David Earleywine

POL399

Un-Locke-ing the Ideas of Corporate Personhood

 

“Corporations are people, my friend,” declared Mitt Romney, the former governor of Massachusetts and 2012 Republican presidential candidate, during his campaign (Greenfield, 310).  While this line was not Romney’s downfall in the 2012 presidential election, it stands out as one of the more contentious and infamous lines of his campaign.  His statement came just a few years after the Citizens United v. Federal Election Commission Supreme Court case in 2010 affirmed that corporations were people.  Many American citizens, including President Barack Obama, wrestled with the idea that corporations were granted the same constitutional rights, and protections as people.  By extension, this meant that corporations could be construed as constituting a person.

The Citizens United ruling does not make sense to the average American citizen because comparing human beings to corporations would seemingly be comparing apples to cheeseburgers.  Corporations and human beings are, like apples and cheeseburgers, distinctly different entities. In contrast to Mitt Romney’s statement that “corporations are people,” President Obama responded, saying “I don’t care how many times you try to explain it, corporations aren’t people. People are people” (Greenfield, 310).  President Obama, like many Americans, understood that there is something inherently different between corporations and people, despite what the Supreme Court stated.

However, since the Supreme Court has declared that corporations are people, individuals who disagree are left wondering how and why the court came to that conclusion.  Therefore, I am conducting this research to help resolve this discontinuity of my commonsensical beliefs that corporations are not people, and the declaration by the Court that corporations are in fact people.  That said, there are many questions yet to be answered surrounding the issue of corporate personhood.

For example, do corporations, despite being granted personhood, have the same rights, liberties, and freedoms as human persons?  Are corporations part of the “We the people” referred to in the Preamble of the United States Constitution thus granting them constitutionally protected rights, freedoms and liberties?  These questions all remain unanswered.  However, we can be certain about one aspect of Citizens United v. Federal Election Commission ruling regarding corporations: it created a conundrum regarding the definition of persons and their role in American society. The Supreme Court of the United States redefined corporations as people, which creates an ambiguous and unintended role for corporations within the Lockean concept of the social Contract.

This paper will examine how corporations are defined in a political context in the United States, with a particular emphasis on how they fit into John Locke’s theory of the Social Contract as outlined by the Supreme Court of the United States. The Supreme Court, which interprets the law and helps provide legal definitions, has continued to define and redefine corporations since the early days of the United States. Supreme Court cases in the early 1800s began shaping and molding the legal definition of corporations that America has today.  The United States Constitution never uses the word corporation which means that the 2010 Supreme Court provided its own meaning of how to define corporations.

This paper seeks to understand the role of corporations, as defined in a political context by the Supreme Court, in the United States through the lens of Lockean social contract theory.  First, it is vital to understand how the definitions of corporations have evolved over 200 years of constitutional government in the United States. As the definition of corporations evolved over time, the definition of a human person has likewise changed.

Furthermore, I will give historical context to the Supreme Court’s decision in the Citizens United case and how the legal definition of corporations has evolved over time. This research will highlight landmark Supreme Court cases that focused on corporations, their protections, and their status in a social and political context. By conducting qualitative analysis of law review articles and Supreme Court cases, I will synthesize the results to determine the role of corporations in a Lockean version of the social contract.

A Brief History of Corporate Personhood

While this research will focus on corporations in the United States, it is necessary to understand social contract theory and its role in the founding of the United States.  John Locke, a 17th century British philosopher, is largely considered one of the fathers of social contract theory.  Other thinkers, such as Jean Jacque Rousseau and Thomas Hobbes, are also famous for their writings on social contract theory. However, the Lockean view of the social contract theory was the most influential on the founding of the United States and American political thought.

Locke’s influence on the founding of the United States is due in part because he wrote plainly and explicitly about the beginning of a political society. The crux of social contract theory can be summed up by the following passage from Locke’s Second Treatise of Government (1690) which states:

Men being, as has been said, by nature all free, equal, and independent, no one can be put out of this estate and subjected to the political power of another without his own consent, which is done by agreeing with other men, to join and unite into a community for their comfortable, safe, and peaceable living, one amongst another, in a secure enjoyment of their properties, and a greater security against any that are not of it. This any number of men may do, because it injures not the freedom of the rest; they are left, as they were, in the liberty of the state of Nature. When any number of men have so consented to make one community or government, they are thereby presently incorporated, and make one body politic, wherein the majority have a right to act and conclude the rest (p. 146).

 

As Locke points out, the social contract theory is entered into by the free consent of individuals agreeing with each other.  Agreeing to the contract is done in order to “secure enjoyment of their properties” and for “comfortable, safe, and peaceable living, one amongst another” (Locke, 1690, p. 146).  Therefore, only men who freely consent to forgo some of their liberties are able to join the contract.

Furthermore, Locke focuses on individual’s “secure enjoyment of their properties” as the crux of the social contract. Thus, it is important to understand Locke’s definition of property and what an individual is seeking to protect through joining the social contract. In Locke’s Two Treatise of Government, he explains that “Though the earth and all inferior creatures be common to all men, yet every man has a “property” in his own “person.” This nobody has any right to but himself. The “labour” of his body and the “work” of his hands, we may say, are properly his (Locke, 1690, p. 116).  Thus, a Lockean definition of property is an individual’s “person,” “labour of his body,” and “work of his hands” (Locke, 1690).  Therefore, anything an individual creates is considered their property and an extension of themselves.  John Locke’s interpretation of the social contract and his focus on property rights provided a foundation for American political philosophy and the United States Constitution.

The Citizens United v. Federal Election Commission case of 2010 was one of the culminating moments in the discourse of corporate personhood. However, the roots of corporate personhood reach back to shortly after the founding of the United States. In the mid 19th century the Supreme Court defined corporations as citizens for litigation purposes ( Louisville, Cincinnati & Charleston Railroad Company v. Letson, 1844).  The Louisville, Cincinnati, & Charleston Railroad Company v. Letson decision influenced the Santa Clara County v. Southern Pacific Railroad case which was the first time corporations were considered legal persons (1886).

In the early 1900s, President Theodore Roosevelt and the United States Congress attempted to rein in the quickly expanding rights and protections being granted to corporations. With the Tillman Act of 1907, President Roosevelt and Congress severely limited the rights of corporations. The Tillman Act kept the idea of corporate personhood out of the Supreme Court limelight until the 1970s. Corporations sought to find ways around this piece of legislation and there was a reignited passion to rein in corporate rights and political expenditures following the Watergate scandal. The fallout of Watergate led to Supreme Court cases such as Buckley v. Valeo and Bellotti v. First National Bank of Boston which focused on campaign financing specifically as it relates to corporations.  

Corporate rights have continued to grow and evolve over time to include First Amendment, Fourth Amendment and Fourteenth Amendment rights and protections.  These rights granted by the Constitution are different than the rights of life, liberty, and property individuals hold in the Lockean state of nature (Locke, 1690).  This distinction that human beings have inherent rights and corporations do not is vital to understanding the difference between corporations and human beings.

Defining Corporations and Persons

One of the issues with the decision to grant corporations the state of personhood in the Citizens United case is that it undermined the average person’s concept of what it meant to be a person. This begs the question of how to define both corporations and persons. Author Jeffrey Clements defines corporations as “a government-defined legal structure for doing business with legal privileges that can only be provided by government” (2014, p. 64).  This definition could include organizations such as unions, non-profits, banks, businesses, and the like.  Clements’ definition of corporations stands in stark contrast with the Citizens United case. Moreover, the definition provided by Clements is reasonable and practical, whereas the Supreme Court defining corporations as people defies common sense.  When President Obama stated “corporations aren’t people” it was due to the fact that he felt there was an inherent difference between corporations and people (Greenfield, 2015, p. 310).  President Obama’s sentiment indicated there is an implicit difference between corporations and people. So, how do individuals typically differentiate corporations from people?

When trying to describe a human being, people might refer to them as homo sapiens with eyes, ears, feet, hands, lungs, a heart, and a brain.  Individuals think of people as their neighbors, their teachers, their relatives, or their friends.  While someone may be hard-pressed to provide a concrete definition of a person, no one would say that Google, Apple, McDonald’s, Procter and Gamble, or Coca-Cola is people.  These are all large organizations that individuals would categorize as corporations, businesses, or companies.  For example, Coca-Cola does not have eyes and ears, Procter and Gamble does not have hands or feet, and Google does not have internal organs.  Individuals tasked with defining a corporation may reference the fact that it is made up of shareholders or that its lifespan is potentially unlimited.  Perhaps those individuals would simply define corporations in a negative sense by stating that it is not a person. Thus, the main argument put forward by individuals who oppose the Citizens United ruling is that it goes against common sense for a corporation to be classified as a person.

The Origins of Corporate Rights and Personhood in the Supreme Court

The Supreme Court has put forth rulings that impact corporations since the 1800s. While the size and scope of many corporations have changed since the founding of the United States, corporations have existed even before America was founded.  However, the following Supreme Court cases help gives an understanding of how the definition of corporations have shifted over time in the United States.

As early as 1809, the fact that corporations were not people started causing issues. While Bank of the United States v. Deveaux largely focused on the jurisdiction of state and federal courts, the Supreme Court and Chief Justice John Marshall reached a landmark decision regarding corporate personhood.  Peter Deveaux, a tax collector, was sued by the Bank of the United States for unlawfully seizing property. However, Deveaux claimed that the Bank of the United States, a corporation, could not sue in a federal court because it was not a person. Chief Justice Marshall and the opinion of the court agreed, stating that corporations could not sue in a federal court (Bank of the United States v. Deveaux, 1809).  The only way corporations could sue or be sued in the federal courts is if all of the shareholders lived within the same state. This distinction effectively kept corporations out of federal courts and into the lower-level state courts.

The 1819 case of Trustees of Dartmouth College v. Woodward is one of the earliest instances of the Supreme Court taking a case regarding corporate rights. This case centered on the argument of whether or not the state of New Hampshire could circumvent the private charter of the university and make it a public university (Dartmouth v. Woodward, 1819).  Dartmouth’s original charter was granted not by the United States government, but by the British Crown in 1769 (Dartmouth v. Woodward, 1819). The linchpin of the argument was simply that Dartmouth violated the United States Constitution which states “No State shall… enter into any Agreement or Compact with another State, or with a foreign Power” (art. I , § 10).  However, the opinion of the Supreme Court, written by Chief Justice Marshall, upheld the notion that “this corporate charter is a contract, the obligation of which cannot be impaired without violating the Constitution of the United States” (Dartmouth v. Woodward, 1819).  Thus, the opinion of the court recognized the sovereign rights of a corporation and its ability to make private contracts. While this Supreme Court case did not grant corporations the status of personhood, it did reiterate the importance of corporate rights.

Corporations as Citizens (and Railroads)

The court’s ruling in the 1809 Bank of the United States v. Deveaux case was overruled 35 years later. The Louisville, Cincinnati & Charleston Railroad Company v. Letson case redefined corporations as citizens of the states they incorporated (1844). However, this distinction did not fix the situation of corporations effectively being held out of the federal courts for suing and being sued. This is due to the fact that a corporation’s shareholders had to all live in the same state in order to be sued. The Louisville, Cincinnati & Charleston Railroad Company v. Letson case marks the first time corporations were defined as citizens within the United States and would set the stage for the expansion of corporate rights and personhood in future court decisions.

Less than a decade after the Louisville, Cincinnati & Charleston Railroad Company v. Letson, the Supreme Court reaffirmed the idea that corporations are citizens, though they were not granted the same constitutional rights as human persons. Corporations were given the status of citizens for the purpose of state and federal court jurisdiction (Marshall v. Baltimore and Ohio Railroad, 1853). Building off the 1844 Louisville, Cincinnati & Charleston Railroad Company v, Letson decision, Marshall v. Baltimore and Ohio Railroad effectively allowed corporations to sue and be sued in federal court more easily. The increased ease was due to the fact that corporations, as citizens, could now be sued across state lines (Marshall v. Baltimore and Ohio Railroad, 1853).

Corporations, now considered legal citizens, sought to expand their rights of citizenship. The Santa Clara County v. Southern Pacific Railroad case in 1886 set the stage to expand the rights of corporations. The Southern Pacific Railroad Company argued that a special tax levied on them by the Santa Clara County infringed upon their equal protection under the 14th amendment. Interestingly, the court reporter in the Santa Clara case entered the following line into the case summary: “The defendant corporations are persons within the intent of the clause in section 1 of the Fourteenth Amendment to the Constitution of the United States, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws” (1886).  Thus, the court reporter summarizing the case started the notion of corporate personhood with only two lines of text.

A dozen years after the Santa Clara case, the Supreme Court, in a case called Smyth v. Ames, continued to build up the protections of corporations under the Fourteenth Amendment. In the Smyth v. Ames case, the court said: “By the fourteenth amendment it is provided that no state shall deprive any person of property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws. That corporations are persons within the meaning of this amendment is now settled.” (1898).  Thus, while Santa Clara determined that corporations were persons under the Fourteenth amendment, Smyth v. Ames extended the full protections of that Constitutional amendment to corporations (1898). In just over a decade corporations received not only the idea of personhood in the Santa Clara case, but full protections of the Fourteenth amendment as well. This use of judicial activism broadly expanded the scope of corporate rights and protections, as well as the scope of who (or what) is protected by the Fourteenth amendment.

Corporations: More of a person than a person?

During the 19th century when corporations were gaining citizenship and expanding their protections under the law, the United States was at a crossroads regarding citizenship. Less than five years after the 1853 Marshall v. Baltimore and Ohio Railroad case, the now infamous Dred Scott case was decided. In the 1857 Dred Scott v. Sanford case, the Supreme Court ruled that slaves were not citizens of the United States and thus could not sue in court. Therefore, while the Supreme Court granted citizenship to corporations, they maintained that slaves were property and could never become citizens.

This is a surprising and interesting revelation that the court was granting Constitutional rights to corporations, but not to slaves, minorities, or women.  Essentially, during the mid 19th century, corporations were given more rights than any non-white male.  In Lance Strate’s article “The Supreme Identification of Corporations and Persons” (2010) he uses the following paragraph to lay out this contradiction.

The doctrine of corporate personhood creates an interesting legal contradiction. The corporation is owned by its shareholders and is therefore their property. If it is also a legal person, then it is a person owned by others and thus exists in a condition of slavery–a status explicitly forbidden by the Thirteenth Amendment to the Constitution. So is a corporation a person illegally held in servitude by its shareholders? Or is it a person who enjoys the rights of personhood that take precedence over the presumed ownership rights of its shareholders? (p. 282-283)

 

Strate perfectly encapsulates the contradiction of corporations being a legal person, yet also being owned shareholders.  The Thirteenth Amendment clearly abolished slavery, so how can a corporation be a legal person and be owned? It is a question that the Supreme Court has not directly answered.

Corporations in the Early 20th Century

            Eleven years after the Santa Clara decision, the Supreme Court determined that it was “well-settled” that “corporations are persons within the provisions of the fourteenth amendment (Gans and Kendall, 2011, p. 674).  Thus, the Supreme Court cited the lines written by the Santa Clara court reporter in the case brief to reach the decision that it was well settled.  However, after the turn of the century, President Theodore Roosevelt tried to rein in corporations, their rights, and their protections.

President Theodore Roosevelt is often remembered as being a “trust-buster” and trying to limit the power of corporations. This was exemplified in his 1906 State of the Union address in which Roosevelt stated “I again recommend a law prohibiting all corporations from contributing to the campaign expenses of any party” (State of the Union Address). Roosevelt went on to not only condemn corporate political expenditures, but promoted personal expenditures. He argued, “Let individuals contribute as they desire; but let us prohibit in effective fashion all corporations from making contributions for political purpose, directly or indirectly” (State of the Union Address, 1906). President Theodore Roosevelt made his position on corporate personhood and their role in political life very evident.

With the help of Roosevelt’s prodding, Congress passed the Tillman Act in 1907.  The Tillman Act was intended to address corporate campaign contributions.  The law specifically focused on “banning all corporate contributions to candidates” (Citizens United v. FEC, 2010). While Roosevelt pushed this issue on Congress, the impetus for Roosevelt’s concern and the Tillman Act is best summed up by a Senate report.  The Senate report on the Tillman Act stated that the “evils of the use of [corporate] money in connection with political elections are so generally recognized that… it is in the interest of good government and calculated to promote purity in the selection of public officials” (Citizens United v. FEC, 2010).  Thus, the Tillman Act was couched in the idea that corporate money in political campaigns would taint the election system.  Thus, the Senate report shows that the Congress thought there was something inherently different between corporations and people which gave them the right to limit corporation’s role in the election process.

In Justice Steven’s dissenting opinion in the Citizens United case, he stated that the Tillman Act of 1907 was “driven by two pressing concerns: first, the enormous power corporations had come to wield in federal elections, with the accompanying threat of both actual corruption and a public perception of corruption; and second, a respect for the interest of shareholders and members in preventing the use of their money to support candidates they opposed” (2010).  The first point is a popular argument regarding elections in the post-Citizens United system.  Corruption (real or perceived) can be damaging to the credibility and legitimacy of a democracy.  American politicians often accuse each other of being subject to special interests and representing their donors rather than their constituents.  This accusation is used because it strikes a chord with voters who want their interests to be represented by their politicians.

Citizens’ desire for representation drives the justification of Justice Stevens’ second point.  Justice Stevens seemingly recognizes Locke’s view of corporations as property. Therefore, Stevens’ second point only makes sense if corporations are considered an extension of the individual. Thus, it does not make sense for corporations to support someone an individual does not support. With a plethora of individuals involved in corporations (making it an extension of multiple individuals) there is no way to determine what politician would be representative of all those individuals. As Justice Stevens pointed out, the two issues of corruption and misrepresentation due to corporate political expenditures were addressed by the Tillman Act of 1907 (Citizens United v. FEC, 2010).

Corporate Personhood after Watergate and Roe v. Wade

            In the early 1970s, two historical events happened within a year of each other: the Watergate scandal in 1972 and the Roe v. Wade Supreme Court case in 1973.  Roe v. Wade (1973) was a landmark 5-4 Supreme Court decision which legalized abortion of human fetuses.  Roe v. Wade, like the Dred Scott case, does not deal with corporate personhood. However, it does deal with the definition of a human person and provides an intriguing juxtaposition with corporate personhood.

Roe v. Wade remains one of the most contentious Supreme Court cases, even 43 years later.  The divide between the pro-life (opposing abortion) camp and pro-choice (supporting abortion) camp is severe.  Similar to Citizens United, the most divisive point in Roe v. Wade is how the Supreme Court defined a person. Pro-lifers advocate their side under the assumption that the fetus is a human person.  Conversely, the pro-choicers see the fetus as not a fully formed human thus making abortion acceptable.  Roe v. Wade (1973) noted that “the question in terms of the point at which the embryo or fetus became ‘formed’ or recognizably human, or in terms of when a ‘person’ came into being.”

The Supreme Court’s ruling in favor of abortion is a fascinating conundrum regarding how they define persons.  Roe v. Wade (1973) does not give the right to abortion at any time. The case states that “for the stage subsequent to viability the State, in promoting its interest in the potentiality of human life, may, if it chooses, regulate, and even proscribe, abortion except where necessary, in appropriate medical judgement, for the preservation of the life or health of the mother” (Roe v. Wade, 1973).  The “potentiality of human life” is only available to human beings, not corporations (Roe v. Wade, 1973). While both corporations and fetuses receive a certain amount of protection under the Fourteenth Amendment’s equal protection clause, only the fetus has the potential for human life. This is a vital distinction between what it means to be an individual and what it means to be a corporation.

After the Tillman Act of 1907, corporations avoided the limelight of the political conversation for almost 60 years. However, in 1972 all that changed under President Richard Nixon’s administration and the Watergate scandal.  The scandal and ensuing cover-up of five men breaking into the Democratic National Committee headquarters at the Watergate hotel launched a bevy of legislative and judicial reactions.  With President Nixon’s resignation following his involvement in Watergate, there was a desire to regulate money and expenditures in politics and elections.

Following Watergate, the first major Supreme Court case regarding corporate personhood was Buckley v. Valeo in 1976.  The Buckley case effectively stated that personal expenditures supporting or opposing a candidate is considered free speech and is protected under the First Amendment (Buckley v. Valeo, 1976).  In his dissent in the Citizens United case, Justice Stevens summarized Buckley that the case “famously (or infamously) distinguished direct contributions from independent expenditures, … but its silence on corporations only reinforced the understanding that corporate expenditures could be treated differently from individual expenditures” (2010).

As Justice Stevens points out, while corporations were not the main focus of Buckley, the Supreme Court’s silence on the matter spoke volumes.  Buckley effectively legitimized the idea that money is speech by protecting independent expenditures.  This silence on corporations was seen as a break from the doctrine of the Tillman Act of 1907.  However, money as speech makes sense in a Lockean perspective because an individual’s money is the fruit of their labor.  Using the lens of John Locke, money is clearly that individual’s property and an extension of himself.  Thus, it makes sense that money should be protected if one is viewing money as an extension of an individual.

After the Buckley case, the Bellotti v. First National Bank of Boston was decided by a contentious 5-4 vote (1978).  The issue in this case “is whether the corporate identity of the speaker deprives this proposed speech of what otherwise would be its clear entitlement to protection” (Bellotti, 1978).  The Supreme Court ultimately found no reason to “prohibit the appellants from speaking” (Bellotti, 1978).  This meant that corporations’ right to speech was protected under the First Amendment regardless of the corporate identity of the speaker (Bellotti, 1978).  Combining the Bellotti decision with the Buckley decision meant that corporations could legally use money as speech which was a huge step for corporate personhood.  Thus, the majority opinion of both Buckley and Bellotti helped to set the stage for the Citizens United ruling in 2010.

In the Bellotti case, Justice Byron White (joined by his colleagues Justice Thurgood Marshall and Justice William Brennan) authored a strong dissent against this expansion of corporate rights and protections.  Justice White argues that corporations “are created by the State as a means of furthering the public welfare” (Bellotti, 1978).  Furthermore, Justice White writes that the United States “has for many years recognized the need for measures designed to prevent corporate domination of the political process” (Bellotti, 1978).  These two reasons are, in the dissenter’s opinion, enough to justify limiting speech based on corporate identity.  Ultimately, with the decisions of Buckley and Bellotti the public discourse shifted to focus on corporations’ rights within the election process.

Following Buckley and Bellotti, Justices Anthony Kennedy and Antonin Scalia (who were nominated in 1988 and 1986, respectively) joined the Supreme Court.  Justice Kennedy and Justice Scalia would eventually go on to write the majority and concurring opinions, respectively in the Citizens United case.  Prior to that case, however, Justices Kennedy and Scalia were involved in the Austin v. Michigan Chamber of Commerce case (1990).  This majority opinion in this case argued “corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form” is reason enough for the government to ban independent expenditures. However, Justice Kennedy and Justice Scalia, along with Justice Sandra Day O’Connor, dissented in the case arguing that the ruling did not align with Buckley and Bellotti (Austin v. Michigan Chamber of Commerce, 1990).

The Austin decision was just one example of the Supreme Court shifting its course in regards to corporate rights, protections, and personhood.  The court seems to draw arbitrary lines regarding corporate personhood and their influence in elections.  A dozen years after the Austin case, the Supreme Court heard McConnell v. Federal Election Commission (2003).  The McConnell case reestablished the majority opinion from the Austin case which limited corporate spending and rights (2003).  This meant that the Austin and McConnell decisions were effectively at odds with the rulings in Buckley and Bellotti.  In the span of 30 years, the Supreme Court gave completely incongruent and inconsistent rulings regarding corporate protections under the First Amendment. This inconsistency was one of the major issues addressed in the landmark Citizens United decision in 2010.

Congress on Corporations

The Supreme Court and the rest of the judicial branch are charged with interpreting the law in the United States. However, the legislative branch (Congress) is in charge of creating the law on a federal level.  So, while the Supreme Court has continuously defined, redefined, and changed what it means to be a corporation, it is crucial to look briefly at the laws Congress makes regarding corporations.

In 1 U.S.C. §1 the United States Code, Congress informs readers of the context of certain words.  This is important because the Code states, “the words ‘person’ and ‘whoever’ include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals” (1 U.S.C. §1). This shows the opening Title of the United States Code, Congress defines corporations as persons. However, the Code does clarify in §8(a) “In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the words “person”, “human being”, “child”, and “individual”, shall include every infant member of the species homo sapiens who is born alive at any stage of development. So the United States Code, which is put forth by Congress, uses the word “person” to describe both a corporate entity and a natural human being.

The Citizens United case came about in part because of a piece of legislation enacted in 2002 known as the Bipartisan Campaign Reform Act.  The Bipartisan Campaign Reform Act (BCRA) was sponsored and written by Senators John McCain (R-AZ) and Russ Feingold (D-WI).   The Cornell law school Supreme Court bulletin for the Citizens United case describes BCRA as a “federal enactment designed to prevent ‘big money’ from unfairly influencing federal elections” (Lindbloom & Terranova, 2009).  Limiting “big money” (usually from corporations) is one of the main purposes of this law.

Furthermore, BCRA attempted to curtail issue advertisements of independent parties.   Senators McCain and Feingold made a concerted effort to limit contributions of big money and issue ads through writing BCRA.  These issue ads fell under the definition of electioneering communication.  As the Supreme Court noted, BCRA defined electioneering communication as “any broadcast, cable, or satellite communication that refers to a clearly identified candidate for Federal office” made within a specific time period leading up to the election (Citizens Untied v. FEC, 2010.  This definition of electioneering communication was a prominent part of the Citizens United case.

Citizens United: An Overview

The Citizens United v. Federal Election Commission case of 2010 is one of the landmark decisions since the turn of the century.  The debate of whether or not corporations should be considered people was rekindled by the Supreme Court’s 5-4 ruling in favor of corporate personhood (Citizens United v. FEC, 2010).  However, the Supreme Court ruling fell in accordance with past decisions affirming the legal personhood of corporations and their protections under the Constitution. So, why was (and is) Citizens United so controversial in the United States today?  

First and foremost, Citizens United v. Federal Election Commission (as one perhaps infers from the title) focused on elections.  Elections are fundamental to a democracy such as the United States. In his book The Spirit of Democracy: The Struggle to Build Free Societies Throughout the World, author Larry Diamond describes the minimal level of democracy (“thin” democracy as he calls it) “in modern terms, by means of regular, “free and fair” elections” (2008).  While Diamond also goes on to describe a “thick” democracy (which includes attributes such as institutional checks on the power of elected officials and individual freedom of belief, speech, assembly, and petition) he says the minimum requirement for a “thin” democracy comes from elections (2008).

While the Citizens United case is critical to the idea of corporate personhood, the reason this case rose to the Supreme Court ultimately stemmed from a corporation’s ability to freely express itself particularly through campaign ads and election advocacy.  (Citizens United v. FEC, 2010). The case syllabus states, “In January 2008, appellant Citizens United, a nonprofit corporation, released a documentary (hereinafter Hilary) critical of then-Senator Hillary Clinton, a candidate for her party’s Presidential nomination” (Citizens United v. FEC, 2010).  Citizens United believed BRCA §203 to be unconstitutional in regards to Hillary because “the government’s anti corruption interest does not apply to The Movie, a documentary almost entirely finance by individual donation and broadcast only to self-selecting viewers, and because The Movie is merely a critical biography and does not advocate to the viewers how to vote” (Lindbloom & Terranova, 2009).  This raised questions for the Supreme Court to answer regarding what is considered “electioneering communications” and whether disclosure and disclaimer regulations were “overly burdensome” on Citizens United (Lindbloom & Terranova, 2009).  While the Supreme Court answered these questions, it ultimately used the case as a way to rule on corporate rights and personhood with regards to elections.

Citizens United and Corporate Personhood

While there was much disagreement and dissent in the Supreme Court over Citizens United, ultimately the vote was 5-4 in favor of Citizens United.  The division within the court is shown by the vote but is also showed with how the Supreme Court justices concurred and dissented with numerous parts of the ruling.

KENNEDY, J., delivered the opinion of the Court, in which ROBERTS, C. J., and SCALIA and ALITO, JJ., joined, in which THOMAS, J., joined as to all but Part IV, and in which STEVENS, GINSBURG, BREYER, and SOTOMAYOR, JJ., joined as to Part IV. ROBERTS, C. J., filed a concurring opinion, in which ALITO, J., joined. SCALIA, J., filed a concurring opinion, in which ALITO, J., joined, and in which THOMAS, J., joined in part. STEVENS, J., filed an opinion concurring in part and dissenting in part, in which GINSBURG, BREYER, and SOTOMAYOR, JJ., joined. THOMAS, J., filed an opinion concurring in part and dissenting in part (Citizens United v. FEC, 2010).

 

While the difference of opinion of the Supreme Court justices is evident simply in the vote, both the opinion and the dissent had much to say about corporate personhood and their role in elections and American society.

The debate, dissent, and differences among the justices in the Citizens United case may seem to signal division within the Supreme Court.  However, as James Madison pointed in Federalist No. 10, “Factions will necessarily form in our Republic, but the remedy of “destroying the liberty” of some factions is worse than disease” (2001, p. 89). Madison understood that the remedy for disagreements is to encourage speech, not suppress it.  Justice Kennedy went on to write, “Factions should be checked by permitting them all to speak, see ibid., and by entrusting the people to judge what is true and what is false” (Citizens United v. FEC, 2010). Justice Kennedy used the previous quotes from Federalist No. 10 in his opinion of Citizens United in which he promoted free speech for corporations.

This was not the only reference Justice Kennedy made to the Federalist Papers in his opinion.  Kennedy also made a key point about how corporations are an extension of the individual using the example of the Federalist papers. As Justice Kennedy writes, “The great debates between the Federalists and the Anti-Federalists over our founding document were published and expressed in the most important means of mass communication of that era–newspapers owned by individuals” (Citizens United v. FEC, 2010).  The fact that James Madison, Alexander Hamilton and John Jay wrote the Federalist papers under pseudonyms was not lost on Kennedy and the majority view of the court.

The Federalist Papers were written and promulgated by an association of individuals: the Federalists, those in favor of the Constitution.  Although not a corporation, the Federalists were an association of individuals which provides analogies to the Citizens United v. FEC case regarding corporate speech.  For example, Madison, Hamilton, and Jay wrote the Federalist Papers under the pseudonym of “Publius.”  The anonymity of the pseudonym “Publius” would be similar to the anonymous individual donors supporting Citizens United funding for the documentary Hillary.

Free Speech and Corporations

In Justice Kennedy’s opinion for the Court he writes, “The Court has recognized that First Amendment protections extends to corporations” (Citizens United v. FEC, 2010).  Perhaps most importantly for corporations is the First Amendment protection of freedom of speech.  As Justice Kennedy wrote, “Speech is an essential mechanism of democracy, for it is the means to hold officials accountable to the people” (Citizens United v. FEC, 2010).  The freedom of speech possessed by individuals is something they would have held in the Lockean state of nature. Thus, Justice Kennedy’s assertion is consistent with the state of nature and the idea the government is accountable to the individuals.  In the Lockean lens of the social contract, government is created only when individuals give up some of their liberties to protect themselves and their property.  Therefore, the government is accountable to the individuals because it is created by the social contract entered into by individuals.

Furthermore, Justice Kennedy’s opinion states that “by definition, an independent expenditure is political speech presented to the electorate that is not coordinated with a candidate” (Citizens United v. FEC, 2010).  In effect, this means money is speech which has an impact on both the Citizens United case and corporate personhood.  It is important to note that the Supreme Court views “independent expenditures” as speech and not just any expenditure.  As stated above, there are limits placed on expenditures coordinated with a particular candidate and their campaign, but not on independent expenditures which constitute freedom of political speech (Citizens United v. FEC, 2010).

The concern from the dissenting opinions of the Supreme Court is that unlimited independent expenditures will cause corruption within the government and election process.  This is especially concerning with regards to corporations due to their larger capacity for independent expenditures compared to individuals.  At the end of his dissenting opinion, Justice John Paul Stevens stated “American democracy is imperfect, few outside the majority of this Court would have thought it flaws included a dearth of corporate money in politics” (Citizens United v. FEC, 2010).  Justice Stevens believes that independent expenditures (particularly from corporations) have a negative impact on elections.

On the flip side, the opinion of the Supreme Court states that the “appearance of influence or access, furthermore, will not cause the electorate to lose faith in our democracy… The fact that a corporation, or any other speaker, is willing to spend money to try to persuade voters presupposes that the people have the ultimate influence over elected officials” (Citizens United v. FEC, 2010).  This statement is based on the assumptions of the Founding Fathers that money is a form of speech or expression, and corporations are an extension of the individual shareholders.     

            In the 2016 presidential election cycle, the United States has seen the conjectured pros and cons come to fruition.  According to the article “How ‘ghost corporations’ are funding the 2016 election” from the Washington Post, “the 2016 campaign has already seen the highest rate of corporate donations since the Supreme Court unleashed such spending with its 2010 Citizens United v. FEC decision” (Gold & Narayanswamy, 2016).  While corporations are not contributing directly to political campaigns they are creating “pop-up limited liability corporations (LLCs) funneling money into independent groups” (Gold & Narayanswamy, 2016).  These independent groups (often called “political action committees” or “super PACs”) have spent large amounts of independent expenditures in the local and federal campaigns following the Citizens United case.

For example, “one out of every eight dollars collected by super PACs this election cycle have come from corporate coffers, including millions flowing from opaque and hard-to-trace entities” (Gold & Narayanswamy, 2016).  Another statistic from the Washington Post article on “ghost corporations” states “so far, 680 companies have given at least $10,000 to a super PAC this cycle, together contributing nearly $68 million through Jan. 31” (Gold & Narayanswamy, 2016).  This number is “on track to far exceed the $86 million they gave to super PACs in the entire 2012 presidential cycle” (Gold & Narayanswamy, 2016).  As Justice Stevens predicted, there is a “dearth of corporate money in politics,” but perhaps the situation of money in politics is not as dire as it may initially appear.

Though companies have given almost $68 million dollars in this campaign cycle, that amount is only “12 percent of the $549 million raised by such groups, which can accept unlimited donations” (Gold & Narayanswamy, 2016).  This is a slight uptick from the 2012 presidential cycle which saw 10% of its donations raised by such groups (Gold & Narayanswamy, 2016).  Put another way, 88% of money (or approximately $481 million) raised by super PACS in this election cycle came from donations of less than $10,000 from corporations or individuals.

However, individuals still argue that corporations should not be allowed to give unlimited amounts to super PACs. But, as Justice Kennedy wrote in the majority opinion of Citizens United, “Government may not suppress political speech on the basis of the speaker’s corporate identity. No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations” (Citizens United v. FEC, 2010).  Justice Kennedy’s sentiment is rooted in the ideas that corporations are people (or at least an extension of individuals) and that money is a form of speech.  If this is the case (as the Supreme Court has continually reaffirmed) corporations should not have their First Amendment rights encroached upon, since they are the property and extension of an individual.   

Conclusion

The history of corporate personhood in the United States is a long and convoluted one.  Almost 200 years ago, the Dartmouth case (1819) stated that corporations were a “creature of the law.”  However by the end of the 1800s, corporations were granted due process and equal protection under the Fourteenth Amendment (Santa Clara v. Southern Pacific Railroad, 1886).  Despite efforts by Congress (through the Tillman Act and the Bipartisan Campaign Reform Act) to rein in corporate personhood, the Supreme Court has not been nearly as consistent in its ruling on corporate protections.

Using a Lockean social contract perspective allows one to sift through the erratic and unpredictable rulings laid down by the Supreme Court.  John Locke (1690) provides a definition of property as an extension of the individual gives a basis for understand of what it means to be a corporation. For example, a corporation is like an individual’s hand. While the hand is part of the individual, it is not its own person.  However, it is an extension of the individual and is as much a part of that person as the rest of himself.  This means corporations could only enter into the social contract because of the individuals of whom it extends.  Corporations are not sentient beings capable of joining the social contract on their own. Thus, it does not make sense for the Supreme Court to grant corporations personhood any more than it would make sense for them to grant personhood to your hand.

However, the question remains of whether or not certain Constitutional protections make sense under a Lockean framework.  As previously shown, the Supreme Court has granted corporations protections of speech under the First Amendment in Buckley and Bellotti and equal protection and due process rights under the Fourteenth Amendment in Santa Clara to name a few.  Despite legal justifications by the majority opinions, these rights and protections do not make sense in a Lockean system.  The Supreme Court seemingly bestowed corporations with natural rights which is a non sequitur under Locke’s principles.  Only humans are bestowed with natural rights in the state of nature, and they give up their liberties to enter into the social contract (Locke, 1690).  The state (or Supreme Court) cannot retroactively grant these Lockean natural rights of individuals (life, liberty, and property) onto corporations as they have been doing (Locke, 1690).

Furthermore, with the plethora of individuals involved in corporations, it is difficult to determine who corporations represent politically.  Corporations, being the property and extension of multiple individuals make it hard for those corporations to be in tune with the shareholders political views.  While corporations are a creation of the state, they are not meant to be political creatures. Thus, it would make more sense for individuals to be protected when entering into a political association such as a political action committee.  Unlike corporations, super-PACs are intended for individuals to come together to support or oppose a candidate. While corporations are integral to the United States society and the social contract, they are not deserving of Lockean natural rights, and are not the appropriate vehicle for political action.

 

References

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