Paul Cienfuegos’ November 3, 2015 Commentary on KBOO Evening News
(His weekly commentaries are broadcast every Tuesday evening. You can view or listen to them all at PaulCienfuegos.com, CommunityRightsPDX.org/podcast, or subscribe via ITunes.)
Greetings! You are listening to the weekly commentary by yours truly, Paul Cienfuegos.
Today is the fourth week in my series of commentaries that attempt to unveil the fascinating story and chronology of how the Supreme Court – over the past 196 years – has transformed the business corporation from an institution that was legally subordinate to The People, beginning after the American Revolution, into something having more constitutionally protected so-called “rights” than do you or I. Shall we proceed?
We think of the business corporation as something with a fixed definition. Because we do not know our own history, we assume that corporate executives have limited liability for their actions, that corporations can buy and sell other corporations, that corporations exist for as long as their directors and investors want them to exist, and that corporations are required by law to maximize profit as their first priority. But as it turns out, all of these legal norms were established more than a century after the American Revolution – and mostly by the courts. Here’s just one example, to help you to understand that how a corporation is defined is entirely dependent on who’s in charge at the time, and what they want the corporation to do or to not do.
In 1919, Henry Ford’s famous assembly lines were churning out cars faster than ever before, and he was making huge profits. But he wasn’t paying his factory workers enough for them to be able to afford to buy the cars they were assembling. Henry Ford recognized this dilemma as a potential win-win. He could raise his employees’ wages, they could start buying the cars they wanted to own, and everyone would benefit. Not so fast, said the stockholders, those profits should be paid back to us! In 1919, in the case Dodge v. Ford Motor Company, the stockholders sued Henry Ford. The Michigan Supreme Court sided with the stockholders, stating “A business corporation is organized and carried on primarily for the
profit of the stockholders. The powers of the directors are to be employed for that end.” This is the case that first established “Stockholder
Primacy”, and is still the leading case on “corporate purpose”.
In 1922, in the case Pennsylvania Coal Company v. Mahon, corporations won access to the 5th Amendment “takings clause” for the very first time. The relevant line in that amendment reads: “…nor shall private property be taken for public use, without just compensation.” In this case, a new regulation was deemed a taking. The State of Pennsylvania had passed a law saying it was illegal to dig mines under houses if it would cause them to collapse. The Supreme Court overturned this law. Entire towns were undermined for coal extraction and sank as a result. Corporations have used the takings clause ever since to oppose and thwart environmental laws. Takings compensation is the basis for NAFTA, the WTO, the Trans-Pacific so-called Partnership, and many other global corporate trade treaties.
In the early 1930’s, the people of Florida passed a law that levied higher taxes on chain stores than on locally-owned stores. The Supreme Court overturned the law in 1933, in the case Louis K. Liggett Company v. Lee, citing the due process and equal protection clause of the 14th Amendment and the Interstate Commerce Clause. It is because of this court decision way back in 1933 that WalMart and other chains cannot be banned by towns that don’t want them. As in many Supreme Court cases, there are very strongly worded dissents, such as this one from
Justice Brandeis: “The prevalence of the corporation in America has led men of this generation to act, at times, as if the privilege of doing business in corporate form were inherent in the citizen; and has led them to accept the evils attendant upon the free and unrestricted use of the corporate mechanism as if these evils were the inescapable price of civilized life, and hence to be borne with resignation. Throughout the greater part of our history a different view prevailed.”
Corporations won the 1st Amendment right to freedom of speech for the first time in 1936, in the case Grosjean v. American Press Company. And then three years later in 1939, the court denied the same 1st Amendment rights to labor unions, even though they were also incorporated bodies, in the case Hague v. C.I.O., claiming that only the individual members of the union could invoke those rights. This lopsided position of the courts resulted in 1947 in the Taft-Hartley Act, where corporations were granted “free speech” in the union certification process, usurping worker’s right to “freedom of association” and greatly weakening the Labor Relations Act of 1935. So don’t believe the media when they tell you that the Citizens United case was the beginning of 1st Amendment rights for corporations; it’s just not true. It happened way back in 1936.
In 1967, in the case See v. Seattle, the Supreme Court granted corporations 4th Amendment protection from random health and safety inspection by fire departments. From this point forward, a warrant has been required before a government agency can enter and inspect commercial premises.
In 1970, in the case Ross v. Bernhard, corporations won the 7th Amendment right to a jury trial in a civil case for the first time.
I’ve been sharing with you an unveiling of the fascinating chronology of how the US Supreme Court – over the past 196 years – has transformed the business corporation from an institution that was legally subordinate to The People, beginning after the American Revolution, into something having more constitutionally protected so-called “rights” than do you or I. We’ll be continuing with this timeline next week.
You’ve been listening to the weekly commentary by yours truly, Paul Cienfuegos. You can hear future commentaries every Tuesday on the KBOO Evening News in Portland, Oregon, and on a growing number of other radio stations. I welcome your feedback.
You can subscribe to my weekly podcast via I-Tunes or at CommunityRightsPDX.org. You can sign up for my twice monthly Updates at PaulCienfuegos.com. You can follow me on twitter at CienfuegosPaul. THANKS FOR LISTENING! And remember: WE are the people we’ve been WAITING for!