Eliminating Corporate Power Over Ballot Questions: Background and Resources for Change

The Problem:
Corporations regularly wield immense Supreme Court-created power to defeat citizen ballot initiatives and referenda that are disfavored by company executives and increasingly, corporations are running their own initiative campaigns. While it is far easier for corporations to defeat citizen initiatives than to pass their own, merely threatening to run a costly initiative campaign often is sufficient to cow local governments into complying with corporate agendas.

Legal background:
In First National Bank of Boston v. Bellotti (1978) the U.S. Supreme Court struck down a Massachusetts law that prohibited corporate spending to influence the outcome of a state ballot initiative (on First Amendment grounds). Though much of the opinion resorted to "listeners' rights" arguments that protect the speech, not the (corporate) "speaker," the effect was to create a presumed corporate “right” to influence initiatives and referenda. Justice Rehnquist's sharp dissent is notable.

In Austin v. Michigan Chamber of Commerce (1990) the Court held that there was no First Amendment violation in requiring a corporation to set up segregated funds (a PAC) for spending on candidate campaigns. This meant that while corporate executives and employees could contribute to a PAC affiliated with the corporation, the corporation could not write company checks directly to a candidate's campaign.

Following that ruling's logic, in 1996 Montana citizens drafted and passed Initiative 125, which banned direct corporate contributions to initiative campaigns. The law was challenged by the Montana Chamber of Commerce and others as unconstitutional. Deciding Bellotti, rather than Austin was the guiding precedent, the Ninth Circuit Court of Appeals took Bellotti even further in striking down I-125 (Montana Chamber of Commerce, et. al. v. Argenbright, 2000).

Since Bellotti, however, a series of Supreme Court decisions (links below) have indicated increased deference to campaign contribution limits, leading some scholars to believe that a reversal of Bellotti may occur.

Our Campaign Objectives:
We are working to create widespread public awareness of the damage done to democracy by the precedent of granting corporations the right to influence initiatives and referenda. We seek to integrate popular education --via op-eds (several examples linked on this page), local forums, talk radio, helping re-frame local ballot measure battles, etc. -- with a coordinated legal strategy to to begin eroding corporate political speech privileges via local and state campaigns.

The successful "Measure T" campaign won by allies in California in 2006 is one model for change (see below). Our ultimate goal is to overturn Bellotti in Court or via constitutional amendment. Contact us to get involved.

Recent examples of the problem and opportunities:

In multiple communities
Wal-Mart Inc. and their development partners regularly threaten communities with initiatives if local officials do not obey their wishes. These cases present ripe opportunities for local organizing to confront the destructive power of "corporate free speech." Turlock, CA, Westbrook, ME, Bennington, VT and Flagstaff, AZ are examples, but Wal-Mart is not alone. Target, Home Dept and other chains engage in this behavior, too. This op-ed highlights some of these cases.

In California
Target Corporation succeeded in overturning a size cap in Davis at the ballot box in Nov., 2006. Wal-Mart is threatened to do the same in Long Beach in April, 2007.

In June 2005, two giant pharmaceutical companies committed $12 million to run a California ballot initiative on prescription drug pricing at the state level. Donations to Schwarzenegger's California Recovery Team, the funding arm of his package of ballot initiatives, include $1 million from developer Alex Spanos, $100,000 from Cisco Systems CEO John Chambers and $100,000 from Yahoo Inc. cofounder Jerry Yang, along with investments from Safeway Inc., EBay Inc. and Bank of America. Wal-Mart Stores Inc., Cendant Corp., Citigroup Inc. and Target Inc. each gave $100,000 to Citizens to Save California, a political action committee promoting the governor's agenda. Their bid failed, but again at enormous cost to those who defeated it.

In 2004, a corporate consortium succeeded in passing Proposition 64 (pdf) to rescind key elements of California 's Unfair Business Practices Act (see pre-election story + background links or a post-election analysis by one of the law's defenders). The law, previously was one of the nation's strongest tools for environmental and consumer protection, was emasculated in the name of stopping "frivolous lawsuits." This was the law used by Marc Kasky to sue Nike in the Nike v. Kasky case. We filed an amicus brief (pdf) at the U.S. Supreme Court challenging Nike's claim to a "right to lie" under the 1st Amendment.

In Montana. In Nov., 2006, Wal-Mart overwhelmed citizen activists in Ravalli County with a massive PR campaign and overturned perhaps the most democratically-enacted law in county history. Residents of the county's four municipalities -- those most likely to be impacted -- were banned from voting by county officials, based on the argument that their towns can enact their own zoning regulations. With the core base of opposition disenfranchised, Wal-Mart won narrowly.

In 2004, a single out-of-state mining corporation, Canyon Resources, Inc., spent a staggering $3 million (in a state with well under a million people) in a failed attempt to overturn I-137, passed by state voters in 1998 to prohibit cyanide leach mining in Montana (see news summary or this op-ed for details). Even though the initiative failed, the fight sucked huge amounts of money from citizen groups and diverted thousands of hours of work from pro-active organizing.

In Utah. In November of 2007, residents of Heber (near Park City) will vote on whether to allow stores exceeding 60,000 sq ft. A proposed Wal-Mart is the focal point. Wal-Mart already overwhelmed a ballot initiative by residents in nearby Sandy, UT in 2005.

In Arizona. Real estate interests advanced a 2004 initiative to overturn public campaign financing at the state level. This initiative was later removed from the ballot for mixing two issues in a single initiative -- forbidden by state law. Months later, Wal-Mart succeeded in overturning a size cap in Flagstaff by running its own ballot initiative. This op-ed covers that battle and an one in Sandy, Utah, where residents won a battle at Utah's Supreme Court to hold a fall 2005 referendum on whether land should be rezoned to permit Wal-Mart and Home Depot to build there, only to be defeated at the ballot box.

In March of 2007, Wal-Mart spent more than $275,000 (the developer kicked in another $25k) to convince voters not to support a rezoning decision that allowed a proposed new "superstore." Wal-Mart won, 5,598 to 2,893. Protect Prescott Valley, the local opposition, collected $1,500 from the UFCW.

In Maine, HR 2050 was introduced and defeated in spring, 2005. The bill proposed to revoke corporate claims to enjoy Bill of Rights protections in the state of Maine.

Victory in California Campaign

Humboldt County, CA: On June 6, 2006, the Humboldt Coalition for Community Rights successfully drove passage of a ballot initiative to ban any non-local corporation from contributing to any candidate campaign, referendum or recall in county elections. Read a brief summary or a more detailed pre-vote report. HCCR won 55% of the vote.

Some CA unions are pursuing a different strategy of requiring shareholder consent for corporate political expenditures. Though we have not thoroughly evaluated the potential efficacy of this approach, this particular initiative is seriously flawed in our view.

Key Background Resources

Court Cases

*Austin v. Michigan Chamber of Commerce (1990) upheld limits on corporate spending in candidate elections. A detailed, strident argument opposing our position on this issue is provided by Justice Scalia in dissent.

*McConnell v. FEC (2003) upheld most provisions of the Bipartisan Campaign Reform Act of 2002.

* FEC v. Massachusetts Citizens for Life, Inc. (1986)

* Nixon v. Shrink Missouri Government PAC (2000) (see summary or full decision)

* FEC v. Colorado Republican Federal Campaign Committee (2001)

Papers

* Rethinking the Unconstitutionality of Contribution and Expenditure Limits in Ballot Measure Campaigns by Richard Hasen (Loyola Law School paper 2004--link is to summary, full paper is 53 pp pdf). Hasen concludes that Bellotti and Buckley precedents "are ripe for reexamination in light of the Supreme Court's new-found deference to campaign finance regulation."

* "Essential Speech: Why Corporate Speech is Not Free" by Daniel Greenwood, Iowa Law Review, 1998.

* “Corporate Political Speech, and The Legacy Of The Segregated Fund Cases,” by Adam Winkler in Election Law Journal, Spring, 2004 (rtf document). This paper argues that Bellotti was an aberration in light of the Supreme Court's “segregated funds cases.” Those decisions on labor union campaign spending provide substantial backing for prohibiting spending of company funds for initiatives: United States v. CIO (1948), United States v. Autoworkers (1957), and Pipefitters v. United States (1972), Abood v. Detroit Board of Education (1977, summary here).

"An Analysis of the Continued Viability of Corporate Speech Rights" by Joshua Salzman (18 pp. pdf). This paper contains individual breakdowns of the votes of sitting Supreme Court justices as of March, 2005.

* "The First Amendment and the Limits of Campaign Finance Reform" by Daniel Ortiz is Chapter 3 in The New Campaign Finance Sourcebook (Brookings Institution 2005). Ortiz offers another insightful interpretation of many of the cases noted above.

* For talking points and public discussion, our letter to ACLU Board of Directors and other materials on Nike v. Kasky and Corporate Personhood pages may be useful.

* "Corporations and Elections, A Century of Debate." Paper by Robert Mutch. (2003). Contact us to request a copy.

Additional Resources

The Initiative & Referendum Institute

Brief introduction on the use of ballot initiatives at municipal level

Money Doesn't Buy Success at Ballot Box (1998 report by Public Policy Inst. of California). The report documents that defeating initiatives with big spending is far easier than passing them.

Citizens Against Rent Control v. Berkeley. This decision forbade limits on contributions by individuals to ballot initiative lobbying groups. Justice White's dissent is an interesting read.

Montana Initiative 125
- Case overview: Montana v Argenbright
- Text of initiative
- 9th Circuit court opinion
- Appellate brief by National Voting Rights Institute
- Reply brief by NVRI

Many more related resources can be found on our Corporate Personhood page and Nike v Kasky archive. We seek a volunteer familiar with the subject to help integrate much of our Kasky archive into a more general and extensive library on "corporate free speech." Contact us to learn more.