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Why do corporations have the same rights as you?

        Money | Money & Ethics

Legal Challenges to Corporate Constitutional Protection
Protest in Washington, D.C., in 2003 over Nike's assertion that as an artificial person, it has a right to use deception under the First Amendment protection of free speech.
Protest in Washington, D.C., in 2003 over Nike's assertion that as an artificial person, it has a right to use deception under the First Amendment protection of free speech.
Mark Wilson/Getty Images

The remarkably odd stipulation that, as artificial persons, corporations should enjoy the same Constitutional protections as humans has given rise to some equally odd arguments. Time and again, the strength of this assumption has been tested in court. As a result, this American tradition has been upheld and challenged.

In the 1990s, the athletic company Nike was accused of running sweatshops -- factories that employ labor at substandard conditions and low wages -- in developing Asian countries. The story came to the fore even more in 2001. That year, Nike launched a shoe line that allowed customers to have whatever they pleased embroidered on the company's shoes. One MIT graduate student lodged his order: He wanted the word "sweatshop" embroidered on his pair.

The company refused his order, and the student circulated the e-mail Nike had sent him. The media took notice. In short order, stories of Nike's overseas labor practices made it into the pages of news outlets like the Wall Street Journal [source: The Industry Standard].

In an ongoing public relations campaign, Nike said it did not use exploitative labor practices, and it actually protected workers' rights abroad. Based on proof that contradicted the PR blitz, a California man sued the company in 1998 for false advertising [source: BBC]. The company challenged the issue, saying that as an artificial person, it was allowed to lie. Lying, after all, is protected by the freedom of speech granted in the First Amendment. 

Nike lost in the California Supreme Court, but appealed. After accepting the case, the Supreme Court deferred it back to the lower courts [source: New York Times]. Ultimately, the company settled the suit for $1.5 million, which went to a labor rights group [source: BBC]. In 2005, Nike published a report of the working conditions in its overseas factories, which included admissions of employee mistreatment [source: The Guardian].

Nike's not alone in seeking Constitutional protection against bad publicity. In 1986, Dow Chemical sued the federal government. The company argued that the use of aerial photography by the Environmental Protection Agency (EPA) was a violation of the corporation's Fourth Amendment rights. Dow asserted that the EPA shouldn't be able to snap photos in search of federal violations. The Fourth Amendment protects Americans from unreasonable search and seizure, and Dow alleged its rights were violated by EPA flyovers [source: Connecticut General Assembly]. The Supreme Court ultimately decided 5 to 4 to uphold the lost case, opining that Dow couldn't reasonably expect privacy in its chemical plant [source: New York Times].

But corporations have been successful in court as well. In the 1978 case Marshall v. Barlow's, Inc., the Supreme Court established freedom from search for businesses under the Fourth Amendment. Prior to the ruling, agents from the federal Occupational Safety and Health Administration (OSHA) could inspect any business for safety violations without alerting the owner or asking his or her permission [source: USSC Plus]. Following the Marshall case, incorporated businesses were granted the same protection human citizens have from police searches. OSHA now must either receive permission from the owner or show evidence that a violation has occurred and obtain a search warrant [source: CBIA]. 

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