Why corporate personhood should not be overturned
Activists in Wyoming have been gathering signatures for a ballot measure calling for a constitutional amendment to overturn Citizens United, the controversial Supreme Court decision saying that corporations had the same right as individuals to spend money to influence elections. The proposed 28th Amendment, which has already been endorsed by 19 states and public interest groups like Common Cause and Public Citizen, would limit rights to people — and declare, once and for all, that corporations are not people.
Especially in the wake of President Trump’s business-friendly tax bill, frustration with corporate power and influence is understandable. But a constitutional amendment ending corporate personhood is a mistake. Indeed, corporate personhood may just be the best way to sensibly limit the rights of corporations.
Corporate personhood is a foundational principle of business law. It means that a corporation has its own independent identity in the eyes of the law. The corporate entity is wholly separate from the people who form it, own it, manage it or finance it. That’s why if your toaster explodes, you have to sue the company that makes the toaster. You can’t sue the company’s shareholders. The company and its shareholders are distinct legal persons, with different legal rights and duties.
Wyoming activists and Common Cause pin decisions like Citizens United and the subsequent Hobby Lobby case, which held that corporations have religious liberty rights under a federal statute, on corporate personhood. In fact, however, the Supreme Court rarely treats corporations as their own legal persons in cases dealing with the constitutional rights of corporations.
And there have been many such cases.
The first Supreme Court case on the rights of corporations was in 1809. (For some perspective, the first Supreme Court cases on the rights of African Americans and women were not decided until 1857 and 1873, respectively.) Over the past 200 years, corporations have brought lawsuits
seeking nearly every individual right, from the freedom of speech to the right to be free from unreasonable searches and seizures.
The Supreme Court has often ruled in favor of corporations — but not because corporations are people. The justices typically say instead that corporations have rights because they are made up of people. Corporations take on the rights of their members.
In the Hobby Lobby case, for example, the Supreme Court allowed the national chain of craft stores to exclude birth control from employee health plans on grounds of religion. Although the case was brought in the name of Hobby Lobby, the corporation, to challenge a legal duty imposed on Hobby Lobby, the corporation, Justice Samuel Alito’s opinion said the birth control requirement burdened the religious liberty of Hobby Lobby’s owners, David and Barbara Green and their children.
In Citizens United, the Supreme Court never says that corporations are people. It describes corporations as “associations of citizens,” focusing again on the members. Corporations today have nearly all the same rights as individuals because the court allows them to assert the rights of their members, who are themselves individuals.
It looks like the justices may take the same approach in the case of a baker who refused to sell a wedding cake to a same-sex couple. Although Colorado imposes the legal duty not to discriminate on the basis of sexual orientation on the bakery, a for-profit corporation, the justices during oral argument focused almost exclusively on the rights of the bakery owner.
Of course, the bakery owner would insist on the strict legal separation between him and the corporation if a customer slipped and fell in the store. Yet he wants to ignore that separation when deciding which customers to serve. He wants to, well, eat his cake and have it, too.
The Supreme Court should instead treat corporations as people — as separate and distinct legal entities with rights of their own. Rather than simply allowing corporations to assert the rights of their members, we should ask which rights corporate entities should have.
In a few cases over the past 200 years, the Supreme Court has treated corporations as independent people, separate and apart from their members. The result, surprisingly, has been to limit the rights of corporations.
A century ago, when the government tried to break up the tobacco trust, the tobacco firms claimed that their right against self-incrimination would be violated if their own executives were required to testify against them. The Supreme Court disagreed. The executives and the corporations were wholly separate legal persons and the Fifth Amendment protects only against self-incrimination.
The proposed 28th Amendment, however, would take all rights away from corporations. But that cannot be the right answer.
If corporations do not have property rights, the government could seize Google’s campus and turn it into a park without paying a dime in compensation. Without due process rights, Apple would not be able to challenge the FBI’s demand to unlock a terrorist’s iPhone. Newspaper corporations could be censored at the whim of Congress.
Corporate persons need certain basic rights to fulfill their economic function. But not until Citizens United and Hobby Lobby were business corporations thought to have a right to influence elections for public office or have religious liberty entitling them to exemptions from laws that apply to every other business. As legally organized entities required by law to pursue wealth, corporations lack the autonomy and conscience upon which these rights are based.
The question is not whether corporations should have rights but which rights corporations should have. Today’s steady expansion of corporate rights is a product of giving corporations the same rights as their members. Instead, we should treat corporations as separate legal persons — with only those rights appropriate for corporations.