is not subject to political manipulation and administrative abuse by the FEC?
I am not asking what the previous law was, but how you would distinguish between the two, whether legislatively or via precedent.
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January 24, 2010, 2:51 pmM.V.Sankaran says:
At the outset, I confess that have not read the Judgment of the Honorable U.S.Supreme Court in the Citizens United case, but I have read about it, like in the present post and the interesting comments thereunder. I find that some of the persons who have commented here have also obviously not read the judgment itself, but have something or other to say about the topic concerned or the previous comment. Personally I felt that this case kicks up the old controversy about who is the ‘final arbiter’ of the Constitution — the Congress that has the power to amend it or the Honorable Supreme Court that has the power to interpret it under the guise of judicial review to test the constitutionality of a legislative enactment. In a razor-thin majority, it has apparently overturned its own earlier decisions and also, the wisdom of the legislatures of about half the States in the U.S.A. that have enacted a law (in one form or another) to prohibit the use of corporate financial resources for political campaigns. In opposition to the New York Times’ point of view, which was critical of it, this post has been defensive of the said ruling. Very interesting comments have been made here about the origin of ‘joint stock companies’ and their status under the monarchy in the Anglo-American law,their subsequent growth to monolithic proportions over the centuries, their attempts to dominate the economic, political and social life in the societies concerned and across the nations of the world, as in the case of MNCs, the distinction(s) between an incorporated company, which is a juridical or artificial entity in its own right, and other forms of association of persons like a partnership, whether limited or general, and informal associations like clubs and other bodies where the liability of the members is joint and several, as opposed to the limited liability of corporations, sought to be used to limit even their liability for their torts, the doctrine of ‘piercing the veil’ adopted in certain cases to overcome the ‘limited liability’ concept of incorporated companies, the principle of vicarious liability of companies (as the employer) for the torts committed by its employees, who really operates the corporate enterprise — the owners or the professional managers (?), whether it always functions in the interests of the shareholders or in its own ‘narrow’ profit-making interests, even if it be diametrically opposed to ‘public interest’, whether ‘production or service-oriented’ corporations can be distinguished from ‘media-related’ corporations in respect of their First Amendment rights to ‘freedom of speech’ and all actions directed towards securing the same and so on and so forth. Very interesting to read them really! The canvass has been stretched wide to include even observations that have nothing to do with the impugned ‘classification’ adopted by the legislature and whether it has at all any ‘rational nexus’ to the ‘object’ sought to be achieved by it, that is, to curb the influence of ‘money power’ in political campaigns obviously. When ‘natural persons’ have to vote, one may well ask why allow ‘profit-making’ corporations to influence their thinking and determine how they vote? Perhaps the role of ‘media corporations’ also have to be restrained further for the same reason, or they should accept ‘voluntary restraint in reporting’ to guard their ‘freedom of press’ from being abridged in the larger interests of the voting public.In this context, corporations cannot vote, just as they cannot be hanged or imprisoned for any crime, but they can be fined. If any ‘media corporation’ transgresses the norms of ‘fair play’ and were to be guilty of an offence, it should be visited with an exemplary or punitive fine. That cannot, however, be an argument for making inroads into laws that have stood the test of time apparently for the sake of ‘judicial activism’. And those who vindicate such a ruling as a ‘triumph of democracy’ are perhaps deluding themselves. The decision will obviously have a ‘limited period’ validity. Time alone will tell!
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January 24, 2010, 3:02 pmOren says:
Interestingly, an analysis of corruption between those States with the most such regulation and those with the least found very they appear to make very little difference. See, e.g. Milyo, J & Primo, D Campaign Finance Laws and Political Efficacy: Evidence from the States (2006) Election Law Journal, 5(1): 23–39.
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January 24, 2010, 4:24 pmDan says:
A shareholder can sue the board for taking an action if the board did not have an honest and rational belief that the action was in best interests of of the corporation. See, e.g., Smith v. Van Gorkom.
In applying this rule, Court apply the “Shareholder Primacy Norm” under which directors must favor the interests of shareholders over nonshareholders (ie charity, community, and employees). Directors do have discretion to consider nonshareholder interests, but only if those interests impact long-term shareholder interests. See, e.g. The Shareholder Primacy Norm, 23 J. Corp. L. 277, 277–83 (1998).
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January 24, 2010, 4:48 pmmuffler says:
Copied from Splathrop’s post on Huffpost on Alan Grayson’s bill “Business Should Mind Its Own Business Act” (H.R. 4431)
How about this. Treat this as a problem of corporate governance, which it is. A shareholder and an executive won’t have conflicts of interest regarding the outcomes of routine commercial expenditures. With regard to political expenditures, such conflicts will be commonplace. This needs to be guarded against.
Under the commerce clause, let Congress pass a law regulating political expenditures by corporations engaged in interstate commerce. Political expenditures must be approved in advance by shareholders fully informed with regard to the costs and the political positions proposed for support.
Unlike commercial expenditures, the outcomes of political expenditures have implications beyond the mere welfare of the corporation, affecting lives and public policy beyond the corporate walls. This makes the normal corporate practice of voting by share ownership inappropriate. Make the standard for approval 51% of a one-shareholder-one-vote election, without regard to the quantity of shares owned. Make beneficial ownership of shares the standard of eligibility to vote.
In this manner the ordinary standards of political elections can be brought to corporations wishing to participate as good citizens in the political process.
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January 24, 2010, 6:31 pmAndrew says:
Scott Eudaley: Just to elaborate slightly. Clearly, even the dissent agrees that some corporations are entitled to full protection (see NY Times vs. Sullivan) while others are not (see Austin). What distinguishes these two classes? How can you define these in a way that is not subject to political manipulation and administrative abuse by the FEC?
I am not asking what the previous law was, but how you would distinguish between the two, whether legislatively or via precedent.
New York Times v. Sullivan is actually a very bad illustration of your point. The Court was not asked, and did not decide, whether the freedom of the press extended to the New York Times under its auspices as a media corporation. Most of the time (except, of course, with the Roberts Court’s handling of Citizens United), the Court refrains from answering questions not presented by the litigants. The Court assumed the New York Times’ protection because no one challenged it (at least, per my skimming of the opinion. Quote a portion of it if I’m wrong.)
As to the distinction I would make (though, of course, I do not speak for everyone who disagrees with the conservative majority in Citizens United, or even the dissent): I would follow what I’ve already said before: there is no right to any particular form of association, so long as the basic right to associate for purposes of speech is not unduly limited. Thus, in settings where the corporation is the only effective way to associate for a type of speech, the owners of the corporation are protected in their association. In settings where there are other effective ways of reaching the same goal, the owners of the corporation are not protected in that particular association.
I suspect that media corporations such as the New York Times or CBS or FOX News would pass muster under this standard: Large scale media efforts such as those would be almost impossible without the organizational structure provided by the corporate form. The same logic would probably apply to non-profit advocacy corporations: they are almost identical to media corporations, except that they take a more obvious point of view.
If the only speech at issue is the occasional advertisement for a political candidate, however, I doubt that the corporate form would often be necessary to promote the speech of the owners. It’s possible–again, I’m not an expert in business organization. However, Congress could relatively easily justify a strict wall between corporate funds invested for the purposes of political speech and funds invested for other purposes, as that would not limit the ability of any of the shareholders who wished to speak to do so.
Your question about GE’s ability to “speak” through NBC is based on the fallacious assumption that GE or NBC are doing the speaking. As Professor Somin has pointed out, the right to speak belongs to the owners of the corporations, not the corporations. So, if the shareholders of NBC have the right to speak, and they have a contract with GE whereby they have to express certain opinions of GE’s shareholders, then that is legitimate.
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January 24, 2010, 7:21 pmSuperSkeptic says:
It could be that the Court in Craft was merely construing a statute. Or, it could be that Craft is wrong.
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January 24, 2010, 11:27 pmzuch says:
Not exactly. As I pointed out, both the pastors that bought the ad and the N.Y. Times that ran the ad were let off. The gist of the decision was as to what was actionable libel (and the establishment of an “actual malice” standard for public figures).
Cheers,
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January 25, 2010, 1:38 amzuch says:
If what you say is true and such “rights” are a creation of state law, then the Constitution can’t protect these rights at all. But it does.
But you’re wrong even here. See, e.g., Article I, Section 2 and Amendment XVII.
Cheers,
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January 25, 2010, 1:50 amzuch says:
Seamus:
Just to be clear, why don’t you trot out any case you’d like that has held that there is no Constitutional right to vote, and that the 15th and 19th Amendments are just talking about limiting states from abridging state-granted rights (despite the plain text of these amendments)? You’re free to have your own ‘opinion’ on your strained ‘interpretation’, but we’re under no obligation to take your word for it as a final word on such.
Cheers,
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January 25, 2010, 1:57 am