by Adam Winkler
At Yale, Strine pointed to the “obvious differences between flesh and blood citizens and corporate citizens.” Corporations lack “the capacity or inclination to think and act like a human being with the full range of human concerns.” For Strine, this was not a matter of metaphysics; it was a basic principle of corporate law. “Corporations must put profit first under the predominant corporate law in the United States, that of my own state, Delaware.” Indeed, ever since the Dodge brothers sued to stop Henry Ford from pursuing policies to benefit employees and the broader public without regard to stockholders, the law required that all corporate activity be designed in the long run to enhance profits. Officers had to obey that legal mandate or risk being held in violation of their fiduciary duties to the corporation. As a result, corporations are not truly “free” in the way that individuals can be. A person can choose her own values, preferring to prioritize personal wealth, social welfare, the environment, or law and order. A corporation, however, is legally obligated to prioritize profit, at least in the long term. Corporate law purports to prohibit corporations from exercising the very autonomy often thought to be essential to rights of political participation and religious liberty.13
As Strine neared the end of his talk, he said that he was “going to finish—and you’ll be glad to hear the word ‘finish,’ ” he said with a wry smile, by asking whether the recent decisions of the Roberts court were just examples of “this is the balls and strikes, as a certain judge said? Or does it evidence judges willing to depart from principles of restraint and move the law in a direction they think is better for society?” Given the Constitution’s silence on the issue of corporations, Strine’s question was one that could have been asked of all the corporate rights cases dating back to the early 1800s.
* * *
THE MORA COUNTY COMMISSION meets in a small, drab, prefabricated office off Highway 518 in a remote part of northern New Mexico. Although the temporary structure serves as the seat of government for this small community (population 4,881), the parking lot is unpaved and it sits next door to a dilapidated house with boarded-up windows. The entrance to the prefab is marked with a hand-painted wooden sign that says “Mora County Court House” in bright, slightly uneven letters. In May of 2013, John Olivas, the chairman of the commission, stood out in front of the sign talking to a reporter from an international news agency. Although the foreign press rarely took an interest in the doings of tiny Mora County, Olivas and the other commissioners had made headlines earlier that spring when they enacted the nation’s first countywide ban on fracking, the controversial drilling technique believed to cause earthquakes and water pollution. “Approximately ninety-five percent of the people in our community don’t want oil and gas,” Olivas explained to the journalist. “They want to protect the water. They want to protect the air. They want to protect the environment.”14
Olivas, the main sponsor of the ordinance to ban fracking, was tall and lean, with a boyish face that masked his stubborn resolve. He came from hardy stock; his family was among the earliest settlers of this high-mountain outpost back in 1835 when it was still part of Mexico, and they fought against the US takeover in 1848. An outfitter by trade, Olivas often went into the Pecos Wilderness alone to hunt 700-pound elk with only a bow and arrow. With the fracking ban, however, Olivas and the Mora County Commission had taken aim at more formidable quarry. Not only were they targeting the wealthy oil and gas companies that owned mineral leases to more than 30,000 acres of land in the county, they were also seeking to overturn Citizens United and indeed the entire two-hundred-year line of Supreme Court cases establishing constitutional rights for corporations.
THE MORA COUNTY COURTHOUSE IN NEW MEXICO.
“For well over a century now, corporations have used those ‘rights’ to stop efforts, like ours, which seek to use local lawmaking to protect our communities from harmful corporate activities,” said Olivas. Citing recent lawsuits brought by businesses to challenge laws requiring the labeling of dairy products and regulating the siting of cell phone towers, Olivas insisted that “our lawmaking authority as ‘we the people’ has been largely eliminated.” With a populist tone that harkened all the way back to Thomas Jefferson and Roger Taney, Olivas warned that “private corporations have been granted increasing power to dictate the future of our communities.”
Olivas’s ordinance, titled the “Mora Community Water Rights and Self-Governance Act,” declared that the oil and gas companies who wanted to frack in the county had no constitutional rights. “Corporations in violation of the prohibitions enacted by this ordinance, or seeking to engage in activities prohibited by this ordinance [such as fracking], shall not have the rights of ‘persons’ afforded by the United States and New Mexico Constitutions, nor shall those corporations be afforded rights under the 1st or 5th amendments to the United States Constitution or corresponding sections of the New Mexico Constitution, nor shall those corporations be afforded the protections of the commerce or contracts clauses within the United States Constitution or corresponding sections of the New Mexico Constitution.” Instead, the ordinance endorsed a different set of rights: the local residents’ “right to water,” “right to a sustainable energy future,” and “right to self-government.”
When the Mora County Commission first met in the prefab to deliberate over Olivas’s bold, populist measure, they were carrying on a tradition that traced directly back to the Virginia Company and the first legislative assembly in Jamestown. Although separated by four centuries and nearly two thousand miles, both the colonists and the Mora County commissioners were small, desperate communities seeking to assert some control over their environment. Yet the world had changed so much in the intervening years. Jamestown was a fragile corporate outpost in the vast expanse of America, the Virginia Company quite literally the only corporation on these shores. By 2013, however, corporations had become the dominant form of business enterprise and were pervasive in every corner of America—even little Mora County, a tiny outpost whose people were attempting to assert what they saw as their last vestiges of popular sovereignty.
Like the colonists of Jamestown, the people of Mora County faced daunting odds. While flush with a fighting spirit, Mora County lacked the resources to be able to compete with the oil and gas giants, such as the subsidiary of Royal Dutch Shell that filed suit in January of 2014 to challenge Olivas’s ordinance. The annual budget of Mora County was reported to be less than $1 million, while Shell was the sixth largest company in the world and had annual revenues of over $270 billion.
By filing suit to protect its rights in federal court, the Shell subsidiary corporation, like the Mora County Commission, was also carrying on a tradition—one that went back to Horace Binney, the Bank of the United States, and the first corporate rights case. The Bank was the first corporation to use the federal courts to challenge a local law; its victory established the precedent that, even though the text of the Constitution guarantees the right to sue in federal court only to “Citizens,” corporations enjoyed that right too. Chief Justice John Marshall’s decision in Bank of the United States v. Deveaux would be the germinal seed of more than two centuries of corporate rights cases—up to and including the Shell subsidiary’s lawsuit against Mora County.
The Shell subsidiary claimed Olivas’s ordinance denied the company a number of corporate constitutional rights. The law denied the corporation the right of access to federal court by prohibiting corporations seeking to engage in fracking from having any legal right to challenge the law in any tribunal, state or federal. The ordinance was said to violate the company’s property rights—an argument that would have been appreciated by Daniel Webster. The company further argued that the ordinance violated the company’s rights to equal protection and due process under the Fourteenth Amendment, 130 years after Roscoe Conkling deceived the Supreme Court in pursuit of those same rights for the Southern Pacific Railroad. Mora County’s ordinance, the company said, was “motivated by animus” and was “directed at a
politically unpopular group,” similar to Huey Long’s advertising tax, Alabama’s persecution of the NAACP, and, according to Citizens United, campaign finance laws restricting corporate spending.
The oil company’s constitutional arguments were anything but innovative; this corporation was not a constitutional first mover. The Supreme Court had extended all of these constitutional protections to corporations. Those decisions came from an institution that for much of its history has leaned decidedly in favor of business—often under the leadership of influential justices, like Stephen Field and Lewis Powell, who were committed to expansive rights for corporations. At the same time, corporations have also won constitutional rights when their cases became caught up in larger political controversies or jurisprudential shifts, such as the civil rights movement or the rise of modern free speech doctrine. It was, ironically, the New Deal and Warren courts that extended to corporations rights of “liberty” that the famously business-friendly Lochner court had rejected.
Judge James Browning, the federal judge who presided over the challenge to Mora County’s fracking ban, was no stranger to the oil business. During his summers in college he worked in the oilfields, and his father had been an employee of Texaco. Yet Browning was passionate about the law. He traced his inspiration to a book about John Marshall that he found in the fourth grade, when as a young, voracious reader Browning set out to read every book in the local public library. The book recounted in depth the Dartmouth College case, celebrating Marshall’s opinion that established the constitutional status of corporations as private entities. Browning went to law school at the University of Virginia, located about 125 miles from Jamestown, and then clerked on the Supreme Court for Justice Lewis Powell four years after the landmark Bellotti decision. The Shell subsidiary, however, did not need Browning to take after his corporationalist mentor and expand the rights of corporations in order to win. The law was already on the company’s side.15
In January of 2015, Judge Browning struck down the Mora County ordinance. His decision rested largely on the most controversial of corporate constitutional rights: freedom of speech. Mora County’s ordinance unconstitutionally purported to strip away the First Amendment rights of any corporation “seeking to engage” in fracking, Browning ruled. A century ago, when the federal courts were turning away free speech cases brought by brewing companies seeking to stem the rising tide of Prohibition, the ordinance might have been upheld. Back then, the federal courts insisted that corporations had rights of property but not rights of liberty. In the years since, however, the Supreme Court had gradually recognized corporations to have ever-greater protections under the First Amendment, beginning with the Louisiana newspapers in the 1930s. By the time of the Mora County case, the justices had afforded corporations broad rights of political and commercial speech too. In light of this clear line of precedent, Browning had little choice but to invalidate the ordinance.
“It is well established, however, that corporations have constitutional rights,” Browning explained. “To find support for the long history of corporate constitutional rights, the court needs to look no further than” Mora County’s own briefs, which listed “numerous cases in which the Supreme Court recognized” such protections. “The Defendants’ argument that corporations should not be granted constitutional rights, or that corporate rights should be subservient to people’s rights, are arguments that are best made before the Supreme Court—the only court that can overrule Supreme Court precedent—rather than a district court.” Corporate constitutional rights were a product of Supreme Court decisions and so, absent a constitutional amendment like the one proposed by Occupy Wall Street, only the justices could declare an end to them.16
The justices would not have the opportunity to reconsider the long, complicated history of corporate rights in the Mora County case. The lawsuit by the Shell subsidiary worried many local residents, who feared that defending the law and paying damages and legal fees to the company could bankrupt the already impoverished county. Six months after the lawsuit was filed, John Olivas lost his bid for reelection to the county commission, which subsequently decided not to appeal Browning’s ruling. The effort to turn back the remarkably successful corporate rights movement would have to wait for another day—and another, more deep-pocketed challenger who, like the wealthy and powerful corporations that fought to gain constitutional rights over the course of American history, could afford the costs of litigation.
Nearly two hundred years ago, in one of the very first corporate rights cases, Chief Justice Marshall wrote, “A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law.” In so many ways, the corporation has remained invisible in constitutional law ever since. Although corporations have won the lion’s share of constitutional protections, the corporate rights movement has remained largely unnoticed by the public at large—despite many of the cases being high-profile controversies that drew considerable public attention contemporaneously. The Supreme Court has contributed to the cloaking of the corporation by looking right through the corporate form and basing the rights of the corporation on the rights of the people associated together within it. While calling corporations “people,” the justices have usually rejected the core principle of corporate personhood: the independent legal standing of the corporation, with rights and duties separate and distinct from those of its members.
Lawyers and historians have extensively studied the civil rights movements for racial minorities, women, and others, making those stories central to our understanding of the Constitution and of America itself. Corporations, too, have had a civil rights movement of sorts. Although Citizens United and Hobby Lobby brought new public attention and scrutiny to corporate rights, long before those controversial cases were decided corporations had already taken their place among We the People.
ACKNOWLEDGMENTS
ONE BENEFIT OF A BOOK THAT TAKES TOO MANY YEARS to write is that the deliberate pace offers the chance to discuss the ideas and stories with a large number of people. I am indebted to the insights offered and inspired by Steve Bainbridge, Tamara Belinfanti, Joan Biskupic, Josh Blackman, Margaret Blair, Sam Bray, Rick Brooks, Judge James Browning, Devon Carbado, Wah Chen, David Ciepley, Jeff Clements, Mitchell Duneier, Garrett Epps, Jason Epstein, Andreas Flexner, David Gans, Nancy Gordon, Malcolm Harkins III, Dan Klerman, Russell Korobkin, Naomi Lamoreaux, Jessica Levinson (for the title), Ajay Mehrotra, Judith Miller, Hiroshi Motomura, Doug Nejaime, William Novak, Karen Orren, Tamara Piety, Kal Raustiala, Sergio Alberto Gramitto Ricci, Larry Rosenthal, David Savage, Lynn Stout, Eugene Volokh, the participants in the Corporations and American Democracy convening of the Tobin Project, the participants in the Corporations as Legal Persons: Taking Entity Status Seriously workshop, and the students in my 2013 and 2015 Constitutional Theory seminars at UCLA School of Law. I will forever be indebted to the friends who read the manuscript and pushed me to make it better, including Ryan Azad, Stuart Banner, Stephen Breyer, Kent Greenfield, Rick Hasen, David Leyva, Louis Marshall, Darrell Miller, Alan Morrison, Frank Partnoy, Elizabeth Pollman, Richard Re, Ed Renwick, Ganesh Sitaraman, Irwin Winkler, Margo Winkler, and James Zagel.
A veritable army of librarians and research assistants helped me uncover the wealth of detail necessary to tell the story of corporate rights, and this book would not have been possible without Amy Atchison, Thomas Cochrane, Stephanie Der, Robert Double, Meredith Gallen, Daniel Gibbons, Lucy Jackson, Katherine Kamlowsky, Sarah Levesque, Sam Moniz, Nicole Nour, Jaqi Schock, Terry Stedman, Vicki Steiner, Zachary Taylor, Stephanie Thomas-Hodge, Amy Takeuchi Wanlass, and Brooke Zarouri. A special thanks to Linda O’Connor, who keeps me well stocked in extremely well-trained research assistants. Elsa Duong, Cheryl Kelly Fischer, and Rebecca Fordon were tireless in finding and securing the rights to images. My two assistants, Rusty Klibaner and Sherry Yuan, were unfailingly helpful with organizational details. Deans Jennifer Mnookin and Rachel Moran of the UCLA School of Law provided the f
unds necessary to finance my research.
The final chapters benefited immensely from interviews with Jim Bopp, Michael Dukakis, Trevor Potter, John Paul Stevens, Leo Strine, and others; each graciously gave their time and memories. Lynn Nesbit, my superb agent, guided me through the process of writing this book from beginning to end. At W. W. Norton & Company, Marie Pantojan provided needed assistance at every turn, and Ed Klaris gave his thoughtful legal advice. No one did more than my fantastic editor Bob Weil to improve the manuscript and sharpen the history.
One final note of gratitude to two special people who shape everything I do, Melissa Bomes and Dani Winkler. My love for you is boundless.
CHRONOLOGY OF CORPORATE RIGHTS
BEFORE THE CONSTITUTION
300 BC: Societas Publicoranum – The Romans invent this early version of the corporation to enable groups of people to hold property together.
1607: Jamestown – The Virginia Company founds England’s first permanent colony as a business venture.
1610: Sir Thomas West – The largest shareholder of the Virginia Company arrives in Jamestown and saves the colony.
1619: Jamestown Assembly – The Virginia Company, under the leadership of Sir Edwin Sandys, institutes the first representative assembly to encourage investment in the colony.
1629: Massachusetts Bay Company – The corporation receives a corporate charter that bears a striking resemblance to the future Constitution.
1650: President and Fellows of Harvard College – America’s oldest living corporation (business or otherwise) is incorporated.