Corporate speech & the rights of others.

Author:Joo, Thomas W.
Position:Symposium: Money, Politics, Corporations and the Constitution
 
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  1. INTRODUCTION

    How might the role of money in electoral politics change if corporations had no First Amendment rights? In short, "not much." Insofar as the Supreme Court has protected business corporations' under the Constitution, that protection has never expressly relied on the notion that a corporation per se has constitutional rights. To the contrary, a central strategy of the Court's corporate constitutional jurisprudence has been to avoid deciding whether corporations are the holders of constitutional rights. Critics of corporate constitutional jurisprudence must recognize that it is based not on the rights of the corporation but on the rights of others. Recognizing this fact reveals the real weakness of the Court's reasoning: it depends on a mischaracterization of corporate governance as a participatory democracy.

    This Essay makes two main arguments. First, the jurisprudence extending constitutional protection to corporations focuses not on the rights of corporations themselves, but on the rights of others. Criticizing the Court for focusing on corporate constitutional "personhood" misses the point of the case law. In fact, the jurisprudence has avoided simplistically equating the corporate legal "person" with the human individual to whom the Constitution guarantees rights. The Court has done so by carefully reframing corporate constitutional law issues to focus on the interests of individuals. The Court has done this in two ways: First, it sometimes treats a corporation as an "aggregate" of individual natural persons. Second, in the free speech context, it focuses on the rights of human listeners rather than those of corporate speakers. For example, the Court has justified corporate speech protection on the basis of individuals' interest in hearing diverse viewpoints.

    My second point focuses on the real weakness of the corporate constitutional jurisprudence: its reliance on the common misconception that the actions of a corporation reliably reflect the will of its constituent individuals. Using this flawed assumption, the Supreme Court has held that corporate regulations infringe on the due process and Fourth Amendment rights of natural persons. The Court has made a related error in the free speech context--the central concern of this Essay. Although listeners may have an interest in hearing corporate messages, that may conflict with the interests of the corporation's shareholders (or its other constituents, such as employees) if they disagree with those messages. But the Court has dismissed this concern on the ground that shareholders control a corporation's messages through "the procedures of corporate democracy." (2)

    However, corporate law does not, and is not intended to, run corporations in a democratic way. Rather, in the interests of money-making efficiency, the law concentrates power in professional managers. (3) They enjoy nearly unreviewable discretion to control the resources of the corporation with negligible input from shareholders. As intended, this arrangement is likely to benefit shareholders financially. But it does not protect them (or other corporate constituents) from corporate political spending or other speech acts they disagree with. This fact undermines the Court's listeners' rights argument against corporate campaign finance regulation. It is also consistent with the proposed "Democracy for All Amendment," which would expressly permit campaign finance law to regulate corporations and natural persons differently. (4)

    Another proposed constitutional amendment, the "People's Rights Amendment," would amend the Constitution to exclude corporations from the categories of "people, person, or citizen as used in this Constitution." (5) The amendment aims to deny corporations the rights the Constitution gives to human individuals. Because corporate First Amendment law does not depend on corporate rights per se, however, the People's Rights Amendment would have no immediate determinative effect on corporate campaign finance regulation or other corporate speech laws. (It could nonetheless be useful in informing the Court of the public's impatience with corporate constitutional protection, whatever its doctrinal basis.)

    The remainder of this Essay proceeds as follows. Part II describes the two ways in which the Supreme Court bases its corporate constitutional law jurisprudence on the rights of others: the aggregate theory and the listeners' rights doctrine. Part III explains how these theories depend on the misperception that corporate decisions are made through "procedures of corporate democracy." The Court does not indulge in a nonsensical equation of corporations with human beings. The real failing of the jurisprudence is its mischaracterization of corporate law and governance. Corporate constitutional doctrine is thus based on a fundamental misunderstanding about how corporations work.

  2. THE RIGHTS OF OTHERS

    Constitutional doctrine avoids the question of whether corporations are constitutional "persons" and focuses instead on the rights of others in two ways. First, the Court sometimes treats a corporation as no more, and no less, than an "aggregate" of human individuals. (6) The Court then focuses on the rights of those individuals. In the First Amendment free speech context, the Court allows corporations to invoke individuals' rights in a second way. The so-called "listeners' rights" theory of the First Amendment protects the public's right to hear messages, and thus requires neither a corporate nor an individual "right" to speak.

    The troublesome "corporate" aspects of the cases are thus made to disappear, and the Court employs existing notions of natural persons' constitutional rights. While avoiding the fallacy of anthropomorphizing the corporation, this reductionist approach has fallacies of its own, because it depends on misunderstandings about the law and practice of corporate governance. Corporate governance is designed to optimize business performance by concentrating power in the hands of professional management. This is inconsistent with the aggregate theory's notion that a corporation's acts reflect the consensus of its members. It is also in tension with the listeners' rights theory. Even if listeners have an interest in hearing political messages, it may be inappropriate for management to unilaterally decide to pay for such messages with corporate funds.

    It may be argued that it is excessively formalistic to distinguish between constitutional protection based on corporate "personhood" and protection derived from rights of others. (7) Whatever lawyerly rhetoric is deployed, corporations are in effect protected like individuals. While there is truth to this description of the end result, it is dangerous to be dismissive of the Court's method of reaching that result. Advocating for reform requires an understanding of what is really at stake, but also the ability to challenge legal arguments on their own terms. These specific formal and rhetorical strategies are particularly well-suited to our neo-formalist and (nominally) libertarian era. The Court has carefully chosen to evade the (still-unanswered) question of corporate speech "rights" and reframe the issue in terms that are consistent with both existing constitutional law doctrine and various politically powerful notions: property rights, free markets, freedom of information, and limited government.

    1. CORPORATION AS AGGREGATE

      In some contexts, the Court has treated corporations' constitutional claims as vindicating the rights of its constituent individuals. The Court first expressed this view in late nineteenth-century cases invalidating state regulations for infringing on property rights in violation of the Fourteenth Amendment's Due Process clause. In Pembina Consolidated Silver Mining & Milling Co. v. Pennsylvania, an 1888 case, the Court stated that "the designation of person" in the Fourteenth Amendment includes corporations because they are "merely associations of individuals united for a special purpose." (8) The Court did not hold that a corporation is itself a "person" in some metaphysical sense. Rather, the Court held that corporation is a group of individuals, and thus that its legal treatment affects the constitutional rights of individual persons. In a 1906 case, Hale v. Henkel, (9) the Court invoked the aggregate theory to justify protecting a corporation's papers from unreasonable searches under the Fourth Amendment. While the Fourth Amendment guarantees this right to "the people," the Court did not state that corporations themselves are "people," but again focused on the individuals behind the corporation: "A corporation is, after all, but an association of individuals under an assumed name and with a distinct legal entity."

      More recently, in Hobby Lobby, the Court applied the aggregate theory to non-constitutional free exercise rights. Hobby Lobby and its co-petitioners were corporations that objected to the Affordable Care Act's mandate that employers provide contraception coverage for their employees. (10) Each corporation was entirely owned and controlled by the members of a single family whose members unanimously opposed the mandate on religious grounds. (11) The case was based not on the First Amendment's Free Exercise Clause, but on the Religious Freedom Restoration Act (RFRA). According to RFRA, the government may not "substantially burden a person's exercise of religion" unless the burden furthers a compelling governmental interest by the least restrictive means available. (12) The word "person" in a federal statute includes corporations "unless the context indicates otherwise." (13) In language reminiscent of Pembina and Hale, the Court insisted that protecting the petitioner corporations was necessary in order to protect individuals:

      Congress provided protection for people ... by employing a familiar legal fiction: It included corporations within RFRA's definition of "persons."...

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