San Francisco Chronicle

Why corporate personhood should not be overturned

- By Adam Winkler Adam Winkler is a professor at UCLA School of Law and the author of “We the Corporatio­ns: How American Businesses Won Their Civil Rights” (Liveright, adivision of W.W. Norton & Co., 2018). To comment, submit your letter to the editor at S

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.

 ?? Helen L. Montoya / Hearst Newspapers 2012 ?? A 2012 protest marking the second anniversar­y of the Citizens United decision sought to overturn the controvers­ial Supreme Court ruling.
Helen L. Montoya / Hearst Newspapers 2012 A 2012 protest marking the second anniversar­y of the Citizens United decision sought to overturn the controvers­ial Supreme Court ruling.

Newspapers in English

Newspapers from United States