Why Corporations Aren’t Persons for First Amendment Purposes.

A prominent feature of my position, and the position of many of my fellow leftists, on Citizens United is the notion that corporations are not people who are the appropriate object of First Amendment rights. I think it’s worthwhile to try and lay out the basics of this argument here in a hopefully-brief post. (Written a little bit hastily, apologies for any typos/incoherencies.)

The fundamental idea is simple. Corporations are not persons. Corporations are fictional entities created by the state for a specific purpose (to permit certain economic efficiencies), and it makes as much sense to say that they have constitutional rights as it does to say that a dog or a car or the categorical imperative or an estate in land or a trust or a local government has constitutional rights. The management and shareholders of a corporation have constitutional rights, but there’s no reason to think those rights extend to the willy-nilly use of corporate resources, any more than do the constitutional rights of the management and citizens/beneficiaries of a trust or local government.

The details require some fleshing out, obviously.

1. The important differences between a corporation and an aggregate of people..

One immediate objection to the fundamental idea stated above is that a corporation is nothing more than a bunch of people (shareholders) pooling their resources, and if it’s constitutionally protected to get together and aggregate resources to influence the government (which it obviously is), this should protect corporations too.

This objection is completely wrongheaded. Corporations are state-chartered entities given special privileges (limited liability, in particular), for a particular purpose (to promote the economic benefits from efficiencies of scale). Corporations are, at their most basic level, profit-generating machines. By insulating investors from many of the risks of their economic activity, they permit a much faster and larger aggregation of wealth than would be the case if the people involved just got together and formed, say, a massive partnership. And the price for this is some loss of control — the owners of a corporation aren’t allowed, without going through special procedures, to just take money out of the treasury, management and directors have all kinds of funny fiduciary duties, there are numerous rules about how stock is issued, sold, priced, etc. Management and owners who treat corporate resources as their own personal resources (it goes by names like “commingling of funds”) can even lose the limited liability benefit for which the corporation was created.

What this means on a policy level is that if the people who make up a corporation (i.e., shareholders and employees) got together without the benefit of a corporation and decided to try to influence politics, they’d have far fewer resources with which to do so. Corporations, as concentrations of money, distort the political system.

What this means on a constitutional level is that (a) there’s a coherent, meaningful, and legally familiar difference between “my resources” and “the resources of the corporation in which I happen to own a share,” such that it requires an argument (thus far not offered) to go from “I have the right to spend my own money to influence politics” to “I have the right to spend the money of the corporation in which I hold shares/a management position to influence politics.” It also means (b) that we ought to pay due regard to the fact that the state is often permitted to impose conditions on benefits (like a corporate charter) that it gives that it isn’t permitted to impose as regulations on the populace at large. For example, when the state gives you a license to drive, it’s permitted to require you to submit to a breath test, even though if it gave you breath tests while walking down the street it would be a fourth amendment violation. (Or consider a hypothetical. Suppose the state gives you a car in order to achieve some public policy goal, say because it hired you to deliver welfare checks. And you use that car to go canvassing for political candidates. I think we’d agree that the state’s forbidding this behavior wouldn’t constitute a First Amendment violation.)

Just for some historical perspective, at the beginning of the United States, restrictions on corporations were much more severe. Corporations were chartered for a specific purpose, and if they exceeded that purpose they were deemed to be acting ultra vires and subject to a revocation of their charter by a writ of quo warranto. For examples of this, see footnote 30 in “Quo Warranto and Private Corporations” Yale Law Journal 37:2 (1927) pg. 242 (which seems to be unsigned?). And this should matter for originalist (like, ahem, Scalia), since it seems highly unlikely that the founders would have expected corporations to have broad-based constitutional rights to use their money like an ordinary person can, in light of the legal context in which they existed at the founding.

(Incidentally, a vestige of these old restrictions can be seen in local government law. Local governments were among the original models for the corporate form — hence, for example, the government of London is still called the City of London Corporation — and in many U.S. states, local governments have no powers, except those explicitly granted by the state, a restriction that is often enforced quite vigorously by the courts, who happily rule trivial local government actions ultra vires on a daily basis.)

2. But what about other constitutional rights?

On Facebook, the always insightful Jacob Levy offered the following challenge to this position:

I ask others who think “corporations =/=persons–> they lack constitutional rights”: may corporate-owned property be taken without compensation? Can it be searched without a warrant? Must a lawsuit against a corporation be governed by due process rules? Could corporate charters be conditioned on the corporations donating to Protestant churches?

And I’d answer: corporations don’t have constitutional rights against those things either. However, the shareholders of corporations have constitutional rights against some of those things being done to the corporations in which they own shares, and others of those things are barred by general constitutional provisions that don’t require a specific person whose rights were violated.

The general idea here is that the state permits the corporate form to be created for certain economic reasons, and in pursuit of that, gives people certain guarantees, such that their investments in corporations won’t be stolen. I think it would probably violate the property and due process rights of shareholders to seize corporate-owned property without compensation, just like certain kinds of “regulatory takings” (which ought to be a pretty narrow category, but perhaps not nonexistent). Like a “regulatory taking,” the state doesn’t directly seize what the constitutionally cognizable (human) victim owns (i.e., the stock), but it both a) violates the reasonable expectations of the property (stock) owner, and b) basically renders the property (stock) worthless. I think this argument is quite good enough to establish that the state may not take corporate property without compensation or permit lawsuits against corporations to go forward without the guarantees of due process, but without giving corporations constitutional rights that they don’t have.

(Andrew March aptly pointed out on Facebook that corporations don’t have the right to vote. The general principle — that corporations, being artificial entities created for an economic purpose, ought to [indirectly] get economic rights but not political ones — seems totally sound to me.)

The protestant churches example is a different case. The establishment clause forbids the state from subsidizing particular religions regardless of if there’s any particular person who can say her constitutional rights have been violated. So a corporation need not have constitutional rights in order for it to be impermissible for the state to make it give a bunch of money to the protestants.

And finally, I will happily bite the bullet on the search warrant case. There doesn’t seem to be any real constitutional reason to protect the “privacy” of fictional entities. Indeed, we don’t do so in many cases — publicly traded corporations are required to make huge amounts of financial information public that would probably be a fourth amendment violation if imposed on human beings, for example. And individual humans have reasonable expectations of privacy in their spaces on corporate property — saying corporations have no privacy rights doesn’t mean the state is entitled to search the desks of managers or the safe deposit boxes of bank depositors, so denying that corporations have fourth amendment rights on their own behalf won’t usher in a world of total surveillance. (We actually need much stronger fourth amendment protections for individuals.)

For example, the Supreme Court in NAACP v. Alabama aptly held that the constitution prohibited Alabama from by demanding a copy of the organization’s membership list. But not because the corporate entity of the NAACP had any rights. Rather, because it would chill the individual free speech and association rights of NAACP members to require the disclosure. As the Court said:

There is no occasion in this case for us to consider how much survives of the principle that a State can impose such conditions as it chooses on the right of a foreign corporation to do business within the State, or can exclude it from the State altogether. E. g., Crescent Cotton Oil Co. v. Mississippi, 257 U.S. 129, 137 . This case, in truth, involves not the privilege of a corporation to do business in a State, but rather the freedom of individuals to associate for the collective advocacy of ideas. “Freedoms such as . . . [this] are protected not only against heavy-handed frontal attack, but also from being stifled by more subtle governmental interference.” Bates v. City of Little Rock, 361 U.S. 516, 523 .

(emphasis mine) This seems like exactly the right approach.

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33 Responses to “Why Corporations Aren’t Persons for First Amendment Purposes.”

  1. Paul Gowder Says:

    Apologies for the terrible formatting: I’m having trouble with wordpress.

  2. ben Says:

    I diagnose your problem as having used html in the html-free formatting box. It would be simpler if there were only one option; people would make fewer errors of this sort.

    Anyway, what boots the obvious (to me) cogency of your argument? The SC isn’t obligated to produce good arguments to justify its decisions, and I’m not optimistic that anything will come before the court to challenge whatever decision it was that found that corporations are persons.

  3. Paul Gowder Says:

    I wish it were that simple. Wordpress won’t let me post on the web interface at all, nor edit posts. (An e-mail is out to my ISP’s tech support.) I had to download some crappy desktop blogging app to post this, and had thought it would post in html, but it didn’t. And now I can’t get that application to edit it either.

  4. Paul Gowder Says:

    Hah, fixed it from the iphone app. Apparently wordpress’s posting script on the web version violates the rules of some security software.

  5. Robin Hanson Says:

    You are arguing about the law actually is interpreted to say, not about what it should say. Why shouldn’t *everything*, human, animal, machine, zombie, spirit, etc. have free speech? Their speech might give us info, and if we don’t trust them we can just choose not to listen to them? What harm is there from allowing everything to speak?

  6. Paul Gowder Says:

    Robin, I agree, in principle, but it’s bad for the informational environment and for democracy if some entities have voices that are so loud that they drown out all others — and I think that’s the case with corporations. Because they have such immense concentrations of wealth, giving them free speech actually reduces the amount of accessible info (and, of course, facilitates corruption-by-campaign-contribution).

  7. Kenny Says:

    Despite certainly not being a leftist, I agree with almost everything you say here. In fact, I argued for a similar view here, though I was concerned with natural rights rather than legal rights.

    I’m sure the Objectivists are out celebrating somewhere, but I see no reason for a (thoughtful) libertarian to be happy with this ruling. Just as you say, the rights of individuals straightforwardly give rise to rights for sole proprietorships and unlimited partnerships, but the limited liability corporation is a different beast altogether, and there is no reason why the government shouldn’t be able to lay down conditions corporations have to follow in order to receive limitation of liability.

  8. Michael Drake Says:

    No argument from me. What I would like to see, though, is an attempt (any attempt) to harmonize the following two propositions:

    1. Corporations are “persons” for First Amendment purposes.
    2. The meaning of the Constitution was fixed when it was drafted or ratified.

    Has anyone seen any takers?

  9. Kenny Says:

    Michael – See Scalia’s concurring opinion. The Stevens dissent makes exactly your point, and Scalia tries to refute it.

  10. JL Says:

    Or perhaps a corporation has a right against compelling it to testify against itself in criminal cases? If the gov’t couldn’t subpoena corporate records, it probably wouldn’t be very good for, well, anybody.

  11. Michael Drake Says:

    Thanks Kenny. I guess I read Scalia as arguing against regulations on corporate speech on slightly different grounds, viz., either that free speech is constitutionally protected in the abstract, independent of the nature of the entity producing it, or that the speech in issue is that of the individuals who the corporation comprises. As I read him, he never really confronts (and maybe means to evade) the issue of whether corporations are “persons” under the First Amendment, as they would have to be to have standing to assert First Amendment claims.

  12. Kenny Says:

    He certainly does make the claim that the first amendment prohibits congress from restricting speech, as opposed to requiring congress to recognize that persons have a right to free speech, and he seems to think that distinction is significant here, but he does also argue that in the original interpretation of the Constitution first amendment free speech protections extended to corporations.

  13. Stuart Buck Says:

    Why is “personhood” even relevant? This wasn’t a state-law 14th-Amendment-incorporation case (which would have to rely on the 14th Amendment’s protection of “persons”). It involved the First Amendment directly, which simply says “Congress shall make no law . . . abridging the freedom of speech, or of the press.” There’s nothing in there limiting protection to the speech of individual persons speaking for themselves alone, rather than as an association or a journalistic corporation.

  14. Paul Gowder Says:

    Stuart, I don’t mean to hinge the argument on an appeal to the word “persons” in any constitutional text. (Indeed, it’s hard to see what the word “person” does in the 14th amendment — surely it wouldn’t apply to, say, dogs or trees absent that text.) Rather, I mean to claim as a conceptual matter (pre-textually) that it makes no bloody sense for non-persons to have constitutional rights in general. At most we may treat them as if they have rights insofar as doing so is necessary to protect the rights of actual people.

    It is true, some constitutional principles are expressed as general prohibitions/powers in terms that are not tied to rights-bearers — in my post, I gave the establishment clause as one obvious example of this. But I don’t think the speech clause is one, for the text refers to the “freedom” of speech, and I’d deny that non-persons can have freedoms in the first place.

    For a slightly ridiculous comparison, suppose Congress passed a law saying prohibiting parrots from talking on pain of being put to sleep. I wouldn’t think that would be obviously unconstitutional, and I’d lean toward saying it’s perfectly ok. (Well, it might be a taking from the owners of the parrots, but you get the point.)

  15. Stuart Buck Says:

    Funny example, but then again parrots are something than mere groups of human persons. It occurs to me that maybe what distorts constitutional law here (or in other place) is the view that the First Amendment hinges on protecting personal rights (in which case one starts to ask, who is the person?) instead of viewing the First Amendment as a limitation on congressional power (in which case one asks, congressional power is the concern)).

  16. Stuart Buck Says:

    Sorry, the grammar got messed up due to editing. Take out that “one asks,”.

  17. Stuart Buck Says:

    If we passed a constitutional provision stating, “Congress shall make no law inhibiting the purchase of fire insurance,” it wouldn’t be the most obvious interpretation to say, “This creates an individual right to fire insurance; but individual rights can be possessed only by individuals; therefore Congress is actually empowered to ban the purchase of fire insurance by sole proprietorships, partnerships, LLCs, corporations, unions, churches, etc.” The more obvious interpretation would be “Congress can’t interfere with the purchase of fire insurance by anyone or anything.”

  18. Paul Gowder Says:

    Stuart, I think the notion of standing strongly suggests that we ordinarily understand most constitutional provisions as protections of personal rights, or, at least, as restrictions on Congress that can only be appealed to by someone with a legitimate interest in the restriction in question.

    Recall that the Court carved out a special exception to constitutional standing rules in Flast v. Cohen just for the establishment clause, which jibes nicely with my suggestion that the clause is special in virtue of its creating a general restriction on state power rather than an individual right.

    (Also consider the fourth amendment jurisprudence about expectations of privacy — a clear example of the courts interpreting a constitutional right as tracking the individual interests that that right is meant to protect.)

    The fire insurance example, I think, is inapposite because we’d ordinarily understand corporations, unions, churches, etc. as the sort of thing that ordinarily buys fire insurance. Not so with exercising political/self-actualization rights like freedom of speech.

  19. Mike Says:

    Couldn’t a similar case be made for denying freedom of the press to corporations and say that if a media company wishes to publicize something the government may suppress it.

  20. Paul Gowder Says:

    Mike: not very comfortably. Recall that the first distinction in the argument I’m advancing — before we even get to the question of corporate free speech rights on their own part — is a distinction between individual free speech rights and the right to use corporate assets in unrestricted ways in pursuit of one’s individual rights. I think we can understand the press clause as rejecting an analogous version of that distinction in the case of media outlets — to wit, the individual right to speak extends to having a right to speak via whatever media outlets the market happens to provide, in virtue of the press clause. (Note that this understanding does not require us to give any constitutional rights to the corporate owners of newspapers, nor give people a right to divert corporate assets to these purposes except to the extent they happen to control a media company.)

    It would actually be interesting to think about a case where a conventional media outlet went completely insane for a candidate — suppose you think campaign finance restrictions are constitutional, could the New York Times be prevented from running free every-other-page ads for a candidate whom its editors fanatically supported? On balance, I’d probably say “no” because of the way the First Amendment captures the special role of the press in a democracy. But that role is special — and note that this sort of thing has less of a distorting effect on the political process than massive corporate funding that spreads a single message all over every media outlet — one newspaper’s flogging a candidate like mad doesn’t drown out other candidates in other newspapers in the same way the kinds of funding the major parties get can. (Which is also why we need to be very good at policing antitrust restrictions in the media industry…)

  21. Mike Says:

    Suppose a corporation formed a division whose express goal was to publish information in favor of position x. What justification would there be for not considering that division as equivalent to a media corporation and subject to the constitutional protections they enjoy.

  22. Paul Gowder Says:

    I’m just making this up out of my ass here, but suppose we draw a distinction between publishers and advertising campaigns on the theory that the former is one-channel (i.e., one newspaper, one TV station, etc.), or, in the case of media conglomerates, multiple channels that operate independently (are under different editorial control etc.) while the latter is multi-channel and not operating independently. This tracks the problem with corporate political advertising — namely that they can buy huge amounts of airtime on everything and drown out other messages — a one-channel information route, even one spun off by an ordinary corporation, doesn’t offer that same kind of threat (because people can read things OTHER than the Position X Times).

    There are probably numerous problems with this, but it’s an interesting first pass. Thoughts?

  23. Mike Says:

    It seems to me that you’re making the utilitarian argument that corporate political advertisement is a bad thing and therefore should be banned (which I personally disagree with but don’t find unreasonable), and trying to therefore create a constitutional standard which bans it.
    From a constitutional perspective how a corporation sets up its internal management structure should not affect its free speech rights. Your argument seems to be an anti-trust argument which is a possible legal justification, but one which would be pretty far-reaching if pursued as theory.

  24. Paul Gowder Says:

    But the issue isn’t about internal management structure, it’s about control — about who controls how much of the cognitive environment in which citizens are placed. (And I wouldn’t describe it as a “utilitarian” argument exactly — it doesn’t appeal to a conception of the good, it appeals to a conception of democracy.)

    Anyway, yes, I agree that this would be somewhat far-reaching, but, well, I’m no “strict constructionist.” I think the First Amendment should be understood, first and foremost, as a device for ensuring that citizens can act as autonomous political agents — as democratic citizens who can make a difference — and when concentrations of wealth and power threaten that, the first amendment ought not to protect those concentrations.

  25. Steve M. Says:

    I think there’s an empirical disagreement here that hasn’t been discussed as clearly as it could be. Set aside for the moment the question of foreign shareholders, or foreign government shareholders (and sovereign wealth funds, &c.). The Court’s argument is, to oversimplify greatly, that Sally Citizen can spend as much of her money as she likes on campaign ads within the last 60 days of a campaign. So can her friends. Everyone agrees with that. But under section 441b, one thing Sally and her friends can’t do is pool their money and form a corporation, which can then hire employees who will put together the ads and get them on television. That’s silly, says the Court. All 441b does is make it harder for Sally and her friends to do something everyone acknowledges she has a right to do.

    Or let’s say Sally owns a business, which is incorporated. It’s small, too. It’s only got three employees, one of whom is Sally herself. Let’s say she owns all the stock, or 95% of it. Section 441b provides that she can’t just write a check for a campaign ad, not even after holding a shareholder vote and giving her husband (maybe he’s with the other political party?) the right to vote against it. No, instead she has to go through the hassle of declaring a dividend, taking 95% of it, and writing a check from her own bank account. That’s also silly, says the Court, especially if Sally is the sole shareholder. It’s just needless busywork.

    The Court applies this way of thinking to very large business corporations. Except for Stevens’s partial dissent, the opinions have a very strong faith that shareholder democracy actually works. And I think a lot of liberal reactions to the decision ultimately come from a belief that in sufficiently large corporations, management will almost alway win a struggle with large shareholders. The business judgment rule, the standards for bringing derivate suits, and the sometimes-extreme difficulty of winning a vote against management (especially in corporations with a large reserve of unissued stock, which is issuable at the discretion of the board) could all make it very difficult for shareholders to control a firm’s spending on political ads.

    I suppose we’re about to find out whether shareholders want political ad spending, or oppose it, and whether as a practical matter they can stop it.

    I’m also curious to hear what people think about the relationship is between Citizens United and lobbying. My understanding is that corporate lobbying expenditures are huge compared to any conceivable amount that corporations might spend on ads. It’s far more effective, and it doesn’t drive away customers. I’ve read a few comments, mostly to the effect that the decision doesn’t matter because the real money is in lobbying, but I’m surprised I haven’t read more.

  26. Ryan Says:

    Paul, earlier you argued that because corporations are not identical to aggregates of people pooling their resources an argument is required (which you think has not yet been provided) to show why they ought to be treated as if they were for first amendment purposes.

    But what if someone came to the argument from with the position that corporations are, in a common sense way, similar enough to mere aggregates pooling their resources that an argument is required to show why they are relevantly different from a constitutional standpoint.

    Say for example that youth groups were granted special privileges not given to other sorts of groups. It seems that the appropriate default position is that we should allow youth groups the same first amendment protection as other ordinary groups -and that the onus is on those who disagree to show why youth group privilege makes them relevantly different from a first amendment standpoint.

  27. Ryan Says:

    This isn’t to say that you haven’t made strong arguments for the relevance of the difference from a first amendment standpoint, but maybe not everyone finds those arguments convincing. If burden of proof is on you rather than your opponents this is a problem.

    If we can’t tell who the burden of proof is on, that is a bigger problem.

  28. ryan Says:

    I don’t really know anything about constitutional law, as my questions may reveal, but it seems to me incorrect to say that everytime the government grants special privileges an argument has to be made to show why those to take those privileges deserve to be protected by the first amendment anyway.

    Or more generally, take your driver’s license example. The government grants you the privilege of driving a car. Accepting that privilege doesn’t automatically mean that you have to argue with the government for all of your old rights back when you are acting in capacity as a ‘driver’. The government can’t arbitrarily exert its power on you simply because you have accepted a privilege.

    Rather things seem to work the other way. The default position is that you have all of the same protections as a driver that you did as an ordinary non-driver.

    Then arguments have to be made to show why your accepting the privilege of driving relevantly changes your status with respect to various protections. As it turns out, being a driver changes your status with respect to search and seizure but not with respect to free speech for example. But no one had to argue that ‘drivers too’ should have a right to free speech. It was assumed that they would unless convincing reason could be provided that demonstrated that their accepting the gov privilege relevantly changed their status.

  29. Paul Gowder Says:

    (Ryan, I owe you a response to this — don’t let me forget, extreme sleep deprivation intervened…)

  30. ryan Says:

    I really appreciate it Paul. Do get some rest!

  31. Paul Gowder Says:

    Ok Ryan… there are two issues intertwined in your comments, and I think it might be helpful to separate them.

    The first issue we can call the “burden of proof objection.” My argument is phrased in part in the form “there has been no argument to suggest that corporations are just the same as aggregates of people,” and you object that there also hasn’t been any real argument to suggest that they’re different, so aren’t I just dumping the burden of proof on my opponent?

    The second we can call the “conditional privileges” objection. You suggest that just because the government can condition some privileges on consent to things that would otherwise be rights violations, it doesn’t follow that whenever you do get some government privilege the feds can suspend any of your rights it wants in exchange.

    On the burden of proof objection… so I think my basic response (at least right now, I’m kinda shooting from the hip here) is to suggest that we can point to the First Amendment interests against corporate-financed politics as sort of a prima facie reason to permit forbidding their participation. The claim is something like this: the First Amendment is primarily about preserving the democratic powers of the people. Because the injection of corporate money into politics threatens those powers (by drowning out independent messages, corrupting officials, etc.), we ought to interpret the First Amendment as permitting it to be banned. This seems to me to be enough to nudge the burden over — to put the onus on my opponent to offer an argument for his interpretation of the First Amendment.

    On the conditional privileges objection, I’m not totally familiar with the caselaw on this, but I do know that the privilege of having a corporate charter is one that has traditionally been subject to very strict conditions — recall from the post that there are numerous cases from the 18th and 19th centuries where corporations have been denied basic negative liberties — where even engaging in simple economic activities beyond the scope of their charters got those charters revoked. This seems relevant to the sorts of conditions that can be imposed on this particular privilege.

  32. ryan Says:

    Thanks for clarifying some of my thinking on this.

    So, does the debate reduce to differing intuitions about the purpose of the first amendment?

    Will corps look more like groups of people (a little strangely organized and with some additional privileges) to those who view the first amendment less as a tool for preserving democracy powers and more as a barrier against government suppression of people’s speech?

    My sense is that if your intuition about the first amendment is that it is about preserving the brute right of people to speak, however efficacious or inefficacious, you might think corps look enough like normal groups of people that at the very least the burden falls on the other guy to show why they are relevantly different.

  33. ryan Says:

    sorry, efficaciously or inefficaciously

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