The Supreme Court's gift to big business

By David A. Kaplan, contributor


NEW YORK (Fortune) -- So much for the demise of corporate America, at least in the popular imagination. Just a little while ago, we were petrified about the auto companies in Detroit and the larger manufacturing infrastructure. Wall Street behemoths like Lehman Brothers and Bear Stearns were crushed. AIG was saved only by Uncle Sam. Even the iconic Goldman Sachs, today riding high with record profits of $13.4 billion for 2009, needed a temporary bailout. The president acted, Congress enacted emergency legislation, crises were stemmed. Now, though, comes the U.S. Supreme Court to rescue corporations not from financial ruin but from laws barring them from swaying elections. Who knew this was such a problem?

Yesterday, the justices issued one of their most important business decisions in decades. Overturning two prior cases and undoing a century of First Amendment doctrine, a monumentally divided court ruled that corporations, well, are just like people, too. No longer can those corporations be banned by Congress from spending whatever they wanted on advertisements on political candidates. Money is like speech. Since you can pretty much say what you want, you can pretty much spend what you want on ads or paid documentaries or any other broadcast vehicle.

"The censorship we now confront is vast in its reach," wrote Justice Anthony Kennedy for a 5-to-4 majority in Citizens United v. Federal Election Commission. "If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech." All of the Court's conservatives voted in the majority, all the liberals in dissent. Come the midterm elections in November, expect even more campaign ads -- and this time from companies, labor unions, and any other organization with millions to spend on behalf of a candidate. It's enough to make you long for more Jay Leno at 10. "The court's ruling threatens to undermine the integrity of elected institutions across the nation," Justice John Paul Stevens correctly wrote in dissent.

I will admit to a certain squeamishness over attacking a ruling that seems to rest on free-speech principles. Those of us who usually plead guilty to being First Amendment absolutists -- after all, the easy-to-read constitutional provision does say, "Congress shall make no law" that abridges freedom of speech -- argue that the remedy to expression we disagree with is more expression. Thus, while we deplore the hateful things that Nazis and Ku Klux Klanners say, we maintain the First Amendment prohibits banning that speech and that the better course is to speak out ourselves more robustly. In that way, no government bureaucrat or censor gets the power to determine what speech is good and what speech is bad, and instead the "marketplace of ideas" decides which ideas win out. So, the argument goes, if you don't like want Exxon says in its ad this November for Congressman Pete Polluter, put on your own ad for Hybrid Hank.

Like most theory, it sounds great. And there is something appealing about apparent consistency: If, say, The New York Times get to endorse candidates or choose whom to give publicity to, why shouldn't Hallmark Cards get the privilege of influencing an electoral outcome? But like much theory, it doesn't work out as well. The fact is, special-interests groups --through lobbying, soft money, and legal direct contributions to candidates -- already exercise huge influence on elections. You can't prove that observation, yet there is widespread agreement among both Republicans and Democrats that the way we finance American campaigns is an abomination -- and that if voices are missing from the marketplace, they are of individuals rather than groups like corporations.

It is within that context that Congress has passed bipartisan legislation dating to the Gilded Age that has curbed corporate spending in the political arena. And since corporations are merely creatures of legislation -- established only to make money for shareholders rather than to be deep-pocketed actors in electoral politics -- it then follows that legislators can regulate corporations, including on matters relating to speech. That's especially so when the individual shareholders in a company retain their full individual right to speak in the arena, including purchasing ads and all the rest. Even when the interests of corporations aren't at stake, First Amendment protections have never been absolute. We draw lines all the time -- most importantly on libel. If you carelessly defame someone in private life, you pay damages. If you defame a public official or someone in public life, you probably win, because the victim has to show you were reckless or worse; nonetheless, the risk of losing -- and the certainty of ruinous legal fees -- casts a chill in newsrooms and editors self-censor anyway. In short, the First Amendment has limits.

While some companies and unions have chafed at the spending regulations, it's typically been at the margins. Last spring, as the Supreme Court took up the case, the issues were narrow. Citizens United, a conservative nonprofit, had produced "Hillary: The Movie," a 90-minute screed released during the Democratic presidential primaries in 2008. Enforcing a federal law, lower courts said the movie was akin to a long political ad and couldn't be shown on local cable systems too close to primary dates. When the dispute first reached the Supreme Court, the questions were confined to whether federal law included documentaries and video-on-demand. But the justices declined to be constrained by those questions and took the rare step of asking that the case be reargued this term, explaining that they were now interested in bigger game -- whether restrictions on corporations were entirely unconstitutional.

The Court makes its own rules. It chooses which appeals to hear from the thousands brought to it a year (it takes fewer than a hundred). It decides what the relevant questions are. In this case the Court went far out of its way to address a question nobody had asked -- and to create a constitutional right where none is indicated. "Essentially," Justice Stevens noted, "five justices were unhappy with the limited nature of the case before us, so they changed the case to give themselves an opportunity to change the law." When liberals do such a thing -- and they did so repeatedly in the 1960s and '70s on issues like abortion -- conservatives hollered "judicial activism!" When conservatives do it now, they squeal about "vindicating constitutional rights." By any other name, that's hypocrisy -- and it allows the public to cynically conclude the court is just another political branch of government, except one that's unelected and unaccountable.

We live in complicated enough times, when distrust of the president and members of Congress is widespread. The Court ought to be the branch we believe is neutral and does indeed operate, as Chief Justice John Roberts disingenuously preached during his confirmation hearings, as "an umpire calling balls and strikes." Instead, just as Roe v. Wade overreached years ago, and just as Bush v. Gore did in 2001, the Court in Citizens United has inflicted another grievous wound unto itself.

David A. Kaplan, a contributing editor for Fortune, once practiced law on Wall Street and now teaches journalism and law at New York University. His book on Bush v. Gore, "The Accidental President," was the basis for "Recount," the 2008 HBO docudrama about the Florida recount. You can reach him at david.kaplan@fortunemail1.com. To top of page