Let us now praise corporate persons: Citizens United was a bad decision; but the cry of "corporations are not people!" isn't helping fix the problem--in fact, its making it worse.

Author:Greenfield, Kent
 
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The American left is notoriously fractious. But one belief that unites more than most is this: corporations are not people. "Corporations are people, my friend," said Mitt Romney in 2012, and Democrats skewered his cluelessness. "I don't care how many times you try to explain it," Barack Obama said on the stump. "Corporations aren't people. People are people." During the 2014 midterms, Massachusetts Democratic Senator Elizabeth Warren barnstormed the country to rally the faithful. Her most dependable applause line? "Corporations are not people!"

The main target of the corporations-are-not-people crowd is the Supreme Court's 2010 Citizens United ruling striking down limits on independent corporate spending in elections. After that case, groups sprang up to fight corporate personhood. Others rebranded themselves by newly taking aim at it. But they do not limit themselves to attacking the Court's campaign finance jurisprudence. Most groups make a broader attack on corporations being able to assert any First Amendment speech rights at all; and some have called for disabusing all corporations or businesses of any constitutional right.

Common Cause, for example, uses Robert Reich to tout its support for "a constitutional amendment declaring that 'Only People are People' and that only people should have free speech rights protected by the Constitution." Public Citizen, the liberal litigation group founded by Ralph Nader, argues that "rights protected by the Constitution were intended for natural people." Free Speech for People, one of the groups most influential in the anti-personhood movement, is pushing a "People's Rights Amendment." A version has already been sponsored in the U.S. Senate by Jon Tester of Montana and in the House by Jim McGovern of Massachusetts. It would declare that "the rights protected by this Constitution" are "the rights of natural persons." A range of liberal groups have signed on to the anti-personhood project--MoveOn, Sierra Club and NAACP chapters, and steelworker and SEIU locals. By their count, sixteen states and nearly 600 localities have endorsed some kind of anti-personhood amendment. Even in a moment when the progressive left seems otherwise to be fighting rearguard actions, this movement has genuine energy.

These are my people. Many of the leaders of this movement are friends and respected colleagues. I contributed to Elizabeth Warren's senatorial campaign and voted for Reich when he ran for governor of Massachusetts. Forty years ago, my coal miner grandfather sat me down and told me how a union had saved his life. As a law professor, I have spent my career as an oddity--a progressive who teaches corporate law, almost always the most liberal person in any room of business law academics. A decade ago, I came up with a novel legal theory that shareholder activists recently put to good use suing the Hershey Company over the use of child labor in West African chocolate cultivation.

A corporate lickspittle I'm not.

But the attack on corporate personhood is a mistake. And it may, ironically, be playing into the hands of the financial and managerial elite.

What's the best way to control corporate power? More corporate personhood, not less.

If you're shopping for glue sticks or glitter and hearing Christian music over a loudspeaker, you're probably in a Hobby Lobby store. An arts-and-crafts retailer, Hobby Lobby is a big company, with upwards of 20,000 employees and more than 600 stores. But it's a "closely held" corporation--meaning its stock is not publicly traded. The stock is owned by members of one family, the Greens of Oklahoma City, who are devout Christians. As enacted, the Affordable Care Act contained a provision requiring the company to provide its employees with health insurance that includes all medically approved forms of contraceptive care. The Greens objected. They believe that four of those methods are "abortifacients," and claimed that the coverage mandate violated their rights under the Religious Freedom Restoration Act.

When their suit made it to the Supreme Court in early 2014, a group of corporate law professors (of which I was one) filed a "friend of the court" brief arguing against the corporation.

The brief's main argument? Corporate personhood.

Understand that "corporate personhood" simply expresses the idea that the corporation has a legal identity separate from its shareholders. That separateness, the brief pointed out, is inherent in what it means to be a corporation. A "first principle" of corporate law (as we explained) is that "for-profit corporations are entities that possess legal interests and a legal identity of their own--one separate and distinct from their shareholders." The very purpose of the corporation as a legal form is to create an entity "distinct in its legal interests and existence from those who contribute capital to it." This separateness means that shareholders are not held liable for the debts of the corporation. That makes it possible for people who do not wish to oversee the day-to-day activities of companies in which they invest--and do not wish to risk every penny they own if the corporation goes bankrupt--to invest in corporate stock. In other words, this separateness is what makes capital markets possible. And capital markets are essential for the development of a vibrant national economy. Beyond that, corporations can exist long after the life of any individual that invests in, or works for, them. This means, as the legal scholar Lynn Stout has pointed out, that corporations provide a mechanism for society to make long-term, intergenerational investments that are not linked to government or a specific family.

It is not an overstatement to say that corporate separateness has been one of the legal innovations most important to the development of national wealth.

The professors argued that this separateness meant that the Greens should not be able to attach their own religious beliefs to the corporation. The reason the Greens had chosen to form a corporation was to be able to operate the business without running the risk of losing their personal assets if the corporation went belly up. They wanted separateness. They should not then be able to stand in the shoes of the corporation for purposes of religion.

The Supreme Court disagreed. It held, 5-4, that the Greens could project their religious beliefs onto the corporation and refuse to provide their employees the required contraceptive-care benefits. Justice Samuel Alito's opinion is evidence of the Court's much-discussed pro-business tilt, to be sure. But it's also evidence that the majority doesn't understand the basics of corporate law. Its sin was not an embrace of corporate personhood but a rejection of it.

In fact, let us now praise corporate persons.

Consider the Deepwater Horizon oil spill disaster. For three months in 2010, Americans woke each morning to the news of another 50,000 barrels of crude spewing into the coastal waters of the Gulf of Mexico. We were justifiably outraged. In a legal system without corporate personhood, the channel for that outrage would be limited to lawsuits and criminal inquiries against individual human beings responsible-- managers, workers, and contractors. That's important, of course. In any legal jurisdiction worth its salt, the search for culpable individuals has to be part of the settling-up of...

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