{"id":9175,"date":"2010-03-02T14:28:07","date_gmt":"2010-03-02T19:28:07","guid":{"rendered":"http:\/\/law.marquette.edu\/facultyblog\/?p=9175"},"modified":"2010-03-03T11:58:49","modified_gmt":"2010-03-03T16:58:49","slug":"federalism-free-markets-and-free-speech","status":"publish","type":"post","link":"https:\/\/law.marquette.edu\/facultyblog\/2010\/03\/federalism-free-markets-and-free-speech\/","title":{"rendered":"Federalism, Free Markets, and Free Speech"},"content":{"rendered":"

\"2notThe Supreme Court decision in Citizens United v. FEC<\/a><\/em> strikes down as unconstitutional a federal law that prohibits corporations and unions from using general treasury funds to make independent expenditures that expressly advocate the election or defeat of candidates for office.\u00a0 The majority opinion, written by Justice Kennedy, ignores hundreds of years of Supreme Court history in interpreting the subjects of federalism, free markets, and free speech.\u00a0 In its place, Justice Kennedy presents a textualist interpretation of the First Amendment that is divorced from any history or context.\u00a0 Justice Kennedy engages in the sort of \u201cfaux originalism<\/em>\u201d (syn. \u201cfake,\u201d \u201cartificial,\u201d \u201cfalse\u201d) that has been criticized by Judge Richard Posner<\/a>.\u00a0 Kennedy places a historical glaze on his own personal values and policy preferences, and calls the result the \u201coriginal understanding\u201d of the First Amendment.<\/p>\n

As such, Citizens United v. FEC<\/em> stands with District of Columbia v. Heller<\/a><\/em>, the Second Amendment case decided in 2008, as an example of the Justices slapping the \u201coriginalist\u201d label on a profoundly un-originalist interpretation of the Bill of Rights.\u00a0 It is appropriate to view the two cases together.\u00a0 Both are exercises in raw political power employed in order to accomplish conservative objectives.\u00a0 Both ignore hundreds of years of understanding about the meaning of the relevant constitutional provisions, in favor of a meaning derived by taking the words of the Amendment out of context.\u00a0 And both embrace interpretations of the constitutional Amendment at issue that are inconsistent with the meaning ascribed to that same language by the intellectual father of originalism, Robert Bork.\u00a0 In the same way that modern scholars deride the \u201cLochner<\/em> era\u201d as a misguided period in American Constitutional Law, I believe that future scholars and judges will recognize and reject the intellectual dishonesty of the \u201cHeller<\/em> era.\u201d<\/p>\n

We begin, as we so often do, with John Marshall.\u00a0 Justice Marshall\u2019s reading of the Constitution was clearly a reading that respected the rights of property.\u00a0 As R. Kent Newmyer succinctly summarized it, in his book \u201cJohn Marshall and the Heroic Age of the Supreme Court<\/a>,\u201d Marshall understood the rights of property ownership to include an individual\u2019s right \u201cto acquire property and deploy it creatively as he saw fit and to enjoy its fruits without hindrance.\u201d (Newmyer p. 264)\u00a0 But this does not mean that Marshall embraced Adam Smith\u2019s theory of completely free markets, where private business enterprises act completely free from government regulation.\u00a0 First of all, not even Adam Smith advocated for markets that were sealed off from all government regulation.\u00a0 Second of all, while the Framers of the Constitution were aware of Adam Smith, there is little evidence that Smith\u2019s economic theories influenced the Constitution.<\/p>\n

John Marshall\u2019s understanding of how the Constitution protected property rights was, characteristically, derived from his understanding of federalism.\u00a0 Justice Marshall struck down state laws that interfered with private property rights, for example in Fletcher v. Peck<\/em> and Dartmouth College v. Woodward<\/em>, because those laws violated the Contract Clause of the Constitution.\u00a0 However, Marshall\u2019s motivation was not to protect private economic activity from all forms of government regulation.\u00a0 His motivation was to protect national economic interests from protectionist state laws.\u00a0 Marshall viewed the states less as political units and more as local interest groups that would pass legislation favoring parochial economic interests over interests from out of state.\u00a0 If the young United States of America was to build a truly nationwide economy, private enterprise had to be able to grow free from the constant parade of protectionist legislation being passed by the states.\u00a0 As stated by Newmyer: \u201cWhat he feared . . . was state legislative meddling with contracts, either by passing laws that undercut contracts between individuals or by reneging on its own.\u201d (Newmyer p. 265)<\/p>\n

Marshall\u2019s protection of the rights of property, therefore, is not inconsistent with the idea of uniform, federal <\/em>regulation of private enterprise when in the public interest.\u00a0 (Kutler, infra<\/em>,\u00a0p. 67) Marshall simply never faced this issue.\u00a0 The corporations in existence at the time of his opinions were not national in scope, and corporate activity that exploited labor or endangered consumers would not become common until the industrial revolution.\u00a0 Marshall used the text of the Contracts Clause to clear local<\/em> state laws from the path of private enterprise, and no more.\u00a0 He sought to support a system of federalism where national interests could act free from state constraints.\u00a0 He did not seek to completely immunize private enterprise from all government regulation. (Kutler, infra<\/em>,\u00a0p. 179)<\/p>\n

Those who put their faith in the \u201cinvisible hand\u201d of the marketplace often assert that the owners of a private enterprise have a natural law right to use their property as they see fit, free from any government interference.\u00a0 The Supreme Court rejected this argument shortly after John Marshall\u2019s death when, in 1837 the Court decided the Charles River Bridge Case<\/em>.\u00a0 The majority of the Court held that the Massachusetts legislature, by granting a charter to the proprietors of a toll bridge, did not violate the Contract Clause of the Constitution by subsequently chartering the construction of a competing (and free) bridge.\u00a0 As explained by University of Wisconsin law professor Stanley Kutler in his classic book, \u201cPrivilege and Creative Destruction<\/a>,\u201d the case strongly affirmed the power of government to regulate the use of private property.\u00a0 In the words of Chief Justice Taney, \u201cThe continued existence of a government would be of no great value, if . . . it was disarmed of the powers necessary to accomplish the ends of its creations; and the functions [government] was designed to perform, transferred to the hands of privileged corporations.\u201d (Kutler p. 91)\u00a0 The Constitution has never been interpreted to preclude government regulation of a private business enterprise for the public good.<\/p>\n

The specific treatment of corporations under the Constitution is entirely consistent with this treatment of private property in general.\u00a0 There is no evidence that the Framers\u2019 generation understood corporations to have any rights under the Constitution separate from the rights of the persons who owned the corporation.\u00a0 In fact, for most of our nation\u2019s history, the Supreme Court denied the existence of any rights for corporations under the Constitution at all<\/em>.<\/p>\n

This history is usefully summarized in a forthcoming article <\/a>by David Gans and Douglas Kendall.\u00a0 In 1809, Justice John Marshall wrote in Bank of U.S. v. Deveaux that corporations were not \u201ccitizens\u201d as that word was used in Article III of the Constitution.\u00a0 Unfortunately, the result of the ruling was that corporations evaded the jurisdiction of the federal courts in order to avoid paying their debts.\u00a0 Therefore, the Court quickly overruled Deveaux and adopted the legal fiction that corporations could be deemed \u201ccitizens\u201d for purposes of suing or being sued in federal court.\u00a0 The Court\u2019s motivation in adopting this legal fiction, however, was to preserve the ability of natural persons harmed by a corporation to avail themselves of the diversity jurisdiction of the federal courts.<\/p>\n

In 1839 the Court specifically ruled that the treatment of corporations as \u201cpersons\u201d for diversity jurisdiction purposes did not grant corporations any of the other rights that the Constitution granted to natural persons.\u00a0 The Court never extended any of the individual rights provisions of the Constitution to corporations until the end of the 19th<\/sup> century.\u00a0 Nor did the Court ever suggest that the federal government lacked the power to regulate corporate activity, so long as the government did not violate the literal terms of the corporate charter.<\/p>\n

The first case extending constitutional rights to corporations came in 1897, under the Equal Protection Clause of the 14th<\/sup> Amendment, and it ushered in the Lochner<\/em> era when the Supreme Court used theories of substantive due process to assert that the Constitution protected corporations from federal economic regulation.\u00a0 It is significant that this innovation came via an interpretation of a Reconstruction-era constitutional amendment, and not from a purported interpretation of the original text.\u00a0 Moreover, in non-economic areas, such as the rights of self-incrimination, the Court continued to refuse to recognize any constitutional right for corporations.\u00a0 Also, during this era, two giants of the law, Oliver Wendell Holmes and Louis Brandeis, dissented often and aggressively from all extensions of constitutional rights to corporations.<\/p>\n

The Lochner<\/em> era ended in 1937, after President Roosevelt threatened to pack the Supreme Court.\u00a0 The Supreme Court retreated from its Lochner<\/em> line of cases and once again began to uphold the federal power to regulate corporate affairs.\u00a0 Over time, however, the Supreme Court began to hold that this power to regulate corporate activity was tempered by the existence of constitutional rights for corporations under the 14th<\/sup> Amendment and under the criminal procedure provisions of the Constitution.<\/p>\n

The true revolution occurred in 1978, when the Supreme Court ruled in First National Bank of Boston v. Bellotti<\/em> that a state law limiting the ability of corporations to spend money on referenda elections that didn\u2019t affect their property was unconstitutional.\u00a0 The ruling did not explicitly hold that corporations had a First Amendment right, but it did say that the protection of speech was so important that it didn\u2019t matter who was doing the talking.\u00a0 This ruling was revolutionary because it was a departure from precedent that, with the exception of the Lochner<\/em> era, had held that the distinction between the regulation of corporations and the regulation of individuals is<\/em> an important distinction under the Constitution.<\/p>\n

However, the Bellotti<\/em> opinion was careful to preserve the power of the government to regulate corporate spending in the context of candidate elections, as opposed to referenda.\u00a0 The Court continued to recognize this power to regulate corporate money in FEC v. National Right to Work Committee<\/em>, in Austin v. Michigan Chamber of Commerce<\/em>, and in McConnell v. FEC<\/em>.\u00a0 These latter two cases contained spirited dissents from Justices Scalia and Kennedy arguing that the First Amendment right that protected corporations in Bellotti<\/em> should be extended to the context of candidate elections.<\/p>\n

In Citizens United v. FEC<\/em>, these dissents become the majority opinion, and the Austin<\/em> and McConnell<\/em> decisions were overruled insofar as they allowed the federal government to prevent corporations from making independent expenditures on behalf of candidates for office.\u00a0 Not only are these prior cases overruled, but the history of the Court\u2019s treatment of corporations under the Constitution is ignored.\u00a0 Ignored, as well, is the Court\u2019s pre-Lochner <\/em>understanding that the Constitution permits the government to regulate corporate activity when it is contrary to the public interest.<\/p>\n

Instead, what we get in the Citizens United<\/em> opinion is the textualist assertion that the language of the First Amendment does not distinguish between whose speech is being regulated, so the government must therefore lack the power to makes a similar distinction.\u00a0 We are told that the benefits of political speech are the same, whether the source of that speech is an individual or a corporation.\u00a0 And we are told that media corporations, that report the news, might be subjected to government control if we do not recognize a First Amendment right for corporations.<\/p>\n

Similar arguments were rejected by Robert Bork.\u00a0 Bork clearly did not understand the First Amendment to require a complete absence of government regulation over speech.\u00a0 For example, in his 1971 Indiana Law Journal article<\/a>, Bork argued that the First Amendment does not prevent the government from regulating speech outside of the political context if that speech causes public harm.\u00a0 Bork wrote that the Framers \u201cdisplayed a determination to punish speech thought dangerous to government.\u201d\u00a0 For him, it was the impact of the speech at issue on the political process (positive or negative) that determined whether the speech was protected under the First Amendment, and not an absolutist interpretation of the text.<\/p>\n

Justice Kennedy\u2019s arguments were also rejected by Justice William Rehnquist, who dissented in Bellotti.<\/em> Rehnquist stressed that \u201cearly in our history\u201d the Supreme Court had declined to extend constitutional rights to corporations.\u00a0 He viewed the Bellotti<\/em> majority as acting inconsistently with this original understanding.\u00a0 Therefore, the so-called \u201corginalism\u201d that Justice Kennedy says requires us to depart from longstanding precedent is in fact contrary to earlier interpretations of the First Amendment by two notable originalists.<\/p>\n

Justice Stevens\u2019 dissent in Citizens United<\/em> contains a devastatingly accurate characterization of Justice Kennedy\u2019s argument:<\/p>\n

As a matter of original expectations, then, it seems absurd to think that the First Amendment prohibits legislatures from taking into account the corporate identity of a sponsor of electoral activity.\u00a0 As a matter of original meaning, it likewise seems baseless \u2013 unless one elevates the First Amendment\u2019s \u2018principles\u2019 or its \u2018purpose\u2019 at such a high level of generality that the historical understandings of the Amendment cease to be a meaningful constraint on the judicial task.\u00a0 This case sheds a revelatory light on the assumption of some that an impartial judge\u2019s application of an originalist methodology is likely to yield more determinate answers, or to play a more decisive role in the decisional process, than his or her views about sound policy.\u00a0<\/p><\/blockquote>\n

What does<\/em> support the majority\u2019s interpretation of the First Amendment in Citizens United<\/em>?\u00a0 We are left with Justice Kennedy\u2019s personal preference that corporations should have a voice in the political arena.\u00a0 Except what is this \u201ccorporate voice\u201d that needs protection?\u00a0 It is most assuredly not<\/em> the voice of the shareholders.\u00a0 State law provides them with no mechanism to approve in advance the use of corporate funds for political activity, and under state law shareholders have little prospect for successfully punishing management after the fact for the use of corporate funds to sponsor political activity that they disagree with.\u00a0 In addition, given that during 2009 the average share of stock was bought and sold two and one half times, shareholders will probably not own their shares long enough to care what management does with corporate money.\u00a0 With the turnover in corporate ownership today, we do not have share-holders<\/em>, we have share- renters<\/em><\/a>.\u00a0 In this context, the corporate voice is reduced to the voice of top management, who will use corporate money to fund political views that these highly compensated individuals are fully capable of funding out of their own pocket.<\/p>\n

When it comes to the First Amendment, therefore, it seems that an ideological preference for free markets trumps traditional notions of federalism and free speech.\u00a0\u00a0 \u00a0<\/p>\n

Note:\u00a0 The photo accompanying this post depicts the cover of Harper\u2019s Weekly January 21, 1888 and is entitled \u201cNot Even-Handed Justice: Crushing the Scorpion of Anarchy But Sparing the Octopus of Monopoly.\u201d\u00a0 A framed copy hangs in my office.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Supreme Court decision in Citizens United v. FEC strikes down as unconstitutional a federal law that prohibits corporations and unions from using general treasury funds to make independent expenditures that expressly advocate the election or defeat of candidates for office.\u00a0 The majority opinion, written by Justice Kennedy, ignores hundreds of years of Supreme Court 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