Breaking News

Analysis: The personhood of corporations


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.