Supreme Court and the Constitution
Over the course of the nineteenth century, the Supreme Court ruled in a number of cases that corporations were, indeed, persons. At the onset of the century, however, this was not the case, as Chief Justice John Marshall enunciated in an 1819 case: "[the corporation] possesses only those properties which the charter of its creation confers upon it." The Industrial Revolution gave birth to views in which the corporation's place in society began to evolve. These developments took place during a period when many financial and industrial firms were beginning to exercise unprecedented power in the United States. In fact, this period represents the time when corporations began expanding their activities across state lines, and eventually across national borders, with the help of robber barons such as John D. Rockefeller and J.P Morgan. Throughout the eighteenth, nineteenth and twentieth centuries such legislation has been utilized to expand market share of a select few corporations -- with a select few elite interests sitting on the Boards of Directors of many such firms -- seeking profits and wealth accumulation for only a few.
In an 1886 tax dispute between the Southern Pacific Railroad and the state of California, Chief Justice Morrison Waite evidently advised attorneys to skip testimony regarding whether the Fourteenth Amendment's equal-protection clause included corporations, for "we are all of the opinion that it does." This opinion protects businesses from certain types of government regulations. (Bravin)
To be sure, not all efforts by the legislature and judicial branches benefited corporations. In 1907 Congress put forth legislation to ban corporations from making contributions to candidates. In 1947, the law began preventing corporations and unions from spending money on their own as a means of electing or defeating certain candidates for, not only Congress, but also the White House. Efforts to get rid of those restrictions dates back to the Nixon Era, when, in 1971, Lewis F. Powell, a corporate lawyer out of Richmond, Virginia, sent a memo urging the U.S. Chamber of Commerce to lobby for corporate rights in the courts. Two months later, Powell was on the Supreme Court, nominated by Nixon.
According to David Million, a law professor at Washington and Lee University, "a positive way to put [constitutional rights for corporations] is that the economy is booming, American productions is leading the world and the courts want to promote that;" less apologetically, "it's all about protecting corporate wealth" from taxes and other governmental initiatives. Later opinions worked to expand the rights of corporations, such as a 1928 court decision by which a Pennsylvania tax on transportation corporations was rejected because taxicab drivers were exempt. Corporations are afforded "the same protection and equal laws [as] natural persons."
From the mid-20th century on, however, the court dithered as to how far corporate rights extend. A more liberal court, in 1973, rejected the Butler opinion as "a relic" that undermined "the narrow confines of judicial review." Today there are bitter divisions regarding the rights a corporation enjoys. In 1979, then-Associate Justice William Rehnquist dissented from a ruling overturning Massachusetts's restriction of corporate political spending on referendums. He wrote that, because corporations receive legal and tax favor, "it might reasonably be concluded that those properties, so beneficial in the economic sphere, pose special dangers in the political sphere." He referred to corporations as "creatures of the law," and were entities capable of accumulating wealth, but were protected by none of the rights reserved for voters. Today, people who learn of corporate personhood are surprised by the vast implications.
In the mid-nineteenth century, as United States society debated how to incorporate newly freed slaves into the fabric of society, big business was on the rise. To many of these corporations, the Fourteenth Amendment -- drafted to free slaves -- offered an opportunity to expand their power. Of the 150 cases regarding the Fourteenth Amendment leading up to the end of the nineteenth century, 15 involved blacks and 135 involved businesses. Blacks won only one case of those 15. Corporations, on the other hand, succeeded in utilizing the Fourteenth Amendment to shield them from governmental regulation. (Hammerstrom)
On January 21, 2009, the United States Supreme Court ruled in a 5-to-4 split decision "that labor unions and corporations can spend unlimited amounts to influence federal elections, throwing out a ban that had been in effect for 63 years and adding an explosive new element to this year's midterm elections." The courts current majority, therefore, sees corporations as "associations of citizens," and therefore reserves for them the same free-speech rights as individuals. The line of reasoning sees all disseminated information as beneficial to the national debate. The ruling, Citizens United v. Federal Election Commission, No. 08-205, "dismayed lawmakers and public interest groups that fought for decades to limit the influence of wealth special interests in politics." Those who favored the decision argued that the ban in stood in contraposition to the First Amendment, for it controlled free speech in election campaigns. The decision is destined to have wide scale political and practical consequences on American political ideology, as well as refashioning the way elections are carried out. (Kirkpatrick)
The ruling was precluded by a September 2009 case that considered overruling the 1990 case of Austin v Michigan Chamber of Commerce, by which the court ruled the Constitution did not avert a state from prohibiting corporate political speech. The Michigan law is an oddity in a legal system that for a century has recognized the constitutional rights of corporations. The question in that case revolved around whether a corporation should be allowed First Amendment rights. As National Public Radio pointed out, the case raised a number of interesting questions, such as: Can corporate offices be searched without a warrant? Can a phone company withhold from the government call records of its subscribers? Can the New York Times be censored because it is a corporation? In cases such as the one presented here, the government has maintained that it can censor books if they are published by corporations.
Corporations are protected under the Constitution, or so the argument goes, because they are composed of individual persons, and are recognized by the state. While corporations do receive benefits from the state -- among which are limited liability and perpetual life -- so do most people. In 1969, Goldberg v. Kelly recognized that government creates rights that are given constitutional protection. For example, a welfare recipient had a great interest in receiving the benefits to which he was entitled, and did not give up his rights by accepting those benefits.
The ruling holds vast implications for federal elections, and will provide framework by which interests can legally overturn state laws limiting corporate spending in state and local elections. On behalf of the court's majority (alongside Alioto, Roberts, Thomas and Scalia), Justice Anthony Kennedy compared corporate and labor union spending in elections to free speech. Further, the ruling undermines, though only in part, the "McCain-Feingold" election campaign finance reform law of 2002, as it removes the ban on corporate and union-sponsored "issue ads" in the late phases of campaigning. This law outlawed the broadcast, cable or satellite transmission of "electioneering communications" financed by corporations or labor unions. Untouched by the court in the recent ruling are the dollar limits for contributions in favor of candidates by individuals and political action committees. On behalf of the court's minority (alongside Breyer, Ginsbug and Sotomayor), Justice John Paul Stevens said the court had made a mistake in equating corporate speech to that of individual persons: "The difference between selling a vote and selling access is a matter of degree, not kind…and selling access is not qualitatively different from giving special preference to those who spend money on one's behalf." (Liptack)
President Obama called the ruling "a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans." President Obama came under fire, in 2009, when it was realized that Goldman Sachs, an investment securities firm under investigation for fraud, donated nearly $1,000,000 to his campaign efforts. The decision overrules both Austin v. Michigan Chamber of Commerce, the 1990 decision reinforcing restrictions on corporate spending to support or oppose political campaigns, and McConnell v. Federal Election Commission, which, in 2003, reinforced a section of the Bipartisan Campaign Reform Act of 2002 restricting the campaign spending of corporations and unions. President Obama offered strong criticism of the Supreme Court: (Washington Post)
With its ruling today, the Supreme Court has given a green light to a new stampede of special interest money in our politics. It is a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans. This ruling gives the special interests and their lobbyists even more power in Washington -- while undermining the influence of…