Corporate speech & the First Amendment: history, data, and implications.

Author:Coates, John C., IV
Position:Continuation of II. Empirical Evidence on the Corporate Takeover of the First Amendment through III. The Relationship between the takeover to the New Corruption, with footnotes, p. 249-275 - Symposium: Money, Politics, Corporations and the Constitution

    i. Data and Coding

    This subsection starts with all U.S. Supreme Court cases in the Supreme Court Database ("SCD"), (107) which ranges from 1946 to the present (n=12908 as of the date that the data were downloaded, in December 2014). After dropping 68 records that on inspection were duplicates or cases closely related to other records, the resulting data set includes 423 unique Supreme Court decisions involving speech, press or assembly under the First Amendment. (108) The cases were then coded for whether they involved a business, an individual or some other kind of party (usually a government entity), in what combination, and which type of party won. Victories were distinguished between those in which a party defeated an attempt to persuade the Court to strike down a law or regulation under the First Amendment and those in which a party succeeded in so persuading a Court to strike down a law or regulation. (109)

    ii. Summary Statistics

    Over the full period of the dataset, based on the above classification, 63% of the cases involved at least one individual party, and a slightly overlapping subset of 30% involving at least one business party, with the remaining cases consisting of disputes between other kinds of parties (e.g., university vs. government, government official vs. government, etc.). The ratio of business to individual First Amendment cases overall was 0.48.

    Consistent with standard doctrinal histories and the review in Part I.C, Virginia Pharmacy (1976) marks a clear shift in the data. Prior to Virginia Pharmacy, businesses were involved in 26% of the 176 cases, or 1.5 per year, while afterwards they were involved in 34% of the 246 cases, or 2.2 per year. These increases for business are statistically significant at a 95% level. These increases are not due to an overall increase in First Amendment cases over time--the overall linear time trend in the number of such cases is almost zero. The increase in business cases remains significant with linear time (annual) controls. The annual number of First Amendment cases involving individuals actually decreased from 4.3 per year prior to Virginia Pharmacy to 3.6 per year after that case. Both absolutely, and relative to individuals, business has been involved in significantly more First Amendment cases to the Supreme Court in the thirty-eight years since Virginia Pharmacy than in the prior thirty-eight years.

    The increase in First Amendment cases involving businesses is depicted in Figure 2, which plots a five-year moving average of the percentage of such cases as a share of the Supreme Court's First Amendment docket as a whole. Visual inspection reveals four periods: the period prior to the 1950s, when business cases were missing altogether; the period from the 1950s thorough the early 1970s, when cases represented roughly 20% of the Court's First Amendment docket; the period from the mid-1970s through the late 1980s, when such cases rose steeply and steadily before leveling off at around 40% of the Court's First Amendment docket; and then the period since the late 1980s, during which they have varied but represented a roughly stable share between 35% and 40%. What constitutional law scholars will already have noted is that period 3--the period of rising First Amendment cases involving businesses--coincides with the presence on the Court of Justice Powell, who served from 1972 to 1987.

    Business "win" rates also rose dramatically after Virginia Pharmacy. Prior to that case, business won 20% of its First Amendment cases, compared to a 41% win rate for individuals. After Virginia Pharmacy, business and individual win rates were roughly equivalent at 55% each. Again, the differences are robust to overall time trends--while both kinds of parties won more frequently, businesses won more frequently after Virginia Pharmacy than can be accounted for by the overall increase alone, while individuals' victories are in line with the time trend.

    These changes over time in the role of business in First Amendment cases is larger once the cases are analyzed to see if business is seeking to use the First Amendment affirmatively, to strike down a law or regulation, rather than defensively, to uphold a law or regulation. In the 1940s, and a few times since then, unions sought to have the Supreme Court strike down open shop or anti-picketing laws as violating union members' First Amendment rights--generally to no avail. (110) Business involvement in those cases was defensive--they were not seeking to use the First Amendment to overturn legislation, but were defending the outcome of the popular legislative process against potential court intervention. Excluding defensive cases and focusing solely on offensive uses of the First Amendment, business cases and win rates fall by roughly a third in the pre-Virginia Pharmacy era, but not after.

    A final point to make about the "offensive" First Amendment cases prior to Virginia Pharmacy involving business is that they almost always involved attacks on laws barring or restricting expressive businesses--i.e., the business of the business party itself--whereas after Virginia Pharmacy they began increasingly to involve attacks on laws regulating speech, such as advertising, that was incidental or instrumental in the business of the business party, brought by non-expressive businesses. The first businesses to win First Amendment victories in the Supreme Court illustrate typical expressive business cases. In Grosjean v. American Press Co., (111) the Court found the right to a free press incorporated into the Fourteenth Amendment's Due Process Clause conflicted with a two percent gross receipts tax imposed by Louisiana solely on individuals or corporations engaged in the business of ad-based large-circulation newspapers, magazines or similar publications, at the behest of Governor Huey Long, who was generally understood to be retaliating against the newspapers for being critical of his administration. (112) In Joseph Burstyn, Inc. v. Wilson, (113) the Court found that a New York statute authorizing the appointment by the Board of Regents of a head of the motion picture division of New York State's Board of Regents (which has authority over education policy in the state) to examine motion picture films and to issue licenses based on whether films were "sacrilegious" was invalid as an unconstitutional abridgment of free speech and of free press. The law challenged in this case directly regulated the revenue-producing expression (in the form of movies) of the business plaintiff, a for-profit film company.

    Contrast these cases with the POM Wonderful case discussed above, or another recent business victory--that of Western States Medical Center et al. against provisions of the federal Food and Drug Administration Modernization Act in 2002. (114) In Western States, the statute and regulations challenged did not regulate the sale of the underlying drugs being sold by the business party, but instead regulated the advertising and promotion of drugs. The companies involved were not set up to engage in speech or other forms of expression, but were using expression as an instrument, to further the primary goals for which they were established, to produce, distribute and sell drugs.

    The distinction between laws regulating expressive businesses and laws regulating expression by non-expressive businesses is an important one in understanding the patterns in and social effects of post-World War II First Amendment doctrine. Expressive business cases--those involving film companies, (115) newspapers, (116) magazines, (117) book publishers, (118) radio stations, (119) theatre companies, (120) and similar businesses--often have fact patterns that are nearly identical to those involving individuals, with the only difference being the nature of the party. Individuals, by contrast, much less commonly bring cases involving expression of commercial speech, even though there are more sole proprietorships doing business in the U.S. than corporate businesses, and the sole proprietorships are equally subject to most business regulation. (121) More importantly, expressive businesses brought all of the business victories under the First Amendment prior to Virginia Pharmacy. No non-expressive business--which is to say, no business not engaged in expression for its primary revenue-producing activity--was able to achieve an offensive First Amendment case prior to 1976. Put differently, the era in which businesses have used the First Amendment to achieve de- or re-regulatory goals beyond their core revenue-producing activities falls entirely in, with increasing frequency during, the last thirty years since the First Amendment's adoption in 1791.

    iii. Limits and Implications of Supreme Court Evidence

    The analysis so far has limits. Because the dataset is composed solely of Supreme Court cases, it runs up against censoring or selection problems for both case type and outcome data. These include the fact that the Supreme Court's docket is largely discretionary and small relative to the universe of disputes, creating a challenge for interpreting data on both case type incidence and case outcomes. For data on case type incidence, the Court's docket over time may not reflect the importance of legal doctrines over time, if a doctrine had reasonably predicable implications for disputes if litigated. For data on case outcomes, the empirical challenge was flagged long ago context by Priest and Klein (122)--one should expect to see "win" rates for a given class of cases near 50%, if litigants were rational and equally informed and incentivized, because they would tend to settle as the odds of victory moved away from 50%. (123) Indeed, this is what we see for the period after Virginia Pharmacy, where win rates for both businesses and individuals are 55%, close enough to 50% given the variance in the...

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