On Corporate Personhood...(part 1)

"That invisible, intangible, and artificial being, that mere legal entity, a corporation aggregate, is certainly not a citizen..."

A recent Huffington Post article addresses one of the more popular refrains arising from the Occupy Wall Street movement -- the idea that 'corporate personhood' (CP) should be abolished. 

The article begins by characterizing CP as "corrupt," and it purports to then trace the history of the corruption.  The article traces the origins of the term back to Justice Field's dissent in the Slaughter-House Cases of 1873.  In that opinion, Justice Field noted that the right of a corporation to pursue its business interests was one of the "distinguishing privilege[s] of all citizens of the United States."

The article goes on to suggest that Justice Field got his chance to enshrine CP into the Constitution in a one-two punch of cases out of the late 1880's.  The first was Santa Clara County v. Southern Pacific Railroad.  In that case, the authors allege that the court reporter "nonsensical[lly] and corrupt[ly]" slipped that statement into his reporter's notes at the direction of Justice Field.  The article states that the conspiracy was complete when:

"[I]n a 1888 decision, Field enshrined the error. Citing the Santa Clara case, he wrote, completely out of the blue and not in reaction to any facts in the new case, that a 'private corporation is included under the designation of 'person' in the Fourteenth Amendment to the Constitution of the United States, Section I.' That a corporation was a person had -- presto -- become settled law."

After some meandering through the "liberty of contract" concept that was abrogated by the Supreme Court in Lochner v. New York, the article then concludes with Chief Justice Roberts's villainous majority opinion in Citizens United v. F.E.C. describing that holding as:

"[an] equally perverse notion that a corporation is a person entitled to all the liberties of the First Amendment and therefore, in another leap of logic, free to spend as much of its money as it pleases to influence elections, regardless of any laws passed to the contrary."

As is typical of a Huffington Post article, the article mixes historical fact with normative opinion.  Here are some facts to consider:

1. The notion of CP traces its origin to 1809 not 1873.

Let's return to the quote that began this posting.  One might expect that the quote came from a dissent in Citizens United or Santa Clara, or even from the HuffPo article itself.  In fact, the quote was penned by Chief Justice John Marshall way back in the 1809 case of Bank of the United States v. Deveaux.  While the first half of that quote seems to support the HuffPo author's argument, the second half refutes it entirely:

"...and consequently cannot sue or be sued in the courts of the United States unless the rights of the members in this respect can be exercised in their corporate name. If the corporation be considered as a mere faculty, and not as a company of individuals who, in transacting their joint concerns, may use a legal name, they must be excluded from the courts of the union."

In Deveaux, the Bank of the United States sued Deveaux to recover $3000 worth of silver that it alleged Deveaux stole.  Deveaux averred that the because the bank was not a "citizen" it could not sue in federal court because Article III of the Constitution only permits suits between "citizens of different states."  Marshall sided with the bank.  In order to arrive at his decision that a corporation can sue and be sued, he created the legal fiction that a corporation was a "citizen" under Article III of the Constitution.

Marshall found support for his argument in the English common law:  "Yet when we examine the subject further we find that corporations have been included within terms of description appropriated to real persons."  Marshall cited several English cases concluding "For the term 'citizen' ought to be understood as it is used in the Constitution and as it is used in other laws -- that is, to describe the real persons who come into court, in this case under their corporate name."

2.  Justice Field's quote in the Slaughter-House Cases is misleading.

While the article correctly attributes the quote to Justice Field, it incorrectly characterizes the subject of the quote as corporations.  The opinion says nothing of the sort.  In fact, the sentence before speaks of " the equality of right among citizens in the pursuit of the ordinary avocations of life" and the sentence immediately after states: "To them [the citizens], everywhere, all pursuits, all professions, all avocations are open without other restrictions..."

The entire import of Justice Field's dissent is that it is unconstitutional for a state to give a single corporation an exclusive right to operate a slaughter house.  Field's point was that a "citizen" has a right to pursue whatever avocation the citizen wants.  The distinction between a real person and a corporate person was entirely irrelevant.

3. The article leaves out an important part of the Santa Clara syllabus.

The article's contention that Justice Field colluded with a corrupt court reporter to slip in the bit about CP.  It goes on to assert that "nothing like [the quote]" was contained in Justice Harlan's opinion for the court.  That part is correct, but it is also misleading.  The reason that the opinion did not contain an analysis of CP as it relates to the Fourteenth Amendment because the Justices agreed that the Amendment did apply.  On this point, the reporter wrote:

One of the points made and discussed at length in the brief of counsel for defendants in error was that "corporations are persons within the meaning of the Fourteenth Amendment to the Constitution of the United States."

Before argument, MR. CHIEF JUSTICE WAITE said:
"The Court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution which forbids a state to deny to any person within its jurisdiction the equal protection of the laws applies to these corporations. We are all of opinion that it does. "

While it presents an incomplete account of the opinion in Santa Clara, the article is nevertheless correct that the syllabus (and the opinion of the Justices as announced at oral argument) is merely dicta -- having no precedential value.  The statement, however, undercuts the article's main point that Field conspired with Davis (the reporter) to slip in an incorrect statement into an opinion just so that he could later cite that statement as binding precedent in a later opinion. 

4.  The "1888 decision" NEVER cited Santa Clara.

The article next boldly declares that:

in a 1888 decision, Field enshrined the error. Citing the Santa Clara case, he wrote, completely out of the blue and not in reaction to any facts in the new case, that a "private corporation is included under the designation of 'person' in the Fourteenth Amendment to the Constitution of the United States, Section I." That a corporation was a person had -- presto -- become settled law.

This statement in the article is demonstrably false.  The case that the author is referring to is Pembina Consolidated Silver Mining Co. v. Pennsylvania.  The problems with the statement are:

(1) the quoted part of the article actually appears in the reporter's notes of the decision that the author correctly points out is (a) written by the reporter and not the Justice who authored the opinion, and (b) has no precedential value; and

(2) the case categorically does not ever cite to Santa Clara.  There is not "presto" moment whatsoever.

(3) the section of Field's opinion was not "out of the blue," it was addressing an argument made by counsel.  Consider this from Field's opinion:

The clauses of the federal Constitution with which it was urged in the state supreme court that the statute conflicts are the one vesting in Congress the power to regulate foreign and interstate commerce, the one declaring that the citizens of each state are entitled to the privileges and immunities of citizens in the several states, and the one embodied in the Fourteenth Amendment declaring that no state shall deny to any person within its jurisdiction the equal protection of the laws. (Underlining added for emphasis).

(4) No other Justice dissented from the opinion.  Justice Field was writing the opinion of the court that was joined by all the other participating Justices.

While this article is very effective at presenting a tight narrative to fan the flames of rebellion, it presents an incomplete view of legal history; it mischaracterizes several cherry-picked quotes from opinions; it duplicitiously criticizes the use of the reporter's notes of decision in one instance, only to cite the reporter's note in another case; and it attempts to link its narrative together with a statement that is demonstrably false.

The Greatest Capitalist in a Generation

Steve Jobs was one of the most influential, innovative, and successful people of his generation.  He was also a rabid capitalist and a marketing genius.  He had the uncanny ability to convince the same customer to buy an iPod for $399 (the price of the original unit in October, 2001), use it for nine months, then buy a completely new model for $499 (the price of the iPod2 in July, 2002).

Consider.  Since the first iPod was sold just ten years ago, there have been:
--6 versions of the iPod Classic;
--2 versions of the iPod Mini;
--6 generations of the iPod Nano;
--4 generations of the iPod Shuffle; and
--4 versions of the iPod Touch.
That is more than 2 "new" iPod models out every year.

I do not have the time (or inclination) to list the various iterations of the iPhone, iPad or MacBook, but one can assume that new models are being routinely introduced into the marketplace.  What is astonishing to me is how many customers are buying an "upgraded" version of the Apple product that they already own. 

And that was the genius of Apple under Steve Jobs.  The company was able to grow and succeed by adopting the decades old idea of "planned obsolescence" and updating it for the computer age.  What used to work for lawn mowers and automobiles could be equally applied to electronics.

This dovetails nicely with the ongoing "Occupy America" protests.  One such object of the protestors ire is Bank of America for supposedly putting 'profits over people.'  The only problem is that in 2010, those villains at Bank of America actually did not turn a profit; they lost almost $3.6 billion.  During that same time, the heroes over at Apple were busy turning a profit of over $14 billion!  The stock prices tell the same story: while a single share of Bank of America will set you back a little less than $6, you would have to cough up nearly $370 for a single share of Apple.

Is Apple putting real profits over people?  How much is too much?  Is $14 billion profit in a single year too much?  Maybe the protestors should bring their roving protests by the nearest Apple store on their way to the local Bank of America branch to protest the new $5 debit card fee.

Welcome to the Blog!

Thanks for visiting the blog.  A word on the title.

During the Revolutionary War period, the Liberty Tree (or sometimes a pole) was a place in the center of town that served as a meeting place for the townspeople.  While it is true that the famous Liberty Tree in downtown Boston was used by the Sons of Liberty to plot insurrection and hang British officials in effigy, most Liberty Trees did not share this subversive purpose.  In those days, literacy was not very high and newspapers did not have nearly as widespread circulation as those in the 20th Century.  To respond to this need to spread information and share ideas, Liberty Trees sprung up across the colonies.

And so it is with this space.  I hope that this blog will blend information, analysis and opinion in a way that will spark further analysis and discussion.  As always, I welcome your input.