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41 Amici Weigh in on the Proper Role of Corporations in a Democracy

Today, the Supreme Court is set to hear oral arguments in Citizens United v. FEC to determine whether it should overturn 60 years of precedent prohibiting corporations from spending shareholder funds supporting or opposing a candidate in a federal election.

September 9, 2009


Contact:  Jeanine Plant-Chirlin at 212-998-6289 or jeanine.plant-chirlin@nyu.edu.

Background on Today's Rehearing of Citizens United v. FEC  

Today, the Supreme Court is set to hear oral arguments in Citizens United v. FEC to determine whether it should overturn 60 years of precedent prohibiting corporations from spending shareholder funds supporting or opposing a candidate in a federal election.  Reversal of such precedent would permit corporations -- for the first time in modern political history -- to spend shareholder funds on political ads in federal elections. 

At the rehearing, the Supreme Court will hear oral arguments on whether Austin v. Michigan Chamber of Commerce (1990) and McConnell v. Federal Election Commission (FEC) (2003) should be overturned in order to resolve Citizens United

The Supreme Court's decision to rehear the case has brought to the forefront a hotly contested issue: What role should corporations play in our elections.  Over 40 amici briefs (friends of the Court) --  including state governments, congresspersons, corporate interests, advocates, think tanks and journalists - were filed in an effort to weigh in on this critical issue. This memo outlines the broad themes and arguments of these amici in an effort to persuade the Court to rule narrowly in the case.

Background on Citizens United v. FEC

On June 29, 2009, rather than deciding whether "Hillary: the Movie" technically fell within the statutory scope of the Bipartisan Campaign Reform Act (BCRA), commonly known as McCain-Feingold, the Supreme Court instead issued a rare and unorthodox request for re-argument on the question of whether it should overturn its own precedents in two landmark cases -- Austin v. Michigan Chamber of Commerce or McConnell v. Federal Election Commission

In Austin, a 1990 case, the Court upheld a regulation requiring corporations to use a corporate PAC instead of general treasury funds to pay for independent expenditures in support of, or in opposition to, a candidate. The Court upheld the regulation noting that corporate advocacy funded through general treasury funds has little or no correlation to the public's support for the corporation's political ideas.  Instead, such corporate expenditures reflect only the "immense aggregations of wealth" of a corporation, partially due to favorable treatment by state and federal laws.  In contrast, advocacy funded by corporate PACs - the result of decisions by individual managers, officers, and shareholders to support the corporation's political advocacy-reflect actual public support for the political ideas espoused by that PAC.  

In McConnell v. FEC, the Supreme Court upheld the constitutionality of BCRA, which requires corporations to fund political communications that mention a candidate 30 days before a primary or 60 days before a general election through separate corporate PACs and not the corporation's general treasury funds. (Corporate treasury funds are the corporations' general funds.  Corporate PACs are funded through contributions from a corporation's employees, shareholders, and other affiliated persons who have opted to fund the corporation's campaign advocacy.)

Citizens United is a non-profit group that wanted to use its treasury funds to finance and run a negative on-demand "infomercial" about Hillary Clinton during the presidential primary.  Their lawsuit claimed that, for several technical reasons, BCRA could not regulate its film. For example, Citizens United argued that it is not the type of organization that BCRA intended to regulate, that a 90 minute video aired "on-demand" is not the type communication that BCRA intended to regulate, etc.

By ordering this rehearing, the Roberts Court has taken a very narrow technical question in a specific case and has transformed it into a question of whether the government can ever regulate corporate political ads.  This sudden shift in the direction of the suit coupled with the potential consequences of overturning or affirming Austin and McConnell sparked the filing of 41 amicus briefs. 

Background on Amici Filed in Citizens United Case

The vast majority of the amici briefs fall into two camps, those describing the impact that the reversal of Austin and McConnell would have on our electoral system and those discussing the First Amendment implications of upholding Austin and McConnell

Some amici sought to provide the Court with historical context. A collective of campaign finance reform groups, including Common Cause, US PIRG and the Asian American Legal Defense Fund, filed a brief explaining that restrictions on corporate political ads have been a cornerstone of American election law for over 100 years and that overturning Austin would constitute a break with decades old precedent upholding such regulations.  

A group of campaign finance law professors filed a brief offering an alternative view of the history of restrictions on corporate political ads, urging the Court to overturn Austin and McConnell because such regulation was intended to be a weapon deployed against political rivals.

Other briefs, argued more technical aspects of the law.  For example, Senators John McCain and Russell Feingold, co-sponsor of BCRA, filed a brief urging the Court to respect precedent and not overturn McConnell.  A brief by former ACLU officials argued that the Court should not rule on Austin or McConnell because it could decide the initial lawsuit on the narrow technical grounds initially asserted by Citizens United.  

Overturning Austin and McConnell Would Have Dire Consequences for Democracy

Amici opposing the reversal of Austin and McConnell submitted briefs outlining the adverse impact such ruling would have on the electoral process.

  • The Carol and Lawrence Center for Business Ethics Research at the Wharton School at the University of Pennsylvania filed a brief explaining that permitting the use of corporate general treasury funds in elections would undermine the integrity of our system. To illustrate, the Wharton School noted that ExxonMobil, the nation's largest corporation, made $85 billion in profits in the last election cycle, 560 times the amount raised by all corporate political action committees combined. Just a small fraction of these profits cause a candidate to become beholden to special interests to ensure his or her political survival. The Center urged the Court to remember that while a corporation's ability to amass capital, maximize shareholder value and centralize management "are the engines of economic growth, [those same attributes] may have a corrosive impact on the functioning of our democratic institutions."
  • Other Amici warned that opening the floodgates of corporate spending in the wake of the 2008 election could engender cynicism and frustration by voters and would undermine the improvements in individual participation witnessed in the 2008 election. The Democratic National Committee argued that lifting restrictions on corporate participation in elections would endanger the participation of unprecedented numbers of small donors who contributed in the 2008 election. Representatives Van Hollen, Price, Castle and Lewis also predicted that overturning Austin and McConnell, especially so soon after the high levels of small donor participation in the 2008 election, would undermine the integrity of the system by instilling a belief in voters that the rules of the game are being changed to give corporations more power.
  • A group of 20 national, regional and state organizations with an interest in preserving judicial independence and a former chief justice of the Georgia Supreme Court highlighted that 39 states currently have some form of judicial elections and that a flood of corporate money into those elections could pose a danger to the integrity of the judiciary.
  • The Committee for Economic Development, a nonpolitical public policy organization representing corporate interests, argued that allowing sustained and substantial corporate involvement in federal elections would expose corporations to shakedowns for money by political parties, elected officials and candidate's influential backers. Corporations would find it necessary to give large amounts of money to politicians in an effort to stay competitive by maintaining access to legislators and avoiding retribution from rival elected officials.
  • A brief signed by 26 state governments argued that at least 24 states relied upon Supreme Court precedent upholding the regulation of corporate political ads when passing campaign finance legislation. Overturning Austin now would disrupt these regimes and undermine the authority of state governments to regulate state elections and police corporations.

The First Amendment Rights of Corporations

Several amici supporting the reversal of this precedent base their briefs on the argument that corporations, like individuals, have First Amendment rights in the political process and that any restriction on their ability to finance political advertisements constitutes a violation of the right to speak.  The ACLU, the NRA and the US Chamber of Commerce all argued that the regulation of corporate political ads fall within the protections of the First Amendment. 

Notably, the American Independent Business Alliance, a non-profit representing 15,000 independent businesses, and the League of Woman Voters both filed briefs arguing that the Constitution never contemplated First Amendment rights for corporations.  These briefs argue that the aim of all corporate activity is to secure financial returns, an interest that is contrary to the principles of democratic self governance.  Therefore, the First Amendment does not afford corporations the same protections afforded natural persons in the electoral context.

For more information, please visit http://www.brennancenter.org/, or contact Jeanine Plant-Chirlin at 212-998-6289 or jeanine.plant-chirlin@nyu.edu.

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