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October 16, 2007

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Be careful what you wish for.
jo6pac

the fiction of the corporation as a "person" is one of the most damaging concessions to corporate hegemony that american jurisprudence had ever made.

it permits first amendment "free speech" to be applied to advertising,

no matter how much against the public interest that advertising may be

and

it permits

"free speech" to be applied to corporate lobbying of congressmen, aka bribery,

and "free speech" to be applied to corporate efforts to mislead the public

thru pseudo-citizen, "public interest" organizations,

aka "astrorturf" organizations,

such as those created by the american tobacco companies.

nothing will improve american democracy more, and more rapidly,

than severely limiting corporate involvement in american politics,

including, i would add, the involvement of individuals who has lucked upon "earned" or inherited corporate wealth.

Usually, like now, I think that no law is better than a bad one, and that sounds like a humdinger.

Readings in civil disobedience for the J-school curriculum? Parlous times, these are.

Reminds me of Sesame Street. "Which of these things is not like the other?"

(A) and (B) have some urgency to them - "necessary to prevent".

(C) is of such different character that I wonder about its genesis. "You must out your source because they have revealed a secret", not "this is a dire emergency".

It is somewhat amusing that the legislative branch is willing to insist that journalists must disclose who has revealed a secret while the executive branch insists it has an all-encompassing right to insist that corporations not reveal that they have revealed secrets normally protected by law.

Let's stop beating around the bush.

The United States of America needs an "Official Secrets Act."

"Trade secrets" could include technical descriptions of Teh Program, could it not? Run a story on it and expect to have to testify against your sources. Those sources would tend to dry up right quick, would they not?

Hmmm.

I agree with what appears to be the consensus view here as to clause (C); the intent appears to be bogus. I can certainly imagine situations where it would render the right result; but those are clearly not the contemplated purpose.

More importantly at this moment, I want to agree with orionATL and EW on the damage done by the corporate personage establishment. I would like to tack on to that thought the corollary effect of the incredibly impenetrable corporate veil we have afforded corporate ownership and management. The two combined have created ravenous corporate entities concerned with, and motivated by, nothing but sheer greed. Anything goes if it increases, or could if things worked out increase, share price and management compensation. Remarkably, and quite telling, even actions that will in the long run either cripple the company or lessen relative value, are acceptable and increasingly even desirable if they will drive up the price and value now. The result is that corporations no longer have long term interest and motivation to think of their employees, local communities, our country, the environment and the future. Somehow, we have to engineer a heart, soul, morality and conscience back into corporate entities. And yes, I understand there was never much of this factor to begin with, as the railroad robber barons and so many other examples prove, but there must be a way to make them less rapacious than what we have now.

Bmaz - bang on, corporate law needs statutory reform that goes against the common law doctrines that have made corporations essentially unanswerable for their actions. The recent documentary The Corporation had the thesis that the law on corporate bodies has essentially required that corporations act in a sociopathic manner, without regard to the consequences its actions has on others, and in fact that its board of directors, as its "directing mind", is mandated by law not to have a "conscience", is not even answerable to the shareholders, but only to act in the best interest of the corporation, which is invariably defined as maximizing profit.

Ishmael - Exactly! there has to be a way of instilling some small measure of human, civic and patriotic duty into the corporate equation. I fully realize this is a difficult and sensitive task; but if enough bright minds collaborated on the job, you would think something positive could result. Even a subtle tilt in the positive direction could produce wildly positive results across the board of American life. What ills do we suffer that are not significantly fueled by corporate rapacity?

I have heard this conversation before and read Hartmann and others, seen "The Corporation"--- I assume that this is fairly widespread knowledge by now (that "corporate personhood" is a legal fiction enshrined in precedent perhaps them to be sociopaths unlike most air-breathers).

What, Bmaz, is corporate reform? Who and how would it be undertaken? As I understand it, every state has laws of incorporation more-or-less accepting the notions ruled hunky-dory by Federal authorities. I want very much to have this reform (no, I'd rather eliminate every last vestige of a money-making enterprise being equal to an air-breather unless or until they pay taxes just like one and die like one too)---but how do you unravel something this monsterous?

dude, I got no clue. Not to mention that I am now opening comments with sentences straight out of Spicoli in Fast Times at Ridgemont High. This is going to be a very complex and difficult task, and is going to require minds a lot brighter than mine. I would suggest that we could start with some fashion of weakening of the corporate liability veil as to owners and management so that there is just a little more accountability for their actions. You sure would not want to go too far here; but I think just a modicum would be a good place to start.

Ted Olsen wrote an op-ed in favor of the shield bill

Ted Olsen is a tool of the right, and this means the right sees no harm in this bill, and perhaps benefit.

If Ted Olsen orders vanilla, I'm taking the chocolate.

"... in fact that its board of directors, as its "directing mind", is mandated by law not to have a "conscience", is not even answerable to the shareholders, but only to act in the best interest of the corporation, which is invariably defined as maximizing profit."
Posted by: Ishmael | October 17, 2007

Even that idea isn't supported by the actions of criminals who brutalize "their" corporations, breaking them up, selling them off, ruining them like Enron and walking away with the money. They act to make money for individuals under the guise of making it for "the corporation".

We should shrink the power of Corporations, not because corporations are inherently bad (after all, they're just paper), but because they allow private individuals to exercise more unrestrained power than is good for Society.

You put cops on the street to stop muggers, so why not keep an eye on others who have shown a propensity to mug?

bmaz et al., I agree entirely. Corporate person-hood is the reason endlessly held up for why we can't have effective campaign finance laws, because it wouldn't be fair to dis-enfranchise the free speech rights of our well-heeled corporate-persons.

Unfortunately, not only are we NOT fixing all that is wrong with corporate law, we are exporting these problems via our "free-trade" agreements, which default to lowest common denominators in terms of environmental restrictions on the corporate entity, workplace safety, wages, and benefits, etc. The world doesn't need free trade, it needs fair trade. But it seems unlikely that we will get it, since our elected officials represent their campaign donors (corporations and their lobbyists) rather than the voting public (formerly known as constituents).

With Congress no longer representing the public interest, how likely are we to get real campaign finance reform, health care reform, or more open government. After all, we can't have the public find out about how the DOD or any of the spy agencies spend their money, which companies are funded via our taxes, or precisely how certain companies aid and abet unconstitutional government conduct.

It is no longer possible for citizens to give their informed consent to our elected representatives, because far too much information is withheld from us. We need both corporate and government transparency, but I doubt we will see anything of the sort any time soon.

The concept of business corporations existing as artificial beings with full rights, etc. definitely needs to be addressed. It is something that I have often pondered through constant reminders every day with new service fees, changes to credit card agreements, poor customer service, enormous profits... What it amounts to is that money becomes the bottom line in everything we touch -- and I don't like that way of living.

If corporations don't like a law, they simply contract around it so that contract provisions prevail over the law. Or, they hire a few lobbyists and spread some dollars around for campaign expenses and get the law changed. Corporate power is totally out of control and has been for a very long time. "Chainsaw" Al Dunlap espoused shareholder rights back in the late 80s, and it seems like it has gone downhill from there. Of course, government has abdicated its role in terms of protecting the public by deregulating and privatizing so many government services, and that has not helped.

Our economy is based on business and vice versa, but corporate rights are totally out of control when misdeeds go mostly unpunished. There is no downside to poor management or planning because the government will find a way to bail the shareholders out so that no one loses -- except the taxpayers! If corporations want to be treated as beings, then they should be subject to dying, just as humans are. If a company mis-manages itself and gets itself into a jam, the shareholders need to share the pain. (I might add here that the revision in bankruptcy laws gives corporations greater power to recover from the debtors. Is that reciprocal? For instance, what are the penalties for a corporation that has to go into bankruptcy?)

Just some random thoughts...

Phred - Have missed you. My World Series dreams are already down the crapper; yours perilously close. My condolences (Badgers too). Go Pack!

sojouner - So true. The only shareholders feeling the pain are the shareholders of the country, i.e. the common citizens and taxpayers. They are reaping all the pain, and very little of the benefit these days.

In December 2002 a small township north of Pittsburg PA passed an ordinance denying personhood to corporations doing business anywhere in that township. The followng March Licking Township also in PA followed suit. Within 5 years more than 100 townships had passed similar ordinances. And in 2006 Humboldt County in CA took simillar action. There are 2 websites telling you all about it: http://www.celdf.org/ and reclaim democracy. To me, this is taking on the aspect of a national movement. Read & enjoy.

There have been statutory attempts to protect minority shareholders from oppression by the majority, and there are class action provisions, and (in theory)the SEC to protect the investors in public corporations, but corporations remain largely shielded from effective criminal law jurisdiction, given that they cannot be imprisoned, only fined or perhaps wound up, but like Enron, this only ends up punishing the employees, pensioners and creditors, the vast majority of which are often blameless. As well, shareholders are often prevented from exercising control because a minority can control the voting shares, which elect the Board of the Directors, which is where the action really takes place. A minority shareholder is often a mute, powerless, and unsecured creditor in corporate malfeasance cases. On a constructive note, we should remember that progressive causes can use corporate vehicles as well, and the concepts of the trust, limited liability and perpetual existence can be harnessed for good purposes too, as well as the need to encourage entrepreneurship and risk taking.

Sojourner - if a corporation is bankrupt, certain of its debts can sometimes be attached to the corporate directors, usually for unpaid source deductions and taxes, but generally these do not happen in big businesses, which provide director's liability coverage - it is much more of a risk for the small businessman who get's caught up in a cash crunch and is the company's sole director.

bmaz, like EW, I have been traveling quite a bit, unlike EW, I can't keep up when I do ;) I was really sorry to see your Dbacks swept away by the Rockies. Honestly, I don't think anyone can beat them right now. Fortunately, from the looks of things it will be the Tribe that will suffer at their hands rather than my Sox. That said, I didn't think Cleveland would beat up on the Sox to the extent they have. With Becket, we might win two (maybe). Good thing I have the Pack! 5-1, who woulda thunk???

sojourner, while we are on the subject of bankruptcies and corporate bailouts by the federal government, we also need to revisit usuary laws. If we once again restrained interest rates we would see lower bankruptcy rates (remember it was the credit card companies that pushed hard for the new bankruptcy law) and we also would not have the sub-prime mortgage debacle on our hands. The real problem with the sub-prime market wasn't with the people who got the loans, it was with the adjustable rate loans that they were sold. With rates that would balloon from less than 3% to something like 18%, it's no wonder people couldn't make the payments. It's ridiculous to suggest that the lenders could not afford a more reasonable rate increase. They just wanted obscene profits. And they got 'em from everyone who didn't default.

As Bmaz notes, corporate risk is spread throughout the population while the cards of corporate ownership are held rather close to the chest. This is clearly a recipe for the relatively small club of owners to raid the public treasury without providing any public goods in return. And that is just as clearly what has been happening for quite some time. If the problem lies in ownership, then why not redefine who owns a corporation? It seems kind of ridiculous to claim that investment is the sole asset of a corporation, yet if the investors are declared to be the sole owners, then that is exactly what is being asserted. As soon as some of that investment is used to hire employees, the people who will actually carry out the mission of the corporation, then those employees become corporate assets. And as no "person" (corporate or otherwise) owns another person, governance of those assets immediately fall upon the employees themselves. They should be considered as having ownership in the corporation and therefore entitled to participate in corporate governance.

A fundamental problem arises out of the failure to understand how deeply employees are involved in the success of the organization they work for. When shareholders alone delegate a board of directors to oversee the operation of the company, the interests of those employees are left out. Because the facile picture of employees as economic agents with no loyalty is so common, the employees are not given a role to play in the governance of the company. Yet they have an enormous stake in the success of the company; not so much to create dividends for the stockholders, but to make their lives worthwhile by participating in a venture that impacts society. The very ties that build employee loyalty toward the organization, the social structure that they fit into, are also the keys to recognizing that the interests of the employees are aligned with the interests of the stockholders. For the success of the organization is what guarantees continuing returns on the investment made by the stockholders. In addition, the employees are intimately knowledgeable about the workings of the company in a way that remote stockholders can never be. If they were given a significant role in the governance of the company, we would see much less of the current trend whereby the senior management of a large corporation raids it for their own personal gain, under the trusteeship of an unresponsive corporate board.

As useful as market analyses have been toward our understanding of economics, it is long past time to recognize that humans are much more complex than mere selfish agents of rational expectation. We are social beings by nature, and with the vast interdependence of modern society, we are also social beings by necessity. We need to understand ourselves better so that we can make our institutions work better. Money is solely a token for resources; it cannot be exchanged for social interaction, yet that social interaction is as basic a human need as food and shelter.

There are corporations, and then there are Corporashuns. Not the same thing; one has principles, the uther dusn't.

Laws are only part of the puzzle; my accountant friends tell me that accounting and finance procedures, which reward managers for short-term profits, PLUS the loss of social safety nets and reduced social trust, continue to skew behaviors toward the predatory.

The market has no conscience. Neither does a corporation, under current law. But they're not rewarded for being socially responsible, and until they are, these problems will continue to spin out of control.
Nevertheless, society can't operate without ethical standards; therein lies the rub.

Socially responsible work and products bear higher up-front costs than offering 'cheaper prices' at the front end. Until we price things to reflect their TRUE costs, the legal identity of corporations is only a contributing factor, IMHO.

I doubt that changing the law regarding the legal status of corporations will solve the issues mentioned in this thread; those legal changes have to be supported and implemented by different accounting and taxation procedures. At least, that's the concensus that I'm hearing more and more these days.

ROTL - I think it is going to take subtle shifts in all of the above. I don't think alteration of the liability veil is the sole answer, nor do think accountancy and taxation alone is it either. It is going to take all those, and probably more. Inertia will not allow wholesale change in any one aspect anyway; that is why I think there needs to be a well thought out package of tweaks that effect a subtle shift toward the good.

Ken Muldrew makes an excellent point above that the employees should be represented in the governance of a company. I would add that members of the communities in which the corporation operates should also be represented. This admittedly may become unwieldy for huge multi-nationals. However, for companies such as chemical plants, nuclear power stations, mining operations, etc. whose business has a significant impact on the local community, those community interests should be incorporated into the business plan. For example, a mining company would be more likely to pursue an environmentally responsible course of action if members of the community had a say in corporate decisions regarding waste disposal.

Phred, I fully agree! The usury laws have been effectively negated through contractual items or legislatively revised for corporate wants, putting many people at the hands of some very unscrupulous entities.

I worked in the oil and gas exploration industry back in the 80s. What is going on now is something of a repeat from that time. There was too much money chasing around looking for an investment, and there were LOTS of oil and gas operators who were more than willing to use it. If you have never read it, a guy named Mark Singer wrote a fascinating book entitled "Funny Money" about the rise and fall of Penn Square bank. Talk about loose lending practices and greed! The result was that several major banks folded or had to be taken over because of the lending practices of one small institution. Remarkably, the situation is virtually identical today but with different players.

EW--suggest you read just how the corps got their "personhood". It was NOT in the court's words, but lifted from the official preface to the court transcript, inserted ...as below:

Added, unofficial language language-change was responsible for accepted law that CORPORATIONS ARE PERSONS.

Don't want to believe it? See "Unequal Protection:The Rise of Corporate Dominance and the Protection of Corporate Rights" by Thom Hartmann 2002, Chapter 6.

[excerpts:]
"The Supreme Court did not rule, in this case or any case, on the issue of corporate personhood.

In fact, to this day there has been no Supreme Court ruling that could explain why a corporation - with its ability to continue operating forever, a legal agreement that can’t be put in jail and doesn’t need fresh water to drink or clean air to breathe - should be granted the same Constitutional rights our Founders explicitly fought for, died for, and granted to the very mortal human beings who are citizens of the United States, to protect them against the perils of imprisonment and suppression they’d experienced under a despot king."


"Regardless how it happened - whether it was a simple error by Davis [[Davis was official court reporter; connected and very friendly to the railroad interests, who wrote the preface to the court document]], or Davis was bending to pressure from Fields, or if Davis simply took it upon himself to use the voice of the Supreme Court to modify the United States Constitution - the fact is that an amendment to the Constitution which had been written by and passed in Congress, voted on and ratified by the states, and signed into law by the president, was radically altered in1886 from the intent of its post-Civil War authors.

And the hand on the pen that did it was that of J. C. Bancroft Davis."

qwerty - I can't speak as to the Davis story; but even if true, that is certainly not the entirety of the genesis of corporate personage. There was a little case known as SANTA CLARA COUNTY v. SOUTHERN PAC. R. CO., 118 U.S. 394 (1886) that put the stamp on the concept.

I apologize for going OT here, but have a question...

BMAZ, there is an interesting article over on RawStory about "All The President's PR Men." In that article, the author cites the National Security Act of 1947, Section 503(f), which ostensibly defines "Domestic Propaganda." That is a fascinating concept, and I am just curious to find out if that is still an active law...

There are some very interesting ramifications, I would think, in how that law could be applied. Is there any way to find out if there have ever been any prosecutions under it?

Sojourner - It appears to still be on the books, but my quick search didn't find any prosecutions under it. That is not to say that there are not any, I just didn't see any; although, I would not be shocked if there were none, it is a bit oblique for a criminal prosecution.

bmaz--that is it: Santa Clara v SPRR
and Davis was the court reporter who, in those days, was resp for collating and publishing verbatim the SCOTUS' judges decisions. He apparently added the rights-of-persons concept into the heading that prefaced the actual text of the judges' opinions. Davis was appointed to the position, which afforded the holder the rights to income from the publication of the official opinions.

so let's pass a constitutional amendment that limits corporate entities to less than full personage

we could also declare that corporations are eligible for direct taxation by the federal government on separate schedule

and while we're at it, we should ban all corporate political donations too

67 seats in the Senate folks, that's what we need

and after that, we impeach scalia, roberts, thomas, and alito ...

bmaz re Davis and SP railroad--

"“In other words, these headnotes by court reporter J.C. Bancroft Davis, ..... Southern Pacific Railroad case when it came before the Supreme Court which ..."

www.thomhartmann.com/theft.shtml
which should display Chapt 6 of his book.

Sorry to sound smug in earlier post. IANAL and have no info on the author Hartmann's bona fides. But what a read!

bmaz, thanks for bringing "SANTA CLARA COUNTY v. SOUTHERN PAC. R. CO., 118 U.S. 394 (1886)" into this conversation.

Coincidentally, some kind soul made me aware for the first time of that case over at FDL yesterday, and I was finally able to identify a name to place the original blame on for the ascension of the Corporatist control over our nation.

I was gob-smacked to read:

In 1886, . . . in the case of Santa Clara County v. Southern Pacific Railroad Company, the U.S. Supreme Court decided that a private corporation is a person and entitled to the legal rights and protections the Constitutions affords to any person. Because the Constitution makes no mention of corporations, it is a fairly clear case of the Court's taking it upon itself to rewrite the Constitution. Far more remarkable, however, is that the doctrine of corporate personhood, which subsequently became a cornerstone of corporate law, was introduced into this 1886 decision without argument. According to the official case record, Supreme Court Justice Morrison Remick Waite simply pronounced before the beginning of arguement in the case of Santa Clara County v. Southern Pacific Railroad Company that
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 opinion that it does.
The court reporter duly entered into the summary record of the Court's findings that
The defendant Corporations are persons within the intent of the clause in section 1 of the Fourteen 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.
Thus it was that a two-sentence assertion by a single judge elevated corporations to the status of persons under the law, prepared the way for the rise of global corporate rule, and thereby changed the course of history.

The above quote was from http://www.ratical.org/corporations/SCvSPR1886.html

I understand the arguments as to how the concept allegedly came to be as a result of weird circumstances; however that kind of neglects the fact that the court can correct it's own mistake nunc pro tunc if it feels it is necessary, and that did not happen. Furthermore, despite constant litigation of the parameters of corporate existence over the intervening 120 years, the Court has not seen fit to revisit or readdress the subject. That kind of speaks for itself as to where they stand; the holding has not existed as an unwanted fluke all this time, it is clearly established stare decisis precedence at this point.

bmaz, given that, is there any way that precedent can be dismantled by the courts (or are they painted into a corner by their own precedent)? Will it require new legislation on the part of Congress and if so, will it have to be in the form of a Constitutional amendment, or will garden variety legislation do the trick?

phred,

IANAL, but someone (it might have even been our esteemed Mary) in the past answered that very same question for me by stating that "trying" to deconstruct all of the law that is based on these corporate "rights" would be to throw away 90% of existing case law.

Could be a wee bit of hyperbole, but I got the point. *g*

bmaz has the facts exactly right about the Santa Clara case (Google it), but left out the most important thing, and that is that the pre-argument comment about the 14th Amendment was what we lawyers call "dictum," or "mere dictum," meaning that although it was said, it was NOT THE BASIS for the ruling of the Court. The Court opinion itself said that the ruling was based on its interpretation of the Santa Clara tax law in dispute, and not on any 14th Amendment argument.

The importance of this is that dictum HAS NO LEGITIMATE VALUE AS PRECEDENT! Yet this is the seminal case that has been mindlessly cited ever since for the supposed applicability of the Fourteenth Amendment to the concept of corporate personhood.

It seems obvious to me that the best and most direct and most legitimate way to attack the corporate personhood concept is to bring a case that directly presents the question of whether the 14th applies in that context. No rational legal analysis could ever argue that it does. To preserve the concept, a court could only say that "it is now enshrined in our traditions by long practice," which would be a truly bizarre rationale for validating the constitutional standing of the most powerful entities among us. Bringing a case like that is our best hope.

Phred - To a large extent, Mad dogs (and Mary) is correct. That is why I was discussing the idea of very subtle shifts or tweaks in several different areas. In the first place, I am not sure you would really want to totally dismantle the existence of corporate personage even if you could; and Mad Dogs/mary are quite right, you cannot because doing so would be such a tectonic change that it would throw pretty much everything related to business, finance, commerce and, really, everything else into such a state of uncertainty that chaos would result. But perhaps the definition of "person" as the term applies to artifices (as opposed to living sentient beings) could be more narrowly and intelligently defined. On the surface, I see no reason this could not be accomplished by legislative establishment of statutory law and an included clause that the subject is declared occupied by Federal law and therefore preempted from contravening state law. I could be wrong here, but that is my initial thought. I also think the same goes for redefining the limits of the corporate liability veil, tax structure, and standing of individuals and/or community ability to have standing against corporate entities and their management. Again, this is not going to be an easy or simple task; either intellectually or politically.

Jane Harman's 1/5/06 HuffPo blogpost on the 1947 National Security Act:

http://www.huffingtonpost.com/rep-jane-harman/congress-needs-the-facts_b_13334.html

Toby, that would be the way to attack the concept; I got to think that it has been attempted at some point. For the reasons of n ot wanting to have to go on the record making "bizarre" law, as you quite correctly note, I think SCOTUS has never sought to clarify this case. Clearly, if they had issue with the way their decision was being interpreted and used, they certainly could have as I related above. Surely they could have carved out an opportunity to set things straight in any number of cases over the years, even if not specifically pled on appeal, if they really wanted to. Seems pretty clear they do not; unfortunately. I also think that if forced to drop the pretense of the 14th Amendment, my guess is they would shoehorn the same concept in under the commerce clause, which has been substantially expanded over the years. Do you know of any specific cases on application of the 14th that have been considered since Santa Clara?

Bmaz, there have been no specific cases I am aware of, but I have done only limited research. What I found was that the case was never cited for the 14th Amendment at all until one case in 1919 or 1920, when it was cited for the language of the headnote without further examination. You could easily check any other cites in Shepherd's, if you have access to one.

I have to disagree about the utility of a direct attack. The assumption that the Court would have changed the rule if it disagreed with it does not necessarily hold true, they would have had to have had a case that presented the question squarely. It is a basic principle of jurisprudence that a court will not decide a case on Constitutional grounds unless absolutely necessary. That is why the Santa Clara Court found another basis for its decision. But a direct presentation would force a detailed articulation of why or why not, which would have to begin with a reference to the intent of the 14th Amndment itself, and that intent clearly could not encompass corporation, since they were not a disadvantaged class. On a question of such moment, no Court with any integrity could say that it was wrong to grant personhood, with all the power that comes with that in the corporate context, essentially making corporations into supercitizens more powerful than any others, and then simply leave the whole thing in place with a simple, "Never mind, too much trouble to make a change." It would undermine respect for all legal jurisprudence to do so.

I would also add that the Commerce Clause could not confer the entire Bill of Rights. Only the 14th can do that.

bmaz, agree with two points; (a) your point that laws, accounting practices, etc would need to be altered in coordination, and also (b) that incremental shifts are probably more (sane, workable, adaptive) than tectonic shifts.

Fascinating that this legal interpretation originated in the 1880s, as many things trace to that period. But the phenomenal changes in culture, communications, technologies, and finance in the 120 years since then suggest that the older interpretation no longer fits current circumstances, and needs to be adapted.

It's interesting to see this discussion; I've recently heard this theme emerging from a couple business contacts, and also several accountants. Seems to be a more frequent topic of serious, thoughtful conversation these days; that in and of itself is worth noting.

FWIW, several of those accountants are/were moderate Repubs... pre-Bush. Now, they're politically homeless. (But I remember when they were just horrified at watching the Arthur Anderson mess. Perhaps this is more post-Enron fallout?)

It is not really the Court's job to be a social engineer and keep all change painless. It is the Court's job to interpret the Constitution, and to do it in a way that is intellectually honest. They swore an oath to do so. If the question ever reached them with a direct presentation, they would have an obligation to let the chips fall where they might. Similar changes have been necessary in the past. Consider the evolution of tort law, specifically product liability law. Consider Brown v. Board of Ed. Massive changes followed the initial rulings. Society must adjust to the plain language and intent of the Constitution, not the other way around. That is the central premise of our entire system.

i'm no lawyer but (heard that before?) -

i can easily understand that a court might agree to the fiction of a corporation being a person for the convenience of the court - though i don't know if that was the import of the 1886 decision or not.

i cannot accept that,

the corporation deserves any sort of additional benefit, having been artificially labeled a "person".

the original concession to being a "person",

at least as i, in my ignorance, posit it,

would have been simply, and exclusively for the convenience of the court.

but what may have happened in succeeding years is that this word "person",

which should have been meant in a limited and clearly idiosyncratic way,

has in fact been taken literally by courts and, therefore,

corporations have been granted the same rights as individual citizens.

for christ's sake.

under no circumstances was the first amendment ever conceived of as applying to corporations.

the first amendment was intended to protect outspoken citizens,

concerned with the conduct of their government,

who disagreed with the crown.

it was conceived based on the personal experience and the historical knowledge of folks like franklin, jefferson, washington, monroe, madison, hamilton, et al.

it was designed to protect individuals who disagreed with the crown,

against the depredations of their liberties by the crown.

(you know, like protecting folks wearing anti-bush t-shirts to a bush event from being arrested)

if a judge wants to be an originalist, or a literalist, or any other of the numerous purblind right-wing cliques of legal scholars who claim to know the "proper" interpretation of the u.s. constitution,

then he/she damn well out to agree that corporations were never intended to be protected under the first amendment.

but then,

i have not made a place in the equation

for corporate money.


by the way,

speaking of money and scholarship, did you know there is an entire "center", affiliated with the univ of virginia in charlottesville,

whose chartered purpose is to pursue and protect the corporate interest in the first amendment?

sweet.

The case was about the 14th Amendment, which was adopted after the Civil War to make it explicit that the Bill of Rights (Amendments 1 through 10) applied to the newly freed slaves, who were not previously considered to be full "persons." The 14th was later construed to also apply to other disadvantaged classes of Americans. There is no way the corporate entity could ever have been considered disadvantaged. And therefore there is no way a modern Court could ever make the argument that the 14th applies to corporations. Doing so, in fact, makes them supercitizens, i.e., they have more money, accrued from the capital of many, more personal power, derived from thousands of employees, and then to add the protections of the Bill of Rights makes them practically immune from all the limitations that ordinary citizens must operate under. Which is why corporations have been able to take over the world, and will dominate us all in the future.

Mad Dogs, sorry I missed your earlier exchange with Mary, I bet it made good reading :) Thanks for mentioning it.

bmaz, Toby and all, thanks for the further discussion. Toby, like you, the notion of the corporate supercitizen is something that I simply find indefensible. Yet, correct me if I am wrong, but I thought a Supreme Court review of campaign finance reform did in fact address this question. I thought they found that limiting contributions to campaigns was a restriction of the free speech of wealthy individuals and corporations that was unacceptable since corporate entities are recognized as citizens. It's been a long time (wasn't this a case back in the '80s?) and my memory is not very good, but that was my understanding of the problem at the time. But, as I said, I may be remembering things poorly.

Toby - First off, my thoughts here today have been off the top of my head as I came and went during brief escapes from paying work, so they are not necessarily completely thought through. Secondly, I am pretty decent on Constitutional law on criminal due process and civil rights issues; but have not exercised any residual knowledge of other areas much since law school, which has now become a long time ago, so any thoughts offered may not be particularly bright. That said, I think you underestimate the ability of the SCOTUS to creatively bend and contort all types of legal substrate to fit their desired objectives. Take Bush v. Gore for instance; please. If you have followed search and seizure law over the last 25 years, you would recognize the rubber joints that must be in the Justices bone structure to arrive at their decisions. You have greater faith in their intellectual honesty and consistency than I do. I would also note that for all the sturm and drang the right emits over "activist judges", the most horrendous examples of that theory are almost all at the hand of conservative SCOTUS factions, of which the Roberts/Scalia/Alito block is shaping up to be the most active. Oh, as to my commerce clause thought, it strikes me that all that is needed is a basis, any basis, that could permit Congress the rational basis foundation to legislate the definition of corporate entities as persons. There may be more germane places, but I would think the commerce clause would do in a pinch. Again, I may well be totally full of it here.

re: Santa Clara v. SP Railroad...
Has no one read Hartmann's evidence, freshly disclosed in 2002, that the ONLY reference to corporations-as-persons is the HEADNOTES composed and invented by the court reporter; there is NO reference in any of the judges opinions as officially transcribed by that court reporter.

After all the foregoing discussion, is it not prudent to look at Hartmann's work? Just go here

thomhartmann[dot]com/theft[dot]shtml

and read his Chapter 6; then gum it to death.
Rather Alice In Wonderland to pass sentence before the verdict.

I fully understand the Hartmann point; what I am saying is that that fact set, assuming it is true in every regard, is but a mere part of the legal puzzle that is the current precedent and existence of corporate personage. It may, possibly, be important; but it is by no means determinative legally. That is a sentence I can quite easily pass without one iota of hesitation.

To Phred: the case you refer to upheld corporate free speech under the First Amendment because the Court ASSUMED that the 14 Amendment applied to extend personhood to corporations. To my knowledge, there was no direct inquiry into whether that was a proper application of the 14th Amendement. I don't think there ever has been since the Santa Clara case.


To Bmaz: Brother, you misunderstand me. The only reason I did not include a snarky comment about the poor chances of getting the current Court to act with integrity is because I preferred to stress the obligation that exists for them to do so. But you are absolutely right that the ideals of jurisprudential behavior have been totally flushed down the toilet in recent years. I studied Constitutional law for the first time in 1981, at the start of the Rehnquist era. Almost nothing of what I was taught about the First, Fourth, Fifth, and Sixth Amendments remains good law, and I have raged and agonized over each tortured opinion that has crumbled what used to be a sturdy edifice of protection for individual liberty. The "totality of the circumstances" style of "analysis" enshrined by Rehnquist is just an all-purpose excuse to get the result you want without having to offer any specific articulated justification. Nobody is more cynical about the Court's integrity than I am, friend, but every once in a while, it is still a good idea to refer back to first principles, and that is what I did in my comments. Societal behavior should be made to conform to the Constitution, and judges should always observe the basics of logic and intellectual honesty and the clear language and intent of the Constitution in deciding cases and writing opinions.

And if they did in a case that clearly presented the isssue of corporate personhood under the 14th Amendment, I believe they would have to rule that the 14th does not apply to corporations.

Toby - No, you know your stuff very well; I kind of figured you understood the score. I come and go here often, but usually in fairly short bursts around other work, so it leads to fairly truncated comments, sentences and thoughts which to the uninitiated can come off as confrontational when it really is not in the least, or if it is, constitutes honest debate. i spent too many years in the past as a trial advocate; the attitude is still ingrained. Most of the regulars here have me well figured out and don't give it a second thought. When I am actually taking after somebody, trust me, it isn't very subtle or chivalrous. I also have a nasty sarcastic snark streak. Bottom line, pay no attention to me, I'm mostly harmless. You have a very good bead on law and procedural aspects thereof. There is never enough of that, and even in instances where there is disagreement, smart discourse is always welcome here; that is one of the many redeeming aspects of TNH.

As an aside, I also went to law school in the early 80s, and had the undistinct pleasure of having Rehnquist guest lecture on con law. As he came from Arizona, we already knew what he portended, even back then. There was literally something creepy about the guy. Blechh!!

Bmaz, I never thought you were going after me. We are obviously on the same side. I just thought I had not made myself clear about my lack of faith in the integrity of the Court. I have little such faith, same as you, but I still think it would be worth putting them to the test.

Toby -- Thanks for clarifying the point about the 1st v. 14th amendments with respect to campaign finance. I'm curious, what sort of case do you imagine could be brought that would force the Supreme Court to deal with the 14th amendment question head on?

Phred and Toby - I would think there are a million different ways to raise the argument; the key is pleading it with this intent from the get go, and properly protecting the argument throughout the rest of the case and on appeal (because such an argument will be bounced early at the trial level; got to keep it perfected after that). For instance, kind of hokey in a way, but it could be raised in something as simple as a challenge to standing as a proper party on certain claims, actions, etc. Taxation issues, liability veils, jeebus with the right fact scenario, it could be a whole host of places.

Bmaz. you've got it exactly right. A lot of work required, but what a prize! I wish I was free to do it, and can't understand why some public interest group hasn't tried to.

Toby, I can see one impediment from a practical standpoint. I don't know about others, but I didn't try any civil case in Federal court that I did not absolutely have to (mostly 1983 actions with federal agency affiliated defendants) because the docket is so freaking slow. In my jurisdiction, at least as of 2000 or so when I walked away from most trial work, you could wait up to a year for a written order on a Rule 12(b)(6) motion before the defendant had even filed their answer, and it only slowed down from there. Although you certainly could approach this issue from a state forum, i would think that if you really cared about it, you would want to proceed through Federal jurisdiction. I always wanted to pursue issues of conscience and principle; but I always wanted more to wrap things up and collect my fees. Overhead is a bitch.

Thanks as always bmaz. Toby, perhaps some public interest group could be persuaded. Would the ACLU be appropriate? Maybe I can start pestering the local chapter... Of course, with the current make-up of the Supreme Court, we can't exactly count on them arriving at a proper Constitutional interpretation of the 14th amendment, no matter how often they try to tell us that the conservatives on the court are "originalists".

Jeepers Phred, you have raised a fascinating thought and I bet you don't even know it! Much of ACLU's litigation is filed in their name as opposed to the aggrieved individuals at the root of the matter. If the concept of corporate personage (and it's lesser included corollary of organizational personage because benevolent organizations are, in fact, usually non-profit corps) is scuttled, will that deleteriously affect the ACLU's standing to bring their litigation? If so, they may indeed have little interest.

bmaz -- what's the expression, "out of the mouths of babes"? Indeed, you are right, that I had not considered that such a case could have ramifications for benevolent organizations. Geez, what a can of worms...

It would be a project of Herculean proportions. Only a public interest group of major standing would have the resources and the institutional continuity to see it through. The conflict of interest in having the work done by even a non-profit corporation might indeed make them very reluctant. But of course, their risk would be nothing compared to that of the for-profits corps. Maybe the best method would be to have a citizens action commitee fund a private legal team for the specific purpose, but those lawyers would have to make it their life's work, because the forces arrayed on the other side would be very daunting. Having said all that, I think the legal validity of such an action is clear, and it truly would transform much of what we complain about in the economic, political, and even the judicial systems. If we stay on the path we are on, corporations we rule the known universe, and the rest of us will all be reduced to insect status. Of that I am certain.

Correct: corporations WILL rule the known universe.

Wonderful spirit on this thread; what a pleasure to read!
But I think the worries about non-profits being whomped by changes to the 14th Amendment should not be an obstacle to more thinking about this topic.

The two organizations are quite different in critical respects.
member != shareholder.
(Sorry: != is just shorthand for 'is not equal to')

A member contributes, but does not 'own' a portion of any non-profit organization.
In contrast, a shareholder 'has [limited] ownership' in a corporation; corporate guidelines stipulate the nature and extent of the 'ownership' that shares represent. But shares are freely sold, traded, gifted... transferred within 'the stock market'.

However, this form or 'transfer' doesn't happen with non-profit memberships.
For instance, I don't 'transfer' my membership in the local Art Musuem to a friend or sibling; I either purchase a membership on their behalf, which then needs to be updated (by them or by me). But at no point do I 'own' any portion of the musuem, the expertise of the curators, or the collection(s).

I realize that an art museum is not synonymous with the ACLU; just thinking through what properties of organizations make them 'corporations', and ownership would seem to be a critical property.
Membership != ownership.
Owning shares == limited ownership (which results in marginal responsibility and no accountability)

So it seems that the two types of organizations are fundamentally different -- and it's a function of ownership. Therefore, how could a reinterp of the 14th Amendment screw up non-profits -- or NON-ownership organizations? Babies don't always get tossed out with bathwater.

Man, do I agree with that. Along with massively increased education across the board, I think resetting the corporate existence is the closest thing to a magic bullet we have for the broad spectrum of serious ills we have in this country. Hey, and if anybody out there has more dollars than sense, I don't work on many cases at one time any more and would be thrilled to make this my life's work if you will ante up the money and resources to do it right.....

They would lose the Bill of Rights protections extended throught the 14th Amendment, which would leave them very vulnerable to politically motivated investigations.

Man, do I agree with that. Along with massively increased education across the board, I think resetting the corporate existence is the closest thing to a magic bullet we have for the broad spectrum of serious ills we have in this country. Hey, and if anybody out there has more dollars than sense, I don't work on many cases at one time any more and would be thrilled to make this my life's work if you will ante up the money and resources to do it right.....

Toby -- would there be a way to carve out a protection for non-profits? All we are really trying to achieve here is to curtail the supercitizen status of for-profit corporations, aren't we? As ROTL notes, there should be some way to distinguish between protecting non-profit endeavors and preventing corporations from obliterating our system of government.

bmaz -- I would chip in, question is how much would it cost to "do right"? Perhaps we could start some sort of Constitution Defense Fund. Everyone of all political stripes who gives a damn about our Constitutional form of government would be welcome to chip in...

ROTL - You are right for many, if not most, purposes. But for the isolated issue of jurisdictional standing, the distinctions you draw arguably don't matter. I think the standing issue, even if it would exist (which is no given; it was mostly just an interesting discussion point I thought) could be worked around and solved by appropriate legislation. The discussion point was this for what its worth, and again it was abstract and hypothetical to start with: A party seeking to invoke the jurisdiction of a given court must be identifiable. Persons (people) are identifiable. Partnerships and proprietorships may be captioned under the company name, but they are really parties before the court by and through their owners and general partners as "persons". If a corporation is not itself a "person", how does it come before the court? Through the owners? That could be millions of people for a public corporation. Through the management? Why should they bear the personal responsibility alone? Who will be the persons responsible for the benevolent organizations? Do they have full liability? Members of ACLU are not "owners"; so does this mean that the board of directors bear the personal liability? Take the wiretapping cases the ACLU is doing for instance. If the telcos win out and are awarded attorney fees and costs, that could be in the millions, if not tens of millions, of dollars; are the directors liable for this? Again, this is a pretty out there theoretical discussion, and even if it were correct, there are ways around the problem I think; but this is why this whole issue is such a clusterfuck and why anybody who is currently the beneficiary of corporate personage, including entities like the ACLU, are not likely to be chomping at the bit to spend a fortune in time and money to lose it.

Phred-I don't know how you could carve out an exception for non-profits, but really, how badly do they need it? The one prosecuting this action we are discussing might be subject to retaliatory prosecution, but not the others. A business has no legitimate need to hide behind the Bill of Rights if they are following the rules of law and common decency.

Bmaz-You're getting to a level of complexity that's way above me, but I would submit that the corporations fully were subject to actions at law before the Santa Clara case, so I would asssume that they could just go back to the old rules.

Bmaz, I won't answer all your points, but briefly:

1. I see your point about how the legal requirements for 'standing' inadvertantly contributed to the legal authority that 'corporations' now enjoy.

2. There are a variety of ways that non-profits can be set up, and IIRC one that I worked for also took the precaution of insuring the organization and its Board members. So with respect to potential payouts... I can see risk. But at the same time, the system we have now is terribly destructive and it isn't going to fix itself -- that will have to come from the process of legal challenges.

The 14th could be a strategic issue that would have the best chance of addressing other issues: from ethics, to environmental degradation, to fiduciary responsibility, to fraud.... a whole host of improvements could occur, IMHO.

And BTW, I don't always have time to read Glenn Greenwald at Salon, but he has done some great stuff on the telecom wankering (Oct 17, 18). Really good.

Toby -- IANAL so I have no idea about how badly I would need to carve out protections for non-profits. However, if bmaz is correct and organizations such as ACLU would lose their legal standing to bring cases before a court, that seems to me to be a real problem. From my spectators point of view, non-profits frequently bring cases that end up before the Supreme Court that serve the interests of the public in a way that individuals would be hard pressed to do. So if we can contest the notion that corporations can enjoy supercitizen status and yet preserve the ability for non-profits to represent the public interest in a court of law, then it appears we need to make sure that the former doesn't undermine the latter.

Phred - That random musing on my part was a little theoretical. I am convinced that any problem could be fixed by statutory language if the 14th Amendment justification is set aside; so it is not necessarily ultimately fatal to non-profits or regular corporations ability to gain proper standing. But my original point was in response to your question on whether benevolent groups like the ACLU would be eager to take this on. Because success on this argument could throw their ability to gain standing into uncertainty and flux until a statutory remedy is made (again this is all theoretical, I may be full of dung in this), I would think this would terrify any corporation, whether benevolent or multi-national. Neither politicians, the government, nor the powerful big money corporations have any love of groups like the ACLU; if the ability of the ACLU to operate is in the hands of these groups, you just know which way that is going to go. For this reason, the uncertainty, if I was the ACLU, this is one battle I would not want.

I think the big picture is that if the corps can be deprived of personhood, they will still survive on the same basis they did pre-Santa Clara. And the Court would have to come up with extensive new rules, but will always leave a path for legitimate do-gooders to bring cases before the Court. First things first.

Oh, I agree with that wholeheartedly; I just think goofball issues like this are part of why there is so much inertia in making the bif first move.

Bmaz, you're right, but in any case, doing it right would be a huge, uphill fight. Still, I wish someone would try it. I was thinking, maybe the best and cleanest approach would be a declaratory judgment action.

Toby, for us non-lawyers what is a declaratory judgment action?

In federal court,, unlike in most state courts where only an actual controversy can be adjudicated, there is an action called an action for declaratory judgment. You can look it up online in the Federal Rules of Civil Procedure. Basically, you come before the court and declare that you have a need to know what the law actually is on a given issue. The judge is then supposed to declare what the law is with respect to that issue. So, as here, and this is theoretical since I haven't practiced law for a long time, a plaintiff could allege that his life is adversely affected by the unfair and oppressive practices of corporations, made possible by the enhanced and undeserved protection from various legal enforcement mechanisms that is afforded them by their claim of personhood under the 14th Amendment, which allows them to use various Bill of Rights Amendments to conduct activities outside of their general purpose and to resist appropriate investigations into their activities.

Perhaps other lawyers here can comment, but it seems to me that this would be the simplest and also the most sweeping way to tackle the issue we have been discussing.

Perhaps the best specific allegation might be to allege that one's political rights are unconstitutionally impeded because the "free speech" of corporations has bought and paid for all the politicians and the entire political system, and that that only happened because they claim the protection of the First Amendment, as extended to them through the 14th Amendment.

For a good historical overview of this issue, see The Hijacking of The Fourteenth Amendment, by Doug Hammerstrom

Toby, thanks for the explanation and the book suggestion, I appreciate it!

Phred, it's just a short article, one of many available on this topic if you Google "corporate personhood, 14th Amendment, Bill of Rights."

Got it Toby -- Thanks!

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