Corporate Personhood is not the Enemy
posted by Kaimipono D. Wenger
The recent Citizens United decision has spawned a wave of really awful political critique, mostly from progressive writers and activists. A news story from earlier this year highlights one of the wackier critiques, in which a man drove in the carpool lane along with a copy of Articles of Incorporation. When pulled over, he turned it into a media event:
Your honor, according to the vehicle code definition and legal sources, I did have a ‘person’ in my car.But Officer ‘so-and-so’ believes I did NOT have another person in my car. If you rule in his favor, you are saying that corporations are not persons.
The carpool-lane stunt is probably the most over-the-top of responses, but many other critics have weighed in. For instance, the Occupy movement passed a resolution against corporate personhood, while an internet petition to “end corporate personhood” has garnered hundreds of thousands of signatures. Clearly, many people are deeply upset about the idea of corporate personhood.
They’re also, as a general matter, deeply misguided.
Let’s start with the popular conception that corporate personhood was invented in Citizens United. This is flat-out false, as a descriptive matter. In fact, the legal doctrine goes back a century, and has been established and relatively uncontroversial for decades.
This does not mean that Citizens United was rightly decided (and in fact, there are some excellent critiques of the court’s ruling). But the backlash against Citizens United has been severely overstated and misses the point: Corporate personhood is in fact an important protection from corporation wrongdoing. Here’s why.
Suppose that the officers of XYZ Corp engage in some kind of harmful behavior. They dumped chemicals in the river; they lied about the health effects of their products; they broke securities laws. And these actions led to millions of dollars in damages. But by the time this is discovered, the individual wrongdoers are long gone. How can plaintiffs recover? Simple: They bring a claim against the legal person of the corporation.
At its most fundamental, corporate personhood is what allows corporations to be held accountable for their actions over time.
For instance, Jeff Skilling and Andy Fastow engaged in a variety of acts of financial wrongdoing. But it was not simply Skilling and Fastow who were doing this — it was also a legal person called Enron. And even after both Skilling and Fastow left the company, people harmed by legal-person Enron could bring claims against the legal person of Enron.
Similarly, it was not simply a set of 1950s tobacco execs who lied about the harm of smoking. It was also a group of legal persons named RJR, Philip Morris, and so on. And the legal personhood of those entities is the only reason why plaintiffs were able to bring lawsuits decades later.
They were not only harmed by specific executives. They were also harmed by Philip Morris, a legal person. And they recovered from that person.
This is not to say that everything about legal personhood in existing law is fine and dandy. Clearly, corporations are a specific and limited type of person. They don’t get certain rights, and aren’t subject to certain obligations. (They can’t be drafted to join the army, for instance.) And arguably, the Citizens United court went too far in its determination of the scope of those rights.
But let’s not throw the baby out with the bathwater. The real work is in pushing back against specific overly permissive corporate-speech doctrine, not trying to undo the century-old rule of corporate personhood. Corporate personhood is not the enemy.