Published in The Atlantic on June 24, 2015
Over the next week, the Supreme Court will decide cases on same-sex marriage, Obamacare, and lethal injection. So Monday’s rulings about raisins and hotels were not the focus of much interest. But they should be. Taken together, they represent an important victory for corporate personhood. And they suggest both the utility of that legal fiction, and its limits.
No legal question has sparked more recent controversy than whether corporations are people. Obviously, corporations are not human. Yet the Court has held that they, like people, are entitled to certain fundamental rights, including the freedom to make political expenditures (Citizens United) and the religious freedom to object to birth-control coverage in their employees’ health insurance (Hobby Lobby).
Many Americans, including the Court’s most liberal justices, object to the recent expansion of corporate rights. Yet, in Monday’s cases, corporations gained valuable new constitutional protections—and the liberals were on board.
In Horne v. Department of Agriculture, the Court ruled that a federal program requiring raisin growers to set aside a percentage of their crops for government redistribution was an unconstitutional “taking” under the Fifth Amendment. In Los Angeles v. Patel, the Court extended the Constitution’s Fourth Amendment guarantee of privacy to hoteliers, invalidating a city ordinance (similar to laws around the country) allowing police to search guest registries without a warrant.
In both cases, the constitutional claimants included individuals as well as a mix of business associations. In neither case did the justices explicitly address whether corporate businesses should have the same constitutional protections as individuals. Yet there is no question that the biggest beneficiaries of these decisions will be corporations. Del Monte Corporation will not have to give up a portion of its raisin crop; Marriott and Hilton hotels can refuse to show their guest books to police.
Although corporations won big, the justices focused on the nature of the rights in question, not the identity or status of those who claim their protection. The raisin growers had to be compensated because, as Chief Justice John Roberts wrote for a majority that included Justices Ruth Bader Ginsburg, Stephen Breyer, and Elena Kagan, the ban on government taking of private property is as old as the Magna Carta. In the hotel case, Justice Sonia Sotomayor, writing for a majority that included the Court’s liberal wing and Justice Anthony Kennedy, declared that searches conducted without judicial process are “per se unreasonable.”
Opponents of corporate rights too simplistically champion the notion that “corporations are not people.” Corporations deserve some Constitutional protections, both in order to keep government in check and because the ultimate beneficiaries are citizens. A corporate right to be free from government takings, for example, makes sense both as a matter of constitutional law and of economics. Government overreach is problematic whether the raisin grower is a family farm or a business corporation. And corporations left exposed to government expropriation would find investors reluctant to take that risk, undermining the basic social purpose of the corporation, to make money. (So Roberts in the raisin case got the takings question correct for corporations, even though he never explicitly considered it.)
Some rights, though, are more appropriate for people than for corporations, particularly when the nature of the right does not “fit” with the corporate form, or the corporate form magnifies the nature of the right beyond what humans would have. Religious rights, for example, should be different for corporations because only humans have consciences. Rights to spend money in elections should be different for corporations because the benefits they receive from the government give them an improper advantage in influencing government policy.
Do corporations warrant privacy rights? Corporations should be able to expect that government agents will not seize their property or search their premises without good reason. But the privacy interests of humans are likely to be stronger than those of corporations, and the Court has understood that in the past. In 2011, the Court unanimously rejected AT&T’s claim that its finances be excluded from Freedom of Information Act requests under that statute’s exception for “personal privacy.” Roberts wrote that such right “does not extend to corporations. We trust that AT&T will not take it personally.”
In Monday’s hotel case, the Court could have analyzed whether the distinction between corporate hotel chains and human innkeepers should make a difference. Sotomayor has been attuned to problem of corporate rights in the past—in the oral argument in Citizens United six years ago, Sotomayor pointedly asked whether corporations should be considered “persons” for purposes of constitutional law. But in Patel, she did not even raise the issue.
Today, corporations have nearly all the same constitutional rights as individuals. Yet too often the Court has expanded the rights of corporations as it did on Monday, without ever asking whether such entities ought to be entitled to the same rights as people. And the liberals have been as guilty as the conservatives.
Corporations may be constitutional people, at least some of the time. But it would be helpful if the Court explained when and why.