Corporations gain civil rights - Activate World

Corporations gain civil rights

Adam Winkler, author of We the Corporations, UCLA law professor

Dr. Adam Winkler is a professor at UCLA. Dr. Winkler is a specialist in American constitutional law and the Supreme Court. He is the author of We the Corporations: How American Businesses Won Their Civil Rights (2018) and Gunfight: The Battle over the Right to Bear Arms in America (2011). He also served as co-editor of the Encyclopedia of the American Constitution (2nd Edition). His scholarship has been cited in landmark Supreme Court cases on the First and Second Amendments, and according to a 2016 study he is one of the top twenty law professors for citations by the courts.

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Season 1, Episode 2:

Corporations have been some of the most important innovators in American law, shaping it positively and often negatively. Many are unaware that corporations gained civil rights faster in the U.S. than African Americans and women. Law Professor Adam Winkler outlines the history, court cases, and the roles of corporations as they pursued and expanded their “civil rights.” With these new rights, do corporations have greater social responsibilities?

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Corporations Gain Civil Rights

Adam Winkler, author of We the Corporations, UCLA law professor

Season 1, Episode 2 Transcript

Jon Mertz:          00:02          Welcome to The Activate World Podcast, a series on how business leaders have more power to solve societal issues than any elected official. We explore business activism with substance and depth of thought. As we continue to explore what business leader activism means, we need to continue to build on how businesses have gotten involved in politics and policy. Our guest today is the author of We the Corporations: How American Businesses Won Their Civil Rights. Adam Winkler, welcome to our podcast.

Adam Winkler:       00:34          Well, thanks so much for having me, and I really appreciate the opportunity to talk about We the Corporations. I’m a professor of constitutional law at UCLA Law School, and I write largely in the area of legal history, and my emphasis on this book is looking at how corporations, business corporations came to win the same constitutional protections that individuals have. It turns out, that’s a long story that goes back to the earliest days of America.

Jon Mertz:          01:00          I was reading your book, We the Corporations, and it was just fascinating to learn how this history unfolded in stories that I was totally unaware of. Like when our nation formed, there were a lot of different interests going back and forth. On one side, you had proponents of strong state rights, and then the other side, proponents of strong national government. There were the conversationalists, and then there were more of the populists that wanted to control businesses. So, out of this mix of interest, businesses became more recognized as citizens with certain rights. So, give us a glimpse into how this began and unfolded early in our history.

Adam Winkler:       01:31          Sure. I mean it’s really one of these fascinating questions. How did corporations come to have some of our most fundamental rights? And the answer really does go back to early America, and debates over what was then the most powerful and biggest corporation in the country. The Bank of the United States. And the Bank of the United States is created by Congress but it was private corporation responsible to shareholders, sold stock to the public, and was famous for being the source of the dispute between Hamilton and Jefferson that led to the rise of two competing political parties. But the Bank of the United States also led to the first Supreme Court case on the rights of business corporations. Business corporations have won rights, constitutional rights, but they haven’t done it the way racial minorities or women have won constitutional rights. Those movements have really gone out into the public with marches and protests and made very explicit claims that they were entitled to equal citizenship too.

Adam Winkler:       02:29          Corporations have done it in a more subtle way. They have done it by filing Supreme Court cases and winning landmark Supreme Court cases that extended constitutional protections to them. And that first case was the Bank of the United States case back in 1809.

Jon Mertz:          02:44          In that battle between business and political interests, was it more of a mutual interest or was it purely a business interest.

Adam Winkler:       02:51          No. The first Supreme Court case on the rights of business corporations, like so many of the cases that would come after it, were really cases brought by powerful businesses seeking to fight off efforts by states in the Federal Government to regulate them. To restrict their business autonomy, if you will. In this case, it was the Jeffersonian in Georgia who didn’t like the Bank of the United States imposed a tax on the Savannah branch, and the bank went to court trying to challenge that tax, and it went to Federal Court, and said it was entitled under the constitution to sue in Federal Court rather that to sue in State Court. And the Supreme Court ultimately sided with the corporation and said indeed, that corporations do have access to Federal Court under the Constitution, even though the constitutional provision involved only gave that right to citizens by its tax.

Adam Winkler:       03:42          But the Supreme Court said, nonetheless that provision will also cover business corporations. I mean that case really set the foundation. The first Supreme Court case on The Rights of African Americans wasn’t decided until 1857, and the first Supreme Court case on The Rights of Women wasn’t decided until 1873. The first Corporate Rights case was a half century earlier, and unlike women and minorities, the corporation won that case and indeed corporations have been winning cases ever since. And often the courts have implied have used the same logic and reasoning that was used by the court all the way back in 1809 to extend rights to corporations. And that’s why I say that when we look at this sort of history, we see a long, long history of corporations gaining ever greater shares of individual rights, but it really does start back in 1809.

Adam Winkler:       04:29          And there’s also cases in which corporations were first movers in the same way that corporations are at the vanguard of the economy because of their pursuit of profit. They’ve also been on the vanguard of constitutional law and been first movers that helped to bring lawsuits that breathed life into many of the constitutional rights that became important for the protections of minorities and women.

Jon Mertz:          04:51          Another interesting angle that you pointed out here and in the book, is that many organizations talk about hiring the best talent to move a business organization forward. In the case of businesses gaining property and civil rights, talk a little bit about how the attorney’s representing these businesses helped the progress in their pursuit.

Adam Winkler:       05:08          That’s right. Because corporations fought for their rights in courts rather than in the court of public opinion, out there on the streets with protests and marches, lawyers played an especially important and prominent role. Now of course lawyers have played an important role in all the civil rights movements from Thurgood Marshall and the Civil Rights Movement to Ruth Bader Ginsburg and the Women’s Rights Movement. And similarly in the Corporate Rights Movement, corporations have always been able to afford the best, most creative, most expensive lawyers that money can buy, and they’ve been able to use those resources to really fight and pursue risky litigation, risky lawsuits. Whereas, in the case of minorities and women, often those movements were under-funded. They didn’t have the resources to go out and hire, necessarily, the best lawyers. And the story that I tell in my book is really a story of some of the greatest lawyers in American history from Daniel Webster and John Quincy Adams up to today and the dean of the Supreme Court Bar, the Elite Supreme Court Bar in Washington, Ted Olsen. These are all very, very notable and successful lawyers, and they’ve really used their efforts to fight for business.

Jon Mertz:          06:15          Interesting. So having these well-branded attorneys, does that play a role into what cases the Supreme Court may take on?

Adam Winkler:       06:22          Well today, it plays a very powerful role. So there have been some studies done in recent years about which lawyers are most successful in getting their petitions to the Supreme Court heard. Because the Supreme Court gets over 5000 petitions every year and only decided about 70 cases. So only a very small fraction of the total cases really gets heard by the justices. And it turns out that the studies show that the members of the elite Supreme Court Bar in Washington, just a handful of lawyers, about eight lawyers who work for top notch firms and who represent almost exclusively business corporations, are the most successful at getting their cases taken and heard by the Supreme Court. And I think that testifies to the fact that, while we think of Supreme Court Justices as Liberal or Conservative, what has really united justices over the course of American history, is that they’ve been by large very strongly pro-business, pro-capitalism, pro free market, and that comes out in constitutional law rulings as well.

Jon Mertz:          07:25          It’s very interesting and unexpected statistic that you highlight in your book, that between 1868 and 1912, the Supreme Court ruled on 28 cases involving the rights of African Americans and 312 on the rights of corporations. It goes to your point that disparity shows a pro-capitalist view on the courts.

Adam Winkler:       07:45          And it shows, it highlights in some ways, how corporations have been successful at taking progressive reforms in the Constitution and turning them for the ends of business and capital. The 14th Amendment, as you mentioned, was adopted after the Civil War to protect the rights of the newly freed slaves. Any student of American history knows that the newly freed slaves didn’t get much protection from that amendment, not until the 1950s at least with Brown vs. Board of Education. But business corporations started winning 14th Amendment cases only 15 years after the amendment was ratified and indeed have a tremendous track record of success in pursuing 14th Amendment cases. And indeed we see that throughout time.

Jon Mertz:          08:26          So what was the pivot moment, where it was not just about property, but also about liberty.

Adam Winkler:       08:31          That’s a great point. The Supreme Court, even when it was in a very business friendly period back at the turn of the 20th century, the courts said that corporations had property protections under the Constitution, so the government couldn’t come and seize their assets without paying just compensation; a pretty reasonable principle I think. But at the same time, the courts said that corporations should not have liberty rights, rights associated with personal conscious or political freedom. And the courts rejected claims of corporations to say that they had a right, for instance, to refuse some customers, or a right to participate in taking out election ads.

Adam Winkler:       09:04          In recent years, the Supreme Court’s gone the other way, and it wasn’t one shift, one particular moment, but at a couple of key turning points, the court eventually started to expand liberty and property rights to corporations too, largely for reasons that didn’t have anything to do with corporations, but had a lot to do with other public interests like promoting newspapers, and the accountability of government, and things like that. And so, we get to the point where now, corporations have many of the liberty rights of people and that old distinction has been discarded.

Jon Mertz:          09:35          In your book, you talk about piercing the corporate veil. It was a concept that played into a number of court decisions and cases. What does it mean to pierce the corporate veil?

Adam Winkler:       09:44          As many of your listeners know, the doctrine of piercing the corporate veil is the idea that a corporation is its own independent entity in the eyes of the law. And only in unusual circumstances, where the corporate form is used to perpetuate a fraud, will the courts ” pierce the corporate veil” and impose liability directly on the owners of enterprise. And what the Supreme Court has done in the constitutional law of context, is do something similar to expand rights to corporations. Instead of treating a corporation as its own independent entity in the eyes of the law, with its own rights, the court has often said that corporations have rights because their members have those rights. And in some ways, this really … so I call this a kind of piercing the corporate veil theory of corporate rights.

Adam Winkler:       10:30          Corporations have rights because their members do. And what’s difficult to top this issue, is that it really flies in the face of standard principles, basic principles of corporate law and business law today, which say that corporations are wholly distinct entities in the eyes of the law and they’re totally separate and apart from the rights and duties of their members. And that’s why if you slip and fall at Starbucks, you have to sue the corporation. You can’t sue the individual shareholders, because they’re separate legal people with separate legal responsibility. It turns out that for all the complaints about corporate personhood in the wake of Citizen’s United, the Supreme Court has rarely treated a corporation as a person, and usually treated a corporation as a pass through, piercing the corporate veil, if you will.

Jon Mertz:          11:14          Tell us a little bit about Hobby Lobby and the Citizen’s United cases.

Adam Winkler:       11:18          These are two of the most controversial cases. And really, Citizen’s United and Hobby Lobby were the reason why I was inspired to look back and write this book to begin with. Citizen’s United, a 2010 case by the Supreme Court, held that corporations have the same free speech right as individuals to take out, to spend their money on election ads. And the Hobby Lobby case said that corporations have religious freedom under a federal statute, and entitled the chain of craft stores to an exemption from healthcare or requiring large employers to cover birth control in employee health plans. And these two cases are really significant because they show the extent to which corporations have won the same fundamental rights as people. That whereas the courts 100 years ago said that corporations did not have a right to spend their money to influence politics. Today’s court says they do have that right, and that old distinction between property rights and liberty rights has been discarded.

Adam Winkler:       12:15          So these are two important cases. The Hobby Lobby case is also important because it is being used today to help justify business owners who don’t want to serve LGBT couples, say in a wedding context.

Jon Mertz:          12:26          Right.

Adam Winkler:       12:27          By saying that they’re religious freedom entitles them to an exemption from basic civil rights laws in the same way that Hobby Lobby won an exemption from the healthcare requirement that employers provide birth control in employee health plans. Their participating in politics for one simple and seemingly somewhat pathological reason, which is just to make money. Just to maximize profits. I think many people in America, including many executives, believe that businesses should have a broader role to play in America. That it’s not just about maximizing profits, but also about doing good and being a good corporate citizen.

Jon Mertz:          13:01          Right.

Adam Winkler:       13:03          Milton Friedman’s argument, which has been very powerful and very influential, has taught that while corporations can do those things, they can make charitable contributions, they can be a green corporation or a publicly conscious corporation, at the end of the day, all those efforts have to be about maximizing profits, at least in the long run. So Friedman’s view of the corporation, a very one-sided view perhaps, has become very influential.

Jon Mertz:          13:28          Right. And so, recently we’ve seen CEOs, like taking on gender discrimination issues in North Carolina and Texas. We’ve seen the Dick’s Sporting Goods CEO take on gun laws and within the power of his corporation, making changes of who they sell guns to and what types of guns they sell. So as we see these things happening, do you think this is a good move? Is it done for the right reasons?

Adam Winkler:       13:51          You can certainly understand why it’s happening. It does feel like over the last 10 years in politics that congress has been really unable to address the major problems that confront America, and that especially somebody’s hot button issues like transgender rights, and gun rights, and gun issues, and immigration, very difficult for law makers to come to some consensus and agreement. And so we’re seeing business corporations sort of stand up and try to take the lead on some of these things; such as the sporting goods stores that won’t sell assault weapons. If congress won’t ban them, we just won’t sell them, for instance.

Jon Mertz:          14:24          Right.

Adam Winkler:       14:25          And we can also emphasize that corporations are going to become politically involved in ways that you might like on some issues, but there are some other issues that really matter to business that they’re going to be on the business side. So, for all these corporations that are standing up to Trump on immigration, or transgender rights, or even the gun issue. How many corporations were going to stand up and argue against the Trump tax bill, which was very favorable to business? Very, very few because they saw that as something that benefited the businesses.

Jon Mertz:          14:54          The Masterpiece Cakeshop case that was recently decided, was decided more narrowly. So do you expect that case to come up again?

Adam Winkler:       15:01          Yes. I do. And the Masterpiece Cakeshop case really presented the fundamental question, which is, does someone with profound religious beliefs have to provide services to same sex couples who want to get married. So if you have a religious objection, do you have to provide those services. And that question has not gone away. The Supreme Court ducked it in the Masterpiece Cakeshop case, found that they could rule on a very fact, specific ground. But that issue is going to arise again and again because there are a lot of businesses out there that really don’t want to provide those kinds of services. But yet, we’re seeing more and more laws pass that say hey, you can’t deny services to people on the basis of their sexual orientation. This is a battle we fought back in the 1960s when the Civil Rights Act was passed. People made religious and First Amendment objections to obeying Civil Rights laws and racially integrating their businesses. Those cases lost then. The question is, what’s going to happen now with LGBT rights. Will they have similar success fighting those religious based efforts, or will religious observers win the right to disregard essentially, civil rights laws.

Jon Mertz:          16:05          One of the other things that seems to be happening is there are several groups involved and constitutional amendments to reverse Citizen’s United and some of these corporate rights that have been achieved through our history. Is that a good movement?

Adam Winkler:       16:18          It’s very understandable that since Citizen’s United, there’s been a lot of outrage about the amount of dark money in politics and especially corporate money in politics. And so 19 states have endorsed a constitutional amendment that would declare the corporations are not people and have no rights under the constitution. While I sympathize with that idea of fighting back against corporate power, I think that particular reform is not the right way to do it. I think corporations need some basic constitutional protections. If the New York Times, a business corporation, does not have a first amendment right of Freedom of the Press, then I’m not sure what the Freedom of the Press is valuable for. And it certainly would seem that a company like that would be subject to censorship. If corporations don’t have basic property or due process rights, then the government could seize Google’s campus and make it into a public park without paying a dime of compensation. That can’t be the right answer. And Apple could be punished and basically fined with huge criminal penalties without even going to trial, if they don’t have a right of due process of law. That doesn’t seem, again, like the right answer. So I think we need a balanced nuanced approach, that corporations should have some constitutional protections and not all the same rights as you and me.

Jon Mertz:          17:28          Right. So what do you see on the horizon. Are there any cases bubbling up that may continue this history of business and Civil Rights.

Adam Winkler:       17:35          Absolutely. We’ve already talked briefly about perhaps the most important confrontation over corporate rights to come, which is, are business corporations going to be allowed to discriminate against LGBT people if the owners of those enterprises have profound religious beliefs against gay marriage. That’s really one of the biggest questions out there on the corporate rights horizon. But even outside of that context, we’re seeing corporations very aggressively use the constitution to fight back against regulation. There was a recent study, for instance, that looked at all the First Amendment cases brought in the federal courts in recent years, and found that half of the court cases, challenging laws on the basis of violating the freedom of speech were brought by business corporations and trade associations that represent corporations. So, we’re seeing a very, very active use by corporations of the Constitution to fight back against regulation.

Jon Mertz:          18:31          Thank you so much Adam Winkler. Your book We the Corporations: How the American Businesses Won Their Civil Rights is definitely a must read. Thank you so much for writing this book and sharing your insights with us today.

Adam Winkler:       18:41          Thanks so much for having me.

Jon Mertz:          18:45          Listeners, we’d love to hear from you. Do you think that corporations pursuing their own interests in the courts has made it easier for individuals to pursue theirs? And have corporations established a positive prescient? Send your perspective to me at jon @ Write it out or record it. Send it my way. We want to hear and share your thoughts.

Be sure to tell your friends and colleagues about the Activate World Podcast. Encourage them to subscribe, listen, and share from their favorite podcast platform: Apple, Google, Spotify, and others. Let us know how we’re doing by leaving a review. Your reviews mean a lot to us. And join us next time as we speak with Carolyn Berkowitz, President and CEO of the Association of Corporate Citizenship Professionals. We will be exploring corporate social responsibility. Activate World is a team endeavor. Special thanks to Kayla Waldstein and Kent Knutt. Music by Jason 
Goodyear. For Activate World, I’m Jon Mertz.

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