[EL] Too Brave for the "Home of the Brave"?
Bill Maurer
wmaurer at ij.org
Tue May 1 16:35:35 PDT 2012
Shareholders are permitted to opt out of corporate spending on speech. It's called "selling your shares."*
Bill
* Offer not valid with shares of General Motors. Please consult relevant IRS laws and regulations for details.
From: law-election-bounces at department-lists.uci.edu [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of Justin Levitt
Sent: Tuesday, May 01, 2012 3:28 PM
To: law-election at department-lists.uci.edu
Subject: Re: [EL] Too Brave for the "Home of the Brave"?
Well, those who fund nonprofits (including universities) have the option of earmarking their contributions to express strong preferences for how their money should be used. If that's an opt-in mechanism, union members have a similar opt-out for the political portion of their dues. I'm not sure that either customers or owners of corporations that raise funds by means other than contributions have that option -- it's either all or nothing.
But I'm actually interested in a question that I think is related -- and it's a question I mean to be hypothetical, or if you prefer, a thought exercise (it's exam season). Let's take the case of a corporation that already has established a PAC, open to all members of the corporate family. Anyone who wants to contribute for political purposes can do so. Presumably, the only difference in terms of the individuals who speak through the PAC (run by the corporate management) and those who speak through the corporation (run by the corporate management) is that the individuals who are corporate shareholders but not members of the PAC would expressly decline to join the corporation's speech if they could. Doesn't seem like the PAC structure in that context leaves any individual who wishes to speak about political matters out in the cold.
To Brad's point, maybe the difference isn't in leaving any individual out, but in preventing those individuals from spending as much as they wish, collectively (which, presumably, superPACs taking individual donations already do, but not using assets acquired collectively by the affected individuals). So if corporate SSFs were set up such that shareholders directed percentages of their ownership stake to the SSF, would that suffice to overcome the collective action objection to SSFs as alternatives to general treasury spending? Or if, as Ben Sachs suggests<http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1924916>, shareholders were permitted to opt-out, pro rata, restricting the use of their share of funds for a corporation's political spending, would that structure similarly allow those who wanted to contribute to contribute the amount they wished to contribute, without the collective action objection?
Justin
On 5/1/2012 1:42 PM, Smith, Brad wrote:
Of course, it's not the paperwork, but the regulations and the limits on who can be solicited and for how much that is the issue. To take Joe's analogy further, we could then say that after you for a PAC, you still can't engage in political speech until people who joined the PAC contribute to another SSF. No burden there they can't handle - they've already demonstrated that they can form a corporation and a PAC. Of course, the silliness is quickly seen - they joined the PAC to speak out. Saying that now they have to join yet another SSF to speak out makes no sense.
The idea that people should just contribute individually misses the point of the corporation. People form corporations to overcome collective action problems. Since the activities of corporations are heavily regulated, it stands to reason that the corporation - that is, the group of people being regulated - will want to speak out in the political process. To say that they should just contribute individually is to recreate the collective action problem that led them to form a corporation in the first place. And in this case, we understand that the reason people want to recreate those burdens is that they fear that they will not like what the corporation - a group of people - says. In any event, the argument that one is free to spend invidually is kind of like saying that universities should not be able to maintain athletic teams. No big deal - students who want to play sports can do so individually, and alumni who want to support sports teams based on the student body and university identity can simply pool their resources into some other body to support sports.
Or we could take the view that corporations shouldn't be allowed to make automobiles. Rather, people who work for the corporation and want to stamp sheet metal can just do so individually, and then enter into contracts with people who want to install dashboards, etc. etc. If that sound absurd (and I hope it does) it simply illustrates that the purpose of the corporation is for the owners to come together to coordinate various activties for the purpose of an enterprise. Part of that enterprise, in the modern world, will inevitably include advocating for their political rights and views. They will delegate this obligation - just like other activities in which the corporation must make decisions, such as wages to pay, themes in advertising, opening new markets, etc. - to management. That's the purpose of the corporation. Management will also, within the corporate structure, make decisions on what is in the best interest of the corporation. People who don't like it can seek to change management, or they can leave - just as that can do if they don't like a company's human resources or investment policies. It is expected that no one in the corporation - at least in a large, publicly held corporation - will agree with all policies undertaken by the corporation, just as people routinely join churches, social clubs, etc. with no expectation that they will agree with every decision made by those delegated to make those decisions, or with every decision made by the majority.
Bradley A. Smith
Josiah H. Blackmore II/Shirley M. Nault
Professor of Law
Capital University Law School
303 E. Broad St.
Columbus, OH 43215
614.236.6317
http://law.capital.edu/faculty/bios/bsmith.aspx
________________________________
From: law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu> [law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu>] on behalf of Joseph Birkenstock [jbirkenstock at capdale.com<mailto:jbirkenstock at capdale.com>]
Sent: Tuesday, May 01, 2012 3:38 PM
To: JBoppjr at aol.com<mailto:JBoppjr at aol.com>; wmaurer at ij.org<mailto:wmaurer at ij.org>; Trevor Potter; hoersting at gmail.com<mailto:hoersting at gmail.com>; rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>
Cc: law-election at uci.edu<mailto:law-election at uci.edu>
Subject: Re: [EL] Too Brave for the "Home of the Brave"?
You know, creating a corporation is pretty burdensome, too - really, even more burdensome than creating an SSF. You have to agree on articles of incorporation, bylaws, name a board, appoint directors, etc., etc. File much of that paperwork with the government, keep it updated, file annual reports going forward. Truly, the mind boggles.
So if you think the PAC option was bad, just imagine how many corporations are prevented from speaking by the requirement that they exist first before they can engage in corporate political speech...
Best,
Joe
________________________________
Joseph M. Birkenstock, Esq.
Caplin & Drysdale, Chtd.
One Thomas Circle, NW
Washington, DC 20005
(202) 862-7836
www.capdale.com/jbirkenstock<http://www.capdale.com/jbirkenstock>
*also admitted to practice in CA
From: law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu> [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of JBoppjr at aol.com<mailto:JBoppjr at aol.com>
Sent: Tuesday, May 01, 2012 3:26 PM
To: wmaurer at ij.org<mailto:wmaurer at ij.org>; Trevor Potter; hoersting at gmail.com<mailto:hoersting at gmail.com>; rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>
Cc: law-election at uci.edu<mailto:law-election at uci.edu>
Subject: Re: [EL] Too Brave for the "Home of the Brave"?
But this is why Trevor like the PAC requirement. Having lost the outright ban on corporate speech, requiring it to be done through a PAC is the next best thing. It prevents 99.97% from speaking. Jim Bopp
In a message dated 5/1/2012 2:53:57 P.M. Eastern Daylight Time, wmaurer at ij.org<mailto:wmaurer at ij.org> writes:
And it's a lousy alternative, as Justice Kennedy pointed out in Citizens United. Of the 5.8 million for-profit corporations in America, less than 2000 formed PACs. That's like the government banning purchasing cars, but saying it's not a ban on owning an automobile because you can always build your own car from scratch.
Bill
-----Original Message-----
From: law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu> [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of Trevor Potter
Sent: Tuesday, May 01, 2012 11:31 AM
To: Steve Hoersting; Rick Hasen
Cc: law-election at uci.edu<mailto:law-election at uci.edu>
Subject: Re: [EL] Too Brave for the "Home of the Brave"?
Since the PAC. (seperate seggregated fund) is created and completely controlled by the corporation, why is it not the corporation? Just because its funding is voluntarily contributed rather than achieved through commerce does not seem to make it any less "the corporation".
Trevor Potter
Sent by Good Messaging (www.good.com<http://www.good.com>)
-----Original Message-----
From: Steve Hoersting [mailto:hoersting at gmail.com]
Sent: Tuesday, May 01, 2012 02:19 PM Eastern Standard Time
To: Rick Hasen
Cc: law-election at uci.edu<mailto:law-election at uci.edu>
Subject: Re: [EL] Too Brave for the "Home of the Brave"?
The PAC is not the corporation. Banning the latter because rights are recognized in the former is insufficient.
On Tue, May 1, 2012 at 2:08 PM, Rick Hasen <rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>> wrote:
> Any human being associated with a corporation (who is a U.S. citizen)
> should have the right to spend money on elections. And if they want
> to do so together to speak as the voice of the corporation, they can
> amply do so with a PAC. As Justice Souter said in the context of the
> ban on corporate contributions in elections in FEC v. Beaumont, " A
> ban on direct corporate contributions leaves individual members of
> corporations free to make their own contributions, and deprives the
> public of little or no material information. "
>
>
> On 5/1/2012 11:01 AM, Steve Hoersting wrote:
>
> Rick,
>
> Thank you for the reply.
>
> I will think about your point that the ability of an independent
> speaker to choose anonymity can be worse than a system of compelled
> disclosure for all independent electoral speakers, though I don't lean that way.
> Nonetheless, this point still leaves open the question of
> exemptions... of when they are triggered and acceptable.
>
> I don't believe, however, I'll be coming to the position that there
> is, on balance, a benefit in banning corporate electoral speakers to
> shield them from extortion. Corporations are one of many
> associational forms; they are groups of people. If they choose not to
> speak, fine. But I believe the association has rights that cannot be reconciled with a ban.
>
> Banning the rights of the people to protect them from their
> representatives reverses the role of principal and agent.
>
> Best regards,
>
> Steve
>
> On Mon, Apr 30, 2012 at 12:23 AM, Rick Hasen <rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>> wrote:
>
>> Steve,
>> Sorry for the late response---I've been travelling. I don't think
>> your post below adds anything to our earlier discussion (that is, I
>> don't think we've done anything since the last time to convince each
>> other to change our own positions). I've yet to see compelling
>> evidence in current times of economic retaliation by government
>> actors based upon to whom they give/don't give money.
>> But even if we suppose that this happens on a regular enough basis to
>> worry about, I think that non-disclosure of campaign spending makes
>> things WORSE, not better. The government actor could still demand
>> that money be spent in support of a campaign or exact retribution.
>> But now the public is deprived of relevant information for elections
>> and it is harder to ferret out corrupt deals end enforce other
>> campaign finance laws, such as the ban on foreign money in elections.
>> Even more importantly, the best way to deal with this problem might
>> be to prevent corporations from making such spending so that they
>> could not be extorted in this way. I understand this is precisely
>> why many large corporations supported the soft money provisions of BCRA.
>> Rick
>>
>>
>> On 4/27/12 9:04 AM, Steve Hoersting wrote:
>>
>> Dear Rick,
>>
>> When last you and I chatted about disclosure and its exceptions, I
>> closed on this point:
>>
>> But ask yourself, for a later discussion: Can you imagine actions
>> taken with the aid of public disclosure that even "someone important"
>> [and I'm sure you meant J. Scalia] might likely say is too much, even
>> for "the Brave?"
>>
>> Everyone discussing disclosure exemptions, *Doe v. Reed,* Civic
>> Courage and The Brave do so on the premise of managing the problem of
>> citizen-on-citizen retribution. But they ignore a quickly shifting
>> landscape. The real question is quickly becoming this: What about
>> the rights of a potential speaker who witnesses or reads of *
>> government-on-citizen* retribution visited on others? This person
>> wants to participate in the election, but doesn't want to risk being
>> the next one made an example of.
>>
>> An op-ed today, by *WSJ's* Kim Strassel, brings this issue to the fore.
>>
>>
>> http://online.wsj.com/article/SB1000142405270230472330457736828060452
>> 4916.html?mod=WSJ_Opinion_LEADTop
>>
>> If the regulatory process is soon to be so divorced from
>> congressional budgetary processes and meaningful judicial review --
>> and I am thinking now of the powers vested in an IPAB or Dodd-Frank's
>> new consumer czar -- the prospect of *post hoc* regulatory decisions,
>> made by winning officeholders who have already demonstrated a
>> willingness to reward friends and frustrate opponents, can intimidate
>> businessmen deciding whether to speak at all in the election.
>>
>> An answer to this drain on popular sovereignty is for business-men
>> and -women to 1) seek the *Socialist Workers* exemption 2) to
>> campaign disclosure of independent communications (not candidate
>> donations) 3) for potential speakers who 4) have observed the actions
>> of abusive officials of any party, want to speak against them in the
>> election, and do not want to be "next." These business men or women
>> would file as John Does or Jane Does to protect their anonymity while
>> the district court adjudicates their application. If the request is
>> denied, they would have the choice to proceed or stay silent -- forming a record for appellate review.
>>
>> If no one receives the *Socialist Workers* exemption from a district
>> court, appellate courts will have to consider that fact when
>> revisiting not only *Socialist Workers'* efficacy as a safety valve,
>> but the importance of "the informational interest" itself. If no
>> lower court will grant the exemption, then, in the new wave of
>> regulatory power sure to come, the *Carolene
>> Products* compromise -- that economic deprivations will not be
>> handled in the courts but rather in robust political processes -- is all but dead.
>>
>> Even after the Judicial Revolution of 1937, and irrespective of who
>> wins in November, regulatory power is only legitimate if it is the
>> result of robust political processes.
>>
>> Now back to Scalia, our discussion, and the Home of the Brave. Where
>> citizen-on-citizen intimidation is facilitated by disclosure, as in
>> the Prop 8 cases and *Doe v. Reed*, Scalia wants citizens to toughen
>> up and get some "civic courage." But I believe where
>> *government*-on-citizen intimidation is facilitated by public
>> disclosure Scalia would not look favorably upon this *at all.*
>> Scalia knows our Founders pledged their lives, fortunes and honor in their 18th century campaign against the King.
>> But these men were already acting outside the political system of
>> their day, not within it. Their "Courage" cannot be the model Scalia
>> would hold businessmen to while U.S. courts are open. The reasonable
>> probability of government-on-citizen retribution can be a difference in kind.
>>
>> It is conventional wisdom that Scalia likes what he calls "real"
>> constitutional law -- not just adjudicating rights under the first
>> ten amendments, but deciding questions about relative power
>> distributed among co-equal branches. Scalia would recognize that,
>> after 1937 and the *
>> Carolene* compromise of 1938, regulatory legitimacy derives almost
>> entirely from robust political processes. I have to believe he would
>> understand that those asked to speak electorally in an atmosphere of
>> a probable government retribution knowing their is a 50-50 chance
>> their side will lose the coming election are not "Brave" but martyrs or fools.
>>
>> Most importantly, Scalia knows that when robustness is chilled, the *
>> Carolene* compromise itself is called into question. Not only are
>> speech rights deprived, the electoral crucible that ensures popular
>> sovereignty begins to produce tainted results; and the very structure
>> of government and relative power among the branches risks being altered.
>>
>> This is a theory I will be promulgating when I get the opportunity,
>> in addition to this old op-ed.
>> http://www.nationalreview.com/blogs/print/266623 If anyone else
>> wants to develop it, please be my guest.
>>
>> --
>> Stephen M. Hoersting
>>
>>
>>
>> _______________________________________________
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>>
>>
>> --
>> Rick Hasen
>> Chancellor's Professor of Law and Political Science UC Irvine School
>> of Law
>> 401 E. Peltason Dr., Suite 1000
>> Irvine, CA 92697-8000
>> 949.824.3072 - office
>> 949.824.0495 - fax
>> rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>
>> http://law.uci.edu/faculty/page1_r_hasen.html
>> http://electionlawblog.org
>>
>
>
>
> --
> Stephen M. Hoersting
>
>
> --
> Rick Hasen
> Chancellor's Professor of Law and Political Science UC Irvine School
> of Law
> 401 E. Peltason Dr., Suite 1000
> Irvine, CA 92697-8000
> 949.824.3072 - office
> 949.824.0495 - fax
> rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>
> http://law.uci.edu/faculty/page1_r_hasen.html
> http://electionlawblog.org
>
--
Stephen M. Hoersting
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Justin Levitt
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Loyola Law School | Los Angeles
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