Sunday, July 06, 2014

Corporate Personhood - a Historical and Necessary Legal Concept




If you support the right to advertise contraception, even if it ‘offends’ some people; if you believe that newspapers need to be able to report on corruption in government; and if you think that big banks need to be prosecuted when they conspire to manipulate currency and commodity prices – then thank the concept of Corporate Personhood.

In the wake of the Citizens United and Hobby Lobby decisions, many people are just coming to see that corporations are often treated as ‘persons’ under the law, and are upset about it;  many believe it’s an invention of a runaway, pro-corporate court.

But nothing could be further from the truth.  The concept of Corporate Personhood – and of corporate rights under the Constitution – is as old as our Republic itself.  Having grown weary of trying to argue this point over and over in limited space on Facebook, I decided to put my thoughts into one longer blog post, and stroll through some of the critically important background relating to corporate personhood.

1. Freedom of the Press – Surely the founding fathers understood, when they penned that “Congress shall make no law…abridging the freedom..of the press” (First Amendment) that they meant newspapers and corporate media, and not just individual reporters. Indeed, two of the most important decisions in this century protecting a free press protected a corporate entity: The New York Times.

In 1964, the New York Times claimed that the arrest of Rev. Martin Luther King, Jr. for perjury in Montgomery, Ala., was part of a campaign to destroy King's efforts to integrate public facilities and encourage blacks to vote. In response, Montgomery city commissioner L.B. Sullivan filed a libel action against the newspaper as a corporation.  The Court ruled, in New York Times Co. v. Sullivan, that even though some of the newspaper’s statements were in fact false, that the corporation was protected by the First Amendment.  

Seven years later, a second blockbuster case arose involving the NY Times: New York Times Co. vs. United States.

In 1971, as the nation heatedly debated its involvement in the Vietnam War, the Times obtained a copy of an internal Defense Department report detailing government discussions about the war. These confidential documents would become famously known as the Pentagon Papers. At the U.S. government's request, the district court issued a temporary injunction ordering the New York Times not to publish the documents, claiming that the publication of the documents would endanger national security. The Times appealed, arguing that prior restraint (preventing publication) violated the First Amendment. Once again, the Supreme Court ruled (6-3) in favor of the Times. 

Yes, the Corporation had rights under the Constitution, even as against government arguments of national security.

2. Freedom of Speech:  Congress shall make no law…abridging the freedom of speech.”

In the 1970s, New York State enacted a law prohibiting anyone other than a licensed pharmacist from distributing nonprescription contraceptives to persons 16 years of age or over, prohibiting the distribution of nonprescription contraceptives by any adult to minors under 16 years of age, and prohibiting anyone, including licensed pharmacists, from advertising or displaying contraceptives.

Population Services International was a North Carolina corporation that distributed birth control knowledge and services. The corporation sold and advertised contraceptives to New Yorkers  primarily through mail-order retail sale of nonmedical contraceptive devices, which was a violation of the New York law. 

In Carey v. Population Services International, 431 U.S. 678 (1977), the Supreme Court held that the law was unconstitutional: 

“The prohibition of any advertisement or display of any contraceptives that seeks to suppress completely any information about the availability and price of contraceptives cannot be justified on the ground that advertisements of contraceptive products would offend and embarrass those exposed to them and that permitting them would legitimize sexual activity of young people. These are not justifications validating suppression of expression, which are protected by Amendment I. The advertisements in question simply state the availability of products that are not only entirely legal, but also constitutionally protected."

The case is critical because it ruled that a corporation, Population Services International, had free speech rights. Without corporate personhood, New York State could have legally squashed advertising for contraception.

3. The Fourth Amendment to the United States Constitution provides that:

"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

For almost 100 years, this right of  “the people” has been extended to corporations.

In 1924, the US Federal Trade Commission – acting on its own - demanded internal documents and private communications from the American Tobacco Co., and denied that any warrant or cause was needed.  In FTC v. American Tobacco Co. - 264 U.S. 298 (1924), the Court held,

A governmental fishing expedition into the papers of a private corporation, on the possibility that they may disclose evidence of crime, is so contrary to first principles of justice, if not defiant of the Fourth Amendment, that an intention to grant [that] power to a[n]agency will not be attributed to Congress unless expressed in most explicit language…We cannot attribute to Congress an intent to defy the Fourth Amendment, or even to come so near to doing so as to raise a serious question of constitutional law.”

And so yes, your desk and office and items in your workplace are subject to the same protections that you have elsewhere…because 4th amendment rights have been bestowed on businesses as well.

5. Double Jeopardy – most of us growing up watching police dramas know that you can not be tried for the same crime twice once you are acquitted.  It is the 5th Amendment that offers us that protection:

[N]or shall any person be subject for the same offence to be twice put in jeopardy of life or limb . . .

Note that the wording is very specific: no person.

And yet, this too has always been seen as applying to corporations. 

In 1977, the Martin Linen Supply Company was brought up on charges for collusion, and after a trial by jury, acquitted.  The US Government sought to bring the same charges again, and in a unanimous decision, the Supreme Court held that the right against double jeopardy clearly applied to the company, and the suit was tossed. (United States v. Martin Linen Supply Co, 430 U.S. 564 (1977).

6. Due Process and Equal Protection – Two places in the Constitution address these rights.

The 5th Amendment provides:
[N] or shall any person . . . be deprived of life, liberty, or property, without due process of law . . . , and
Section One of the 14th Amendment provides:
[N]or shall any State deprive any person of life, liberty, or property, without due process of law . . .

In general, these two clauses require that laws be transparent and equitably enforced by both the federal government and state governments. A law must be clear, fair, and have a presumption of innocence to comply with procedural due process; all have a right to a fair and public trial conducted in a competent manner, the right to be present at the trial, and the right to an impartial jury; Taxes may only be taken for public purposes, property may be taken by the government only for public purposes, and owners of taken property must be fairly compensated .

The 14th Amendment was adopted after the Civil War, and even though it clearly states ‘person,’ the same generation that adopted the amendment understood it to apply to  corporations. In  Santa Clara County v. Southern Pacific Railroad – 118 U.S. 394 (1886), Chief Justice Morrison Waite began oral arguments on a case by stating, 

"The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does."  

 
7. The view that corporations are ‘persons’ within the meaning of the law is not just limited to Constitutional Law, but to statutory Law as well, for well over a century.  The Sherman Anti-Trust Act of 1890  - which is still alive and valid today – was the first federal law to go after monopolization and corporate collusion. And yet, read this critical section:
Section 2: 

"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felon.”

“Person.”  And for 124 years, we have understood that “person” also refers to corporations. 

In fact, just two weeks ago, it was reported that JPMorgan Chase & Co., Goldman Sachs Group Inc. and the London Metal Exchange Ltd. were hit with a class action in New York federal court alleging they schemed to manipulate zinc prices by hoarding it in LME warehouses in order to artificially spike its price.

The suit against the corporations was brought under section 2 of the Sherman Anti-Trust Act, which addresses “persons.”

8. Finally – and perhaps conclusively – is the Dictionary Act of 1947 (Ch 388, 61 Stat. 633; commonly referred to 1 US Code Section 1.

It defines terms for US laws this way:

In determining the meaning of any Act of Congress, unless the context indicates otherwise—

words importing the singular include and apply to several persons, parties, or things;

words importing the plural include the singular;

words importing the masculine gender include the feminine as well;

words used in the present tense include the future as well as the present;

the words “person” and “whoever” include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals


The notion of Corporate Personhood has been supported by almost every provision of American Constitutional Law and legal jurisprudence, and has been since our founding.  You may not like some of the decisions that rely on that concept, but, over the course of American history, the concept has carried out what the Constitution was designed to do:  enhance the rights of private entities, of whatever make-up, and restrict the power of government.


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2 comments:

Dstarr said...

Corporate person hood goes farther back than any US court case, or in fact than the Constitution itself. The first corporations were invented to shield investors from personal liability corporate debts. Corporations were allowed to own property, sign binding contracts, get sued, and pay taxes. Stockholders were not personally liable for debts incurred by the corporation. All this goes back to the seventeenth century when corporations were invented. The court cases you cite merely broaden the rights of corporate "citizens", corporations have always been treated as persons by the courts.

Thomas Simmons said...

Hey, thanks for your post - I agree 100% with you, Dstarr...and the Common Law precedents go back even further than that!

I wrote the article as I did as a reaction to those who have hysterically stated that Hobby Lobby was a departure from US Law, by showing that it has always been in the law, in the US, under our existing Constitution, since our establishment as an independent state.