Since the day it was handed down, Citizens United has been a kind of political flypaper for bad laws. The first dead bugs sought to exploit the decision’s caveats by targeting disclosure and shareholder approval (the Shareholder Protection Act, critized here) and prohibiting political expenditures by government contractors (the Disclose Act).
More recently, CU-haters are trying a more frontal assault. Some senators have proposed a constitutional amendment that would authorize Congress and the states to regulate contributions and expenditures in connection with political candidates. See the Law Blog.
And now ballot initiatives in such corporate powerhouses as Boulder, Madison and Missoula are striking out against “corporate personhood.” See MoveToAmend.org.
Bainbridge notes that this move is “kind of clever” because it would distinguish corporations from unions, which are unincorporated voluntary associations and the left’s key source of campaign funds.
But even David St. Hubbins and Nigel Tufnel know there’s but a fine line between clever and stupid (side comment: this coming Friday is Nigel Tufnel day). Bainbridge notes that personhood is an important corporate characteristic in protecting corporate and shareholder assets. He asks how “the brilliant legal minds behind this movement propose to preserve this feature of corporate personhood if they succeed” and observes that “lots of pillars of the liberal political movement are limited liability entities with the status of legal persons.”
Actually, I’m skeptical that abolishing artificial personhood would have a lot of non-constitutional implications. To be sure, it would introduce massive confusion and provided needed work for lawyers. But in the final analysis, personhood is more a description than a creator of legal consequences (see Bromberg & Ribstein, §1.03). If state law says corporations have limited liability and owners’ creditors have limited recourse to business assets, these consequences should and probably would still hold even in Madison, Wisconsin.
The real problems arise on the constitutional front. To begin with, the loss of personhood would not have the slightest effect under Citizens United. The Court held that the First Amendment “protects speech and speaker, and the ideas that flow from each” (130 S.Ct. at 899). As I have discussed, “the First Amendment does not guard corporations’ expressive rights, but rather the public’s interest in hearing what corporations have to say.” The “entity” nature of corporations doesn’t seem to have anything to do with this reasoning.
On the other hand, if personhood matters at all under Citizens United and subsequent decisions, the loss of personhood actually could be a constitutional boon to corporations. As I noted some time ago (The Constitutional Conception of the Corporation, 4 Supreme Court Economic Review 95, 129 (1995)):
Under the corporate person theory, speech is attributed to the corporate entity rather than to individuals. Although Bellotti held that speech is protected even if uttered by artificial persons, the post-Bellotti cases on corporate political speech showed that it is easier to deny First Amendment rights if the speech is attributed to an artificial person.
CU avoided this problem by reasoning that the identity of the speaker should be irrelevant. In the article just cited I argued that corporations would derive more robust constitutional protection, including under the First Amendment, if courts squarely applied the contract theory. Explicitly overruling artificial personhood would force courts to look through the artificial entity to actual people whose speech is clearly protected. In other words, the courts would finally have to recognize that corporate speech is people speech.
What’s the answer to those looking for a constitutional fix for CU? The Supreme Court decided that the for-profit corporation is one of those ideas the First Amendment forbids government from censoring. So there would seem to be only two ways around CU: change the Supreme Court or repeal the First Amendment.