Breaking News

Argument preview: Corporate “personhood” — again

At 10 a.m. Wednesday, the Court will hear one hour of oral argument on a government appeal arguing that business corporations do not have a right of of “personal privacy” that shields from compelled public disclosure the records they turn over to federal agencies.  Arguing for the Federal Communications Commission will be Anthony A. Yang, an Assistant to the U.S. Solicitor General.  Arguing for AT&T Inc. will be Geoffrey M. Klineberg of Kellogg, Huber, Hansen, Todd, Evans & Figel in Washington, D.C.


The controversy that the Supreme Court stirred up almost exactly one year ago with its ruling in Citizens United v. Federal Election Commission — recognizing a broad constitutional right of free speech for profit-making corporations — has an echo this Term as the Court takes up Federal Communications Commission v. AT&T Inc., et al. (09-1279).  In a manner of speaking, it is a return to the debate over corporate “personhood” — a legal fiction that gained solid new substance in the Citizens United decision last Jan. 21, in a campaign finance case.

Although the case is focused primarily upon what Congress meant in the Freedom of Information Act, when it provided protection for “personal privacy,”  the case has developed significant constitutional overtones, and AT&T is making much of its claim for privacy in its internal records on constitutional argument.

The case grows out of an investigation that the FCC made more than six years ago into a federal program run by that agency: the so-called “E-Rate” program.  That was designed to increase schools’ access to advanced telecommunications technology.  Taking part in that program was a telecom company then known as SBC Communications, one of the regional “Baby Bell” companies that existed after AT&T was broken up; it has since again become a part of AT&T Inc.

SBC provided equipment and services to elementary and secondary schools under the program, and billed the government for the cost.  In August 2004, the company discovered that it might have over-charged the government for work done for the school district in New London, Conn.  It voluntarily reported that to the FCC, and that agency’s Enforcement Bureau conducted an investigation.

During that probe, the Bureau ordered SBC to produce a range of documents related to the New London project.  The  papers included invoices, internal e-mails about pricing and billing, responses to Bureau inquiries, names of employees involved in the improper billing, and the company’s own assessment of whether the over-charges violated its internal code of conduct.   In December 2004, the Bureau wound up the case in a consent decree.  SBC agreed to make a voluntary contribution to the U.S. Treasury of $500,000 and to institute a compliance plan to ensure that no future over-billing would occur.  The company, however, did not formally admit any legal wrongdoing.

In April 2005, CompTel, a trade group representing some of AT&T’s competitors, submitted a request under the Freedom of Information Act for all pleadings and correspondence in the FCC probe of SBC on the New London project.  AT&T objected, arguing that the files were compiled for law enforcement purposes, and were exempt under a specific section of FOIA.

Congress had passed the Act in 1966 to increase the public disclosure of government records, especially by limiting the broad discretion that federal officials previously had to withhold records from public release.  The Act’s overall aim is disclosure, and thus any agency seeking to withhold records must prove that the non-disclosure would come within the very specific exceptions Congress wrote into the law.

Three of those exemptions are at issue in the case now before the Justices, but the principal one is contained in Section 7(C)   As Congress originally enacted that exemption in 1966, it protected from compelled disclosure “investigatory files compiled for law enforcement purposes,” unless such files were of a type that could be obtained by a private party in a court case.  After courts had interpreted that to mean everything that was in such an investigatory file, Congress in 1974 changed it to narrow the scope.   Now, it exempts from disclosure such files if public release “could reasonably be expected to constitute an unwarranted invasion of personal privacy.”  There is no specific definition of the words “personal privacy.”

Somewhat tangentially involved in the new case are Exemption 6, withholding from disclosure personnel and medical files that, if disclosed, would invade personal privacy, and Exemption 4, which withholds from disclosure trade secrets and other commercial or financial information that is obtained from a person and is privileged or confidential.   Under the Administrative Procedure Act, the term “person” includes a corporation, among others.

In the FCC case, SBC Communications contended that Exemption 7(C) applied to the records it had been required to submit during the FCC investigation.  FCC granted the SBC challenge in part, finding that some of the files were protected from disclosure by Exemption 4, for confidential commercial data.  The FCC also refused to disclose under 7(C) files that would invade the privacy of individuals.

But it refused to protect from disclosure the files that SBC claimed would invade its “personal privacy,” concluding that that part of FOIA did not apply because corporations lack “personal privacy.” The agency said that the exemption applied only to individual privacy, and it ordered the files at issue disclosed to CompTel.  (CompTel had its own objection to the FCC ruling, but that is not at issue before the Supreme Court.)

The dispute went on to the Third Circuit Court, based in Philadelphia.   Since the FOIA does define the word “person” to include a corporation, and since, in a grammatical sense, the word “personal” comes from the word “person,”  the Circuit Court said the company was entitled to the protection of 7(C) for its internal records.  The language of the law is unambiguous, the Circuit Court concluded, and the FCC was only one agency interpreting FOIA’s meaning, so the court need not defer to the agency’s view of what the phrase “personal privacy” meant.

Disagreeing with a ruling by the D.C. Circuit, the Third Circuit said that corporations, like human beings, are capable of being publicly embarrassed, harassed, or stigmatized.  It ordered the FCC to consider whether the disclosure it had ordered to CompTel would in fact invade the company’s personal privacy.

Petition for Certiorari

The FCC and the United States filed a petition for review in the Supreme Court last April.   (The petition was signed by Elena Kagan, then the U.S. Solicitor General.  She has since become a Justice, of course, and in that capacity is not taking any part in the Court’s consideration of the case.)

The FCC’s arguments were almost entirely statutory, arguing that no other federal court had found a right of “personal privacy” under FOIA, and that chaos would ensue if every federal agency — and the federal courts reviewing FOIA cases — would have to spend considerable resources delving into the nature of corporate “privacy.”   In passing, it contended that there is no constitutional foundation for a right of  “personal privacy” for a profit-making corporation.

By now, SBC Communications had become part of AT&T.  It urged the Supreme Court not to take on the issue, saying that there was no conflict in the lower courts on it, and that the government’s petition was premature, since the Circuit Court had sent the issue back to FCC.  To the FCC’s argument that chaos would reign in trying to sort out corporate privacy, the company argued that all that agencies will be obliged to do is to consider privacy in balancing the interests at stake when records have been produced for federal investigations.

The Court granted review of the case on September 28, in the first round of new cases accepted for the current Term.  Justice Kagan did not take part in that order.

Merits Briefs

The FCC’s merits brief focuses on what it describes as the Third Circuit’s unique interpretation of corporate privacy.  Until that ruling, it argued, no court, agency, or commentator had given that breadth to Exemption 7(C) “in the more than 35 years” of that provision’s existence.

The brief also relied upon the drafting history of FOIA, on Congress’s desire to strictly limit the exceptions to disclosure, and to the problems it foresees if 7(C) is expanded as the Third Circuit would have it.

On the “personal privacy” phrase itself, the FCC noted that Congress had not given it a definition.  It argued, therefore, that the Court must give the words their ordinary meaning.  “The ordinary meaning of ‘personal privacy’ is one that encompasses only the privacy of individual human beings.”  Turning to dictionaries, the brief said that “personal” means “relating to a particular person.”

When “personal” is joined with “privacy,” according to the FCC, “the resulting statutory phrase invokes background principles that focus exclusively on individuals.  The law ordinarily protects personal privacy to safeguard human dignity and preserve individual autonomy.”   None of that, it argued, fits “artificial entities like corporations.”   They are incapable of emotions, such as embarrassment or stigma, and those feelings “are at the heart of what personal privacy is all about,” the brief contended.

A section of the brief sought to answer the somewhat subtle arguments that AT&T made, in opposing Supreme Court review, seeking to tie corporate privacy to constitutional rights, such as the Fourth Amendment right not to be subjected to “unreasonable searches.”   Since the meaning of FOIA for human beings does not depend upon the scope of rights guaranteed to them under the Constitution, the same should be true for corporations, the agency brief asserted.

AT&T’s merits brief opens with an argument that the “plain text” of Exemption 7(C) applies to corporations.  It initially makes a grammatical argument, as did the Third Circuit: that is, that the word “personal” is an adjective related to “a particular person,” and Congress, in one section of FOIA, has defined “person” to mean a corporation.  That “the adjective form of a noun takes its meaning from the noun,” it argued, is a “grammatical imperative” that the Court is obliged to follow in this context.  It is simply unnecessary, AT&T said, to go beyond what the exemption specifically says.

The government, the company asserted, is relying on what lay people would understand “personal privacy” to mean.  The Court should turn instead, it said, to the Administrative Procedure Act, which, it said, includes a corporation as a person.

Major sections of AT&T’s brief are devoted to the constitutional rights that it notes corporations have had for generations.  Quoting from prior Supreme Court precedent, the brief said that “by1871, it was well understood that corporations should be treated as natural persons for virtually all purposes of constitutional and statutory analysis.”  The government’s efforts to distinguish that history from this case, the company asserted,  “are unpersuasive.”


Given the heat the Court took over its Citizens United ruling expanding the constitutional rights of corporations, including a public chastisement by President Obama, the chances that it will say a great deal about constitutional “personhood” for corporations in this case appears remote.  Moreover, the Court often repeats the institutional command that it should not decide constitutional issues unless it absolutely has no alternative.

Whether AT&T has been clever enough to make statutory arguments by relying upon the constitutional guarantees that it found applying to corporations remains to be seen.   The Court may well be skeptical of the interpretive approach of starting with constitutional rights and working backward to statutory rights.

What the Justices may be left with in the FOIA case, then, is to focus on what the Act explicitly says, and what those words mean — alone or, perhaps, in contest.  The Court is likely to find that each side’s argument about what the Act “plainly” means is overstated; the Act does not define “personal privacy,” so the Court must look to other aids to interpretation.   There is, of course, an ongoing debate within the Court as to whether it is proper for the Justices to examine the drafting and legislative history of a statute it is interpreting.  That debate could emerge anew in this case.

Some Justices, like Antonin Scalia, insist that the Court must find the meaning of a federal law, not in what Congress intended or in what individual lawmakers said during passage, but what the final words put into the legislation actually say.   Others Justices, like Stephen G. Breyer, think that Congress’s intent and its legislative purpose, as revealed in debates and committee reports, help explain what Congress had said.

AT&T’s argument about the “grammatical imperative” that supposedly bolsters its argument has been directly challenged by the FCC, but the FCC also has sought to use some supposed linguistic norms to justify its view of the exemption’s scope.

Recommended Citation: Lyle Denniston, Argument preview: Corporate “personhood” — again, SCOTUSblog (Jan. 18, 2011, 11:02 PM),