Seattle's stand against treating corporations as people

A local initiative would challenge personhood protections to corporations. One problem: the way foreign owners claim and abuse such rights.
Seattle City Councilmembers take on the plastic bag industry.

Seattle City Councilmembers take on the plastic bag industry. Seattle City Council

Mitt Romney famously said, “corporations are people … everything corporations earn ultimately goes to people.” He went on to ask: “Where do you think it goes?” The answer is: often to foreign investors.

For example, Peabody Energy, which plans massive long term coal exports through Seattle by train, is 12 percent foreign owned. When Facebook co-founder Eduardo Saverin renounced his American citizenship in May to avoid $67 million in taxes, he pushed the company’s foreign ownership above 10 percent. Foreign investors own more than 10 percent of Alcoa, 9 percent of Bank of America and 7 percent of Microsoft.

The word corporation doesn't appear in the Constitution but the U.S. Supreme Court first granted constitutional protections to corporations in 1819, then formally established corporate personhood and extended constitutional rights such as the Fourteenth Amendment’s equal protection clause in 1886.

The problem is that our founding documents provide no basis for the transfer of constitutional rights and privileges to foreign investors. In fact, the Court has denied these rights to resident aliens in other cases. And, it’s quite common for U.S. corporations owned in part by foreign investors to use corporate personhood and judge-made constitutional rights to overturn the wishes of actual Americans.

In 2009, the Seattle City Council’s tax on plastic grocery bags was overturned by a $1.4 million referendum campaign led by the so-called American Chemistry Council, whose members include Japan’s, Mitsubishi Chemical Corporation, Germany’s Evonik, Dutch Akzo Nobel, and India’s Dorf Ketal. The legal basis of the industry’s referendum relied on corporate personhood, free speech rights, and the right to spend money on elections.

Since May 2011, Seattle’s been defending a costly lawsuit for offering residents the right to opt out of unwanted phonebook deliveries. The program has been popular with residents and good for the environment; the city reports that more than 75,000 homes and businesses have stopped nearly 420,000 unwanted phonebook deliveries, saving 375 tons of paper.

In the suit, the phonebook companies assert their corporate personhood and claim that the phonebooks are free speech and that their right to equal protection has been violated. They also claim constitutional protections from having the city (not Congress) regulate the interstate transfer of the phonebooks’ content. Foreign ownership is also at play in this situation. One of the key litigants is the Yellow Pages Integrated Media Association which represents Yellow Media Inc., a Canadian corporation.

With legal costs mounting, it’s no surprise that the Seattle City Council chose only to pass a non-binding resolution stating its opposition to Peabody Energy’s coal train expansion. While the city objects to the local and global dangers coal presents such as coal remnants, diesel emissions, and climate change, state and federal regulations provide the city no legal means to stop the company’s plan. If Seattle tried to ban the company’s trains, Peabody would likely sue asserting corporate personhood and claiming constitutional protections from the city’s attempt to regulate interstate commerce.

If it seems we’ve fought this fight before, we have. The American Revolution wholly rejected the dwindling legitimacy of foreign control over the colonies. But today, innumerable foreign companies once again own trillions in U.S. corporations. Some examples:  Barclays more than $500 billion, Norwegian Norges Bank $115 billion, German Deutsche Bank $93 billion, Credit Suisse $60 billion, and  Japan’s Sumitomo Mitsui Bank $53 billion. And in turn, these corporations wield corporate constitutional rights against American communities in court.

President Obama and retired Supreme Court Justice John Paul Stevens have expressed concern for how the Citizens United decision allows foreign-owned corporations to spend unlimited amounts to influence elections. But even if we reverse Citizens United, foreign-owned corporations will still wield corporate personhood, equal protection, and commerce clause protections to overturn community wishes.

Corporate personhood is a 19th century idea formed by an all white male court before women and blacks universally had the right to vote. The Fourteenth Amendment protections corporations typically assert were actually added to the Constitution to remedy discrimination against freed slaves; they were also the legal basis used to end segregation in Brown v. Board of Education. In other words, the anti-discrimination laws of the post civil war era are the legal foundation which corporations routinely use in court.


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Comments:

Posted Thu, Jun 21, 9:38 a.m. Inappropriate

Are corporations persons?
Are unions persons?
Are tribes persons?

The Citizens United Ruling really only leveled the playing field. Prior, indian tribes were exempt from campaign limitations enacted under McCain-Feingold. The "tribal loophole" as it is known was exploited to great profit and power.

If any legislature moves to "correct" the Citizens United ruling, the public should insist on one tenet: that any law passed apply equally to EVERYONE.

And if corporations are not persons for campaign contribution reasons, are they persons for regulatory reasons? Corporations are considered persons according to the Endangered Species Act. So if we roll back corporate personhood in the arena of campaign finance, do we roll back corporate personhood in all areas?

http://www.fws.gov/laws/lawsdigest/esact.html

BlueLight

Posted Thu, Jun 21, 11:42 a.m. Inappropriate

Seattle's Initiative 103 reads like it was written by Democratic Party alter boys. Notice it doesn't limit union money.

Quick, kids! Who buys elections? Wrong! What? That's not what your teacher told you?

http://online.wsj.com/article/SB10001424052702303339504575566481761790288.html

BlueLight

Posted Fri, Jun 22, 8:30 a.m. Inappropriate

So what's so wrong about union money? Each member of a union's rank and file is the union. There is more democratic representation in union money than corporate money. Why? Because corporate money obviously doesn't represent the full interests of all the employees of the corporation.

In my union, we vote on whether or not make a donation to support a politician. We even vote on whether or not our officials get a pay raise. There is no equivalence between corporate and union money.

It's amazing how folks like BlueLight wish to gloss that reality.

Posted Fri, Jun 29, 11:57 a.m. Inappropriate

And those union votes are unanimous?

Posted Sat, Jun 30, 2:47 p.m. Inappropriate

So, are the shareholders of a corporation unanimous in their votes for corporate donations for politics? Shareholders don't even get a chance to vote on corporate donations at all.

jhande

Posted Thu, Jun 21, 1:53 p.m. Inappropriate

The author uses the phrase "corporate personhood" multiple times but never defines it. Is a corporation a person? Of course not. But when people join together to form a corporation they don't abandon their rights. Corporations have rights under the law because the people who own them have rights. The fact that a corporation is a legal entity in its own right (it can buy, sell, borrow, loan, sue and be sued, possess property, etc.) provides the owners some security. For instance, if the corporation defaults on a loan, creditors can go after the corporation's assets, but not the stockholders'. In that sense, it functions like a person within the legal system, but it is not a person in any other sense. This "corporate personhood" bugaboo is just a lot of fear mongering by people (and in the case of the author, apparently xenophobic people) who don't understand the law.

dbreneman

Posted Thu, Jun 21, 2:28 p.m. Inappropriate

db - are you saying the foreign investors in the corporation should also have these constitutional rights? it's like you didn't read the piece.

Here's the video from Thursday night's Initiative 103 talk... http://www.youtube.com/watch?v=zPByZsn7KxI

Posted Fri, Jun 22, 12:01 p.m. Inappropriate

If it's an American corporation, it should have the rights and responsibilities of any other American corporation. How many rights are you going to take away, and in what proportions, to reflect what percentage of foreign ownership? Or are you going to say that any corporation with even one share of stock in foreign hands loses all its rights and therefore should be simply swept out of existence? I have a mutual fund in my 401(k) which invests in overseas stocks. I don't expect those companies to lose rights under their home legal systems because of my involvement, any more than I would expect an American company to lose rights here because a foreign investor is invested in it.


And I'd still like to know how you define "corporate personhood" as it's used in this article.

dbreneman

Posted Fri, Jun 22, 12:56 p.m. Inappropriate

A corporation is a piece of paper, a STATE charter. Nothing more. It cannot go to jail, vote (at least before CU), or have any of the natural rights of a person, or confers citizenship, period.

Revoking a state corporate charter is not the same as the death penalty. The officers, shareholders, and employees of a corporation cannot vote twice-- once for themselves and once for the corporation. CU did not do any such thing as "leveling any playing field." As it has proven, it as only provided an insurmountable advantage by classifiying money as protected speech that allows that speech to bury the individual voices that oppose it.

Marksp

Posted Fri, Jun 22, 2:05 p.m. Inappropriate

From the Endangered Species Act:

"The term “person” means an individual, corporation, partnership, trust, association, or any other private entity; or any officer, employee, agent, department, or instrumentality of the Federal Government, of any State, municipality, or political subdivision of a State, or of any foreign government; any State, municipality, or political subdivision of a State; or any other entity subject to the jurisdiction of the United States."

Are you sure you want to do away with corporate personhood?

BlueLight

Posted Fri, Jun 22, 8:16 p.m. Inappropriate

If money does not equate to speech, why does Crosscut ask for monetary contributions to support this forum?

dbreneman

Posted Sat, Jun 23, 2:15 a.m. Inappropriate

Ok Bluelight I will bite. Are you saying that corporations are an endangered species?

You are stretching so much, the Marqius de Sade would be impressed.

Marksp

Posted Fri, Jun 22, 4:48 a.m. Inappropriate

Welcome to the 21st century. Capital is going to move across borders. Foreigners can invest in our businesses and we can invest in theirs. Does anyone believe that this isn't a good thing?

Is the worry that foreigners (and, really, I don't think most people are nearly as afraid of foreigners as the author seems to think we should be) will start buying American companies specifically so that they can utilize a backdoor channel for spending money on our elections? Or is the fear that once they own stakes in our businesses, they'll all of a sudden become more interested in our domestic politics? The former seems unlikely. The latter seems quite reasonable and mostly harmless.

And also, just a factual correction (that somewhat confirms that this story contains innuendo and hyperbole). The part that states "But today, innumerable foreign companies once again own trillions in U.S. corporations. Some examples: Barclays more than $500 billion, Norwegian Norges Bank $115 billion... [etc.]"

Untrue. How could Barclays own $500 billion in U.S. corporations? The bank's total market capitalization is less than $40 billion. In fact, it's very rare historically for there to be any companies in the world with a market capitalization over $500 billion. Currently there is only one (Apple). It could be true that clients of Barclays hold that much of an ownership stake in US companies. But Barclays certainly doesn't own it. So instead of all those evil british corporate executives snapping up our precious American firms, we're actually talking about mostly regular British white collar workers who hold retirement accounts at their nation's largest bank. Nothing nefarious. Nothing to fear.

Aaron30

Posted Fri, Jun 22, 9:09 a.m. Inappropriate

Umm, Aaron30:

"Or is the fear that once they own stakes in our businesses, they'll all of a sudden become more interested in our domestic politics? The former seems unlikely. The latter seems quite reasonable and mostly harmless."

Son, have you never heard of News Corp? Yes, Rupert Murdoch might have surrendered his Australian citizenship to gain a more favorable tax rate, but his now foreigner status in England illustrates how much control a foreign entity can have in a host country. No, when money can and does influence politics to the degree that it does today, the Citizens United ruling does provide an avenue for foreign interests to influence our domestic politics via corporate donations. Unlimited corporate money--a sum that dwarfs what unions can ever muster--flowing into SuperPacs can and does influence elections.

The acknowledgement that Capital does move across national boundaries lends greater weight to the need to protect our interests against those of foreign money. It's fine for anyone to invest in our businesses within our economy, but it must be done with the understanding that it gets done without influencing our political system--a system that exists to provide at least some degree of representation for the citizenship.

After all, you can't vote if you aren't a citizen, right? So why should any law exist that allows that intent and purpose to be undermined? That's also why there has been restrictions on foreign ownership of media. Those rules were established with the understanding that domestic and foreign interests are not necessarily the same. If you view the world through the lens of pure capital, that might not be so obvious.

Wake up, Aaron30!

Posted Fri, Jun 22, 9:31 a.m. Inappropriate

http://www.opensecrets.org/orgs/list.php

BlueLight

Posted Fri, Jun 22, 11:09 a.m. Inappropriate

The legal recognition of corporate 'personhood' is what allows these organizations to buy and sell property, hire employees, and enter into contracts. (And such recognition goes way back earlier than the Fourteenth Amendment, even than the founding of our Republic.) If corporate 'personhood' were to be banned, and corporations could no longer do these things, it would wreak havoc on our economic and social system--as you couldn't expect all the economic activity in a society of the scale of ours with its high degree of development and integration to be run and financed entirely by family-owned and mom-and-pop businesses. I think some of the motivation for offering such an initiative is due to a (willful?) misinterpretation of Romney's now-famous "corporations are people" remark (which wasn't about the issue of 'legal personhood' that courts have ascribed to corporations) and given momentum by Stephen Colbert's comic riff on this same misinterpretation. Whether on the local or national levels, the effort to revoke corporate 'personhood' is just a publicity stunt and a distraction from more serious discussion in the face of real problems.

Posted Sat, Jun 23, 2:22 a.m. Inappropriate

You are hysterical. It's is a distraction alright.

Marksp

Posted Sat, Jun 23, 2:33 a.m. Inappropriate

BTW corporations can and have been displaced by new and sustainable business models, not dependant upom the status quo:

http://www.salon.com/2012/05/22/rise_of_the_new_economy_movement/

And the sooner we get a State Bank on the model of North Dakota, the better off we will be.

Marksp

Posted Fri, Jun 22, 12:17 p.m. Inappropriate

We actually want foreigners to invest in the U.S. The author makes it sound like this is a bad thing. Investment in the U.S. by ANYONE is good for America. It provides capital and therefore jobs.

taupe

Posted Fri, Jun 22, 12:48 p.m. Inappropriate

"...the U.S. Supreme Court first granted constitutional protections to corporations in 1819, then formally established corporate personhood and extended constitutional rights such as the Fourteenth Amendment’s equal protection clause in 1886...

Although I agree with most of this article, the above is an incorrect interpretation. Corporations/Businesses were only granted the right to enforce contracts. That does not make them equal to, or even to be considered "persons." And that 1886 decision refers to ad addition to the courts opinion written in by a part time clerk, who was also employed by the railroad it benefited by. Somehow, that never gets clairfied, especially since Citizen's United.

A minority Foreign ownership is not always bad, depending upon what kind of business/industry you are talking about. Anything to do with infrastructure or defense for example should be bad for obvious reasons. PSE for example, should not have been approved for sale at all to any foreign interests. But yet it went through. And that was BEFORE CU.

Marksp

Posted Fri, Jun 22, 8:53 p.m. Inappropriate

I kind of understand the sentiment, but is it really that rational to fear foreign investment in utilities or transportation? Let's say the Japanese buy a stake in Burlington Northern. What exactly is the fear? That they're going to sabotage the railroad they bought so Emperor Hirohito can attack the west coast? What year is it again?

All of this just ignores two realities: first, people who invest in utilities and infrastructure do so for the primary reason that, even though profits are limited and the business is highly regulated, they provide regular, dependable returns. So you think they're going to risk their entire investment for political purposes?

Second, and most importantly, in today's integrated, interdependent world, we simply do not need to fear foreigners in the ways (it seems) so many are still accustomed. And they don't need to fear us.

All of this anti-foreigner sentiment reminds me of the Dubai Ports World manufactured scandal a few years back. A lot of people are very tolerant and open-minded until the point when appealing to nativistic xenophobia will help their politics, then they turn on a dime. Kinda scary.

Aaron30

Posted Fri, Jun 22, 8:13 p.m. Inappropriate

Bluelight points to corporations being included in the definition of "person"in the Endangered Species Act, as in many other laws. Any problems with invoking jurisdiction that would be caused by omitting corporations from this definition can be easily dealt with by simply using the conspiracy (of natural persons) concept instead to deal with such violations. Indeed, it fairly obvious given their histories of environmental crime that some corporations are in fact very large criminal conspiracies.

Steve E.

Posted Sat, Jun 23, 1:55 a.m. Inappropriate

To repeat and amplify a sage:

I'll believe corporations are people when the state puts one to death. Or, more importantly, when the state puts one in jail, by taking all of its income away for a period of incarceration equal to that awarded a natural person for partaking in a crime. Manslaughter for a freight company's truck running over somebody: 2 years of lost profits. Ecoterrorism by way of willful violation of significant environmental laws: 20 years to throw away the key. That sort of thing.

Posted Sat, Jun 23, 11:49 a.m. Inappropriate

I'll believe corporations are people when the state of Texas executes one; until then they cannot be citizens because their charters only allow them to seek maximum profit at the expense of all the complexity that is human.

adexterc

Posted Sat, Jun 23, 9:19 p.m. Inappropriate

All the commenters who want those greedy businesses put to death: who created the beautiful little macbooks on which you angrily pounded out your little screeds? That would be the largest corporation in the world, Apple. Run exclusively by members of the 1%! Off with their heads! We don't need their stinking (yet elegant, fast and stunningly beautiful) technology!

Aaron30

Posted Sun, Jun 24, 7:56 a.m. Inappropriate

So if the Foundation that sponsors Jeff's work is founded by and staffed by people who have come up through the "corporate personhood" environment including his own Microsoft experience didn't exist, who would skim off the labor or others to fund their activism?

Cameron

Posted Mon, Jun 25, 9:20 a.m. Inappropriate

One thing the Supreme Court had to reconcile in the Citizens United case is that some corporations (News Corp., New York Times) have a business that consists of disseminating opinions (to varying degrees). How to separate those corporations from from those who make widgets? you have to admit that would be hard to do.
The widget manufacturer and its stockholders should be able to lobby and argue in public for their interests. How do you rationally shut that down while allowing the Crosscuts of this world to influence public opinion and, presumably, public elections.
If the court tried to separate news corporations from manufacturers and real estate developers what would probably happen is that the larger corporations would just buy newspapers or TV stations as a front for their opinion broadcasts (more than they do now). I think the nativist arguments above are not good but the threat from all corporate news is real.

kieth

Posted Mon, Jun 25, 2:16 p.m. Inappropriate

Voting stockholders should be held accountable for their corporations activities. If a corporation goes bankrupt, the assets of the voting stockholders of that corporation should be up for grabs in the bankruptcy. If a corporation breaks the law and incurs a fine, the fine should be directly payed by the voting stockholders. The idea that the corporate structure should indemnify voting stockholders assets needs to end. The LLC designation needs to end.

jhande

Posted Mon, Jun 25, 9:24 p.m. Inappropriate

What a pointless initiative. It has no legal effect and will get overturned the moment a corporation challenges it. Yet another do gooder Seattle initiative that has zero effect on reality.

hlongan

Posted Tue, Jun 26, 10:46 a.m. Inappropriate

jhande,
Your comments make no sense. The whole reason corporations even exist is to limit liability. Otherwise companies would be partnerships or sole proprietorships.

taupe

Posted Wed, Jun 27, 9:17 p.m. Inappropriate

There is a difference between voting shareholders, and non-voting shareholders. Voting shareholders hire the corporation's "control group", and voting shareholders set the agenda for the control group. When things go wrong the voting shareholders should be held liable. This should be the case even in corporate bankruptcy. The voting shareholders assets should be on the table during bankruptcy.

So, it is time to get rid of the limited liability involved in business. Get rid of LLC's. Make individuals liable for their own actions, and the actions of their corporations. Much of the illegal, and unethical, behavior we have seen displayed by business interests would diminish if individuals had to take responsibility for the actions of their LLC business, or their hired corporate control groups.

Also, on foreign ownership of business in the United States. Majority foreign owned businesses should be taxed at triple the rate of 90-100% United States citizen owned businesses. Businesses with 10-49% should be taxed at 2 to 3 times the rate of 90-100% United States citizen owned businesses. Foreign ownership of infrastructure should be outlawed. Foreign ownership in the energy sector should be outlawed. Foreign ownership in any natural resource extraction should be outlawed. Foreign ownership in agriculture should be outlawed. Foreign corporations should not be awarded government contracts of any kind.

This is the United States. We have borders because we wish to control what happens within our own borders. Foreign ownership of business in the United States works against the United States citizen determing what goes on within the United States. The canard of "mobile capital" is just that, a canard. The United States could easily put restrictions on "mobile capital", and should.

jhande

Posted Thu, Jun 28, 4:33 p.m. Inappropriate

jhande,

Under your scenario, why would anyone ever invest in a public company? This would be counterproductive. We need investment. That is how companies raise capital to grow and hire more workers.

So you want to prohibit foreign companies in the U.S.? Why would you want to do that? Toyota has created 365,000 jobs in the U.S. Don't you think that is a good thing for American workers? Investment in the U.S. is good for Americans.

Please make an argument for your case. You simply repeat your assertions. An assertion is not an argument.

taupe

Posted Thu, Jun 28, 5:59 p.m. Inappropriate

The United States has seen massive growth in the financial sector in the United States. The United States has seen massive investment in corporations. This investment has not translated into any massive rise in employment. The United States has seen massive profits to corporations, and no massive rise in employment. To point at some 365,000 jobs at Toyota, while disregrding the loss of tens of millions of jobs to corporate outsourcing is meaningless. Outsourcing of industrial, and other, business from the United States has been done by the corporations, that you claim benefit the United States. Corporations have no concern at all about the United States citizen. The United States is considered to just be part of the North American Market.

Forget the bailouts? Beneficial business entities do not need bailouts (the shareholders, and 401k holders got bailed out also). The corporate recipients of bailouts were involved in what is called the "global economy".

The United States became involved in the current global economy scheme starting in 1994. Since 1994, the United States has seen loss of industry, soft industry, some service industry, and huge trade deficits. The wages of United States citizens have stayed stagnant, or declined, and profits and wealth has poured into the corporate coffers. This detrimental effect of the current global economy scheme has happened in only 18 years. 18 years of increased foreign ownership in the corporate sector, and especially natural resource extraction in the United States. It has not been beneficial to the United States citizen at all.

Foreign owners of a corporation have no concern of the effects of their actions on United States citizens. Foreign owners are just want to make money. Example: the bp oil spill in the Gulf of Mexico. BP used a dispersant "Corexit" in the United States that is illegal to use in Britain, because "Corexit" is more of a pollutant than oil. It didn't matter to the foreign owned BP. Just like the BP explosion at the refinery that killed over 20 United States citizens, where BP documents show that cheaper protective materials were used because it was less expensive to pay for any deaths; and of course the dead people would only be United States citizens. Not the foreign owners, or any of their countrymen. Then there are the oil spills that BP has throughout the United States, and in the United States Arctic. These spills involve wilfull disregard of maintennance by BP in it's infrastructure. So, what if some oil spills in the United States, the foreign owners of BP don't live in the United States, so why care about spilt oil in the United States. If it hurts United States citizens, so what. That attitude toward United States citizens is not just held by BP; but is prevalent among all foreign owners, and foreign businesses. BP is just one example.

Foreign investment in a corporation that operates in the United States is not foreign "investment in the U.S". It is investment in a corporation. Corporations are not the United States. The more the owners are foreign, the less the corporation cares about the United States, or United States citizens.

So no, the last 18 years has shown the United States citizen that easing the ability of foreign corporations, and foreign ownership, to operate in the United States has only led to a huge extraction of wealth from the United States. This cannot be called "good for Americans" in any way. [of course I have simplified my response. A true respnse would take a book.]

jhande

Posted Thu, Jun 28, 6:24 p.m. Inappropriate

Also, forgot to shoehorn this in: If individuals will not invest in a business without knowing that they are indemnified from responsibility for the actions of the business, then that business probably should not be started. This indemnity given to shareholders allows the creation of harmful business/corporations. The shareholder indemnity allows the shareholders to (an old chestnut bordering on cliche; but true) "privatize profit, and socialize cost". The complete economic mess currently in the United States is the result of 18 years of deregulated corporate power, and the global economy scheme. These past 18 years have been a disaster for the United States economy, the United States, and United States citizens.

jhande

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