Turns out Alito isn’t the only justice who conflates the Securities Exchange Act with state-law corporate-structure statutes. Roberts does, too! (Unless, that is, racial-minority-owned corporations are denied access to restaurants and hotels when traveling. Or something.)
Roberts suggested that he believes Hobby Lobby and Conestoga Wood can bring forth claims of religious freedom, saying courts have held that “corporations can bring racial discrimination claims as corporations” and that “those cases involve construction of the term ‘person.'”
— John Roberts Offers Conservatives A Way Out Of Birth Control Dilemma, Sahil Kapur, TPM, yesterday
Late Tuesday afternoon, after I’d read two or three early reports on the argument at the Supreme Court that morning in the Hobby Lobby and Conestoga Wood cases, I posted a piece here titled:
“My early take on the ACA-contraception-mandate-case argument: Alito conflates the Securities Exchange Act with state-law corporate-structure statutes (yikes); Kennedy really, really wants to give corporations the full complement of human constitutional rights; and Scalia really, really needs to limit this ruling to an interpretation of the Religious Freedom Restoration Act.”
That post harked back to one I’d posted the day before about what to look for in the upcoming argument. What to look for, I said? Mainly whether “the court will back away somewhat from its Citizens United claim that corporate CEOs can, in the name of the corporation, access the constitutional rights of citizen-association members.” I predicted that it would–that the Court “will find some way to segregate speech rights from other constitutional rights, and will rule against the plaintiffs in these two cases.” I wrote:
That’s because, well, apparently a slew of other associations of citizens–e.g., the business community at large–are making it known, including in amicus briefs to the court, that they’re downright scared to death of this end-to-the-corporate-veil/corporations-are-groups-of-citizens (who can be held individually responsible for their for-profit association’s liabilities) thing.
Or maybe they’re just scared to death at the thought of ExxonMobil or Amazon marauding through their towns bearing AK-47s in exercise of their derivative Second Amendment rights. It could be time for some for-profit associations of citizens to pray.
I said in my post-argument post on Tuesday, based almost entirely on SCOTUSblog’s Lyle Denniston’s report on the argument:
[The decision in these cases] could, in theory anyway, invite a narrowing of Citizens United, even though the ruling would not be a First Amendment corporate-rights decision. The First Amendment prospects for an implicit narrowing of Citizens United was the main focus of my post yesterday. But the question of a narrowing depends not really on the constitutional nature of the right but instead on the derivative-or-not nature of the right at issue, whether or not the right is constitutional or is instead statutory. If the Court says the derivative nature a provision of law that provides a right to “persons” comes from the personal closeness of its shareholders to the corporation, then Citizens United should be limited to closely held corporations, too.
The First Amendment right Kennedy proclaimed for people unaffiliated with the corporation to hear the speech of the corporation was, of course, as I said yesterday really a proclaimed right of unaffiliated people to hear the corporation’s CEO’s speech, funded, though, by all the shareholders–or, as Kennedy out it, the association of citizens. The idea was that the political speech advanced the financial interests of all of the association’s citizen members, because they shared an interest in the financial success of the corporation and the political speech they were funding concerned financial matters. The premise was ridiculous; union members who owned shares of the company through their pension fund probably would not have supported anti-union candidates, for example. And if these two cases serve to remove that fig leaf from the corporations-have-their-owners’ derivative-constitutional-rights juggernaut, except for closely-held corporations, the outcome will have an important silver lining.
So we probably won’t have to fear Exxonmobil and Amazon marauding around with AK-47s, after all, since they’re publicly held corporations. And hopefully Hobby Lobby’s hobby isn’t hunting.
Several prominent commentators, Kapur among them in the article referenced above, have now written that that appears to be the most likely outcome in these cases. Roberts certainly appeared to endorse the idea. He also said it would leave the door open to publicly traded corporations to claim the same entitlement, although he said he didn’t expect that any would do so. In other words, closely held corporations are people who can hold religious beliefs because their private shareholders can. And maybe publicly held corporations also can hold religious beliefs because their publicly-held shares are owned by people who can–but maybe not, because some of those shareholders may be atheists. And others might hold religious beliefs contrary to those of the CEO.
But all shareholders, whether of a closely held corporation or of a publicly traded one, share an interest in the profitability of the corporation. Which, although I don’t know what court opinions have held that “corporations can bring racial discrimination claims as corporations” and that “those cases involve construction of the term ‘person,” I’m sure it’s a really good bet that the basis for those decisions was not that the corporation had been denied a hotel room at the Marriott or breakfast service at Denny’s but instead that it, the corporation, was being discriminated against in business contracts because its CEO or major (or sole) shareholder was a member of a racial minority. Think: bank loans, construction contracts, property purchases, zoning variances.
Which brings me to a discussion about an exchange between Alito and Solicitor General Donald Verilli in my earlier post-argument. I began with this quote from Denniston’s argument recap:
When [U.S. Solicitor General Donald] Verrilli said the Court has never found a right to exercise religion for corporations, Alito wondered if there was something wrong with the corporate form that it would not be accorded religion freedom rights. Did Verrilli agree, Alito said, with a lower court’s view that the only reason for a corporation to exist was to “maximize profits?” Verrilli said no, but Alito had made his point.
Alito, I said, was conflating the Securities Exchange Act, which regulates publicly traded corporations, with state-law corporate structure. Or, specifically, he was conflating the reasons for incorporation of a for-profit business or nonprofit organization with the reason for the business itself. I explained:
The Securities Exchange Act does (I believe; that’s not my area of expertise) require for-profit corporations to try to maximize profits–albeit not to the exclusion of all else–but the purpose of the corporate structure (as opposed to an unincorporated, for-profit business) is to enable the business itself, in its own name rather than in its owners’, to incur debt (stocks, bonds, bank loans, etc.), make contracts (including purchase and sales contracts), and generally do business as an entity separate from its shareholders. A critical purpose of the corporate structure is, in other words, to remove the shareholders from financial liabilities of the business.
The only reason, normally, for a for-profit business, incorporated or not, to exist is to make money. But making money is not the sole reason for incorporation of the business; a legal separation between the business and its owners is the main reason for incorporation of the business. So the point Alito had made is that he doesn’t (or pretends not to) know that. Or that he misunderstood the lower appellate court’s point.
And a final excerpt from that earlier post of mine:
So Alito wondered if there was something wrong with the corporate form that it would not be accorded religion freedom rights. Well, maybe, but the remedy is to lobby state legislators to amend the states’ incorporation laws. Or to amend the Religious Freedom Restoration Act to accord corporations religious freedom, should they wish to pray or something. Or to amend the First Amendment’s religious-exercise clause to do that. But although the plaintiffs had been relying upon Citizens United’s ruling not that corporations themselves are people, who have First Amendment speech rights, but instead upon First Amendment speech rights derivative of its owners as “associations of citizens”–and that the public is entitled to hear the political views of that association of citizens (or, actually, of its CEO)–Alito thinks the corporate form itself, not the derivative rights of the corporation’s shareholders, accords the corporation religion freedom rights. And that if not, there’s something wrong with the corporate form.
Then again, maybe what’s wrong with the corporate form is that it has no heart.
Corporations are, by state incorporation statute, considered people for purposes of engaging in the for-profit business or in the nonprofit-organization purpose for which the business or organization operates. If Hobby Lobby and Conestoga Wood were organizations that existed in some part for the purpose of providing healthcare–as physicians, hospitals and healthcare clinics do–then Roberts’ analogy to race-discrimination lawsuits filed by corporations would not be a syllogism, and Alito’s query whether there was something wrong with the corporate form that it would not be accorded religion freedom rights would not be a tautology. But these corporations are not, and these justices’ comments are respectively a syllogism and a tautology.
Which brings me (surprise!) to Kennedy, who already-famously told Verilli near the end of Verilli’s argument:
Under your view, for-profit corporations can be forced to pay for abortion. Your reasoning would permit that….You say that for-profit corporations have no standing to litigate what their shareholders believed.
That, too, strikes me as a tautology, except if a purpose for the corporation’s existence is to provide health care or access to it. But it does require an inquiry into what the shareholders believe. Which is what Citizens United should have required, and what Hobby Lobby and Conestoga Wood may, as I’ve expressed hope they would, serve to require in corporate First Amendment cases going forward.
The Koch brothers needn’t fear, though. Koch Industries is a privately held corporation. Very privately held. And it’s a corporation that prays, dines out and travels. Just not in pews, at Denny’s, or on commercial airliners.
UPDATE: A guest post by University of Virginia law professor Brandon Garrett, published yesterday on the blog of the American Constitution Society (ACS), concerns the very points I make (or try to) in this post and in my two earlier posts on this this week.
The ACA is a liberal organization that attempts to be a mirror counterpart to the rightwing Federalist Society that for more than three decades has been the driving force behind the Conservative Legal Movement–Scalia is a founder, and three other justices are or have been affiliated with it, as are a slew of Republican-appointed federal appellate court judges.
The title of Professor Garrett’s post: Does Hobby Lobby Even Have Standing? His post focuses on and explains the concept of “third-party standing.” He also writes:
Corporate personhood is not the problem. Of course corporations can sue and be sued. They can be prosecuted for the crimes of employees. But only a voluntary association of people with likeminded beliefs or a religious group or a nonprofit can stand for the beliefs of others. A for-profit corporation stands for its profits.
I would extend that to political speech, as well. In fact, it has been a point I’ve made about Citizens United for three years now, including in my posts of Hobby Lobby/Conestoga Wood.