Corporate Hobbies

The Supreme Court seems poised to rad­i­cally revise Amer­i­can cor­po­rate law, by enter­tain­ing the idea that a cor­po­ra­tion can have reli­gious beliefs. (Thea­poretic is not a cor­po­rate lawyer, so if any reader has more accu­rate knowl­edge he wel­comes the cor­rec­tion to what follows).

Hobby Lobby, a pri­vately held cor­po­ra­tion, objects to the fact that Oba­macare requires it to pro­vide health insur­ance that includes con­tra­cep­tion. Hobby Lobby’s CEO, David Green rejects con­tra­cep­tion on reli­gious grounds and resents hav­ing to pay for it.

But accord­ing US legal prece­dent, he is not pay­ing for it, the cor­po­ra­tion is. The cor­po­ra­tion is a dif­fer­ent per­son from David Green. But from the left and the right, the nature of cor­po­rate per­son­hood appears to be chang­ing. Cor­po­ra­tions are being re-imagined as rep­re­sen­ta­tions of the per­son who make them up.

If the reader will for­give a review, a cor­po­ra­tion is an entity cre­ated by law which is, for most of the pur­poses of the law, a per­son. “Hobby Lobby” is a legal person–it can buy and sell land like a per­son; it can sue in court; it can sign con­tracts. It has many but not all of the rights that bio­log­i­cal per­sons have–protection from ille­gal search and seizure, for exam­ple. It has a right to free speech. But it can’t vote.

One of the main advan­tages of a cor­po­ra­tion is lim­ited legal lia­bil­ity. If Hobby Lobby goes broke, its CEO, Green, is not liable for the debts Hobby Lobby owes. The fic­ti­tious per­son, “Hobby Lobby,” is liable. If Hobby Lobby sells toxic paint, and peo­ple who buy it die, Green is not liable, Hobby Lobby is liable. It’s pretty remarkable.

For this to work, a cor­po­ra­tion has to be under­stood as sep­a­rate from the peo­ple who make it up. That is, it has to be under­stood as a real per­son, not sim­ply as a device for ampli­fy­ing and pro­ject­ing the desires of its share­hold­ers. It may indeed do that, but if it is under­stood only as the col­lec­tive rep­re­sen­ta­tion of its share­hold­ers, how can there be any claim to lim­ited lia­bil­ity? For lim­ited lia­bil­ity to make sense in law, the cor­po­ra­tion has to have an exis­tence sep­a­rate from its share­hold­ers. Legal schol­ars argued through­out the 19th cen­tury that the cor­po­ra­tion was a real, arti­fi­cial per­son, much in the same way that a man-made lake, an arti­fi­cial lake,  is nev­er­the­less a real lake, full of water and fish. The per­son cre­ated by law was a “real” per­son in law, not sim­ply the voice of its members.

leviathan

So cor­po­ra­tions, his­tor­i­cally, can’t have a race or a gen­der. See for exam­ple the 1908 case of People’s Plea­sure Park V. Rohleder, in which a group of African Amer­i­can formed a cor­po­ra­tion to build an amuse­ment park in a whites-only area of Rich­mond. The VA Supreme Court con­cluded that cor­po­ra­tions are real legal per­sons, dis­tinct from their mem­bers, and hav­ing no body, they can­not have a race. Cor­po­ra­tions until recently have been seen as  dis­tinct from the bio­log­i­cal per­sons who make them up.

So if a cor­po­ra­tion can­not have a race, it can­not have a gen­der, and it would seem it can­not have reli­gious beliefs or the claim to a soul or redemp­tion by Christ. It’s a per­son, but not that kind of per­son. David Green has reli­gious beliefs, but David Green and “Hobby Lobby” are, in the his­tory of Amer­i­can law, dis­tinct and sep­a­rate per­sons. Hobby Lobby can­not go to church or receive God’s grace; can­not be bap­tized or feel guilt or love or awe or mys­tery. Green would, in tra­di­tional cor­po­rate law, have no case.

In the now famous Cit­i­zens United deci­sion, how­ever, the Supreme Court recast cor­po­ra­tions as instru­ments designed to amplify the voices of their mem­bers. A cor­po­ra­tion was like a labor union or any other advo­cacy group: an entity through which peo­ple join to advance their inter­ests. They have polit­i­cal beliefs and the cor­po­ra­tion expresses them, so it’s uncon­sti­tu­tional to limit their polit­i­cal speech.

The Hobby Lobby case appears to build on this prece­dent. Hobby Lobby is held to have reli­gious beliefs. These just so hap­pen to be iden­ti­cal to those of David Green, and Hobby Lobby and David Green seem to have become inter­change­able. So it seems to me (again not a lawyer) that Green’s lawyers are build­ing on the revi­sion of cor­po­rate law imag­ined in Cit­i­zens United.

Sim­i­larly, in 2013 the US fourth Cir­cuit Court ruled, in Car­nell Con­struc­tion v. Danville Rede­vel­op­ment that corporations–in this case a minor­ity owned corporation–can have a race: “we hold that a cor­po­ra­tion can acquire a racial iden­tity and estab­lish stand­ing to seek a rem­edy for alleged race dis­crim­i­na­tion.” The cor­po­ra­tion is not imag­ined as hav­ing been born with a race, but it can “acquire” a racial iden­tity. So as in the case of David Green and Hobby Lobby, the cor­po­ra­tion is merg­ing with the peo­ple who make it up.

The Supreme Court tilts polit­i­cally right; the author of the Car­nell deci­sion, though, was an Obama appointee. What this sug­gests to me is a major cul­tural shift, across the polit­i­cal spec­trum, in think­ing about the nature of the cor­po­ra­tion. There are sorts of pos­si­bil­i­ties for legal chal­lenge if you start to recon­sider the cor­po­ra­tion in this way.

If the cor­po­ra­tion is merely a mega­phone through which peo­ple speak, or if a cor­po­ra­tion bears the race of its own­ers, then it’s not really dis­tinct from them and so how can lia­bil­ity be lim­ited? If it is the instru­ment of their will then surely they, and not the cor­po­ra­tion, are liable. This is why Cit­i­zens United seems like a rad­i­cal revi­sion of cor­po­rate law.

Oddly, Cit­i­zens United is kind of a “social­ist” deci­sion, in that it imag­ines, as Mitt Rom­ney put it, “that cor­po­ra­tions are peo­ple,” they are a com­mu­nity, a col­lec­tive, a social phe­nom­e­non, a com­ing together. This is entirely counter to the his­tory of Amer­i­can cor­po­rate law since at least 1820, which has insisted that cor­po­ra­tions are abstract, dis­em­bod­ied per­sons cre­ated out of mar­ket dri­ves and needs, lack­ing sen­ti­men­tal­ity or a con­science, ratio­nal, dis­tinct from the peo­ple who work for or direct the corporation’s movements.

Yes­ter­day Jus­tice Roberts sug­gested in ques­tion­ing that cor­po­ra­tions which are “closely held” (s-corporations) might embody their hold­ers’ selves. In this he seems to be fol­low­ing the logic of the Car­nell case as well as Cit­i­zens United. Roberts ques­tions sug­gested that large cor­po­ra­tions like Coca Cola are not “closely held” and so can’t be imag­ined to have a reli­gion, though why this would be the case is less than clear.

What does a world full of male or female, bap­tist or pres­by­ter­ian cor­po­ra­tions look like? Cor­po­ra­tions become rep­re­sen­ta­tions, not sim­ply of abstract mar­ket forces, but of our­selves, in the way that elected offi­cials were once imag­ined as rep­re­sen­ta­tives of our­selves. Male cor­po­ra­tions, female cor­po­ra­tions, cranky old man cor­po­ra­tions, cor­po­ra­tions com­posed of small peo­ple or peo­ple who believe the earth is flat: it would con­tinue the process whereby pol­i­tics is corporatized.

 

 

 

 

 

 

 

 

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