Judicial Activism for Corporations Is Subverting Democracy

By Jeff Milchen 
Published August 25, 2005

After battling city officials all the way to the Utah Supreme Court over whether they had collected enough petition signatures to force a referendum, it seems the residents of Sandy, Utah will become the latest in a growing number of communities to decide the fate of controversial “big box” stores at the ballot box.

In a state where growth control often is equated with communism, the court came down firmly on the side of citizens seeking to prevent Sandy’s City Council from rezoning industrial land in order to allow a new Wal-Mart and Home Depot. The court’s 5-0 ruling in July said, “The exercise of the people’s referendum right is of such importance that it properly overrides individual [corporation’s] economic interests.” But after winning their initial battle, Sandy residents may find the court’s Jeffersonian words hollow.After battling city officials all the way to the Utah Supreme Court over whether they had collected enough petition signatures to force a referendum, it seems the residents of Sandy, Utah will become the latest in a growing number of communities to decide the fate of controversial “big box” stores at the ballot box.

Why? The U.S. Supreme Court has ruled corporations have a “right” to spend unlimited corporate funds to influence ballot questions. As citizens in dozens of communities have learned, that power enables giant corporations to turn ballot measures — theoretically the purest form of democracy — into yet another sphere of corporate dominance.

In May, Wal-Mart spent almost $400,000 in Flagstaff, AZ to run its own ballot initiative and reverse a size cap on big box stores previously passed by the city council. The company outspent the size cap’s defenders three to one — a whopping $44 for each vote it received — en route to winning 51% of the vote.

Wal-Mart’s ad campaigns painted the size cap as a union and governmental attack on citizens’ rights, including an ad that equated opponents with Nazi book-burners. A backlash resulted, but came after most of mail-in ballots were cast.

Becky Daggett of Friends of Flagstaff’s Future, which supported efforts to uphold the size cap, said the corporate funding “drove what should have been a community debate and determined the outcome of a local decision.”

The story isn’t unique — just two months earlier in Bennington, VT, Wal-Mart had steamrolled citizens who tried to defend the town’s big-box size cap.

This is hardly what the authors of our Constitution had in mind.

When American colonists declared independence from England, they also freed themselves from control by corporations like the East India Company that extracted colonists’ wealth and dominated trade. The colonial experience bred fear of concentrated power in the hands of corporations as well as despots, leading states to limit corporations’ size, lifespan, and range of activity. In most states, corporations were forbidden to spend any money to influence elections or law-making.

Corporations escaped many of those barriers during the 1800s, aided by the distraction and growth opportunities of the Civil War. By the end of the century, the Supreme Court’s judicial activism had invented a concept that would have shocked American revolutionaries.

Ignoring the fact that corporations’ are unmentioned in our Constitution, the Court interpreted the 14th Amendment’s guarantee of “due process of law” — written to protect the rights of freed slaves — to make corporations legal “persons.”

It took almost another century, however, before another episode of Supreme Court activism effectively created a corporate “right” to dominate ballot initiatives and referenda (initiatives are questions placed on the ballot via signature gathering among the general public, referenda are questions on which the government chooses to allow a popular vote).

The man who went on to write that key ruling gave fair warning of his bias. In 1971, he wrote a famous memo to a friend at the U.S. Chamber of Commerce, urging the Chamber to aggressively expand big business’ power, noting, “the judiciary may be the most important instrument for social, economic and political change.”

One month later President Nixon appointed the memo’s author, Lewis Powell, to the Supreme Court, where he went on in 1978 to make his political opinion the law of the land, writing the (5-4) majority opinion in First National Bank of Boston v. Bellottithat created a new class of corporate political “speech”

Notably, such decisions on expansion of corporate political power don’t necessarily follow left-right political divides. Indeed, Chief Justice Rehnquist has repeatedly attacked the invention of corporate constitutional rights. In his dissenting opinion fromBellotti, he warned of “special dangers in the political sphere” that result from granting political power to corporations (his full dissent is well worth a read).

Despite Rehnquist’s objections, corporate executives have since wielded vastly expanded power over communities around the country. Often, the mere threat of running a costly ballot initiative intimidates local governments into weakening controls over corporate activities.

So when the citizens of Sandy go the voting booth this fall, they’ll battle against a company that spent less than sixty seconds worth of corporate revenue to defeat a skilled and well-organized citizen effort in Flagstaff. Whether or not we’re concerned by the proliferation of big box stores, we all should be alarmed by this perversion of democracy.

The reasons that drove our country’s founders to keep business creations subordinate to democracy are even more compelling today. Until we return corporate activity to “strictly business” and revoke their ill-gotten political power, the power of a Wal-Mart typically will trump even the most committed citizen efforts.

Community-level fights will continue and I wish people of Sandy the best, but the crucial battle — one to determine whether citizens or corporations will control the future of our communities and country — must take place nationwide.

Jeff Milchen formerly directed Reclaim Democracy! Our resource library on corporations and ballot questions has much more on this topic. This article is updated from a piece the author first wrote for Writers on the Range, a service of High Country News.