The U.S. Supreme Court may be about to render the most important business decision of the decidedly pro-business Roberts era, but one might not know it from the details of the case. The plaintiff is a small conservative advocacy group, not a major corporation; the focal point is a corporate-funded anti-Hillary Clinton documentary that was banned by the FEC, as opposed to, for instance, an anti-trust dispute. But Citizens United v. FEC could have implications for the business world, and the relationship between business and government, that rank it as one of the most important rulings in recent years.
The Crystal Ball
Of course, the truth of that bold statement will depend on the actual decision, which could always surprise us. But there have been strong indications that the Court’s conservatives are planning to expend some judicial capital on the issue of campaign finance. Most tellingly, the case could have been decided on narrower (though still anti-reform) terms earlier this year, but instead was held for re-argument on broad constitutional questions: should the Court overturn two major recent precedents upholding restrictions on corporate electioneering? Should corporations, in other words, get the same free-speech rights as individual citizens?
Interest Group Reactions
Pro-reform groups have taken the Court’s reconsideration of its precedents to signal the worst: a determination by the five conservatives (Justice Anthony Kennedy included) to make a big dent in McCain-Feingold, the hallmark 2002 reform legislation. Bruce Freed, the president of the Center for Political Accountability, told the HPR, “this case has grave implications. It could unleash the power of the corporations.” Freed cited ExxonMobil as an example of a corporation whose electoral influence could be disproportionate if restrictions on corporate electioneering were eliminated. If ExxonMobil, with quarterly profits exceeding $10 billion, felt it could increase shareholder value by running ads against, say, pro-cap-and-trade politicians, the effect could be highly distorting, according to reformers like Freed.
But this apocalyptic prediction is disputed by conservatives and libertarians. John Samples, the director of the Center for Representative Government at the Cato Institute, told the HPR that corporate money is “not poison being introduced into the body politic.” In fact, according to Samples, “there is a lot of evidence that people do get information and become more informed” because of corporate-funded messaging.
Corporations and Shareholders
No matter whose view, Freed’s or Samples’, has more merit, businesses clearly perceive some self-interest in the outcome of the case. The amicus brief for the U.S. Chamber of Commerce, for instance, put it bluntly: “The corporate form is not a constitutional basis for banning core speech.” Much of the discussion during re-argument in September centered on this very question. Justice Sonia Sotomayor expressed regret that the Court had ever “imbued a creature of state law with human characteristics,” while Justice Antonin Scalia waxed poetic about the virtues of small businesses, like hairdressers and car dealers, many of which are incorporated.
The Obama administration tried to justify regulating corporate speech on novel grounds. Instead of retreading ancient concerns about corruption, distortion, and quid pro quo, Solicitor General Elena Kagan focused on the so-called shareholder-protection rationale, which argues that corporations should not be allowed to spend unlimited amounts of what might be called “other people’s money.” Since it is nearly impossible for investors in, for example, mutual or pension funds to find out which companies their money is invested in at any given moment, there is no possibility for accountability, Kagan argued. But Samples, echoing points made by Chief Justice Roberts and Justice Scalia during oral arguments, told the HPR, “If you don’t like what the President of Whole Foods said about healthcare, for example, you can sell the stock.”
Business at the Court
Perhaps most interesting about the shareholder-protection rationale is that it seems designed to appeal to business-sympathizing judges. Instead of painting corporations as harmful, self-interested interlopers in the game of politics, it worries about the integrity of a corporate relationship: that between shareholders and managers. This interesting angle may not (and, many would boldly say, will not) salvage restrictions on corporate electioneering from heavy editing, if not outright erasure, but it does suggest that, if you want to win at the Roberts Court, it is best to seem as business-friendly as possible.
Reporting was contributed by Ray Duer ’11, a contributing writer.