We the Corporation…

Since the decision came down in Citizens United, the application of First Amendment rights to the corporate form has been a topic of debate among many. Citizen United has made me painfully aware of the lack of knowledge I possess about the political process and the influences on those processes. I ask myself many questions that I hope to explore in this post and open myself to responses and criticism.

“What’s the bitch?”

I view the corporate structure in America as a controlling influence on governmental policy. Representatives of corporations have always been connected to the White House, Congress, and the political sphere as a whole. The influence of these individuals effect the decisions made by our representatives. Now due to Citizens United the corporation has been extended First Amendment rights from a case that arguably should have been narrowly construed.

Citizen United has now taken the personal representative’s to private influence over political actors and now allows Corporations to use all of their resources to openly support politicians and platforms.

“Does this promote transparency in the corporate form?”

I wonder if this promotes transparency through the corporate shell? Corporations operate with a division between ownership and control. When a corporation uses assets to enter the political speech arena how will the corporation’s shareholders respond? Since a corporation’s purpose is to maximize shareholder profits, will the courts uphold the corporation’s reasoning that supporting a political candidate(s) is in the furtherance of the corporate interests?

“The Court in disguise”

The Supreme Court did not want to place restrictions on the corporate form. In turn, the Court approved the largest expansion of the corporate form since corporations were considered a person. The Court has placed their duty on the American people, the law community, and the States. The laboratories are open. Lawyers are buzzing. The American people are the moral compass. Lawsuits will come and after several years of fighting over Citizens the Court will finally rule on the restrictions that should have been placed on the corporation at the time of Citizens.

“America, Inc.”

I remember a quote from a history class I took as an undergrad, “What’s good for GM is good for America.” Corporate America has grown stronger over the years at the consent of the Supreme Court. Corporations bind the world through an economic system and banks with global ambitions fund them. The banks supply the money, the corporations supply the mechanism, and the political sphere provides the protection. Since the ruling in Citizens the corporation now can openly advocate for its protectors and use its assets and shareholders, the American people, to do it.

“Removing the veil”

Personally, Citizens United has brought light to an area of neglected thought. How involved is the corporation in our daily lives? What type of information will be disseminated in to the populace? Will we keep a skeptical eye? What form will the corporation take to hide its agendas?

We are constantly bombarded with information. It’s time we removed the veil and paid attention to the information we are receiving and why.

Who is Really Speaking for Corporations?

"If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.” This passage from the majority opinion in Citizens United summarizes the decision of the court. However, a major issue that I find with this ruling is deciding who is really speaking for the corporation. The majority gave corporations the right to spend and endorse political campaigns at its discretion, but who makes these decisions and how do we regulate this spending. With corporations, there always exists the issue of shareholder rights. According to the decisions in Citizens United, shareholders have the same right to free speech as the corporation does. How do we protect shareholders from having a corporation speak on their behalf where they do support such ideals? I believe it is imperative that legislators and the SEC, in response to this decision, draft new rules and regulations that would support the interests of both shareholders and corporations, protecting freedom of speech and shareholder rights.

One must think, will this decision by the court have an effect on shareholder investment and involvement in corporations? Will we see a dramatic change in how investors analyze options and choose which corporations to invest in? Will political analysis become a part of shareholderism? Allowing corporations to enter the political process may be a dangerous game. For some corporations, supporting a decision may be easy based on the fundamentals of that organization. Shareholder support for these endeavors may be overwhelming and unquestioned. However, what will be the result when there is great shareholder opposition to such a contribution? Can a corporation exercise reasonable business judgment when there is such a stark contrast with shareholder views? Will this clash lead to an increase in litigation over spending habits of the corporation and how it is furthering a business purpose?

As with other actions of a corporation, some decisions require a shareholder vote while others require a board vote. What should be the standard here? Is a political contribution a corporate decision that the shareholders have a right to vote on? I would argue ABSOLUTELY! In order to protect both free speech and shareholder interest, a corporation cannot be allowed to take a political stance based on the opinions of a few board members. It is imperative that the political position of the corporation reflect not only its board members views, but the views of its shareholders.

While this may sound like a good, in practical application, shareholder voting on a political issue may be a moot point. By the time that the shareholders could exercise their voting power, the election may be over and the opportunity for a contribution may have passed. So how do we both protect rights and allow free speech? In my opinion, the rights of the shareholders trump the need for corporations to contribute to the political process. I agree with Justice Stevens’ dissent in that allowing corporate free speech under the First Amendment was not the original intent of the drafters—protecting the American people was. In allowing a corporation to express its “free speech” through corporate spending at the expense of shareholders appears to change the intentions of the political process and corporate form. In essence this would make the free speech efforts of individual citizens less worthwhile and important as corporations can make a greater impact through spending. In order for the Citizens United decision to not, in effect, run away with the political process, it is crucial that shareholders have a voice in a corporation’s political activities. How this is to be accomplished remains to be seen.

With that final thought in mind, I close with a quote from President Barack Obama: “[the decision] gives the special interests and their lobbyists even more power in Washington — while undermining the influence of average Americans who make small contributions to support their preferred candidates….the Supreme Court reversed a century of law to open the floodgates for [corporations]…to spend without limit in our elections." While I do not go as far as to say corporations should never be involved in the political process, I think there has yet to be implementation of a system of checks and balances that would protect not only shareholders, but the American people as well, from corporate political spending running wild.

Personal Privacy Rights for Corporations?

The Supreme Court’s decision in Citizens United v. FEC may have opened the floodgates to whether corporations have the same rights as individuals. In regards to free speech, the Supreme Court answered affirmatively in Citizens United, by striking down certain campaign finance laws. The Supreme Court will next decide whether corporations have the same personal privacy rights as individuals.

The Court has agreed to hear FCC v. AT&T, (Docket Number 09-1279) which will determine whether exemption 7(C) of the Freedom of Information Act (FOIA) protects the “personal privacy” of corporate entities. The FOIA allows ordinary citizens to access federal government records. Thus, the government is legally bound to disclose records to any citizen or organization that files a proper "FOIA" request. The exemption in question, exempts from mandatory disclosure, records or information compiled for law enforcement purposes when such disclosure could reasonably be expected to constitute an unwarranted invasion of “personal privacy.”

In 2005, AT&T objected to a FOIA request for the details of its government contract work in New London, Connecticut. The company argued that it qualifies for a legal exemption under 7(c) from FOIA requests.

AT&T has already won at the Third Circuit Court of Appeals, which held that the plain language of the FOIA allowed certain government documents to be withheld if it could “reasonably be expected to constitute an unwarranted invasion of personal privacy.” The FCC argued the common meaning of “personal privacy” means “personal,” as in human person. The Supreme Court granted review of the AT&T case on September 28, 2010, and arguments are scheduled for January 19, 2011.

Just as Citizens United drew strong protest from those who argued that corporations don’t deserve the same rights as individuals, FCC v. AT&T will surely cause similar protest. Groups such as Public Citizen, Electronic Frontier Foundation, and the Reporters Committee for Freedom of the Press say the exemption for privacy was never intended to protect corporations, which have protection against disclosure of trade secrets and other information under a separate section of the FOIA.

Personally, I think allowing corporations personal privacy rights may further shield any type of transparency that corporations operate under. The legal fiction of "corporate personhood" is beginning to not seem like such a "fiction" after all. An earlier post on the blog had questioned why corporations do not enjoy all the rights of individuals. Seeing that the Supreme Court has already granted corporations free speech rights, I suppose the next logical step would be personal privacy rights? I'm not so sure.

Money as Access to Speech?

Part of the analysis I have found of the Citizens United v. FEC, 130 S.Ct. 876 (2010) decision centers around the ideas of corporate person-hood it relies upon and extends. I would argue, however, that the extension of corporate person-hood advanced by the Court in this decision was not unexpected. For example, a corporation can own property and is afforded all the rights which accompany property ownership. A corporation has the ability to sue and be sued. Also, like the Court indicated in its decision, the First Amendment's protection had long been recognized as applying to corporate speakers. Id. at 899. The Court had previously rejected the argument that a corporation, an association of persons, was not a natural person and not afforded First Amendment rights. Id. So, was this decision really as momentous as everyone believes it to be? With my limited knowledge of the law, I would argue yes. However, my argument stems not from the idea of corporate person-hood, but from the opinion's equation of freedom of speech with spending power or "money as speech."

Several critics of the decision have found the decision's equation with one's voice in free speech to one's spending power perhaps more troubling than its extension of corporate person-hood. Some critics refer to this idea as "money as speech." One critic of the decision, Roger Hodge, former editor of Harper's Magazine, said in a recent interview that he was most troubled by Justice Kennedy's replacement of the word "speak" throughout the decision with the words "contribute," "spend," and "buy." While I am somewhat troubled about the idea of money as speech, I do not necessarily agree with this characterization. The opinion itself explains why the ban on the amount of money a corporation is allowed to spend can invoke the First Amendment by stating that "[a]s a restriction on the amount of money a person or group can spend on political communication during a campaign, that statute necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached." Id. at 898. Thus, limiting its ability to speak freely as protected by the First Amendment.

One main concern about the theory of money as speech centers around value. If we view money as speech, obviously money has a specific value in society, so does this value translate to speech? The intrinsic answer is no. I assume most people would say that just because one speaker may have more money behind his or her message does not make it more valuable than the average person's message. However, if one looks at this theory as "money as access to speech" the message with the most spending power behind it would clearly be more valuable because the speaker would have more access to distribute the message and the listener would have more opportunities to receive that message. Thus, the more money certain a speaker has the more quantity of expression, issues discussed, depth of exploration, and the larger the audience reached. It this idea of money as access to speech which makes corporate political speakers/spenders more valuable.

The rebuttal to the arguments against money as speech are numerous. For instance, without the ability to distribute your speech, i.e. fund what you have to say, what use is the freedom. Putting substantial limits on constitutionally guaranteed freedoms will not with stand strict scrutiny. Therefore, if we view a corporation as a person in the eyes of the law and as defined by the First Amendment, there can be no outright ban political spending to support political speech absent the Government proving that the restriction "furthers a compelling interest and is narrowly tailored to achieve that interest." Id.

In conclusion, it can be argued that the idea of the wealthiest in society having more access to speech is not new. After all, corporations are associations of persons, so they should be acting in the best interests of those persons, which in theory could make a corporate political speaker better for society than an individual political speaker, who may be acting solely for his or her own interests.

James Madison Would Approve?

Personally, I have always been fascinated by history, especially history of the founding of our country. So, in reading Citizens United v. FEC, 130 S.Ct. 876 (2010), I wondered how the decision would comport with the ideas behind the Constitution, especially those of the Federalists, like James Madison.

In the opinion for Citizens United, Justice Kennedy quotes James Madison's Federalist Paper No. 10 in support of the proposition that the government had "muffled the voices that best represent the most significant segments of the economy," i.e. corporations. Id. at 907. The Federalist Papers were a series published in New York newspapers during the Constitutional Convention in 1787. Catherine Drinker Bowen, Miracle at Philadelphia: The Story of the Constitutional Convention May to September 1787 268 (1986). Although the series was signed "Publius," the papers were actually written by James Madison, Alexander Hamilton, and John Jay and constituted the Federalist point of view. Id. The papers are now widely considered as the "final eloquent exposition of the United States Constitution, and . . . serve as an aid to the courts, to Congress and the President." Id.

The opinion cites a Federalist Paper written by Madison when stating, "[f]actions will necessarily form in our Republic, but the remedy of destroying the liberty of some factions is worse than disease. Factions should be checked by permitting them all to speak and by entrusting the people to judge what is true and what is false." Citizens, 130 S.Ct. at 907 (internal citations omitted). After this decision, however, many scholars now debate whether the determination that the prohibition on corporate independent political expenditures as an unconstitutional outright ban on speech of corporations is truly what the framers of the Constitution, like Madison, who was the primary drafter of the Bill of Rights, intended.

Although we can only speculate, it is probably safe to assume that the modern corporation was not envisioned by the drafters of the Constitution. That fact alone, however, does not necessarily make the extension of its provisions void to such organizations. The Constitution is like no other document of its type in history in that it has been malleable to modern expansions of traditional ideas, such as the corporation. But was the idea of corporate person-hood and the idea of corporate freedom of speech really intended by the drafters of the document itself? The best answer to this question is like most others in law, it depends.

Some scholars point to the fact that Madison fought the establishment of a national bank as evidence of his aversion to this principal. Others also point to his warning of corporate interference in politics, calling corporations necessary evils that require proper limitations. Still others, like Justice Kennedy, point to the Federalist Papers as evidence to support the proposition that fractions are necessary to our governments and should be given protection, even if coming from a corporation. Citizens, 130 S.Ct. at 907. Like the Constitution itself, however, the Federalist Papers and other writings of the founding fathers lend themselves to interpretation, which is what makes them still relevant but also frustrating when looking for a solid answer. The writings often take the interpretation of the reader.

Arguably, the more important question is how does this important decision impact the future and the rights that corporations are given moving forward; however, a look to the past may give us direction for the future. Is a corporation now a citizen?

An Attack on Democracy hits close to home

Now that the “historic” 2010 mid-term elections have come and gone, it is time to reflect on the outcome of the election as a whole and how outside influences have impacted campaigns. One of the hallmark characteristics that history will define the 2010 mid-terms from will be that corporations could spend unlimited funds promoting one candidate over another and, more typical, bashing one candidate to assist another candidate. Nationally, millions upon millions of dollars were given to candidates by outside groups such as the United States Chamber of Commerce and American Crossroads. The Week magazine has an excellent break down of the spending here. This new wave of money being spent by Super-PACS has occurred because, as The Week simply put it, “The Supreme Court's decision in Citizens United v. the FEC earlier this year gives corporations and unions the same rights as individuals when it comes to free speech — meaning Big Business can spend as much as it likes on influencing public debate. Super PACs have emerged to help solicit those funds from corporate donors.”

In addition to corporations and Big Business being able to freely spend as much as it likes on influencing elections, many of the new Super PACs that have emerged do not have to disclose who is funding them. Many new Super PACs have registered as non-profit organizations under the tax code 501(c)(4). Such a registration allows Super PACs to promote policy and influence elections with a virtually unlimited supply of money from nameless individuals. Such a loophole has created a scenario where foreign entities have the potential to influence our elections. This scenario, most notably, reported when the United States Chamber of Commerce began pouring money into elections at all levels to the tune of $75 million. The issue of foreign contributions arose with the United States Chamber of Commerce because it receives donations from foreign entities and deposits all monies into one general account. Such an account is then used to finance political activities, hence, foreign contributions are funding domestic politics. While the Chamber of Commerce aspect has been the most widely commented in the news media, any 501(c)(4) organization could easily used undisclosed foreign contributions to finance political spending activities.

This activity by Super PACS has opened a new debate focused on whether or not such activity by organizations who do not disclose donations is an abomination on our democratic process itself. In a post in “The Hill” newspaper, Robert Weissman discusses how donations to Super PACS will hurt our democratic process. In his article, Weissman states that Super PACS are merely attack machines from organizations with no real membership or accountability. The other side of the debate focuses on ‘liberating’ advocacy groups to talk openly with people. Such an argument of liberation is bunk and undisclosed spending has started to hit too close to home.

In the recent Senate election between then Governor Joe Manchin and business mogul John Raese, West Virginia was the recipient of millions of dollars of Super PAC contributions. The Charleston Gazette first reported that a Super PAC was going to be spending large amounts on the Senate race. In the October 1 article, it was reported that American Crossroads GPS, an organization funded in part by Karl Rove, would be spending a massive amount of resources in West Virginia. The article states that American Crossroads would spend money on mail and phone calls. Additionally, the organization and several other Super PACs spent money in the Mountain State on television advertising aimed at negative advertisements against candidates.

West Virginia is an interesting study in the new arena of Super PACs. While Super PACS spent millions in West Virginia, using American Crossroads as a focus in the West Virginia Senate race, it was, seemingly, unsuccessful. One may, at first glance, think that spending millions like this would be a moot issue. However, even though the Senate race was perceived as lost by Super PACs that invested in the Republican Senate Race, the perceived loss was actually a victory. Although the Republican nominee for Senate lost and the Democrat candidate won, the investments by Super PACs throughout West Virginia has allowed for the Republican Party within West Virginia to expand. While this may not sound like a big deal to a lay person, it is a huge deal to a politico who studies West Virginia politics. As an historically Democrat state, West Virginia has slowly started to turn Red on a national scale. Not only has West Virginia voted for the Republican Candidate for President in every election since 2000, our state now has 2 out of the 3 Congressional districts represented by a Republican. Such an investment by Super PACs has helped this transformation to occur.

An influx of capital and attention, starting in 2000, exacerbated in 2004 and 2006 by Don Blankenship’s personal investments, and then further intensified by investments in Super PACs in 2010 has shifted the average West Virginian’s focus away from their personal needs and economic concerns and towards social issues merely tear apart friends and neighbors. This is not to say that only an influx of monies in West Virginia political races has turned West Virginia from a Democratic stronghold to a state that has the potential of going red. Historically, West Virginia has always trended more conservative than average blue states. However, the influxes of money from out of state corporate entities have allowed Republicans to spread their message more easily than in the past. The problem with such ability by the Republicans, especially, is that most of the funding used to spread the Republicans’ message, particularly in the 2010 election cycle, came from interests outside of our state. This can be likened to foreign monies being used to fund national races as noted above with the U.S. Chamber of Commerce illustration. So where does one draw the line?

The decision by the United States Supreme Court in Citizens United took an electorate system that was already influenced by corporations and outside interests and place it on steroids. This decision has done nothing but further complicate our election cycle and continue to turn people off to voting because of relentless negative campaigning brought on by corporate interests. The Supreme Court has allowed corporations to be viewed as having almost identical rights as individuals when it comes to campaign contributions. This decision has only started to wreak havoc on our political system. By allowing the wealthy corporate interests to dominate the political contribution arena, elected officials will become even more concentrated on raising money to get re-elected instead of serving the people they were elected to serve. The need for money was at a premium before Citizens United. Now that elected officials know that they will have to compete with corporate interests who have virtually unlimited bank accounts, even more time will be allocated to fund raising and less time will be spent on the democratic process.

Justice Stevens and the Anti-Distortion Rationale

Rick Hasen blogged yesterday about comments made by retired Justice John Paul Stevens concerning Citizens United. Justice Stevens' comments focused on the anti-distortion rationale rejected in Citizens United. He emphasized the idea that an actor in an election debate who has more resources than the other actors will distort the ability of the voters to make their decisions. Justice Stevens made these comments on "60 Minutes" this past weekend. You can read and see the original CBS story here. His Citizens United-relevant comments I repost from Hasen's blog:

SCOTT PELLEY (voiceover): In Citizens United, the majority gave corporations the right to spend as much as they want on political campaigns; the majority said that limiting money in politics is the same as limiting free speech.

Where does the court make a mistake in your view?

JUSTICE JOHN PAUL STEVENS: Well, you know, which mistake do I want to emphasize?

(Justice John Paul Stevens laughing)

SCOTT PELLEY: You decide.

JUSTICE JOHN PAUL STEVENS: Well, you know, basically an election is a debate. And most debates you have rules. And I think Congress is the one that ought to make those rules. And if the debate is distorted by having one side have so much greater resources than the other that sometimes may distort the ability to decide the debate on the merits. You-- you want to be sure that-- that it's a fair fight.

As I have stated during the recent forum Professor Amerson and I hosted with West Virginia University College of Law and the University of Akron School of Law, the rejection of the anti-distortion rationale represents, in my view, a departure from the Supreme Court caselaw that represented an uneasy but necessary pragmatism concerning corporate spending in elections. In his way, Justice Stevens echos this thesis quite pointedly and precisely. I will say more about this in future blogposts and other publications.