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 4^th 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 5^th 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 5^th Amendment provides:

[N] or shall any person . . . be deprived of life, liberty, or property, without due process of law . . . , and

Section One of the 14^th 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 14^th 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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Federal Judge rules Patriot Act Provisions Unconstitutional

U.S. District Judge Ann Aiken ruled today that two provisions of the Patriot Act are unconstitutional because they allow search warrants to be issued without a showing of probable cause, thus constituting a violation of the 4th Amendment’s guarantee against unreasonable search and seizures.

Aiken wrote that the Patriot Act, "...permits the executive branch of government to conduct surveillance and searches of American citizens without satisfying the probable cause requirements of the Fourth Amendment.... For over 200 years, this Nation has adhered to the rule of law — with unparalleled success. A shift to a Nation based on extra-constitutional authority is prohibited ..."

The federal government, Aiken continued, was “...asking this court to, in essence, amend the Bill of Rights, by giving it an interpretation that would deprive it of any real meaning. This court declines to do so."

The case was brought by Portland resident Brandon Mayfield, who was erroneously linked by the FBI to the Madrid train bombings that killed 191 people in 2004. Mayfield - possibly targeted because he is a Muslim convert - was taken into custody on May 6, 2004, because of a fingerprint found on a detonator at the scene of the Madrid bombing. The FBI said the print matched Mayfield's. As part the investigation leading to his arrest, secret searches of Mayfield’s home were conducted by the FBI, his home and office were placed under surveillance, and his phone was wiretapped, all without warrants. An internal investigation by the US Justice Department eventually concluded that FBI agents compunded their wrecklessness by making “...inaccurate and ambiguous statements...” to a federal judge to backtrack and get an arrest warrant against Mayfield.

Mayfield was released two weeks later, after the FBI admitted that the fingerprints did not match.

A Justice Department spokesman said the agency was reviewing the court's decision and declined to comment further. The Federal Government has the right to appeal the decision to the 9th Circuit Court of Appeals.

3 Lessons from the TSA Horror Stories

The stories have gone viral, and we hardly have to repeat what has been covered by every major news channel: The pleas of Thomas Sawyer, a 61-year old Bladder Cancer survivor with a Urostomy (an external bag collecting urine), are ignored by TSA agents who break his bag and leave him in tears and covered in his own urine. Cathy Bossy, a 32-year old Breast Cancer survivor, is forced to remove her prosthetic breast. A three year old is subjected to a full-body pat down because she cried when Agents attempted to take her teddy bear away from her to go through the metal detector. Gurdeep Bawa, a religious Sikh, is forced to remove his turban and watch it manhandled, even though he had passed both a metal detector and a detectives trace detection test.

In an effort to prevent terrorism on the airlines, the 'experience' of airline travel has clearly changed in the last decade...and the public debate between those who would preserve privacy, and those who would insist on security, is at fever pitch. Now, to be 100% honest, I have a perverse desire to wear some type of leather-and-metal masochistic contraption on my 'junk' just to watch some TSA agent have to deal with it. But many Americans (more Normal than me) have called for a massive protest on Wednesday ("National Opt-Out Day"), to overwhelm the government security operations on one of the busiest travel days of the year. As expected, the TSA, and some news commentators, are warning against such an action.

We draw 3 conclusions from this entire episode:

1) American officials need a lesson in Marginal Analysis (Microeconomics 101).

On the first day of Micro class, I ask my students if they think that protecting children is important. Of course, they respond in the affirmative. Then I ask them if ski slopes that permit children to ski should be forced to bubble-wrap all the trees on the slope...after all, if children's lives are important, shouldn't we do everything in our power to make it safer...even just a little bit? Eventually, students come around to reconciling their concern for children with their recognition of the innate, if unstated, concept of Marginal Analysis: the question is NOT "Don't you want children to be safe?," but rather, "What are the costs and benefits of the next proposed action?"

This applies to *every* public policy debate. Yes, children's education is important...that doesn't mean every school should have a 1:1 teacher-student ratio. Yes, fire protection is important...that doesn't mean there should be a firehouse on every block. Yes, rescuing fishermen whose boats have gone down is important...that doesn't mean the Coast Guard should be searching 6 months later.

And the same reasoning applies to Airline Security. The question is NOT, "Is airline security important?" (Of course it is). The question is, "What are the costs and benefits associated with this additional step." People who defend the TSA's actions based on the broad concept of "the importance of security" are simply not thinking this through.

According to the TSA, only 3% of airline passengers are subjected to "enhanced" security searches. How much additional safety do we all experience as a result of a process that is only used on 3% of passengers?! The fact is, the additional benefits are dwarfed by the additional costs associated by this procedure: costs in equipment, personnel, delays, and public outrage. Standard Marginal Analysis would suggest that the TSA's efforts are a sure loser (and while children are being stripped at the gates, al qaeda is circumventing this process entirely by planting bombs in cargo holds).

2) The Terrorists have Won. Beginning with waterboarding and continuing through Guantanamo Bay, the suspending of habaeus corpus, and the Patriot Act, from Bush through Obama, constitutional guarantees have been shredded.

The Fourth Amendment of the Constitution reads as follows:

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.

Patting down a 3-year old is now "reasonable?" Removing a prosthetic breast is "reasonable?" Breaking an American's Urostomy bag is consistent with being "secure in their persons?"

In the name of Security, the Fourth Amendment has been rendered 'voidable' by our federal government. The Terrorists, who have a deep-seated hatred for American civil liberties, have succeeded in eliminating one of our most important rights...and sadly, many Americans go along in the name of 'security.'

3) Obama is Clueless. President Obama's detached, passionless leadership style has hurt both his Presidency and the Democratic Party. The high-falutin,' tortured, bureaucratic gobbledy-gook emanating from the White House in response to the public outcry is remarkable for its total lack of any hint of empathy. The President should have immediately joined in the outrage over the abuse to cancer survivors and children named above, and declared that he was ordering changes to TSA policy...instead, what we received was an into-the-air comment about 'evolving policy.'

Sigh.....Where is the sign up sheet for "Hillary in 2012?" A

And in the meantime, dammit - if you're flying on Wednesday - get there early, stand up for reason and for your rights as an American, and join the National Opt-Out Day