Archives For corporate speech

Yesterday was President Trump’s big “Social Media Summit” where he got together with a number of right-wing firebrands to decry the power of Big Tech to censor conservatives online. According to the Wall Street Journal

Mr. Trump attacked social-media companies he says are trying to silence individuals and groups with right-leaning views, without presenting specific evidence. He said he was directing his administration to “explore all legislative and regulatory solutions to protect free speech and the free speech of all Americans.”

“Big Tech must not censor the voices of the American people,” Mr. Trump told a crowd of more than 100 allies who cheered him on. “This new technology is so important and it has to be used fairly.”

Despite the simplistic narrative tying President Trump’s vision of the world to conservatism, there is nothing conservative about his views on the First Amendment and how it applies to social media companies.

I have noted in several places before that there is a conflict of visions when it comes to whether the First Amendment protects a negative or positive conception of free speech. For those unfamiliar with the distinction: it comes from philosopher Isaiah Berlin, who identified negative liberty as freedom from external interference, and positive liberty as freedom to do something, including having the power and resources necessary to do that thing. Discussions of the First Amendment’s protection of free speech often elide over this distinction.

With respect to speech, the negative conception of liberty recognizes that individual property owners can control what is said on their property, for example. To force property owners to allow speakers/speech on their property that they don’t desire would actually be a violation of their liberty — what the Supreme Court calls “compelled speech.” The First Amendment, consistent with this view, generally protects speech from government interference (with very few, narrow exceptions), while allowing private regulation of speech (again, with very few, narrow exceptions).

Contrary to the original meaning of the First Amendment and the weight of Supreme Court precedent, President Trump’s view of the First Amendment is that it protects a positive conception of liberty — one under which the government, in order to facilitate its conception of “free speech,” has the right and even the duty to impose restrictions on how private actors regulate speech on their property (in this case, social media companies). 

But if Trump’s view were adopted, discretion as to what is necessary to facilitate free speech would be left to future presidents and congresses, undermining the bedrock conservative principle of the Constitution as a shield against government regulation, all falsely in the name of protecting speech. This is counter to the general approach of modern conservatism (but not, of course, necessarily Republicanism) in the United States, including that of many of President Trump’s own judicial and agency appointees. Indeed, it is actually more consistent with the views of modern progressives — especially within the FCC.

For instance, the current conservative bloc on the Supreme Court (over the dissent of the four liberal Justices) recently reaffirmed the view that the First Amendment applies only to state action in Manhattan Community Access Corp. v. Halleck. The opinion, written by Trump-appointee, Justice Brett Kavanaugh, states plainly that:

Ratified in 1791, the First Amendment provides in relevant part that “Congress shall make no law . . . abridging the freedom of speech.” Ratified in 1868, the Fourteenth Amendment makes the First Amendment’s Free Speech Clause applicable against the States: “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law . . . .” §1. The text and original meaning of those Amendments, as well as this Court’s longstanding precedents, establish that the Free Speech Clause prohibits only governmental abridgment of speech. The Free Speech Clause does not prohibit private abridgment of speech… In accord with the text and structure of the Constitution, this Court’s state-action doctrine distinguishes the government from individuals and private entities. By enforcing that constitutional boundary between the governmental and the private, the state-action doctrine protects a robust sphere of individual liberty. (Emphasis added).

Former Stanford Law dean and First Amendment scholar, Kathleen Sullivan, has summed up the very different approaches to free speech pursued by conservatives and progressives (insofar as they are represented by the “conservative” and “liberal” blocs on the Supreme Court): 

In the first vision…, free speech rights serve an overarching interest in political equality. Free speech as equality embraces first an antidiscrimination principle: in upholding the speech rights of anarchists, syndicalists, communists, civil rights marchers, Maoist flag burners, and other marginal, dissident, or unorthodox speakers, the Court protects members of ideological minorities who are likely to be the target of the majority’s animus or selective indifference…. By invalidating conditions on speakers’ use of public land, facilities, and funds, a long line of speech cases in the free-speech-as-equality tradition ensures public subvention of speech expressing “the poorly financed causes of little people.” On the equality-based view of free speech, it follows that the well-financed causes of big people (or big corporations) do not merit special judicial protection from political regulation. And because, in this view, the value of equality is prior to the value of speech, politically disadvantaged speech prevails over regulation but regulation promoting political equality prevails over speech.

The second vision of free speech, by contrast, sees free speech as serving the interest of political liberty. On this view…, the First Amendment is a negative check on government tyranny, and treats with skepticism all government efforts at speech suppression that might skew the private ordering of ideas. And on this view, members of the public are trusted to make their own individual evaluations of speech, and government is forbidden to intervene for paternalistic or redistributive reasons. Government intervention might be warranted to correct certain allocative inefficiencies in the way that speech transactions take place, but otherwise, ideas are best left to a freely competitive ideological market.

The outcome of Citizens United is best explained as representing a triumph of the libertarian over the egalitarian vision of free speech. Justice Kennedy’s opinion for the Court, joined by Chief Justice Roberts and Justices Scalia, Thomas, and Alito, articulates a robust vision of free speech as serving political liberty; the dissenting opinion by Justice Stevens, joined by Justices Ginsburg, Breyer, and Sotomayor, sets forth in depth the countervailing egalitarian view. (Emphasis added).

President Trump’s views on the regulation of private speech are alarmingly consistent with those embraced by the Court’s progressives to “protect[] members of ideological minorities who are likely to be the target of the majority’s animus or selective indifference” — exactly the sort of conservative “victimhood” that Trump and his online supporters have somehow concocted to describe themselves. 

Trump’s views are also consistent with those of progressives who, since the Reagan FCC abolished it in 1987, have consistently angled for a resurrection of some form of fairness doctrine, as well as other policies inconsistent with the “free-speech-as-liberty” view. Thus Democratic commissioner Jessica Rosenworcel takes a far more interventionist approach to private speech:

The First Amendment does more than protect the interests of corporations. As courts have long recognized, it is a force to support individual interest in self-expression and the right of the public to receive information and ideas. As Justice Black so eloquently put it, “the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.” Our leased access rules provide opportunity for civic participation. They enhance the marketplace of ideas by increasing the number of speakers and the variety of viewpoints. They help preserve the possibility of a diverse, pluralistic medium—just as Congress called for the Cable Communications Policy Act… The proper inquiry then, is not simply whether corporations providing channel capacity have First Amendment rights, but whether this law abridges expression that the First Amendment was meant to protect. Here, our leased access rules are not content-based and their purpose and effect is to promote free speech. Moreover, they accomplish this in a narrowly-tailored way that does not substantially burden more speech than is necessary to further important interests. In other words, they are not at odds with the First Amendment, but instead help effectuate its purpose for all of us. (Emphasis added).

Consistent with the progressive approach, this leaves discretion in the hands of “experts” (like Rosenworcel) to determine what needs to be done in order to protect the underlying value of free speech in the First Amendment through government regulation, even if it means compelling speech upon private actors. 

Trump’s view of what the First Amendment’s free speech protections entail when it comes to social media companies is inconsistent with the conception of the Constitution-as-guarantor-of-negative-liberty that conservatives have long embraced. 

Of course, this is not merely a “conservative” position; it is fundamental to the longstanding bipartisan approach to free speech generally and to the regulation of online platforms specifically. As a diverse group of 75 scholars and civil society groups (including ICLE) wrote yesterday in their “Principles for Lawmakers on Liability for User-Generated Content Online”:

Principle #2: Any new intermediary liability law must not target constitutionally protected speech.

The government shouldn’t require—or coerce—intermediaries to remove constitutionally protected speech that the government cannot prohibit directly. Such demands violate the First Amendment. Also, imposing broad liability for user speech incentivizes services to err on the side of taking down speech, resulting in overbroad censorship—or even avoid offering speech forums altogether.

As those principles suggest, the sort of platform regulation that Trump, et al. advocate — essentially a “fairness doctrine” for the Internet — is the opposite of free speech:

Principle #4: Section 230 does not, and should not, require “neutrality.”

Publishing third-party content online never can be “neutral.” Indeed, every publication decision will necessarily prioritize some content at the expense of other content. Even an “objective” approach, such as presenting content in reverse chronological order, isn’t neutral because it prioritizes recency over other values. By protecting the prioritization, de-prioritization, and removal of content, Section 230 provides Internet services with the legal certainty they need to do the socially beneficial work of minimizing harmful content.

The idea that social media should be subject to a nondiscrimination requirement — for which President Trump and others like Senator Josh Hawley have been arguing lately — is flatly contrary to Section 230 — as well as to the First Amendment.

Conservatives upset about “social media discrimination” need to think hard about whether they really want to adopt this sort of position out of convenience, when the tradition with which they align rejects it — rightly — in nearly all other venues. Even if you believe that Facebook, Google, and Twitter are trying to make it harder for conservative voices to be heard (despite all evidence to the contrary), it is imprudent to reject constitutional first principles for a temporary policy victory. In fact, there’s nothing at all “conservative” about an abdication of the traditional principle linking freedom to property for the sake of political expediency.

It is a bedrock principle underlying the First Amendment that the government may not penalize private speech merely because it disapproves of the message it conveys.

The Federal Circuit handed down a victory for free expression today — in the commercial context no less. At issue was the Lanham Act’s § 2(a) prohibition of trademark registrations that

[c]onsist[] of or comprise[] immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.

The court, sitting en banc, held that the “disparaging” provision is an unconstitutional violation of free expression, and that trademarks will indeed be protected by the First Amendment. Although it declined to decide whether the other prohibitions actually violated the First Amendment, the opinion contained a very strong suggestion to future panels that this opinion likely applies in that context as well.

In many respects the opinion was not all that surprising (particularly if you’ve read my thoughts on the subject here and here ). However given that it was a predecessor Court of Customs and Patent Appeals decision, In Re McGinley, that once held that First Amendment concerns were not implicated at all by § 2(a) because “it is clear that the … refusal to register appellant’s mark does not affect his right to use it” — totally ignoring of course the chilling effects on speech — it was by no means certain that this decision would come out correctly decided.

Today’s holding vacated a decision from a three-judge panel that, earlier this year, upheld the ill-fated “disparaging” prohibition. From just a cursory reading of § 2(a), it should be a no-brainer that it clearly implicates the content of speech — if not a particular view point — and should get at least some First Amendment scrutiny. However, the earlier three-judge opinion  gave all of three paragraphs to this consideration — one of which was just a quotation from McGinley. There, the three-judge panel rather tersely concluded that the First Amendment argument was “foreclosed by our precedent.”

Thus it was with pleasure that I read the Federal Circuit as it today acknowledged that “[m]ore than thirty years have passed since the decision in McGinley, and in that time both the McGinley decision and our reliance on it have been widely criticized[.]” The core of the First Amendment analysis is fairly straightforward: barring “disparaging” marks from registration is neither content neutral nor viewpoint neutral, and is therefore subject to strict scrutiny (which it fails). The court notes that McGinley’s First Amendment analysis was “cursory” (to put it mildly), and was decided before a fully developed body of commercial speech doctrine had emerged. Overall, the opinion is a good example of subtle, probing First Amendment analysis, wherein the court really grasps that merely labeling speech as “commercial” does not somehow magically strip away any protected expressive content.

In fact, perhaps the most important and interesting material has to do with this commercial speech analysis. The court acknowledges that the government’s policy against “disparaging” marks is targeting the expressive aspects of trademarks and not the more easily regulable “transactional” aspects (such as product information, pricing, etc.)— to look at § 2(a) otherwise would not make sense as the government is rather explicitly trying to stop certain messages because of their noncommercial aspects. And the court importantly acknowledges the Supreme Court’s admonition that “[a] consumer’s concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue” ( although I might go so far as to hazard a guess that commercial speech is more important that political speech, most of the time, to most people, but perhaps I am just cynical).

The upshot of the Federal Circuit’s new view of trademarks and “commercial speech” reinforces the notion that regulations and laws that are directed toward “commercial speech” need to be very narrowly focused on the actual “commercial” message — pricing, source, etc. — and cannot veer into controlling the “expressive” aspects without justification under strict scrutiny. Although there is nothing terrible new or shocking here, the opinion ties together a variety of the commercial speech doctrines, gives much needed clarity to trademark registration, and reaffirms a sensible view of commercial speech law.

And, although I may be reading too deeply based on my preferences, I think the opinion is quietly staking out a useful position for commercial speech cases going forward—at least to a speech maximalist like myself. In particular, it explicitly relies upon the “unconstitutional conditions” doctrine for the proposition that the benefits of government programs cannot be granted upon a condition that a party only engage in “good” or “approved” commercial speech.  As the world becomes increasingly interested in hate speech regulation,  and our college campuses more interested in preparing a generation of”safe spacers” than of critically thinking adults, this will undoubtedly become an important arrow in a speech defender’s quiver.

In my just published Heritage Foundation Legal Memorandum, I argue that the U.S. Federal Trade Commission (FTC) should substantially scale back its overly aggressive “advertising substantiation” program, which disincentivizes firms from providing the public with valuable information about the products they sell.  As I explain:

“The . . . [FTC] has a long history of vigorously combating false and deceptive advertising under its statutory authorities, but recent efforts by the FTC to impose excessive ‘advertising substantiation’ requirements on companies go far beyond what is needed to combat false advertising. Such actions threaten to discourage companies from providing useful information that consumers value and that improves the workings of the marketplace. They also are in tension with constitutional protection for commercial speech. The FTC should reform its advertising substantiation policy and allow businesses greater flexibility to tailor their advertising practices, which would further the interests of both consumers and businesses. It should also decline to seek ‘disgorgement’ of allegedly ‘ill-gotten gains’ in cases involving advertising substantiation.”

In particular, I recommend that the FTC issue a revised policy statement explaining that it will seek to restrict commercial speech to the minimum extent possible, consistent with fraud prevention, and will not require onerous clinical studies to substantiate non-fraudulent advertising claims.  I also urge that the FTC clarify that it will only seek equitable remedies (including injunctions and financial exactions) in court for cases of clear fraud.

William Buckley once described a conservative as “someone who stands athwart history, yelling Stop.” Ironically, this definition applies to Professor Tim Wu’s stance against the Supreme Court applying the Constitution’s protections to the information age.

Wu admits he is going against the grain by fighting what he describes as leading liberals from the civil rights era, conservatives and economic libertarians bent on deregulation, and corporations practicing “First Amendment opportunism.” Wu wants to reorient our thinking on the First Amendment, limiting its domain to what he believes are its rightful boundaries.

But in his relatively recent piece in The New Republic and journal article in U Penn Law Review, Wu bites off more than he can chew. First, Wu does not recognize that the First Amendment is used “opportunistically” only because the New Deal revolution and subsequent jurisprudence has foreclosed all other Constitutional avenues to challenge economic regulations. Second, his positive formulation for differentiating protected speech from non-speech will lead to results counter to his stated preferences. Third, contra both conservatives like Bork and liberals like Wu, the Constitution’s protections can and should be adapted to new technologies, consistent with the original meaning.

Wu’s Irrational Lochner-Baiting

Wu makes the case that the First Amendment has been interpreted to protect things that aren’t really within the First Amendment’s purview. He starts his New Republic essay with Sorrell v. IMS (cf. TechFreedom’s Amicus Brief), describing the data mining process as something undeserving of any judicial protection. He deems the application of the First Amendment to economic regulation a revival of Lochner, evincing a misunderstanding of the case that appeals to undefended academic prejudice and popular ignorance. This is important because the economic liberty which was long protected by the Constitution, either as matter of federalism or substantive rights, no longer has any protection from government power aside from the First Amendment jurisprudence Wu decries.

Lochner v. New York is a 1905 Supreme Court case that has received more scorn, left and right, than just about any case that isn’t dealing with slavery or segregation. This has led to the phenomenon (my former Constitutional Law) Professor David Bernstein calls “Lochner-baiting,” where a commentator describes any Supreme Court decision with which he or she disagrees as Lochnerism. Wu does this throughout his New Republic piece, somehow seeing parallels between application of the First Amendment to the Internet and a Liberty of Contract case under substantive Due Process.

The idea that economic regulation should receive little judicial scrutiny is not new. In fact, it has been the operating law since at least the famous Carolene Products footnote four. However, the idea that only insular and discrete minorities should receive First Amendment protection is a novel application of law. Wu implicitly argues exactly this when he says “corporations are not the Jehovah’s Witnesses, unpopular outsiders needing a safeguard that legislators and law enforcement could not be moved to provide.” On the contrary, the application of First Amendment protections to Jehovah’s Witnesses and student protesters is part and parcel of the application of the First Amendment to advertising and data that drives the Internet. Just because Wu does not believe businesspersons need the Constitution’s protections does not mean they do not apply.

Finally, while Wu may be correct that the First Amendment should not apply to everything for which it is being asserted today, he does not seem to recognize why there is “First Amendment opportunism.” In theory, those trying to limit the power of government over economic regulation could use any number of provisions in the text of the Constitution: enumerated powers of Congress and the Tenth Amendment, the Ninth Amendment, the Contracts Clause, the Privileges or Immunities Clause of the Fourteenth Amendment, the Due Process Clause of the Fifth and Fourteenth Amendments, the Equal Protection Clause, etc. For much of the Constitution’s history, the combination of these clauses generally restricted the growth of government over economic affairs. Lochner was just one example of courts generally putting the burden on governments to show the restrictions placed upon economic liberty are outweighed by public interest considerations.

The Lochner court actually protected a small bakery run by immigrants from special interest legislation aimed at putting them out of business on behalf of bigger, established competitors. Shifting this burden away from government and towards the individual is not clearly the good thing Wu assumes. Applying the same Liberty of Contract doctrine, the Supreme Court struck down legislation enforcing housing segregation in Buchanan v. Warley and legislation outlawing the teaching of the German language in Meyer v. Nebraska. After the New Deal revolution, courts chose to apply only rational basis review to economic regulation, and would need to find a new way to protect fundamental rights that were once classified as economic in nature. The burden shifted to individuals to prove an economic regulation is not loosely related to any conceivable legitimate governmental purpose.

Now, the only Constitutional avenue left for a winnable challenge of economic regulation is the First Amendment. Under the rational basis test, the Tenth Circuit in Powers v. Harris actually found that protecting businesses from competition is a legitimate state interest. This is why the cat owner Wu references in his essay and describes in more detail in his law review article brought a First Amendment claim against a regime requiring licensing of his talking cat show: there is basically no other Constitutional protection against burdensome economic regulation.

The More You Edit, the More Your <sic> Protected?

In his law review piece, Machine Speech, Wu explains that the First Amendment has a functionality requirement. He points out that the First Amendment has never been interpreted to mean, and should not mean, that all communication is protected. Wu believes the dividing lines between protected and unprotected speech should be whether the communicator is a person attempting to communicate a specific message in a non-mechanical way to another, and whether the communication at issue is more speech than conduct. The first test excludes carriers and conduits that handle or process information but have an ultimately functional relationship with it–like Federal Express or a telephone company. The second excludes tools, those works that are purely functional like navigational charts, court filings, or contracts.

Of course, Wu admits the actual application of his test online can be difficult. In his law review article he deals with some easy cases, like the obvious application of the First Amendment to blog posts, tweets, and video games, and non-application to Google Maps. Of course, harder cases are the main target of his article: search engines, automated concierges, and other algorithm-based services. At the very end of his law review article, Wu finally states how to differentiate between protected speech and non-speech in such cases:

The rule of thumb is this: the more the concierge merely tells the user about himself, the more like a tool and less like protected speech the program is. The more the programmer puts in place his opinion, and tries to influence the user, the more likely there will be First Amendment coverage. These are the kinds of considerations that ultimately should drive every algorithmic output case that courts could encounter.

Unfortunately for Wu, this test would lead to results counterproductive to his goals.

Applying this rationale to Google, for instance, would lead to the perverse conclusion that the more the allegations against the company about tinkering with its algorithm to disadvantage competitors are true, the more likely Google would receive First Amendment protection. And if Net Neutrality advocates are right that ISPs are restricting consumer access to content, then the analogy to the newspaper in Tornillo becomes a good one–ISPs have a right to exercise editorial discretion and mandating speech would be unconstitutional. The application of Wu’s test to search engines and ISPs effectively puts them in a “use it or lose it” position with their First Amendment rights that courts have rejected. The idea that antitrust and FCC regulations can apply without First Amendment scrutiny only if search engines and ISPs are not doing anything requiring antitrust or FCC scrutiny is counterproductive to sound public policy–and presumably, the regulatory goals Wu holds.

First Amendment Dynamism

The application of the First Amendment to the Internet Age does not involve large leaps of logic from current jurisprudence. As Stuart Minor Benjamin shows in his article in the same issue of the U Penn Law Review, the bigger leap would be to follow Wu’s recommendations. We do not need a 21st Century First Amendment that some on the left have called for—the original one will do just fine.

This is because the Constitution’s protections can be dynamically applied, consistent with original meaning. Wu’s complaint is that he does not like how the First Amendment has evolved. Even his points that have merit, though, seem to indicate a stasis mentality. In her book, The Future and Its Enemies, Virginia Postrel described this mentality as a preference for a “controlled, uniform society that changes only with permission from some central authority.” But the First Amendment’s text is not a grant of power to the central authority to control or permit anything. It actually restricts government from intervening into the open-ended society where creativity and enterprise, operating under predictable rules, generate progress in unpredictable ways.

The application of current First Amendment jurisprudence to search engines, ISPs, and data mining will not necessarily create a world where machines have rights. Wu is right that the line must be drawn somewhere, but his technocratic attempt to empower government officials to control innovation is short-sighted. Ultimately, the First Amendment is as much about protecting the individuals who innovate and create online as those in the offline world. Such protection embraces the future instead of fearing it.

In Arizona Free Enterprise Club, et al., v. Bennett, et al. and McComish, et al., v. Bennett, et al.  the Court is deciding what seems to be a couple of relatively narrow issues:

(1) Whether the First Amendment forbids states from providing additional government subsidies to publicly financed candidates that are triggered by independent expenditure groups’ speech against such candidates; and (2) whether the First Amendment forbids states from providing additional government subsidies to publicly financed candidates that are triggered by the fundraising or expenditures by these candidates’ privately financed opponents.

But at the oral argument yesterday, the issues seemed a lot broader than that. 

To begin with, excerpts from the argument in the SCOTUSblog summary suggested strongly that the challenger did not have to show that the law actually deterred speech.  Thus, the Chief Justice asked:

If you knew that a $10,000 expenditure that you would make that would support a candidate would result in $30,000, $40,000, $50,000, depending on how many opposition candidates there were available for them, wouldn’t you think twice about it?

In other words, the Court seems inclined to apply basic price theory:  you raise the price of something the demand goes down. 

Citizens United seemed to be a narrow case about “corporate” speech.  But as I pointed out in my First Amendment and Corporate Governance, the opinion didn’t really rest on the special nature of the corporation.  Its whole point was to vigorously guard the public’s right to hear: 

By suppressing the speech of manifold corporations, both for-profit and nonprofit, the Government prevents their voices and viewpoints from reaching the public and advising voters on which persons or entities are hostile to their interests.” Citizens United v. Fed. Election Comm’n, 130 S. Ct. 876, 907 (2010).  

The Court has also said, in Davis v. Federal Election Commission, that you can’t penalize candidates running on their own money.

Where is all this heading?  Consider Justice Breyer in the Arizona argument:

McCain-Feingold is hundreds of pages, and we cannot possibly test each provision which is related to the others on such a test of whether it equalizes or incentivizes or some other thing, because the answer is normally we don’t know. And it is better to say that it’s all illegal than to subject these things to death by a thousand cuts, because we don’t know what will happen when we start tinkering with one provision rather than another.  That thought went through my mind as I’ve heard this discussion.

I concluded my article linked above on the First Amendment issues concerning regulating the corporate governance processes that produce corporate speech:

In the final analysis, the majority’s listeners’ rights theory may be the only viable approach for dealing with political and commercial corporate speech. Now that it is clear that protection of corporate speech under the First Amendment cannot be diminished by shunting it off into an artificial entity, any justification for regulation would have to grapple with the complexities of corporate finance and governance and with the myriad variations among business and non-business associations. Add the risks inherent in politicians deciding who can speak and the better course is to err on the side of free speech.

Justice Breyer’s observation in the Arizona argument extended that logic beyond corporate speech. 

So Citizens United was not some little case about the power of corporations.  It was part of a bunch of big cases about the death of campaign finance regulation.  It is a passing that I, for one, will not mourn.

I have spent some time over the last year discussing the Supreme Court’s big corporate speech case, Citizens United — at Stanford and Georgia State, and in an archive full of Ideoblog posts.

Now my paper on the case, The First Amendment and Corporate Governance, is finally available on SSRN.  Here’s the abstract:

The Supreme Court’s decision in Citizens United did not end the controversy over regulating corporate speech. Although the Court broadly subjected regulation of corporate speech to the First Amendment, it did not wholly preclude regulation of corporate governance processes that produce corporate speech. The Court’s opinion therefore shifted debate concerning corporate speech from corporations’ “external” distortion of the political process to their “internal” distortion of shareholders’ self-expression. This paper shows that regulation of the corporate governance process that produces speech faces significant obstacles under the First Amendment. These include the limited efficacy of regulation of corporate governance, regulation’s potential for protecting the expressive rights of some shareholders by suppressing others, and the uncertain implications of this rationale for types of speech other than that involved in Citizens United. These problems with the corporate governance rationale for regulating corporate speech suggest that protection of shareholders’ expressive rights may be trumped by society’s interest in hearing corporate speech and the First Amendment’s central goal of preventing government censorship.

As you can see from the abstract, I have moved on from debating whether the case is rightly decided to thinking about what will happen in the post-Citizens United era, particularly regarding corporate governance regulation and commercial speech. 

I think my paper is an important addition to the discussion of Citizens United.  It struck me at the AALS Business Associations/Con Law session on Citizens United last week that a lot of law professors do not seem to have fully internalized the fact that the Supreme Court has decided to protect corporate speech.  And the law professors who are thinking about the corporate governance implications of Citizens United haven’t fully internalized the fact that the First Amendment applies to this issue.  Thus, Bebchuk & Jackson’s recent paper devotes just a few paragraphs to the constitutionality of their proposals.

So if you want the lowdown on how the constitution now applies to corporate governance, read my paper.

In the wake of the Citizens United decision I responded to the argument that empowering corporation would distort political debate in part by noting that “[f]or-profit firms are limited in their ability to invest in politics for the simple reason that they can’t stay in business over the long run if they lose money.”

As the WSJ discussed, Target learned that when its political contribution found its way to a pro-business candidate who also happens to oppose same-sex marriage: “[H]undreds of gay-rights supporters demonstrated outside Target stores in locations nationwide, and a petition promising a boycott, signed by more than 240,000, was delivered to Target.”

The article notes:

The Target flap shows the potential downside for companies that want to get more involved in politics since a January Supreme Court ruling on campaign contributions. Brand-oriented companies, in particular, worry about getting embroiled in controversies that can tarnish their reputation. It is a rare political black eye for the trendy discounter, which has a track record of supporting gay causes, including extending partner health benefits to its employees. * * *

Despite the [Citizens United] ruling, most corporations remain reluctant to donate money to outside political organizations. People involved in politics say most companies remain risk-averse, worried about what would happen if they supported the loser.

As usual, proponents of government regulation simply forgot about markets. Incidents like this make many issues off limits for big corporations. They also may make it difficult for firms to support any candidate, since political candidates are not single issues but bundles of issues, support of any of which can backfire on the contributor. Corporations have a business to run.

Note that the WSJ pointed out that “labor unions remain larger contributors to elections than corporations.” Labor unions are much less sensitive to market reactions of the sort that hit Target. That’s why the First Amendment protection Citizens United granted to organizations may mean more to labor than to corporations.

This is just one of many reasons for rejecting the arguments seeking to deny First Amendment protection to corporate speech. For more, see my Citizens United archive.