leonardo da vinci, “study in perpetual motion” forster codex (1495-97)

Leonardo da Vinci, “Study in Perpetual Motion” Forster Codex (1495-97)

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Chapter 5Corporation as Constitutional “Person”

Corporations:A Contemporary Approach

Chapter 5Corporation as “Person”

Slide 2Of 17

•History of corporation as “person”• Long-time recognition by SCOTUS• Economic rights political rights

•Corporation as political actor • Bellotti (state referendum); Austin (state

election expenditures)• Citizens United (federal election expenditures);

Bullock (state)•Supreme Court’s views of “corporation”

• Creature of state law: social institution• Association: property view• Person: natural rights

Module II – Corporations and Policy

Citizen of world

Citizen of world

Law profession

Law profession

Corporate practice

Corporate practice

Bar examBar

exam

“Don’t worry about the rich; they’ll take care of themselves.

They always have.”

Harry Truman



Slide 3Of 17

Dartmouth C

ollege (U

S 1819)

Bank of A

ugusta v.

Earle

(US 1839)

Southern R

y. v.

Greene (U

S 1910)

GM Leasing v.

US (U

S 1977)

Okla P

ress

Publ v

. Wallin

g (US 1946)

Santa Clara

County

v. Southern

Pac R

R (US 1888)

1800 19501900 20001850

Fourteenth A

mendment (1873)



Slide 4Of 17

Corporation as “Person” Timeline (1787 – 1977)

Tillman A

ct (1

907)

Fed Electi

on Campaign A

ct (1

971/1974)

US Consti

tution (1

787)

Labor Management R

elations A

ct (1

947)

FEC v. M

CFL (US 1986)

First N

at’l Bank v

. Bello

tti (U

S 1978)

Am Tra

dition v,

Bullo

ck

(U

S 2012)

McConnell v

. FEC (U

S 2003)

Austin v.

Mich

igan CC (U

S 1990)

1980 201020001990



Slide 5Of 17

Corporation as “Person” Timeline (1977 – present)

Bipartisan C

ampaign Reform

Act

(2002)

Citizens U

nited v.

FEC (U

S 2010)

Tillman Act (1907)as amended by LMRA (1947)

2 USC § 441b(a): It is unlawful for … any corporation whatever, or any labor organization, to make a contribution or expenditure in connection with any election at which presidential … electors or a Senator or Representative in … Congress are to be voted for, or in connection with any primary election or political convention or caucus held to select candidates for any of the foregoing offices, or …

for any officer or any director of any corporation … to consent to any contribution or expenditure by the corporation … prohibited by this section.



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Corporation as political actor …

1. First Nat’l Bank of Boston v. Bellotti (US 1978)

2. Austin v. Michigan Chamber of Commerce (US 1990)

3. FEC v. Massachusetts Citizens for Life, Inc. (US 1986)

4. Citizens United v. FEC (US 2010)

5. American Tradition P-ship v. Bullock (US 2012)



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For-profit corporations …



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Banks / business corporations

Shareholders

Statereferendum

State law: No $$, unless affect business

Massachusetts(Bellotti)

Michigan(Austin)

For-profit corporations

PUBLIC

Statecandidates

State law: No $$ (contributions

or expenditure)

PUBLICShareholders

DISTIN

GUISH

PAC

Bellotti (1978)MAJORITY

Powell, Blackmun, BurgerStewart, Stevens

DISSENTWhite, Brennan,

Marshall, Rehnquist

Austin (1990)MAJORITY

Marshall, Brennan (Souter), RehnquistWhite, Blackmun, Stevens

DISSENTScalia, Kennedy, O’Connor

Not-for-profit corporations …



Slide 10Of 17

Federal Law(Mass. Citizens for Life)

Allcorporations

Statecandidates

FECA: No $$ (contributions

or expenditure)

PUBLICMembers

Citizens United v. FEC(US 2010)

• Issue– Narrow construction (non-

electioneering, movie, non-profit)?– Overrule Austin?

• Holding– Corporation = person– Can’t single out speaker (PAC

alternative not enough)

– But can require disclosure

• Analysis– Distortion of corp $ not enough– No appearance of corruption– Not needed to protect SHs– No indication disclosure chills



Slide 11Of 17

Citizens United v. FEC(US 2010)



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Individual

Political Association

Political Non-profit

Closely-heldFor-profit

Publicly-heldFor-profitAnthony Kennedy

So what’s a corporation anyway?



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Corporations and other associations, like individuals, contribute to the marketplace of ideas“ingratiation and access . . . are not corruption. The

appearance of influence or access … will not cause the electorate to lose faith in our democracy.

… smaller or nonprofit corporations cannot raise a voice to object when [wealthy] corporations are cooperating with the Government.

little evidence of abuse that cannot be corrected by shareholders “through the procedures of corporate democracy.”

… it is far from clear that by the end of the 18th century corporations were despised.

The authorized spokesman of a corporation is a human being, who speaks on behalf of the human beings who have formed that association-just as the spokesman of an unincorporated association speaks on behalf of its members.

Although they make enormous contributions to our society, corporations are not actually members of it. They cannot vote or run for office. The financial resources, legal structure, and instrumental orientation of corporations raise legitimate concerns about their role in the electoral process.

When corporations use general treasury funds to praise or attack a particular candidate for office, it is the shareholders, as the residual claimants, who are effectively footing the bill.



Slide 14Of 17

MATCHING

What is for-profit corporation?

1. Corporations are persons; corporations need not “stick to business”

2. Corporations are “creatures of state law,” but state must have reason to regulate

3. Corporations are creatures of state law, and that means “government giveth, government taketh away”

4. Corporations are voluntary associations, who have as much right to free speech as individuals

Byron White

Thurgood Marshall Antonin Scalia

Lewis Powell Wm Rehnquist

Anthony Kennedy John Paul Stevens

Bellotti (1978)

Citizens United (2010)

Austin (1990)

1 – LP / 2 – TM, JPS / 3 – WR / 4 - AS

MORE MATCHING

Effect of corporate political speech?

1.Corporations afford the public access to information and add to marketplace of ideas.2.Corporate communication doesn’t further self-realization3.Corporate voice has not been shown to be distorting, overwhelming or corrosive.4.Corporate expenditures/contributions can unfairly influence elections

Byron White




Bellotti (1978)


Austin (1990)

1 – LP, AK / 2 – TM, JPS / 3 – LP, AK / 4 – TM, JPS

YET MORE MATCHING

Regulate corporate speech?

1. Government must have compelling interest to regulate corporate speech, just like individual speech

2. Too much speech can’t be bad; should avoid government censorship of corporate speech

3. Government has a compelling interest to prevent corruption, through corporate political war chests

Byron White




Bellotti (1978)


Austin (1990)

1 – LP, AK / 2 – LP, AK / 3 – TM, JPS

LAST MATCHING

Internal corporate governance?

1. Shareholders unhappy with their corporation’s speech can always resort to “corporate democracy”

2. For-profit corporations, unlike non-profit political associations, may not reflect shareholders’ views

3. Ideological and political activities are not proper for business corporations

4. Shareholders know management will sometimes be political and ideological, part of maximizing shareholder profits

Byron White




Bellotti (1978)


Austin (1990)

1 – LP, AK / 2 – BW, JPS / 3 – BW / 4 - AS

John Coates (HLS)

• Question: Do corporate politics, governance and value relate to each other in S&P 500 before and after Citizens United?

• Answer: After the shock of Citizens United, corporate lobbying and PAC activity jumped, in both frequency and amount,

– firms politically active in 2008 had lower value in 2010 than other firms, consistent with politics at least partly causing and not merely correlating with lower value.

– The results are inconsistent with politics generally serving shareholder interests, and support proposals to require disclosure of political activity to shareholders.



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The end



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leonardo da vinci, “study in perpetual motion” forster codex (1495-97)

Documents

person slide

bellotti us

fec us

bullock us

us constitution

walling us

greene us

earle us