VII. Is a corporation a person?

(This post is the seventh in the series on corporations--see links below for previous posts. If you like this or other posts, share it with your friends.)

A corporation is a legal person but not a human one.

Unfortunately, the criticisms of Citizens United that attack the idea that a corporation is a human person miss the point and thereby divert attention away from the real need for campaign finance reform. (See my earlier post, The Misguided People’s Rights Amendment.)

A corporation has never been considered to be the same as a human person. There is a difference between a legal person and a human person. Corporations in U.S. law are legal persons, not human ones. This difference is important and negates the attempts to mock Citizens United as affirming that corporations are the same as people.

An example of the distinction between a human person and a legal person was made evident in the U.S. Supreme Court case of Federal Communications Commission et al. v. AT&T Inc., 562 U.S. ____, 131S. Ct. 1177 (2011).

This case began with an investigation of AT&T by the Federal Communications Commission. The FCC sought certain documents from AT&T under the Freedom of Information Act. The Freedom of Information Act states that the Act does not require the disclosure of certain specified kinds of documents. Among those documents that are excluded from the Act’s disclosure requirement are "records or information compiled for law enforcement purposes" that "could reasonably be expected to constitute an unwarranted invasion of personal privacy" -- §552(b)(7)(C).

AT&T argued that, as a corporate person, it had personal privacy rights. Thus, AT&T claimed that it, as a corporation, did not have to disclose records that invaded its personal privacy. The U.S. Court of Appeals for the Third Circuit agreed with AT&T. The U.S. Supreme Court disagreed and held for the FCC.

The Supreme Court’s opinion was unanimous except for the absence of Justice Kagan who did not participate. Justice Roberts, writing for the Court, stated, “’Personal’ ordinarily refers to individuals. We do not usually speak of personal characteristics, personal effects, personal correspondence, personal influence, or personal tragedy as referring to corporations or other artificial entities” (my emphasis). Thus, the Court held that corporations do not have “personal privacy” for the purposes of the personal privacy exemption in the Freedom of Information Act.

Note particularly that the Court referred to corporations as “artificial entities.” The Court thus has clearly established that there is a difference between human persons and corporate persons.

As we know, Citizens United did not make use of this distinction. Why? Later in this series I will post an examination of that case. In any event, Citizens United handled difficult legal issues that cannot be easily dismissed by incorrectly mocking the Court for saying that a corporation is a human person. The Court is quite aware that a corporation is a legal person, not a human one.

Thus, those jumping on the simplistic bandwagon of “corporations are not people” are shooting themselves in the foot by not addressing the more difficult constitutional issues that Citizens United present. These are difficult issues that require careful thought, not slogans.

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Links to previous posts this series:

Corporations (Part I of series): Introduction—Why We Need To Know About Them (2/3/12)

                II. Corporations: Their Early Beginnings (2/18/12)

                III. Corporations--an Example of Extreme but Conditional Power (7/3/12)

                IV: The First American Corporations--pre-1776 (12/31/12)
            
                V: The Transformation of the American Corporation (2/24/13)         

            VI. A recent example of potential governmental and people power over corporations

Corporations (Part I of series): Introduction—Why We Need to Know About Them

Corporations are an integral part of the fabric of modern society. They affect nearly everything we buy as well as our jobs, entertainment, news sources, and politics. Yet, little is known about them. What is a corporation? Can they distort financing of political campaigns? I am writing this series on corporations so that we may learn about them.

The need for this series is indicated by my previous posting, “The Misguided People’s Rights Amendment.” The promoters of this amendment are seeking to amend the U.S. Constitution to make it inapplicable to corporations. Though these promoters are liberal democrats with good intentions, they are going down the wrong path. They think, incorrectly, that the disproportionate influence of wealth in the financing of political candidates can be corrected by eliminating any legal rights corporations may have under the Constitution. They also think, incorrectly, that the amendment will reverse the U.S. Supreme Court decision in the Citizens United case. (See previous post.) These promoters not only misunderstand what Citizens United actually held (which pertains to much more than corporations), they also misunderstand what corporations are. Their promotion of this amendment, thus, arises from and depends on public ignorance.

But don’t feel bad if you are among the ignorant. Corporations are such varied and complex entities that they are not easy to comprehend. Understanding Citizens United requires very careful reading of a very long legal opinion. You can have a Ph.D. and know nothing about corporations. My first introduction to corporations was in law school, and many lawyers never took a course in the subject. I will be learning too as I continue with this series.

Corporations are entities created by law that exist independently of any person or group of people. Corporations cannot exist without some sort of legal authorization from a governmental body. They have historically been regarded as artificial persons. Unlike real people, they are potentially immortal, though like real people, they can be born, die or be killed. Whether a corporation is created and how long it lives, nonetheless, depends on real natural living people.

Most of us think of corporations as huge businesses, like General Motors or Apple or Bank of America. But there are many different kinds of corporations. They include tiny businesses, educational and religious institutions, and non-profit organizations. For example, Wikipedia is operated by Wikimedia Foundation, Inc., a non-profit charitable corporation. Thus, it is incorrect to equate corporations with large capitalistic profit-making enterprises. Corporations serve many purposes, some good, some not so good, depending on your point of view. If we think of corporations as “bad,” then we do not understand what they are. Nonetheless, there is good reason to be concerned about the influence and power of mammoth multinational corporations. Are they a threat to democracy?

This series of postings on corporations will give us some basic information. The series will span many months. We will use this information later to discuss the role that corporations should have, or not have, in a democratic society. We will learn that corporations, for better or worse, have played a major role in the development of modern civilization. The world economy depends on them. This blog depends on them. So if we determine that there is a problem with them, we need to be careful in addressing the problem.

The Misguided People’s Rights Amendment

The so-called “People’s Rights Amendment” is an attempt to nullify the 2010 U.S. Supreme Court decision in Citizens United v. Federal Election Commission. The key provision of the proposed amendment states, “People, person, or persons as used in this Constitution does not include corporations.”

An “op-ed” supporting this proposed amendment, written by U.S. Representative Jim McGovern and author Jeff Clements, appeared in the Boston Globe on January 21^st, titled “'We the People' can overturn Citizens United.” In a similar vein, the Huffington Post, on January 9^th, published an online article by Marge Baker titled “Overturning Citizens United: A Movement Moment.” (My January 10^th comment on that article is similar to my letter below.)

These articles illustrate the need for the public to know more about corporations, for the articles are products of widespread public ignorance of the subject. I will seek to remedy this problem by posting a series on corporations. It’s a big subject that will take several months of postings. The first posting will be soon.

Meanwhile, you should know something about why the People’s Rights Amendment is a bad idea. My letter to the editor, published today, introduces the matter. Here is the letter as it appeared in the Boston Sunday Globe in the Ideas section, page K9, January 29, 2012, and also online for subscribers at BostonGlobe.com:

Proposal is misguided attempt to reform election financing

THE PEOPLE’S Rights Amendment, as currently drafted, is a misguided attempt to bring about needed reform of the financing of elections ( “ ‘We the People’ can overturn Citizens United,’’ Op-ed, Jan. 21). Such financing reform is desperately needed, but it cannot be attained merely by attacking the personhood of corporations. Since wealthy individuals can distort the funding of elections just as easily as corporations, the electoral reform that is needed is different from and broader in scope than corporate personhood.

Moreover, the Supreme Court initially declared that corporations were persons, not in Citizens United v. Federal Election Commission in 2010, but in Santa Clara County v. Southern Pacific Railroad Company in 1886. Even in the colonies prior to the Revolution, corporations (such as they were then) were regarded as artificial persons. Such entities created by law have been instrumental in the development of modern civilization and include not only large business corporations but a multitude of micro and small businesses and charitable nonprofits.

Thus, the People’s Rights Amendment is not only based on a misunderstanding of the history and law of corporations. It also misses the bigger target of wealth’s disproportionate influence over government.

John L. Hodge

Jamaica Plain