Citizens United v. FEC

  • August 30, 2011
    Guest Post

    By Michael R. Siebecker, Professor of Law, University of Florida Levin College of Law

    Recently, a group of law professors petitioned the Securities & Exchange Commission (SEC) to adopt rules requiring corporations to disclose expenditures for political activities. The petition advances a variety of convincing yet fairly conservative arguments supporting both the need to adopt new political disclosure rules and the mechanisms for disseminating sufficient information. Although the petition adopts a properly dispassionate tone and focuses on pragmatic steps the SEC could easily take, the potential implications of a failure to adopt a political expenditure disclosure rule, or of a defeat of any new disclosure rule based on a First Amendment challenge, are much more striking than the petition conveys.

    First, the failure to require public corporations to disclose their political expenditures would exacerbate a tragedy of transparency that already threatens the collapse of the market for corporate social responsibility (CSR), where consumers and investors employ various political, social, environmental, or ethical screening criteria before purchasing a company’s stock or products. On a worldwide basis, owners or managers of assets exceeding $14 trillion make investment decisions based on one or more CSR criteria. 

    In an efficient market, fully informed consumers and investors could reward companies that engage in desired CSR practices by purchasing their products or stock, and, conversely, could punish companies that fail to engage in desired practices by refusing to purchase their products or stock. To the extent consumer and investor preferences for CSR provide compliant companies greater economic benefits (e.g., through higher consumer prices, stock premiums, or cheaper access to capital) than the cost of embracing CSR practices, an opportunity for true wealth creation exists that satisfies the preferences of consumers, investors, and corporate shareholders alike. That classic win-win opportunity quickly devolves into economic waste, however, if investors and consumers stop rewarding companies for engaging in socially responsible behavior. 

  • June 27, 2011

    by Jeremy Leaming

    Following today’s latest U.S. Supreme Court opinion striking a campaign finance law, a growing number of court-watchers are noting the Court’s tendency to side with corporate interests.

    “There seems to be, according to a growing number of court-watchers, a troubling trend of victories for corporate interests,” ACS Executive Director Caroline Fredrickson said. “For example, critics are already noting that the Supreme Court has ended its latest session with another decision overturning a campaign finance regulation – this time an Arizona law intended to help candidates who forgo private donations.

    “This latest decision undercutting campaign finance regulation,” Fredrickson continued, “follows last year’s Citizens United v. FEC that turned aside longstanding precedent upholding the government’s ability to regulate corporate influence of our elections.”

    She added, “The current high court session also included the decision in Wal-Mart v. Dukes, which shut down the ability of millions of former and current Wal-Mart women workers to band together in class action litigation to challenge alleged discrimination.”

    The high court ruling 5-4 invalidated the Arizona Citizens Clean Elections Act which, in part, provided public dollars to candidates who agreed to limit their personal spending. The majority, led by Chief Justice John Roberts Jr. said, “Laws like Arizona’s matching funds provision that inhibit robust and wide-open political debate without sufficient justification cannot stand.” Roberts was joined by Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas and Samuel Alito Jr., the same majority that invalidated campaign finance regulation law in Citizens United v. FEC.

    Justice Elena Kagan, joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor, lodged a dissent. Kagan defend programs like Arizona’s writing, it “does not discriminate against any candidate or point of view, and it does not restrict any person’s ability to speak. In fact, by providing resources to many candidates, the program creates more speech and thereby broadens public debate.”

    In a piece for Slate, Paul Clement, former U.S. Solicitor General during a portion of the George W. Bush administration, wrote that it appears “that 5-4 divisions over campaign finance laws are here to stay. The newest justices – Kagan and Sonia Sotomayor – are passionate defenders of such laws.”

    And Clement said the majority “seems undeterred, maybe even energized, by criticism of its First Amendment holdings in the campaign-finance realm. The dissenters seem equally resolute.”

    For more material regarding the high court’s rulings involving corporate interests, see the ACS Web page, “Corporations and The Courts.” This Thursday ACS will host a Supreme Court review at the National Press Club.

  • June 24, 2011

    In a piece for the Boston Review, Stanford University law school professor Pamela S. Karlan examines the Supreme Court’s changing view on the rights of corporations, concluding that the ruling in Citizens United v. FEC should not end the debate over the “constitutionality” of campaign finance regulation.

    Karlan, also an ACS Board member, notes that the Supreme Court a long, long time ago found that corporations “are entitled to constitutional protection, but not the same as human beings.”

    And in recent times under direction of a conservative Supreme bloc, Karlan notes that “when it comes to a willingness to restrict constitutional rights in the name of confidence in the democratic process, the Court’s decisions show a troubling and puzzling asymmetry in favor of corporations.”

    One of those areas of favoring corporate interests, of course, centers on campaign finance regulation. In Citizens United, the conservative high court bloc overturned precedent that found a compelling government interest in “preventing ‘the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideas.’”

    Karlan points to a “better argument” for limiting outlandish corporate spending on elections.

    She writes:

    Under current law the actual owners of corporations – their shareholders – have little say in how corporations make decisions in the political arena. That corporate managers might spend corporate funds not to maximize the shareholders’ welfare but to maximize their own is a very real danger. Many shares are owned by mutual funds and pension funds that in turn are owned by individual citizens who often have political convictions that go beyond maximizing the profitability of the corporations whose stock forms part of their retirement savings. What is more, those political commitments may be sharply at odds with the economic interests of the corporate managers who are making decisions about corporate political spending. The law should not force citizens to forgo beneficial investments in order to avoid subsidizing their political opponents.

  • June 21, 2011

    For some of the only, or at least the best, on-spot coverage of the ACS 10th Anniversary National Convention see Jessica Jackson's coverage on the Harvard Law & Policy Review's HLPR Blog.

    Jackson, a student ACS Board member, writes for HLPR, the official journal of ACS, on:

    AG Holder's opening night speech;

    Rep. Bobby Scott’s comments, as well as those by other panelists, regarding the nation's crime-reduction strategy and its "collateral consequences," that impede rehabilitation; and

    Discussion of the Roberts Court's track record on free speech issues, obviously including its opinion in Citizens United.

    ACSblog provides coverage of the convention here and here and video here. Additional video and coverage of the ACS 10th Anniversary National Convention is forthcoming to ACSblog.

  • June 9, 2011
    Guest Post

    By Rick Hasen, Visiting Professor, University of California, Irvine School of Law and the author of Election Law Blog.

    When President Obama in his 2010 State of the Union speech criticized the Supreme Court’s decision in Citizens United, he got a lot of conservative flak. The President had said, among other things, that the 5-4 decision recognizing that corporations have a First Amendment right to spend money in federal elections overturned a 100-year-old campaign finance law.

    Thus, Bill Maurer, writing in the Weekly Standard, said:

    President Obama has been the most notable proponent of this myth. In the State of the Union he said that Citizens United “reversed a century of law that I believe will open the floodgates for special interests .  .  . to spend without limit in our elections.” In response, Justice Alito was seen shaking his head and mouthing the words “not true.” Alito was right. 

    While federal law has indeed prohibited corporations from directly contributing to federal candidates since 1907, that portion of the law was not at issue in Citizens United. It remains the law of the land. Direct corporate contributions to candidates are still banned. 

    It was a fair point, though there is some uncertainty as to how the 1907 law was interpreted before the 1940s, when it expressly banned not just corporate contributions to candidates but corporate and labor union independent spending as well. But now a federal district judge has overturned the direct contribution ban too, and done so against controlling Supreme Court precedent to the contrary.