by Adam Winkler
In the decades that followed, the freedom of the press would become one of the hallmarks of American law and politics. Yet rarely acknowledged is that it was corporations that were behind many of the earliest and most important cases; newspaper companies like the Louisiana media corporations were constitutional first movers whose cases invigorated constitutional protections that would also be enjoyed by individuals. When the Supreme Court issued its ruling in 1964 establishing the right to criticize public figures without fear of libel, the First Amendment claim was asserted by the New York Times Company. In 1971, when the justices held that President Richard Nixon could not stop publication of the classified Pentagon Papers, the constitutional claimant was not leaker of the documents Daniel Ellsberg but the New York Times Company and the Washington Post Company. The right to a free press was certainly not limited to media corporations but, unlike most individuals, newspaper companies and broadcasters had the resources to litigate whenever new restrictions were imposed. As A. J. Liebling of The New Yorker quipped, “Freedom of the press is guaranteed only to those who own one.”39
Though well known for its impact on First Amendment law, Grosjean also marked a turning point in the history of corporate rights. For the first time in American history, the Supreme Court held that corporations have the right to freedom of speech and freedom of the press under the Constitution. Corporations no longer only had property rights; they also had a right associated with liberty. Indeed, they were treated as valuable participants in America’s democratic debates—a vision of the corporation that would appear again in the Supreme Court’s opinion in Citizens United.
CHAPTER 8
Corporations, Race, and Civil Rights
IN THE EARLY TWENTIETH CENTURY, THE SUPREME COURT began to focus on civil liberties in response to the persecution of socialists like Jacob Abrams and the silencing of newspapers like Charles Manship’s Capital City Press. By mid-century, the court, under the leadership of Earl Warren—often named alongside John Marshall as the greatest chief justices in American history—had finally begun to embrace a commitment to racial equality to match its commitment to free speech. Racial minorities, as much as if not more than political dissenters, needed the judiciary to protect them from the tyranny of the majority. The civil rights movement provided the court with the opportunity to more fully realize Harlan Fiske Stone’s proposal from Carolene Products to recast the court as a bulwark against the persecution of minorities. At the same time, the civil rights movement also led the Warren court to expand the constitutional protections for corporations, affording at least some of them another liberty right they had previously been denied—the freedom of association.
Corporate rights became entangled with the civil rights movement in 1956, when elected officials across the South determined to aggressively persecute civil rights activists, especially the National Association for the Advancement of Colored People. Founded in 1909 by famed African American scholar W. E. B. DuBois and others, the NAACP had already made considerable headway by the time of the crackdown. Brown v. Board of Education, decided two years earlier, promised to end segregated public schools. The Montgomery bus boycott of 1955, triggered by longtime NAACP member Rosa Parks’s refusal to move to the back of a city bus, brought widespread condemnation of Jim Crow. Integrationists had gained the political and legal momentum, and reactionaries decided it was time to put the nation’s leading advocate of civil rights out of business.1
Of course, the NAACP was not a business. Yet it was organized as a corporation, a nonprofit membership corporation under New York law. It was the NAACP’s status as a corporate entity that Alabama and its young, ambitious attorney general, John Patterson, tried to use to destroy the organization. Patterson was elected to that post in 1954 after his father, Albert Patterson, the original Democratic nominee, was gunned down for promising a crackdown on organized crime. The son ran in his father’s place, and turned his attention to the equally popular (and much less dangerous to himself) issue of fighting racial integration. His strategy paid off, and within four years he was elected governor of Alabama on an anti–civil rights platform.2
Alabama was a central battlefield in the war over racial equality. The bus boycott triggered by Parks propelled a 26-year-old local pastor at the Dexter Avenue Baptist Church in Montgomery into the national limelight and a leadership position in the movement; Martin Luther King Jr. would also write his momentous Letter from Birmingham Jail (1963) behind Alabama bars. Civil rights protestors would bravely cross the Edmund Pettus Bridge in Selma, where their bold activism was met with brutality. White terrorists in Alabama bombed the homes of activists Ralph Abernathy, E. D. Nixon, and King, along with the Sixteenth Street Baptist Church, killing four girls attending Sunday school. Freedom Riders were attacked with pipes and bats in the state, their bus set on fire. Often the violence was at the hands of government officials, like Eugene “Bull” Connor, the Birmingham public safety commissioner who sicced German Shepherds and trained fire hoses on marchers.
The Alabama attorney general’s war against the NAACP began in 1956, Patterson’s first year in office. He filed a lawsuit charging the organization with failing to register as a “foreign” corporation. Under Alabama law, out-of-state corporations doing business within the state were required to file with the government a copy of their articles of incorporation and designate a local agent to receive legal documents. The NAACP had never filed these documents in the belief that the rules did not apply to a nonprofit, and officials had never before requested them. Although the organization offered to register and fulfill the requirements, which were really no burden at all, Patterson asked a state court to order the NAACP to also turn over a list of its members. The ostensible reason was to enable the attorney general’s office to more fully investigate the NAACP’s activities in Alabama but many speculated the real motive was to intimidate the organization’s members, who faced potential violence if identified.3
JOHN PATTERSON ARGUED THAT THE NAACP DID NOT HAVE THE FREEDOM OF ASSOCIATION BECAUSE IT WAS A CORPORATION.
In places like Alabama, the local courts could not be counted on to protect discrete and insular minorities from persecution, and the NAACP was ordered to turn over its membership list. When the organization refused, it was held in contempt and fined a crippling $100,000. The NAACP, led by legendary attorneys Thurgood Marshall and Robert Carter, turned to the Supreme Court for relief, arguing that the organization had a constitutional right to freedom of association. In the Lochner era, the Supreme Court had refused to extend this right to corporations, be they businesses like Western Turf Association, which tried to exclude competitors from its horse tracks, or schools like Berea College, which fought to maintain an integrated student body in the face of Jim Crow. The NAACP would succeed where those other types of corporations had failed. Its victory would safeguard the nation’s most vital civil rights organization from persecution, and also win for corporations—at least nonprofit corporations—the protections of another liberty right under the Constitution.
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CAN A CORPORATION BE BLACK? If corporations like the Louisiana newspapers persecuted by Huey Long could be political outcasts, could corporations also be ascribed a racial identity? At first, the question sounds absurd. Corporations are legal fictions, devices created by people to achieve certain goals such as making money. Even if corporations might usefully be thought to be “persons” for some legal purposes, viewing them as having a race or an ethnicity seems to take the metaphor too far. Supreme Court justice Hugo Black, whose views on corporations and the Constitution would shape the corporate rights jurisprudence of the mid-twentieth century, likely gave voice to a commonplace sentiment when he wrote, “Corporations have neither race nor color.”4
In a nation whose history is so intimately tied up with race and color, however, it was inevitable that questions about the racial identity of corporations would arise. The first known cases came in the Jim Crow era. The South’s obsession with sepa
rating the races led to any number of inanimate objects being deemed to have a race; courts “recognized and gave countenance to black blood, black churches, black cemeteries, black books (even Bibles), and much more,” according to legal scholar Richard Brooks. When African Americans in the South began to earn enough money to start their own incorporated businesses around the end of the nineteenth century, the courts were forced to decide whether those corporations were black too.5
The People’s Pleasure Park Company was one such corporation. Owned by Joseph P. Johnson, a former slave who rose to the upper echelon of Virginia’s African American society through service in the state’s black militia, the company opened a popular amusement park for people of color outside of Richmond in 1906. Whites who lived nearby were upset that Johnson’s amusement park brought so many African Americans into their community and sought to shut it down. They sued, pointing to the racially restrictive covenant in the deed for the park’s land, which prohibited sale to “a person or persons of African descent” or any other “colored person.” Such covenants became commonplace in the early twentieth century as one of the primary ways to enforce residential segregation. Although the Supreme Court of the United States would rule in 1948 that such deed restrictions were unconstitutional, the People’s Pleasure Park case arose in the Virginia Supreme Court forty years earlier, when the neighbors sought to use the racially restrictive covenant to annul the sale of the land to Johnson’s company.6
One might expect the justices of the Virginia Supreme Court to have viewed this case through the lens of Jim Crow. It came before them in 1908, when racial lines were hardening in the South and the gains from Reconstruction were being stripped away. The Supreme Court had given constitutional imprimatur to racial segregation a decade earlier in Plessy v. Ferguson. Laws banning interracial marriage were being enacted, as were laws requiring separate schools and literacy tests to vote. White racial resentment was feeding a surge in lynching and other forms of antiblack violence. Within a few years of the People’s Pleasure Park case, the growing oppression would lead to the Great Migration, as southern blacks moved in large numbers to northern cities.
At the turn of the century, hostility toward minorities was not only aimed at African Americans, of course; white minorities, whether ethnic or religious, often confronted a government insensitive to their rights. Indeed, not too long before the People’s Pleasure Park case, the Supreme Court of the United States had decided another corporate rights case with undertones of discrimination. The law at issue in The Late Corporation of the Church of Jesus Christ of Latter-Day Saints v. United States, decided in 1890, was a federal law dissolving the Mormon Church, which had been organized as a religious corporation. Citing the unlawful practice of polygamy, Congress revoked the church’s charter of incorporation and authorized the seizure of all the church’s property, save for houses of worship. The church and several of its members, including George Romney—a distant relative of future presidential candidate Mitt Romney—challenged the law. At the time, Utah was not yet a state, and the court upheld the law on the basis of Congress’s broad powers to regulate the territories. If that was the formal reason for the decision, the informal one was the justices’ anti-Mormon biases. Describing polygamy as a “repugnant” and “nefarious . . . blot on our civilization,” the court opined that any “organization of a community for the spread and practice of polygamy is, in a measure, a return to barbarism.”7
The justices of the Virginia Supreme Court could easily have manifested a similar enmity to Johnson’s “colored” amusement park. Yet the court, even though it upheld racial segregation in numerous other cases, unexpectedly ruled in favor of the People’s Pleasure Park. The Virginia jurists were not struck by a bolt of racial egalitarianism. Rather, they ignored the deed restriction because of corporate law, coupled with concerns about disrupting creditor contracts. Relying on “general principles relating to the legal nature of corporations,” the court explained that the People’s Pleasure Park Company was “a legal entity distinct from the persons composing it.” The “one important fact” in the case, the court explained in a way that evoked the Taney court precedents, was that “in the eye of the law” the corporation had an “existence separate and distinct from the individual or individuals composing it.” Johnson’s company, in other words, was clearly a legal person: its own, separate, legally identifiable entity that was not reducible to its members. Simply because the corporation’s owner and customers were black did not make the corporation a “colored person.”8
The Virginia court did something the Supreme Court of the United States has only occasionally done in constitutional law cases involving corporations by embracing the principle of corporate personhood. The court said that the identity and rights of the Park’s owner do not determine the scope and nature of the corporation’s rights. Corporations were entities with their own rights and their own legal identities. And although Jim Crow courts declined to ascribe a race to corporations, by the end of the twentieth century the law would indeed allow corporations to be black.
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WHEN THE NAACP FACED OFF against Alabama’s John Patterson a half-century after the People’s Pleasure Park case, the issue was not the race of corporations but their rights. Even the famed Supreme Court advocate Thurgood Marshall, like Horace Binney, Daniel Webster, and Delancey Nicoll before him, would argue for recognizing new rights for corporate entities.
Few, if any, lawyers in American history enjoyed more success than Marshall and his chief deputy, Robert Carter. In 1944, four years after founding the NAACP’s Legal Defense Fund, Marshall hired Carter fresh out of military service and Howard Law School, where Carter had been mentored by Marshall’s mentor, Charles Hamilton Houston. Together, Marshall and Carter developed and implemented the litigation strategy that brought down the doctrine of separate but equal. Although Marshall, who went on to become the first African American solicitor general and first African American Supreme Court justice, may be better remembered today, Carter’s contributions to the NAACP’s civil rights work were immeasurable. Carter was only thirty-three when he made his first Supreme Court argument; he briefed and argued parts of Brown; and he won a series of landmark race cases after succeeding Marshall as general counsel of the NAACP. Carter, like Marshall, would also be appointed to the federal bench, serving with distinction on the United States District Court in New York for forty years.9
In the Alabama case, NAACP v. Alabama ex rel. Patterson, Marshall and Carter argued that forcing the NAACP to reveal its membership list would violate the constitutional rights of both the corporation and its members. The organization claimed that the NAACP had “its own right of freedom of association” that would be infringed by the mandated disclosure. Like the Louisiana newspaper companies that distinguished themselves from ordinary business corporations by citing the special role of the press in a democracy, Carter and Marshall argued that the NAACP was unique too. Unlike a profit-maximizing business, the NAACP was a “political organization” that “seeks to influence public opinion and affect the political structure to achieve its objectives.” Although a corporation, the NAACP was truly a voluntary membership organization operating in the public interest.10
THURGOOD MARSHALL (FOURTH FROM LEFT) AND ROBERT CARTER’S (SECOND FROM LEFT) FIGHT AGAINST RACIAL SEGREGATION LED THEM TO DEFEND THE RIGHTS OF NONPROFIT CORPORATIONS.
While the NAACP’s lawyers highlighted how the entity was different from an ordinary corporation, Patterson emphasized the ordinariness of the NAACP’s corporate status. Referring to the NAACP over and over again as “the corporation,” Patterson emphasized that it was subject to state supervision like all other corporations. Because the NAACP was a corporation, it did not have any right of freedom of association that might allow it to keep its membership list secret. “A corporation, being an artificial entity, is subject to the restraints of the police power more than a natural person and has fewer rights,” Patterson argued. With a nod to Grosjean, Pa
tterson insisted that while the “rights of a corporation” might include the “freedom of the press,” they “do not include freedom of association” or “a right of privacy.” Indeed, in the Western Turf Association case, the Supreme Court had held that corporations did not have associational freedoms.11
Marshall and Carter highlighted how the NAACP was a victim of political persecution, not unlike the newspaper companies targeted by Huey Long. The NAACP, too, was being harassed for challenging government orthodoxy. “This case cannot be properly considered without being viewed against the background and setting in which it arose,” Marshall and Carter’s brief argued. The NAACP’s victory in Brown required racial integration of schools and, in response, “Alabama officials have committed themselves to a course of persecution and intimidation of all who seek to implement desegregation.” “The truth is that Alabama seeks, in these proceedings, to silence petitioner and its members” and “eradicate opposition” to Jim Crow. Rather than viewing the NAACP as a corporation, Marshall and Carter saw the NAACP as one of the political dissenters Justice Harlan Fiske Stone had worried about in his Carolene Products footnote.
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ONE JUSTICE WHOSE VOTE the NAACP could usually count on was Hugo Black, whose diminutive size and southern manners could easily obscure his forceful personality and dogged determination. Given his background, Black’s frequent votes in favor of the NAACP were surprising to many. Prior to his nomination to the Supreme Court in 1937 by fellow New Dealer Franklin Roosevelt, Black had been a member of the Ku Klux Klan. Although the revelation of his Klan membership almost derailed his chances, once on the bench Black became, as his obituary in the New York Times observed, “a champion of civil rights and liberties.”12