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Constitutional Rights and Corporations:

Since the topic is in the news again, I thought I'd briefly repost — in a slightly modified form — this item that I blogged several years ago.

A reader asked me to elaborate on my comment about corporations having rights; here are some general observations of mine on the subject. Note that the following speaks only of corporate constitutional rights — naturally, corporations have many rights protected by common-law and statute as well — and in particular of the rights in the Bill of Rights and the body of the Constitution. (The rights do not include the right to vote, which is not expressly in the Bill of Rights or in the Constitution.)

1. Consequences. The New York Times is owned by a corporation. Most private universities are organized as corporations. So are most nonprofit advocacy groups. So are many religious groups (though I believe some are organized through some special quasi-corporate forms). If you really believe that corporations lack constitutional rights, then the government would be free to ban corporate-run newspapers from criticizing the government, or ban the Catholic Church or the ACLU or the NRA from expressing its views.

Likewise, if corporations lack constitutional rights, the government could take their property without just compensation, and in fact without any hearing. It could just come in and grab it, no questions asked.

Now some people might think this is the right result. Or perhaps if this happened, people would stop using the corporate form — newspapers, advocacy groups, and churches would somehow reorganize themselves as, say, partnerships or sole proprietorships. This might actually be hard, and from the perspective of people who disapprove of corporate rights, it might be counterproductive; what's the point of letting the Times have constitutional rights if it's run as a partnership but not if it's run as a corporation? But for now, my point is simply that we should clearly identify the consequences of denying constitutional rights to corporations — and those consequences hardly seem sensible.

2. Individual rights. One reason these results may seem senseless is that restricting the rights of corporations usually means restricting the rights of individuals. If you take the property of a corporation without compensation, whom are you really hurting? Not "the corporation," which is, indeed, a convenient legal fiction. You're hurting the corporation's owners.

If you accept the legal fiction of the corporation being a separate person, then taking its property violates its rights. But if you reject that fiction, as a means of arguing that the corporation should lack rights, then taking its property violates its owners' rights. Either way, the Takings Clause should apply; and that's what suggests that the legal fiction (a corporation is a person) is a sensible one here — using it makes analysis easier, but doesn't ultimately change the results much.

The same goes for the Due Process Clause, the Civil Jury Trial Clause, and so on. If you take a corporation's property, or let it be taken through certain procedures, you're affecting the property of individual owners. There's therefore no real reason to deny these rights to the corporation.

Likewise for free speech. Corporations don't actually speak; people speak. A corporation's employee (a person) communications information that is decided on by a group of managers (people) who represent the stockholders (other people). Barring the New York Times or the ACLU or the Catholic Church or General Motors from speaking bars real people from speaking using the corporation's property.

Aha, some might say, the real people aren't silenced — they can still speak using their own property. But the Court has long understood that to speak effectively in a vast nation, you need to be able to pool your resources with others (even in this cyberspace age).

The Court has recognized this under the rubric of the right to expressive association, but the same applies to speech via corporations. When people contribute money to the ACLU, so that the ACLU's directors can decide what ACLU's spokespeople say, the contributors are making a decision to pool their resources so that some decisionmakers (the directors) can decide how to use them to speak. And the same goes for GM shareholders — they are pooling their resources and giving them to some decisionmakers (GM managers) so they can decide how to spend the resources, including spending them for speech, whether advertising or political advocacy.

Related Posts (on one page):

  1. What's Missing from This New York Times Editorial?
  2. Constitutional Rights and Corporations:
21 Comments

What's Missing from This New York Times Editorial?

Here's an excerpt, though read the whole thing:

The question at the heart of one of the biggest Supreme Court cases this year is simple: What constitutional rights should corporations have? To us, as well as many legal scholars, former justices and, indeed, drafters of the Constitution, the answer is that their rights should be quite limited -- far less than those of people....

The Constitution mentions the rights of the people frequently but does not cite corporations. Indeed, many of the founders were skeptical of corporate influence.

John Marshall, the nation's greatest chief justice, saw a corporation as "an artificial being, invisible, intangible," he wrote in 1819. "Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence."

That does not mean that corporations should have no rights. It is in society's interest that they are allowed to speak about their products and policies and that they are able to go to court when another company steals their patents. It makes sense that they can be sued, as a person would be, when they pollute or violate labor laws.

The law also gives corporations special legal status: limited liability, special rules for the accumulation of assets and the ability to live forever. These rules put corporations in a privileged position in producing profits and aggregating wealth. Their influence would be overwhelming with the full array of rights that people have.

One of the main areas where corporations' rights have long been limited is politics.... The founders of this nation knew just what they were doing when they drew a line between legally created economic entities and living, breathing human beings. The court should stick to that line.

I discussed the substantive matter below, but for now let me ask a different question: Where would the arguments in the New York Times editorial leave the New York Times itself? Shouldn't New York Times v. Sullivan (the landmark libel case) and New York Times v. United States (the Pentagon Papers case), for instance, have come out the opposite way under the Times' analysis? The corporation that owns the Times, like all corporations, has "limited liability, special rules for the accumulation of assets and the ability to live forever [in theory]." It is "in a privileged position in producing profits and aggregating wealth." It surely has tremendous "influence." It tries to participate in "politics," in its editorials and also, inevitably (whether intentionally or not) in its news coverage and choices of what to cover. It is a "legally created economic entit[y]."

Now maybe the Times is implicitly suggesting that it's excluded from the analysis because of the proviso that it "is in society's interest that they are allowed to speak about their products and policies." But the ads in New York Times v. Sullivan and the publication of the Pentagon Papers wasn't speech about its products and policies. The speech was its product, in the sense that it was produced by the Times in part -- not clear whether this was so in the ad in Sullivan but perhaps one might say so -- and it was something that the Times sold.

But a political ad put out by a business corporation is also produced by the corporation; and though it isn't something that the corporation sells, why should that affect the corporation's rights? I agree that speech that one sells shouldn't be less constitutionally protected because it's sold rather than given away for free; but surely speech that a corporation gives away for free likewise shouldn't be less constitutionally protected than speech that is some other corporation's "product." Perhaps the Times is hinting at a distinction by quoting the "incidental to its very existence" language from Chief Justice Marshall, but it's hardly "incidental to [a newspaper's] very existence" for the newspaper to be able to publish political editorials, or endorse candidates. A newspaper certainly could exist without that power.

Of course, one could say that the Free Press Clause protects newspapers but not other companies. But the Times editorial doesn't say that; and it's not clear why we should read the Free Press Clause as privileging a particular form of business, as opposed to a particular medium -- the press, which could be used both by its owners to publish newspapers (with political editorials in them), and by other people and companies to publish leaflets, books, political statements in others' newspapers, or (with technological changes) political Web sites, made-for-TV opinionated political documentaries, and the like.

But in any event, my point here isn't so much the substantive point -- it's that a business corporation is publishing a political message arguing that business corporations shouldn't have the constitutional right to publish political messages, without even (1) mentioning that its argument would apply to itself, and (2) explaining why, despite that, the argument should not apply to itself. (It's clear, after all, from its past statements and arguments in court that the Times does take the view that it indeed should continue to have constitutional rights.)

Related Posts (on one page):

  1. What's Missing from This New York Times Editorial?
  2. Constitutional Rights and Corporations:
65 Comments