States should be permitted to limit corporate political “speech”
Case Argued November 9, 1977
Decided April 26, 1978
Case # 435 U.S. 765
Justice Powell delivered the opinion of the Court, in which Justices Burger, Stewart, Blackmun, and Stevens, joined. Justice Burger also filed a concurring opinion. Justice White filed a dissenting opinion, in which Brennan and Marshall joined. Justice Rehnquist filed a separate dissenting opinion.
Passages in red text are some we consider to be of particular interest.
Mr. Justice Rehnquist, dissenting.
This Court decided at an early date, with neither argument nor discussion, that a business corporation is a “person” entitled to the protection of the Equal Protection Clause of the Fourteenth Amendment. Santa Clara County v. Southern Pacific R. Co., (1886). Likewise, it soon became accepted that the property of a corporation was protected under the Due Process Clause of that same Amendment. See, e. g., Smyth v. Ames, (1898). Nevertheless, we concluded soon thereafter that the liberty protected by that Amendment “is the liberty of natural, not artificial persons.” Northwestern Nat. Life Ins. Co. v. Riggs, (1906).
Before today, our only considered and explicit departures from that holding have been that a corporation engaged in the business of publishing or broadcasting enjoys the same liberty of the press as is enjoyed by natural persons, Grosjean v. American Press Co., (1936), and that a nonprofit membership corporation organized for the purpose of “achieving . . . equality of treatment by all government, federal, state and local, for the members of the Negro community” enjoys certain liberties of political expression. NAACP v. Button, (1963).
The question presented today, whether business corporations have a constitutionally protected liberty to engage in political activities, has never been squarely addressed by any previous decision of this Court. 1 However, the General Court of the Commonwealth of Massachusetts, the Congress of the United States, and the legislatures of 30 other States of this Republic have considered the matter, and have concluded that restrictions upon the political activity of business corporations are both politically desirable and constitutionally permissible. The judgment of such a broad consensus of governmental bodies expressed over a period of many decades is entitled to considerable deference from this Court. I think it quite probable that their judgment may properly be reconciled with our controlling precedents, but I am certain that under my views of the limited application of the First Amendment to the States, which I share with the two immediately preceding occupants of my seat on the Court, but not with my present colleagues, the judgment of the Supreme Judicial Court of Massachusetts should be affirmed.
Early in our history, Mr. Chief Justice Marshall described the status of a corporation in the eyes of federal law:
A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of creation confers upon it, either expressly, or as incidental to its very existence. These are such as are supposed best calculated to effect the object for which it was created.
-Dartmouth College v. Woodward, 4 Wheat. 518, 636 (1819).
The appellants herein either were created by the Commonwealth or were admitted into the Commonwealth only for the limited purposes described in their charters and regulated by state law. 2 Since it cannot be disputed that the mere creation of a corporation does not invest it with all the liberties enjoyed by natural persons, United States v. White, (1944) (corporations do not enjoy the privilege against self-incrimination), our inquiry must seek to determine which constitutional protections are “incidental to its very existence.” Dartmouth College, supra, at 636.
There can be little doubt that when a State creates a corporation with the power to acquire and utilize property, it necessarily and implicitly guarantees that the corporation will not be deprived of that property absent due process of law. Likewise, when a State charters a corporation for the purpose of publishing a newspaper, it necessarily assumes that the corporation is entitled to the liberty of the press essential to the conduct of its business. 3 Grosjean so held, and our subsequent cases have so assumed. E. g., Time, Inc. v. Firestone, (1976); New York Times Co. v. Sullivan, (1964). 4
Until recently, it was not thought that any persons, natural or artificial, had any protected right to engage in commercial speech. See Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, (1976). Although the Court has never explicitly recognized a corporation’s right of commercial speech, such a right might be considered necessarily incidental to the business of a commercial corporation.
It cannot be so readily concluded that the right of political expression is equally necessary to carry out the functions of a corporation organized for commercial purposes. 5 A State grants to a business corporation the blessings of potentially perpetual life and limited liability to enhance its efficiency as an economic entity. It might reasonably be concluded that those properties, so beneficial in the economic sphere, pose special dangers in the political sphere.
Furthermore, it might be argued that liberties of political expression are not at all necessary to effectuate the purposes for which States permit commercial corporations to exist. So long as the Judicial Branches of the State and Federal Governments remain open to protect the corporation’s interest in its property, it has no need, though it may have the desire, to petition the political branches for similar protection. Indeed, the States might reasonably fear that the corporation would use its economic power to obtain further benefits beyond those already bestowed. 6 I would think that any particular form of organization upon which the State confers special privileges or immunities different from those of natural persons would be subject to like regulation, whether the organization is a labor union, a partnership, a trade association, or a corporation.
One need not adopt such a restrictive view of the political liberties of business corporations to affirm the judgment of the Supreme Judicial Court in this case. That court reasoned that this Court’s decisions entitling the property of a corporation to constitutional protection should be construed as recognizing the liberty of a corporation to express itself on political matters concerning that property. Thus, the Court construed the statute in question not to forbid political expression by a corporation “when a general political issue materially affects a corporation’s business, property or assets.” (1977).
I can see no basis for concluding that the liberty of a corporation to engage in political activity with regard to matters having no material effect on its business is necessarily incidental to the purposes for which the Commonwealth permitted these corporations to be organized or admitted within its boundaries. Nor can I disagree with the Supreme Judicial Court’s factual finding that no such effect has been shown by these appellants. Because the statute as construed provides at least as much protection as the Fourteenth Amendment requires, I believe it is constitutionally valid.
It is true, as the Court points out, ante, at 781-783, that recent decisions of this Court have emphasized the interest of the public in receiving the information offered by the speaker seeking protection. The free flow of information is in no way diminished by the Commonwealth’s decision to permit the operation of business corporations with limited rights of political expression. All natural persons, who owe their existence to a higher sovereign than the Commonwealth, remain as free as before to engage in political activity. Cf. Maher v. Roe, (1977).
I would affirm the judgment of the Supreme Judicial Court.
[ Footnote 1 ] Our prior cases, mostly of recent vintage, have discussed the boundaries of protected speech without distinguishing between artificial and natural persons. See, e. g., Linmark Associates, Inc. v. Willingboro, (1977); Buckley v. Valeo, (1976). Nevertheless, the Court today affirms that the failure of those cases to draw distinctions between artificial and natural persons does not mean that no such distinctions may be drawn. The Court explicitly states that corporations may not enjoy all the political liberties of natural persons, although it fails to articulate the basis of its suggested distinction. Ante, at 777-778, n. 13.
[ Footnote 2 ] Appellants Wyman-Gordon Co. and Digital Equipment Corp. are incorporated in Massachusetts. The Gillette Co. is incorporated in Delaware, but does business in Massachusetts. It is absolutely clear that a State may impose the same restrictions upon foreign corporations doing business within its borders as it imposes upon its own corporations. Northwestern Nat. Life Ins. Co., (1906). Appellants First National Bank of Boston and New England Merchants National Bank are organized under the laws of the United States. In providing for the chartering of national banks, Congress has not purported to empower them to take part in the political activities of the States in which they do business. Indeed, it has explicitly forbidden them to make any “contribution or expenditure in connection with any election to any political office.” 2 U.S.C. 441b (a) (1976 ed.). thus, there is no occasion to consider whether Congress would have the power to require the States to permit national banks to participate in political affairs. Cf. McCulloch v. Maryland, 4 Wheat. 316 (1819).
[ Footnote 3 ] The Court concedes, ante, at 781, that, for this reason, this statute poses no threat to the ordinary operations of corporations in the communications business.
[ Footnote 4 ] It does not necessarily follow that such a corporation would be entitled to all the rights of free expression enjoyed by natural persons. Although a newspaper corporation must necessarily have the liberty to endorse a political candidate in its editorial columns, it need have no greater right than any other corporation to contribute money to that candidate’s campaign. Such a right is no more “incidental to its very existence” than it is to any other business corporation.
[ Footnote 5 ] However, where a State permits the organization of a corporation for explicitly political purposes, this Court has held that its rights of political expression, which are necessarily incidental to its purposes, are entitled to constitutional protection. NAACP v. Button, (1963).
The fact that the author of that opinion, my Brother BRENNAN, has joined my Brother WHITE’s dissent in this case strengthens my conclusion that nothing in Button requires that similar protection be extended to ordinary business corporations. It should not escape notice that the rule established in Button was only an alternative holding, since the Court also ruled that the National Association for the Advancement of Colored People had standing to assert the personal rights of its members. Ibid., citing NAACP v. Alabama ex rel. Patterson, (1958). The holding, which has never been repeated, was directly contrary to an earlier decision of this Court holding that another political corporation, the American Civil Liberties Union, did not enjoy freedom of speech and assembly. Hague v. CIO, (1939) (opinion of Roberts, J.); id., at 527 (opinion of Stone, J.).
[ Footnote 6 ] My Brother WHITE raises substantially these same arguments in his dissent, ante, at 809-810. However, his heavy emphasis on the need to protect minority shareholders at least suggests that “[t]he governmental interest in regulating corporate political communications,” ante, at 809, might not prove sufficiently weighty in the absence of such concerns. Because of my conclusion that the Fourteenth Amendment does not require a State to endow a business corporation with the power of political speech, I do not find it necessary to join his assessment of the interests of the Commonwealth supporting this legislation.
The question of whether such restrictions are politically desirable is exclusively for decision by the political branches of the Federal Government and by the States, and may not be reviewed here. My Brother WHITE, in his dissenting opinion, puts the legislative determination in its most appealing light when he says, ibid.: “[T]he interest of Massachusetts and the many other States which have restricted corporate political activity . . . is not one of equalizing the resources of opposing candidates or opposing positions, but rather of preventing institutions which have been permitted to amass wealth as a result of special advantages extended by the State for certain economic purposes from using that wealth to acquire an unfair advantage in the political process ….” As I indicate in the text, supra, I agree that this is a rational basis for sustaining the legislation here in question. But I cannot agree with my Brother WHITE’s intimation that this is in fact the reason that the Massachusetts General Court enacted this legislation.
If inquiry into legislative motives were to determine the outcome of cases such as this, I think a very persuasive argument could be made that the General Court, desiring to impose a personal income tax but more than once defeated in that desire by the combination of the Commonwealth’s referendum provision and corporate expenditures in opposition to such a tax, simply decided to muzzle corporations on this sort of issue so that it could succeed in its desire.
If one believes, as my Brother WHITE apparently does, see ante, at 806, that a function of the First Amendment is to protect the interchange of ideas, he cannot readily subscribe to the idea that, if the desire to muzzle corporations played a part in the enactment of this legislation, the General Court was simply engaged in deciding which First Amendment values to promote.
Thomas Jefferson in his First Inaugural Address made the now familiar observation: “If there by any among us who would wish to dissolve this Union or to change its republican form, let them stand undisturbed as monuments of the safety with which error of opinion may be tolerated where reason is left free to combat it.” J. Richardson, A Compilation of the Messages and Papers of the Presidents 310 (1897). One may entertain a healthy skepticism as to whether the General Court left reason free to combat error by their legislation; and it most assuredly did not leave undisturbed corporations which opposed its proposed personal income tax as “monuments of the safety with which error of opinion may be tolerated.” But I think the supreme Judicial Court was correct in concluding that, whatever may have been the motive of the General Court, the law thus challenged did not violate the United States Constitution.
- For the entire Bellotti decision, see Findlaw
- For an extensive collection of resources relating to the Bellotti case and stripping corporations of their power to influence ballot questions, see our library of resources on Corporations and Ballot Initiatives or on Corporate Personhood.
- Of related interest: memo by Justice Lewis Powell (author of the majority opinion) to the U.S. Chamber of Commerce, written weeks before his appointment to the Supreme Court, in which he called for an aggresive expansion of corporate legal and political power.