Saturday, September 19, 2009

Corporate Personhood

This week’s commentary on questioning by Justice Sonia Sotomayor in oral argument in the Citizens United v. FEC case concerns corporate personhood, one of the basic foundations of modern corporate law. See Jess Bravin’s article, Sotomayor Issues Challenge to a Century of Corporate Law. On page 33 of the oral argument transcript of the case (well worth reading in full), Justice Sotomayor questioned Floyd Abrams, Esq., counsel for Senator Mitch McConnell, as amicus curiae, in support of the Appellant Citizens United, on the issue of stare decisis:

And so my question to you is, once we say they can't, except on the basis of a compelling government interest narrowly tailored, are we cutting off or would we be cutting off that future democratic process? Because what you are suggesting is that the courts who created corporations as persons, gave birth to corporations as persons, and there could be an argument made that that was the Court's error to start with, not Austin or McConnell, but the fact that the Court imbued a creature of State law with human characteristics.
Page 4 of the transcript has an interesting exchange between Theodore B. Olson, Esq., counsel for the Appellant and Justice Ruth Ginsburg:

Mr. Olson, are you taking the position that there is no difference in the First Amendment rights of an individual? A corporation, after all, is not endowed by its creator with inalienable rights. So is there any distinction that Congress could draw between corporations and natural human beings for purposes of campaign finance?

Stephen Bainbridge, Professor of Law at UCLA, in a posting at examines at greater length the idea of corporate personhood. The utility of this legal fiction, he points out, helps provide legal protection for shareholders engaged in a common venture where their contract rights are protected by allowing the corporation to sue and be sued in its own name and to own and deal in property in its own name.

Contractual rights afforded to corporations are arguably different than rights of free speech under the First Amendment. Laws prohibiting corporations specifically from directly contributing to political parties and election committees have been in place since the Tillman Act of 1907 (Pub. L. 59-36, 34 Stat. 864), the first law specifically addressing campaign funding on the federal level. That legislation, codified at 2 U.S. Code § 441b makes it "unlawful for any national bank, or any corporation…to make a contribution or expenditure in connection" with a federal election. Currently 24 states, including New York, have some restrictions or bans on corporate spending in elections. NY Elec. Law § 14-116 prohibits contributions or expenditures by corporations in excess of $5,000 although there is an exception for corporations organized "for political purposes only".

For more arguments of the issue of the range of rights afforded to corporations, see the video with transcript of Trevor Potter of the Campaign Legal Center and former chairman of the FEC, and Floyd Abrams, from Bill Moyer’s Journal. On the broader issue of corporate personhood, the Law Librarian Blog posted Friday Fun: Colbert on Citizens United v. FEC that has a video from the Colbert Report asking whether the issue is one of political speech or corporations buying elections.

The Brooklyn Law School Library’s collection has Unequal Protection: The Rise of Corporate Dominance and the Theft f Human Rights by Thom Hartmann (Call # HD3616.U46 H37 2002) which addresses the concept of corporate personhood from its origins in the US Supreme Court case, Santa Clara County v. Southern Pac. R. Co.(1886).

That case is often cited for the principle that the term person as used in the Equal Protection Clause of the Fourteenth Amendment applies to corporations as well as to natural persons. One of the points in the briefs in Santa Clara was that “Corporations are persons within the meaning of the Fourteenth Amendment to the Constitution of the United States.” Before oral argument, Chief Justice Morrison R. 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."

The court reporter, J.C. Bancroft Davis, entered a summary of the Court’s findings in the syllabus and case history above the opinion stating “The defendant Corporations are persons within the intent of the clause in section 1 of the Fourteen Amendment to the Constitution of the United States, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws.” This language was not in the opinion itself. The opinion was reported in three separate reporters: the United States Reports, (118 U.S. 394), the Supreme Court Reporter (6 S. Ct. 1132) and the U.S. Supreme Court Reports Lawyers’ Edition (30 Law. Ed. 118). Only the US Reports edition contains Davis’ summary.

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