Are Corporations People?Presentation by Jeff Borg & Ryan Rasmussen

Constitution DaySeptember 17, 2010

Brief History

• The founding fathers were wary of corporations.

• Thomas Jefferson worried that corporate and government interests would become intertwined.

• He said, “I hope we shall … crush in its birth the aristocracy of our monied corporations.”

Brief History

• The word “corporation” never once appears in the United States Constitution.

Supreme Court Case: Dartmouth College v. Woodward - 1819

• A case in which the New Hampshire Legislature tried to become the majority shareholder of Dartmouth College, which was a private school.

• After years of state interference with private charters, the Supreme Court decided that private charters were to remain private, even if the state were a member to the corporation.

Supreme Court Case: Dartmouth College v. Woodward - 1819

• This ruling enforced the autonomy of the private corporation, declaring it was a right for private citizens to incorporate without being subject to complete regulation by the state.

The Fourteenth Amendment and Corporations - 1868

• Created after the Civil War, the Fourteenth Amendment granted equal protection to former slaves and all other minorities.

• The Equal Protection Clause (Section 1) has often been cited as implying corporate inclusion.

The Fourteenth Amendment and Corporations - 1868

The 14th Amendment:

“No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

Supreme Court Case: Santa Clara County v. Southern Pacific Railroad - 1886

CORPORATIONS = PEOPLE

A case which did not concern the personhood of corporations, but became a landmark case due to a head-note by the court reporter.

In the head-note of the report, Chief Justice Waite is quoted as saying:

"The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.“

Supreme Court Case: Santa Clara County v. Southern Pacific Railroad - 1886

• This set a precedent that corporations have rights as human beings, even though that finding was not included in the decision itself.

Supreme Court Case:Buckley v. Valeo - 1976

MONEY = SPEECH

In a landmark ruling, the Supreme Court declared that money spent to influence elections was a constitutionally protected form of free speech.

While this case did not deal with corporations explicitly, it was the precedent which was applied to corporations with Citizens United v. Federal Election Commission.

Supreme Court Case: Citizens United v. Federal Election Commission - 2010

The Supreme Court declared that corporations were avenues for citizens to collectively advocate for political issues.

Therefore, restrictions on corporate political spending were restrictions on freedom of speech.

Supreme Court Case: Citizens United v. FEC - 2010

• In an earlier ruling, the Supreme Court decided that corporations could only encourage employees to contribute to “segregated accounts”, or Political Action Committees (PACs).

• After the Citizens United decision, corporations are allowed to freely spend from their treasury funds on issue advocacy.*

*“Issue advocacy" is a type of political advocacy which avoids expressly advocating the election or defeat of a candidate.

Citizens UnitedThe Supreme Court decision was 5-4

Citizens United & McCain-Feingold

• In Citizens United v. FEC, the Supreme Court set aside part of the Bipartisan Campaign Reform Act of 2002, the part that banned all independent advertising (commercials, etc.) starting 60 days before a general election.

Majority Opinion The Free Speech Argument:

“Political speech does not lose First Amendment protection simply because its source is a corporation.”

Justice Kennedy: “When government seeks to use its full power … to command where a person may get his or her information or what distrusted source he or she may not hear, it uses censorship to control thought.”

Majority Opinion

• The Blurry Distinction Argument:

• Previous regulations on campaign finance made it difficult for for-profit as well as non-profit organizations to advocate on political issues.

• An arbitrary line existed between certain types of organizations which could clearly advocate in elections (news corporations, for example, were exempt) and those that could not.

Dissenting Opinion

• Justice Stevens, in his dissent from the Citizens United ruling, stated that the Supreme Court has undermined the role of Congress.

“Our lawmakers have a compelling constitutional basis, if not also a democratic duty, to take measures designed to guard against the potentially deleterious effects of corporate spending in local and national races.”

Dissenting Opinion

• Differing kinds of speech:

• Stevens wrote: “In the context of election to public office, the distinction between corporate and human speakers is significant. Although they make enormous contributions to our society, corporations are not actually members of it. They cannot vote or run for office.”

Dissenting Opinion

• Stevens also invoked the nation’s founders: “Unlike our colleagues, they had little trouble distinguishing corporations from human beings, and when they constitutionalized the right to free speech in the First Amendment, it was the free speech of individual Americans that they had in mind.”

Positive Reaction to Citizens United

• The fact that non-profit and for-profit organizations are similarly structured corporations, the Supreme Court ruling has made it so that any group of citizens can engage in issue advocacy.

Positive Reaction to Citizens United

• A Blow for Simplicity?• From the National Review magazine:

• The ruling will “guarantee that Congress does not decide which voices—big or small, rich or poor—should be favored in federal elections. It may, by its own force, streamline the morass of federal election regulation.”

Negative Reaction to Citizens United

• Unlimited corporate spending in elections will overshadow the voice of the people.

• When corporations are involved, some speech is more powerful than other speech.

• Public opinion seems to be clearly counter to the court’s ruling.

Negative Reaction to Citizens United

Negative Reaction to Citizens United

“Do you support or oppose the recent ruling by the Supreme Court that says corporations and unions can spend as much money as they want to help

political candidates win elections?”

0

10

20

30

40

50

60

70

80

90

Oppose Support

Overall

Strongly

Source: Washington Post-ABC News Poll (February 8, 2010)

Undermining Democracy?

• MONEY = SPEECH

• CORPORATE SPEECH =INDIVIDUAL SPEECH

Does this combination compromise political equality, which is essential to democracy?

Reversing Citizens United?

• A Legislative Fix

• An Executive Fix

• A Constitutional Amendment

A Constitutional Amendment

• On February 2, Rep. Donna Edwards (D-MD) introduced this possible amendment:

• “The sovereign right of the people to govern being essential to a free democracy, Congress and the States may regulate the expenditure of funds for political speech by any corporation, limited liability company, or other corporate entity.”

A Constitutional Amendment

• Other political leaders and groups have proposed different kinds of amendments to reverse Citizens United.

• However, it is extremely difficult to amend the Constitution. The US Constitution has only been amended 27 times since 1787.

A Constitutional Amendment: The ESRA

• One group has proposed a particularly far-reaching amendment called the Environmental and Social Responsibility Amendment.

• Corporations over a certain size would be required to prove their positive effects on society and the planet every five years, based on a list of criteria. Each case would be heard by a grand jury of civilians.

Environmental and Social Responsibility Amendment

• If the corporations failed to meet the criteria, their charter would not be renewed.

Campaign Finance Reform

• Another solution to the concerns about corporate spending on campaigns is an overall reform of campaign financing.

• Various groups have suggested plans for publicly funding political campaigns.

• One such plan has been introduced in Congress as the Fair Elections Now Act.

Fair Elections Now Act

• An optional way to run for office in Congress which would be funded by taxpayers.

• The money for campaigns is distributed in proportion to congressional districts in each state.

• Would restrict individual contributions to campaigns at $100.

Fair Elections Now Act

• The funds are built on a sliding scale, so more funds are available for a candidate running against a highly-funded private campaign.

• Corporations would have very little influence in these publicly funded campaigns.

To Get Involved

• Here are some groups which are attempting to educate about and agitate against the Citizens United decision:

• www.freespeechforpeople.org• www.dontgetrolled.org (Public Citizen)• www.commoncause.org• www.movetoamend.org

Sources and More Reading History of Corporate Personhood:

– http://www.reclaimdemocracy.org/personhood/ Dartmouth College v. Woodward:

– http://www.vlib.us/amdocs/texts/drtmouth.htm– http://www.oyez.org/cases/1792-1850/1818/1818_0

14th Amendment to the US Constitution:– http://www.usconstitution.net/xconst_Am14.html– http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1120308 (background and intent of

the 14th Amendment) Santa Clara County v. Southern Pacific Railroad Company:

– http://supreme.justia.com/us/118/394/case.html Buckley v. Valeo:

– http://www.oyez.org/cases/1970-1979/1975/1975_75_436 Citizens United v. Federal Election Commission (decision with dissent and concurrences):

– http://www.supremecourt.gov/opinions/09pdf/08-205.pdf Fair Elections Now Act:

– http://fairelectionsnow.org/about-bill Environmental and Social Responsibility Amendment:

– http://www.tikkun.org/article.php/sept2010esra#esra