Sotomayor Issues Challenge to a Century of Corporate Law

http://online.wsj.com/article/SB125314088285517643.html

by tvon • 17 years ago

39 49 17 years ago

online.wsj.com

alain940402• 17 years ago

Let's go with the current situation of corporations having similar rights to people.

I'd like to make this proposal: when a corporation dies (goes bankrupt), it should be treated as murder. If the CEO is responsible for killing that corporation, shouldn't he go to jail?

That would put an interesting twist on corporate responbilibity.

timdellinger• 17 years ago

I always wondered if corporate personhood meant that corporations would lose some of their their rights if convicted of a felony. And are corporations eligible for tougher sentencing under "three strikes you're out" legislation? If a corporation kills someone, is the death penalty a possibility? It seems like corporate personhood gives the benefits of being a real person, but without all of the responsibilities or negative consequences.

wglb2• 17 years ago

If the corporation is convicted of a felony, it should lose the right to vote, right?

m_eiman2• 17 years ago

I'd like to see a corporation put in jail, or equivalent. Maybe prevent it from doing any business for the duration of the sentece.

8plot• 17 years ago

Or put under government control, and profits go to the people for the length of the sentence.

logic• 17 years ago

The entire concept of "criminal liability" as pertains to corporations has always confused me. You can't effectively sentence a corporation to anything, you can only sanction it by enforcing (typically monetary) reparations, or by dissolving the corporation in extreme circumstances.

There's a reason that, when it comes to criminal acts committed on behalf of a company, individuals are the ones that go to jail: THEY committed a crime, whether they did it to help their organization or not.

The idea of corporate person-hood a perfect example of a (very) leaky abstraction

njharman• 17 years ago

This gets to the root of the issue. Corporations have the rights of people but none of the responsibilities and few and weaker penalties for doing wrong.

They "buy" politicians and their money and power provide huge voices with which to drown out views they do not like.

Can't die, don't go to jail, hard to regulate, suing them just gets rid of some of the employees/executives the corp goes back to doing whatever it can get away with. Bankruptcy is rarely fatal

wsprague• 17 years ago

This makes me very happy! A lot corporate nastiness has remained unregulated due to arguments based on the tenet (ridiculous, in my view) that corporations should be afforded the same rights as human beings.

chasingsparks• 17 years ago

I don't follow law very much. What nastiness has been perpetuated by corporations as the result of corporate personhood?

mynameishere• 17 years ago

I second this question. As soon as corporations stop having 1st amendment protections, Fox News is going to have trouble putting Glenn Beck (or the bogeyman du jour) on the air. I can't conceive of any other (real) reason for this...

hristov2• 17 years ago

I have to agree with Sotomayor here. And mind you, I am not anti-business at all. I think corporations should have the same "business" rights as people. They should be able to enter into contracts, sue for non-performance, and generally have all the economic rights and protections of a person.

But rights like freedom of speech just do not make sense for corporations. They are based on purely human considerations which are just non-existent for fictitious entities. We know that a human being feels oppressed if he/she cannot speak his/her mind. But does a fictitious entity? Of course not. Note that all the actual human beings that are part of the corporation (i.e., stockholders, employees, directors, etc.) have their own free speech rights and can exercise free speech as long as they make it clear they are not speaking on behalf of the corporation.

sp3323• 17 years ago

If corporations are only afforded business rights, what sort of organization could acquire freedom of speech? If a group of people would like to make a joint statement, do you think they should each have to sign the document? Do governments have the right to say what they like, or would every citizen have to sign each law, treaty, and declaration of war?

roc3• 17 years ago

What groups? None.

The whole point is that people are people, whereas their organizations are not them, nor are they free willed individuals on their own.

There's no need for an organization to be immune from censure or regulation when its constituents are all themselves immune.

If the government decides corporations shouldn't be able to pay for political advertising or host fund-raisers, then the corporation's constituents are free to speak out such measures, vote against them, run against the incumbent politicians, etc.

The rights of sovereign governments is a red herring. They have an implicit ability to do whatever they like, either because:they are democratically elected and their actions subject to review and reversal by their citizens' votes; or they rule by force and the will of their citizens is irrelevant.

hristov2• 17 years ago

Just because a corporation does not have rights of free speech under the 1st amendment does not mean that all of its speech rights should be destroyed. They can just be controlled in some ways for the public good as allowed by law.

Thus, an organization should have the right to speech and to voice its opinions, but those rights can be controlled for the public good, for example by laws that prohibit them spending too much money for campaigns or requiring them to identify themselves when buying TV ads.

And of course any organization can fall back on the first amendment rights of its members -- thus as you mentioned they can have all their members sign a document or have them all go to a demonstration, etc. I don't see anythign wrong with this system.

wglb2• 17 years ago

Wait--when a person goes bankrupt, nobody is charged with murder, so I am not following the argument here.

bokonist6• 17 years ago

The employees and the shareholders of the corporation have the right, not the corporation itself. In practice though, this is the same thing.

Note that all the actual human beings that are part of the corporation (i.e., stockholders, employees, directors, etc.) have their own free speech rights and can exercise free speech as long as they make it clear they are not speaking on behalf of the corporation.

No, this is wrong. A person has the first amendment right to speak on behalf of whomever or whatever they please.

billswift2• 17 years ago

Then I assume you believe corporations should be immediately stripped of all media outlets like the NYT, WSJ, WaPo, ABC, NBC, CNN, MSNBC, and so on? Otherwise, you are just saying some corporations should have first amendment rights (those that own presses) and others shouldn't.

jcdreads• 17 years ago

That people have the same legal rights as people is known as the "doctrine of corporate personhood." An indie film from a few years ago explored what _kind_ of person a corporation would be is here:

http://www.thecorporation.com/

(spoiler: a sociopath)

vannevar3• 17 years ago

I'd say putting corporations on the level of a sociopath is giving them undue credit. Their level of intellectual sophistication is probably more on the level of an insect. It makes no more sense to apply human rights to corporations than to honeybees. Both are indispensable to modern society, but we don't talk about the free speech rights of honeybees.

The reason is that people confuse the corporation with its component members, ie its personnel because the corporation can't be visualized the way a bee can. As such visualizations become more common, I think people will see more clearly that giving corporations human rights is ludicrous.

That isn't to say that we shouldn't give them certain privileges, but the power to regulate a for-profit corporation should be absolute, since it owes its existence to a government charter in the first place.

tptacek• 17 years ago

See, here's an article that is clearly about the politics of corporate law, and not about corporate law. It spends more time reading tea leaves about what one question could mean for the balance of the court re corporate standing than it does talking about the impact of that re-balancing one way or the other.

Flagged.

hughprime4• 17 years ago

Does anyone know the law with respect to free speech rights of other non-corporation groups of individuals? For instance: labor unions, churches, charities, "community organizing" organizations... hell, political parties? Are these groups presumed to have free speech rights that extend from the free speech rights of their members, or is the government allowed to restrict them?

bokonist6• 17 years ago

In my humble opinion, everyone is wrong in this article - Sotomayor, Butler, Marshall.

A corporation should not be considered a person in and of itself. A corporation is a contractual agreement between people over the ownership of property. This was the original understanding of a corporation, until the courts started creating this weird, and wrong, personhood doctrine. A corporation should not have rights - a corporation is a contract - the idea of a contract having rights is non-nonsensical.

But Sotomayor is also wrong. The people running the corporation, and the people owning the property do have rights. Just as Arthur Sulzberger has first amendment right to hire people to speak for him, shareholders of a corporation have a first amendment right to hire people to speak for them. The government has no right to restrict the freedom of speech of employees or shareholders of a corporation.

asdfqwersdf• 17 years ago

The idea that a corporation should be reduced to a contractual agreement strikes me as problematic.

Since corporations necessarily have contracts with other entities and a contract as an entity can't be a party to another contract, then your corporation would have to somehow specify a process for employees to hold contracts in proxy.

Also, a corporation that's just a contract between individuals can't provide any protection from lawsuits by people who aren't employees or shareholders.

Certainly there's a place for the kind of construct you're talking about, but it seems to be fundamentally incompatible with anything remotely similar to the way business is structured today.

misuba• 17 years ago

Corporations as they're structured today may not be contract-like, but they certainly aren't person-like either. I hope a high court or two finds the cojones to admit this and stop trying to do legal code by analogy.

bokonist6• 17 years ago

That's exactly what a corporate charter is. It's the shareholders delegating the management and contracts associated with a piece of property to a process determined by the corporate charter.

Also, a corporation that's just a contract between individuals can't provide any protection from lawsuits by people who aren't employees or shareholders.

The contract can protect from lawsuits by creditors. When a creditor loans to a limited liability company, the creditor knows that he only has recourse to the funds pledged to the corporation. He can not claw back into the shareholders personal funds. Again, it's a matter of voluntary contracts. If the creditor wants that right, he can explicitly demand that the shareholders pledge their own assets as part of the terms of the contract. ( in fact, that's exactly what banks do when lending to very small businesses).

But an LLC designation should not protect from criminal liability. Shareholders should be held to the normal standards of criminal culpability for the actions of the management. A shareholder who knowingly profits from the management committing criminal acts should be held to the same level of guilt as anyone who knowingly profits from criminal acts.

anigbrowl4• 17 years ago

Sotomayor has not suggested such rights don't exist - how you drew that conclusion, I cannot understand - and the WSJ's summary of proceedings seems misleading to me.

The transcript is at http://www.supremecourtus.gov/oral_arguments/argument_transc... and I urge people to read it. The relevant portion is as follows:

JUSTICE SOTOMAYOR: Going back to the question of stare decisis, the one thing that is very interesting about this area of law for the last 100 years is the active involvement of both State and Federal legislatures in trying to find that balance between the interest of protecting in their views how the electoral process should proceed and the interests of the First Amendment.

And so my question to you is, once we say they can't, except on the basis of a compelling government interest narrowly tailored, are we cutting off or would we be cutting off that future democratic process? Because what you are suggesting is that the courts who created corporations as persons, gave birth to corporations as persons, and there could be an argument made that that was the Court's error to start with, not Austin or McConnell, but the fact that the Court imbued a creature of State law with human characteristics.

But we can go back to the very basics that way, but wouldn't we be doing some more harm than good by a broad ruling in a case that doesn't involve more business corporations and actually doesn't even involve the traditional nonprofit organization? It involves an advocacy corporation that has a very particular interest.

In other words, she is asking the attorney for Citizen's united if he is aware that the basis of his argument for invalidating Austin McConnell (in which a court ruled that Congress had the right to balance electoral and first amendment considerations) would create the basis for a challenge to corporate personhood itself, by making the right of corporate speech pendant on past court decisions which assumed the validity of corporate personhood without ever having formally established it.

Your point about employees and shareholders enjoying free speech qua individuals makes ethical sense, but have you considered that treating the corporation as proxy for the rights of its human owners or agents would conflict with the idea of corporate severability, the legal framework which protects shareholders from direct legal liability for wrongdoing carried out on behalf of a corporation by its officers?

sorry for the long-windedness :-/

bokonist6• 17 years ago

I haven't read the full Sotomayor transcript, but this overall quote exists in the context of a debate about whether corporations are allowed political free speech, and I have some strong guesses about which side Sotomayor is on.

Your point about employees and shareholders enjoying free speech qua individuals makes ethical sense, but have you considered that treating the corporation as proxy for the rights of its human owners or agents would conflict with the idea of corporate severability, the legal framework which protects shareholders from direct legal liability for wrongdoing carried out on behalf of a corporation by its officers?

Corporate severability is bogus. Shareholders should be held to the same level of criminal liability as anyone else who knowingly profits from criminal acts. In practice, this would be rare, as shareholders in public companies would not knowingly profit from criminal actions, because if the actions were publicly known, they would be immediately stopped.

alain940402• 17 years ago

a corporation is a contract

You are not completely correct here, because the corporation itself can enter into contracts with other people (and corporations).

I know the distinction first-hand because when we invented the license behind FairSoftware (http://softwarebillofrights.org/license.html), we had the exact same problem: we are building virtual corporations by using a licensing contract among participants. It's great, but it doesn't create an independent "person". As you said, it's just a contract between people.

Regular corporations are given special treatment by allowing them in turn to do special things. So they are more than a contract.

sp3323• 17 years ago

OK, I've talked with some people and it seems to me that the issue here is primarily ownership of money. One of the major advantages to having a corporation is separate bank accounts. Basically, the corporation, as a "person," can own money and property that is legally separated from its owners'. This means, among other things, that if a corporation is sued, the owners don't lose money out of their own bank accounts. But it also means that they can;t give that money to a campaign in their own name. If they want to use that money, it has to be given in the name of the corporation. If corporations lose their right to free speech, campaigns could never be given any of the money in corporations' bank accounts.

btilly2• 17 years ago

Lose their right to free speech? What right to free speech? Centuries of jurisprudence have never recognized a right to free speech for corporations. Corporations stand to GAIN a right here, not lose one.

Here is my biased view of the issue. If corporations gain the right to unlimited direct political advertising, then they will have a much more powerful lobbying option than any they have already. This will give incumbent corporate powers increased influence.

It is the nature of incumbents to try to maintain their dominant position by fair means or foul. Therefore we'll see companies asking the government to erect more powerful barriers to competition. These barriers will often be bad for startups and innovation.

Obvious examples of barriers are expanded patent and copyright laws. However that is just the start. Suppose that the oil industry decided that the right president pursuing the right foreign policy would improve their profit margin by 5%. If they had invested 1% of their 2008 profits into the last election, that would have been more than both presidential campaigns spent together. Is this really how we want US policy decided?

Sotomayor Issues Challenge to a Century of Corporate Law

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