Why Liberals Need To Get On Board With Corporate Personhood

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.

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9 thoughts on “Why Liberals Need To Get On Board With Corporate Personhood

  1. deskclerk104

    I think at heart you described much more accurately the intricacies of the laws and how they work. Also, you did a great job at explaining the positive benefits of having corporations treated as “people” for legal reasons. Even though liberals may not understand the reasons and explain them as well as you do, I think they would all come to agree the real reason they have a problem with it is the reason you mentioned, where company owners can “use the company to impose their personal religious viewpoints on their employees.”

    I think the whole weird thing about this is that the legal definition just doesn’t quite fit and now we have a weird problem. A corporation, put bluntly, is not a person. It’s an abstract idea or representation of other things. The reason we have the legal definition, like you said, is for all the nice protections we have. But we can never really truly separate a corporation as it’s own autonomous identity, because someone has to represent it, someone has to create it, it has to be tied to something, while individual adults do not.

    Anyways, great write up I really liked it.

    Reply
    1. thingspersonated Post author

      Deskclerk104-
      Thanks for the comment! To be clear, I’m not saying that corporations are just like you and me. Obviously there are lots of differences. And corporations are, of course, made up of individual people and mostly you interact with them by interacting with their employees. Still, I’m not sure I would say that they’re abstract. I’ve had some pretty real-feeling interactions with corporations. The example I always think of is when your flight gets canceled for no reason: I think I’m mad at United Airlines when that happens, and I feel bad if I shout at the ticket agent because I know it’s not really his or her fault. I think the fact that you can’t yell at who you’re actually mad it is what makes that experience so frustrating. You’re definitely right that corporations aren’t autonomous in the sense that they can’t do anything without some human being doing something, but I do think that in the legal context it works pretty seamlessly to treat them as having their own identities and there are good reasons that we mostly do that.

      Reply
  2. Zach

    So it sounds like we should be severing the connection between corporations and their ownership when we’re talking about the religious beliefs of an owner extending effortlessly to the corporation. How does your articulation of corporate personhood work in the other direction? Are there instances in which corporations can have beliefs for which we might want to hold its ownership responsible in some way? For those instances in which the owners/executives of a corporation are liable for corporate misdeeds, does that complicate the idea of a separate corporate person?

    Reply
    1. thingspersonated Post author

      Thanks Zach! It’s a good question. In one sense, limiting the owners’ liability is of course one of the biggest reasons anyone would set up a corporation in the first place; so if you lose everyone’s money they can’t sue you and take your personal assets. But that’s just legally; as far as moral responsibility is concerned I think it gets pretty murky. When corporations do things, it usually takes place through someone who works for them doing something. So in a lot of cases I think it would be that the corporation did something wrong and someone who was working for them did (if a CEO knowingly has employees dump pollution in a river, for example). But I think sometimes corporate misdeeds might not be able to be blamed on any individual person or specific group of people who did something wrong. It does happen sometimes that a corporation gets criminally prosecuted but no one who works for them has any charges brought against them (I think this happened in the case of the BP oil spill). That could be simply because there wasn’t enough evidence to support charges against any individuals, but I think sometimes it might be that no people by themselves really did anything that added up to wrongdoing, but the corporation’s actions overall did. These might be places where we talk about a problematic “corporate culture” or “lack of accountability” or something like that. We can usually see in hindsight how the problem could have been fixed, but it doesn’t seem like any individual really did anything wrong him- or herself. (BTW, I’ve tried to argue that this is plausible in other contexts and most people seem to be pretty skeptical, so you’re in good company if you’re not convinced.)

      Reply
      1. Zach

        So I couldn’t help myself but to look back at this. When Romney was talking about corporations as people, he wasn’t trying to defend the Citizens United decision or some other argument that corporate actions are just proxies for those of their owners. It was used in the context of income inequality. The link is below. I feel like that’s interesting in that it seems like he would consider using the ‘corporations are people’ line to mean different things depending on the situation. When it comes to the Green family and Hobby Lobby, their corporation is really just one person (or a few people who hold the company ‘closely’), but when it comes to conversations about income/corporate profits (also a sticky topic), Hobby Lobby and other large corporations are all of their employees and stockholders.

        Doesn’t seem to matter for the legal discussion, but it’s interesting politically…and unsurprisingly opportunistic.

        http://www.washingtonpost.com/politics/mitt-romney-says-corporations-are-people/2011/08/11/gIQABwZ38I_story.html

  3. Liam

    I’m no legal expert, but I think I would want to argue that corporations are a mechanism for shielding assets – as you say, a means of protecting owners and employees from CIVIL liability. But corporations are not the sorts of things that can have political or civil rights. You say they have rights and responsibilities, which they do, but only legal rights and responsibilities. They are market actors, not political actors. Or something….

    You can thank a certain someone for the Facebook link I followed.

    Reply
    1. thingspersonated Post author

      Hi Liam,

      Thanks for your comment! Sorry I didn’t respond for a while. For some reason WordPress stopped notifying me of new comments.

      I think that’s a fair point — corporations have legal rights, but that doesn’t mean they have moral rights of the same kind that human beings do. It would depend on what you think the reason is for according something or someone moral rights. Certainly there’s a long tradition of thought which would say that only human beings have moral rights. I’m not convinced that that’s right, but if it is then clearly corporations aren’t the kind of thing that can have moral rights. Still, giving independent legal identities and rights to corporations can be justified by saying that doing so protects the rights of human individuals. That seems to be more or less the way that Alito and the majority in this case think about it, but my point would be that that argument can be filled in in a number of different ways and “protecting the rights of human individuals” doesn’t necessarily need to mean “protecting the rights of the owners of corporations.”

      Reply
  4. WHAT TIME IS IT?

    Hello! I’m a liberal skeptical of corporate personhood.

    I appreciate your point that we need a corporate entity distinct from the owners, board of directors, etc., and that there would have been no case brought without the corporate entity. While we need to recognize a corporate entity for liability and other reasons, “personhood” seems like the wrong paradigm. We shouldn’t assess the rights and responsibilities of corporations on a spectrum from nothing (dealing with the corporation as just the collection of decision-makers) to personhood; there should be a separate model for corporations where we’re not ascribing corporations the identical rights we grant to individuals.

    Corporations aren’t flesh and blood and emotional with some independent ability to reason like humans. It seems fair that by incorporating this entity to insulate the owners from personal liability, the new entity does not retain all of the rights of those owners (e.g., the same freedom of speech or religion.) Corporations are designed to make profits for shareholders. (I did hear recently about a tiny new class of non-profit-like corporate entities that can consider other positive outcomes as part of the benefit to shareholders, but let’s set that anomaly aside). In Dodge v. Ford Motor Company, the court held Ford was required to operate in the best interests of the shareholders; he was prohibited from investing in a way that would best support his workers and the community if it would be to the detriment of shareholders. Thankfully, we don’t prohibit parents from making decisions that best support their children even if it’s to their own detriment. That would be a tough way to maintain the human race, even if it’s the best way to maintain a corporate entity. Surely others have said this far better elsewhere, but I thought the point should be raised here about fundamental differences in the way human beings and corporations operate.

    You suggested the court go further in requiring Hobby Lobby to show its personhood and its embodiment of its religious beliefs. I don’t think such a showing would satisfy me such that I’d be okay with an outcome like this case. To throw out an example I haven’t researched, I’d bet Desert Books, which is essentially owned by the LDS Church, could make a highly compelling case that it’s a religious “person” based on its practices and the principles observed (i.e., probably a much better case than Hobby Lobby). However, it’s still a corporation and, to me, shouldn’t be entitled to the same protections that a group of people–like say, Catholic nuns–would be.

    Rant over. Keep up the good work!

    Reply
    1. thingspersonated Post author

      Thanks for the response! Sorry about not seeing it for so long.

      You make a good point about the fact that corporations having legal identities doesn’t mean that we need to think of their rights in anything like the same way that we talk about the rights of individual people. Even if corporations are legal persons, there’s not necessarily any requirement that they have religions freedom rights or free speech rights (for example) at all. I do think it would be hard to imagine them having limited rights regarding contracts or property, however.

      I think the argument that corporations ought not to have certain rights because their function is exclusively to make money for shareholders is an interesting one. I think it’s one of the arguments that was put forward on behalf of the Obama administration in this case, and it seems like the one that Justice Ginsburg is the most sympathetic to in her dissent. I think it makes some sense too; if an organization is mostly just involved in selling products or services for money, then it doesn’t need any religious rights because it isn’t involved in doing anything with a religious function. However, I worry about this line of thinking because I worry that if we don’t expect corporations to do anything but seek profits, then that’s all they’re going to do. If all a corporation is supposed to do is make money for shareholders, can we really be surprised when they don’t care about their employees’ safety, their customers’ health, or their impact on the environment? Maybe this is ridiculously naive, but I think if we expected accountability and good citizenship from organizations, maybe we would get some. In any case, I wasn’t aware of the case you mentioned, so I’ll need to look that up.

      Reply

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