Corporate Personhood: A Limit to Corporate Empowerment

Following the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission (2010), the American public has grown increasingly wary of the Court’s enshrinement of corporate rights. [1] In Citizens United, the Court majority interpreted campaign spending as an exercise of free speech, more specifically political speech, and granted corporations protection from government restrictions on campaign spending. In doing so, the Court seemingly opened the floodgates to an increased volume of corporate rights cases—emerging at a level much higher than previous decades. [2] 

With this influx of cases and expansion of corporate rights, grassroots organizations such as “Move to Amend” have partnered with members of Congress to advocate for abolishing corporate personhood and all other corporate rights. [3] Proponents of this movement assert that corporate rights have been expanded by the Supreme Court under the guise of corporate personhood. These abolitionists fear that courts have begun viewing corporations as equals to “flesh and bones” natural persons; beyond this, they believe that courts have prioritized the rights of corporations over the rights of citizens. This is in line with what abolitionists believe about corporate personhood’s influence on elections as well. In particular, following Citizens United, abolitionists fear that corporations will be able to use their financial resources to elect candidates who will turn a blind eye to corporations’ questionable business dealings or will push the agenda of private companies. If this is the case, proponents claim that corporations would have a dominating influence over average voters with less resources or influence. [4] Ultimately, abolitionists are claiming that the rights of natural persons are being threatened as a result of the legal doctrine of corporate personhood. Though certain concerns raised are valid, corporate personhood is not a threat to the rights of people, nor is it to blame for corporations’ growing influence over the government. 

Corporate rights, unlike the rights of natural persons, were not enumerated in the United States Constitution. Natural persons were granted rights such as the freedom of speech, the right to remain silent (against self-incrimination), and more with the ratification of the Bill of Rights. Unlike the rights of natural persons, the rights of corporations are based on a legal fiction: corporate personhood, or the idea that corporations are legal persons with rights, and that they can own property, enter into contracts, or sue and be sued by individuals. [5] Corporate personhood establishes that corporations, much like natural persons, can enjoy certain rights as a separate entity from their owners, shareholders, employees, or anyone in relation to the corporation. 

While abolitionists fear that the Supreme Court has begun expanding rights such as the freedom of speech or freedom of religion to corporations under the premise that corporations and shareholder rights are separate, courts have in fact been doing the opposite. Instead of upholding corporate personhood, courts have been treating corporate rights as extensions of the rights of their shareholders, thus only preserving the rights of natural persons. [6] An example of this is Burwell v. Hobby Lobby Stores, Inc. (2014), where the owners of Hobby Lobby sued Kathleen Sebelius, the Secretary of the Department of Health and Human Services at the time, in order to forgo the provision of birth control for its employees mandated by the Patient Protection and Affordable Care Act. Hobby Lobby’s owners claimed that the Act violated their First Amendment rights to freedom of religion, preventing them from organizing their business under their Christian beliefs. [7] 

The court ruled in favor of Hobby Lobby, stating that the Department of Health and Human Services’s enforcement of the Patient Protection and Affordable Care Act violated the Religious Freedom Restoration Act of 1993 (RFRA). Justice Samuel Alito, in his majority opinion, wrote that the court sided with Hobby Lobby on the basis that the regulations “substantially burden the exercise of religion.” He cited the hefty fines the owners would be subject to if they had not complied with the mandate as evidence of this substantial burden. Further, Justice Alito explicitly mentioned the concept of corporate personhood, stating, “a corporation is simply a form of organization used by human beings to achieve desired ends… When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people.” [8] Citing the ruling from the Third Circuit on Conestoga Wood Specialties v. Burwell (2013), Alito went further, affirming that the courts view corporations not as separate entities, but as extensions of their owners, employees, and shareholders. [9] This illustrates how courts do not view corporations as persons deserving of separate rights, but as tools that expand the rights of the individuals related to them. Instead of expanding the so called rights of corporations, courts have expanded rights so that the people running the corporations would be protected from breaches of their rights. 

Moreover, in cases where the Court viewed corporations as separate entities and not as extensions of natural persons, it has been reluctant to extend rights to them. The contrasting results of the FCC v. AT&T (2011) and Silverthorne Lumber Co., Inc., et al. v. United States (1920), both corporate Fourth Amendment cases, further support the idea that courts will grant corporations rights only in an effort to preserve the rights of natural persons involved with the company. In FCC, where AT&T sought personal privacy protections against the government’s probe into its business practices, the court stated that while the definition of “person” for the purposes of Freedom of Information Act (FOIA) included corporations, the right to personal privacy did not extend to corporations. [10]  Writing for the unanimous majority,  Chief Justice John Roberts states, “a corporation, partnership or unincorporated association has no personal right of privacy… It seems to be generally agreed that the right of privacy is one pertaining only to individuals, and that a corporation or a partnership cannot claim it as such.” [11] The majority opinion dissects the definition of “person” in context of the law, with Roberts reaching the conclusion that corporations are not capable of arguing for personal privacy protections. Since this case did not involve the privacy rights of natural persons, no privacy rights were extended to the corporation. Roberts even humorously concluded the majority opinion with, “we trust that AT&T will not take it personally.” [12] 

While the Court denied corporations Fourth Amendment protections in FCC, it reached a very different conclusion in Silverthorne Lumber Co., Inc., et al. v. The United States (1920). The Silverthorne case was concerned with the illegal search and seizure on Silverthorne Lumber, which led to the subpoena of its owners who had been charged for tax evasion. Justice Oliver Wendell Holmes Jr., in his majority opinion, criticized the government for its illegal acquisition of evidence against the owners (Silverthorne and his father) and stated that the illegal search and seizure had violated their Fourth Amendment rights. In violating the rights of the Silverthornes, Holmes stated that “the rights of a corporation against unlawful search and seizure are to be protected even if the same result might have been achieved in a lawful way.” [13] 

Both cases involved the Fourth Amendment rights of a corporation, but only one succeeded in being granted the right. The key difference was the involvement of the right of a natural person, or more accurately, of the rights of the owner of the corporation. AT&T failed to receive Fourth Amendment protections because the courts did not find a connection between the rights of the corporation and that of its shareholders. In Silverthorne’s case, the court viewed the violation of its owners’ rights as the violation of the corporation’s rights. By extending Fourth Amendment protections to the Silverthornes, the court extended those same protections to the corporation that they owned. Just as in Hobby Lobby and Conestoga, the majority ruling in Silverthorne illustrated that courts will expand the rights of corporations if they are to protect the rights of the people it encompasses. 

Moreover, courts are not expanding the rights of corporations under the principle of corporate personhood, they are instead rejecting it. [14] Cases where corporations have succeeded in gaining rights often rely on the notion that corporations are separate from their owners or shareholders. Thus, courts have not seen corporations as separate entities or “persons” deserving of rights shared by natural persons, but as an extension of people, and will rule in favor of them to protect the people that corporations are made up of. Thus, the belief that corporate personhood is responsible for the expansion of corporate rights is misplaced. 

Another core belief of abolitionists is that corporate personhood causes corporate empowerment, granting corporations excessive influence over society [define what this phrase means]. Citing the influence of corporations over politics following Citizens United, proponents claim that the political and social power of corporations stems from their ability to claim constitutional rights. However, as discussed earlier, corporations do not have enumerated rights. Rights of corporations followed after the incorporation of the Fourteenth Amendment and Santa Clara County v. Southern Pacific Railroad Company (1886). [15] Incorporation extended protections granted by the Bill of Rights, not only in cases of infringements by the federal government, but state governments as well. In the Santa Clara County case, the county sued the Southern Pacific Railroad Company after the corporation had refused to pay the tax enforced upon them on the fences that they owned. [16] This case became a landmark case that extended equal protection to corporations under the Fourteenth Amendment. Though not stated explicitly, the headnote over the opinion of the case mentioned that the court refused to hear an argument on whether the extension of the Fourteenth Amendment applied to corporations, because Chief Justice Morrison Waite and all of the justices at the time believed that it did. [17] Since then, corporations steadily obtained more rights, as they began challenging laws that threatened their own interest. 

Yet, contrary to the belief that courts were responsible for this expansion, the reality is that courts only played a minor role in the expansion. [18] Corporations, even prior to the incorporation of the Fourteenth Amendment, were powerful organizations that demonstrated great influence over government and other individuals. [19] Corporations’ wealth and longevity, not its newly acquired rights, are what contributed to their growth and increasing influence. [20] Historically and to this day, there are limited regulations on the wealth that corporations are able to amass and how long corporations can remain in business. With these factors and the ongling process of economic globalization, many of the corporations in the United States have found avenues to maximize profits with limited fear of regulation. 

However, corporations’ ability to make and maintain profit is mostly a consequence of their ability to adapt to the current economic system. [21] The current legal system and the protections granted to corporations under corporate law are what allow them to function effectively and achieve economic success. The norms that have allowed corporations to maximize profits have led to the economy’s dependence on them and, as a result, such dependence has allowed corporations to dodge government regulation. This influence over government is what contributed to the role that corporations play in our society. [22] Corporations have thus been empowered by this deeply entrenched cultural norm that promotes their growth and stability. As such, no amendment that abolishes corporate rights can reverse the effect of decades of corporate power in the making. Society must address the laws, the government, and its own norms that have created this problem instead of placing the blame on corporate personhood. [23] 

Instead of blaming corporate personhood for the growth of corporate power, abolitionists must search for ways to challenge the socio-economic and political systems that have allowed for the empowerment of corporations. As mentioned prior, the empowerment of corporations is partly due to the lack of regulation on business practices under the current legal system. With the current political climate, there is a slim chance that the legislative branch will be able to pass sweeping reforms that restrict the amount of wealth that corporations can accumulate or for how long corporations can function for. Thus, if abolitionists seek to regulate corporations, they should lobby for greater corporate governance laws or policies that push for greater transparency from corporations. Moreover, abolitionists should lobby for specific issues that they hope to target. If the issue they want to address is corporate campaign spending, they should lobby for restrictions to campaign spending instead generalizing all of the issues of corporations under corporate rights.

Edited by Animesh Joshi and Joanne Park

Sources:

[1] Citizens United v. FEC, 558 U.S. 310 (2010).

[2] Elizabeth Pollman, “Is Corporate Personhood to Blame for Money in Politics?”, Promarket, February 14, 2021, https://www.promarket.org/2021/02/14/corporate-personhood-money-politics-supreme-court/.

[3] Move to Amend. 2009. “About.” Move to Amend. https://www.movetoamend.org/about-us.

[4] Corrine Harvey and Patty Frugoni, “Corporations Aren’t People but They Can Be Psychopaths”, North Coast Journal, August 4, 202, https://www.northcoastjournal.com/humboldt/corporations-arent-people-but-they-can-be-psychopaths/Content?oid=24263895.

[5] Susanna Ripken, “Corporations are People Too: A Multi-Dimensional Approach to the Corporate Personhood Puzzle,” Fordham Journal of Corporate & Finance Law 15, no. 1 (2010): 84. 

[6] Adam Winkler, We the Corporations: How American Businesses Won Their Civil Rights (New York: Liveright Publishing, 2018), 7. 

[7] Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014).

[8] Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014).  

[9] Conestoga Wood Specialties Corp. v. Sec'y of the U.S. Dep't of Health & Human Servs., 724 F.3d 377 (3d Cir. 2013).

[10] FCC v. AT&T Inc., 562 U.S. 397 (2011).

[11] FCC v. AT&T Inc., 562 U.S. 397 (2011).

[12] FCC v. AT&T Inc., 562 U.S. 397 (2011).

[13] Silverthorne Lumber Co. v. United States, 251 U.S. 385 (1920).

[14] Winkler, “We the Corporations.”  

[15] Kent Greenfield, “In Defense of Corporate Persons Symposium: Money, Politics, Corporations & the Constitution,” Constitutional Commentary 30, no. 2 (2015): 34.

[16] Santa Clara County v. Southern Pacific Railroad Co., 118 U.S. 394 (1886).

[17] Melissa Block, “What Is The Basis For Corporate Personhood?,” NPR, October 24, 2011, https://www.npr.org/2011/10/24/141663195/what-is-the-basis-for-corporate-personhood. 

[18] Susanna Ripken, Corporate Personhood (Cambridge, United Kingdom: Cambridge University Press, 2019), 241-269.

[19] Joshua Barkan, Corporate Sovereignty: Law and Government under Capitalism (Minnesota: U of Minnesota Press, 2013), 111-138.

[20] Ripken, Corporate Personhood, 241-269. 

[21] Ripken, Corporate Personhood, 241-269.

[22] Ripken, Corporate Personhood, 241-269. 

[23] Barkan, Corporate Sovereignty, 111-138.