Academic journal article William and Mary Law Review

The Derivative Nature of Corporate Constitutional Rights

Academic journal article William and Mary Law Review

The Derivative Nature of Corporate Constitutional Rights

Article excerpt

Abstract

This Article engages the two-hundred-year history of corporate constitutional rights jurisprudence to show that the Supreme Court has long accorded rights to corporations based on the rationale that corporations represent associations of people from whom such rights are derived. The Article draws on the history of business corporations in America to argue that the Court's characterization of corporations as associations made sense throughout most of the nineteenth century. By the late nineteenth century, however, when the Court was deciding several key cases involving corporate rights, this associational view was already becoming a poor fit for some corporations. The Court's failure to account for the wide spectrum of organizations labeled "corporations" became increasingly problematic with the rise of modern business corporations that could no longer be fairly characterized as an identifiable group of people acting in association. Nonetheless, the Court continued to apply the associational rationale from early case law and expand corporate rights into the realm of speech and political spending without careful analysis of when the associational approach would be appropriate.

We set forth a theoretical framework that we believe is consistent with the underlying logic of the Court's jurisprudence, based on the concepts of derivative and instrumental rights. Specifically, we argue that the Court, to date, has not granted constitutional rights to corporations in their own right. Instead, it has granted rights to corporations either derivatively, when necessary to protect the rights of natural persons assumed to be represented by the corporation, or instrumentally, when necessary to protect the rights of parties outside the corporation. Further, we consider the implications that this framework, with a more nuanced view of the spectrum of corporations in existence, would have if applied to recent corporate rights cases, such as Citizens United. We believe this framework provides a principled path forward for the difficult line drawing between corporations that needs to be done.

TABLE OF CONTENTS

INTRODUCTION

I.   EARLY SUPREME COURT JURISPRUDENCE CONCERNING
     CORPORATE CONSTITUTIONAL RIGHTS
II.  CORPORATIONS IN EARLY AND PRE-TWENTIETH
     CENTURY AMERICA
     A. Late Eighteenth and Early Nineteenth Century:
        Business Corporations Before General
        Incorporation Acts
     B. 1840-1895: Rapid Growth in the Use of
        Business Corporations
     C. 1895-Early 1900s: Mergers and Consolidations and
        the Rise of Modern Corporations
III. THE SUPREME COURT'S TWENTIETH-CENTURY CORPORATE
     RIGHTS JURISPRUDENCE AND APPROACH TO THE RISE OF
     MODERN CORPORATIONS
     A. Giant Corporations Emerge
     B. Corporate Criminal Liability, Related Protections, and
        Other Early Twentieth-Century Legal Developments
     C. Corporate Rights Jurisprudence on the
        First Amendment
IV.  TOWARDS A CONSISTENT FRAMEWORK FOR ANALYZING
     CORPORATE CLAIMS TO CONSTITUTIONAL PROTECTIONS
     A. Using the Logic of the Derivative Rights Rationale
     B. Conceptual Challenges in Corporate Rights
        Determinations
CONCLUSION

INTRODUCTION

Many Americans believe that the Supreme Court surely must have gotten it wrong in Citizens United v. FEC when the Court held that corporations can spend unlimited amounts of corporate treasury money on independent political expenditures. (1) Politicians and grassroots organizations have called for a fix to Citizens United in the courts or through the political process. (2) Legal scholars have examined Citizens United in depth--both defending and criticizing the case on a number of grounds--often engaging with the case primarily in the context of the First Amendment, campaign finance jurisprudence, or modern business law. (3)

Justice Frankfurter once observed that "[t]he history of American constitutional law in no small measure is the history of the impact of the modern corporation. …

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