Corporate Personhood and the Rights of Corporate Speech

• Publication year: 2007
• Citation: Vol. 30 No. 04

SEATTLE UNIVERSITY LAW REVIEWVolume 30, No. 4SUMMER 2007

Corporate Personhood and the Rights of Corporate Speech

Adam Winkler(fn*)

My objective here is to provide a little historical background on business corporations and their place in First Amendment law. In the course of that overview, I will also make a few observations that I believe can be helpful in thinking about corporate speech rights. First, I will argue that one aspect of the constitutional status of corporations-the notion of corporate personhood-has not played the central role in shaping corporate speech rights that some believe. Corporations have free speech rights, but they are more limited than those held by individuals. Second, I will argue that there is not a single right of corporate speech. Rather, there are at least four distinct free speech rights held by corporations. Each one is subject to its own set of rules and restrictions, and there are a number of inconsistencies in the reasoning of the relevant decisions, breeding a set of doctrines with little coherence. I will conclude with some thoughts on the effectiveness of limiting corporate speech in an age of "loose" corporate law.

I.

When the Founders established the principle of free speech in both the Federal and state constitutions, corporate speech was far from their minds. There were very few corporations at the founding, with estimates of only about six corporations chartered in the U.S. at that time.(fn1) Moreover, in the early decades of the U.S., the states exercised considerable control over corporations that made them unlikely holders of so-called rights against the government. Corporations could only be formed by an affirmative grant by the legislature and were required to have a "public purpose."(fn2) As part of this process of state chartering, states dictated corporate affairs with a fine eye for detail-setting the rates companies could charge, providing for government inspection, and establishing firm limits on corporate powers.(fn3)

In the landmark decision of Dartmouth College v. Woodward,(fn4) decided in 1819, Chief Justice John Marshall emphasized that a corporation was "an artificial being, invisible, intangible, and existing only in contemplation of law."(fn5) But this decision also held that state power was not unlimited. The charter given by the state to the corporation, Marshall wrote, was a contract that the state was bound to respect.(fn6) The basis for this ruling was a fundamental fact of the corporate form in the context of constitutional law: corporations are formed by real individuals and those individuals have constitutional rights against the state.(fn7) Corporations receive constitutional protection, as Dartmouth College did, in order to protect the constitutional rights of the individuals behind the artificial entity.

States easily maneuvered around the Dartmouth College decision by adding to new corporate charters provisions permitting the states to revise their bargains.(fn8) Because incorporators agreed to this contractual provision, they could not complain. Effectively, then, states were able to continue to regulate corporate affairs with vigor. This continued even after the adoption of "general" or "free" incorporation laws in the mid-1800s, which broadened access to corporations, diminished the necessity for an affirmative act of the legislature, and led to a wave of corporate formation.(fn9)

In 1868, the Fourteenth Amendment was added to the Constitution.(fn10) Its most significant provision, Section 1, guarantees to all "persons" due process of law and equal protection of the laws. Although corporations were widespread and well known at this time,(fn11) the Framers of the Fourteenth Amendment did not intend to grant corporations these rights.(fn12) One member of the congressional committee that drafted the Fourteenth Amendment however-Roscoe Conkling of New York- argued to the Supreme Court on behalf of a railroad company that the drafters silently intended to include corporations within the ambit of the Amendment,(fn13) giving rise to what has been called the "conspiracy theory" of the Fourteenth Amendment.(fn14) No independent evidence to support his claim has ever been uncovered.(fn15)

Nevertheless, in 1886, the Supreme Court issued an opinion in the case of Santa Clara County v. Southern Pacific Railroad(fn16) that would establish corporate personhood. Prior to oral argument, Chief Justice Morrison Waite announced: "The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does."(fn17) When the court reporter included this statement at the beginning of the published opinion,(fn18) corporate personhood was established-without argument, without justification, without explanation, and without dissent.

This doctrinal development coincided with the dawn of the giant management corporations.(fn19) Fed by a national economy, broader stock ownership separated from corporate control, and the liberalization of corporate law to remove longstanding limits on corporate powers-such as the doctrine of ultra vires-American business became organized largely around the business corporation.(fn20) Less and less were corporations controlled by state corporate law; increasingly they were run by professional, salaried managers.(fn21)

According to some critics of Santa Clara, the decision placed business corporations on par with natural individuals, with each entitled to the same rights under the Constitution.(fn22) But equivalent rights for corporations did not follow from Santa Clara and, indeed, in subsequent years the Supreme Court allowed the states to cabin the rights of corporations in ways not possible in the context of individuals. For example, in the Lochner era, when the Supreme Court held that individuals enjoyed a liberty of contract that prevented states from interfering with private business relationships, the courts upheld state laws limiting corporations' contractual rights.(fn23) Although recognizing corporate rights under the Fourth Amendment, the Court also held that, unlike individuals, corporations do not have a Fifth Amendment right against self-incrimination.(fn24)

In the realm of freedom of speech, corporate rights have never been equivalent to those of individuals. In the early 1900s, Congress and the majority of state legislatures adopted laws completely barring corporations...