Ciara Torres Sp
disamb, see main
merri ok
===
===
https://www.brennancenter.org/our-work/analysis-opinion/how-big-business-bailed-out-nazis
How Big Business Bailed Out the Nazis
A tragic tale of what can go wrong when profits are entangled with politics.
Ciara Torres Spelliscy
The views expressed are the author’s own and not necessarily those of the Brennan Center for Justice.
Considering the outcome of this year’s presidential primaries, where the best-financed candidates were defeated, I’ve been asked repeatedly whether corporate money in politics really matters. And I’ll grant, corporate money so far mostly gone to losing candidates. But history may give us some greater perspective on how corporate money in politics can prove decisive.
It’s a largely forgotten piece of history, but in 1932 the German Nazi Party was facing financial ruin. How did the Nazis move from being broke to being in control of the German government just a year later? The Nazi Party was bailed out by German industrialists in early 1933.
The industrialists who led the way were two huge German firms, I.G. Farben and Krupp. Leaders of both of companies were among the few civilians who were later charged with war crimes at the Nuremberg Tribunals after World War II. These trials placed the story of their financial and moral support of the Nazis into the historical record. Krupp was a huge arms manufacturer. I.G. Farben was a vast chemical company which made everything from Bayer aspirin to Zyklon B, the poison used in the gas chambers.
According to The Arms of Krupp, the Nazi Party was essentially bankrupt in late 1932. Joseph Goebbels, who would later become the Minister of Propaganda, complained, “[w]e are all very discouraged, particularly in the face of the present danger that the entire party may collapse….The financial situation of the Berlin organization is hopeless. Nothing but debts and obligations.”
Regardless of the party’s financial problems, Hitler was named Chancellor in late January 1933. He called for elections in early March. With less than two weeks left before the vote, Herman Goering sent telegrams to Germany’s 25 leading industrialists, inviting them to a secret meeting in Berlin on February20, 1933. Attending the gathering were four I.G. Farben directors and Krupp chief Gustav Krupp. Hitler addressed the group, saying “private enterprise cannot be maintained in a democracy.” He also told the men that he would eliminate trade unions and communists. Hitler asked for their financial support and to back his vision for Germany.
According to Robert Jackson, the former Supreme Court Justice and chief U.S. prosecutor at Nuremberg, “[T]he industrialists…became so enthusiastic that they set about to raise three million Reichsmarks worth about [$30 million today] to strengthen and confirm the Nazi Party in power.”
Gustav Krupp was the first executive to speak at the Berlin meeting, and pledged one million marks. As the United Nations summarized in a 1949 report, Krupp was a key financier for the Nazi Party, including through his corporation:
It was clear from the evidence that Gustav Krupp embraced Nazism shortly prior to the seizure of power by the Nazi Party and continued his allegiance thereafter.He played an important part in bringing to Hitler’s support other leading industrialists and through the medium of the Krupp firm… from time to time made large scale contributions to the [Nazi] Party Treasury.
Hitler awarded Krupp the title of Fuhrer of Industry later in 1933.
Krupp acted in concert with other businessmen, including the directors of I.G. Farben, then Europe’s largest corporation. I.G. Farben’s full name was Interessen Gemeinschaft Farbenindustrie Aktiengesellschaft which translates to “Community of Interest of the Dyestuffs Industry, Incorporated” or as one of the Nuremburg prosecutors, Josiah DuBois Jr. in his book, The Devil’s Chemists, put it, the name was “like the cross between a service club and Easter eggs.” But what I.G. Farben did with the Nazis was no laughing matter, including using slave labor at a specially-constructed plant at Auschwitz called Monowitz.
In the opening of the tribunal against the directors of I.G. Farben, prosecutor U.S. Gen. Telford Taylor stated: “The indictment accuses these men of major responsibility for visiting upon mankind the most searing and catastrophic war in human history. It accuses them of wholesale enslavement, plunder, and murder.”
At the February meeting, the I.G. Farben executives gave the Nazis 400,000 marks, and a total of 4.5 million marks by the end of 1933, according to The Crime and Punishment of I.G. Farben. This infusion of corporate cash saved the Nazi Party from financial disaster. The rest, as they say, is history — tragic, tragic history.
As the book Hell’s Cartel explains, the history of the German industrialists’ support of Hitler shows “what can go wrong when political objectives and the pursuit of profit become dangerously entwined.” One can only surmise what might have happened if the businessmen had simply said “no” to Hitler that night.
===
===
Ted Deutch, “Supreme Court’s Citizens United mistake just turned 10 years old. It’s time to reverse it”;
Ciara Torres-Spelliscy, “Does “We the People” Include Corporations?,” American Bar Association, n.d., https:// www.americanbar.org/groups/crsj/publications/ human_rights_magazine_home/we-the-people/ we-the-people-corporations/
===
TAKING BACK OUR DEMOCRACY: RESPONDING TO CITIZENS UNITED AND THE RISE
OF SUPER PACS
HEARING
before the
SUBCOMMITTEE ON CONSTITUTION,
CIVIL RIGHTS AND HUMAN RIGHTS
of the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__
JULY 24, 2012
...:(style="font-family:Merriweather"):
STATEMENTS OF COMMITTEE MEMBERS
Page
Durbin, Hon. Dick, a U.S. Senator from the State of Illinois..... 1
prepared statement........................................... 40
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont. 6
prepared statement........................................... 43
WITNESSES
Witness List..................................................... 39
Baucus, Hon. Max, a U.S. Senator from the State of Montana....... 4
prepared statement........................................... 46
Sanders, Hon. Bernard, a U.S. Senator from the State of Vermont.. 7
prepared statement........................................... 50
Udall, Hon. Tom, a U.S. Senator from the New Mexico.............. 9
prepared statement........................................... 57
Edwards, Hon. Donna, a Representative in Congress from the State
of Maryland.................................................... 11
Roemer, Hon. Charles ``Buddy'', former Congressman and former
Governor, State of Louisiana, Baton Rouge, Louisiana........... 14
prepared statement........................................... 61
Shapiro, Ilya, Senior Fellow in Constitutional Studies, Cato
Institute, Washington, DC...................................... 15
prepared statement........................................... 66
Lessig, Lawrence, Roy L. Furman Professor of Law and Leadership,
Harvard Law School, Cambridge, Massachusetts................... 18
prepared statement........................................... 70
SUBMISSIONS FOR THE RECORD
American Civil Liberties Union (ACLU), Laura W. Murphy, Director,
Washington Legislative Office, Michael W. Macleod-Ball, Chief
of Staff/First Amendment Counsel, and Gabriel Rottman,
Legislative Counsel/Policy Advisor, July 24, 2012, joint letter 111
American Sustainable Business Council, David Levine, Chief
Executive Office and Co-Founder, Washington, DC, July 23, 2012,
letter......................................................... 120
Americans for Campaign Reform, Concord, New Hampshire, statement. 123
Ben & Jerry's Homemade, Inc, Jostein Solheim, Chief Executive
Officer, South Burlington, Vermont, July 11, 2012, letter...... 126
Center for Competitive Politics, Alexandria, Virginia, statement. 129
Center for Media and Democracy, Lisa Graves, Executive Director,
and Brendan Fischer, Staff Counsel, Madison, Wisconsin; article
``Super PACs and Beyond.''..................................... 138
Beyond Super PACs, article....................................... 145
Common Cause, Bob Edgar, President and Chief Executive Office,
Washington, DC, statement...................................... 152
Demos Ideas & Action, Adam Lioz, Counsel, New York, New York,
statement...................................................... 160
Free Speech for People, Jeffrey D. Clements, Co-Founder and
President, Amherst, Massachusetts, statement................... 170
Heagarty, Chris, former North Carolina State Representative, Law
Offices of Chris Heagarty, PLLC, Raleigh, North Carolina,
statement...................................................... 187
Hubbard, Rick, MBA, JC, South Burlington, Vermont, July 13, 2012,
letter......................................................... 194
Lessig, Lawrence, Roy L. Furman Professor of Law and Leadership,
Harvard Law School, Cambridge, Massachusetts, attachment....... 198
Move to Amend, Salt Lake City, Utah, July 18, 2012, letter....... 202
People for the American Way, Michael B. Keegan, President,
Washington, DC, July 24, 2012, letter.......................... 222
Public Campaign's, Washington, DC, statement..................... 241
Washington Public Campaigns, John E. King, President, Seattle,
Washington, statement.......................................... 245
ADDITIONAL SUBMISSIONS FOR THE RECORD
Submissions for the record not printed due to voluminous nature,
preiously printed by an agency of the Federal government or
other criteria determined by the Committee:.................... 247
Torres-Spelliscy, Ciara, Assistant Professor of Law, Stetson Law,
Tampa, Florida, Part 1, see link: http://papers.ssrn.com/sol3/
papers.cfm?abstract--id=2046832................................ 247
CITIZENS UNITED AT 10: THE CONSEQUENCES FOR DEMOCRACY AND POTENTIAL :(style="font-family:Merriweather"):
RESPONSES BY CONGRESS:(style="font-family:Merriweather"):
=======================================================================
HEARING:(style="font-family:Merriweather"):
BEFORE THE:(style="font-family:Merriweather"):
SUBCOMMITTEE ON THE CONSTITUTION,:(style="font-family:Merriweather"):
CIVIL RIGHTS, AND CIVIL JUSTICE:(style="font-family:Merriweather"):
OF THE:(style="font-family:Merriweather"):
COMMITTEE ON THE JUDICIARY:(style="font-family:Merriweather"):
HOUSE OF REPRESENTATIVES:(style="font-family:Merriweather"):
ONE HUNDRED SIXTEENTH CONGRESS:(style="font-family:Merriweather"):
SECOND SESSION:(style="font-family:Merriweather"):
\_________\_:(style="font-family:Merriweather"):
FEBRUARY 6, 2020:(style="font-family:Merriweather"):`` WITNESSES
The Honorable Ted Deutch, Member of Congress
Oral Testimony............................................... 9
Prepared Testimony........................................... 34
The Honorable Pramila Jayapal, Member of Congress
Oral Testimony............................................... 39
Prepared Testimony........................................... 41
Ellen L. Weintraub, Commissioner, Federal Election Commission
Oral Testimony............................................... 45
Prepared Testimony........................................... 48
Robert Weissman, President, Public Citizen
Oral Testimony............................................... 53
Prepared Testimony........................................... 55
Bradley A. Smith, Josiah H. Blackmore II/Shirley M. Nault
Professor of Law, Capital University Law School
Oral Testimony............................................... 56
Prepared Testimony........................................... 58
Ciara Torres-Spelliscy, Professor of Law, Stetson University
College of Law
Oral Testimony............................................... 71
Prepared Testimony........................................... 73
LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING
Statement by the Honorable Jerrold Nadler, submitted by the
Honorable Steve Cohen, Chairman, Subcommittee on the
Constitution, Civil Rights, and Civil Liberties................ 6
Items for the record submitted by the Honorable Ted Deutch,
Committee on the Judiciary..................................... 10
Items for the record submitted by the Mary Gay Scanlon, Committee
on the Judiciary............................................... 92
Items for the record submitted by the Steve Cohen, Committee on
the Judiciary.................................................. 106
Mr. Cohen. Thank you, Mr. Weissman.:(style="font-family:Merriweather"):
Our next witness is Mr. Bradley Smith. Rarely is a witness :(style="font-family:Merriweather"):
thanked for coming and complimented by the other side, so you :(style="font-family:Merriweather"):
are special.:(style="font-family:Merriweather"):
Bradley Smith holds the Josiah H. Blackmore II/Shirley M. :(style="font-family:Merriweather"):
Nault Professor of Law position at Capital University Law :(style="font-family:Merriweather"):
School. He is one of the nation's leading authorities on :(style="font-family:Merriweather"):
election law and campaign finance, and co-author of ``Voting :(style="font-family:Merriweather"):
Rights and Election Law,'' a leading casebook in the field. He :(style="font-family:Merriweather"):
previously served for five years as a member of the FEC and :(style="font-family:Merriweather"):
Chair of the Commission in 2004.:(style="font-family:Merriweather"):
He received his J.D. cum laude from **Harvard Law School.:(style="font-family:Merriweather"):**
Do any of you ever get accepted at another school? :(style="font-family:Merriweather"):
[Laughter.]:(style="font-family:Merriweather"):
And his B.A. from Kalamazoo College.:(style="font-family:Merriweather"):
Professor, you are recognized.:(style="font-family:Merriweather"):
TESTIMONY OF **BRADLEY SMITH:(style="font-family:Merriweather"):**
Mr. Smith. Thank you, Mr. Chairman and members of the :(style="font-family:Merriweather"):
committee.:(style="font-family:Merriweather"):
I guess I would begin simply by saying that repeatedly :(style="font-family:Merriweather"):
calling a decision a disaster doesn't really make it so, and we :(style="font-family:Merriweather"):
haven't really heard much evidence that actually ties the idea :(style="font-family:Merriweather"):
that people can't enact their preferences to anything that has :come about from Citizens United.:(
In fact, Citizens United has had a number of beneficial :(style="font-family:Merriweather"):
effects on American society. We were told that it would lead to :(style="font-family:Merriweather"):
an oligarchy, an entrenched group of people who would strangle :(style="font-family:Merriweather"):
American democracy. And yet instead, in the years since :(style="font-family:Merriweather"):
Citizens United, politics in America has been more fluid. :(style="font-family:Merriweather"):
Congressional incumbent reelection rates have declined. That :(style="font-family:Merriweather"):
may not be good news for all of you, but it cuts against :(style="font-family:Merriweather"):
certainly the argument that has been made against Citizens :(style="font-family:Merriweather"):
United.:(style="font-family:Merriweather"):
We have seen that either Congress or the presidency has :(style="font-family:Merriweather"):
changed hands in four of the five election cycles since :(style="font-family:Merriweather"):
Citizens United. There are more newcomers in Congress by about :(style="font-family:Merriweather"):
40 percent each time around. That may be good news for some of :(style="font-family:Merriweather"):
you who are among those newcomers.:(style="font-family:Merriweather"):
Outsiders such as the President himself, such as at least a :(style="font-family:Merriweather"):
contender to the President in the general election, Senator :(style="font-family:Merriweather"):
Sanders, people such as Representative Ocasio-Cortez or former :(style="font-family:Merriweather"):
Representative Braut have been complete outsiders who have :(style="font-family:Merriweather"):
dramatically shaken up the system and defeated entrenched :(style="font-family:Merriweather"):
insiders, typically by spending far less money.:(style="font-family:Merriweather"):
We find that the trend of more women being elected to :(style="font-family:Merriweather"):
office has continued, and there are other things that are just :(style="font-family:Merriweather"):
kind of interesting. For example, the rate of spending increase :(style="font-family:Merriweather"):
in American politics has actually declined considerably since :(style="font-family:Merriweather"):
Citizens United. I don't think that is because of Citizens :(style="font-family:Merriweather"):
United, but it certainly cuts against the notion that this is :(style="font-family:Merriweather"):
some disaster leading to this massive explosion in spending. It :(style="font-family:Merriweather"):
is just not really so.:(style="font-family:Merriweather"):
We find that most money in politics, dramatically so, still :(style="font-family:Merriweather"):
comes from individuals in amounts limited under the law. The :(style="font-family:Merriweather"):
vast majority still comes in limited individual contributions. :(style="font-family:Merriweather"):
But corporate contributions, which make up at most\--I don't :(style="font-family:Merriweather"):
know how we want to calculate it and what we do with this small :(style="font-family:Merriweather"):
percentage of money, about 2 or 3 percent that is so-called :(style="font-family:Merriweather"):
``dark money,'' how much we think that might be corporate :(style="font-family:Merriweather"):
money. If we take the worst case, so to speak, the highest case :(style="font-family:Merriweather"):
scenario, we are talking about 5 percent of spending, maybe 6 :(style="font-family:Merriweather"):
percent coming from for-profit corporations. That is hardly :(style="font-family:Merriweather"):
drowning anybody out. And, in fact, it is a good thing. The :(style="font-family:Merriweather"):
American people have a right to hear those voices, they should :(style="font-family:Merriweather"):
hear those voices, and polling data shows that they actually :(style="font-family:Merriweather"):
want to hear those voices and believe that business has a right :(style="font-family:Merriweather"):
to comment on issues of concern.:(style="font-family:Merriweather"):
Finally, it is important to remember what the case was all :(style="font-family:Merriweather"):
about. It was the position of the United States Government that :(style="font-family:Merriweather"):
it could censor a book or a movie if that book or movie was at :(style="font-family:Merriweather"):
any stage produced or distributed with corporate funds, like :(style="font-family:Merriweather"):
every other book or movie you have ever bought on Amazon or in :(style="font-family:Merriweather"):
a book store or seen in a theater or seen on cable or streaming :(style="font-family:Merriweather"):
television. That was the position of the government, that you :(style="font-family:Merriweather"):
could censor this. In that respect, the position that four :(style="font-family:Merriweather"):
members of the Supreme Court actually endorsed that is the :(style="font-family:Merriweather"):
truly radical view that we saw in Citizens United.:(style="font-family:Merriweather"):
We have heard a lot in both the opening panel and from my :(style="font-family:Merriweather"):
colleagues here about all these policy initiatives that have :(style="font-family:Merriweather"):
been blocked, and it is curious to me that they all happen to :(style="font-family:Merriweather"):
be policy preferences of the American political left. There is :(style="font-family:Merriweather"):
nothing wrong with the political left having policy :(style="font-family:Merriweather"):
preferences, but the idea that you are not able to enact your :(style="font-family:Merriweather"):
policy preferences unless you can kneecap people who oppose :(style="font-family:Merriweather"):
those is hardly something that the First Amendment endorses. :(style="font-family:Merriweather"):
Indeed, that is why we have a First Amendment, so you can't :(style="font-family:Merriweather"):
kneecap your opponents in order to shut them up so that you can :(style="font-family:Merriweather"):
pass whatever policies you want.:(style="font-family:Merriweather"):
I find it interesting. We had the NRA used as an example. :(style="font-family:Merriweather"):
The NRA has 3 to 5 million members. These are U.S. citizens, :(style="font-family:Merriweather"):
people who are out there, and they care intensely about these :(style="font-family:Merriweather"):
issues. They talk to their neighbors and they work on these :(style="font-family:Merriweather"):
issues, and that is why these things sometimes don't come :(style="font-family:Merriweather"):
through.:(style="font-family:Merriweather"):
I remind you, it is not impossible to pass legislation. :(style="font-family:Merriweather"):
Medicare, Social Security, the Voting Rights Act, the Civil :(style="font-family:Merriweather"):
Rights Act, these things all passed when contributions even :(style="font-family:Merriweather"):
from individuals were unlimited and almost never reported :(style="font-family:Merriweather"):
because there was no enforcement mechanism even on reporting.:(style="font-family:Merriweather"):
So I think when we look at things more rationally, we see :(style="font-family:Merriweather"):
that while the American people certainly don't like Citizens :(style="font-family:Merriweather"):
United when they are asked specific questions like ``Do you :(style="font-family:Merriweather"):
think corporations should be able to speak in elections?'', :(style="font-family:Merriweather"):
when we ask ``Do you think Citizens United should have been :(style="font-family:Merriweather"):
able to show its movie?'', we find that majorities, in some :(style="font-family:Merriweather"):
cases substantial majorities, do, in fact, favor those :(style="font-family:Merriweather"):
positions.:(style="font-family:Merriweather"):
So again, I would say Citizens United has been good for the :(style="font-family:Merriweather"):
United States, but mostly it is really good for the First :(style="font-family:Merriweather"):
Amendment precisely because it does what the First Amendment is :(style="font-family:Merriweather"):
supposed to do. It is a check.:(style="font-family:Merriweather"):
Thank you.:(style="font-family:Merriweather"):
[The statement of Mr. Smith follows:]:(style="font-family:Merriweather"):
:(style="font-family:Merriweather"):
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] :(style="font-family:Merriweather"):
:(style="font-family:Merriweather"):
Mr. Cohen. Thank you, sir.:(style="font-family:Merriweather"):
Finally, our last witness is Ms. Ciara Spelliscy. She is a :(style="font-family:Merriweather"):
Professor of Law at Stetson College of Law in Florida. She :(style="font-family:Merriweather"):
teaches election law, corporate governance, business entities, :(style="font-family:Merriweather"):
and constitutional law. Prior to joining Stetson's faculty she :(style="font-family:Merriweather"):
was Counsel to the Democracy Program at the Brennan Center for :(style="font-family:Merriweather"):
Justice at NYU School of Law, where she provided guidance on :(style="font-family:Merriweather"):
the issue of money in politics. She was a staffer for Richard :(style="font-family:Merriweather"):
Durbin up here on the Hill.:(style="font-family:Merriweather"):
She received her J.D. from Columbia University and her A.B. :(style="font-family:Merriweather"):
from Harvard.:(style="font-family:Merriweather"):
Professor, you are recognized for 5 minutes.:(style="font-family:Merriweather"):
TESTIMONY OF CIARA TORRES-SPELLISCY:(style="font-family:Merriweather"):
Ms. Torres-Spelliscy. Thank you. Good morning. My name:(style="font-family:Merriweather"):
is :(style="font-family:Merriweather"):
Ciara Torres-Spelliscy. I live in a swing district in the swing :(style="font-family:Merriweather"):
state of Florida. My law students are Republicans, Democrats, :(style="font-family:Merriweather"):
and Independents, and I am here to tell you that American :(style="font-family:Merriweather"):
voters are worried about the state of our elections after the :(style="font-family:Merriweather"):
attacks on our democracy in 2016.:(style="font-family:Merriweather"):
What American voters see from Congress and from the Federal :(style="font-family:Merriweather"):
Election Commission is not reassuring. It looks like they :(style="font-family:Merriweather"):
cannot get out of their own way to protect the integrity of :(style="font-family:Merriweather"):
American elections. This was true before 2016, but after 2016 :(style="font-family:Merriweather"):
it is nothing short of excruciating to watch Congress and the :(style="font-family:Merriweather"):
FEC not act in the face of eager enemies.:(style="font-family:Merriweather"):
Now without a quorum, the FEC is more powerless than ever :(style="font-family:Merriweather"):
at a time when the 2020 election already has candidate debates, :(style="font-family:Merriweather"):
large-scale rallies, primary votes, and big political :(style="font-family:Merriweather"):
fundraising to the tune of over $2 billion already.:(style="font-family:Merriweather"):
Nearly a decade ago, I told Congress right after Citizens :(style="font-family:Merriweather"):
United that I could predict two problems with inviting :(style="font-family:Merriweather"):
corporate money into our democracy: a lack of shareholder :(style="font-family:Merriweather"):
consent, and a lack of transparency. And I wish my prediction :(style="font-family:Merriweather"):
had not come true, but it did.:(style="font-family:Merriweather"):
Today I will focus on the lack of transparency, which is :(style="font-family:Merriweather"):
better known as the dark money problem. Dark money has :(style="font-family:Merriweather"):
blanketed our elections since 2008. To date, over a billion :(style="font-family:Merriweather"):
dollars in dark money has been spent in Federal elections :(style="font-family:Merriweather"):
alone. With dark money you can see the public dance, but you :(style="font-family:Merriweather"):
can't see the puppeteer. And after the 2016 election, Americans :(style="font-family:Merriweather"):
really deserve to know whether any of those puppeteers were :(style="font-family:Merriweather"):
foreign nationals or foreign governments.:(style="font-family:Merriweather"):
As I note in my book, Political Brands, we know from the :(style="font-family:Merriweather"):
redacted Mueller Report, as well as indictments of Russians by :(style="font-family:Merriweather"):
the Special Counsel's Office, that Russians were trying to :(style="font-family:Merriweather"):
influence the 2016 election, including by purchasing political :(style="font-family:Merriweather"):
ads on Facebook with rubles. In nearly any other area of the :(style="font-family:Merriweather"):
law, what happens with dark money would be akin to money :(style="font-family:Merriweather"):
laundering. But in election law, most dark money is actually :(style="font-family:Merriweather"):
legal.:(style="font-family:Merriweather"):
The FEC is the primary regulator with the ability to stop :(style="font-family:Merriweather"):
dark money, and instead they have basically done nothing. The :(style="font-family:Merriweather"):
FEC could have started rulemakings to end dark money even :(style="font-family:Merriweather"):
before Citizens United, because the problem appeared before :(style="font-family:Merriweather"):
2010. The typical way that dark money is created is by spending :(style="font-family:Merriweather"):
through an opaque non-profit, like a 501(c)(4) or a 501(c)(6), :(style="font-family:Merriweather"):
and the porous rules at the FEC have allowed donors to remain :(style="font-family:Merriweather"):
anonymous. The only change that has come was at the order of a :(style="font-family:Merriweather"):
Federal court in CREW v. FEC.:(style="font-family:Merriweather"):
One thing American voters still do not know is whether dark :(style="font-family:Merriweather"):
money is hiding illegal foreign money. And because the FEC has :(style="font-family:Merriweather"):
largely been stuck in deadlocks, even investigations or :(style="font-family:Merriweather"):
punishment for foreign spending has largely been lacking.:(style="font-family:Merriweather"):
As I discussed in my first book, Corporate Citizen, in a :(style="font-family:Merriweather"):
particularly colorful episode, a foreign pornographer spent in :(style="font-family:Merriweather"):
a Los Angeles election in 2012. This spending violated :(style="font-family:Merriweather"):
longstanding bans on foreign money in American elections, :(style="font-family:Merriweather"):
whether they are Federal, state, or local. But the FEC would :(style="font-family:Merriweather"):
not enforce the law against the foreign pornographer. If the :(style="font-family:Merriweather"):
FEC is not going to stand up to a foreign pornographer, it begs :(style="font-family:Merriweather"):
the question who would they stand up against?:(style="font-family:Merriweather"):
This general lack of enforcement against foreign spending :(style="font-family:Merriweather"):
has sent a terrible message to anyone who was paying attention. :(style="font-family:Merriweather"):
The message is that campaign finance laws are basically not :(style="font-family:Merriweather"):
being enforced at the Federal level by the FEC, and as American :(style="font-family:Merriweather"):
voters face 2020, the Department of Justice is the only cop :(style="font-family:Merriweather"):
left on the beat. But DOJ can only enforce willful and :(style="font-family:Merriweather"):
egregious violations of law. This leaves a vast wasteland of :(style="font-family:Merriweather"):
unenforced campaign finance laws where cheating and corner\-:(style="font-family:Merriweather"):
cutting is all but invited.:(style="font-family:Merriweather"):
And this happens as American voters are asked to choose the :(style="font-family:Merriweather"):
next president, all of the members of the House, a third of the :(style="font-family:Merriweather"):
Senate, 11 governors, and 45 state legislatures.:(style="font-family:Merriweather"):
Given the experience of 2016 with Russians breaking :(style="font-family:Merriweather"):
American election laws with abandon, the lesson for North :(style="font-family:Merriweather"):
Korea, China, Iran, or any other hostile nation is that :(style="font-family:Merriweather"):
interference in our elections can be done with little :(style="font-family:Merriweather"):
consequence.:(style="font-family:Merriweather"):
So the FEC needs a full complement of commissioners so that :(style="font-family:Merriweather"):
they can at least act. And if you are serious about reform, you :(style="font-family:Merriweather"):
need to add an additional seat to the FEC so that, like every :(style="font-family:Merriweather"):
other Federal agency, they have an odd number of commissioners :(style="font-family:Merriweather"):
so that they can enforce the law instead of ending in a :(style="font-family:Merriweather"):
deadlock.:(style="font-family:Merriweather"):
And you can improve disclosure by either changing election :(style="font-family:Merriweather"):
laws or changing securities laws, or possibly both. And, of :(style="font-family:Merriweather"):
course, you could expand what Congress can constitutionally :(style="font-family:Merriweather"):
regulate if the Constitution is amended to address Citizens :(style="font-family:Merriweather"):
United and other campaign finance cases like Buckley.:(style="font-family:Merriweather"):
But in our constitutional system, the fate of the nation is :(style="font-family:Merriweather"):
in your hands. Thank you.:(style="font-family:Merriweather"):
[The statement of Ms. Torres-Spelliscy follows:]:(style="font-family:Merriweather"):
:(style="font-family:Merriweather"):
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] :(style="font-family:Merriweather"):
... Mr. Raskin, you are recognized for 5 minutes.:(style="font-family:Merriweather"):
Mr. Raskin. Mr. Chairman, thank you.:(style="font-family:Merriweather"):
Welcome to all of our distinguished witnesses today, and :(style="font-family:Merriweather"):
all of the natural persons who have come to participate in :(style="font-family:Merriweather"):
today's proceeding.:(style="font-family:Merriweather"):
The first thing that I want to point out is that Citizens :(style="font-family:Merriweather"):
United did not enlarge the free speech rights of any citizen in :(style="font-family:Merriweather"):
the United States, not even CEOs or corporate executives who :(style="font-family:Merriweather"):
could spend already whatever they wanted as independent :(style="font-family:Merriweather"):
expenditures under Buckley v. Valeo. All that Citizens United :(style="font-family:Merriweather"):
did was to transform every corporate treasury in America into a :(style="font-family:Merriweather"):
potential political slush fund and thereby authorize and :(style="font-family:Merriweather"):
empower the CEOs of the corporations to spend whatever they :(style="font-family:Merriweather"):
wanted of other people's money in the corporate treasuries in :(style="font-family:Merriweather"):
political campaigns.:(style="font-family:Merriweather"):
This declaration did transform, to my understanding, two :(style="font-family:Merriweather"):
centuries of jurisprudential understanding of what a :(style="font-family:Merriweather"):
corporation is. You can go back to Chief Justice John :(style="font-family:Merriweather"):
Marshall's opinion in 1819 in the Dartmouth College v. Woodward :(style="font-family:Merriweather"):
case, where he said that a corporation is an artificial entity, :(style="font-family:Merriweather"):
invisible, intangible, existing only in contemplation of law, :(style="font-family:Merriweather"):
possessing only the rights conferred upon it by the state :(style="font-family:Merriweather"):
legislature and not the constitutional rights of the people. :(style="font-family:Merriweather"):
And yet the Roberts court in Citizens United endowed private :(style="font-family:Merriweather"):
corporations, these invisible, intangible, artificial entities, :(style="font-family:Merriweather"):
with the political rights of the people, essentially arming the :(style="font-family:Merriweather"):
CEOs with the power to spend other people's money, as Justice :(style="font-family:Merriweather"):
Brandeis termed it, in political campaigns. And for all of the :(style="font-family:Merriweather"):
reasons stated by the witnesses, that has occasioned a dramatic :(style="font-family:Merriweather"):
change in the character and the quality of American politics.:(style="font-family:Merriweather"):
Now, I favor a constitutional amendment for the same reason :(style="font-family:Merriweather"):
that I support all the constitutional amendments that have :(style="font-family:Merriweather"):
reversed reactionary jurisprudence by the Supreme Court. That :(style="font-family:Merriweather"):
is how we got women's suffrage in the 19th Amendment which :(style="font-family:Merriweather"):
toppled the Supreme Court's decision in Minor v. Happersett, :(style="font-family:Merriweather"):
saying that women did not get the right under the 14th or 15th :(style="font-family:Merriweather"):
Amendment. The 14th Amendment, and the 15th and 13th, of :(style="font-family:Merriweather"):
course, reversed the Supreme Court's reactionary decision in :(style="font-family:Merriweather"):
the Dred Scott case before the Civil War. It is how we got the :(style="font-family:Merriweather"):
26th Amendment. It is how we got the 24th Amendment. Most of :(style="font-family:Merriweather"):
our amendments have been democracy-deepening, suffrage\-:(style="font-family:Merriweather"):
enlarging, democracy-perfecting amendments where the people :(style="font-family:Merriweather"):
have to overturn pinched and reactionary understandings of the :(style="font-family:Merriweather"):
Supreme Court.:(style="font-family:Merriweather"):
But until we get there, I wanted to take up an issue that :(style="font-family:Merriweather"):
comes out of Citizens United, because Justice Kennedy's conceit :(style="font-family:Merriweather"):
in his majority opinion is that the corporations are speaking :(style="font-family:Merriweather"):
for the shareholders, the corporations derive their First :(style="font-family:Merriweather"):
Amendment political rights from the First Amendment rights of :(style="font-family:Merriweather"):
the human beings who actually own stock in the corporation. But :(style="font-family:Merriweather"):
there is a problem, which is that the corporations are spending :(style="font-family:Merriweather"):
all of this money and putting money into political campaigns :(style="font-family:Merriweather"):
and dark money channels and so on without ever consulting the :(style="font-family:Merriweather"):
shareholders themselves; and, in fact, in most cases not even :(style="font-family:Merriweather"):
notifying the shareholders. And they have been doing everything :(style="font-family:Merriweather"):
in their power to fight in both the SEC and the FEC efforts to :(style="font-family:Merriweather"):
get just notice to people of how their money in the corporation :(style="font-family:Merriweather"):
is being spent.:(style="font-family:Merriweather"):
I introduced a measure which became part of H.R. 1 which I :(style="font-family:Merriweather"):
call Shareholders United. Shareholders United says that no :(style="font-family:Merriweather"):
corporation shall be allowed to spend any money in politics :(style="font-family:Merriweather"):
until you have first notified the shareholders of the proposal :(style="font-family:Merriweather"):
and they are authorized in advance by majority vote that their :(style="font-family:Merriweather"):
money be spent in a political campaign.:(style="font-family:Merriweather"):
I am wondering if each of you, if you could go quickly\--and :(style="font-family:Merriweather"):
forgive us because we have our 5-minute stricture here. But :(style="font-family:Merriweather"):
would you agree that as long as we are living under the regime :(style="font-family:Merriweather"):
of Citizens United, that the shareholders should have the right :(style="font-family:Merriweather"):
to be apprised of proposed political spending by corporations :(style="font-family:Merriweather"):
of their money, and they should have the right to vote on it? I :(style="font-family:Merriweather"):
know there is an argument that there should have to be a 100 :(style="font-family:Merriweather"):
percent vote, but at the very least there should be a majority :(style="font-family:Merriweather"):
vote before the corporation goes ahead and spends their money.:(style="font-family:Merriweather"):
And I could start with you, Madam Chair.:(style="font-family:Merriweather"):
Ms. Weintraub. Yes.:(style="font-family:Merriweather"):
Mr. Weissman. Absolutely. And as you know, more than a :(style="font-family:Merriweather"):
million people have requested the SEC to issue a rule to do :(style="font-family:Merriweather"):
exactly what you are suggesting.:(style="font-family:Merriweather"):
Mr. Raskin. Professor Smith, do you agree?:(style="font-family:Merriweather"):
Mr. Smith. No. This is a complex question of corporate :(style="font-family:Merriweather"):
governance and there are many things corporations do, including :(style="font-family:Merriweather"):
things that affect politics, that they don't require :(style="font-family:Merriweather"):
shareholder approval for.:(style="font-family:Merriweather"):
Mr. Raskin. Okay. And Professor Spelliscy?:(style="font-family:Merriweather"):
Ms. Torres-Spelliscy. I wholeheartedly endorse your bill. I :(style="font-family:Merriweather"):
think shareholders should have the right to consent to :(style="font-family:Merriweather"):
corporate political spending, and that would bring American law :(style="font-family:Merriweather"):
in line with the U.K., where shareholders in U.K. companies do :(style="font-family:Merriweather"):
have the right to pre-approve corporate political spending.:(style="font-family:Merriweather"):
Mr. Raskin. Okay.:(style="font-family:Merriweather"):
Mr. Cohen. Thank you, Mr. Raskin.:(style="font-family:Merriweather"):
Mr. Raskin. I yield back, Mr. Chairman.:(style="font-family:Merriweather"):
Mr. Cohen. Mr. Cline, you are recognized for 5 minutes.:(style="font-family:Merriweather"):
Mr. Cline. Thank you, Mr. Chairman, appreciate it.:(style="font-family:Merriweather"):
I would note that one of the things that we have that the :(style="font-family:Merriweather"):
U.K. doesn't have is the First Amendment.:(style="font-family:Merriweather"):
The majority in Citizens United maintain that political :(style="font-family:Merriweather"):
speech is indispensable to a democracy, which is no less true :(style="font-family:Merriweather"):
because the speech comes from a corporation. The majority also :(style="font-family:Merriweather"):
held that the BCRA's disclosure requirements as applied to the :(style="font-family:Merriweather"):
movie were constitutional, reasoning that disclosure is :(style="font-family:Merriweather"):
justified by a governmental interest in providing the :(style="font-family:Merriweather"):
electorate with information about election-related spending :(style="font-family:Merriweather"):
resources.:(style="font-family:Merriweather"):
The Court also upheld the disclosure requirements for :(style="font-family:Merriweather"):
political advertising sponsors and upheld the ban on direct :(style="font-family:Merriweather"):
contributions to candidates from corporations and unions.:(style="font-family:Merriweather"):
What it did not do is overturn centuries of law. Rather, it :(style="font-family:Merriweather"):
overturned portions of McCain-Feingold which had become law in :(style="font-family:Merriweather"):
2002, another law that went into effect in the 1940s, and two :(style="font-family:Merriweather"):
Supreme Court decisions in whole or in part, Austin v. Michigan :(style="font-family:Merriweather"):
Chamber of Commerce from 1990 and McConnell v. FEC from 2003.:(style="font-family:Merriweather"):
So I would ask Professor Smith, in your prepared testimony :(style="font-family:Merriweather"):
you quote part of the oral argument in Citizens United in which :(style="font-family:Merriweather"):
the government argues that as a matter of constitutional law it :(style="font-family:Merriweather"):
can ban books or movies if corporate resources are used in :(style="font-family:Merriweather"):
their production or distribution. Is that correct?:(style="font-family:Merriweather"):
Mr. Smith. Yes.:(style="font-family:Merriweather"):
Mr. Cline. And can we talk about whether this is really a :(style="font-family:Merriweather"):
danger?:(style="font-family:Merriweather"):
Mr. Smith. Yes. Citizens United was rescheduled after that :(style="font-family:Merriweather"):
first oral argument, and in the second oral argument then\-:(style="font-family:Merriweather"):
Solicitor General Kagan argued, well, we would never actually :(style="font-family:Merriweather"):
do that. But, in fact, the FEC from time to time has done that. :(style="font-family:Merriweather"):
In a little-noticed 1987 advisory opinion, the FEC informed :(style="font-family:Merriweather"):
U.S. News and World Report that their publication of a book :(style="font-family:Merriweather"):
would not be exempt under the press exemption because it was :(style="font-family:Merriweather"):
not a periodical, that it would therefore be potentially :(style="font-family:Merriweather"):
illegal to distribute a book.:(style="font-family:Merriweather"):
Now, maybe that wasn't noticed so much because in the end :(style="font-family:Merriweather"):
U.S. News wasn't really going to do that. It was dismissed on :(style="font-family:Merriweather"):
other grounds. But the FEC made that point.:(style="font-family:Merriweather"):
Just in the last decade, in 5642, the FEC spent almost two :(style="font-family:Merriweather"):
years investigating publication and distribution of a book, one :(style="font-family:Merriweather"):
that was written by George Soros, and it was eventually :(style="font-family:Merriweather"):
dismissed. But it should be noted that the General Counsel in :(style="font-family:Merriweather"):
that case recommended that the FEC find a violation due to :(style="font-family:Merriweather"):
distribution of a book about policy, a book called The Bubble :(style="font-family:Merriweather"):
of American Supremacy, because it included such radical :(style="font-family:Merriweather"):
statements as ``It is not enough to defeat President Bush at :(style="font-family:Merriweather"):
the polls,'' and ``We can regain the moral high ground only by :(style="font-family:Merriweather"):
rejecting President Bush when he stands for reelection,'' and :(style="font-family:Merriweather"):
that was considered enough that that book could have been :(style="font-family:Merriweather"):
potentially banned.:(style="font-family:Merriweather"):
So I do think it is a real issue.:(style="font-family:Merriweather"):
I would also note that when Justice Kagan, or now-Justice :(style="font-family:Merriweather"):
Kagan, then-Solicitor General Kagan, was asked what about :(style="font-family:Merriweather"):
pamphlets, she said pamphlets we ban, we definitely go in for :(style="font-family:Merriweather"):
pamphlets.:(style="font-family:Merriweather"):
I have here a copy of Common Sense, the great revolutionary :(style="font-family:Merriweather"):
tract by Thomas Paine. It is 54, 58 pages. That includes a :(style="font-family:Merriweather"):
couple of cover pages here. Is this a book or a pamphlet? I :(style="font-family:Merriweather"):
will ask you all to vote for it because you are the legislators :(style="font-family:Merriweather"):
who will get to decide whether or not this can be published or :(style="font-family:Merriweather"):
whether or not this can be banned as a pamphlet.:(style="font-family:Merriweather"):
Mr. Cline. Thank you.:(style="font-family:Merriweather"):
Some of our Democratic colleagues in the Senate have :(style="font-family:Merriweather"):
previously introduced a constitutional amendment to undo or :(style="font-family:Merriweather"):
overturn Citizens United. The amendment would allow Congress to :(style="font-family:Merriweather"):
regulate the giving and spending of money on political advocacy :(style="font-family:Merriweather"):
but explicitly carves out the press. Do you have any views on :(style="font-family:Merriweather"):
that approach?:(style="font-family:Merriweather"):
Mr. Smith. Well again, if I may, Mr. Cline, I want to :(style="font-family:Merriweather"):
briefly address something that my old colleague\--we were law :(style="font-family:Merriweather"):
professors going back. You got your J.D. from Harvard, too; is :(style="font-family:Merriweather"):
that right?:(style="font-family:Merriweather"):
I think, Mr. Chairman, that we should probably note that :(style="font-family:Merriweather"):
again.:(style="font-family:Merriweather"):
But in any case, one thing I did want to comment, though, :(style="font-family:Merriweather"):
is that who has benefitted\--...we haven't seen this torrent of money from Fortune 100 companies. The corporations that have :(style="font-family:Merriweather"):
benefitted are small corporations, and most of those :(style="font-family:Merriweather"):
corporations can't afford to operate a PAC, they can't afford :(style="font-family:Merriweather"):
to have a lobbyist here, and those are the corporations that :(style="font-family:Merriweather"):
are really benefitting from this, and those are closely held :(style="font-family:Merriweather"):
corporations where I think we can usually find the shareholder :(style="font-family:Merriweather"):
benefits.:(style="font-family:Merriweather"):===
==
paywall?
Calif. Donor Info Ruling May Spur Campaign Finance ...
https://www.law360.com › tax-authority › articles › calif-...
Jul 2, 2021 — Torres-Spelliscy also noted, however, that the precedent from the NAACP case has "somewhat diminished over the years," particularly in the ...
===
ABA!
Introduction: Contesting Personhood
The plain meaning of words can get mangled in the hands of a clever lawyer. One word that is heavily contested in the American legal context is “person”—and by extension—who counts as a member of “we the people.” For instance, Chief Justice Roger B. Taney had a case before him in 1857 where a man was trying to claim his status as a free man because he had long lived in a free territory of the United States. In Chief Justice Taney’s hands, Mr. Scott was not a person at all. He was property to be bought, sold, and inherited, and the only rights Chief Justice Taney would protect were the property rights of his owner. In Dred Scott, the Supreme Court concluded that African Americans were not included in “we the people” in the preamble of the U.S. Constitution. The Court concluded that blacks “had no rights which the white man was bound to respect. . . .”
This racist conclusion of the Supreme Court fencing out African Americans from counting as “persons” was controversial in its day. In response toDred Scott, ex-slave Frederick Douglass gave a speech before the American Anti-Slavery Society. He said of the U.S. Constitution’s preamble, the text says,
“We, the people”—not we, the white people—not we, the citizens, or the legal voters—not we, the privileged class, and excluding all other classes but we, the people; not we, the horses and cattle, but we the people—the men and women, the human inhabitants of the United States. . . .
Thus, Douglass reasoned “we the people” included African Americans as well.
Courts continue to this day to wrestle with the basic question of who or what counts as a person with protectable rights. Flash forward to 2010 when the Supreme Court ruled in Citizens United v. FEC that corporations have First Amendment political rights to buy ads in all American elections.If the logical flaw in Dred Scott was mistaking a person (Mr. Scott) for a piece of property, the blunder in Citizens United was mistaking a piece of property (a corporation) for a person. (For a longer analysis of the Scottdecision, see Crooms-Robinson’s article that begins on page 2.)
Through Article V amendments to the Constitution, the American people decided that individuals who had long been excluded from being considered part of “we the people,” like African Americans and women, were, in fact, full members of the body politic. But now counter-majoritarian courts are taking the lead in shoehorning corporations into roles that previously only American citizens occupied. Corporations do not have coequal constitutional rights as living, breathing human citizens, but they are making claims on more rights that, until relatively recently, were only asserted by real people.
The Evolution of the Corporate Form
I wrote about the bizarre U.S. Supreme Court jurisprudence surrounding corporations in my book Corporate Citizen? An Argument for the Separation of Corporation and State. In a nutshell, in my book I argue that the Supreme Court is allowing for vastly expanded corporate rights, while at the same time the same Court is excusing corporations from a growing list of responsibilities. As I demonstrate in my book, corporate lawyers have a long history of arguing for expanded notions of corporate personhood in America. In fact, early American lawyers were only carrying on a tradition that started centuries ago across the sea in Europe. The idea of anthropomorphizing corporations through “corporate personhood” dates back to a medieval pope who was also a lawyer. The idea of corporate personhood spread across Europe, jumped to England, and landed in America along with the British colonists.
Corporations have evolved radically since America became a nation at the end of the eighteenth century. Justice Louis Brandeis, in his famous dissent in Liggett, 288 U.S. at 554–56, Louis K. Liggett Co. v. Lee (1933), explained the historical path of the expansion of corporations from single-purpose entities with limited terms of existence into the multipurpose, immortal behemoths we have today. As Justice Brandeis wrote:
Limitations upon the scope of a business corporation’s powers and activity were also long universal. At first, corporations could be formed under the general laws only for a limited number of purposes—usually those which required a relatively large fixed capital, like transportation, banking, and insurance, and mechanical, mining, and manufacturing enterprises. Permission to incorporate for “any lawful purpose” was not common until 1875; . . . All, or a majority, of the incorporators or directors, or both, were required to be residents of the incorporating state. The powers which the corporation might exercise in carrying out its purposes were sparingly conferred and strictly construed.
As Justice Brandeis noted, the purposes of corporations were once narrow and are now incredibly broad.
One of the big changes from the founding to today is that, at the founding, only a special legislative act could create a corporation. By contrast, now, under general incorporation statutes, incorporators can file a few administrative papers, pay a few fees, and be the proud owner of their very own corporation. And many take advantage of this ease and convenience. Approximately 2 million corporations are incorporated annually in the United States. Delaware has clearly won the race for corporate charters, as the majority of U.S. corporations are incorporated in Delaware, America’s second smallest state.
Additionally, at the founding, corporations were created for a limited purpose, like building a road from point A to point B. Now, while incorporators could limit the purpose of a corporation in its articles of incorporation, few do. Rather, the norm presently is for entrepreneurs to establish corporations for “any lawful purpose.” This allows modern firms to do multiple lines of business as well as assert the ability to act in non-business fora.
After Citizens United was decided in 2010, bumper stickers appeared stating: “I’ll believe a corporation is a person when Texas executes one.” What this clever catchphrase captures is the fact that corporations are not corporeal. Contemporary corporations, unlike their human counterparts, can exist in perpetuity, hence why they are sometimes referred to as being “immortal.” Cryogenics aside, although Walt Disney the man died, the Walt Disney Company shows no signs of going anywhere anytime soon.
This wasn’t always the case. Until 1875, corporate franchises were for a limited term of years. But eventually, as states competed in a race to the bottom for corporate charters, they all eventually allowed corporations to continue in perpetuity. So now, anyone can incorporate a corporation, and those corporations do not have to be for a limited purpose, or for a limited time. This, of course, could be changed if state laws, like those in Delaware, were changed to require corporations only for limited terms.
Today, immortality is a feature of modern corporations, not a bug. But this may be why granting corporations the same rights as individuals doesn’t always make sense. As the Supreme Court once concluded, “[s]ometimes the grossest discrimination can lie in treating things that are different as though they were exactly alike[.]” Buckley v. Valeo, 424 U.S. 1, 97–98 (1976). And this seems particularly apt, when corporations and humans are being balanced on the scales of justice.
As corporations themselves grew, simultaneously the diffusion of stock ownership grew dramatically. At the founding, the owners of a corporation would typically be a small circle of people. As such, a small group of investors could easily keep an eye on how their investments were being managed. But with the modern publicly traded corporation, millions of people may own stock in a single firm. Shareholders are geographically dispersed, and because each one typically owns only a fraction of a percent of the firm, the incentive to keep a watchful eye over management is diminished. In the 1930s, Professors Berle and Means worried that this separation of management from control would prove troublesome. And time has shown that Berle’s and Means’s instincts were correct. Whether the issue is executive compensation or other aspects of corporate governance, shareholders have collective action problems that inhibit the coordination of large numbers of investors, and they also have a rational disinterest in not monitoring corporate insiders on a regular basis.Corporate managers, thus, may act in undisciplined and self-serving ways at the expense of shareholders, like helping themselves to generous retirement packages or the use of perks like corporate jets.
This is known as an agency problem—corporate managers are the shareholders’ agents within the firm, and the managers have a fiduciary duty to act in the shareholders’ best interest, but because the shareholders are not continually monitoring the behavior of managers, the managers may produce suboptimal returns for investors because of self-serving behaviors like enjoying expensive perks on the company’s dime. The worries raised by the agency theory become more acute as firms become larger and the temptation for managers to tap corporate resources for personal reasons—like backing a favorite political cause at shareholder expense—grows.
At the same time that statutory powers of corporations expanded, the Supreme Court also decided which constitutional rights could attach to the corporate form. The Supreme Court’s approach to the rights for corporations can be divided into two distinct strains of case law. Interestingly, while the Court has concluded that corporations are “persons” within the meaning of the Equal Protection Clause of the Fourteenth Amendment, the Court has been quite reticent to concede that corporations are “citizens” for the purpose of the Privileges and Immunities Clause.
Corporate Personhood Expands
There is a widely held misconception that Citizens United was the first case to create corporate personhood. This claim lands quite wide of the mark. First, the phrase “corporate personhood” does not appear in the opinion at all. Second, Citizens United did not grant corporations personhood. Corporations already had it.
Throughout American legal history, corporations have been near the first in line to claim various constitutional rights. This was true when it came to corporations’ claiming rights protecting private property and rights protecting the right to contract. The Supreme Court considered the property rights of corporations in Terrett v. Taylor, 13 U.S. 43 (1815). In Terrett, the Episcopal Church (a corporation) asserted property rights over certain land. The Supreme Court stated that the property rights were not disturbed by the Revolutionary War. And as the Supreme Court stated: “[T]he dissolution of the regal government no more destroyed the right to possess or enjoy this property than it did the right of any other corporation or individual to his or its own property[.]”
The Supreme Court in very early cases decided that corporations were covered by the Contract Clause of the Constitution. Article I of the Constitution says, “[n]o State shall . . . pass any . . . Law impairing the Obligation of Contracts. . . .” This means that a state, like New Hampshire, could not pass a law that interfered with a pre-existing contract between two parties. In the Dartmouth College case in 1819, the college (a corporation) claimed protection under the Constitution’s Contract Clause. The Supreme Court agreed that it applied, ruling even the Revolutionary War had not changed contractual rights for educational corporations like the college. Despite recognizing differences between corporations and actual citizens in the case, the Supreme Court ultimately held that New Hampshire had violated the Contracts Clause when the state essentially tried to take over the private college.
Equal Protection and Corporations
The first big leap in corporate personhood from holding mere property and contract rights to possessing more expansive rights was a claim that the Equal Protection Clause applied to corporations. One of the strangest twists in American constitutional law was the moment that corporations gained personhood under the Equal Protection Clause of the Fourteenth Amendment. It occurred in a case called Santa Clara County, and what was odd was that the Supreme Court did not really even decide the matter in the actual opinion. It only appeared in a footnote to the case.
Corporations were very aggressive in asserting Fourteenth Amendment rights after the Civil War. We have the likes of former U.S. Senator Roscoe Conkling to thank for the extension of Equal Protection to corporations. Conkling helped draft the Fourteenth Amendment. He argued as an expert witness in 1882 in San Mateo County v. Southern Pacific Rail Roadthat the Fourteenth Amendment is not limited to natural persons. He produced a journal that seemed to show that the Joint Congressional Committee that drafted the Fourteenth Amendment vacillated between using “citizen” and “person” and the drafters chose “person” specifically to include corporations. According to historians, Conkling was simply lying. Nonetheless, the Supreme Court embraced Conkling’s reading of the Fourteenth Amendment, not in the San Mateo County case, but rather in a footnote four years later in 1886 in Santa Clara County v. Southern Pacific Rail Road.
In the 1970s,Santa Clara was used to justify granting corporations the First Amendment right to spend unlimited corporate funds on ballot initiatives in a case called Bellotti. In Citizens United in 2010, when the Supreme Court held that political speech is “indispensable to decision making in a democracy, and this is no less true because the speech comes from a corporation,” they cited Bellotti. Hence, there’s direct line betweenSanta Clara and Citizens United. So, Citizens Unitedwas more of a culmination, and not the beginning, of the Supreme Court’s granting ever more expansive rights to corporate “persons.” But, of course, the Court continued to be petitioned by corporations that were emboldened by Citizens United. The troublesome conclusions of Citizens Unitedrecognizing political rights for corporations were extended in 2014 in Hobby Lobby, which recognized statutory religious rights for corporations too.
Not Citizens Under the Comity Clause
Article IV’s Privileges and Immunities Clause cases are one of the few areas of law where the Supreme Court has refused to extend the rights of humans to corporations. This clause of the Constitution reads: “[T]he Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.” The point of the Privileges and Immunities Clause, also known as the Comity Clause, is to stop a given state from treating out-of-staters worse than it treats its own citizens. Alexander Hamilton, in Federalist No. 80, argued that the Comity Clause was “the basis of the union.” The Comity Clause helps safeguard the principle that Americans have the same rights no matter where they are within the United States.
In contradistinction to the Supreme Court’s approach under the Fourteenth Amendment of treating humans and corporations as functional equivalents, under the Comity Cause the Court has not extended corporations “citizenship.” The Supreme Court’s holding that corporations are not covered by the Comity Clause traces back to Bank of Augusta v. Earle, 38 U.S. 519, 587 (1839), where the Court concluded that “[t]he only rights [a corporation] can claim are the rights which are given to it in that character, and not the rights which belong to its members as citizens of a state.” (Also note that “corporations are neither persons nor partners, but artificial bodies politic, created by act of state, always ad hoc, and their franchises are granted for public good, of which they are the supposed instruments.”) This central holding has been reaffirmed repeatedly by the Supreme Court.
Courts have been willing to grant expansive rights to corporations, but they have not granted corporations and people identical rights. To this day, the Supreme Court has been of at least two minds when it comes to corporations—they are treated as “persons” who are covered by the Equal Protection Clause (and Contracts Clause among others), but they are excluded from the definition of “citizens” under the Comity Clause. One of the reasons why the anticorporate citizenship cases are so important is that they serve as a legal basis to challenge the direction of the probusiness Roberts Court.
What’s at Stake in Jesner v. Arab Bank
While the Supreme Court (outside of the Comity Clause exception) has given more corporate rights to corporations, especially in the areas of Equal Protection and the First Amendment, the Supreme Court has also puzzlingly excused corporations from certain human rights suits. This Supreme Court term, the Court may dig itself into an even bigger hole in its peculiar treatment of corporations. The case that affords this opportunity is Jesner v. Arab Bank. The plaintiffs in Jesnercould not be more sympathetic. They are the victims of suicide bombings and the families of victims killed in terrorist attacks. Their case was scheduled to be heard by the justices on October 11, 2017. The issue in the case is one that has been rattling around the U.S. legal system for years, and it is now on a roundtrip back to the Supreme Court. This issue is simply: Can corporations be sued for their human rights violations abroad in U.S. federal courts under the Alien Tort Statute?
If the issue in Jesnersounds familiar, it should. This was one of the questions in Nestle USA v. Doe in 2015. The Supreme Court denied cert. in the Nestle USA case in January 2016. It was also the issue in Kiobel v. Royal Dutch Petroleum in 2013 (Kiobel II). In Kiobel II, after two oral arguments, the Supreme Court punted on the core questions of corporate liability and instead decided that in “foreign cubed” cases (with a foreign plaintiff, a foreign defendant with underlying events occurring on foreign soil), that U.S. federal courts lack jurisdiction. This left open the issue of whether a corporation could be sued in a case that touched and concerned the United States. In Jesner, the Supreme Court gets another opportunity to clarify whether (and if) corporations can aid and abet human rights abuses outside the United States and get away scot-free.
In Jesner v. Arab Bank, the Arab Bank (a corporation) stands accused of, among other things, helping to finance terrorist attacks and incentivizing suicide bombings by paying funds to the families of so-called “martyrs” who carry out the bombings. In other words, the bank helped to pay the families of the perpetrators of the violence (not the families of their victims).
The way that the Arab Bank may get away with this alleged morally troubling behavior, even though it has a New York branch, is by reasserting the basic argument that was made in Nestle USA and Kiobel II: that the federal Alien Tort Statute was not intended to apply to corporations full stop. Given other cases in this area like Mohamad v. PLO, which held the word “individual” in the Torture Victim Protection Act means a natural person and does not impose any liability against organizations, the Arab Bank’s procorporate argument may well prevail.
There are multiple federal Circuit Courts which have shot down the argument that corporations are immune from suit under the Alien Tort Statute. The lone outlier is the Second Circuit, which decided in 2010 that corporations are excused from suit in Kiobel I. This is the case that was appealed to the Supreme Court and became Kiobel II.Jesner v. Arab Bank was litigated in the Second Circuit. One question in Jesnerwas what exactly did Kiobel II do to Kiobel I. So far in the litigation, Jesnerconcluded that Kiobel I and its conclusion that corporations can’t be sued in federal court using the Alien Tort Statute remained the controlling law of the Second Circuit.
So, what is the new Supreme Court likely to do in Jesner v. Arab Bank? No one can know for sure. If the Supreme Court cares to notice, most federal Circuit Courts have decided that liability for corporations under the Alien Tort Statute is appropriate, and the Second Circuit still stands alone in its aggressive reading of the law that corporations simply are not liable. It’s also possible that the justices could find the victims of suicide bombings more sympathetic than the widow in Kiobel IIwhose husband was executed in Nigeria after a widely decried show trial against African environmentalists who protested against Shell’s pollution of their land.
Conclusion
What we are likely to have at the conclusion of the Supreme Court term is corporations that are empowered to spend in American elections because of Bellottiand Citizens United; corporations that can make religious objections thanks to Hobby Lobby; and if Jesnerturns out as badly as I predict, corporations will be able to aid and abet human rights violations abroad with impunity. It’s not a pretty picture. If corporations are going to be treated as legal persons, they should have personal accountability too, especially for human rights abuses.
---
Ciara Torres-Spelliscy is an associate professor of law and the Leroy Highbaugh Research Chair at Stetson University College of Law and a fellow at the Brennan Centerfor Justice at New York University School of Law. She is the author of Corporate Citizen? An Argument for the Separation of Corporation and State.
===
===
an ah 3 23
The Religious Right movement, which gained considerable momentum during President Ronald Reagan's 1980 campaign, has had a complex relationship with Catholicism over the years. The Religious Right is dominated by far-right white evangelical Protestant fundamentalists, who are vehemently critical of Catholic practices (the confessional, physical images of Jesus). Yet Republican evangelicals will work with the Catholic right when it comes to fighting abortion or same-sex marriage.
The Catholic right is by no means universally loved by American Catholics. President Joe Biden and former House Speaker Nancy Pelosi (D-California), for example, are both known for being devout Catholics, but they are also major critics of the Religious Right and its influence on the U.S. Supreme Court — which the Catholic right now dominates. Justice Clarence Thomas, Justice Samuel Alito, Justice Brett Kavanaugh and Justice Amy Coney Barrett are all hard-right Catholics and GOP appointees who voted to overturn Roe v. Wade in the Dobbs v. Jackson Women’s Health Organization ruling of 2022.
In contrast, Justice Sonia Sotomayor, a Democratic Barack Obama appointee, is a Catholic who was a dissenter in Dobbs and has been a scathing critic of the High Court's current direction. She even used the word "stench" to express her disdain. Sotomayor is to the left of the Vatican, while Thomas, Alito and Barrett are to the right of the Vatican.
One of the Catholic right's most influential figures is judicial activist Leonard Leo, former executive vice president of the Federalist Society. Leo has spent decades lobbying to push the federal courts to the far right. And according to Politico's Heidi Przybyla, he has made a fortune in the process.
In an article published by Politico on March 1, Przybyla reports, "A network of political nonprofits formed by judicial activist Leonard Leo moved at least $43 million to a new firm he is leading, raising questions about how his conservative legal movement is funded. Leo's own personal wealth appeared to have ballooned as his fundraising prowess accelerated since his efforts to cement the Supreme Court's conservative majority helped to bring about its decision to overturn abortion rights. Most recently, Leo reaped a $1.6 billion windfall from a single donor in what is likely the biggest single political gift in U.S. history."
According to Przybyla, Politico's analysis of "dozens of financial, property and public records dating from 2000 to 2021" shows that Leo's "lifestyle took a lavish turn beginning in 2016." And his fortunes grew considerably during the Trump years, Przybyla reports.
READ MORE: Dark money groups pump nearly $90 million into 'independent state legislature' case
The Politico journalist explains, "The spending by Leo-aligned nonprofits on his for-profit businesses coincided with changes in his personal lifestyle and finances. IRS and other public records between 2016 and 2020 show a major expansion of Leo's personal wealth that coincided with the start of his work for Trump and the creation of his own for-profit entity calledBH Group. Both happened in 2016."
The former Federalist Society VP forcefully lobbied for many of the severe social conservatives who are now on the U.S. Supreme Court, including Barrett. In 2016, he encouraged then-Senate Majority Leader Mitch McConnell (R-Kentucky) to do everything he could to derail then-President Barack Obama's nomination of Merrick Garland following the death of Justice Antonin Scalia (a far-right Catholic social conservative). It worked; that seat stayed open until 2017, when then-President Donald Trump appointed Justice Neil Gorsuch — another justice who voted to overturn Roe in 2022. Gorsuch was raised Catholic but has more recently attended an Episcopal church.
Trump was very specific about the type of justices he wanted: hardcore social conservatives. Former Justice Anthony Kennedy was a right-wing fiscally conservative 1987 Reagan appointee, but he was much more of a libertarian than Scalia, Alito or Thomas and often voted with Democratic justices when it came to abortion or gay rights. And that wasn't the type of justice that Trump and Leo wanted.
Przybyla notes, "The Court’s 2022 decision overturning half a century of the federal right to abortion was widely seen as a victory for the conservative legal movement led by Leo. Trump picked his Court nominees from a list drawn up by Leo, who then served as his unofficial adviser in the White House. A constellation of outside groups affiliated with Leo poured tens of millions of dollars in anonymous donor funds into promoting those nominees — Neil Gorsuch, Brett Kavanaugh and Amy Coney Barrett — thereby cementing a new conservative majority for the next generation."
Read Politico's full report at this link.
---
3 23 raw
Leonard Leo, the right-wing leader of the judicial activist network the Federalist Society, is coming under scrutiny for his "lavish" use of the organization's funds to live the high life, POLITICO reported on Wednesday.
"A network of political non-profits formed by judicial activist Leonard Leo moved at least $43 million to a new firm he is leading, raising questions about how his conservative legal movement is funded," reported Heidi Przybyla. "Leo’s own personal wealth appeared to have ballooned as his fundraising prowess accelerated since his efforts to cement the Supreme Court’s conservative majority helped to bring about its decision to overturn abortion rights. Most recently, Leo reaped a $1.6 billion windfall from a single donor in what is likely the biggest single political gift in U.S. history."
Leo has been a massively influential figure, often called Trump's "judge whisperer" for the outsized role he played in getting right-wing jurists seated who have been involved in everything from dismantling abortion rights, to rolling back voting and redistricting protections, to undermining the regulatory process.
According to POLITICO, which has obtained records of Leo's finances over the last two decades, Leo's personal wealth skyrocketed under President Donald Trump, with whom he worked closely to appoint a steady stream of right-wing judges to the federal bench including three at the Supreme Court — "the same period during which he erected a for-profit ecosystem around his longtime nonprofit empire that is shielded from taxes."
CRC Advisers, the consulting firm he created in 2020, did not respond to questions about what the $43 million is being used for. However, Leo, who led a "middle class lifestyle" prior for most of his time at the Federalist Society, began making extravagant purchases after the former president's election in 2016, including "two new mansions in Maine, four new cars, private school tuition for his children, hundreds of thousands of dollars in donations to Catholic causes and a wine buyer and locker at Morton’s Steakhouse."
Stetson University law professor Ciara Torres-Spelliscy, an expert on campaign finance, told POLITICO, “If millions of dollars in dark money are sloshing around, it makes it really easy for people on the inside to take a cut ... That behavior is, unfortunately, now showing in the judicial nominating process."
This is not the first time questions have been raised about Leo's financial activities. In 2019, The Washington Post flagged that Leo has helped right-wing nonprofits raise $250 million to promote his approved judges, with no transparency in the donors' identity. And another dark-money group, BH Ventures, which contributed $24 million to CRC Advisors and up to $5 million to former Trump adviser Kellyanne Conway's polling firm, shut down shortly after reporters began investigating it.
Alarmed Democrats have responded in force to the Federalist Society's efforts to remake federal courts. Since taking office, President Joe Biden has been confirming judges at an even faster pace than Trump did, with 97 seated in his first two years alone — often from a diverse array of racial and professional backgrounds.
===
===