Law in the Internet Society

Corporate Law: Protecting Corporations From Us

We don't necessarily learn this in law school but corporate personhood is an oxymoron. Corporations live past the existence of their members. They exist in perpetuity and they never die. They are different from people. Law schools teach us that corporations are treated as "persons" in the American legal system but fail to explain why this is the case. Furthermore, law schools tend to instruct us that the creation of the corporate veil and the limited liability company are two of the more important creations in the field of corporate law but I was never instructed to ask of what, and to whom, are these creations and legal protections important.

In answering these questions, I have realized that these are merely tools used by corporate owners (real people) to escape their social responsibilities. For many corporations, the purpose of the corporate veil and the limited liability corporate form is to protect the corporation's owners from facing human consequences. The corporate veil provides the necessary distance for corporate owners to escape social responsibilities in the name of profit and as if that weren't enough, the formation of a limited liability company builds a whole new level of defense, allowing owners to commit actions through their corporations without personal repercussion. Those same actions, if committed by a natural person, could be considered criminal actions and at times, clear violations of human rights.

But surely, if you presented this point to a teacher of corporations (or "business units"), she would say that the tools of constraining individuals' tendency to anti-social behavior can be used to constrain corporate entities. She would go on to say that limited liability and the requirement that outsiders deal with the business as a unit enable the accumulation of investment and managerial resources that are otherwise unattainable, achieving levels of economic and social productivity otherwise unreachable. You either want to deny those arguments and show why they are wrong, or accept them so far as to concede the need to balance benefits and harms arising from these devices of legal abstraction.

One would think that corporate owners would be content with a veil and limited liability protecting them from most forms of social responsibility but that was not enough to protect their profits. They desired an even stronger weapon to protect their asse[t]s. They wanted the convenience of picking and choosing when they should have the rights of natural persons. These profit-driven, often inhumane organizations have sought personhood in the court system throughout our country's history but only when it would be convenient for their profits to be deemed a natural person in the U.S. legal system.

Pronouns are tricky here. "Owners" are comparatively widely dispersed, and are diverse in nature and social purpose. Large non-profit entities are also corporations, with personhood, using that legal identity in similar ways for both similar and dissimilar purposes. Your brush must be wide here, but not too wide.

How Did We Get Here?

Early on in our nation's history, courts and government officials were hesitant to give in to the requests of corporations. Andrew Jackson was wary, once stating that the problem with corporations is that they have "neither bodies to be kicked nor souls to be damned." But over time, as corporations gained political power via the Industrial Revolution, they received a silver platter of rights, freeing owners from liability.

This is potted history that compresses too much too fast. Perhaps you need a sentence that says "general incorporation laws," replacing the grant of corporate form as a privilege controlled directly by state legislatures, were the creation of the 19th century in the US?

In the U.S. court system, it has been ruled consistently and frequently that corporations are legal persons.

Well, isn't that tautological? The idea of incorporation is the creation of legal personality, so it would be surprising if the intention were unachievable by the means defined.

In two well-known modern-era cases, Buckley v. Valeo (1976) and Citizens United (2010), corporations quietly snatched up rights that took real people centuries of war and violence to attain, gaining the First Amendment's right to free speech, including the right to contribute to political campaigns.

Now you mean that the legal entities called corporations are "persons" within the meaning of the 14th amendment's guarantee that states will not deprive persons of due process of law, which has been taken to include a number of enumerated rights from the bill of rights. That's a secondary conclusion, made not in the late 20th century but in the 1870s. Buckley did not grant corporations the right to contribute to political campaigns. Corporate contributions to federal political campaigns were prohibited in a 1911 statute that Buckley (unlike Citizens United) did nothing to disturb. Your legal statements must be accurate for this essay to work.

Look at those dates a little closer and you will see that just a few moments passed between the time that real people, African-Americans, attained the rights of natural U.S. citizens and the time that corporations attained an even stronger right in the political scheme.

How does it look if you use the real dates?

Citizens of the United States may have the right to vote but corporations have the right to create the platforms for the electoral process through financing political campaigns and cherry-picking favorable candidates. The right to choose the candidates is much more powerful than the right to vote for the chosen candidates. Yet again, this was not enough protection.

I don't know what this means. If it depends on wrong law, perhaps it doesn't mean anything?

Corporations also sought the right "not to speak" as part of their First Amendment rights. In International Dairy Foods Association et al v. Attorney General of Vermont, a Federal Court overturned a district court decision and ruled that a Vermont labeling law, requiring corporations to label products containing recombinant bovine growth hormone in order to protect consumers from a dangerous genetically engineered product, was unconstitutional.

False. The Second Circuit held, 2-1 over Judge Leval's dissent, that a preliminary injunction should issue to prevent enforcement until the constitutionality of the law could be adjudicated in the trial court. That's why the "irreparable harm" test is in use in the sentence you quote.

The Court stated that "because the statute at issue requires appellants to make an involuntary statement whenever they offer their products for sale, we find that the statute causes the dairy manufacturers irreparable harm...he dairy manufacturer's right not to speak is a serious one that was not given proper weight by the district court."

Did you check to find out what happened after the grant of the preliminary injunction led to a trial? Your sloppiness about law here is very disquieting.

Corporations gained the right not to speak even when they knowingly injure real people. Corporations' rights were deemed greater than public health concerns. One can also look to a single case brought by the People of Anniston, Alabama against the multinational corporation, Monsanto, in which the Court thought it was acceptable that the people of Anniston were poisoned by Monsanto's actions and subsequent withholding of knowledge of dangerous chemicals used in Anniston. These are court decisions in the greatest system of justice in the history of the world but this is far from justice in my eyes.

Could you provide a citation, and some support? Once you have made a couple of legal errors in a draft, you predispose the reader to check you everywhere.

It is true that some corporations have helped to alleviate poverty, increase our production, make our lives easier and healthier, etc. but did the corporations and their owners intend these beneficial results or were the results just unintended consequences of their profit schemes?

And if those profit schemes are non-profit schemes?

The corporation has come into our lives, taken our property, taken our rights, taken our freedoms, taken our health, paralyzed us with illusory choices, and has recently sucked up all of our savings by convincing us that consumerism and materialism are productive systems of living.

"The corporation" has done this? Who is reifying now?

If a truly natural person tried to do all of that to you, how would you react? I would hope that you would find a way to stand up for yourself, whether that defense be by a legal battle or a bout of physical violence. But for most of us, it has been easier to join them than to beat them, pretending that the possibilities corporatism presents to us at least makes the ride fun for our lives. So we accept all of that and sit back in our corporate clothes, on our corporate couches, watch corporate commercials, view corporate advertisements that try to convince us to consume corporate products and ensure us that we are comfortable on our corporate couches.

I do not know if this is just some evolutionary twist that will work itself out but merely observing it is clearly disturbing. It is as if many of us have given up on the human instinct to survive. We have surrendered our freedom and our volition, the exact things that make us living persons, to a group of non-living entities.

After studying corporate law for three years, I have learned that the corporation is well protected from people and from reality. It finally struck me why I found corporate law so interesting but wanted no part of it in my career search. Corporate law takes the rights of living things and hands those same rights to entities that are not living. We treat corporations like spoiled children. We may punish them slightly once in a while but our actions are not effective and they do not deter irresponsible behavior; it is just bad parenting. We give them cause to do whatever they want without caring about the consequences but unlike spoiled children, they have enormous voting power so they always remain in power.

There should and could be a middle ground. A legal regime where we can use corporations for the benefit of society, maintaining control over our lives and controlling their choices to ensure that they are responsible to life. We should not give up the great things that they provide but we should minimize the harms that they bring with them. Like the spoiled child, they have to act responsibly and they must mature. Until there is proof that a corporation is a contributing and functioning member of our society, I do not think they should have the rights of real persons.

Once again, your rhetoric seems to push you further than you need to go in order to explore the idea you want to get across. I think the point of this draft is that legal personality should not be extended to endow corporate personality with the rights of natural persons under the 14th amendment. This has been a staple argument in the US since 1877. There's long history and much available literature. You don't need to be so strident, or to throw so wildly, in order to take advantage of it.


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r5 - 10 Apr 2012 - 13:51:15 - EbenMoglen
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