Corporations Are Not Persons

The case of Nike v. Kasky, currently before the Supreme Court, involves a fundamental question about corporations that unfortunately has not been raised by either the parties in the case or the media.

Marc Kasky is suing Nike, Inc. under California laws regulating unfair competition and false advertising. Kasky claims that when an internal audit was leaked to the press that revealed illegal employment practices in Nike's factories in China, Vietnam, and Indonesia, Nike responded by issuing to the press numerous statements it knew to be false.

The issue before the Supreme Court is whether Nike can be held liable for its misrepresentations under false advertising laws or whether its various public documents and letters to the press and others are constitutionally protected free speech.

Not addressed in the arguments before the Court, but underlying them nonetheless is an invisible beast: the idea that corporations are people.

This is a notion that the National Lawyers Guild (NLG) opposes. The Mission Statement of the NLG Committee on Corporations, the Constitution & Human Rights states, in part: "We oppose recognition of the personhood of corporations under the Fourteenth Amendment. Protections of the Bill of Rights are given to people out of a concern for human dignity, liberty or equality. Corporate claims to such protections should be rejected."

ReclaimDemocracy.org mirrors this sentiment: "The notion that corporations -- entities unmentioned in our Constitution -- should enjoy protections created for living human beings is a concept deserving burial deep in the same dark closet as the legal precedents of slavery and 'separate but equal.'"

The National Voting Rights Institute and ReclaimDemocracy.org, which jointly filed an amicus brief for Kasky, state: "The claim that corporations possess a right to intentionally deceive the public has no basis in the U.S. Constitution. Incorporation is a privilege granted by the people's representatives in state governments, and corporations must remain subordinate to our democratic institutions. The discredited judicial creations of "corporate personhood" and corporate "political rights" should be unequivocally rejected by the Court."

The Dangers of Corporate Personhood

Nike argues that its statements should be protected under the First Amendment. This implies that Nike can be viewed as a person.

The notion of "corporate personhood" was adopted by the Supreme Court under very dubious circumstances, when a court reporter used the term in a head note he created for an 1886 Court decision that actually declined to address the issue. (The case was Santa Clara County v. Southern Pacific Railroad Co., 118 U.S. 394.)

In a later 1889 case, Minneapolis & St. Louis Railway Company (129 U.S. 26), Justice Field cited Santa Clara as holding that corporations are persons, and that inaccurate notion of Santa Clara's holding remains today. Nonetheless, other Supreme Court decisions support the opposite view. The Court stated in a 1990 decision, Austin v. Michigan Chamber of Commerce, that because corporations have "state-conferred . . . structures," and "[s]tate law grants [them] special advantages," their political speech can be regulated by the state. In other words, they do not have the constitutional right to free speech.

These "special advantages" include the ability to amass "large treasuries" and "immense aggregations of wealth." What is wrong with immense aggregations of wealth? Isn't that the American way: rags to riches? The problem is that in the corporate world those who hold the wealth (stockholders) do little to create it, while those who actually do the work, the employees of these corporations, get less and less for their labors. (Recall Enron.)

In her book, "The Divine Right of Capital," Marjorie Kelly asks: "Why have the rich gotten richer while employee income has stagnated? Because that's the way the corporation is designed." Kelly asserts that stockholders today reserve for themselves (and deny to employees) the same privilege claimed by the French aristocracy before the French Revolution: rights to endless streams of income detached from productive contributions.