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Analysis

Supreme Court Justice Samuel A. Alito, Jr., on Wednesday night allowed himself a dissent — or, perhaps, a point of privilege — at one point during President Obama’s State of the Union address in the chamber of the House of Representatives. It has much of Washington talking — at the level of common gossip, and at a more significant level.  It may have a bearing on what is shaping up as the first attempt in Congress to write a new law reacting to the Supreme Court’s decision last week in Citizens United v. Federal Election Commission.

Fairly late in the President’s speech, he made a passing gesture of respect for the Court’s role as a separate branch of government, and then leveled a criticism.  He said this: ”With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests "“- including foreign corporations "“- to spend without limit in our elections.  (Applause.)  I don’t think American elections should be bankrolled by America’s most powerful interests, or worse, by foreign entities.  (Applause.)  They should be decided by the American people.  And I’d urge Democrats and Republicans to pass a bill that helps to correct some of these problems.’”

At that point, the television cameras panned to the row of seats where six members of the Court were seated.  The cameras caught Justice Alito shaking his head side to side, and mouthing some words, which many observers have interpreted as ”Not true.”   (On Thursday, when asked about this, the Court’s public information office relayed this: “The Justice has no comment.”)

This exchange, if it can be called that, had to do with the Court’s ruling in Citizens United, nullifying federal campaign spending limits on corporations.  If one assumes (without hard proof) that Justice Alito was reacting to the President’s discussion of the potential role of foreign corporations in American politics, the Justice could have had in mind a section of the Court’s main opinion in Citizens United.

That section said: “We need not reach the question whether the Government has a compelling interest in preventing foreign individuals or associations from influencing our Nation’s political process.”  The opinion then cited a provision of federal law (the full text is here.) In essence, that provision bars any “foreign national” from making any direct or indirect contribution of money or anything of value “in connection with any federal, state, or local election.”)

The clear implication of the phrasing is that the Court, in the future, might well uphold such a ban by finding that the Government did, indeed, have a strong interest in keeping foreign money out of U.S.  campaigns, at any level of government.

And that implication, perhaps, is what Justice Alito was thinking about.  The President, for his part, did not seem to share that view, indicating that he thought it would be necessary for Congress to pass a new law to put up a barrier to the flow of foreign money into U.S. politics.

The early indications, from a flurry of activity in Congress and among groups that favor limits on campaign finance, is that the first attempt to pass new legislation will focus on foreign corporations.  For example, Sen. Al Franken, Minnesota Democrat, on Thursday became one of the first to introduce such a bill (his office’s press release discussing the measure is here).  One of the more active lobbying groups in the campaign finance field, Democracy 21, is also promoting that initial approach, as are other groups.

The debate that now seems to be getting under way in Congress will focus on just how far a ban on foreign money should go.  Sen. Franken, for example, said that nothing in present federal law “explicitly prohibits foreign companies from creating American subsidiaries or getting control of American companies and using them to flood the airwaves in support of their preferred candidates.”

It thus appears that new legislation, if passed, would reach American entities of some definition.  And, presumably, if those entities have an existence under U.S. law (such as state corporation law), they might have the same First Amendment rights that the Court recognized in Citizens United for purely American companies.  It is likely, therefore, that there will be future tests in U.S. courts on the constitutionality of the new post-Citizens United legislation.

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Commentary

For years, a quiet debate has continued — and it has included some Supreme Court Justices — about the propriety of members of the Court attending the State of the Union ceremonies when Presidents visit Congress.  One current Justice, John Paul Stevens, has explicitly opted not to attend, believing that it is not appropriate.  Other Justices, over time, have absented themselves for that reason.  There have been times, recently, when only a single Justice showed up for such a message.

The State of the Union message is a constitutional affair, in one sense.  Article II, Section 3, provides that the President “shall from time to time give to the Congress information on the State of the Union, and recommend to their consideration such measures as he shall judge necessary and expedient…”

Thus, the affair has the dignity of a state occasion, and, therefore, has considerable potential dignity attached to it.  The Justices, by their attendance, may add to that.  But both the President, and the audience, understand that this is also a very explicit political event: the President is speaking to the audience outside the chamber as much as to those in the seats and the galleries, to build support for his policy ambitions and agenda, and the audience responses — applause, shouts, or other expressions of sentiment — are meant to convey messages, too.

When Supreme Court Justices attend, they sometimes sit awkwardly in silence, sometimes rise at what they deem appropriate points, and sometimes applaud where they are moved to express approval.  Television cameras frequently focus on them as they are reacting.

Whatever messages such attendance and such responses are intended by the Justices, it is fair to assume that the American people draw some conclusions from them.  The Justices thereby become participants in the political dialogue that goes on during the message.  On Thursday, Justice Alito’s apparent response was the subject of a lively public debate, supporting him and chastising him.  He thus has become a part of the public discussion over whether something should be done in response to Citizens United.  Whether he is now aware of that is unknown, since he has opted not to comment in response to inquiries.

The Supreme Court, by a very long tradition, does not get out in public very often to defend the substance of its rulings, or even to explain them.  The common understanding, within the Court, is that the opinions speak for themselves.  Justice Antonin Scalia, of course, has run against that tradition repeatedly, telling many audiences, for example,  to “get over” their criticism of the 2000 decision in Bush v. Gore.

Justice Alito’s response on Wednesday night, one may presume, was intended to suggest that Citizens United did not do what the President said it did.   But it puts him on record on the specific point of law that may arise if Congress does pass a new law in response to the President’s call.  And, should litigation in response to such a law reach the Supreme Court, Justice Alito and his colleagues will be faced directly with the question of whether that measure fits within Citizens United, or violates it.

Turning to the President and the propriety of his remark;  he, too, has drawn criticism.  It is not uncommon for Presidents to react negatively to Supreme Court decisions they do not like.  Franklin Roosevelt, in fact, wanted to re-structure the Supreme Court in reaction to a string of rulings against his initiatives.  But Presidents seldom challenge the Supreme Court to its face, as President Obama did Wednesday night.

The reaction, predictably, is split: his critics say it was an insult to the Court, his supporters say the Justices deserved it.  No matter which side one takes in that debate, there is no doubt that the President has greater freedom to speak out in a political way than the Supreme Court does.  His remark very likely was intended to be more political than institutional, and seemed designed to help build his case for new legislation.

In fact, Vice President Biden, in an appearance Thursday morning on television, defended the President by noting that Mr. Obama had not questioned the Court’s “integrity” while questioning its “judgment.”

In association with Bloomberg Law

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Clearly operating on the premise that the Supreme Court last week changed the entire legal landscape for money in politics, the D.C. Circuit Court appeared on Wednesday to be leaning strongly toward giving even more freedom to campaign groups that are set up to operate independently of candidates and parties.  From the opening moment of the 65-minute hearing, most of the nine judges on the en banc Court treated the Supreme Court’s ruling in Citizens United v. Federal Election Commission as the beginning, not the end, of expansion of those freedoms.  When an FEC lawyer tried to bring up, and rely on, older precedents, he was reminded repeatedly that those came before Citizens United.

Chief Judge David B. Sentelle, in the first words spoken during the argument session, said to an independent group’s lawyer, ready to open his argument: “What do you have to add to Justice Kennedy?” — Anthony M. Kennedy was Citizen United’s author.  And when that lawyer started making his case for more freedom, Judges Sentelle and Douglas H. Ginsburg suggested that he postpone his thoughts on that until after the FEC’s lawyer (arguing second) had a chance to deal with Citizens United.  The tone of skepticism toward the FEC then continued throughout.  Judge after judge pressed for justifications of government regulation, and seemed unpersuaded by the responses.

The en banc Court heard two consolidated cases (the lead case is SpeechNow.org v. FEC, 08-5223) in the first federal court hearing to explore how far the Supreme Court had gone last Thursday toward liberating independent political operators.  It was abundantly clear that each of the nine judges was thoroughly familiar with every detail of the Citizens United decision. And one of the most important developments of the hearing was the degree to which the circuit judges were questioning the government’s ability to justify any restraints on independent groups based on a fear that they might corrupt politics.

Without a corruption rationale, and they suggested that that rationale had been thoroughly undermined by Citizens United, what basis would the FEC have for imposing restrictions, they asked. The questioning went not only to FEC controls on political spending, but on taking in donations at the other end of the political finance pipeline.

The FEC’s associate general counsel, David B. Kolker, argued that Citizens United had nothing to do with campaign contributions, focusing only on spending by independent groups (specifically, in that case, corporations).  But each time he attempted to make the point, the judges returned their focus to the supposed scuttling of a corruption justification for restrictions.  Steven M. Simpson, the lawyer for SpeechNow.org, sought to reinforce the impression that the Supreme Court had not spoken only about freedom to spend.  “It is not appropriate to call Citizens United an expenditure case; it is a burden case” — that is, a case against government-imposed burdens on political activity by independent groups.

Simpson did have difficulty from the bench on one point: his argument that SpeechNow should not have to obey rigorous FEC rules that require political independent groups to report their income and outgo to the FEC, in order to apprise the voters of how money is flowing in campaigns.  Any judge who spoke on that subject suggested that SpeechNow and similar groups really faced no more burdensome reporting and disclosure rules than they would have to in filing reports to the Internal Revenue Service to justify tax-exempt status.  (The Supreme Court, in Citizens United, had actually upheld disclosure requirements; SpeechNow does not object to some disclosure, but is unwilling to accept it at the level the FEC has sought.)

The FEC has taken the position that groups like SpeechNow — so-called “527 groups” that run operations that they insist are entirely separate from candidates and parties — are not really independent political operators, but use their right to spend money to shore up candidacies they favor and trash those they oppose.  FEC lawyer Kolker spent much of his time Wednesday trying to suggest that, like political parties, political committees like SpeechNow should be subject to the same limits on their spending that political parties face when they coordinate with candidate organizations.  There did not appear to be much interest in that approach among the circuit judges.

In fact, the Supreme Court precedents on which Kolker relied — principally, two rulings in which the Colorado Republican Party failed to overturn federal money restraints — appeared largely favorable to FEC’s views, but several of the judges seemed unsure whether those precedents have outlasted Citizens United.

The most aggressive questioner of the FEC counsel, not surprisingly, was Circuit Judge Brett M. Kavanaugh, the author of an earlier Circuit Court ruling (in the Emily’s List case) nullifying several FEC rules aimed at “527 groups.”  No one on the bench sought to counter Kavanaugh’s questions and comments, some of which seemed clearly to telegraph a sure vote in favor of SpeechNow.  If there was skepticism at any part of the argument by the SpeechNow lawyer (except his points about disclosure requirements), it went unspoken.  Judge Kavanaugh, too, mentioned repeatedly that the Supreme Court had regularly upheld disclosure requirements in the campaign finance field; he also argued that the voting public would have a keen interest in who was paying the bills for an independent political operator.

After Simpson sat down following 28 minutes of argument, almost wholly taken up with the disclosure and reporting issue, FEC lawyer Kolker stood and began with an argument that the Supreme Court has always drawn a distinction between campaign spending (more protected) and campaign contributions (less protected).  And, he said, the Court had never struck down a contribution limit on the theory that it would interfere with later spending by a political organization — the main thrust of SpeechNow’s challenge to being treated as a “political committee” that can accept no more than $5,000 in any year from any one contributor.

But Kolker’s first sentence had barely been uttered when Chief Judge Sentelle asked pointedly: “How does Citizens United change your analysis?”  Kolker replied that it “really doesn’t,” insisting that the SpeechNow case was about contributions, not spending (the issue he said was at stake in Citizens United).  But Judge Kavanaugh stepped in immediately, saying that the Supreme Court in that case, in mentioning government controls on contributions, had only referred to limits on contributions made to candidates or their organizations.

“The larger question,” Kavanaugh suggested, “was that, if an unlimited expenditure is not corrupting, how can a group of people getting together [to form a 527 group] suddenly become corrupting?”  Kolker answered by returning to a rationale the Supreme Court had used in the Colorado Republican litigation, saying that some curbs on spending, even by parties, may be necessary in order to prevent “circumvention” of federal limits on contributions.  “Nothing in Citizens United undermines that,” Kolker asserted.

That comment seemed to send the bench off into a thorough exploration of what concept of corruption in politics, as a rationale for campaign finance limits, remained in the wake of Citizens United.  Several of the judges, in fact, openly argued that the circumvention rationale no longer had any role to play in this context.

Judge Kavanaugh related that discussion directly to federal limits on contributions.  “If one person can spend a million dollars to take out an ad [during a campaign], but if several people contribute $6,000 to take out an ad, that is corrupting; what sense does that make?” Kolker responded that the Supreme Court had embraced limits on political spending by independents in order to prevent evasions of contribution limits.

When the Chief Judge joined in the argument about the continuing vitality of the corruption rationale for campaign finance restraints, he flatly accused Kolker of evading the Citizens United ruling. “I’m not hearing you address Citizens United,” Sentelle said.  And Judge Thomas B. Griffith chimed in:  “You’re trying to avoid Citizens United.  This is a new world: corruption means a lot less than it did before….What is the whole point of circumvention if it is not related to corruption?”

The Circuit Court has put the SpeechNow case on an expedited schedule, primarily because that political organization wants to begin operating during this year’s congressional election season, which opens next Tuesday with a primary in Illinois.  Thus, the Court may make a special effort to decide the case fairly quickly.  There is, though, no set timetable.

In association with Bloomberg Law

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Three hours after the Supreme Court completed announcing its controversial Citizens United ruling last week, Steven Simpson and other staff attorneys at the Institute for Justice, after poring over the 176-page ruling, sat down at their headquarters in Arlington, Virginia, to write a letter.  Selecting key passages out of Justice Anthony M. Kennedy’s main opinion, the lawyers finished the letter in two hours, and handed it in at the clerk’s office of the D.C. Circuit Court at 4:06 p.m.  It had two purposes –one perhaps not entirely necessary, the other important to Simpson’s clients.

The Simpson letter’s first purpose was to notify the Circuit Court that the Supreme Court had decided the Citizens United case.  Chances are, the judges on the Circuit Court already knew about it; news of a major Supreme Court ruling  travels fast in judicial circles, and, besides, nine of those Circuit  judges were in the midst of preparing for an argument set for a week later, with the newly released decision now certain to figure prominently in the discussion. Simpson’s second purpose was to lay claim to Citizens United as bolstering the arguments Simpson will make before those nine judges on Wednesday morning.  “This new authority,” the letter said, “is directly relevant to the First Amendment issues” coming before the en banc Court.  It summarized points considered to be helpful to its side of the argument.  The FEC did not file a similar letter.

Observers in the Circuit’s Ceremonial Courtroom — No. 20 — on Wednesday will be watching to see how soon Citizens United comes up in the hearing and how the judges react in two cases with the same name: SpeechNow.org., et al., v. FEC (dockets 08-5223 and 09-5342).  The Supreme Court’s new decision is all about federal controls on campaign finance and the First Amendment, and so are these two cases.  No one doubts that these cases are headed, ultimately, to the Supreme Court; in fact, the organization SpeechNow was put together in part to set up a test case on the free-speech arguments it is pressing.

What makes this case particularly special, to everyone interested in federal campaign finance restrictions, is that a key part of it involves an attack on how much money people can contribute for use in such campaigns.  The Supreme Court has been far more willing to accept limits on contributions than it has on spending, giving spending much more significant First Amendment protection.  Sweeping protection for spending by profitmaking and non-profit corporations emerged in the Citizens United decision. The SpeechNow cases could test whether contributors are now going to gain more protection, to combine their efforts in an organization that can then spend more heavily.

SpeechNow is what, in campaign finance parlance, is called a “527 organization” — a non-profit group organized under a section of the federal tax code (527, governing the tax status of ”political organizations”) that are increasingly active in election campaigns for the White House and Congress.  During the 2004 elections, for example, such groups spent more than $400 million.  They exist all across the ideological spectrum. Part of the reason they have been able to spend so heavily is that they operated outside the usual limits of federal campaign finance restrictions.  That has changed, and that has led to a series of major court challenges.

SpeechNow was organized by David Keating, a self-described “long-time activist” who first gained fame as a vigorous challenger of federal tax laws, and more recently has become well-known as the head of a major 527 group, the Club for Growth.  His lawyers call SpeechNow his “brainchild.”

SpeechNow’s primary target is federal campaign finance controls, treating such restraints as violations of First Amendment free-speech guarantees. It is straightforward about its mission: “SpeechNow would like to run advertisements urging voters to elect federal candidates who support full protections for First Amendment rights and to defeat candidates who are hostile to those rights” — “hostile” because they support campaign finance reform.

The group passed up its first chance to pursue that goal during the 2008 races when it ran up against the very campaign finance laws it protests; it felt those controls would stifle or at least seriously complicate its plans, thereby interfering with its free political speech.   So it sued, asking for a court order to block those restrictions, and for a ruling that they violate the First Amendment.

Thus, the case has proceeded on two tracks.  One was the attempt to get a preliminary injunction against the restrictions, so that SpeechNow could carry on its campaign activity in the 2010 elections. (That is now case 08-5223).  The other is the constitutional challenge (now, case 09-5342), which is proceeding under a highly unusual procedure: a federal District Court judge (the same one who refused to issue the injunction) was assigned the task of defining specific constitutional issues raised in the SpeechNow case and, without ruling on them himself, sending them directly on to the Circuit Court for a ruling.   The Circuit Court treated the two-track litigation separately for a time, then joined the two cases, and laid them before the full Court, without first letting a three-judge panel examine them (the usual initial procedure).

After a couple of rounds of briefing, the cases are now ready for the oral argument — which is being held as quickly as the Circuit Court could schedule it, since the case is being expedited.  Even so, the ruling is unlikely to come down before the first congressional primary this year, in Illinois on Feb. 2 — six days after the hearing.

After SpeechNow was set up in 2007, it asked the FEC whether it had to register as a “political committee” under federal campaign finance law, and whether it had to treat the donations it received as “contributions.”  Because of procedural difficulties, the FEC could not give an answer, so the organization sued in U.S. District Court in Washington.

Federal law defines a “political committee” as any group that receives contributions of more than $1,000 during a calendar year, or spends more than $1,000 during a year.  Such a group must register with the FEC, and file periodic reports to disclose every person from whom it got more than $200, and any person or entity to which it paid more than $200.  It must identify itself on all of its political literature and advertising.   Federal law puts a ceiling on contributions to a political committee, at $5,000 per person.

SpeechNow set itself up as an election advocacy organization with a series of rigorous restrictions on its activity, to insure that it had absolute independence from any candidate or candidate organization or any political party.  It did so to try to head off any argument that its plans for big spending could be treated as “corruption” of the election system; it also did so to maximize its opportunity to make “independent expenditures,” the kind of political outlays that the Supreme Court has given the strongest First Amendment shield.

The group”s lawsuit targeted all of the “political committee” restrictions, although it has said it was willing to abide by some less burdensome requirements to disclose its income and outgo.  It does not want to be treated as a political committee for what it describes as a simple reason: “Individuals acting alone are constitutionally entitled to spend unlimited amounts of money on their independent expenditures; several individuals acting in association with one another are thus entitled to do the same thing.”

If its donors are limited to $5,000 each, that will in practice prohibit like-minded individuals from joining together to pursue common political goals in favor of or opposed to specific candidates, it has argued.

The FEC counters that SpeechNow, and other big spending groups, pose a significant risk of corruption of the political process and are not like a truly individual, politically active person who wants to spend his or her own money for or against a candidate.  “Experience shows,” the FEC’s lawyers have said, “that the increasingly sophisticated methods used by groups devoted to independent candidate advocacy can help candidates win elections just as direct contributions to a candidate can do.”

As a result, the Commission has contended, “winning candidates feel indebted towards those who fund the groups; ads that help elect them.  Those candidates, but not necessarily the voting public, easily discover the identity of those contributors and are inappropriately disposed to favor their interests.  Thus, unlimited contributions to groups like SpeechNow pose a genuine risk of corruption and the appearance of corruption.”

(NOTE: The SpeechNow organization has been co-represented throughout the case by the Center for Competitive Politics, an Alexandria, Virginia, advocacy group.)

In association with Bloomberg Law

There is no doubt that Citizens United v. Federal Election Commission marks a major upheaval in First Amendment law and signals the end of whatever legitimate claim could otherwise have been made by the Roberts Court to an incremental and minimalist approach to constitutional adjudication, to a modest view of the judicial role vis-à-vis the political branches, or to a genuine concern with adherence to precedent.

The masterful dissent by Justice Stevens, which merits close reading by anyone interested in the Supreme Court as an institution or in the Constitution as a source of law, shreds any serious claim to the contrary. It also gravely undermines the First Amendment analysis offered by the majority and concurring opinions, doing so thoroughly enough that anyone who (like me) regards the issues in this case as close and difficult has to wish that Justice Kennedy, joined by the Chief Justice and by Justices Scalia, Thomas, and Alito, had been less emboldened by the knowledge that the votes were there for what they all deemed the right result and had taken greater care to respond, point by point, to the largely unanswered critique launched by Justice Stevens, joined in his dissenting opinion by Justices Ginsburg, Breyer, and Sotomayor.

But there will be plenty of time to dissect the several lengthy opinions in this case and to opine on the merits, and it's not my purpose in this brief comment to add to that growing body of commentary. I would say only that I share neither the jubilant sense that the First Amendment has scored a major triumph over misbegotten censorship nor the apocalyptic sense that the Court has ushered in an era of corporate dominance that threatens to drown out the voices of all but the best-connected and to render representative democracy all but meaningless.

Indeed, part of the argument the dissenting justices made against the Court's opinion rested on the proposition that the federal restrictions on corporate campaign advocacy that the Court struck down, far from banning corporate campaign speech outright as the majority claimed, had in fact left such speech largely intact. It allowed corporations to use PACs to support or oppose candidates in federal elections regardless of medium and independent of timing. Moreover, the provisions struck down in Citizens United left wealthy individuals free to make independent expenditures in unlimited amounts advocating or opposing the election of identified candidates, state or federal. To the degree that those corporate and individual speech opportunities are touted by the dissenters as adequate, the invalidation of the remaining restrictions should be expected to have less staggering consequences.  And tellingly, in the more than two dozen states that currently allow corporate spending without any dollar limit to promote or oppose particular candidates in campaigns for state political office, there doesn't seem to have been the overwhelming flood of corporate spending on state elections that some predict the Citizens United ruling will unleash in federal elections. The reason seems clear enough: business corporations are necessarily risk-averse and hesitate to alienate large sectors of their customer and client base by pouring large sums of money, at least if they must do so openly and visibly, into candidate campaigns even when their economic interests would clearly be better served by one outcome rather than by another.

There nonetheless seem to be real dangers that Congress ought to address in a systematic and non-hysterical way.

People who invest in business corporations, as opposed to contributors to ideological non-profits of the sort that Citizens United itself represented,  don't typically intend thereby to authorize the managers and directors of those corporations to use the money invested in their businesses to help some candidates win election to federal office or to hinder the efforts of others vying for positions of federal authority. Talking about a business corporation as merely another way that individuals might choose to organize their association with one another to pursue their common expressive aims is worse than unrealistic; it obscures the very real injustice and distortion entailed in the phenomenon of some people using other people's money to support candidates they have made no decision to support, or to oppose candidates they have made no decision to oppose.

To be sure, the statutory and decisional laws of every state already create theoretical rights in individual shareholders to sue corporate boards under state law for making "wasteful" expenditures, expenditures that do not advance the corporation's interests, but talk of shareholder democracy is largely illusory in a world where there are countless obstacles to vigilant oversight of corporate management by the widely dispersed "owners" of the underlying enterprise, especially when most of those owners have only the most attenuated link to their stock holdings, a link made all the more tenuous by the fact, noted in the Stevens dissent in Citizens United, that "[m]ost American households that own stock do so through intermediaries such as mutual funds and pension plans, . . . , which makes it more difficult both to monitor and to alter particular holdings."

In the case of non-profit entities that take a corporate form as a matter of convenience but that have the understood ideological purpose of advancing certain political views and electing or defeating certain candidates, there is no fundamental problem of some people using other people's money to amplify their own voices in candidate campaigns. But in the context of for-profit, business corporations, that problem is undeniable "“ and, given the power of Congress to regulate interstate commerce, it is a problem entirely appropriate for federal legislative attention. Indeed, there is at least some question whether states have constitutional authority to regulate corporate activity in connection with the election of federal officials, given the Supreme Court's holding in the case of US Term Limits v. Thornton that states may not interfere with the uniquely federal relationship between citizens and their federal representatives. Even if strengthening the ability of shareholders to prevent their corporations from squandering their property in federal elections is deemed not to set qualifications for federal office and is thus distinguished from the kinds of state-imposed term limits struck down in the Thornton case, it seems plain that Congress may legitimately act under the Commerce Clause to enhance the efficacy of each shareholder's ability to ensure that his or her investment is not deployed to advance or obstruct the election of particular candidates to federal (or, indeed, state) office contrary both to that shareholder's own wishes and, more importantly in this context, to the corporation's business interests.

Whatever individual states might do to beef up their shareholder protections with respect to corporate spending in state or federal candidate elections, federal legislation could usefully set both a nationwide floor of protection and a model for states to follow and build upon. Such federal legislation should, at a minimum, build on the disclosure and disclaimer requirements that the Court upheld by an 8-1 vote inCitizens United, requirements specifying that electioneering communications funded by anyone other than the candidate must disclose who is "responsible for the content of this advertising" and must display on screen "in a clearly readable manner" for at least four seconds the name and address or website of whoever funded the communication. Those requirements should not only be enlarged "“ a blink of an eye or a sip of beer would suffice to make a four-second display useless "“ but should also be made much more specific. The disclaimer should have to include a statement by the corporate sponsor's CEO, by name, providing information about how much of the corporation's general treasury was  being expended in aggregate on the communication in question and certifying the CEO's personal conclusion, as in Sarbanes-Oxley, that making the expenditure from general treasury funds, as opposed to making it through a corporate PAC, significantly advances the corporation's business interest.

Among other things, the impact of a campaign ad, whether in the form of a thirty-second spot or an extended production, would be cut down to size if it had to be (accurately) presented as a self-interested attempt by big pharma or by a cigarette or oil company or a bank holding company or hedge fund to influence the outcome of a candidate election for the benefit of the sponsoring company's bottom line rather than masquerading behind a veil of public-spiritedness. The point, of course, would not be to undercut the force of corporate-funded ads "“ an objective that would itself be problematic from a First Amendment perspective "“ but simply to ensure that the channels of interstate commerce are not used in an inherently misleading manner.

This kind of disclosure requirement could be buttressed by the creation of a federal cause of action for corporate waste. Such an action in this setting "“ unlike the setting of the Violence Against Women Act, where the absence of a link to commerce proved constitutionally fatal a decade ago in United States v. Morrison "“ would be easy to defend as falling within Congress's power over commerce. It could overcome some of the weaknesses that have hindered state corporate law in the past.  For example, it could provide a greater incentive for suit, by offering statutory damages or treble damages (i.e., reimbursement of three times the challenged expenditure, part of which reimbursement would go directly to the plaintiffs rather than into the corporation's coffers), as well as attorneys' fees, and it could provide better deterrence by imposing individual liability for the corporate officers authorizing the improper political expenditure. And the "business judgment" rule making such cases notoriously difficult to bring under state law could be replaced with a rule less deferential to management and more focused on the existence of a convincing justification for using general treasury funds as such rather than relying entirely on PAC funds contributed by people with politics in mind.

Such a federal structure would not operate as a complete substitute for the provisions of McCain-Feingold that the Court struck down in Citizens United, but that is hardly an objection to this kind of legislation. On the contrary, the more completely a federal "fix" replicates what the Court held invalid under the First Amendment, the greater the danger that the Court would strike down the substitute as a thinly disguised end-run around its handiwork. So this is not a complete substitute, but it is an approach Congress should pursue, in a manner as bipartisan as McCain-Feingold itself, without delay.

Whatever one might think of the nationwide reluctance to embrace huge and costly new programs, and whatever lessons one might draw from the Scott Brown victory in Massachusetts in the special election of January 19, my guess is that the American people are ready, and indeed eager, for at least this kind of reform, reform which would suppress no political speech, entail no new bureaucracy, jeopardize nothing on which ordinary people now rely, do nothing to swell the national budget, enhance transparency rather than require back-room deals, and give nothing away to large aggregations of power and influence.

CORRECTION: The original version of this post had a sentence regarding the limits on corporate expenditures that was subsequently deleted.

In association with Bloomberg Law

Will it happen again?  Within hours after the current Court on Thursday decided that the First Amendment protects unchecked spending by corporations and labor unions to influence elections to the White House and Congress, advocacy groups Public Citizens and People for the American Way called for a constitutional amendment to undo the ruling.  A recently formed group, the Campaign to Legalize Democracy, took up the call, and went online at Move to Amend to circulate a petition to gather support for the idea; by the next morning, it claimed more than 21,000 signatures.

It is too soon to evaluate whether this movement, or the alternative idea to write new federal laws to get around the Citizens United ruling, will succeed.  But the blog will be monitoring the effort, and invites those working on the idea to share the language of constitutional amendments or legislative revisions.  Below the jump are some early drafts of a constitutional amendment.

Reclaim Democracy.org:

Section 1: The U.S. Constitution protects only the rights of living human beings.

Section 2: Corporations and other institutions granted the privilege to exist shall be subordinate to any and all laws enacted by citizens and their elected governments.

Section 3: Corporations and other for-profit institutions are prohibited from attempting to influence the outcome of elections, legislation or government policy through the use of aggregate resources or by rewarding or repaying employees or directors to exert such influence.

Section 4: Congress shall have power to implement this article by appropriate legislation.

Reclaim Democracy also has drafted a campaign finance amendment, with these operative sections:

The  Congress shall have the power to set limits on contributions and expenditures made to influence the outcome of any federal election.

Each state shall have the power to set limits on contributions and expenditures made to influence the outcome of elections in that state.

The power of each state to set limits on contributions and expenditures shall extend to all elections in that state, including initiative and referendum elections, as well as the power to lower any federal limits for the election of members of Congress to represent the people of that state.

From a Hofstra Law School faculty member:

For the purposes of the Constitution, corporations are public, not private. The rights enumerated in the Bill of Rights are the rights of human beings, not corporations.

From Ultimate Civics, a project of Earth Island Institute:

This amendment affirms that constitutional rights extend only to human persons.  Corporations, partnerships, and other organization entities are not human persons and, therefore, are not entitled to constitutional protections.

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Supreme Court Justice John Paul Stevens may have had his tongue in his cheek, or perhaps wanted merely to taunt the majority, when he wrote in Thursday’s opinion on the role of corporations in national politics: “Under 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.”  It is a tantalizing notion.

Suppose that General Motors Corp., troubled that a candidate for Congress from Michigan was too favorable to the United Auto Workers, decided to do everything in its corporate power to defeat that candidate.  So, aside from spending huge sums of its own money (none of it federal bailout money) to influence the outcome, it went to the office of the voting registrar in downtown Detroit.  It sought to sign up, affirming that it was a citizen and resident of Michigan.  Denied registration, it sued, claiming that, under the Fourteenth Amendment of the U.S. Constitution, it was a “person,” and, as a “citizen,” it was entitled to equal protection under the election laws.  Would the Supreme Court buy that?

General Motors might already be halfway to winning its lawsuit.  It has been understood, for decades, that corporations are “persons” under the Constitution.  And nothing the Supreme Court said Thursday undermined that notion.  If anything, the decision in Citizens United v. Federal Election Commission conferred new dignity on corporate “persons,” treating them — under the First Amendment free-speech clause — as the equal of human beings.

At least in politics, the Court majority indicated, corporations have a voice, and they have worthy political ideas.  Here is the way Justice Anthony M. Kennedy put it (partially quoting from an earlier ruling): “Corporations and other associations, like individuals, contribute to the ‘discussion, debate, and the dissemination of information and ideas’ that the First Amendment seeks to foster.”

It does not matter that the right-to-vote scenario is quite implausible.  The fact is that the decades-old image of American corporations as a destabilizing and perhaps even corrupting influence in politics has now been thoroughly re-examined by the Supreme Court, and the corporate “person” emerges from the process with — in the eyes of the majority — a burnished image of good citizen.  There is a deep chasm of perception, between Thursday’s majority and the dissenters, about the nature of the corporate personality.

Justice Stevens, writing for the dissenters, turned Chief Justice John Marshall’s celebrated comment in the Dartmouth College case — in a ruling that actually favored the corporate form — into a belittling comment: “A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law.  Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it.”

In vivid contrast, the majority overruled a 19-year-old precedent (Austin v. Michigan Chamber of Commerce) that had lambasted the corporation, when it entered the political arena, because of ”the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideas.” That, the Court had said in 1990, was a form of corruption that legislators could use as the basis for singling out corporations for restrictions on their political activity.  The overruling may have been intended, in part, to scuttle that image.

The rehabilitation of the corporate “person” almost certainly was a project that five of the Justices were prepared to embrace.  It could be argued, indeed, that the Court put the case over to the current Term for a second argument, focused on corporation’s rights under the Constitution, as part of that project.  There was not a hint that those five, in the end, were in any way moved by the suggestion at that second argument by Justice Sonia Sotomayor that the Court may have been wrong for a century about awarding “personhood” to corporations.

The majority put aside the dissenting opinion’s repeated mentions of the special favors that the corporate form gets, treating those as a completely inadequate foundation for treating corporations differently as political citizens.  And Justice Antonin Scalia, in a separate opinion buttressing the majority ruling, went to considerable lengths to enhance the constitutional pedigree of corporations’ rights and to denounce the dissenters’ suggestion that the Founders did not think highly of corporations.

The question now arises whether the enhanced legal stature of corporations will make a difference in other fields of constitutional law.  One might suggest that corporations have already benefited from greater sympathy from the current Court — for example, in constitutional limitations on the size of punitive damages that juries may assess for corporate wrongdoing.  And, this Term, there seems to be quite a realistic prospect that the Court, applying the Due Process Clause, may limit the scope of the federal criminal fraud laws when an executive of a corporation is accused of depriving the shareholders of “honest services.”

Going further, one might speculate whether it would be worth starting a lawsuit to test some of the restraints that states impose on corporations as conditions in their charters, in an effort to further liberate the corporate form.   Or, perhaps, one might anticipate a lawsuit if, as is already being suggested in some quarters, that Congress might respond to the Citizens United ruling by passing a law to require corporations operating in interstate commerce to be federally chartered, and decreeing that, as such, they are not “persons” with constitutional rights.

It is not too much to expect that lawyers for corporate America may well be looking to explore the outer possibilities of their clients’ “personhood” and new-found constitutional equality.

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After more than a year of study and writing, the Supreme Court on Thursday produced a ruling that may make the hundreds of millions spent in past presidential and congressional elections look like a pittance.  By removing existing restraints on what and when profit-making and non-profit corporations may say during federal election campaigns, the Court has significantly raised the financial stakes for all such elections, beginning with the primaries this year — the first of which occurs in 12 days, in Illinois.  But the Court did not directly settle everything with its release of 176 pages of opinions at 10:01 a.m. Thursday.

Some of the questions that linger are truly open questions after the ruling, some may have been partly settled, and some may actually have been settled, if only by implication.   Justice Anthony M. Kennedy’s controlling, 57-page opinion sweeps broadly, but it does not reach every issue that the highly complex mechanism of federal campaign finance regulation has raised.

Perhaps the most important question that one might ask in the wake of Citizens United v. Federal Election Commission is: are labor unions as free as corporations to spend as much as they wish — independently of candidates — to influence elections to Congress and the White House?  The likely answer is: Probably, but check back later.

The parts of the federal law that the Court struck down, barring corporations from using their own in-house cash to spend on politics, are written to apply equally to labor unions.  And there are sections of the Kennedy opinion that seem to treat corporations and labor unions interchangeably.  For example, the most important single conclusion the Court draws is that the identity of the political speaker (spending money on politics is, to the Court, speaking) cannot be the basis for restrictions on their independent political spending.  Thus, it would seem, the same limitation that was nullified today for corporations may be gone for unions, too.

But that was not an explicit issue in the case, and the Kennedy opinion never says explicitly that the curbs are lifted for unions.  Even so, that is an issue that may well be settled, but only by applying the rules of logic, rather than anything conclusive that the Court said.

Another question, and this one the Court explicitly said it was not deciding, was whether foreign corporations with operations in the U.S. — placed under the same restrictions as domestic ones — might now be able to claim the same First Amendment protection if they want to spend large sums to try to influence U.S. federal elections.  Perhaps that is one example of the next generation of campaign finance lawsuits.

The Court also did not rule on the flat ban — in effect for corporations since 1907, and for labor unions since 1947 — on donations that they might want to make directly to a federal candidate or a candidate’s campaign organization.  That was not an issue in the Citizens United case, and it was discussed only briefly in the Kennedy opinion.  With the Court speaking with such fervor about the need for open and robust political spending, one might wonder whether a donation to a candidate is all that different, constitutionally, from paying for an independent ad that says vote for that candidate or vote against the opponent.  Does anyone in political finance have a yen to bring that challenge?  That is not clear.

And that last question gives rise to an even broader one: might this Court be willing, sooner rather than later, to cast aside the clear distinction it has drawn since 1976, declaring that political spending gets more constitutional protection than political donating?  In terms of message to the voters, does writing a check for an advertising campaign to help out a candidate speak any more loudly than writing a check to the candidate directly?  Or differently?  Justice Kennedy nowhere even alludes to this distinction, and whether it might now be drawn into question under the sweeping freedom-to-spend rhetoric of this opinion.

There is another broad question that largely goes unaddressed in this ruling, but it perhaps should be asked anew in the wake of this decision.  It involves a project that the Court, the Federal Election Commission, and politicians and their lawyers have been dealing with for years — defining the difference between a political message (in an ad, for example) that involves “express advocacy” and one that involves “issue advocacy.”  The former might well be an ad that says explicitly “vote for” or “vote against” Candidate X.  The latter might well be an ad that says write to Senator X (a pro-choice lawmaker) and tell her you are a pro-life voter.  The Court has said repeatedly that Congress has more power to curb the former than the latter.

But Thursday’s decision, using a broad free-speech rationale, struck down an explicit ban on use of corporations’ in-house funds to pay for an ad that would say “vote for” or “vote against” Candidate X (a ban that applied only during election season, fairly close to a primary or general election day).  One question is whether there is anyone in politics to whom that “express versus issue” distinction still applies?  That is a truly open question.

Given that there is always someone in American politics interested in testing any limit that any part of the government imposed on political expression, one can easily imagine that Citizens United is not the last word on questions it did not resolve.

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** Disclosure requirement: Any corporation that spends more than $10,000 in a year to produce or air the kind of election season ad covered by federal restrictions must file a  report with the Federal Election Commission revealing the names and addresses of anyone who contributed $1,000 or more to the ad’s preparation or distribution.

** Disclaimer requirement: If a political ad is not authorized by a candidate or a political committee, the broadcast of the ad must say who is responsible for its content, plus the name and address of the group behind the ad.

Justice Clarence Thomas was the lone dissenter as the Court upheld those requirements.

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