MARCH 11, 2018
ADAM WINKLER, professor at UCLA School of Law and author of We the Corporations: How American Businesses Won Their Civil Rights, talks to LARB Legal Affairs editor Don Franzen about the ways corporations have used the Supreme Court to gain rights.
DON FRANZEN: Adam Winkler has written We the Corporations, which tells a fascinating tale of the history of litigation over corporate rights in the United States, culminating fairly recently with two cases that caught a lot of attention, Citizens United in 2010 and Hobby Lobby in 2014. So, as a way to start, might you to give us some idea, what did those two cases decide, and why were they such a flash point for controversy?
ADAM WINKLER: Citizens United held that corporations have the same free speech right as individuals to spend money to influence elections. And Hobby Lobby held that corporations have religious liberty under a federal statute, enabling them to claim an exemption from a requirement to include birth control in employee health plans. These cases raised a fundamental question: how did corporations gain our most fundamental rights?
One of the questions you attempt to answer is whether these two cases are revolutionary or evolutionary.
These two cases are both evolutionary and revolutionary. They are evolutionary in the sense that they are only the most recent chapters in a much longer story of corporations seeking the rights of people. In fact, corporations have been fighting to win constitutional protections in the Supreme Court since the earliest days of the United States and have proven remarkably successful. These cases are nonetheless revolutionary, in that they extend fundamental rights of personal conscience and political freedom to corporations. While corporations have long been held to have property rights, only more recently has the Supreme Court extended what we might think of as “liberty rights” to corporations — rights associated with personal conscience, political freedom, and bodily autonomy.
And it seems a little counterintuitive that a corporation that has neither blood nor bones nor anything physical, for that matter, would end up enjoying comparable civil liberties to real, flesh-and-blood human beings. But your book actually tells us that the story starts in the beginning of the 19th century, with in a way a reflection of the conflict between Jefferson and Hamilton and the United States Bank.
That’s right. The struggle for equal rights for corporations is very old. The first Supreme Court case on the rights of African Americans wasn’t decided until 1857. But the first case on the rights of business corporations was decided a half-century earlier, in 1809, and it involved the Bank of the United States. The framers’ debate over the Bank of the United States is famous for giving rise to the two-party system, as well as a memorable rap battle in Hamilton the Musical. But it also gave rise to the first corporate rights case. The Bank of the United States went to the Supreme Court, seeking protections against a law passed in Georgia that taxed the bank. From that earliest case, the Supreme Court has been broadly reading the Constitution to protect the rights of corporations.
In fact, I think your book cites a fascinating statistic, if I may repeat it: from 1868 to 1912, there were 28 Supreme Court cases brought under the 14th Amendment relating to African-American rights, but 312 cases brought relating to corporate rights. So there’s vastly more litigation over corporations’ rights than there is over African-American rights.
That development was the result of one of the most fascinating, and frankly shocking, stories in the history of the Supreme Court, where a lawyer named Roscoe Conkling went to the Supreme Court claiming that the drafters of the 14th Amendment intended to protect corporations. The 14th Amendment was adopted after the Civil War to protect the rights of newly freed slaves, but Conkling had been on the drafting committee that wrote the 14th Amendment, and he misled the justices about the purpose and meaning of the 14th Amendment. The Supreme Court ultimately agreed with Conkling’s interpretation of the 14th Amendment and extended fundamental rights of equal protection and due process to corporations.
Let’s talk a little bit about the 14th Amendment itself. Just to quote the exact language, I have the 14th Amendment here in front of me, “Nor shall any state deprive any person of life, liberty, or property, without due process of law, nor deny to any person within the jurisdiction, the equal protection of the law.” It was of course enacted right after the Civil War by a Republican Congress, and it uses the words “persons” and the word “citizens” kind of back and forth in the text. So the issue that I think you’re referring to is a question of whether corporations are persons in the same sense that flesh and blood, the people are persons. Can you talk a little bit about how the court found its way to deciding that corporations are persons under the 14th Amendment?
Roscoe Conkling, when he argued on behalf of the Southern Pacific Railroad in the 1880s, told the justices that the framers of the 14th Amendment had specifically chosen the word “persons” to include corporations. Corporations have long been deemed persons for certain purposes under the law. Corporate personhood simply means that a corporation has its own independent legal identity. It is separate and apart from the stockholders or employees. But Conkling misused the term “person” in order to try to expand the rights of corporations like his client, the Southern Pacific Railroad. The Supreme Court has often read the word “persons” in the Constitution to include corporations too, with the logic being that corporations are artificial persons.
What’s the effect of being a person under the 14th Amendment? Why does that matter so much?
Because corporations were deemed to be persons under the 14th Amendment, they had a right to equal protection of the law and to due process of law. Those were rights they used to challenge taxes, minimum wage laws, and any other number of laws regulating business.
So basically, that’s how you jump from being an artificial creation of the state — which is what a corporation is — to being a person entitled to the same liberties and the equal protection as living citizens.
That’s right. And the Southern Pacific Railroad case in the 1880s claimed that it was unconstitutional to discriminate against the company because of its corporate identity, in the same way that it might be unconstitutional to discriminate against someone on the basis of their racial identity.
One of the interesting things your research disclosed is that part of what led to the advent of corporate rights is a false headnote in the Supreme Court case.
The Supreme Court never issued a final decision in Roscoe Conkling’s case, but another case brought by the Southern Pacific Railroad came before the justices just a few years later. And in that case, the court specifically refused to decide whether corporations were persons under the 14th Amendment. But the Reporter of Decisions, who is the bureaucrat responsible for editing and publishing the official Supreme Court opinions, included a summary before that case saying that the court had held that corporations were persons under the 14th Amendment. And ever since then, that case has been cited for holding that corporations are persons under the 14th Amendment — a principle the Supreme Court specifically and expressly refused to endorse in the case itself.
It just sort of became the law sub rosa.
A few years later, Justice Stephen Field, who was one of the most colorful justices ever on the Supreme Court — he was the only sitting justice ever arrested and the crime was murder no less — saw the potential in the Reporter’s misleading summary. Field thought protecting the rights of corporations was essential to capitalism. And a few years after the Southern Pacific case, he casually cited the Southern Pacific case and falsely claimed the court had held that corporations were people under the 14th Amendment.
That brings us up to what we call the Lochner era, the era when the Supreme Court was striking down regulation on economic activity. But your book points out, ironically, while they were recognizing economic rights for corporations, they were not extending it to the civil liberties area.
The Lochner era is famous for being the most business-friendly in the Supreme Court’s history. And during the Lochner era, the court struck down numerous laws regulating business, including federal child labor laws, minimum wage laws, and zoning laws. But one of the surprising things I found in researching We the Corporations was that the Lochner court also imposed new limits on the rights of corporations, saying that corporations have property rights but not liberty rights. For instance, in a case evocative of this term’s wedding cake controversy, in 1907, in the heart of the Lochner era, the Supreme Court held that a corporation did not have a constitutional right to refuse to do service with an unwanted customer. And in the 1910s, the courts upheld campaign finance laws restricting corporate spending 100 years before Citizens United. The Supreme Court today has lost sight of that fundamental limitation on corporate rights that the Lochner era imposed and granted more liberty rights to corporations. In some sense, today’s court is more business-friendly than even the Lochner court.
How and when did that change? How did corporations come to achieve not just property rights, but civil liberties as well?
Today liberals are the most vociferous opponents of corporate rights, but corporations won liberty rights in the liberal courts of the New Deal and Warren eras. It was the progressive fight for the right of newspapers to enjoy the freedom of the press that led the court in the 1930s to first say that corporations had a liberty right in the First Amendment. And it was Ralph Nader in the 1970s who, trying to protect the interests of consumers, ended up winning a landmark case giving corporations the right to advertise. Ralph Nader’s case was an essential precedent relied on by the court in Citizens United. The liberal transformation of the law in the 20th century was partially responsible for Citizens United.
The case of Virginia Board of Pharmacy, which was Ralph Nader’s case, might be an example of, “Be careful what you wish for.”
In the 1970s, Ralph Nader’s Public Citizen Litigation Group brought the Virginia Pharmacy case to try to overturn a limit on advertising of drug prices. Nader’s interest was in helping consumers to get accurate price information. Nader’s group argued that the First Amendment should be understood to protect the rights of listeners, regardless of the identity of the speaker. In Citizens United, the court used that same theory to say that corporations had free speech rights in elections. Corporations have also used Ralph Nader’s victory to fight against graphic tobacco warnings on cigarette packages, dairy hormone labeling requirements, and securities regulations requiring disclosure of conflict minerals. So many laws protecting consumers have been overturned that Public Citizen has recently come out and called for the entire line of cases built on Ralph Nader’s victory to be overturned. It’s a poignant version of constitutional buyer’s remorse.
No good turn goes unpunished, right?
One of the amazing things I found in my research in the 200-year history of corporate rights is that corporations have been remarkably successful at transforming progressive reforms in the law to serve the ends of capital.
You talk about in your book that corporations have been both leveragers and first-movers in the courts. They’ve taken advantage of precedents, and they’ve created precedents.
The 14th Amendment was passed to protect the freed slaves but ends up protecting business corporations much more. Ralph Nader’s listeners’ rights theory of the First Amendment ends up being used in Citizens United to protect the rights of the most powerful business corporations. At the same time, corporations have also been “constitutional first movers.” They’ve been innovators in constitutional law. They developed novel litigation strategies very similar to those that would be used decades later by the NAACP in its fight against racial segregation. And corporations helped breathe life into some of our most cherished individual rights. For instance, some of the very earliest and most important cases on the freedom of the press were cases brought by business corporations. Indeed, it’s worth noting that the popular film The Post is really about a business corporation asserting constitutional rights.
That does raise a question. While the foundations for corporations having full constitutional rights may be a bit shaky under your analysis, isn’t it a good idea that they do have these rights? What would have happened to the Pentagon Papers for example if the Washington Post didn’t enjoy a First Amendment protection? So, is the advent of corporate civil rights altogether a bad thing?
Corporate rights are not altogether a bad thing. Yet, 19 states have endorsed a constitutional amendment to declare an end to all corporate rights under the Constitution. And while I agree that we need better laws restricting corporate money in elections, it’s wrong to deny corporations all constitutional rights. If corporations have no property rights, then the government could seize their buildings to build a highway without paying any compensation. If corporations had no due process rights, the government wouldn’t have to charge them with a crime, it could just declare them guilty and seize their assets. And if corporations have no rights, then Trump could censor CNN or Fox News, both corporations, without any limit. That can’t be the right answer.
And we never would have seen the Pentagon Papers or Snowden’s revelations.
I think at least the beginnings of a solution can be found in history. In the early 1900s, the court drew a line. It said corporations should have property rights but not liberty rights. They should have the rights that are essential for a business, an economic entity to function, but they don’t need the same rights of personal conscience, individual freedom, and political liberty that you and I enjoy.
In the case of let’s say the Pentagon Papers, just to follow that line of reasoning, how would the court have gotten to the position of saying, “Yes, Post, yes, New York Times, you can go ahead and publish this. Prior restraint doesn’t apply to you”?
There’s no way in a modern society to have an effective free press without corporations being protected. And that’s why when we think about corporate rights, we have to approach them with a certain nuance. We should, for example, recognize there are different types of corporations with different rights. Nonprofit corporations like Planned Parenthood and the NRA are not the same as Exxon. Media corporations also have a special role to play in democracy. We can, and for a hundred years have, allow media corporations to discuss politics without having to empower ordinary business corporations to spend millions of dollars on election ads.
There’s also an issue that you discuss in your book, about corporations’ access to extraordinary legal talent, which maybe contributes to less than a level playing field when it comes to constitutional litigation. You talk about the elite Supreme Court bar, and how corporations are the ones that can afford to hire those lawyers.
Lawyers have played a starring role in all the great civil rights movements. Think of Thurgood Marshall in civil rights or Ruth Bader Ginsburg in women’s rights. The same is true of corporate rights. Every movement that seeks to win landmark Supreme Court cases needs lawyers to bring the cases, to devise novel legal arguments, and to persuade the justices. The difference is that corporations have been able to afford the most expensive lawyers. Among those who argued for corporate rights over the course of American history were Daniel Webster, one of the greatest Supreme Court advocates ever; John Quincy Adams, the sixth president of the United States; and Ted Olson, who became famous for fighting for marriage equality in California but is also the dean of the modern elite Supreme Court bar — a group of specialized lawyers who have unusual success at the Supreme Court and mostly represent corporations.
So, the chances of a petition in pauperis like Gideon v. Wainwright being granted by the Supreme Court seems to be less and less likely?
Studies show that if the Supreme Court receives a petition to hear a case from one of just a handful of members of the elite Supreme Court bar, then they’re much more likely to grant that case. And those members of the elite Supreme Court bar rarely represent individuals. They almost always represent big business. That’s where the money is. That’s who’s willing to pay them to take the case.
Not exactly consistent with the idea of equal justice for all.
Well, we each have the equal right to not sleep under the bridge, right?
Or some equal rights are more equal than others.
Given where we are today with the composition of the court, what are the chances of the court ultimately entertaining the more nuanced approach to corporate civil rights that you’re arguing for?
We’re seeing more and more cases go to the Supreme Court raising the question of rights for corporations. Perhaps the biggest case before the Supreme Court, the Masterpiece Cakeshop case, involves a baker who refused to sell a wedding cake to a same-sex couple. And while the case has led to a spirited public debate about the constitutional rights of the religiously motivated baker, the case is also brought in the name of a corporation, Masterpiece Cakeshop, his business. And one of the people whose rights are said to be infringed by Colorado’s antidiscrimination law is that corporation. There’s a wing of the court that is very protective of corporate rights. The court today is moving in a direction of expanding corporate rights, without regards to nuance. And I think that’s why it’s been so controversial.
Do you think in the Masterpiece Cakeshop case, we might see a right of association or a right of non-association recognized? So, then we would have free speech, religion, and then association rights for corporations?
It is possible. It’s not clear how the Supreme Court is going to rule on the Masterpiece Cakeshop case. The case is argued primarily as a matter of free expression, not free association. But we’re not sure how the court’s going to go in that case.
I don’t want to denigrate bakers, and I would agree there’s some art in baking a cake, but it’s not the same as writing a novel or a symphony. But we’ll see if they decide it’s constitutionally protected speech.
It’s always hazardous to predict what Anthony Kennedy’s going to do, especially in a case like this where he’s pulled both ways. But the Masterpiece Cakeshop case highlights that this issue keeps coming before the Supreme Court. And in fact, one study shows that corporations and trade groups are behind 50 percent of all the First Amendment cases brought today. The First Amendment, which was developed to protect radicals and socialists and anarchists back in the 1910s and ’20s, has been transformed into a sword for big businesses to use to strike down regulations protecting investors or consumers or the public at large.
If there’s not much likelihood of the court retreating from its position on civil rights for corporations, how could the current position on corporate rights change?
There is a vibrant movement to amend the Constitution to end constitutional rights for corporations. The head of Public Citizen, Robert Weismann, has called for overturning the line of cases and is in favor of a constitutional amendment that would declare corporations have no free speech rights. While I think that amendment goes too far, and could undermine the free speech rights of The New York Times, it reflects a widespread sense among Americans that corporations have too much power and these recent Supreme Court decisions are wrong. Among the states that have endorsed this 28th Amendment are red or purple states like Montana and Nevada, so this is not just a left-right issue.
It’s an issue that we’ll be grappling with for years to come, it seems. And thank you very much, Professor Winkler, for talking to me about it.
Don Franzen is an entertainment lawyer based in Beverly Hills. He is also an adjunct professor at UCLA’s Herb Alpert School of Music teaching on the law and the music industry and the Legal Affairs editor for LARB.