We the Corporations

by Adam Winkler

  Around the same time Morrison was strategizing his consumer rights lawsuit, Martin Redish, a recent law school graduate aiming to become a law professor, published a law review article offering a similar, listeners’ rights theory of the First Amendment. In the first half of his article, Redish argued that Valentine was wrongly decided and that commercial advertising, like political and artistic expression, was socially valuable. As Morrison would do in the pharmacy case, Redish argued that commercial speech provided consumers with essential information in the easiest, most accessible way. “Since advertising performs a significant function for its recipients, its values are better viewed with the consumer, rather than the seller, as the frame of reference.” The identity of the speaker was irrelevant; it was the listeners’ rights that mattered. If Morrison had discovered Redish’s article, he would have found helpful reasoning and perhaps even a few citations he could have used in his briefs in Lynn Jordan’s case.27

  He would also have found a bright, bold red flag warning of the dangers inherent in a listeners’ rights theory of free speech. The second half of Redish’s article illustrated how this way of thinking about the First Amendment would apply to a number of current controversies, including the recently enacted federal law prohibiting tobacco advertising on television. Redish admitted that, under his approach to the First Amendment, the question was close. While recognizing the public health justifications behind the law, Redish also argued that consumers had a right to hear any truthful information the tobacco companies had to share. If so, then perhaps the ban on tobacco advertising was unconstitutional. Redish’s article provided an ominous sign of how the law might develop—and who exactly would benefit—if the Supreme Court accepted the listeners’ rights theory.

  * * *

  BY THE TIME MORRISON’S case arrived at the Supreme Court in 1975, everyone involved understood that much more than prescription drug ads was at stake. For Morrison, who planned to challenge bans on lawyer ads later, the pharmacy case was about establishing the consumer’s right to know. Virginia, meanwhile, defended the ban as part of the long-standing tradition of state regulation of the professions designed to protect consumers; were this ban to fall, Virginia’s lawyers argued, it would cast doubt on any number of laws governing how lawyers, doctors, dentists, and others solicit clients. Both sides claimed to be helping consumers—even as the case would, in the end, mostly help corporations.28

  While Morrison hoped the justices would articulate broad principles that could be deployed in his next case, he also wanted to win this one. That meant keeping the justices focused on drug ads rather than the more controversial issue of lawyer ads. Morrison repeatedly emphasized the narrowness of the issue before the court. “There is only one question,” he told the justices, “and that is the constitutionality of the Virginia statute which prohibits the advertising of the price of prescription drugs.” Justice Byron “Whizzer” White knew better. White, who earned his memorable nickname as a professional football player—he led the National Football League in rushing in 1938 as a running back for the Pittsburgh Steelers franchise—was a force on and off the bench. Off the bench, he was known for his rough play on the basketball court located surprisingly on the top floor of the Supreme Court Building. (Clerks dutifully called White “the best player on the highest court in the land.”) On the bench, he asked tough questions and, although appointed by liberal president John F. Kennedy, was impossible to pigeonhole ideologically. He opposed abortion rights, gay rights, and, as we will see, corporate rights. “I suppose your next case is going to involve advertising for lawyers,” White suggested to Morrison. Just as Morrison was about to answer, however, White uncharacteristically let Morrison off the hook. “That’s all right,” White said knowingly, “you don’t have to answer that one.”29

  When the court issued its opinion in Virginia Pharmacy Board v. Virginia Citizens Consumer Council in May of 1976, the vote was 7–1 in favor of Morrison. (As it has more recently, the Supreme Court then was operating with only eight justices; William O. Douglas, a liberal icon appointed by Franklin D. Roosevelt, had retired from the court the day after oral argument in Morrison’s case.) The majority decision was written by Justice Harry Blackmun, one of the four Nixon appointees. Blackmun was in his fifth term on the court and was already well on his way to becoming somewhat of a liberal icon himself as the author of the 1973 majority opinion in Roe v. Wade. That decision, however, which is today often criticized as liberal judicial activism, was not reflective of the general tilt of Blackmun’s jurisprudence in his early years on the court. He and the conservative chief justice Warren Burger were known as the “Minnesota Twins,” in part because they were lifelong friends from St. Paul, but also because they voted together in lockstep. In those first five terms on the court, Blackmun voted with Burger in 87 percent of the closely divided cases and with the liberal William Brennan in only 13 percent.30

  Blackmun’s opinion in Virginia Pharmacy appeared, like Roe, to be a liberal decision, one that would help consumer rights activists like Nader. Blackmun heartily embraced Morrison’s novel listeners’ rights theory of the First Amendment. Even without a pharmacist whose own speech was restricted, the First Amendment “protection afforded is to the communication, to its source and to its recipients both.” A consumer like Lynn Jordan had an “interest in the free flow of commercial information” that “may be as keen, if not keener by far, than [her] interest in the day’s most urgent political debate.” This was especially so for “the poor, the sick and particularly the aged,” who spent a disproportionate amount of their income on prescription drugs. The First Amendment’s guarantee of free speech is “enjoyed by the appellees as recipients of the information, and not solely, if at all, by the advertisers themselves.” The court held that commercial advertising was constitutionally protected—and, in doing so, insisted that the identity of the speaker was irrelevant.31

  Following Morrison’s lead, Blackmun characterized the ruling as narrow. Although the court was overturning Valentine and adopting a potentially expansive new theory of the First Amendment, Blackmun took pains to point out that some “forms of commercial speech regulation are surely permissible.” False and deceptive commercial speech could be limited, and Blackmun also said that commercial speech deserved less protection than political speech. In answer to White’s question at oral argument, Blackmun included a footnote saying the decision should not be read to call into doubt advertising bans by other professionals, like physicians and lawyers.

  Lewis Powell was not one to lean instinctively in favor of Ralph Nader and Public Citizen, and he explicitly disagreed with the listeners’ rights theory of the First Amendment. During deliberations in the pharmacy case, Powell jotted down in his case file that “there is no Const[itutional] right to know.” The First Amendment was about protecting the rights of speakers, not the rights of listeners. Yet Powell also thought the advertising restrictions on pharmacists were foolish, and many other conservatives were starting to agree. The Nixon administration was pursuing a broad agenda of deregulating the nation’s airlines, banking, and telecommunications industries, and saw the advertising ban in that same light. Two weeks after oral argument in Morrison’s case, the administration filed its own suit to strike down a drug price advertising ban as an unlawful restraint of trade under federal antitrust law—similar to the claims brought against the American Tobacco Company and the Tobacco Trust back in the early 1900s. Meanwhile, newspapers reported that Nixon’s Federal Trade Commission was considering new rules to require pharmacists to publicize their prices. Despite Powell’s clear trepidation about the listeners’ rights theory, he cast his vote with the majority to invalidate the drug price advertising ban.32

  The lone dissenter in the case was Justice William Rehnquist, another Nixon appointee, and he saw the case as anything but narrow. With longish hair and thick, mutton chop sideburns, Rehnquist looked like one of the counterculture radicals Nixon railed against rather than the strict, states’
rights conservative he was. Rehnquist, in fact, had spent most of his career involved with the Supreme Court, clerking for Justice Robert Jackson in the 1950s, vetting judicial nominees for the Nixon administration, and serving on the court himself for thirty-three years, the last nineteen as chief justice. His approach to cases involving corporate rights was evocative of another chief justice, Roger Taney. On this issue at least, both were populists who thought states should have broad leeway to regulate business and who opposed expansive constitutional rights for corporations.33

  “The logical consequences of the court’s decision in this case are far-reaching indeed,” warned Rehnquist. Not only would the court’s ruling inevitably “extend to lawyers, doctors, and all other professions,” it would also lead to “active promotion of prescription drugs, liquor, cigarettes, and other products.” In a prescient passage, Rehnquist predicted that pharmaceutical companies would soon be hawking their drugs directly to consumers: “Don’t spend another sleepless night,” he predicted the ads might say. “Ask your doctor to prescribe Seconal without delay.” Rehnquist also saw the red flags that Martin Redish, the aspiring law professor, had highlighted in his article on commercial speech. Although consumers might be helped in this one case, the court’s ruling would nonetheless call into question a wide variety of laws regulating “existing commercial and industrial practices” beyond advertising. Rehnquist’s dissent in Virginia Pharmacy would turn out to be one of the most farsighted opinions in the history of the Supreme Court.

  Never one to agree with Rehnquist, the New York Times hailed Nader and Morrison’s case as “a significant victory for consumers.” The two progressive activists agreed, with Morrison expressing satisfaction with the majority’s sweeping listeners’ rights theory of the First Amendment, which he said would likely lead to other advertising bans, such as those on lawyers, being struck down. Indeed, the very next term, the justices adhered to the logic of Virginia Pharmacy and invalidated a ban on lawyer advertising. Although Morrison was not the lawyer behind the lawyer ad case, he was nonetheless thrilled with the result; Nader and Morrison had always hoped the pharmacy case would have a broad impact.34

  And it did. The case was arguably the last great victory for consumer rights in the 1970s, a legal swan song, as Nader and the progressive Left were quickly being overtaken by a mounting conservative backlash. Over the next two decades, the doctrine created by Virginia Pharmacy would rarely be used by consumers like Lynn Jordan but would be invoked instead by tobacco companies challenging restrictions on tobacco advertising; gaming interests seeking to overturn restrictions on television and radio ads for casinos; the liquor industry in an effort to invalidate laws limiting alcohol advertising; and dairy producers hoping to defeat requirements to disclose the use of synthetic growth hormones. And, as we will see, the decision was also used to justify the extension of political speech rights to corporations even before Citizens United. By 2011, the impact of Public Citizen’s drug advertising lawsuit was recognized to be so contrary to consumer interests that Robert Weisman, the president of Public Citizen, called for the entire line of commercial speech cases to be overturned. It was a poignant, First Amendment version of buyer’s remorse.35

  * * *

  IN 1976, THE YEAR Virginia Pharmacy was decided, the Ad Council, an organization that produced and distributed public service announcements, launched a major initiative to “create greater understanding of the American economic system.” The Ad Council had been the creative force behind some of the most iconic advertising campaigns of the twentieth century: the “Loose Lips Sink Ships” ads to support World War II bonds; the “Smokey the Bear” ads on wildfire prevention; and “The Mind Is a Terrible Thing to Waste” ads for the United Negro College Fund. With financial support from what the Ad Council described as a “who’s who in American business,” the new multimillion-dollar campaign to defend free enterprise, which included television ads, newsletters, and educational materials for schools, was a direct outgrowth of Lewis Powell’s memorandum to the Chamber of Commerce.36

  When it was first written, the Powell Memorandum was marked “confidential,” intended only for the leaders of the Chamber of Commerce and perhaps a small group of Powell and Sydnor’s friends. The memo did not become public until many months after Powell’s confirmation when, in September of 1972, Jack Anderson, the legendary columnist for the Washington Post, received a leaked copy and wrote an explosive piece about it. Calling the memo “so militant that it raises a question about [Powell’s] fitness to decide any case involving business interests,” Anderson hoped the American public would rise up against the court’s newest justice. Anderson’s column, however, had a very different result: it led the Chamber to publicize the letter widely, which in turn inspired corporate America to rise up against Nader and the reform movement.37

  DETAIL OF THE AD COUNCIL’S MARKETING CAMPAIGN TO PROMOTE FREE ENTERPRISE TO AMERICA’S YOUTH.

  The impact of the memorandum was felt quickly. Within a year of Anderson’s column, a Chamber of Commerce task force could plausibly claim, “Millions of Americans—including many prominent business executives—have read it” and “hundreds of thousands of copies have been circulated.” The Chamber enthusiastically endorsed Powell’s call to arms, as did business tycoons like Joseph Coors, John M. Olin, and Richard Mellon Scaife, in addition to major American corporations like U.S. Steel, General Electric, Dow Chemical, and Kraft. One sign of the new political orientation of industry was the growth in the number of corporations with “government affairs” lobbyists in Washington, which surged over 500 percent between 1968 and 1978.38

  The Powell Memorandum touched off what one historian called “an explosion of efforts to recast Americans’ understanding of business and economics and to rehabilitate the public image of corporations.” In this war of ideas, a central role was played not only by the Ad Council but also think tanks devoted to free-market principles and reduced government regulation, such as the Heritage Foundation (1973), the Cato Institute (1974), and the Manhattan Institute (1978). Although founded earlier, the American Enterprise Institute grew from a staff of 19 and a budget of $879,000 in 1970 to a staff of 135 and a budget of over $10 million in 1980. With financing from business interests, the think tanks did for corporations what Nader’s Raiders did for consumers. They gathered information, analyzed it, and publicized it to the public and to lawmakers to influence legislation. The main difference was that when Nader’s Raiders went their separate ways as the reform movement slowed in the mid-1970s, the conservative and libertarian think tanks were growing stronger and soon flourished.39

  Spurred by the memorandum, the Chamber of Commerce revamped itself to become one of the most influential lobbying organizations in Washington. That the Chamber would play such an overtly political role would have outraged its first president, a Chicago lawyer named Henry A. Wheeler. Originally founded as a government agency to facilitate information sharing between lawmakers and industry, the Chamber was privatized in 1912 with the blessing of President William Howard Taft, the brother of Tobacco Trust prosecutor Henry Taft. Wheeler doggedly kept the Chamber out of partisan politics. When President Taft asked the Chamber to support his reelection bid, Wheeler refused, insisting on the need to preserve the organization’s neutrality. The Chamber, Wheeler said, “will not, I trust, ever in its history become a lobbying organization.” When Powell was writing his memo in the summer of 1971, the Chamber had a large membership but remained politically moribund. As one vice president put it, the Chamber had “no muscle either in the executive branch or on Capitol Hill.”40

  WRITTEN MONTHS BEFORE LEWIS POWELL WAS NOMINATED TO THE SUPREME COURT, THE POWELL MEMORANDUM WOULD HELP INSPIRE AND SHAPE THE POLITICAL REVITALIZATION OF CORPORATE AMERICA.

  Powell’s memo triggered a complete overhaul of the Chamber’s approach to politics—and, more broadly, ushered in a new era in which business lobbyists would come to dominate lawmaking in Washington. The Chamber established its own think
tank, the National Chamber Foundation, to publish pro-business research. It began a series of public education campaigns to defend free enterprise, even hiring Hanna-Barbera Studios, the makers of the popular primetime cartoons The Flintstones and The Jetsons, to create animated public service announcements promoting capitalism to children. The Chamber also mimicked Nader’s style of grassroots lobbying to mobilize business. With a network of 2,800 state and local chambers and over 200,000 business firm members to generate telephone calls, letters, and editorials, the Chamber developed into “one of the best grassroots lobbying organizations in America.” The Chamber’s politics became increasingly hostile to regulation, opposing proposals for healthcare reform, campaign finance law, consumer protection laws, and environmental legislation. Its politics were also more partisan, with the overwhelming majority of the Chamber’s activity going to help Republicans. In 2012, the Chamber devoted $58 million to election campaigns and—in stark contrast to Wheeler’s prediction—more than $135 million to lobbying; no organization in the country besides the political parties themselves spent more on politics.41

  Washington politics would also be reshaped by the Business Roundtable, founded in 1972 on the basis of the Powell Memorandum and “in the belief that business executives should take an increased role in the continuing debates about public policy.” Bryce Harlow, a Procter & Gamble representative who came to be known as “unofficial dean” of Washington lobbyists, recalled that, due to the social welfare regulation of the Nader era, “the danger had suddenly escalated. . . . We had to prevent business from being rolled up and put in the trash can” by Congress. Harlow, along with the chief executives of Campbell Soup, U.S. Steel, General Electric, and Alcoa, recruited an exclusive membership of Fortune 500 CEOs to launch what an early consultants’ report called a “total attack program.” In addition to funding pro-business publicity campaigns in Reader’s Digest, the most popular magazine in the country, the Roundtable launched an innovative government relations strategy that made it, according to one source, “the most powerful lobby in Washington.” Instead of sending paid representatives like Harlow to meet with members of Congress, the Roundtable would send CEOs from the nation’s largest companies. As one staffer acknowledged, lobbyists could be “shunted over to a legislative assistant. But the chairman of the board is going to get to see the senator.”42