Corporate personhood is a legal fiction recognizing the autonomy of private, incorporated bodies and establishing specific legal rights comparable to but not identical with the legal, political, constitutional, and moral rights of natural persons or private citizens. A private corporation is thereby regarded as an artificial person, a separate entity “personified” by the law and treated as a person in a limited way. According to Black’s Legal Dictionary, a legal or “juridical person” is an “entity, as a firm, that is not a single natural person, as a human being, authorized by law with duties and rights, recognized as a legal authority having a distinct identity, a legal personality.” A “corporation” or “corporate person” is viewed, according to Black’s, as “having a personality and existence distinct from that of its several members, and which is, by the same authority, vested with the capacity of continuous succession, irrespective of changes in its membership, either in perpetuity or for a limited term of years, and of acting as a unit or single individual in matters relating to the common purpose of the association.” Since Dartmouth College v. Woodward, the 1819 landmark Supreme Court case under Chief Justice John Marshal, American law has recognized corporations as “persons” in a limited, abstract, and legal sense, and thus enjoying rights under the law in a way similar to the rights of persons. Or, as Marshal himself wrote in his 1819 opinion, a private corporation is “an artificial being, invisible, intangible, and existing only in contemplation of law.” Corporations, according to this concept, therefore only possess some rights enjoyed by individuals, such as the right to contract and engage in free trade, and the right to bring suit at civil law, but this does not mean that a corporation is morally or even politically identical to a natural person and thereby bears all the rights natural to a human being. More accurately, a legal corporate person possesses limited rights when compared to the full scope of civil rights inherent within individual citizens. Corporations, by this understanding, resemble persons in that they possess some rights, but they are not identical to human beings. Nevertheless, some confusion has occurred in recent years regarding the status of corporate persons, owing to the 2010 Supreme Court case Citizens United v. Federal Election Commission. Without grasping what is meant by the concept of a legal person abstractly construed, many in the public have been led to believe that corporations have the identical rights as a flesh-and-blood person—that they are in fact like people in what they can and cannot do, both legally and politically. While these perceptions are grounded in a general misunderstanding of the concept of a legal person in contrast to a natural person—a human being and an autonomous citizen—there are good reasons for citizens to be alarmed at the potential for abuse in the construction and application of legal personhood under Citizens United.
In Citizens United v. Federal Election Commission (2010), by a vote of five to four, the U.S. Supreme Court held that nonprofit corporations, like individuals, had a First Amendment right to engage in political speech. Despite the fact that the decision dealt with the political activities of a nonprofit corporation, the decision applies to any type of for-profit or nonprofit corporation. This holding effectively reversed more than a century of U.S. Supreme Court decisions granting Congress and state legislatures the authority to limit the use of corporate funds to influence the outcome of local, state, and federal elections, and it opened the door for individuals and for-profit and nonprofit corporations to increase their role in influencing the outcome of elections at the local, state, and federal levels. Citizens United permits individuals and any for-profit corporation to make unlimited anonymous contributions to “nondisclosing” nonprofit groups established under 501(c)(4) and 501(c)(6) of the federal tax code. Citizens United, however, did not end the ban on coordinated campaigning between independent advocacy groups and candidates for federal office, including those running for president of the United States.
Campaign finance scholars trace the effort to control corporate influence on elections to the Campaign of 1896 in which Ohio governor and Republican nominee William McKinley, whose campaign was directed by influential industrialist Mark Hanna, raised millions of dollars from corporations to fund a nationwide campaign against populist Democratic nominee William Jennings Bryan. In the Campaign of 1900, the Republican Party made effective use of large corporate campaign contributions to support McKinley’s reelection. In the Campaign of 1904, the Republican Party relied heavily on corporate contributions to help incumbent president Theodore Roosevelt, who had recently ascended to the presidency on the assassination of President McKinley, win election to a second, full term.
After Roosevelt’s landslide victory, reports surfaced of the large contributions by corporations to his reelection campaign. In sharp contrast to McKinley, Roosevelt had established a record of opposing the political influence of large corporations. Deeply embarrassed, Roosevelt moved quickly to defuse the growing controversy by proposing legislation banning corporations from directly contributing to federal election campaigns. In 1907, Congress passed the Tillman Act, which prohibited corporations and national banks from making direct campaign contributions to candidates for federal office. Despite the passage of the Tillman Act and other campaign finance laws, corporate contributions continued to find their way into campaigns for federal office through the 1960s. In 1971, Congress passed the Federal Election Campaign Act (FECA). The law put in place strict disclosure requirements for campaign contributions and expenditures. To deal with the lack of transparency in indirect corporate and union contributions to campaigns for federal office, the FECA authorized corporations and unions to establish PACs (political action committees) to make contributions to candidates for federal office and to political parties.
From the mid-1970s forward, both Congress and the Supreme Court addressed the ongoing problem of private corporate influence in political elections, Congress establishing the Federal Election Commission in 1974 and the Supreme Court further defining the law by upholding mandatory disclosure and contribution limits imposed on corporations while also ruling that expenditure limits on individuals and independent advocacy groups were unconstitutional (Buckley v. Valeo, 1976). These actions did not alter the long-standing interpretation of the Constitution regarding corporations as not possessing the same First Amendment right to freely engage in political speech, a right guaranteed for all individual citizens; that is, natural persons. In fact, restrictions on corporations, as well as on other organizations such as labor unions, only became tighter in the wake of Buckley. Organizations could work around these restrictions (e.g., through the use of “soft money”), but by and large, the concept that corporate persons were different from real persons with respect to free speech and political action remained clear legally and morally. Those tactics that allowed wealthy donors and groups to get around campaign finance constraints were addressed by Congress in 2002 under the Bipartisan Campaign Finance Reform Act (BCRA), which banned soft money contributions to political parties but then raised individual contribution limits. Critics of these restrictions argued that limiting the political speech of independent advocacy groups would have a chilling impact on political discourse. In 2003, the U.S. Supreme Court ruled in McConnell v. FEC that the soft money ban did not violate the Constitution.
Then, in 2010, the U.S. Supreme Court in Citizens United v. FEC held that nonprofit corporations primarily engaged in political activity had the same rights as individuals to participate in political discourse. In the aftermath of Citizens United, a small number of rich individual and corporate donors have become the principal source of a large percentage of campaign contributions funneled through independent advocacy groups, which are now free to accept unlimited contributions in support of a candidate or to oppose the election of a candidate for federal office. This development opened a new discourse about the meaning of corporate personhood and any resemblance between this legal concept and the personhood of autonomous individuals. It was within this context that a Republican nominee for president during the 2012 campaign, Mitt Romney, responding to an angry heckler at a campaign event who loudly challenged Romney’s position against raising corporate taxes, stated, “Corporations are people, my friend. . . . Everything corporations earn ultimately goes to people. Where do you think it goes?” Gov. Romney’s response in the heat of the moment indicates that he misconstrued what is meant by corporate personhood, for again, the law does not in fact equate corporations with individual persons or view them as “people” in general; but rather, the law only views corporations as legal persons for the sake of the protection of certain rights—primarily property rights—that allow them to operate more freely.
Quite recently the discussion over the nature and extent of corporate personhood has involved issues distinct from political campaign contributions and the “free political speech” of corporations. In Burwell v. Hobby Lobby (2014), the Supreme Court affirmed a decision that recognized the religious right of what is defined as a “closely held corporation”; that is, a corporation in which at least half of its shares are owned by four persons or less—one likely to be family-owned. Specifically, the Court held that a closely held company, Hobby Lobby, could claim an exemption from a law to which its owners objected on religious grounds—in this case, provisions in the Patient Affordable Care Act that allowed for female employees to fund contraception under their insurance coverage—provided that there is a “less restrictive means” to allow the relevant services under the ACA to be delivered to the insured. This case dealt directly with the Religious Freedom Restoration Act (1993), an uncontroversial law passed with bipartisan support during the Clinton administration, now interpreted by the Roberts Court to allow owners of a closely held company to object to the provision of contraceptives for their female employees in violation of their private religious values. This is not to say that the corporation itself has a right to freedom of religion in the same way as a natural person—Hobby Lobby does not go to church—but only that a corporation owned by individuals holding specific religious beliefs in conflict with the federal law in question does not have to comply to a mandate against their religious values. In other words, the Hobby Lobby ruling does not assert that a corporate person is equal to a natural person. As the Court explained, “[The text of the Religious Freedom Restoration Act] shows that Congress designed the statute to provide very broad protection for religious liberty and did not intend to put merchants to such a choice. It employed the familiar legal fiction of including corporations within RFRA’s definition of ‘persons,’ but the purpose of extending rights to corporations is to protect the rights of people associated with the corporation, including shareholders, officers, and employees. Protecting the free-exercise rights of closely held corporations thus protects the religious liberty of the humans who own and control them.”
Even so, some argue that the Court has established a precedent allowing for broader latitude, and potential abuse, with regard to a corporation’s obligations under the law vis-à-vis religious freedom. Sensing this, in her dissent, Associate Justice Ruth Bader Ginsburg wrote, “Suppose an employer’s sincerely held religious belief is offended by health coverage of vaccines, or paying the minimum wage or according women equal pay for substantially similar work?” Justice Ginsburg elaborated further, “Would the exemption the Court holds RFRA demands for employers with religiously grounded objections to the use of certain contraceptives extend to employers with religiously grounded objections to blood transfusions (Jehovah’s Witnesses); antidepressants (Scientologists); medications derived from pigs, including anesthesia, intravenous fluids, and pills coated with gelatin (certain Muslims, Jews, and Hindus); and vaccinations (Christian Scientists, among others)? According to counsel for Hobby Lobby, ‘each one of these cases . . . would have to be evaluated on its own.’”
At the time the ruling was announced, prospective Republican presidential candidates Ted Cruz, Rand Paul, and Bobby Jindal all expressed their support of Hobby Lobby, while Democratic candidate Hillary Clinton voiced her disappointment. Democratic presidential candidate Bernie Sanders is on record as opposing corporate personhood, having proposed in 2011 a constitutional amendment that would prohibit the extension of “the rights of natural persons” to “for-profit corporations, limited liability companies, or other private entities established for business purposes.”
Prior to the Hobby Lobby case, the Court ruled that a federal program requiring raisin growers to reserve a portion of their crop for federally managed redistribution is unconstitutional under the Fifth Amendment (Horne v. Dept. of Agriculture, 2013), in effect extending rights held by natural persons to artificial persons; furthermore, since the Hobby Lobby case, the Court has more recently ruled that the Fourth Amendment’s protections against illegal searches extends to hoteliers, thereby ruling invalid a local ordinance that allowed the police to examine guest registries without a warrant (Los Angeles v. Patel, 2015). These cases do not redefine corporations as “people,” nor do they establish a principle equating artificial persons with natural persons. However, in terms of corporate personhood, the question remains: To what extent is a fictional person similar to a natural person? Fictional, corporate persons certainly must rely on protection under the law and thus possess specific legal rights, such as the right to contract, but how far is this to be extended in comparison to the rights held by individual citizens? To what extent these and similar, related questions will be raised in 2016 remains to be seen, but if 2012 is any indication, the comparison of the legal fiction of a corporate person to a natural person is likely to resurface at some point. We know Sen. Sanders’s official position; beyond that, only time will reveal whether or not the issue is still important enough to the candidates to raise, and where they will stand should the discussion be renewed.
Black’s Law Dictionary. Second ed. http://thelawdictionary.org/.
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