We the Corporations

by Adam Winkler

  Sotomayor, following the example of Justice Hugo Black, the most vocal opponent of corporate rights in the history of the Surpeme Court, asked Floyd Abrams if the problem was the very idea of corporate rights. The Framers of the Constitution did not set out to give rights to corporations; the courts were the ones who expanded corporate freedoms. “There could be an argument made that that was the court’s error to start with,” she suggested, “not Austin or McConnell, but the fact that the court imbued a creature of state law with human characteristics.” No, said Abrams, the court was correct to extend free speech to corporate entities. Political speech of the sort Citizens United wanted to engage in was “at the core of the First Amendment.” The court in cases like Virginia Pharmacy had held that speech should be protected if its content is valuable to listeners, regardless of the identity of the speaker.

  That Abrams, who was ideologically committed to a laissez-faire approach to speech, would attack the corporate money provisions of the Bipartisan Campaign Reform Act was no surprise. On behalf of the ACLU and others, he had consistently fought campaign finance laws as unduly restrictive of free speech. The ACLU, for instance, had been one of the primary challengers to the federal campaign finance laws in Buckley v. Valeo. Olson, however, was in the awkward position now of challenging provisions of a statute that he had previously defended before this very court in the McConnell case. As a result, he made claims to the justices that were directly contradicted by his own previous statements before the court.

  In the Citizens United case, Olson told the court that the Bipartisan Campaign Reform Act was a “ban on speech by corporations.” “What the government has done here is prohibit speech,” he insisted. In McConnell, however, Olson said precisely the opposite, insisting then that the Bipartisan Campaign Reform Act “does not ‘ban’ any speech, but instead merely limits the manner in which a corporation or labor union may finance certain speech” by requiring PAC funding. In the Citizens United case, Olson said “there is no evidence that corporate and union independent expenditures” are corrupting, and criticized the government for being “unable to point to any congressional finding that corporate expenditures result in the corruption of legislators.” In McConnell, by contrast, Olson had described the “massive record” compiled by Congress that “establishes that federal office-holders and candidates are aware of and feel indebted to corporations and unions that finance electioneering advertisements on their behalf.” In the Citizens United case, Olson argued that the Bipartisan Campaign Reform Act provisions were “a dramatically underinclusive means” of combatting corruption. In McConnell, Olson had said the same provisions were a “carefully ‘targeted’ ” and “narrowly tailored” means to “directly advance compelling government interests in eliminating real and apparent corruption.” Olson’s performance in the Citizens United case gave ample ammunition to those who called the elite members of the Supreme Court bar hired guns.55

  When it was time for Kagan to address the court, she began by saying she had “three very quick points to make about the government position. The first is that this issue has a long history,” she said, pointing to the Roosevelt-era Tillman Act. “For over a hundred years Congress has made a judgment that corporations must be subject to special rules when they participate in elections, and this Court has never questioned that judgment. Number 2. . . . ” “Wait, wait, wait, wait,” Justice Scalia interrupted, welcoming her to the lightning fast pace of oral arguments at the Supreme Court. As lawyers quickly learn, you rarely have time to make three points, even very quick ones, before a justice will stop you with a question.

  Kagan’s success in making all three of her points did not really matter. She was going to lose anyway, and she knew it. She tried to persuade the court to take a narrow route similar to the one originally proposed by Olson and merely carve out an exception for the Hillary movie instead of overturning the corporate money provisions in their entirety. In response to a question by Roberts, Kagan was left to reply, “If you are asking me, Mr. Chief Justice, as to whether the government has a preference as to the way in which it loses, if it has to lose, the answer is yes.” Even here, however, the outcome was a foregone conclusion. The justices had already decided the government was going to lose—and corporations were going to win—big.

  * * *

  THE AIR WAS FREEZING and the sky overcast on the morning of January 21, 2010, when David Bossie arrived at the Supreme Court to hear how the court had ruled in the Citizens United case. He came without Ted Olson, who was in California litigating the gay marriage case. Bossie could be reasonably certain of victory, although the exact shape of the court’s ruling remained to be seen. From his perspective, the oral argument had certainly gone well. Yet even though Bossie was not a lawyer, he knew that oral argument could be misleading and the behind-the-scenes deliberations among the justices could result in surprising and unexpected rulings.

  Precisely such deliberations after the first hearing in the Citizens United case had led the justices to order another round of oral argument. After the second hearing, though, there was little left for the justices to negotiate. Justice Kennedy reworked the concurring opinion that he and Justices Alito, Scalia, and Thomas had written months earlier, turning it into a majority opinion with Chief Justice Roberts’s support. Justice Stevens adapted Justice Souter’s scathing draft dissent into one on behalf of himself and the three other dissenters, Justices Ginsburg, Breyer, and Sotomayor. Stevens borrowed so much from his retired colleague’s unpublished opinion that he originally included a footnote acknowledging the debt, although it was removed before the dissent was published.

  THE JUSTICES OF THE SUPREME COURT WHO DECIDED CITIZENS UNITED. STANDING, LEFT TO RIGHT: SAMUEL ALITO, RUTH BADER GINSBURG, STEPHEN BREYER, SONIA SOTOMAYOR. SITTING, LEFT TO RIGHT: ANTHONY KENNEDY, JOHN PAUL STEVENS, JOHN ROBERTS, ANTONIN SCALIA, CLARENCE THOMAS.

  When Bossie took his seat in the courtroom, however, all that backstage maneuvering remained a secret. After the marshal called the court to order and the justices filed in through the break in the tall red velvet curtains behind the bench, Justice Kennedy began to summarize the court’s ruling. The breadth of Kennedy’s corporationalist decision quickly became clear. Corporations and unions, Kennedy explained, had a First Amendment right to make expenditures in elections for candidates for political office. The corporate spending restrictions of the Bipartisan Campaign Reform Act, by burdening this right, were unconstitutional in their entirety. Kennedy also revealed that the court had overturned Austin and McConnell, the two most important precedents for restricting political speech by corporations.56

  Given the public uproar that Citizens United would eventually provoke, perhaps the most surprising thing about the decision was what it omitted. For as Kennedy read out loud from his opinion, not once did he mention corporate personhood. He never said that corporations are people, and nothing in his opinion turned on the notion. Corporate personhood—the idea that a corporation is an entity with rights and obligations separate and distinct from the rights and obligations of its members—is entirely missing from the court’s opinion. The court afforded broad free speech rights to corporations, but not because they were people. Instead, like many of the earlier corporate rights cases, the Citizens United decision obscured the corporate entity and emphasized the rights of others, like shareholders and listeners.

  Citizens United repeatedly described the corporation as “an association that has taken on the corporate form.” “If the First Amendment has any force,” Kennedy read out loud from the opinion, “it prohibits Congress from fining or jailing citizens or associations of citizens for simply engaging in political speech.” By treating corporations as associations, Citizens United echoed the two-centuries-old argument of Horace Binney, the young, creative lawyer who argued the earliest corporate rights case, Bank of the United States v. Deveaux. Calling a corporation “a mere collection of men,” Binney had persuaded the Supreme Court back then to look past the corporate en
tity, to pierce the corporate veil and focus on the rights of the corporation’s members. Rather than treating the corporation as a legal person with rights of its own, both Deveaux and Citizens United—and many cases decided in the interim—allowed corporations to assume the rights of other people, namely the corporations’ members.

  Not only were corporations associations of citizens rather than independent legal persons, the Supreme Court in Citizens United suggested these associations were being persecuted. The court described corporations as “disfavored speakers” and criticized the Bipartisan Campaign Reform Act for threatening to penalize “disfavored associations of citizens—those that have taken on the corporate form” for making political expenditures. This portrayal of corporations as a sort of discrete and insular minority subjected to discriminatory and hostile legislation had its roots in the corporate rights cases of the mid-twentieth century. The Supreme Court had recognized the right of Louisiana’s newspaper corporations to freedom of the press after the companies had been singled out for punitive, censorial taxes by Huey Long. The court subsequently responded to southern efforts to shut down the NAACP because of its ideology by recognizing the organization’s right to freedom of association. Justice Kennedy's opinion in Citizens United similarly imagined corporations, even big business, to be victims. Although corporations are usually thought to be among the most powerful and influential players in American politics, Citizens United’s view that corporations should not be subject to political persecution by a hostile government was not entirely new.57

  Citizens United also reflected the listeners' rights theory of free speech Justice Lewis Powell had used to justify extending political speech rights to corporations in Bellotti. As the Citizens United decision explained, “The First Amendment protects speech and speaker, and the ideas that flow from each.” The Bipartisan Campaign Reform Act restricted political speech, the most valuable form of expression under the First Amendment, and thus was unconstitutional. “Political speech is indispensable to decision-making in a democracy and this is no less true because the speech comes from a corporation rather than an individual.” Here the Supreme Court was following the listeners’ rights theory of the First Amendment first proposed by Ralph Nader’s Public Citizen Litigation Group in the Virginia Pharmacy case and then applied to corporate speech in ballot measure campaigns by Powell. If the speech was valuable, then it was protected regardless of the identity of the speaker. The Constitution, according to Citizens United, forbade the government from “distinguishing among different speakers, allowing speech by some but not others.”58

  Finally, Citizens United was consistent with the law-and-economics perspective on the superfluousness of laws designed to protect shareholders articulated by Justice Scalia’s dissent in Austin v. Michigan Chamber of Commerce. With regard to corporate political activity, Citizens United said, there is “little evidence of abuse that cannot be corrected by shareholders through the procedures of corporate democracy.” Although the court did not elaborate, the reference was clearly to shareholders’ ability to vote for directors and shareholder proposals. Because shareholders could control the political activity of their corporations through board elections or via shareholder proposals to prohibit management from making political expenditures, there was no need for government regulation to protect them. Besides, as Scalia had previously argued, dissatisfied shareholders could simply sell their shares.

  After reading from his opinion summary for about nine minutes, Justice Kennedy concluded and turned the floor over to Justice Stevens to read from the dissent.* Other justices had written opinions too; Chief Justice Roberts and Justice Scalia, for example, wrote separate concurrences to defend their votes against the inevitable charges against them: that Roberts, the consensus-builder, had abandoned minimalism, and that Scalia, the originalist, had extended rights to corporations the Framers never imagined. Yet justices can choose whether to read from their opinions in open court, and only Stevens responded to the majority’s decision.

  The 90-year-old jurist, with his flash of white hair and baritone voice, spoke haltingly, pausing often and fumbling his words. (He would later say that his trouble reading aloud his Citizens United dissent that day was a factor in his decision to retire from the court the following summer.) Yet there was no mistaking Stevens’s passion. He read for over twenty minutes, and although his tone was measured his words carried over the anger and frustration of the now-retired Justice Souter. “I must emphatically disagree with today’s all-changing decision,” Stevens declared.59

  One of the majority’s most significant mistakes was to suggest “the First Amendment absolutely and categorically prohibits any regulation of speech that distinguishes on the basis of the speaker’s identity, including its identity as a corporation.” In fact, Stevens, who had served on the court for thirty-five years, observed that over the course of his long tenure the court had often considered the speaker’s identity in free speech cases. Just a few years earlier, in 2007, the same five justices in the Citizens United majority upheld special restrictions on the speech of public school students. Back then, Chief Justice Roberts had endorsed the principle that “the constitutional rights of students in public school are not automatically coextensive with the rights of adults” and admitted that “the same speech” in another setting “would have been protected.” In a 2006 case, the Roberts court had similarly held that government employees had more limited speech rights than ordinary people. “The Government routinely places special restrictions on the speech rights of students, prisoners, members of the Armed Forces, foreigners and its own employees,” Stevens noted. If the identity of the speaker were irrelevant, then foreign governments and foreign corporations had the exact same right to influence American elections as citizens of the United States. Stevens, who had served as a naval intelligence officer during World War II, warned, “The Court’s new rule would have accorded propaganda broadcast to our troops by Tokyo Rose . . . the same threshold protection as a speech by General MacArthur.”60

  When it came to political speech about elections, Stevens noted that the law had always made identity-based distinctions. The Internal Revenue Code, for example, completely prohibits organizations formed under section 501(c)(3), such as charities and churches, from engaging in any electoral advocacy. Yet a social welfare organization formed under 501(c)(4) is entitled to engage in a moderate amount of political campaigning so long it is not the organization’s “primary” function. The First Amendment has never been thought to prohibit these long-standing differences in how the law treats these distinct types of organizations, even when it comes to restrictions on core political speech.61

  The Supreme Court itself would affirmatively endorse a clear identity-based distinction in federal campaign finance law less than two years after the Citizens United decision insisted the identity of the speaker was irrelevant. In 2012, the court in Bluman v. Federal Election Commission summarily affirmed a lower court ruling that had upheld a ban on political contributions and spending by foreign nationals residing in the United States. Because it was a summary affirmance, the justices did not publish an opinion explaining their reasoning. Indeed, the decision might have been hard to explain. The lower court held that, although foreign nationals within the country have many of the same rights as citizens, the “government may exclude foreign citizens from activities intimately related to the process of democratic self-government.” Just as foreign nationals, on the basis of their identity alone, could be barred “from voting and serving as elected officers . . . [i]t follows that the government may bar foreign citizens . . . from participating in the campaign process that seeks to influence how voters will cast their ballots in the elections.” Had Citizens United applied that same logic to corporations, which cannot vote in federal elections or serve in elected office, the case might well have come out differently.62

  In Citizens United, Justice Stevens accused the majority of unbridled judicial activism. Echoing Souter’s earlie
r criticism of the majority for reaching out to decide questions none of the advocates had even raised, Stevens proclaimed, “While the court tells us that we are asked to reconsider Austin and McConnell, it would be far more accurate for them to say, ‘We have asked ourselves to reconsider those cases and to do so without the benefit of any evidentiary record that might shed light on the issues that the court addresses.’ ” The Citizens United decision, according to Stevens, was “a radical change in the law,” breaking from long-standing tradition that dated back to Charles Evans Hughes, the Great Wall Street Scandal, and the Tillman Act. In Stevens’s written dissent, the justice expanded on the accusation, even deploying the chief justice’s words against him: “The majority has transgressed yet another ‘cardinal’ principle of the judicial process: ‘If it is not necessary to decide more, it is necessary not to decide more.’ ”

  Judicial activism is often just a label given to court rulings someone opposes. In Citizens United, however, the charge was not without justification. The court’s majority had finessed the case so the justices could decide a major constitutional issue that had not originally been briefed and argued by the parties. The court had also struck down key provisions of a law passed by Congress, and in doing so overturned McConnell, a precedent that was less than seven years old. What had changed in the intervening years? Not much more than the personnel on the court.