HUMAN RIGHTS

Does “We the People” Include Corporations?

by Ciara Torres-Spelliscy

Share this:

   
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 to Dred 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 Scott decision, 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 Road that 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 between Santa Clara and Citizens United. So, Citizens United was
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
United recognizing 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 Jesner
could 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 Jesner sounds 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 Jesner was what exactly did Kiobel II do to Kiobel I. So far in the
litigation, Jesner concluded 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 II
whose 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 Bellotti and Citizens United; corporations
that can make religious objections thanks to Hobby Lobby; and if Jesner turns 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 Center for Justice at New York
University School of Law. She is the author of Corporate Citizen? An Argument for the Separation
of Corporation and State.

American Bar Association |

/content/aba-cms-dotorg/en/groups/crsj/publications/human_rights_magazine_home/we-the-people/we-the-people-corporations