The U.S. Constitution, the Bill of Rights and subsequent Amendments do not explicitly mention corporations. Nevertheless, under U.S. law corporations have obtained substantial rights through key court decisions that have established particular legal doctrines and provided corporations some of the same rights as human beings.
Although we believe there are legitimate reasons and instances where corporations and other institutions should be protected from government intrusion, it is also the case that corporations have used their claims to constitutional rights to expand their power, restrict the rights of individual people (esp. employees), trample the public interest (e.g. overturn regulations protective of public health) and undermine democratic decision-making processes, especially at the local level.
The expansion of corporate rights is continuously bolstered by the efforts of the U.S. Chamber of Commerce and a number of other corporate-funded legal foundations, as this 2008 New York Times Magazine article explains. See our Legal Foundations and Front Groups page for more.
Perhaps the most important area where corporations are aggressively seeking to expand their rights is in the area of First Amendment speech protections.
Will corporate rights ever be an issue in Supreme Court nominations? Corporate lobbyists and corporate-friendly jurists would prefer that the Judiciary Committee stick to social issues and not talk about tort reform, anti-trust law, property rights or regulatory powers. Observers say important questions, such as the commerce clause will likely not be debated at all.
Corporations and Commercial Speech
U.S. corporations increasingly invoke the First Amendment to defend advertising and other forms of commercial speech or to attack local, state, and federal restrictions on their activities. Since the 1970s, the U.S. Supreme Court and other federal and state courts have provided ever-increasing levels of protection for commercial speech, gradually approaching the level of protection guaranteed for social and political debates.
Tobacco regulation has been a key issue in many of these cases, including Lorillard Tobacco Co. v. Reilly (2001), in which the Court struck down a Massachusetts law prohibiting tobacco advertising w/in 1,000 feet of a school or playground.
Tobacco companies have also claimed that taxes on tobacco ads violate their First Amendment Rights. For example, a lawyer for R.J. Reynolds and Lorillard reportedly told the Ninth U.S. Circuit Court of Appeals in San Francisco that a 25-cent-a-pack tax approved by California voters in 1988 is "government-compelled speech" -- i.e. violates the industry's First Amendment rights. But the judge concluded there would not be a violation if the tax revenues were deposited in a general fund. The Congressional Research Service has argued in a 1998 report that limiting tax deductibility of tobacco ads would not violate the corporations' First Amendment rights.
Online advertising (aka adware) The spread of online advertising (aka "adware") has also raised concerns about unbridled corporate commercial speech. WhenU, an adware maker, used free speech arguments to block the nation's first spyware statute in Utah. In June, 2004, a Utah Judge ruled in favor of WhenU after it filed a motion in the Third Judicial District Court in Salt Lake County, charging that Utah's Spyware Control Act violates the company's free-speech guarantees. (To learn more about WhenU, go to Ben Edelman's site).
Direct-to-Consumer Drug Ads Corporate speech rights are also being challenged in the area of Direct-to-Consumer (DTC) pharmaceutical ads. 39 groups have called on Congress to pass related legislation known as the Public Health Protection Act. To learn more, see the Stop Drug Ads web site. And read this related WSJ article.
In 2005, a Food and Drug Administration advisory panel recommended that drugmakers be banned from marketing certain pain medicines directly to consumers, a move that industry observers say could be the first step toward limiting DTC ads. This would begin to reverse the FDA's 1997 decision to make it easier for drug companies to tailor commercials for the public opened up the advertising floodgates -- especially on nightly television -- and is now blamed, in part, for the skyrocketing of health-care costs the past several years. Direct-to-consumer drug ads are blamed for harming the doctor-patient relationship by cultivating an emotional bond between consumers and products that are not allowed to be introduced directly in public. In addition, pharmaceutical manufacturers are accused by critics of seeking to expand their markets by inventing new uses for existing drugs through "Disease Mongering" -- i.e. convincing consumers that normal personality traits are signs of illnesses like "generalized anxiety disorder."
The Vioxx example. Vioxx was named by Advertising Age (2000) as one of the "Top 100 Megrabrands" after the manufacturer (Merck) spent well over $100 million per year advertising the drug to consumers. The FDA's advisors have asked the agency to ban direct-to-consumer ads for Cox-2 drugs, which had been among the most-promoted drugs in the U.S. before Merck & Co. pulled Vioxx from the market Sept. 30 and Pfizer Inc. suspended ads for Celebrex in December. The pharmaceutical manufacturers' decisions came in the wake of whistleblower revelations about increased risks for heart attack and stroke from use of the drugs. The panel blamed industry ads for putting Cox-2 painkillers in consumers' hands despite the absence of data to prove that they were actually more effective and safer than existing medications and despite their being more expensive. FDA safety researcher Dr. David Graham says consumers have become "victims of Madison Avenue" as a result of the rule. Consumer drug advertising has tripled to more than $3 billion annually since late 1997 when the FDA said drug companies could eliminate a number of disclaimers in their advertisements that effectively kept drugmakers from advertising on television.
The 1997 change allowed drugmakers to limit lengthy, specific safety warnings in ads by instead urging patients to "ask their doctors" or call a toll-free number for more detailed information about the medicines they were pitching.
But even when so-called side effects are listed, doctors question whether the public really understands the information. FDA advisory panel chairman Dr. Alastair Wood alluded to ads for the impotency drug Cialis, in which viewers are warned about the possibility of a four-hour erection. Wood said the warning could be construed as a selling point, causing some "to assume more potency."
In the 1970s, the Supreme Court established First Amendment protections for "commercial speech." Its test for determining whether the government could restrict corporations' commercial speech rights was set out in the 1978 case Central Hudson Gas & Electric v. Public Service Commission of New York. Since then, the courts have steadily expanded commercial speech rights, effectively restraining the government's right to protect public health and other non-commercial values. One way the Court has done this is by increasingly equating commercial advertising with political and social expression, making it difficult for regulatory agencies that reasonably seek to restrict advertising. In 2002, for example, in Thompson v. Western States Medical Center, the Supreme Court made it difficult for the federal government to restrict Direct-to-Consumer advertising by the pharmaceutical industry (based on the commercial speech test developed in Central Hudson).
The Nike Case. The 2003 Kasky v. Nike case turned on whether Nike's representation of its products in letters to the editor, etc. constituted commercial speech (in which case, a challenge under a California truth-in-advertising law might have applied) or political speech (in which case the company would have the right to make certain claims about its products). The parties settled after the Court refused to issue a substantive ruling on Nike's constitutional claims. But speculation about corporate claims to speech rights has been raised once again in relation to disputes over the do-not-call and do-not-spam registries, which suggest that the "business civil liberties" movement is as strong as ever.
Corporate Political Speech
Good News: The majority of citizens of Humboldt County, CA passed a new law by referendum in July 2006, which bans outside corporations from participating in local elections. To learn more, go here.
Activist and Pro-Democracy links:
National Voting Rights Institute
Corporate Personhood links:
"There already existed a body of law addressed to 'persons' and the corporation was eased into this body of law in the simplest way possible: by ignoring, one by one, the earlier qualms about whether the corporation ('that invisible intangible, and artificial being' as chief Justice Marshall had called it) could be a person, too. As a result, many possible approaches to controlling corporations that would have taken special account of their special organizational natures were not developed as they might have been." -- Christopher Stone, Where the Law Ends (p. 24)
PBS Now recently did a program on corporate rights.
Additional Progressive Law links:
Constitutional Accountability Center
"Essential Speech: Why Corporate Speech is Not Free"
by Prof. Daniel J.H. Greenwood, 83 Iowa Law Rev. 995, August, 1998.
In the News: We told you so. A front-page New York Times article (Adam Liptak, "Justices Offer Receptive Ear to Business Interests," 12/18/20) found that during the past session the Roberts Court sided with corporations 13 out of 16 times.