Do Corporations Have Constitutional Rights?

This is a guest post submitted by Samuel Bray, on behalf of the Stanford Constitutional Law Center.

On March 5 the Stanford Constitutional Law Center held an event exploring one of the most pressing questions in constitutional law: Do corporations have constitutional rights?

This question was addressed by leading scholars on corporate law, constitutional law, and the intersection of the two. The discussants were Professor Daniel Greenwood (Hofstra) and Professor Larry Ribstein (Illinois). The moderator was the director of the Constitutional Law Center, Professor Michael McConnell (Stanford). And the commentators were Professor Kathleen Sullivan (Stanford), who founded the Center; and Professor Joseph Grundfest (Stanford).

The discussion focused on two questions. First, what is the relationship between corporations and individuals? Second, are constitutional rights appropriate for corporations, and if so, which ones?

Professor Greenwood argued that corporations are not just an aggregation of individuals, and that this difference means they should be treated differently. In part this is because in a corporation “you can’t identify a human being” who is the bearer of a constitutional right; “there is no easy way to pretend that you are actually giving rights to a human being.” Another difference is more fundamental. Individual citizens balance different values against each other, sometimes maximizing profit and sometimes maximizing other values. But corporate managers have a fiduciary duty to maximize profit, a duty that requires them to “set aside their own values and promote the interests of the legal entity”—and these interests are “ever more profit and ever looser rules.” The effect of this duty to maximize profit is that the corporation—unlike individuals—is a singleminded “automaton.” As singleminded actors, corporations uniquely distort the political process.

Professor Ribstein saw the relationship between corporations and individuals quite differently. Corporations are legal fictions, and in themselves they do not merit constitutional rights. But corporations are a way that individual citizens come together to act. It is the people who are acting as a group through the corporationthat have a serious claim to legal protection. Most of the characteristics of a corporation are derived from contract, not from a special privilege granted by the state. The only notable exception is limited tort liability, but “restricting individual liberty because of limited tort liability is just too much.” The merit of Citizens United is that a majority of the Supreme Court “finally got over this idea of artificial identities and understood we are talking about individuals operating in groups.” And Ribstein saw much less danger than Greenwood from corporate involvement in the political process, because “there are all kinds of market constraints on what corporations can do,” including the possibility that taking a controversial political position will drive away customers.

On the critical question of the First Amendment rights of the press, Professor Greenwood and Professor Ribstein agreed that newspapers and similar media outlets should be able to endorse candidates. But they offered different rationales. For Ribstein there is no great reason to treat media outlets differently from other kinds of corporate and non-corporate associations: they are groups of people coming together for one or more purposes. In contrast, Greenwood emphasized the role of the editor: the editor’s job is to balance competing interests, including good policy, not just profit. That makes a media outlet different from a singleminded corporation.

Professor Sullivan said it was a mistake to ask whether corporations are the kind of entities that should be promoted to having constitutional rights (the “ontological question”). Instead, we should remember that constitutional rights are “negative restraints on government”—the question is whether the government should have unlimited power. Just as there are limits on the government’s power to search private homes, so too there are limits on the government’s power to search property owned by a corporation. Sullivan argued that concerns about corporate political power could be countered by disclosure: corporate expenditures on political campaigns should be disclosed so that voters can make an informed choice.

Professor Grundfest emphasized the similarity of corporations and other kinds of organizations. Corporations have no body and soul, but neither do the Sierra Club, Stanford University, and the Catholic Church. Each is an “association or aggregation of people,” a way for individuals to exercise their own individual rights to free speech in group form. And individuals retain their constitutional rights regardless of what “particular form [a] collective happens to take,” and regardless of whether these individuals are seeking to make a profit.