Citizens United v. Federal Election Commission

[TellyKNeasuss]

Obviously, you didn't read the SC holding linked in my post here, not that I blame you.



The Association...is but the medium through which its individual members seek to make more effective the expression of their own views.

Could you save me some time and just point me to the section that disproves my contention (and the definition in every dictionary that I've looked in) that corporations are an independent legal entity?

 

[WildCat]

Could you save me some time and just point me to the section that disproves my contention (and the definition in every dictionary that I've looked in) that corporations are an independent legal entity?

And what does that have to do with the right of free speech?

 

[TellyKNeasuss]

And what does that have to do with the right of free speech?

It has to do with whether corporations are people and are therefore automatically entitled to the same rights under the Constitution as human beings are.

 

[WildCat]

It has to do with whether corporations are people and are therefore automatically entitled to the same rights under the Constitution as human beings are.

No, it doesn't.

You are confusing different aspects of the law.

 

[MattusMaximus]

Aren't contributions to a union voluntary?

As the president of my local teachers' union, I can tell you unequivocally the answer is "no, not always". There is something here in IL called "fair share", by which someone is required to pay a minimal amount into the union because, regardless of their desire to join or not, they are being covered by & protected by the contract negotiated by the union.

If someone pays fair share, they don't have to pay the full amount of union dues, but they end up not having a full voice in the union either (for example, they aren't allowed to hold office or vote on union business).

For the record, even though I am a big union guy, I don't like this SCOTUS ruling even as it applies to unions. I don't like the notion of big corporations/unions dumping so much money into our already corrupt political system.

 

[MattusMaximus]

To the extent that Justice Kennedy is under the impression that the vast amounts of cash that will be brought to bear will not be corrupting, one must question his grasp of reality.

His mind is slipping if he seriously believes this.

What can stop this corruption? An informed and educated electorate that refuses to let itself be swayed by propaganda could stop it. I'm not holding my breath.

What did it in the early 20th century is enough people got screwed badly enough by the corporate power-brokers who kept buying off the politicians that it started a big, populist labor movement that built up steam over many decades.

If it happens again, which it could, it will take a lot of bad things happening to a lot of people for the backlash to occur. This could take a generation.

Another Supreme Court opinion that modifies what was said might stop it. This would either entail a change in the Court's personnel, or a contrary case in which the facts are similar but the speaker is of the opposite political stripe (this assumes a result-oriented Court), or a case in which the injustice or corruption is shocking.

Or some of these unintended consequences could be revealed soon enough that Kennedy could be slapped in the face by a hard dose of reality. It isn't unprecedented for the SCOTUS to overturn a previous ruling within just a few years.

There's a line in Michael Crichton's novel, "Rising Sun," that comes to mind. The concern is not necessarily that public officials are going to be bought. The concern is that they are going to be influenced. The concern is that this influence will benefit special interests to the detriment of the people as a whole. The concern is that access to public officials is a limited commodity, and the special interest groups will have disproportionate access.

Bingo.

 

[Ian Perez]

So, a couple of new wrinkles: the president has made some noise indicating that his administration would work with the legislative to deal with the potential conscuences of the ruling, and several Unions and Groups have seen it as an opportunity to prevent the feared consequences of multi-million dollar groups with unlimited spending power, and have written and released a letter making some very specific suggestions to Washington (a link to the letter can be seen within the linked article). I could get behind something like this: if it works, it would ameliorate some of the nastier side effects of the ruling without curbing free speech.

 

[Brown]

A curious case was decided by the Supreme Court today. Read the opinion here.

At issue was basically the location of a corporation, in particular, where a corporation's "principal place of business" is. The opinion, which was unanimous, explicitly recognized the slipperiness of dealing with corporations. Some of the same principles cited in the Citizens United case appear in this case as well:

In 1809, Chief Justice Marshall, writing for a unanimous Court, described a corporation as an "invisible, intangible, and artificial being" which was "certainly not a citizen."

Justice Breyer wrote today's opinion, which will almost certainly be required reading in law school Civil Procedure courses for years to come. Basically, Justice Breyer said that a corporation's "principal place of business" should be its "nerve center," which is usually (but not always) the state where it has its main headquarters. What is interesting is that, because corporations are fictitious entities, even this straightforward standard may be hard to apply:

For example, in this era of telecommuting, some corporations may divide their command and coordinating functions among officers who work at several different locations, perhaps communicating over the Internet.
...
We understand that such seeming anomalies will arise. However, in view of the necessity of having a clearer rule, we must accept them.

If there are anomalies about WHERE a corporation IS, might there also be anomalies about what a corporation SAYS?

 

[WildCat]

What is interesting is that, because corporations are fictitious entities, even this straightforward standard may be hard to apply:If there are anomalies about WHERE a corporation IS, might there also be anomalies about what a corporation SAYS?

How do you get there from "Congress shall make no law... abridging the freedom of speech"?

 

[Brown]

How do you get there from "Congress shall make no law... abridging the freedom of speech"?

With respect, the question either makes no sense or is at best irrelevant to the point.

In the case decided today, the Supreme Court recognized that it can be (nay, WILL be) difficult to tell the location from which some corporations will be calling the shots. Do these same individuals who act as the "nerve center" also control the opinions that may be expressed under the auscpices of the corporation? This is hardly a trivial issue, since some proposals pertaining to speech by corporations being put forward today focus upon who controls the speech from the corporation, and where they are located. (For example, some proposals have been floated that would require shareholder approval of a political message, or that would give shareholders rights to resist a political message.) I'm not taking any position (yet) on whether such proposals are right or wrong. But one wonders whether those who call the shots for business purposes are also going to be the ones who get to call the shots for "speech" purposes.

 

[WildCat]

With respect, the question either makes no sense or is at best irrelevant to the point.

In the case decided today, the Supreme Court recognized that it can be (nay, WILL be) difficult to tell the location from which some corporations will be calling the shots. Do these same individuals who act as the "nerve center" also control the opinions that may be expressed under the auscpices of the corporation? This is hardly a trivial issue, since some proposals pertaining to speech by corporations being put forward today focus upon who controls the speech from the corporation, and where they are located. (For example, some proposals have been floated that would require shareholder approval of a political message, or that would give shareholders rights to resist a political message.) I'm not taking any position (yet) on whether such proposals are right or wrong. But one wonders whether those who call the shots for business purposes are also going to be the ones who get to call the shots for "speech" purposes.

I really don't see why it matters who does, let the company decide that. I really don't think many would place all the power in the hands of someone who's going to secretly raid the corporate treasury and buy a 5 minute bloc of Super Bowl ads pimping his favorite candidate. Certainly shareholders would have a say also.

 

[Dunstan]

In the case decided today, the Supreme Court recognized that it can be (nay, WILL be) difficult to tell the location from which some corporations will be calling the shots.

I'd put it a little differently. The Court acknowledged that it's inherently ambiguous to determine where a corporation "resides." But the question can't be dodged because the diversity jurisdiction statute requires courts to figure that out in order to decide if diversity exists. Lower courts had come up with a variety of tests; the Supreme Court decided to pick one of them so as to reduce the amount of ambiguity, while recognizing that it's not always going to lead to the "right" result.

Do these same individuals who act as the "nerve center" also control the opinions that may be expressed under the auscpices of the corporation? This is hardly a trivial issue, since some proposals pertaining to speech by corporations being put forward today focus upon who controls the speech from the corporation, and where they are located. (For example, some proposals have been floated that would require shareholder approval of a political message, or that would give shareholders rights to resist a political message.) I'm not taking any position (yet) on whether such proposals are right or wrong. But one wonders whether those who call the shots for business purposes are also going to be the ones who get to call the shots for "speech" purposes.

This decision is going to have no real bearing on the issues you are raising. The problems of deciding when someone is acting on behalf of a corporation, when they are authorized to do so, and what rights shareholders have, have been around for centuries and are a matter of state law.

A Supreme Court decision interpreting the federal statute on diversity jurisdiction has pretty much no relevance to the state law corporate governance issues you're raising. It's certainly not binding precedent, and I don't think the issues are sufficiently related that any state court would find it to be useful guidance.

 

[Brown]

I really don't see why it matters who does, let the company decide that. I really don't think many would place all the power in the hands of someone who's going to secretly raid the corporate treasury and buy a 5 minute bloc of Super Bowl ads pimping his favorite candidate. Certainly shareholders would have a say also.

If I'm understanding your point, I think this was Justice Scalia's view. If you just assume for the moment that you have "speech," then that speech is constitutionally protected, whether it comes from a corporation or from an individual. Fair enough.

The concern that some folks are expressing is not whether corporate speech is protected or not, but who "speaks" for the corporation or how that speech is attributed to the corporation.

Today's opinion does not address First Amendment issues, but it does express a degree of puzzlement about the nature of corporate operations and who might be calling the shots.

 

[Brown]

I'd put it a little differently. The Court acknowledged that it's inherently ambiguous to determine where a corporation "resides." But the question can't be dodged because the diversity jurisdiction statute requires courts to figure that out in order to decide if diversity exists. Lower courts had come up with a variety of tests; the Supreme Court decided to pick one of them so as to reduce the amount of ambiguity, while recognizing that it's not always going to lead to the "right" result.

The issue dealt with "principal place of business," and yes, lower courts had come up with a lot of tests. Justice Breyer goes through them in detail, and shows them to be a mess. One of the concerns was that California might be deemed to be the "principal place of business" for a lot of companies, merely because California has more people than any other state, so there are more business transactions there.

(In law school, one of the things first year law students study is something called "diversity jurisdiction"; that's what this case is about.)

This decision is going to have no real bearing on the issues you are raising. The problems of deciding when someone is acting on behalf of a corporation, when they are authorized to do so, and what rights shareholders have, have been around for centuries and are a matter of state law.

A Supreme Court decision interpreting the federal statute on diversity jurisdiction has pretty much no relevance to the state law corporate governance issues you're raising. It's certainly not binding precedent, and I don't think the issues are sufficiently related that any state court would find it to be useful guidance.

On this point, you and I disagree. I think "no relevance" is too strong.

I do not consider it a coincidence that this case and the Citizens United case both delved into the nature of corporate fictions, and that this case came out after Citizens United. Corporations have state existence (as you point out, corporations are creatures of state law [In Canada, by contrast, a corporation can be a creature of Canada or any province]), but there are many federal laws affecting corporate rights and obligations.

If a state were to determine that corporations incorporated under its laws could not issue a political ad unless approved by more than 50 percent of the voting stock, could the officers or directors of the corporation challenge that law on the grounds that the corporation's right to free speech (under the US Constitution) is being violated? I submit this is not an easy question.

 

[Random]

I really don't see why it matters who does, let the company decide that. I really don't think many would place all the power in the hands of someone who's going to secretly raid the corporate treasury and buy a 5 minute bloc of Super Bowl ads pimping his favorite candidate. Certainly shareholders would have a say also.

But how annoyed would shareholders really be if companies decided to invest in politicians? Politicians arre one of the best investments for your money around, you can easily rack up 1,000-5,000% returns on your investment. Even if you split your investment two ways to buy both candidates, its still a cash cow. If it wasn't for the high entry fees, everyone would be investing in politicians.

 

[Dunstan]

(In law school, one of the things first year law students study is something called "diversity jurisdiction"; that's what this case is about.)

I'm aware of that, having practiced law for over ten years. (ETA: I realize you may have been saying that for the benefit of lurkers. I'm just letting you know you can assume I know this kind of thing.)

On this point, you and I disagree. I think "no relevance" is too strong.

I do not consider it a coincidence that this case and the Citizens United case both delved into the nature of corporate fictions, and that this case came out after Citizens United.

That strikes me as highly unlikely. I don't think it's much of a coincidence, because corporate issues (if we're defining that term broadly enough to encompass these two cases) come up often enough that having two in the same Term is not even notable. But there's really no way to know.

If a state were to determine that corporations incorporated under its laws could not issue a political ad unless approved by more than 50 percent of the voting stock, could the officers or directors of the corporation challenge that law on the grounds that the corporation's right to free speech (under the US Constitution) is being violated? I submit this is not an easy question.

I think it's a pretty easy question. The officers and directors would not have standing in their individual capacity, if that's what you're asking. It's not their speech. The corporation would, as would shareholders. And the officers and directors would have authority to direct the corporation's attorneys to file suit on the corporation's behalf just as they normally do. I really don't see anything controversial there.

Putting the standing issue aside, the constitutionality of such a law would be an interesting question, but I think the inquiry would be focused on whether it's too severe a restriction on speech. My initial take is yes: it would be one thing if state law merely authorized corporate bylaws to have such a provision (or made that the default rule absent a bylaw to the contrary), and provided means to enforce them. But actually having a no-opt-out rule that singles out speech for special attention and makes a particular kind of speech highly impractical, would be problematic. But more importantly, I'm not seeing how the Hertz case would relate at all to that issue.

 

[Brown]

I'm aware of that, having practiced law for over ten years. (ETA: I realize you may have been saying that for the benefit of lurkers. I'm just letting you know you can assume I know this kind of thing.)

Yes, this was for the benefit of those who read about legal issues but may not have had the formal training. My practice on this forum is to try not to get too "legal." I took it from your post that you had some knowledge, education, training and experience in the particularities (and that you might have been one of those who laughed like a fiend when Cliff Clavin on "Cheers" started expounding upon Pennoyer v. Neff).

I think it's a pretty easy question. The officers and directors would not have standing in their individual capacity, if that's what you're asking. It's not their speech. The corporation would, as would shareholders. And the officers and directors would have authority to direct the corporation's attorneys to file suit on the corporation's behalf just as they normally do. I really don't see anything controversial there.

Putting the standing issue aside, the constitutionality of such a law would be an interesting question, but I think the inquiry would be focused on whether it's too severe a restriction on speech. My initial take is yes: it would be one thing if state law merely authorized corporate bylaws to have such a provision (or made that the default rule absent a bylaw to the contrary), and provided means to enforce them. But actually having a no-opt-out rule that singles out speech for special attention and makes a particular kind of speech highly impractical, would be problematic. But more importantly, I'm not seeing how the Hertz case would relate at all to that issue.

I don't think the issues are quite as cut and dried as this. I confess that the chance of this issue coming up is fairly remote, and right now I see this issue largely as a potential plot point for a story of fiction. The late Michael Crichton might have eaten it up.

As for standing, the issue is not the individual capacity of the individual officers and directors. A corporation (acting upon the decision of its officers or directors) could challenge a state statute such as the one I've suggested. The corporation would be entitled to go to court (as you say). The speech that would be sought to be protected would be ostensibly the corporation's, yet it would be the officers and directors who would decide what the content of that speech would be. Wouldn't it? Justice Stevens thought it likely:

It is an interesting question "who" is even speaking when a business corporation places an advertisement that endorses or attacks a particular candidate. Presumably it is not the customers or employees, who typically have no say in such matters. It cannot realistically be said to be the shareholders, who tend to be far removed from the day-to-day decisions of the firm and whose political preferences may be opaque to management. Perhaps the officers or directors of the corporation have the best claim to be the ones speaking, except their fiduciary duties generally prohibit them from using corporate funds for personal ends.

If allowed to proceed, such a lawsuit would, of course, involve the shareholders as an indispensible party and would result in the rather uncomfortable (but not unheard-of) situation in which is corporation is involved in a lawsuit against its own owners.

 

[Dunstan]

The corporation would be entitled to go to court (as you say). The speech that would be sought to be protected would be ostensibly the corporation's, yet it would be the officers and directors who would decide what the content of that speech would be. Wouldn't it?

Sure, but that's no different than any of the other decisions D&Os make on behalf of the corporation. When a corporation files a lawsuit, it's the corporation's contractual, intellectual property, or other rights that were (allegedly) violated. But it's the D&Os who decide to sue, decide which lawyers to hire, direct the litigation strategy, and decide whether to settle and on what terms. When Toyota decided not to issue a more extensive recall of its vehicles, it was directors and officers (and other employees) who made that decision, but nobody suggests that "Toyota" the entity is off the hook because hey, it was the D&Os who made the decisions, not "Toyota."

Justice Stevens thought it likely:

That struck me as one of the weaker parts of Stevens' opinion. Among other things, it seems to assume without support that a corporation couldn't possibly have an interest in which candidates win office, so it must reflect the "personal" views of the D&Os. Does anyone really think that health insurance companies don't care who controls Congress? Or oil companies? Or labor unions?.

If allowed to proceed, such a lawsuit would, of course, involve the shareholders as an indispensible party and would result in the rather uncomfortable (but not unheard-of) situation in which is corporation is involved in a lawsuit against its own owners.

I completely disagree. The shareholders would not be an indispensible party to that suit, any more than the shareholders are an indispensible party to any other lawsuit that their corporation files. I don't see where you're getting that idea from.

 

[INRM]

The thing that's really dangerous about this is that some companies are controlled by foreign interests...

 

[Thunder]

The thing that's really dangerous about this is that some companies are controlled by foreign interests...

i know right? all those corporations controlled by the Jews.