The constitutional standing of corporations.

Author:Garrett, Brandon L.
Position:Introduction through II. A Taxonomy of Corporate Constitutional Rights, p. 95-136

Introduction I. Selective Incorporation of Corporate Constitutional Rights A. To Whom Do Constitutional Rights Attach? B. Theories of Corporate Personhood II. A Taxonomy of Corporate Constitutional Rights A. The Contract Clause B. The Equal Protection Clause C. The Due Process Clause D. The First Amendment E. The Fourth Amendment F. The Fifth Amendment G. The Double Jeopardy Clause H. Fines: The Sixth Amendment, Eighth Amendment, and Due Process I. Structural Provisions III. Incorporation of Substantive Corporate Rights A. Associational Standing B. Organizational Standing 1. The Hobby Lobby Decision 2. Hobby Lobby's Implications for Corporate Standing C. Third-Party Standing D. Consequentialism and Not Reciprocity IV. The Future of Corporate Constitutional Rights A. Reconsidering Constitutional Non-Protection of Corporations B. Organizational Rights Taxonomies C. Individualized and Group-Based Constitutional Rights Conclusion Introduction

During the oral arguments in Citizens United v. Federal Election Commission, Justice Sonia Sotomayor commented that it would seem as if the Supreme Court had "imbued a creature of State law," the corporation, "with human characteristics." (1) In Citizens United, the Court ruled that the First Amendment prohibited restrictions on political speech of corporations. (2) Like no other prior decision, Citizens United elevated the importance of the question whether corporations and other types of organizations can assert constitutional rights. That was until the Court decided Burwell v. Hobby Lobby Stores, Inc., in which three for-profit closely held corporations challenged contraceptive coverage under the Affordable Care Act of 2010. (3) In Hobby Lobby, at oral arguments, Justice Kennedy posited: "You say profit corporations just don't have any standing to vindicate the religious rights of their shareholders and owners." (4) Yet in its decision, the Court did not address the standing requirements directly, stating that because corporations protect those "associated with a corporation in one way or another," a for-profit firm can assert free exercise rights and can itself claim to have sincere "religious beliefs." (5)

Are corporations "persons" with standing to assert constitutional rights? The Court in Citizens United gingerly avoided addressing the issue directly; and in Hobby Lobby, the Court avoided the First Amendment issue, relying instead on statutory rights under the Religious Freedom Restoration Act of 1993 while evading the question of corporate standing. As I will explore in this Article, real missteps in both decisions could have been avoided by directly addressing these questions. Corporations and other types of organizations have long exercised a range of constitutional rights, including those found under the Contracts Clause, (6) Due Process Clause, (7) Fourteenth Amendment Equal Protection Clause, (8) First Amendment, (9) Fourth Amendment, (10) Fifth Amendment Takings and Double Jeopardy Clauses, (11) Sixth Amendment, (12) and Seventh Amendment. (13)

Corporate constitutional litigation is pervasive. While perhaps the most significant, Citizens United and Hobby Lobby are by no means the only recent high-profile constitutional cases involving corporate litigants. Take a few prominent examples: (1) shareholders of AIG filed two derivative actions claiming that during the global financial crisis, the government's bailout of AIG was a taking in violation of the Fifth Amendment; (14) (2) the Southern Union Corporation successfully won a Supreme Court victory asserting its Sixth Amendment right to have aggravating facts proven to a jury when prosecuted for environmental crimes; (15) and (3) the Court held that the Goodyear Dunlop Corporation's subsidiaries in Turkey, France, and Luxembourg were not "essentially at home" in North Carolina under its Due Process Clause test for general jurisdiction. (16) Those constitutional claims have little in common with each other, but just those examples indicate the sheer breadth and importance of corporate constitutional litigation.

Responding to the long list of corporate constitutional rights the Supreme Court has already recognized, Justice Stevens went one step further in his Citizens United dissent to note "[u]nder the majority's view, I suppose it may be a First Amendment problem that corporations are not permitted to vote, given that voting is, among other things, a form of speech." (17) Justice Stevens suggested, no doubt tongue in cheek, that having recognized First Amendment rights, the Court would be obligated for the sake of consistency to extend all other constitutional rights to corporations. The Court has not extended all constitutional rights to corporations or to organizations more generally, such as associations, partnerships, and limited liability companies. Corporations cannot vote, and the Court has ruled that they are not citizens under the Fourteenth Amendment. (18) Corporations lack Fifth Amendment self-incrimination rights, (19) Article IV Privileges and Immunities Clause rights, (20) and Due Process Clause liberty rights. (21) Some constitutional rights are individual-centered and not plausible as rights of corporations. Unsurprisingly, courts have not recognized a right of corporations to serve on juries, run for public office, marry, procreate, or travel.

What theory explains why corporations have some constitutional rights and not others? The Supreme Court has not offered a general theory. The closest the Court has come to touching the third rail of this jurisprudence was to suggest that certain "purely personal" constitutional rights cannot be exercised by corporations. (22) Even when the Court recognizes that a corporation does enjoy a constitutional right, it generally does so without discussion. In Citizens United, for example, the Court did not discuss whether a corporation is a pure creature of state law, as Justice Sotomayor suggested; a "real entity" that can exercise all or most of the legal rights of an individual person; or an aggregate entity that helps groups of people realize their interests. The Court noted the difficulty in categorizing firms, which range from media companies to small closely held corporations to large public companies, and recognized that they exist for a wide range of purposes. In Hobby Lobby, the majority called it "quite beside the point" that the plaintiffs were for-profit organizations incorporated separately from their owners, blithely offering that without the action of human beings, a corporation "cannot do anything at all." (23)

Legal scholars have long found the Supreme Court's lack of a coherent approach or engagement with theoretical questions concerning the nature of the firm deeply disturbing, calling the Court's rulings "ad hoc," "right-by-right," "arbitrary," "sporadic," inconsistent, and incoherent. (24) Scholarly objections to the Court's rulings concerning corporate constitutional rights have only increased post-Citizens United, (25)

In this Article, I part company with the many cogent critics of the Supreme Court's rulings, but also with those who conversely argue that in Citizens United (and perhaps now in Hobby Lobby), the Court has finally recognized corporations as "real entities]." (26) The Court adopts a consistent approach, but the approach proceeds right-by-right, rather than by starting with a theory of organizations or corporations as constitutional actors. When the Court embarked on the project of incorporating the Bill of Rights against the states through the Fourteenth Amendment, as I describe in Part I of this Article, it ultimately rejected the "total incorporation" approach championed by Justice Black in favor of a "selective incorporation" approach--considering rights one at a time and asking whether each should apply to state actors. (27) What do the great incorporation debates tell us about the subject of constitutional rights of corporations? Critically, the Court refused to alter the substantive content of any Bill of Rights provision when extending it to the states; each right must "be enforced ... according to the same standards." (28)

Similarly, as I detail in Part II, the Supreme Court has not extended the entire Bill of Rights to corporations. The Court has adopted a selective approach from the early Marshall Court rulings to Citizens United. One could imagine that each right might apply in different ways to individuals and organizations, or apply to only some types of organizations. Instead, the Court keeps constant the substantive content of rights when litigated by organizations. The Court largely avoids organizational theory and focuses on constitutional theory. (29)

The Supreme Court's approach should be grounded in the doctrine of standing, a body of law flowing from the case-or-controversy requirement of Article III, which vests the federal judiciary with the "Power" to decide "Cases" and "Controversies." (30) The Court has defined the general test for standing as a question whether the organization itself can claim a "concrete injury," or an "injury in fact," that is separate from any injury to a third party. (31) The Court has explained that "the injury must affect the plaintiff in a personal and individual way." (32) Conceived as a question of standing, rather than a question of what an organization is and whether it "has" a constitutional right, the analysis is simple: once an organization has Article III standing to litigate a constitutional question, the merits analysis proceeds as for an individual litigant.

In Part III, I develop the implications of Article III standing analysis for constitutional corporate rights. Article III standing doctrine has been criticized since its inception as a highly malleable set of jurisdictional barriers contrary to congressional intent and the structure of the modern regulatory state, contrary to the text and history of Article III, and prone to particularly...

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