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Nike vs. Kasky: Corporations Are Not Persons

June 11th, 2003

The case of Nike v. Kasky, currently before the Supreme Court, involves a fundamental question about corporations that unfortunately has not been raised by either the parties in the case or the media.

Marc Kasky is suing Nike, Inc. under California laws regulating unfair competition and false advertising. Kasky claims that when an internal audit was leaked to the press that revealed illegal employment practices in Nike's factories in China, Vietnam, and Indonesia, Nike responded by issuing to the press numerous statements it knew to be false.

The issue before the Supreme Court is whether Nike can be held liable for its misrepresentations under false advertising laws or whether its various public documents and letters to the press and others are constitutionally protected free speech.

Not addressed in the arguments before the Court, but underlying them nonetheless is an invisible beast: the idea that corporations are people.This is a notion that the National Lawyers Guild (NLG) opposes. The Mission Statement of the NLG Committee on Corporations, the Constitution & Human Rights states, in part: "We oppose recognition of the personhood of corporations under the Fourteenth Amendment. Protections of the Bill of Rights are given to people out of a concern for human dignity, liberty or equality. Corporate claims to such protections should be rejected." mirrors this sentiment: "The notion that corporations - entities unmentioned in our Constitution - should enjoy protections created for living human beings is a concept deserving burial deep in the same dark closet as the legal precedents of slavery and 'separate but equal.'"

The National Voting Rights Institute and, which jointly filed an amicus brief for Kasky, state: "The claim that corporations possess a right to intentionally deceive the public has no basis in the U.S. Constitution. Incorporation is a privilege granted by the people's representatives in state governments, and corporations must remain subordinate to our democratic institutions. The discredited judicial creations of "corporate personhood" and corporate "political rights" should be unequivocally rejected by the Court."

The Dangers of Corporate Personhood

Nike argues that its statements should be protected under the First Amendment. This implies that Nike can be viewed as a person.

The notion of "corporate personhood" was adopted by the Supreme Court under very dubious circumstances, when a court reporter used the term in a head note he created for an 1886 Court decision that actually declined to address the issue. (The case was Santa Clara County v. Southern Pacific Railroad Co., 118 U.S. 394.)

In a later 1889 case, Minneapolis & St. Louis Railway Company (129 U.S. 26), Justice Field cited Santa Clara as holding that corporations are persons, and that inaccurate notion of Santa Clara's holding remains today. Nonetheless, other Supreme Court decisions support the opposite view. The Court stated in a 1990 decision, Austin v. Michigan Chamber of Commerce, that because corporations have "state-conferred . . . structures," and "[s]tate law grants [them] special advantages," their political speech can be regulated by the state. In other words, they do not have the constitutional right to free speech.

These "special advantages" include the ability to amass "large treasuries" and "immense aggregations of wealth." What is wrong with immense aggregations of wealth? Isn't that the American way: rags to riches? The problem is that in the corporate world those who hold the wealth (stockholders) do little to create it, while those who actually do the work, the employees of these corporations, get less and less for their labors. (Recall Enron.)

In her book, The Divine Right of Capital, Marjorie Kelly asks: "Why have the rich gotten richer while employee income has stagnated? Because that's the way the corporation is designed." Kelly asserts that stockholders today reserve for themselves (and deny to employees) the same privilege claimed by the French aristocracy before the French Revolution: rights to endless streams of income detached from productive contributions.

Equally as important, if not more so, is the fact, according to Kelly, that "[c]orporate capitalism embraces a predemocratic concept of liberty reserved for property holders, which thrives by restricting the liberty of employees and the community."

If we take Kelly's statement as accurate, it should be clear that granting corporations personhood subverts and endangers democracy. In the early American republic, corporations existed only by special state grant to promote the public good. Corporations today are no longer subject to such restrictions. They now function like a secular aristocracy that rules over a slave class. In light of the immense wealth and power held by corporations, granting them equivalent rights as individuals is irrational and dangerous.

The consequences of corporate personhood are not trivial. Jerry Mander writes in his book In the Absence of the Sacred: "Not being human, not having feelings, corporations do not have morals or altruistic goals." A >nonhuman entity that cannot possess morals is certainly not fit to be granted equal standing with a person. Indeed, granting amoral entities so-called equal rights with persons, which because of corporations' great wealth and power become greater rights, is so irrational it ought to be considered a kind of insanity.

Finally is the effect of corporations' growth imperative on our world. This effect, according to Mander, is "now clearly visible, as the world's few remaining pristine places are sacrificed to corporate production." Granting personhood to a mechanism for destruction of our environment cannot be sound policy if the human race is to survive and thrive.

Allowing an entity to usurp individual civil rights and harm the environment is bad enough. But corporate personhood does yet more. Activist William Meyers writes that corporate personhood "changes the relationship between people and corporations, between corporations and the government, and even between the government and the people. The effects of these changes in relationships range from loss of liberty and income for citizens to the destruction and poisoning of the earth and the corruption of the U.S. government."

Meyers concludes: "Corporate personhood allows the wealthiest citizens to use corporations to control the government and use it as an intermediary to impose their will upon the people."

Thus, corporate personhood is not just a kind of "free radical" unleashed into an otherwise organized, healthy system. It is something that actively destroys that healthy system. In other words, corporate personhood corrupts and destroys democratic government.

Commercial Speech versus Free Speech: The False Distinction

The argument between Nike and Kasky boils down to whether Nike was engaging in commercial speech or constitutionally protected "free speech" (implying corporate personhood) when it responded to attacks with misrepresentations about its business practices. The Supreme Court, therefore, will decide only whether Nike's responses (including a production pamphlet, postings on Nike's web site, a press release, a letter to the editor of the New York Times, and several other documents) are "commercial speech" or "free speech." If Nike's representations are considered commercial speech, Nike will be subject to California's false advertising law.

If the Supreme Court decides Nike has a right to free speech, like a human being, Nike will not be subject to that law. Since it appears that Kasky can show that Nike lied in its statements to the public, the question then remains whether Nike has a constitutionally protected right to lie.

The Northern California American Civil Liberties Union has filed an amicus brief in support of Nike's right to free speech. Although the NLG and ACLU share many views respecting civil rights, this is one area on which the two differ. The ACLU believes that Nike's speech should be protected like a persons'. The Northern California ACLU states that "the purpose of our brief was to assure that the question of the truthfulness of Nike's assertions was judged by the same set of rules that would apply were someone to question the truthfulness of the assertions of its critics." The ACLU believes that the statements from Nike "are not comparable to ordinary advertisements" that would fall under commercial speech regulations.

Indeed, according to Linda Greenhouse, Kasky himself "conceded that if Nike's statements were deemed not to be commercial speech, the First Amendment would require dismissal of his lawsuit."

The NLG believes that this distinction is false and evades the underlying question of corporate personhood. It is this question that the Supreme Court should be answering. The NLG agrees with the statement of Professor Robert C. Post of the University of California at Berkeley quoted in Greenhouse's article that "[s]tate control of corporate speech is fully at the heart of [this case]." However, as long as the notion of corporate personhood is not clearly raised and finally discredited, the question of state control is not likely to be fairly addressed and the Court's decision will fall short of a democratic solution.

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