

Legal analysis of the personhood granted to corporations - ashley
http://www.scotusblog.com/2010/01/analysis-the-personhood-of-corporations/#more-15376

======
grellas
It is hardly a radical idea in modern western society to treat a corporation
as a so-called "legal person."

Only real people can think and act as individuals but there are all sorts of
situations when they want to associate with one another, form groups, and act
in some coordinated fashion through the group. All sorts of business
associations fit within this category: corporations, LLCs, partnerships,
limited partnerships, business trusts, trade associations, etc.

All sorts of other entities are not directly business-related but otherwise
constitute groups formed for various important associational purposes: labor
unions, non-profit organizations, political organizations, etc.

With respect to all such entities, somewhere in the law books one will always
find some form of formal authorization recognizing that the entity can be
established under law and that it has legal rights and responsibilities. It
can take certain prescribed organizational forms. It can admit or exclude real
persons as owners, principals, or beneficiaries of the entity. It can appoint
real persons to manage its affairs within the rules and confines of what the
law prescribes it can do. It can enter into contracts. It can sue. It can be
sued. It has certain compliance responsibilities necessary to meet minimum
requirements to begin and to continue its status as the particular type of
entity that it is.

In giving these entities the power to act in this manner, the law effectively
recognizes them as fictional "persons" for legal purposes only. This is short-
hand way of saying that they have the same rights as individuals would have in
a like situation. For example, if my corporation sells you a product and you
refuse to pay, "it" (as a legal "person" acting through its lawfully
recognized representatives) can file suit in a court of law to get a judgment
against you and can exercise all available legal rights to enforce that
judgment and collect its money. Similarly, "it" can go to a bank and open an
account in "its" name. Or it can file "its" charter document giving it birth
as an entity. Or file "its" dissolution papers signifying its legal death. In
all such cases, "it" can only act through real individuals who do these things
in some manner that the law recognizes as being in a proper representative
capacity. They act as its agents and bind it legally in its affairs.

Can such entities commit torts or crimes? Absolutely. In such cases, the
entity itself may be hit with money judgments or fines and its authorized
agents who participated in the actions constituting the tort or crime may have
direct liabilities of their own for their conduct, or even face criminal
sanctions, including imprisonment.

Corporations are "persons" in the sense just described. As readily appears
from this analysis, though, there is nothing at all strange about recognizing
them as such. They are "persons" in the same way as, e.g., labor unions are
"persons" - that is, the law recognizes their power to act lawfully as
entities in the society and to do the things they are allowed to do under the
charter and statutes authorizing them to be formed in the first place.

Against this background, a few observations about this piece:

1\. It is hardly correct to suggest that the Supreme Court does not know what
it is doing by recognizing the "personhood" of corporations because, given
this logic, the next step is to give General Motors a right to vote.
Throughout decades if not centuries of experience in the law's dealings with
entities, it has always been clear that the legal rights given to entities
must be appropriate to the form of entity involved and need not extend to all
rights held by living individuals. It is perfectly sensible to say that a
corporation (or a labor union, for that matter) has protectable free speech
rights but does not have things such as a right to vote. A vote represents the
suffrage rights of the citizenry and inherently applies to individuals only.
Speech can be done by real individuals acting as individuals or by entities
acting through their authorized representatives advocating on behalf of the
entity.

2\. All sorts of corporations have been routinely accorded free speech rights
in an unbroken chain right up through this recent decision - they are called
the "press," and everywhere we look we find the New York Times, the Wall
Street Journal, and myriad other corporations exercising unquestioned free
speech rights as organizations. What the Supreme Court did 20 years ago, and
what was reversed in the recent decision, was to say that any corporation not
acting as part of the press did not have protectable speech rights.

3\. The above constitutes a legitimate debate about the proper scope of the
First Amendment. But the recent decision does nothing radical in this respect.
It pretty much restores the politics of American issue-advocacy to the state
it has always been in prior to the last decade or so.

4\. Nothing radical has been decreed with respect to the "personhood" of
corporations. This is a long-established and non-controversial legal concept
that has now been applied to a particular question of constitutional law over
which various factions have vigorously fought. The application of the concept
might be disputed, as it was in this case and by the majority and dissenting
justices, but the concept itself can hardly be disputed unless we are to strip
all entities of their power to function in our modern society.

~~~
argv_empty
* Throughout decades if not centuries of experience in the law's dealings with entities, it has always been clear that the legal rights given to entities must be appropriate to the form of entity involved* I think the point of the article is to argue this has just been tossed out.

------
azzleandre
I think it is kind of rediculous. Who's going to jail, if a corporation as a
"person" robs, steals, beats or even kills? A Personhood is not only
constituted by its acts, but also by it's intentions, the way it's intentions
are created and least but not last: The way it suffers / can be punished.

~~~
ugh
I think it’s a useful concept. Let me try to convince you of that: nearly
everything we do requires corporations. A human alone cannot possibly get his
opinions heard without help from other humans. In the end we really need
corporations. We might to often have that wrong picture in our minds when
thinking of freedom of speech, of the noble thinker, alone in his room,
writing down his opinion and the government anxious to shut him down. That’s
probably not how it ever worked.

You need a publisher, you need an ISP. The government might very well grant
you freedom of speech. If they can limit the rights of corporations however
they damn well please that freedom of speech is not worth very much.

Corporations are how humans do stuff. Corporations are important. Corporations
have to be protected from the government.

~~~
azzleandre
You're right. I have to agree with you on that. And I may haven't been clear
enough, about what my problem is with awarding personhood to corporations.

I think that you can't judge corporations the way you can judge humans. You
have to apply a different "personhood" to a company, since corporations are
not natural. They don't consist of what a human being consists, but of what
human beings contributed to that consistence.

~~~
ugh
Yes, I think they are different. Personhood is a useful concept but – I guess
I’ll have to agree with you – only to a point. I would argue that corporations
should have rights, yet not necessarily always the same ones persons have.
It’s quite obviously complicated :)

~~~
elblanco
If only we had a descriptive word for _corporations_ to help us distinguish
them from persons...

------
azzleandre
After reading the posts on HN a while, I've came across a lot of articles,
that where about the ineffectiveness of interactions between people (e.g. 'the
10 startup-mistakes to avoid'). Just because more people working on something
or investing more money on an issue, doesn't make their aim more intelligent.
Neither their way of approaching it.

Considering a society, we allready have an entity that has to be maneuvered in
the least stupid way possible. Adding new entities to that process doen't help
if it creates new layers of hierachy. It's a matter o preferences I think: Is
it for the 'greater good' (thing at the top of hierarchy) or is the greater
good to serve the smallest entity (i.e. a human being).

Equating corporations with humans could deprive humans of their liberties,
since corporations can speak, cry and lie louder. If the law is there to
protect our liberties, I don't see how this aim is archieved more effectively
by putting additional entities/hierarchies (i.e. corporations) in between.

------
Chirael
Interesting article. I was always under the impression that corporations
weren't "persons" but "entities".

I have seen several references to "natural persons" as opposed to corporation
or other entities, in various legal documents.

So I suppose that if corporations are "persons", then at the least they are
(by inference) "unnatural" persons :)

~~~
ashley
The funny thing with personhood conferral is that it was an obiter dictum
(sort of non-binding comment made by the judges that is not part of the
official decision) that was interpreted by the court stenographer in the 19th
century Santa Clara County v. Southern Pacific Railroad (whose case was ruled
in favor of Southern Pacific on a technicality rather than any explicit ruling
on the personhood of corporations). So now with Thursday's Citizens United
ruling, it will be interesting to see whether corporations will have to be
federally chartered and thereby be revoked of constitutionally protected
status or whether this case opens the door to potentially unfettered powers
granted to corporations, now that campaign finance is protected "free" speech
under the 1st Amendment.

~~~
hga
NO NO NO! The _Citizens United_ case has had absolutely no change to "campaign
finance", and the law and case law about campaign finance "reform" has always
recognized its status as political speech.

What _Citizens United_ has done is to return to "corporations" (including the
non-profit Citizens United that successfully sued the FEC) the rights to free
speech and freedom of association they enjoyed prior to _Austin v. Michigan
Chamber of Commerce_ and McCain-Feingold. No longer can governments censor (in
the real meaning of the world) their speech in elections.

In both these examples, campaign finance and election period speech, there are
still "reasonable" regulations, like various sorts of disclosure (although
Thomas disagreed, based on the nasty retaliation that's been seen lately
against people making small contributions to causes that many don't like; I
expect this will be revisited after the first murder that comes from this
disturbing trend).

For those who think this is a _bad thing_ , I say that the answer to speech
you don't like is more speech, not government censorship of the speech you
don't like. (Need I mention the slippery slope the latter presents?)

~~~
ashley
You're right to say that Citizen United does not change how we view campaign
finance as protected speech for humans. I definitely was wrong and unclear on
that point, but I respectfully disagree about the implications of the Citizens
United ruling: my point is that this ruling sets the stage for allowing undue
power to corporations, both non-profit and for-profit. Corporations are not
living beings with unalienable rights, so we should not have worried that
limiting their speech would have implications for us human beings. For Scalia
being such a conservative reader of the law, he certainly took a highly
judicial activist position in this ruling.

excerpted from the article: In vivid contrast, the majority overruled a
19-year-old precedent (Austin v. Michigan Chamber of Commerce) that had
lambasted the corporation, when it entered the political arena, because of
”the corrosive and distorting effects of immense aggregations of wealth that
are accumulated with the help of the corporate form and that have little or no
correlation to the public’s suport for the corporation’s political ideas.”

The problem with treating corporations as if they have a "right" to free
speech and freedom of association is that they have a disproportionate amount
of influence arising from their sheer size and aggregated wealth. We have
other mechanisms to ensure that size and wealth do not override the voices of
the small and poor in elections (look at how the Senate is constructed versus
the House or how we have the electoral college to ensure that wealthier
coastal states do not decide presidential elections).

And also, the fact that we grant any rights to corporations at all arises from
a court stenographer's foot-note that later opened up loopholes for clever
(although might I add shortsighted) lawyers in subsequent cases that
eventually snowballed into granting rights to this nebulous entity. As Justice
Stevens noted in his dissent to the Citizens United ruling, "A corporation is
an artificial being, invisible, intangible, and existing only in contemplation
of law. Being the mere creature of law, it possesses only those properties
which the charter of its creation confers upon it.” And yet, we worried that
limiting the financial power of corporations will potentially infringe upon
OUR (human) 1st Amendment rights. That is the problem for me. We created the
corporate entity like a machine to serve our purposes; it does not exist with
unalienable rights as we human beings do.

Who donates the most to campaigns, 501(3)(c) non-profits and charities or
Fortune 1000 corporations whose explicit purpose is to generate profits for
stakeholders?

~~~
hga
You might be right as a matter of policy (I don't think so, but it's a
debatable point), but as a Constitutional issue it's pretty clear to me and
the majority of the Supremes that the right of groups of people who happen to
speak through a corporation is strongly protected by the First Amendment.

Or, let's say, take your position to an extreme: that would entail forbidding
the New York Times Corporation from publishing on politics. I'll note that
they are the plaintiffs in two important First Amendment cases, _New York
Times Co. v. Sullivan_
(<http://en.wikipedia.org/wiki/New_York_Times_Co._v._Sullivan>) and _New York
Times Co. v. United States_
([http://en.wikipedia.org/wiki/New_York_Times_Co._v._United_St...](http://en.wikipedia.org/wiki/New_York_Times_Co._v._United_States)),
the first defined modern era libel case law and the second was WRT the
Pentagon Papers.

Or does the provision for freedom of the press somehow carve out an exception
for these "immense aggregations of wealth" (well, before the decline and fall
of the MSM really got started).

As for donations, both 501 (c) (3) non-profits and companies are explicitly
forbidden from donating to campaigns, they have to have individuals do it
through a PAC.

~~~
ashley
"As a Constitutional issue it's pretty clear to me and the majority of the
Supremes" - that depends upon what kind of philosophy you take on approaching
the role of the Supreme Court, activism to change policy versus narrow
interpretation of the Constitution.

It's simplistic to say that Citizens United ruling is simply a matter of
suppression vs. free speech, as Buckley v. Valeo has nuanced to what extent
"money" constitutes speech. As Justice Stevens writes in his dissent, "At
bottom, the Court's opinion is thus a rejection of the common sense of the
American people, who have recognized a need to prevent corporations from
undermining self government since the founding, and who have fought against
the distinctive corrupting potential of corporate electioneering since the
days of Theodore Roosevelt. It is a strange time to repudiate that common
sense. While American democracy is imperfect, few outside the majority of this
Court would have thought its flaws included a dearth of corporate money in
politics."

Several people have cited examples of free speech and the press. The Citizens
United ruling lifts restrictions of corporate spending in political ads during
election campaigns with in-house corporate treasury funds, i.e. unfettered
free speech at any time. Rather than looking at NYT Co v. Sullivan, look
Austin v. Michigan Chamber of Commerce's interpretation.
[http://www.moresoftmoneyhardlaw.com/updates/the_supreme_cour...](http://www.moresoftmoneyhardlaw.com/updates/the_supreme_court.html?AID=1457)

Excerpted: "Austin’s critics aspire to dissolve all this complexity into a
simplistic choice between speech and suppression. In attacking the "political
support" language of Austin, they take it to be something strange, an import
into the jurisprudence of a notion at odds with core First Amendment values.
What they miss is its surprising ordinariness. The Austin case was getting at
something important, even—one could say—basic to the mechanisms within the
campaign finance laws for isolating the corruptive threat of aggregated group
or associational spending."

I'm not arguing that corporations be denied their political speech via
spending, which was outside of the case ruling anyway.

Free speech is controlled in very specific cases because of its potential
injurious impacts - libel, safety, individuals versus entities, etc. What I
take issue with is the extent of power given to special interest groups and
lobbyists that override the interests of individual citizens. Is there a
difference between groups of people coming together and pooling their money to
form a PAC and group of people expressing political views of an entire
corporation using corporation treasury funds?

And if you want to go into fringe, extreme positions: what about tax-paying
subsidiaries in the US headed by groups of American citizens, but owned by
foreign corporations? Should they not then be entitled to equal free speech in
our elections?

In any case, it will be interesting to see what comes of the ruling, and
thanks for highlighting those two cases.

~~~
hga
Hmmm; let me only pose the question, was _Austin_ or _Citizens United_ the
judicial activism? ( _Citizens United_ explicitly reversed _Austin_.)

As for the foreign corporations, yes, that's an interesting question not
touched up on in _Citizens United_. As a matter of policy, those US citizens
working for a "foreign master" (to put it in the worst way) are nonetheless
affected by legislation, and I find it hard to justify completely excluding
such a corporation from the arena of politics ... especially since full
disclosure in this case is not as problematic for a company.

Pat Buchanan had an interesting/amusing proposal for dealing with foreign
influences that I like, except that I don't see how to put it into practice:
outlaw (in whatever method needed) lobbying by them unless done by foreign
nationals.

~~~
ashley
I don't know the answer to your question, and it's not a particularly useful
exercise to make a blanket judgement on whether judicial activism is
undesirable in every case.

What I wanted to refute was your initial statement that a majority of Supreme
Court justice leads to a clear interpretation of the law. What I meant by
bringing up judicial activism is to say that one's opinion on judicial
activism can influence how one views Supreme Court decisions. Dred Scott v.
Sanford is an example of a majority Supreme Court decision, that in my
opinion, was undesirable, despite its "fair" albeit narrow reading of the law.

I can't help add, and this will be the last rebuttal I make since we're not
going to sway each other's opinion, and I do feel like I messed up by adding
something political to HN:

As for foreign corporations, again, I want to emphasize, as I did previously,
that free speech is not black/white of merely include them carte blanche or
else our rights will be infringed upon. Free speech is not that simplistic
although it is sacrosanct.

Why not overturn Morse v. Frederick then, which I believe had such free-speech
loving justices as Alito and Scalia from the Citizens United ruling also in
the majority of that case. In Morse v. Frederick, free speech could be limited
by "important—indeed, perhaps compelling interests" (taken from Justice
Roberts writing the decision for the majority). Granted, it limits only
illegal drug-promoting student speech, but it is again another example where
the justices limited free speech and justified it on grounds of public
interest that did not include immediate violence. The kid could still hang his
"bong hits 4 Jesus" sign on his private residence or yell it on the streets.
Corporations before Citizens United could still runs ads, as could PACs and
the corporate executives _individually_ donating them. They just couldn't use
corporate treasury funds nor could they run the ads a certain number of days
before the date of the election.

Therein, lies the question of what one considers best for public interest.
Blue-collar wages of workers have remained stagnant over the last 30 years
while white-collar and executive salaries have seen a nice rate of growth. The
Chicago School of Economics elegant theories towards markets have not been
substantiated by the uglier, noisier empirical evidence. Having studied
psychological/behavioral economics and interned for a government official as
well as interned with a non-profit lobbying group, I have a more skeptical
view of the "well-informed" voter and the "public" servant. So this largely
explains why I think differently than you do.

------
veqon
Some very sensible reforms are:

If you cannot become eligible to vote, you cannot donate to any campaign.

All donations must be reported online with 24 hours.

~~~
brown9-2
This is exactly what this article speculates on - if they have free speech,
are they not entitled also to vote? Voting is a form of speech.

~~~
yummyfajitas
The answer is simple: corporations only have the rights they are granted by
their owners.

I have the right to free speech and and I can use my possessions to exercise
this right. I can criticize Obama verbally, in a document on my computer or I
can publish that document to my website. Why can't I use my corporation to
pursue the same goal?

I also have the right to vote. I don't get a second vote for my computer,
however. Similarly, my corporation doesn't give me another vote.

Corporations don't have free speech. Their owners have free speech, and they
can use their corporation to exercise those free speech rights.

~~~
DanielBMarkham
Agreed. This does seem like an over-complicating of something very simple.

Five guys sit in a room and decide to use their poker profits to run a
political commercial. It's all fine.

Same five guys sit in a board room and vote to use company money to run a
political commercial. It's all bad.

I must be missing something.

~~~
yummyfajitas
What you are missing is that the people pushing regulations also want to
prevent 5 guys spending their poker profits on political speech.

Some history: Back in 2000, a bunch of guys decided to use their money to run
political commercials. These commercials persuaded people vote against McCain
in the Republican primary. 2 years later, McCain pushes a law which tries to
prevent this.

The goal of political speech limitations is to prevent anyone besides certain
elites (and not other elites) from affecting an election. Since spending money
is necessary to get a message out, they try to restrict spending money on
political speech.

~~~
hga
Bingo. Look at how Washington State persecuted the DeFoley8 people or in
California the people who waged a campaign against Roberti and Roos.

With any luck this ruling will eventually result in an environment where
people like the above who are merely expressing their dislike of powerful
politicians will find it easy to follow a straightforward set of disclosure
rules (and only that) and therefore the establishment won't be able to then
ruin their lives.

------
flatline
Every time I hear one side or another of this argument, I think of
Accelerando. First corporations gain status as individuals, then they become
self-aware computers and ultimately convert all the mass in the solar system
into a giant computer to run their simulations, expelling humans in the
process. Maybe I'm just taking it too far...

------
elblanco
Sounds like the cyberpunk dystopia of corporations = the state is one step
closer.

------
pierrefar
What happens when (say) a car company designs a car whose fuel tank has a
tendency to explode, or for the whole car to flip over in accidents? What
happens if these accidents end up killing the driver? Is it manslaughter or
murder?

