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Is Nike a Person?

By Sarah Stodola

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This is the final installment in a three-part series.  Click here to read previous sections.

Theories on Corporate Personhood

Chief Justice’s description of the corporation as an “artificial being” in the Dartmouth case provides to an interesting segue to the debate over corporate personhood. In the 19th century, there were two dominant theories leading that discussion; the “artificial entity” and “natural entity” theories. The “artificial entity” theory suggested that corporations were “nothing more than an artificial creature of the state, subject to government imposed limitations and restrictions.” The “natural entity” theory, on the other hand, asserted that corporations have individual personalities, and therefore are entitled to individual rights. The “natural entity” theory, as we have seen in the prior examination of selected U.S. Supreme Court cases, is the theory that has prevailed over time.

While a detailed investigation of the economic and legal theory behind the issue of corporate personhood is beyond the scope of this article, there are few points worth mentioning.

It could be possible to recognize the corporation as a “person” without granting it the same rights as true persons. As David Millon writes in an article published in Agora:

According to this version of the new entity theory (the new aggregate theory), the corporation was a separate person in the eyes of the law, but personhood had a particular connotation. The emphasis was on the corporate person’s artificiality, which was based on the fact that its existence depended on action by the state…Because the corporate person was a creature of the state, it was assumed to be subject to whatever limitations or regulatory burdens might emerge from the political process.

It seems, in fact, the whether a corporation is considered an artificial entity or a natural entity is irrelevant. What is relevant is what kind of person the corporation can be qualified as, and perhaps “person” is not the right word to apply to this situation. Corporations can certainly be “entities” without being “persons.” And as an entity, granted such status by the government, a corporation should be subject to the laws and regulations appropriated to it by that government. However, the prevalent tendency is to view corporations as entities created by private initiative rather than by state action. This way of thinking seems to encourage a more lenient concept of the state’s role in regulating corporate doings. In the development of corporate theory, the qualification of the corporation of a natural entity became a slippery slope: Once the corporation was considered “a distinct person born of private initiative,” it was not long before the corporate person came to be considered, for all intensive purposes, a real person. And eventually, the theory was taken even further, suggesting that the corporations should be exempt from certain regulation that even true persons are subject to.

Other theories, on the other hand, claim that the corporate person is responsible for its actions in the all of the same ways that an individual citizen is, and as a result must be regulated with respect to the harm it inflicts on other citizens. Theories like this make it clear that corporate personhood does not inherently mean that corporations are exempt from widespread regulation under the constitution. After all, there is a famous saying that one person’s rights end where another’s begin. This should naturally apply to the “corporate person’s” rights, as well.

To this day, the debate over corporate personhood remains inconclusive. While today it is generally accepted that corporations are “persons,” legally speaking, what type of person there are is not so apparent. And in the past two or three decades, the debate over the theory of corporate has largely fallen by the wayside. With no theorizing about corporate theory in the Supreme Court, corporations have been allowed the status of personhood without a fight.

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Economic Intentions in the Constitution

In 1913, historian Charles Beard published a book that would have a widespread impact on how people viewed the Constitution. An Economic Interpretation of the Constitution claimed that the framers of the Constitution had, instead of the welfare of the people, their own economic interests in mind. Again, while an in depth analysis of the book is beyond the scope of this article, it is important to mention the intent of the framers. Whether or not they intended the Constitution to be an essentially economic document or not could play an important role in the debate over corporate personhood. If the framers did, as Beard claims, intend to protect economic interests in writing the document, then the protection currently afforded to corporations in the United States may possess more constitutional validity than many believe. Keep in mind, though, that this says nothing of the moral validity of corporate protection, only of the constitutional validity.

With regard to the Fourteenth Amendment, in particular, there was a time, not long after Beard published his influential book, when many believed that there had been a “conspiracy theory” in the writing of the amendment. The theory asserts that the Joint Committee on Reconstruction - the committee that wrote the amendment - worded it in such a way that corporations would inevitably be protected under it.

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Corporate Personhood and Nike v. Kasky

There are a number of constitutional issues surrounding Nike v. Kasky, the most conspicuous one being First Amendment protection of commercial speech and the corporate claims of a "right to lie.” However, both of these debates involve the Bill of Rights, which would not today be applied to corporatist without the common law tradition of granting corporations the status of “persons” under the Fourteenth Amendment. Each of the arguments regarding commercial speech in Nike v. Kasky, therefore, invoke the debates over the Fourteenth Amendment and corporate personhood.

In other words, while corporations have ceased to defend themselves under the Fourteenth Amendment in favor of the Bill of Rights, they would not have the power to invoke the Bill of Rights without the concession of personhood granted to them by the Supreme Court under the Fourteenth Amendment. Therefore, the Fourteenth Amendment remains central to current cases involving corporations.

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Arguments in the Case

Nike argues that the decisions made by the California Supreme Court do not conform to precedents set by the Unites States Supreme Court. In it’s Final Brief to the Supreme Court, Nike cites a number of cases discussed in the section on corporate personhood in this article, including Thornhill v. Alabama, Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, the Central Hudson case, and Thompson v. Western States Medical Center.

Nike’s defense rests on the assumption that it is a person under the Constitution, and therefore entitled to the rights thereby guaranteed to persons. The company is essentially claiming that the statements it made which resulted in the case at hand were not commercial speech. Instead, they were statements made in the public debate by a “corporate citizen.” Nike also claims that even if the speech is to be classified as commercial, the Supreme Court has set a precedent of protecting commercial speech under the First Amendment, via the Fourteenth Amendment.

Kasky, on the other hand, is simply arguing that under the laws currently in place in California, Nike’s statements were unlawful in that they constituted “false advertising and other forms of commercial deception.” Kasky’s argument, it seems, is based on the assumption that corporations are not entitled to the same constitutional protection as are individual citizens. Kasky also cites many cases discussed earlier in this article.

Nike relies heavily on Thornhill v. Alabama, claiming that this case gave protection to speech in “matters of great public importance,” and that since the statements made by Nike were part of an important public discussion, they are entitled to First Amendment protection.

Kasky disputes this reasoning, claiming that the wording of Thornhill is such that the case applies only to labor disputes, and that the current case does not involve a labor dispute. The respondent therefore asserts that the Thornhill decision does not apply to the current case. In addition, it claims that even labor disputes are not entitled to full First Amendment protection, as stated in Virginia State Board of Pharmacy.

The fundamental decision to be made by the United States Supreme Court in Nike v. Kasky, then is how much protection will be afforded to corporate speech under the First Amendment. If the court grants full, or nearly full, protections to corporations, Nike will prevail. If not, Kasky will.

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Conclusion

While Nike v. Kasky is being hailed as a potential landmark First Amendment ruling, it is perhaps just as significant for the light it shines on the common law tradition of affording corporations similar constitutional protections to those afforded to individual American citizens. The debate over “corporate free speech” is predicated upon the assumption that corporations possess rights granted by the Constitution. It was with the Fourteenth Amendment that the Supreme Court first granted corporations the status and constitutional protection of “individuals.” So while Nike v. Kasky is indeed a First Amendment case, it is, in a more fundamental sense, a Fourteenth Amendment case.

Corporations often invoke the argument that protection of commercial and political speech for corporations is crucial to the public arena of debate. But they seem to disregard the importance of providing truthful information to the public. In Virginia Pharmacy Board v. Virginia Consumer Council, Justice Blackmun stated that commercial advertising should be free from regulation in order for the public, “in the aggregate, be intelligent and well informed.” Public knowledge does seem crucial in a society such as the United States, and indeed in any society. However, when the information released to the public by corporations is false or misleading, the public ceases to be intelligent or well informed. And this perhaps, creates the strongest argument in existence against corporate personhood. When corporations can say anything - true or false - they strip individual citizens of their rights. Citizens must be able to trust the information provided to them in the pubic debate, or the public debate becomes useless.

Granting the rights of personhood to corporations gives them more power than the same rights give to individual persons. This occurs for several reasons. First, corporations have more money, and thereby more means of communicating their ideas to a large number of people. Related to this, statements that corporations make in the public domain carry much more weight and influence than do the statements of most individual citizens.

Corporations, no matter what context they are speaking in, are motivated by profit. Even if their speech does not qualify as commercial or political speech, it is speech given by a company and it is speech received by potential customers.

The current case deals intimately with issues of commercial speech, corporate personhood, the First Amendment, and the Fourteenth Amendment. There is therefore no doubt that Nike v. Kasky provides the Court with an ideal opportunity to reconsider the status and rights currently afforded to corporations under the United States Constitution.

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Click here for a source list.

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Sarah Stodola is the Managing Editor of Me Three.  She can be contacted at [email protected].

© 2003 Me Three