
Sotomayor Issues Challenge to a Century of Corporate Law - tvon
http://online.wsj.com/article/SB125314088285517643.html
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bokonist
In my humble opinion, everyone is wrong in this article - Sotomayor, Butler,
Marshall.

A corporation should not be considered a person in and of itself. A
corporation is a contractual agreement between people over the ownership of
property. This was the original understanding of a corporation, until the
courts started creating this weird, and wrong, personhood doctrine. A
corporation should not have rights - a corporation is a contract - the idea of
a contract having rights is non-nonsensical.

But Sotomayor is also wrong. The people running the corporation, and the
people owning the property do have rights. Just as Arthur Sulzberger has first
amendment right to hire people to speak for him, shareholders of a corporation
have a first amendment right to hire people to speak for them. The government
has no right to restrict the freedom of speech of employees or shareholders of
a corporation.

~~~
asdfqwersdf
The idea that a corporation should be reduced to a contractual agreement
strikes me as problematic.

Since corporations necessarily have contracts with other entities and a
contract as an entity can't be a party to another contract, then your
corporation would have to somehow specify a process for employees to hold
contracts in proxy.

Also, a corporation that's just a contract between individuals can't provide
any protection from lawsuits by people who aren't employees or shareholders.

Certainly there's a place for the kind of construct you're talking about, but
it seems to be fundamentally incompatible with anything remotely similar to
the way business is structured today.

~~~
bokonist
_Since corporations necessarily have contracts with other entities and a
contract as an entity can't be a party to another contract, then your
corporation would have to somehow specify a process for employees to hold
contracts in proxy._

That's exactly what a corporate charter is. It's the shareholders delegating
the management and contracts associated with a piece of property to a process
determined by the corporate charter.

 _Also, a corporation that's just a contract between individuals can't provide
any protection from lawsuits by people who aren't employees or shareholders._

The contract can protect from lawsuits by creditors. When a creditor loans to
a limited liability company, the creditor knows that he only has recourse to
the funds pledged to the corporation. He can not claw back into the
shareholders personal funds. Again, it's a matter of voluntary contracts. If
the creditor wants that right, he can explicitly demand that the shareholders
pledge their own assets as part of the terms of the contract. ( in fact,
that's exactly what banks do when lending to very small businesses).

But an LLC designation should not protect from criminal liability.
Shareholders should be held to the normal standards of criminal culpability
for the actions of the management. A shareholder who knowingly profits from
the management committing criminal acts should be held to the same level of
guilt as anyone who knowingly profits from criminal acts.

------
hristov
I have to agree with Sotomayor here. And mind you, I am not anti-business at
all. I think corporations should have the same "business" rights as people.
They should be able to enter into contracts, sue for non-performance, and
generally have all the economic rights and protections of a person.

But rights like freedom of speech just do not make sense for corporations.
They are based on purely human considerations which are just non-existent for
fictitious entities. We know that a human being feels oppressed if he/she
cannot speak his/her mind. But does a fictitious entity? Of course not. Note
that all the actual human beings that are part of the corporation (i.e.,
stockholders, employees, directors, etc.) have their own free speech rights
and can exercise free speech as long as they make it clear they are not
speaking on behalf of the corporation.

~~~
sp332
If corporations are only afforded business rights, what sort of organization
could acquire freedom of speech? If a group of people would like to make a
joint statement, do you think they should each have to sign the document? Do
governments have the right to say what they like, or would every citizen have
to sign each law, treaty, and declaration of war?

~~~
roc
What groups? None.

The whole point is that people are people, whereas their organizations are not
them, nor are they free willed individuals on their own.

There's no _need_ for an organization to be immune from censure or regulation
when its constituents are all themselves immune.

If the government decides corporations shouldn't be able to pay for political
advertising or host fund-raisers, then the corporation's constituents are free
to speak out such measures, vote against them, run against the incumbent
politicians, etc.

The rights of sovereign governments is a red herring. They have an implicit
ability to do whatever they like, either because:they are democratically
elected and their actions subject to review and reversal by their citizens'
votes; or they rule by force and the will of their citizens is irrelevant.

~~~
sp332
This last bit, which you dismiss, _is_ my point. Corporations have leaders
which are elected, and their actions are subject to review by stakeholders. So
why shouldn't they have similar rights?

It might be useful to separate "business rights" from "speech rights", but
there should be a way for people to speak as a group. Class-action lawsuits,
for example, allow a lot of people to be represented in court without
personally being involved in the legal proceedings. Political institutions
speak on behalf of significant chunks of the population on a regular basis.

And how would a corporation publish a prospectus without the right to speak?
If prospectus contains lies, would you hold the individual who wrote it
accountable? That defeats some of the protections a corporation provides, and
means the stakeholders get a lot less money if they sue.

~~~
roc
The problem, is that isn't true. In practice, save via a very expensive proxy
fight, shareholders have almost no actual voice within most corporations.

Only the deeply cynical could hold that up as an analogue to democratic
government and even they wouldn't say it was a positive state of affairs worth
emulating.

 _there should be a way for people to speak as a group_ There is. You just
couldn't speak, as a group, through a shell entity that has its own
inalienable right to free speech.

Not having freedom of speech equivalent to individuals doesn't imply a
complete re-write of corporate law. It simply means that congress _can_
(constitutionally) make laws abridging and regulating corporate speech.

No-one's proposing a change to how we handle corporate fraud and
responsibility. I fail to see how the right to free political speech has any
bearing on those areas.

~~~
gojomo
An 'expensive proxy fight' is still cheaper than the campaigns required to
reliably influence an elected government.

What's more, shareholders have many other options for influence. They can buy
additional shares directly. They can 'exit' -- move their money elsewhere,
empowering an alternate organization that does represent them.

In the comparison between shareholders and voters, it's not clear to me that
it's shareholders who have less influence.

------
jcdreads
That people have the same legal rights as people is known as the "doctrine of
corporate personhood." An indie film from a few years ago explored what _kind_
of person a corporation would be is here:

<http://www.thecorporation.com/>

(spoiler: a sociopath)

~~~
vannevar
I'd say putting corporations on the level of a sociopath is giving them undue
credit. Their level of intellectual sophistication is probably more on the
level of an insect. It makes no more sense to apply human rights to
corporations than to honeybees. Both are indispensable to modern society, but
we don't talk about the free speech rights of honeybees.

The reason is that people confuse the corporation with its component members,
ie its personnel because the corporation can't be visualized the way a bee
can. As such visualizations become more common, I think people will see more
clearly that giving corporations human rights is ludicrous.

That isn't to say that we shouldn't give them certain privileges, but the
power to regulate a for-profit corporation should be absolute, since it owes
its existence to a government charter in the first place.

------
alain94040
Let's go with the current situation of corporations having similar rights to
people.

I'd like to make this proposal: when a corporation dies (goes bankrupt), it
should be treated as murder. If the CEO is responsible for killing that
corporation, shouldn't he go to jail?

That would put an interesting twist on corporate responbilibity.

~~~
timdellinger
I always wondered if corporate personhood meant that corporations would lose
some of their their rights if convicted of a felony. And are corporations
eligible for tougher sentencing under "three strikes you're out" legislation?
If a corporation kills someone, is the death penalty a possibility? It seems
like corporate personhood gives the benefits of being a real person, but
without all of the responsibilities or negative consequences.

~~~
wglb
If the corporation is convicted of a felony, it should lose the right to vote,
right?

~~~
whye
Just because a corporation is a person doesn't necessarily mean it's a US
citizen. Maybe it should get deported? :)

------
wsprague
This makes me very happy! A lot corporate nastiness has remained unregulated
due to arguments based on the tenet (ridiculous, in my view) that corporations
should be afforded the same rights as human beings.

~~~
chasingsparks
I don't follow law very much. What nastiness has been perpetuated by
corporations as the result of corporate personhood?

~~~
mynameishere
I second this question. As soon as corporations stop having 1st amendment
protections, Fox News is going to have trouble putting Glenn Beck (or the
bogeyman _du jour_ ) on the air. I can't conceive of any other (real) reason
for this...

~~~
vannevar
No, because Glenn Beck will still have the right to be on the air. There are a
couple of 'real' reasons for denying corporations free speech: the government
may want to more tightly regulate truthfulness in corporate speech, since the
immunity we give corporate officers prevents us from suing a spokesperson if
they lie outright about their product. Another instance where it's important
is the subjet of the case at hand: election law. Corporations want to double
dip, allowing their officers to give to the legal individual limit and then
give again anonymously under the corporate banner. And of course, the immunity
doctrine helps shield the officers in the event of campaign finance chicanery.

------
hughprime
Does anyone know the law with respect to free speech rights of other non-
corporation groups of individuals? For instance: labor unions, churches,
charities, "community organizing" organizations... hell, political parties?
Are these groups presumed to have free speech rights that extend from the free
speech rights of their members, or is the government allowed to restrict them?

------
tptacek
See, here's an article that is clearly about the politics of corporate law,
and not about corporate law. It spends more time reading tea leaves about what
one question could mean for the balance of the court re corporate standing
than it does talking about the impact of that re-balancing one way or the
other.

Flagged.

------
sp332
OK, I've talked with some people and it seems to me that the issue here is
primarily ownership of money. One of the major advantages to having a
corporation is separate bank accounts. Basically, the corporation, as a
"person," can own money and property that is legally separated from its
owners'. This means, among other things, that if a corporation is sued, the
owners don't lose money out of their own bank accounts. But it also means that
they can;t give that money to a campaign in their own name. If they want to
use that money, it has to be given in the name of the corporation. If
corporations lose their right to free speech, campaigns could never be given
any of the money in corporations' bank accounts.

~~~
btilly
Lose their right to free speech? What right to free speech? Centuries of
jurisprudence have never recognized a right to free speech for corporations.
Corporations stand to GAIN a right here, not lose one.

Here is my biased view of the issue. If corporations gain the right to
unlimited direct political advertising, then they will have a much more
powerful lobbying option than any they have already. This will give incumbent
corporate powers increased influence.

It is the nature of incumbents to try to maintain their dominant position by
fair means or foul. Therefore we'll see companies asking the government to
erect more powerful barriers to competition. These barriers will often be bad
for startups and innovation.

Obvious examples of barriers are expanded patent and copyright laws. However
that is just the start. Suppose that the oil industry decided that the right
president pursuing the right foreign policy would improve their profit margin
by 5%. If they had invested 1% of their 2008 profits into the last election,
that would have been more than both presidential campaigns spent together. Is
this really how we want US policy decided?

