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.
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.
“So corporations, historically, can’t have a race or a gender.”
You may want to check out this bit of question from Chief Justice Roberts