[EL] "Use of others' money"

[Volokh, Eugene]

                If the concern really is with use of shareholders' money, how would a ban on using shareholders' money for speech about candidates pass the "no underinclusiveness" prong of strict scrutiny?  If corporations are allowed to use shareholders' money to talk about how they're fighting global warming or promoting "diversity," or to contribute shareholders' money to charities that produce art or engage in public education on various topics, or for that matter lobby legislators, how can the interest in protecting dissenting shareholders from having their money used for things they disapprove of be "compelling" enough to justify restricting corporations' use of shareholders' money to talk about which candidates (or ballot measures) they support or oppose?

To be sure, the permitted categories of corporate speech are generally in the corporation's financial interest (though courts don't really police that, given the business judgment rule) and therefore in the shareholders' financial interest.  But ads supporting or opposing political candidates seem about as likely to be in the corporation's financial interest.  Indeed, much of the criticism of corporate electioneering ads is precisely that those ads are aimed at promoting the election of pro-corporate candidates.  Likewise, shareholders might be said to reasonably expect that the corporation will use its money to advertise and to promote an image that the public likes; but why shouldn't they expect - if reasonable shareholder expectations are relevant - that the corporation will use its money to try to affect government policy, whether by lobbying or by electioneering?

This argument was of course made by the First Nat'l Bank of Boston v. Bellotti, and it strikes me as a pretty serious objection to the supposedly compelling interest in protecting dissenting shareholders against use of their money that they disapprove of.

Eugene


Marty Lederman writes:

What I was referring, instead, was something much more likely to occur--namely, a return to Austin and McConnell, in which corporations and unions are not limited in the amount they can spend but are subject to a separate-segregated-fund requirement, based largely on the "use of others' money" rationale.


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