All Bark and No Bite:The Effect of State Level Election Disclosure Laws on Citizen United

Citizens United v. Federal Election Commission, 130 S. Ct. 876 (2010), is touted as a landmark Supreme Court decision that was said to drastically change the landscape in American politics as we know it by extending the idea of corporate person-hood and by granting First Amendment rights to Corporations, see generally Citizens, 130 S. Ct 883-886. This decision was based partly on the idea that other means of corporate political expression, like creation of Political Action Committees (PAC’s), were unnecessary and overly burdensome. Thus, the Court paved the way for corporation to contribute general treasury funds directly into independent expenditures that expressly advocate for or against a candidate running for political office.

A recent District Court decision has upheld a Minnesota election disclosure law amended in direct response to the decision in Citizens United. The Plaintiff, Minnesota Citizens Concerned for Life (MCCL), challenged certain Minnesota statutes as being unconstitutional under the Supreme Court’s ruling in Citizens. Minnesota Statutes §10A.12, 10A.01, 10A.27, and 21B.15; formerly prohibited corporations from making independent expenditures. See Minnesota Citizens Concerned for Life v. Swanson, citation needed. These statutes were amended to allow independent expenditures so long as the corporation formed and registered “an independent expenditure political fund if the expenditure is in excess of $100 or contributing to an existing independent political expenditure committee or fund.” These independent political expenditure committees and funds were also required to make certain disclosures under Minnesota Law.

Besides requiring that each fund elect or appoint a treasure, the funds were required to file one report in non general election years and five reports during general election years. These reports required the disclosure of the amount of liquid assets at the beginning of the reporting period, the name and address of each individual who’s contributions exceeded $100, the amount and date of contributions, the sum of the contributions, loans received, the names and address of each individual or association whom the reporting entity made expenditures within the reporting period, and various other specific disclosures. See Minn. Stat. §10A.20.

MCCL wanted to make independent expenditures in excess of $100 to expressly advocate for and against specific candidates running in the general election taking place on November 2, 2010. In general, MCCL challenged the Minnesota statutes on the basis that the disclosure law was overly burdensome and thereby infringed upon the groups First Amendment Rights to freedom of speech.

The court upheld the constitutionality of the Minn. Statutes on the basis that the statutes did not require “PAC-style” accounts. The court stated that Minnesota law allows for the use of general treasury funds and states that unlike PAC’s, the funds are always under control of the corporation itself. The court continues to say that the requirements for independent expenditures are far less extensive than what is required by PAC under Federal law. The court bases their opinion largely on making subtle distinctions between PAC requirements and the Minnesota statutes, and by continually stating that corporate independent expenditures are explicitly allowed.

The Supreme Court in Citizens stated that forcing corporations to turn to PAC’s as a means of political speech was overly burdensome and a poor choice when compared to direct independent expenditures. Among other requirements, PAC’s require the appointment of a treasurer, detailed record keeping, the filing of organizational statements, and detailed reports containing information on receipts and expenditures. These are close to some of the very same requirements outlined in the Minnesota statutes allowing independent corporate expenditures.

This case is only a recently reported district court decision that may be placed under further judicial review before the upcoming Nov. 2 elections. Setting aside some of the general propositions made about the impact of Citizens due to its furtherance to the idea of corporate person hood, the Minnesota decision calls into question the importance of Kennedy’s discussion on the ineffectiveness of PAC’s in corporate speech. If a state legislature can require that corporations jump through some of the same procedural hoops and bear many of the same financial burdens when making their constitutionally protected independent expenditures as would be required if the corporation was forced to resort to use of a PAC, how effective was the court at achieving its stated purpose?

All or Nothing

   Citizens United v. Federal Election Commission, 130 S. Ct. 876 (2010), extends First Amendment protections to independent political expenditures by corporations, see Citizens, 130 S. Ct. 913, and naturally, the dissent (and the public) are worried about corporate election influence and whether the reasoning in Citizens will soon give corporations the right to vote. See generally id. (Stevens, J., dissenting). However, Citizens raises another constitutional question: if corporations are citizens and “persons,” at least in some contexts, they why do they not enjoy all of the Constitutional protections afforded to natural citizens and persons?

   Most generally, Citizens reaffirms the time-honored proposition that “[t]he right of citizens to inquire, to hear, to speak, and to use information to reach consensus is a precondition to enlightened self-government and a necessary means to protect it.” Id. at 898. Citizens emphasizes an equally important yet less-accepted notion, as well: corporations are citizens. See generally Citizens, 130 S. Ct. 876. As citizens, corporations have a First Amendment right to free speech. Id. at 899. Moreover, the Court is clear: this right is not new or novel. Id. (citations omitted). However, what is new and novel is the Court’s holding: “[t]he First Amendment does not permit Congress to make . . . categorical distinctions based on the corporate identity of the speaker and the content of the political speech. Id. at 913. The Court thus overruled Austin v. Michigan Chamber of Commerce, 110 S. Ct. 1391 (1990). In doing so, the Court also held that 2 U.S.C. § 441(b) and its restrictions on corporate campaign expenditures was invalid. Id.

   While corporations won an important freedom of speech and expression victory in Citizens, one cannot help but wonder why so little has been said about the disparity of treatment for corporations and the constitutional implications of such disparity. The Fourteenth Amendment should seemingly make this clear: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” U.S. CONST. amend. XIV (emphasis added). This is an affirmative declaration of citizenship, and admittedly, it is not written as a bi-conditional, such that the converse – that anyone not born or naturalized in the United States is not a citizen – is not necessarily true. Nonetheless, citizenship in America has thus far only occurred through naturalization or birth. Or has it? Corporations problematize our understanding of citizenship, for they are neither born nor naturalized. Corporate citizenship exists by virtue of corporate charters, which can be issued and revoked subject to state laws. Yet, corporation would be the only type of “person” who is a citizen of a state but not the nation. More likely, corporations are also “national” citizens, as evidenced by the common distinction of “foreign corporations.” See Citizens, 130 S. Ct. at 947 (Stevens, J., dissenting). An easy solution to the problem to the rights afforded corporate citizens would be to read the first clause of the Fourteenth Amendment, id., as merely a conditional statement: if born or naturalized, then a citizen. Thus, corporations could receive special treatment.

   If only the problem were so simple. The second clause of the Fourteenth Amendment further states:

   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.

   Id. While “citizen,” as used in the first statement could refer back to the conditional definition defined above, “person” is not limited to those naturalized or born in the United States, or otherwise “citizen” would suffice. Instead, it seems to mean all persons, which would include corporations after Citizens, which acknowledged and relied on corporate personhood in its decision. See Citizens, 130 S. Ct. at 900 (“The Court has thus rejected the argument that political speech of corporations or other associations should be treated differently under the First Amendment simply because such associations are not ‘natural persons.’” (citation omitted)). Consequently, at least in light of their personhood status, corporations are, rightfully have been, and should be afforded many constitutional rights. See generally Carl J. Mayer, Personalizing the Impersonal: Corporations and the Bill of Rights, 41 Hastings L.J. 577 (1990).

    Regardless of the individual justifications in particular constitutional amendments, a fundamental belief by most persons in this country is that, by dint of American citizenship, one is protected by the Constitution. If corporations are entitled to some constitutional protections, as the Supreme Court clearly indicated they were in Citizens, then they logically are entitled to all. The thirteenth, fifteenth, and eighteenth amendments were passed to eliminate second classes of citizenship in America: it is illogical that in this advanced age Americans should tolerate the resurgence of second class citizenship, even if the “citizens” are corporations. Citizenship and rights are precious and if corporations are citizens, they should be afforded all rights. Otherwise, it is time to rethink corporate citizenship.

Citizens United's Personhood Debate and the Take Away for Reproductive Justice

This post from the American Constitutional Society regards the potential impact of Citizens United's view of "corporate personhood." It is an interesting discussion about how redefining the term "person" has tremendous consequences for otherwise well-settled law.

The Court Should Not Have Addressed the Facial Constitutionality of § 441b

The majority in Citizens United v. Federal Election Commission concluded that § 441b of the Bipartisan Campaign Reform Act was facially unconstitutional, ___ U.S. ___, 130 S. Ct. 876 (2010), but the majority overreached its authority. The majority declared § 441b facially unconstitutional despite the fact that Citizens United chose to attack § 441b only as-applied. How does the Court rationalize its authority to answer a question that it was not asked, and is the Court ultimately correct?

First, the Court concludes that it has authority to answer the question because it was answered by the District Court below. Id. at 892. But this reason cannot stand alone because it raises a circular problem; if the only reason that the Supreme Court has authority is because the lower court addressed the question, then the lower court must have erred in addressing the question in the first instance.

Second, the Court concludes that it has authority because it was asked to answer whether the statute violates the First Amendment, and it is irrelevant whether the basis is facial or as-applied because “[o]nce a federal claim is properly presented, a party can make any argument in support of that claim; parties are not limited to the precise arguments they made below.” Id. at 893 (citing Lebron v. National Railroad Passenger Corp., 513 U.S. 374 (1995) (emphasis added)). The Court overlooks the fact that Citizens United, the party, in fact did not decide to address the facial validity of the statute on appeal – the Court did. The Court thus must have a claim to authority elsewhere.

Finally, the Court concludes that the distinction between facial challenges and as-applied challenges need not always control the [1] pleadings and [2] disposition in every case involving a constitutional challenge. Id. at 893. Surely the Court did not consider the facial validity of the statute on the basis of preserving the pleadings because this case was decided on summary judgment, not a motion to dismiss. Id. at 888. With respect to dispositions, the Court defends its conclusion, but it limits its reasoning in a significant way. It argues that the distinction cannot control dispositions “if those remedies are necessary to resolve a claim [here, an as-applied challenge] that has been preserved.” Id. By so limiting the scope of its authority to raise the question, the Court’s last arguable independent basis for authority turns upon whether it is necessary for the Court to test the facial validity of the statute in order to reach its conclusion.

The Court answers yes. Its conclusion is based upon a central premise: the First Amendment rights at stake are greatly affected because “[i]t is well known that the public begins to concentrate on elections only in the weeks immediately before they are held. There are short timeframes in which speech can have influence. . . . The decision to speak is made in the heat of political campaigns, when speakers react to messages conveyed by others.” Id. at 895. This premise is the crux of the Court’s authority to address the statute’s facial validity, and if we are forced to accept this premise, it fully justifies the Court’s claim to authority. The Court is right; an as-applied attack on the statute would fail miserably under this premise because a movie, such as Hillary, is far from a reaction to messages conveyed by others “in the heat of political campaigns” within the thirty days prior to an election. Movies require months or years to produce, not days. It would be necessary to challenge the statute facially because the premise is simply inapplicable to electioneering movies like Hillary.

But the premise upon which the Court’s decision hinges is troubling. The Court completely fails to cite any sources to support its facts about the nature of U.S. elections. First, is it well known that the public begins to concentrate on elections only in the weeks immediately before they are held? The mere suggestion belies our perception that elections drag on seemingly forever. Equally persuasive is the view that elections are settled long before the last month.

Second, is the decision to speak made in the heat of political campaigns, when speakers react to one another? Although quick quips occasionally gather press attention, it is a long-term strategy that influences the shape of elections. Speech “in the heat of political campaigns” are thus not, as the majority seems to suggest, of the highest order of speech.

Finally, must the speaker in fact engage in a protracted lawsuit before speaking? Citizens United certainly did have the right to fund this political speech – in the form of a political action committee (“PAC”). The majority dismisses PACs as too onerous a burden because PACs are subject to regulation before they may speak.

But is it really too onerous? Under Austin and McConnell, which the majority vehemently loathes, Corporations had a constitutionally protected right to engage in the dialogue of issues as freely as they wished. See Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990); McConnell v. Federal Election Comm’n, 540 U.S. 93 (2003). That is the real substance of protected political speech; it is the protection of ideas, not parties, that the Framers were concerned with (having not yet foreseen the specter of political parties). By confusing the right to the unrestrained exchange of ideas with unrestrained endorsement of candidates by profit-making machines, the Court, without citing any persuasive authorities about the nature of U.S. elections, wholly ignores the only fact that has been settled by legislative findings – that the fidelity of the election process is threatened by the excess comingling of money with individual candidates.

The Court thus oversteps its authority on review because it relied upon a flawed premise in concluding that a facial review was necessary to the disposition of this case. Accordingly, the Court lacks any sustainable grounds upon which to claim authority to challenge the facial validity of the statute.

PACs: Political Action Committees or Poor Alternative Choice?

In Citizens United v. Federal Election Commission, 130 S.Ct. 876 (2010), Justice Stevens, along with Justices Ginsburg, Breyer, and Sotomayor, maintained that a ban on corporate expenditures did not constitute a complete ban on corporate speech thanks to the existence of political action committees. Id. at 942. As any corporate-savvy individual could tell you, a political action committee, or a PAC as it is endearingly called, is “[a]n organization formed by a special-interest group to raise money to contribute to the campaigns of political candidates who the group believes will promote its interests.” Black’s Law Dictionary (8th ed. 2004). Thus, the thrust of Justice Stevens’s opinion was that a corporation’s “[a]bility to form and administer separate, segregated funds . . . has provided [it] . . . with a constitutionally sufficient opportunity to engage in express advocacy.” Citizens United, 130 S.Ct. at 942 (emphasis added). He proceeded to admit, however, that the administration of a PAC “entails some administrative burden.” Id. at 943. Of course, he merely glossed over the fact that the mandatory creation of a PAC may effectively prevent a corporation from expressly advocating for, or against, a particular candidate during any given election.

On the other hand, Justice Kennedy, who delivered the opinion of the Court, recognized the burdens imposed by PAC creation and clearly delineated the reasons why PACs constitute a poor alternative choice to the allowance of independent corporate expenditures. First, Justice Kennedy noted that PACs are subject to extensive regulations that must be complied with prior to being granted the privilege to speak. Id. at 897. Second, a PAC is a separate entity from its “parent” corporation, thus a corporation is forced to expend a significant amount of time and money if it chooses to create a PAC in order to share its political views. Id.

First, merely to exist, regulations require PACs to “appoint a treasurer, forward donations to the treasurer promptly, keep detailed records of the identities of the persons making donations, preserve receipts for three years, and file an organization statement.” Id. Although these requirements seem simple enough, they are only just the beginning! PACs then must file with the FEC, depending on what election is occurring at the time, extremely detailed monthly reports outlining: “the [PAC’s] amount of cash on hand, total amount of receipts, identification of each political committee candidate’s authorized or affiliated committee making contributions, and persons making loans, . . . or any other offset in an aggregate amount of $200, . . . total sum of all contributions, operating expenses, outstanding debts . . .” Id. Last time I checked, an individual “person” with First Amendment rights did not have to “jump through all of these hoops” just to have his voice heard!

Moreover, regulations limit the sources from which a PAC’s funding may derive. According to Justice Kennedy, donations to PACs can come only from stockholders and corporate-employees. Id. at 888. In many instances, this source regulation could effectively hinder the receipt of potential contributions for use in conveyance of the corporation’s political message because PACs are unable to solicit donations from members of the general public who support their message. Limiting sources of PAC funding can thus only be classified in one way—as an infringement of corporate speech!

Although Justice Stevens admitted that PACs produce some corporate-burden, he contended that “no one has suggested that the burden is severe for a sophisticated for-profit corporation,” and that, in the instant situation, the record was silent as to how substantial a PAC burden would have been to Citizens United. Id. at 943. Is Justice Stevens thus asserting that, if a corporation provides a detailed account of the substantial or potentially prohibitive burdens it would suffer in creating a PAC, then he would agree with Justice Kennedy that PACs are not useful alternatives to independent corporate expenditures in every situation? Obviously compliance with PAC regulation has had some prohibitive impact on corporate speech as less “than 2,000 of the millions of corporations in the United States have developed [and maintained] PACs.” Id. at 897 (citing FEC, Summary of PAC Activity 1990-2006, http://www.fec.gov/press/press2007/20071009pac/sumhistory.pdf). Accordingly, the aforementioned burdens imposed by extensive PAC regulation support my second point—that the costs, both time and monetary, further produce a prohibitive effect on corporate political speech.

Without hesitation, Justice Kennedy announced that “§441b’s prohibition on corporate independent expenditures is an outright ban on speech . . . notwithstanding the fact that a PAC . . . can still speak [because] a PAC is a separate association from the corporation.” Id. at 882 (emphasis added). In other words, PACs do not literally allow corporations to speak for themselves. Id. at 897. Hence, in having to create a distinct association merely to be permitted to “speak” during a particular election, corporations expend copious amounts of time and money to comply with PAC requirements. Basically, the monetary costs of compliance with extensive PAC start-up and maintenance regulations as well as the requisite time to implement said measures (such as detailed and accurate recordkeeping mechanisms and the hiring of staff), may, in effect, deter or in some cases even prohibit corporations from expressing their views in particular elections. This is especially true if corporations underestimate the time necessary to form a PAC. Therefore, in implementing this PAC “obstacle course,” Congress has effectively restrained corporate election-campaign speech.

In conclusion, when considering the prevalent theme of Citizens United, that the “Government may not, under the First Amendment suppress political speech on the basis of the speaker’s corporate identity,” Id. at 913, PACs just do not “stack up” to placing individual-persons and corporate-persons on the “same foot.” Until the day the legislature writes otherwise, corporations are legally “persons”; consequently, a corporate-person should be subjected to no more or no less political speech regulation than its individual-person counterpart. Accordingly, if there is one premise the Citizens United opinion clarifies, it is that PACs are not political action committees; rather, they are a poor alternative choice to corporate independent expenditures.

Then let them vote

I have had the opportunity to work for two publicly traded corporations in my very young career. I worked for three years for the first company and for the second company, only a 3 month internship (but hopefully I’ll be there on a more permanent basis soon). Concentrating on my first stint with a publicly traded company, over the course of my three years with the firm I had the opportunity to interact with hundreds of different people in the corporation. I had the opportunity to work with the company’s CEO, CFO, COO, and numerous other members of the senior management team on a daily basis. In three years with the company I met with hundreds of different employees from every department in the corporation. Although I had the opportunity to meet with practically every single person I worked with over the course of my three years there, there was one person, oddly enough, who I never did have the opportunity to meet. That person, is the corporation itself. Imagine that, having met and built a relationship with everyone from the company’s CEO, to the head of the maintenance department – but never having the opportunity to meet the most important person, the corporation itself. Maybe I did not come into the office early enough in the morning to meet the corporation or perhaps I would leave work too early before the corporation got back to the office. All I know is, in three years I met every single person who worked there and find it weird that I never ran into “the corporation”.

In the recent US Supreme Court decision, Citizens Untied v. Federal Election Commission, the court said that a corporation is entitled to First Amendment protection as it pertains to freedom of speech vis-à-vis campaign ad spending. By now you know that my opening about having never met “the corporation” was a ridiculous exaggeration, perhaps a ridiculous over-simplification. Of course a corporation is not a real person, but instead, a creation of law, which represents an association of persons, and thus has the same First Amendment rights as an individual person would have. But is this what the founding fathers had in mind – that a corporation, like a person, should have a voice politically? A Corporation was a creation of law that was meant to provide for a way to raise capital and spread risk in order to facilitate capitalism. Did our founding fathers envision a world where corporations would raise campaign funds? American democracy is government for the people, by the people – not by the corporations. Corporations facilitate capitalism; people (persons) facilitate democracy. Do you disagree? If you do, why not then give corporations the right to vote? What greater expression of a person’s First Amendment rights than the right to vote? Ridiculous you say? Corporations can’t vote! Well maybe they aren’t persons either.

Some have argued that the corporation or the “corporate culture” can corrupt a person – this notion of the corporation or the corporate culture corrupting a person is a fiction. While working for publicly traded companies I’ve never once had a corporation tell me what to do, or what not to do. I’ve had people (CEO, CFO, Senior Management, other co-workers) tell me to do certain things (or not do certain things), but never ever did I have “the corporation” tell me directly to do anything. That’s because a corporation is not a person. A person is a person. The notion that is a corporation is a person is a legal fiction. As a creature of law, a corporation is given some “human-like” qualities only out of convenience- not because anyone really believes they are persons.

The Supreme Court didn’t get the memo though. For the Supreme Court, corporations aren’t a legal fiction, they’re not a creation of law, they are real people, entitled to the First Amendment protection. I’ll accept that (although I don’t agree with it), but then let them vote. I challenge the Supreme Court to grant a corporation the right to vote – and if they don’t grant them this fundamental First Amendment right – then I challenge them to explain to all of us that it’s not because a corporation is not a person.

Thoughts on Citizens United: why i disagree with the Courts decision

With a 5-4 ruling, the U.S. Supreme Court in Citizens United v. Federal Election Commission decided that corporations and unions may now directly and expressly advocate for the election or defeat of candidates for federal office, as long as they do not coordinate their efforts with campaigns or political parties. The impacts of this decision will be immense and far-reaching, both for nonprofit voter engagement and political discourse as a whole.

The majority opinion authored by Justice Anthony Kennedy argued that limits on “independent expenditures” by corporations violate the First Amendment right to free speech. The Bipartisan Campaign Reform Act (BCRA), which the Citizens United decision partially invalidated, prohibited corporations (including nonprofit organizations) and labor unions from airing any “electioneering communications” – broadcast messages that refer to a federal candidate 30 days before a primary election and 60 days before a general election. Older law also barred corporations from using monies from their general treasuries for “express advocacy,” to directly urge the election or defeat of a candidate for federal office.

The opinion stems from a controversy caused by a clash between Citizens United, a 501(c)(4) nonprofit organization, and regulations crafted by the Federal Election Commission (FEC). The nonprofit group wanted to release a film on a cable TV video-on-demand service about former Democratic presidential candidate Hillary Clinton during the 2008 presidential primary. The group also wanted to promote the film with several ads. The critical movie was partially funded by corporate contributions, in violation of BCRA and FEC regulations.

In its holding, the Court overturned long-standing precedent, ruling that banning corporations from using money from their general treasuries for express advocacy was an unconstitutional violation of First Amendment political free speech rights. In his majority opinion, Justice Kennedy, stated that there was “no basis for the proposition that, in the context of political speech, the Government may impose restrictions on certain disfavored speakers.”

This historic decision specifies that the First Amendment protect corporations and unions the same as individuals with regard to the ability to spend money to influence elections. I find this decision quit disturbing for the following reasons. First, to say that a corporation with billions to spend on advertising is no different from a human being with only one voice and one vote is beyond my understanding. For example, since the law recognizes corporations as legal person deserving of equal protection as any individual person or citizen, should corporations also be allowed to vote as people do because they are legal citizen?

Secondly, the Court overturned a key provision of the McCain-Feingold campaign-finance reform law that prohibited corporate-and union-funded campaign advertising within 90 days of a federal election. As a result of this decision, corporations can now spend unlimited amount of dollars to influence our elections, right up to Election Day. Similarly, whereas more than $5 billion was spent on the 2008 campaigns with the McCain-Feingold law in place, now it is uncertain how much corporations and unions would spend to influence future elections. Furthermore, whereas Citizens United was a case about a corporation spending money to advertise and air a movie that amounted to a “hit piece” on a viable president candidate, now there are no limits on the funding of that sort of negative campaign material. Any candidate who doesn’t toe the corporate line can look forward to a flood of opposition cash.