Corporate Personhood is not the Enemy

The recent Citizens United decision has spawned a wave of really awful political critique, mostly from progressive writers and activists. A news story from earlier this year highlights one of the wackier critiques, in which a man drove in the carpool lane along with a copy of Articles of Incorporation. When pulled over, he turned it into a media event:

Your honor, according to the vehicle code definition and legal sources, I did have a ‘person’ in my car.But Officer ‘so-and-so’ believes I did NOT have another person in my car. If you rule in his favor, you are saying that corporations are not persons.

The carpool-lane stunt is probably the most over-the-top of responses, but many other critics have weighed in. For instance, the Occupy movement passed a resolution against corporate personhood, while an internet petition to “end corporate personhood” has garnered hundreds of thousands of signatures. Clearly, many people are deeply upset about the idea of corporate personhood.

They’re also, as a general matter, deeply misguided.

Let’s start with the popular conception that corporate personhood was invented in Citizens United. This is flat-out false, as a descriptive matter. In fact, the legal doctrine goes back a century, and has been established and relatively uncontroversial for decades.

This does not mean that Citizens United was rightly decided (and in fact, there are some excellent critiques of the court’s ruling). But the backlash against Citizens United has been severely overstated and misses the point: Corporate personhood is in fact an important protection from corporation wrongdoing. Here’s why.

Suppose that the officers of XYZ Corp engage in some kind of harmful behavior. They dumped chemicals in the river; they lied about the health effects of their products; they broke securities laws. And these actions led to millions of dollars in damages. But by the time this is discovered, the individual wrongdoers are long gone. How can plaintiffs recover? Simple: They bring a claim against the legal person of the corporation.

At its most fundamental, corporate personhood is what allows corporations to be held accountable for their actions over time.

For instance, Jeff Skilling and Andy Fastow engaged in a variety of acts of financial wrongdoing. But it was not simply Skilling and Fastow who were doing this — it was also a legal person called Enron. And even after both Skilling and Fastow left the company, people harmed by legal-person Enron could bring claims against the legal person of Enron.

Similarly, it was not simply a set of 1950s tobacco execs who lied about the harm of smoking. It was also a group of legal persons named RJR, Philip Morris, and so on. And the legal personhood of those entities is the only reason why plaintiffs were able to bring lawsuits decades later.

They were not only harmed by specific executives. They were also harmed by Philip Morris, a legal person. And they recovered from that person.

This is not to say that everything about legal personhood in existing law is fine and dandy. Clearly, corporations are a specific and limited type of person. They don’t get certain rights, and aren’t subject to certain obligations. (They can’t be drafted to join the army, for instance.) And arguably, the Citizens United court went too far in its determination of the scope of those rights.

But let’s not throw the baby out with the bathwater. The real work is in pushing back against specific overly permissive corporate-speech doctrine, not trying to undo the century-old rule of corporate personhood. Corporate personhood is not the enemy.

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5 Responses

  1. Brett Bellmore says:

    What are they to do? They want to censor political speech. (That’s the bald truth of it, bad as it sounds.) They don’t want, most of them, to touch the 1st amendment, or too obviously censor individuals.

    Nothing is left but noticing that almost all the speech they want to censor goes through corporations, and setting out to strip corporations of 1st amendment protection. That the NYT is as much a corporation as Citizens United doesn’t change that, just gives them further options later if they win now.

    That the CU decision, dissent not withstanding, had nothing to do with corporate personhood,

    The Amendment is written in terms of “speech,” not speakers. Its text offers no foothold for excluding any category of speaker, from single individuals to partnerships of individuals, to unincorporated associations of individuals, to incorporated associations of individuals—and the dissent offers no evidence about the original meaning of the text to support any such exclusion. We are therefore simply left with the question whether the speech at issue in this case is “speech” covered by the First Amendment.

    doesn’t matter. The real target isn’t corporate personhood, it’s freedom of speech. That’s why the proposed amendments to overturn CU have focused on making the protection of speech dependent on the identity of the speaker, and attack not just donations, but expenditures, even by individuals. (First two amendments here.)

    The real target is freedom of political speech, and if you can censor any speech that is facilitated by a corporation, or involves spending money to be heard, there’s not much speech left to be concerned about.

    In the end, they’re throwing out the bathwater in order to throw out the baby. The baby being freedom of speech.

  2. Joe says:

    I agree with the opening post — the corporate form was created because of its various benefits and this includes the ability to protect the public even of specific individual shareholders or such. This suggests even for those who wish to regulate (or even amend), there is a need to differentiate. Even if the rhetoric is open-ended, if pressed, many will admit non-profits and/or religious corporations, media corporations etc. are different. Anything half-way likely to pass will have that caveat.

    Also, CU did not even the idea that corporations have some (SOME) rights, not a single justice denied that. Also, at least eight also firmly upheld regulations in that case that were somewhat burdensome — this was not seen as “abridging” speech … but the 1A was never absolute, much less so before the last 50 years or so. So, yes, the concern should be on acceptable regulations, such as shareholder consent, just like there are various opinions protecting those who wish not to pay for certain union speech.

    As to the first comment, I think a major concern is money in politics and other things, often not just the corporate form. See, e.g., the posts by Prof. Teachout that in part appeal to history. The comment can’t quite have it both ways — if it is just speech, it isn’t just corporate speech. Money goes to individuals and political parties too and this includes lots of money.

    Also, regulations specifically often address specific things, like corporations, since they are not the same as individuals. Corporations are creatures of the state. They are more open to regulation generally, especially for profits. Campaign finance regulations here follow long practice here — for profit corporations were ALWAYS more regulated.

    There are also various different people involved here, no single “they,” with various proposals and paths. They should take the opening post to heart.

  3. Joe says:

    ETA: Simply put, the idea seems to be based on stereotypes like those that don’t understand the breadth of regulations allowed by the D.C. v. Heller gun case. Even if CU goes too far, each justice still supports corporate speech rights. It’s a matter of degree.

    Also, an ultimate solution, however we do it, has to go further than corporations. The money still will be spent, just in somewhat different ways. A stereotypical view of the corporation will be counterproductive and expend limited energy and reform capital in a dubious fashion.

  4. I have always insisted that problem is not Citizens United and corporations; the problem is Buckley v.Valeo and money.

  5. Brett Bellmore says:

    IOW, the problem is that freedom of the press applies to buying paper and ink, and renting a press? You’d rather have freedom of the press interpreted such that it’s ok for the government to tell you you can’t spend money to print things it doesn’t like?

    How many copies of the paper could the NYT print if they weren’t allowed to buy paper and ink, electricity to run the presses, and hire people to work for them?