by Adam Winkler
As Brennan began drafting the opinion, he found himself in a quandary. He had originally proposed a narrow ruling, focused only on the “conclusive presumption”—the part of Massachusetts’s law that decreed individual tax measures off limits for corporations. Yet as he thought through the issue, Brennan became increasingly convinced that such a limited ruling would be an abdication of the court’s duty to provide a clear and final resolution to the controversy. First National would win this case but still remain uncertain if it could spend money to defeat the graduated tax measure. The two sides would soon be right back in court arguing over whether the measure was, in fact, material to First National’s business. In all likelihood, the case was going to return to the Supreme Court, where the justices would eventually have to decide whether and how states could restrict corporate spending on ballot measures.
A few weeks after the conference, Brennan sent around a note to the other justices expressing his view that the “constitutionality of the general ban” on corporate political expenditures “must also be decided.” Powell had been right at the conference to suggest the court reach that broader question. Yet unlike Powell, Brennan said he would go along with Justice White and vote to uphold Massachusetts’s ban in its entirety. Pointing to the Tillman Act prompted by Charles Evans Hughes’s investigation into the Great Wall Street Scandal of 1905, Brennan wrote, “Corporate spending as a corrupting influence in the political process has long been a national concern and has produced numerous corrupt practices acts, federal and state, ever since Theodore Roosevelt some 75 years ago urged their passage as necessary to curb the abuse to enhance representative democratic government.” As the justices in conference had agreed to decide the case on the narrower issue of the “conclusive presumption,” Brennan suggested that he was no longer the best person to write the opinion.55
Powell was incredulous, writing “Wow!” in the margins of his copy of Brennan’s memo. Yet Brennan had also provided Powell with an opportunity. Several days later, Powell circulated a note of his own. He agreed with Brennan that the justices should address the larger question of corporate speech rights but argued again for striking down the entire law. Powell’s note set out his view of the merits in detail and served as a none-too-subtle invitation to Chief Justice Burger to reassign the opinion to him.56
Burger complied and offered Powell the chance to write the court’s opinion. Powell, however, faced immediate challenges. Now that they were focused on the broad question of the political speech rights of corporations, justices began to peel off and side with Brennan and White. Thurgood Marshall, who argued for the rights of nonprofit membership corporations when he was with the NAACP, now agreed with the dissenters who thought business corporations could be restricted in their political spending. Burger, too, soon began to waver, as he was often known to do, and circulated a memo expressing reluctance about “taking any step which would undermine state and federal Corrupt Practices Acts,” like the Tillman Act. Moreover, Burger wrote, “It seems to me that there are differences between the First Amendment rights of an individual as compared with a corporate-collective body.” Corporate politics raised the problem that Brandeis had long ago identified as “other people’s money” corruption; stockholders, Burger complained, are “rarely, if ever” consulted before corporate money is spent on politics. Burger declined to say exactly how he would vote on the case, but it was looking increasingly as though there were four votes against Powell’s position. His majority was teetering.57
Then Powell received the alarming news that Rehnquist was going to vote with Brennan, White, Marshall, and potentially Burger. As Rehnquist’s opinion in the Virginia Pharmacy case had suggested, he was a states’ rights justice rather than a pro-business justice like Powell. Rehnquist had thought the case could be decided on narrower grounds, but now that the justices were focused on the broader question of whether states could ever prohibit corporate political speech, Rehnquist would side with Massachusetts. If Burger carried through on his threat to do the same, the vote would be 5–4 against Richard Hill, First National Bank, and Lewis Powell.
Desperate to save his majority, Powell attempted to turn Rehnquist. There was an unspoken camaraderie between the two Nixon appointees. They had gone through the confirmation process together, both having been nominated on the same day and sworn in on the same day. Powell thought he might be able to persuade Rehnquist of the importance of this issue to the future of free enterprise, and he sent a note requesting some time to talk. “As you are a man of reason (especially when you agree with me),” Powell offered with a touch of ingratiating humor, “I would like to have about a ten-minute ‘shot’ at you to amplify my arguments.” The outreach, however, proved unsuccessful, and two weeks later Rehnquist distributed a dissent arguing that corporations had no political speech rights under the First Amendment.58
Powell had to find a way to preserve his majority. There were now four solid votes against him—Brennan, White, Marshall, and Rehnquist—and the unreliable chief justice was on the fence. Powell also had reason to believe Blackmun was wavering now too. He had to come up with a way to frame his opinion to keep Burger and Blackmun on board.
Powell allayed the chief justice’s fears about undermining the Tillman Act and similar laws by adding language to his draft opinion that distinguished ballot measures from candidate elections. In an election for candidates, outside spending might be corrupting because the candidate who benefited might feel indebted to the spenders. A ballot measure campaign, Powell said, “presents no comparable problem” because there is no candidate involved. Although Powell’s distinction was questionable—ballot measure campaigns are often closely associated with particular candidates and elected officials, raising similar threats of indebtedness to funders—Burger was satisfied.
The indecisive and vacillating Blackmun required another approach. Especially during his early years on the Supreme Court, Blackmun was known for agonizing endlessly over his votes. It was not false modesty but a lack of confidence that led Blackmun to describe his own draft opinions as “feeble.” In the conference, Blackmun had expressed support for corporations having at least some free speech rights of a commercial nature, which was the logical implication of his own opinion in Virginia Pharmacy. Yet, as Powell noted in his file, Blackmun was “not fully persuaded” that the First Amendment prohibited states from restricting corporate political speech. Moreover, Blackmun’s clerk, who had written an early memorandum summarizing the case that was distributed to all the justices, suggested that states could legitimately restrict corporate political spending as a way to protect shareholders.59
Powell found a way to secure Blackmun’s vote by constitutional leveraging: he would exploit Blackmun’s earlier opinion in Virginia Pharmacy to keep him in the majority. From the beginning, Powell had seen this case as one about whether corporations had the same free speech rights as individuals. Yet it had become clear that such an argument would not likely command a majority. Virginia Pharmacy offered an alternative pathway to victory. Powell could make this case about the rights of listeners, not about the rights of corporations. Just as Virginia’s ban on advertising prescription drug prices interfered with the flow of commercial information to consumers, Massachusetts’s ban on corporate spending interfered with the flow of political information to voters. Although corporations had long been limited in making political expenditures, under Virginia Pharmacy the identity of the speaker was irrelevant. Despite the fact that Powell had indicated in the deliberations over Virginia Pharmacy that he did not believe that listeners had a “right to know,” he could nonetheless use Alan Morrison and Ralph Nader’s theory, developed in the context of individuals, to keep Blackmun’s vote and win broader rights for corporations.60
The idea to focus on the rights of listeners rather than the rights of corporations was apparently first suggested to Powell by Nancy Bregstein, one of his law clerks. Like many young women in the mid-1970s, Bregstein was wont to shatter glass ceiling
s. She had integrated Yale University as part of its first female undergraduate class and was graduated in 1973 magna cum laude. At the University of Pennsylvania Law School, she was the first female editor-in-chief of the law review. After her clerkship with Powell, she would go on to become one of only a handful of women partners in the major Washington, DC, law firms. Never one to shy away from a fight, she later founded CeaseFirePA, a group seeking to prevent gun violence, even as the gun rights movement was becoming one of the most powerful forces in modern American politics. Back in 1978, when she was clerking for Powell, Bregstein was one of only seven women among the court’s thirty-two clerks.61
In a memorandum to Powell in the First National Bank case, Bregstein wrote, “This case is very easy or very difficult, depending on one’s choice of a major premise. If one begins, as did the Massachusetts court, by placing predominant emphasis on the view that corporations are unique because of their artificial existence and their status as creatures of state law, it is not difficult to conclude that their rights are not infringed” by the law. That had been White’s view at the conference. “If, on the other hand, one conceives of the problem in terms of what is prohibited rather than who is guaranteed a certain right,” Bregstein continued, “then the fact that appellants are corporations takes on a different significance.” Under the latter view, the First Amendment protects speech about important matters of public policy “regardless of the identity of the speaker.” Bregstein’s argument was grounded in Virginia Pharmacy: ignore the identity of the speaker and focus on the substance of the speech and its potential benefits to the people who hear it.62
Powell wrote the court’s opinion in First National Bank of Boston v. Bellotti precisely along those lines. He left out any mention of corporations having the same free speech rights as individuals. In contrast to his personal notes, which identified the issue in the case as the “1st Amend. rts of corps.,” his opinion said the opposite: “The proper question therefore is not whether corporations ‘have’ First Amendment rights and, if so, whether they are coextensive with those of natural persons. Instead, the question must be whether [Massachusetts’s law] abridges expression that the First Amendment was meant to protect.” Because the law here restricted political speech valuable to the public at large, it was unconstitutional regardless of the identity of the speaker. “It is the type of speech indispensable to decisionmaking in a democracy, and this is no less true because the speech comes from a corporation rather than an individual.” The speech itself was protected: absent compelling reasons, the government could not deprive “this proposed speech of what would be its clear entitlement to protection.” Blackmun’s vote held—and Powell maintained his majority in the closely divided 5–4 decision.63
Powell’s opinion admitted that the right involved in the case, the freedom of speech, was a liberty right—exactly the sort of right the court in the Lochner era had said was inapplicable to corporations. Back then, the justices recognized corporations to have property rights but not liberty rights, and turned away the brewing companies who claimed they had a free speech right to spend their money to influence referendum elections. In the years since, however, corporations had won a growing share of liberty rights. Indeed, as Powell observed in his opinion, the justices had affirmatively rejected the idea that corporations were limited to property rights forty years earlier when they extended free speech protections to the Louisiana newspaper corporations in the Huey Long case, Grosjean v. American Press Company.
* * *
THE SUPREME COURT’S DECISION in First National Bank of Boston v. Bellotti would have surprised J. W. Sullivan, the crusading late nineteenth-century journalist who introduced Americans to the initiative and referendum process. Borrowing from Switzerland, Sullivan, a populist, thought that having citizens vote directly on proposed laws would diminish the power of the “great trusts and railroad corporations” that often dominated state legislatures. His 1892 book, Direct Legislation by the Citizenship, proposed ballot measures as the way “the American plutocracy might be destroyed,” and captured the attention of progressive activists—especially after the election of 1896, when Republican William McKinley used corporate money raised by Mark Hanna to hand a crushing defeat to William Jennings Bryan and the reform movement. Animated by the same desire to shield democratic politics from the influence of corporations that inspired the wave of laws banning corporate contributions to candidates in the wake of Charles Evans Hughes’s insurance investigation, direct democracy was adopted in twenty states before World War I. Ballot measures became popular as a way of skirting corrupted officials in order to further reforms like women’s suffrage, the eight-hour workday, and the breakup of monopolies.64
In the years after Lewis Powell led the Supreme Court to rule that corporations had a First Amendment right to speak and spend freely on ballot measures, this type of lawmaking became even more popular, with an average of forty referendums per year nationwide. Corporations, empowered with the same legal right to finance ads on ballot measure campaigns as individuals—yet benefiting from the special privileges that enabled them to raise unusually large amounts of capital—have become the loudest voices. In 2014, the top dozen contributors to ballot measure campaigns nationwide were corporations and business trade groups. Outspending opponents by margins as high as 16–1, as Monsanto Company did to defeat a Colorado measure requiring labeling of products with genetically modified organisms, business won 96 percent of its campaigns that year. The device that J. W. Sullivan imagined as the cure for corporate political influence had been transformed by Powell and the Supreme Court into another arena for corporations to dominate.65
The same year the Supreme Court decided Bellotti, Joseph Cullman, the tobacco executive who organized the extravagant multimedia tribute to Lewis Powell, stepped down after twenty years at the helm of Philip Morris. When Cullman took over back in 1957, Philip Morris had ranked dead last in sales among major American tobacco producers. By the time he retired in 1978, however, the company was second only to R. J. Reynolds, which Philip Morris would soon overtake. The company’s turnaround was almost entirely due to Cullman’s imaginative rebranding of a single cigarette that Philip Morris had long marketed to women without much commercial success. Cullman directed future campaigns to aim for male consumers by featuring rugged, virile men like cowboys. Before long, Marlboro cigarettes were among the best-selling products in the world and Cullman was being called “the most successful tobacco merchant since Buck Duke.”66
Powell similarly enjoyed great success, profoundly shaping the law both before and after his appointment to the Supreme Court. When he wrote the Powell Memorandum in 1971, the law was moving in the progressive direction of Ralph Nader, and business interests were on the defensive. Yet Powell’s passionate cri de coeur gave voice to the prevailing fear within the business community—and offered detailed, comprehensive solutions. Powell, who was born in 1907 just as Teddy Roosevelt was signing into law the Tillman Act banning corporate contributions to candidates, would transform America’s political and corporate landscape by the time he passed away in 1998 at the age of 91. The Reagan Revolution of 1980, which was built around the vision articulated in the Powell Memorandum, ushered in a conservative era committed to free markets, small government, pro-business tax policies, and deregulation of industry. The shift was so profound that it shaped the agendas of both major political parties. In the early 1990s, Democrats, fearful after losing five of the previous six presidential elections, also adopted more centrist, business-friendly rhetoric in an effort to regain their Election Day competitiveness.
One of Powell’s most lasting influences was on the role of business advocates before the Supreme Court. Following the Powell Memorandum’s suggestion, the Chamber of Commerce established its own law firm, the National Chamber Litigation Center (NCLC) in 1977, just as the Bellotti case was wending its way up through the courts. With the motto, “In the Case of The Government v. Business, NCLC Is Your Strongest Ally,�
� the Chamber’s litigation arm fought for free enterprise the way Ralph Nader and Alan Morrison’s Public Citizen Litigation Group fought for consumers. The NCLC filed cases and amicus briefs seeking to restrict class actions, limit punitive damages, curtail environmental regulation, and make it harder for employees to sue for discrimination—and became the nation’s most influential business-oriented legal advocacy group. Today, the organization wins nearly 70 percent of its Supreme Court cases. Carter Phillips, a Washington lawyer who has argued scores of cases in the nation’s highest court, says that no private entity “has more influence on what cases the Supreme Court decides and how it decides them than the National Chamber Litigation Center.”67
Indeed, the battle between Powell and Nader is still carried on in the Supreme Court, in cases pitting the NCLC against Public Citizen. In 2007, the two litigation outfits faced off in a lawsuit brought by a man who suffered serious complications when a catheter manufactured by Medtronic burst during an angioplasty procedure. The injured patient sued Medtronic for marketing a defective product and the company, backed by the NCLC, argued that the suit should be thrown out of court because federal regulators had approved the catheter for sale. Although Nader and Morrison had long since left Public Citizen, the organization was still representing consumer interests and handled the patient’s appeal, arguing that lawsuits such as his were the “sole means of obtaining compensation for injuries caused by medical devices.”68