February 2, 2010
As you probably know by now, the U.S. Supreme Court recently invalidated certain restrictions on corporations’ participation in campaign finance in Citizens United v. Federal Election Commission. Because I focus on corporate law, a colleague told me I should write an article about this, to which I replied, I did—ten years ago.
I argued there that the Court’s campaign-finance jurisprudence has consistently failed to consider a large business corporation as a complex hierarchical entity. A decade later, the Court continues to treat a corporation as the equivalent of an individual human speaker under the First Amendment. The Court imagines a corporation as an organization that reflects the will of its constituent individuals.
Citizen United, like past opinions, states in don't-blink-or-you'll-miss-it fashion that shareholders control corporate speech through “corporate democracy." But the Court has never tried to describe how “corporate democracy” works. In fact, while shareholders can cast votes in director elections, directors typically run unopposed and it is very difficult for shareholders to nominate alternate candidates. Moreover, directors do not run corporations-CEOs do, and they are appointed by directors, not elected by shareholders. While shareholders can express discontent with corporate political spending by selling their shares, this is only a kind of after-the-fact punishment, not a method of participation in making political spending choices.
There are certainly some arguments to be made in favor of the petitioners in Citizens United, but “corporate democracy” is not one of them.
If you are interested in hearing more about this issue, Professor Chris Elmendorf and I will participate in a panel discussion on Citizens United in [CORRECTION] King Hall ROOM 2008 at noon on Tuesday, February 9.