Why do corporations have the same rights as you?

In the eyes of American law, corporations like AT&T are the same as humans. See more corporation pictures.
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There's a term that describes a situation when a court makes something out of nothing: It's called legal fiction. This jargon refers to the law's ability to decree that something that's not necessarily true is true. It's somewhat like a person in a discussion agreeing to accept an opinion as fact for the sake of argument in order to move the discussion along. Legal fiction helps to move proceedings along.

A sterling example of legal fiction is what's called corporate personhood. Think about it: A corporation isn't a person. It's a business, a pool of investors' money used to conduct transactions and hopefully make a profit. But in order to determine the legality of business proceedings, the legal fiction of treating a corporation as an artificial person was created.


This concept isn't new. In ancient Roman law, a corporation was considered a juristic person: a single, nonhuman entity that legally represented a group of many people [source: Sherman]. The idea makes sense; after all, a corporation is made up of people's financial contributions.

But a corporation is more superhuman than human. It can function beyond the natural limits of age that govern humans, and as such can produce dividends for its investors, whose stock certificates can be willed and passed down as part of their estates. A corporation doesn't die with its originator -- it can live indefinitely (so long as it's profitable). Nor does a corporation need the same things that an actual person does. Corporations don't require food or water, and they can't feel pain [source: Hartmann].

­The laws that govern people take our hum­an weaknesses into account. For example, our prison system is designed to incarcerate the human body. You can't imprison a corporation, though. So granting human treatment to nonhuman corporations is tricky: It's like breathing life into a superhuman that can't feel pain and, after setting him free, hoping for the best.

It would make sense that in dealing with corporations, the United States would tread lightly and limit the power that these artificial persons have. This hasn't necessarily been the case, however. In fact, in the United States, corporations have the same protections under the Constitution that humans do. Find out how this happened on the next page.





The 14th Amendment and Artificial Personhood

During the framing of the Constitution, Thomas Jefferson wanted language that restricted corporations added to the document. His ideas didn't make it.
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So how did corporations come to enjoy the same Constitutional protections that people do? It all started with a court reporter. In his book, "Unequal protection: The rise of Corporate Dominance and the Theft of Human Rights," author Thom Hartmann describes the situation that gave rise to Constitutional protection for corporations.

Since corporations had been viewed as artificial persons for millennia, the debate over whether they should be afforded the same rights as humans had been raging long before the 14th Amendment was adopted. Thomas Jefferson had suggested explicit language to govern corporate entities, like requiring maximum life spans, be put into the Constitution. His stipulations didn't make the cut, however. And once the 14th Amendment was created, the Constitution actually expanded -- rather than limited -- the scope of corporations' power.


The 14th Amendment was adopted in 1868, and it gave the federal government ultimate power over the states in respect to the rights of newly freed slaves. The amendment sought to overturn state-level legislation that was being created to limit the liberties of freedmen after the Civil War. The federal government circumvented each one of these laws with a broad sweep: Through the 14th Amendment, Congress granted equal protection under the law to every person [source: Library of Congress]. That last word is important, since in the eyes of the law, a corporation is an artificial person.

While the 14th Amendment opened the door for corporate Constitutional rights, the issue wasn't really addressed until 1868. A dispute over whether a county has the right to tax a corporation turned out to settle this much larger issue in a very strange way.

In the case of Santa Clara County v. Southern Pacific Railroad, the Supreme Court decided that only the state that charters a corporation can tax it. This decision upheld the long-standing custom in America of state governance of corporations. It's the state that grants a corporation its charter -- its license to do business -- and it's up to the state to tax and regulate the corporation.

But a note written by the court reporter at the heading of the decision went further than that. Although another, private note from the Chief Justice said that the court had purposely avoided the issue of Constitutional corporate protection, the reporter chose to make his own addition to the records. He noted that the court had decided that corporations are persons under the 14th Amendment, and as such are subject to the same protections under the law as anyone else [source: Hartmann].

What's strange, Hartmann points out, is that the justices hadn't ruled that way at all. Even fishier, the court reporter was a former railroad president [source: Hartmann]. Ultimately, since it was a headnote (a commentary prefix to the court record) written by the reporter, it didn't constitute law. But it did set precedent. Two years later, this idea was upheld in another case: Pembina Consolidated Mining and Milling Co. v. Pennsylvania [source: Aljalian].

Just how much Constitutional protection corporations should be afforded is still being hammered out today, court case by court case. Read about some of these cases on the next page.


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.
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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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  • Greenhouse, Linda. "The Supreme Court: Advertising; Nike free speech case is unexpectedly returned to California." New York Times. June 27, 2003. http://query.nytimes.com/gst/fullpage.html?res=9F0CE5DA1E3BF934A15755C0A9659C8B63
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