In the wake of this week’s Supreme Court decision in Burwell v. Hobby Lobby Stores Inc., a lot of reaction from outraged liberals on Facebook and in the Twitterverse has objected to the idea of corporate personhood. This piles onto reactions to the court’s 2010 ruling in Citizens United v. FEC, which led many indignant progressives to mock the notion that, as Mitt Romney famously put it, “corporations are people, my friend.”
While I’m sympathetic to the opposition of many people on the left to these decisions, it’s important to recognize that corporate personhood doctrine isn’t the reason that they went the wrong way and that, in fact, the idea that corporations are legal persons is entirely necessary to protect individuals from abuses of corporate power in the way liberals would like. The Hobby Lobby decision provides a perfect case study of this because, while corporate personhood played a role in the majority’s reasoning, without the notion there’s no way at all that the court could have found in favor of HHS and the ACA’s contraception mandate.
To see why, it’s important to understand that “corporations are people” simply means that corporations have a different legal identity than their owners, their employees, or their management. To say that a ExxonMobil or Delta Airlines is a person is just to say that it is a legal entity with its own rights and duties, and it isn’t the same entity as any of the individual people affiliated with it. Corporate personhood is the reason that Wal-Mart, as opposed to individuals working for Wal-Mart, can be sued for sex discrimination; it’s the reason a bank has to give me back the money I deposited there even if it changes management or ownership. In both cases the corporation itself is the entity that has legal responsibilities it can be compelled to uphold. If the corporation weren’t a person (in this specific legal sense), then it couldn’t be legally responsible for anything; instead, only its owners or managers would be responsible. The alternative to corporate personhood isn’t a world in which corporations still exist but they have no rights and the government can force them to do whatever it wants. The law doesn’t work that way. The alternative is a world in which corporations have no legal standing and only individuals have legal rights and responsibilities.
This matters a lot in the Hobby Lobby case because what was at issue was whether Hobby Lobby (and other similar companies), as a legal entity distinct from its owners, has a right, under the free exercise clause of the First Amendment and the Religious Freedom Restoration Act, to be excepted from a law because complying would violate its religious beliefs. The court held that it was Hobby Lobby the corporation whose religious freedom was being violated by forcing it to provide health insurance coverage for four forms of contraception that some people believe to be abortifacients. Both sides agreed that the issue was about Hobby Lobby’s rights, not those of its owners. The decision rests on the doctrine of corporate personhood, in the sense that the decision couldn’t have been rendered without that concept. But the case itself couldn’t have even taken place without it, as we can see from the fact that it’s Burwell v. Hobby Lobby Stores Inc., not Burwell v. Green (the Greens are the family that owns a majority of Hobby Lobby). Corporate personhood allows us to separate out the legal identity of the company from that of the owners, and the court’s mistake was actually not separating them enough.
Consider how the case would have looked without corporate personhood. The issue then would have been whether the Greens themselves have a right to refuse to buy this contraceptive coverage for their employees. As individuals, it’s obvious that they have a sincere religious conviction that it’s wrong to use these specific forms of contraception and that they have a right to religious liberty that could exempt them from some laws that conflict with their religion. If those were the questions at issue any court would haven certainly had to find in favor of the Greens and, moreover, the Obama administration would never would have tried to force such a mandate on employers in the first place. Given corporate personhood, however, it isn’t the religious beliefs and rights of the Greens, but those of Hobby Lobby the corporation, that are at issue. If corporate personhood is accepted, it can be argued either that Hobby Lobby isn’t capable of exercising religious liberty or that the requirement to provide contraceptive insurance coverage doesn’t violate the company’s sincere religious convictions. The same claims can’t plausibly be made about the Greens as individuals.
The problem with the court’s decision isn’t that it accords personhood to Hobby Lobby and other corporations and endows them First Amendment rights. The problem is that the court doesn’t take the companies’ separate identity seriously enough. If Hobby Lobby is a different legal person than the Green family, much more should be required to show that it truly is a religious “person” than simply their say-so. The court tries to argue that because these companies are “closely held” their religious interests can be identified with those of their owners. Even if the notion of a “closely held” company was well-defined, however, the Green’s religious beliefs shouldn’t automatically transfer to a separate legal entity, no matter how much of it they own.
Liberals who complain about the law treating corporations as people should recognize that this decision happened not because corporations were identified as separate entities from their owners, but because the court didn’t separate them enough. The decision lets the owners of a company like Hobby Lobby enjoy the legal advantages of incorporation, which separates their own legal status from that of the company, but still permits them to use the company to impose their personal religious viewpoints on their employees. They shouldn’t be allowed to have it both ways. If corporations are distinct from their owners, they have to be considered legally on their own terms. And if we want to hold corporations accountable to their employees, their customers, and society, the idea that they are entities that can be held responsible in their own right has to be part of our conceptual toolbox.
Note: I should mention that Jacob T. Levy at Bleeding Heart Libertarians made a point that’s similar to mine in some ways. It was posted before my piece but I didn’t become aware of it until this morning. You should check it out in any case.