Should Businesses Make Political Statements?

Introduction

Should businesses make political statements? To attempt to answer this question I spent some time reviewing the opinions of the US Supreme Court (SCOTUS) and their evolving decisions on corporate rights. It has been 213 years since SCOTUS made its first opinion regarding corporate rights. 

Corporate Rights History

Following the ratification of the US Constitution, in the 1st Session of Congress, the Judiciary Act of 1789 was passed. This established the Federal Judiciary and also established diversity jurisdiction in Federal District Courts. This jurisdiction requires two conditions to be heard in Federal court: first, the plaintiffs and defendants must be from different US states; and second, the "amount in controversy" must be greater than $500. That amount has been updated five times by Congress, and the most recent updated amount is $75,000.

1806 Strawbridge v. Curtiss - Federal diversity jurisdiction is upheld by SCOTUS and confirms that it requires that no plaintiff is from the same state as any defendant.

1809 Bank of the United States v. Deveaux - Chief Justice John Marshall held that citizens or shareholders that comprise a corporation could sue in Federal Courts on the grounds of diversity jurisdiction. All plaintiffs and defendants must be in their same respective states to have diversity jurisdiction. Meaning if a corporation had members in Virginia and Maryland it could not sue a citizen or corporation in New York because the plaintiffs are not in the same state. It also held that corporations may sue on behalf of the citizens or shareholders, but they cannot be citizens. 

1844 Louisville, Cincinnati & Charleston Railroad Company v. Letson - Associate Justice James Wayne held that corporations are considered citizens in the US state they are incorporated.

1853 Marshall v. Baltimore & Ohio Railroad Company - Held that corporations are to be treated as citizens for deciding court jurisdiction, but do not have the same constitutional rights as the citizens.

1886 Santa Clara County v. Southern Pacific Railroad Company  - Even though it is not explicitly stated in the High Court's Opinion, later rulings cited Santa Clara that it was "well settled" whether corporations were persons and the 14th Amendment of the US Constitution which establishes citizens' equal protection under the law also extends to them.

1898 Smyth v. Ames - Although this case was ultimately overturned, the Court held that the State of Nebraska did violate the corporations14th Amendment rights by not extending proper due process under the law.

1906 Hale v. Henkel - Held that like citizens, corporations have the same 4th Amendment rights. They are protected from unreasonable searches or seizures.

1931 Russian Volunteer Fleet v. United States - Held that foreign corporations were protected against  unlawful government seizures, under the 5th Amendment which provides for fair treatment in the legal system,  

1977 United States v. Martin Linen Supply Company - Held that the double jeopardy rule is also extended to corporations

2010 Citizens United v. Federal Election Commission - Held that the government cannot limit independent campaign donations because it is considered a type of speech. The Court extended the freedom of speech to corporations.

2014 Burwell v. Hobby Lobby Stores, Inc. - Held that requiring corporations to provide contraception to their employees violated the corporation's freedom of religion. This Court concluded that the corporation can exercise the religious rights of its owners. 

My Take

After reviewing the history of corporate personhood and rights, I would agree with the SCOTUS. It is only logical to say corporations comprised of owners, employees, and shareholders who are entitled to the rights in the US Constitution's Bill of Rights should be extended to those same corporations and businesses. 

Now, I would argue that just like how a citizen is able to say most things freely, the question is should they make statements? 

We've established that a company can make a public political statement, but should corporations commit to any side? I would argue that a company's sole focus is to bring in revenue and profits for its owners or shareholders. Making any political statement on any side of the spectrum could be detrimental to its business. In making statements, it may be virtuous, but at the same time, your customer base shrinks, and potential revenue and profits shrink. One could argue that in those scenarios the leadership of the company did not perform their legal fiduciary duty.

It is my own opinion that it is best/proper for a company to remain neutral politically across the spectrum and focus on its customers and business revenues and profits. 

US District Judge Strikes Down CDC Mask Mandate

 

In a recent court case, US District Judge Kathryn Kimball Mizelle struck down the CDC's mask requirement that went into effect on February 3, 2021; concluding that the CDC exceeded its statutory authority and violated APA procedures required for agency rulemaking. There are mixed feelings about this decision, but the decision does not remove the right to wear a mask. There are plenty of comments on news shows, internet forums, Reddit, etc where people say the logic surrounding the decision is flawed or outright wrong because the Judge tossed out one of the definitions of a word arbitrarily. The Judge's reasoning for vacating 86 Fed. Reg. 8025 (Feb 3, 2021) and remanding it to the CDC are below.

The CDC published the Mask Mandate without public participation as required by the APA procedures and the Mandate also claimed it wasn't a rule under the APA. In her judgment, she did not accept the CDC's defense that public participation would've created too much of a burden. Why would the CDC argue it would be too much of a burden if they also claimed that it wouldn't need public participation because it wasn't a rule?

The CDC relied on the Public Health Services Act of 1944 (PHSA) to empower its Mask Mandate through § 264(b)-(d), whereby courts have already vacated decisions regarding the CDC's decision to shut down the cruise industry and prohibit landlords from evicting tenants for not paying rent. The remaining Mask Mandate was still in effect using § 264 for legal standing and authority to enforce such a federal mandate. As with the other two, the third use is likely to exceed CDC's authority to publish and enforce the Mask Mandate.

§ 264(a) of PHSA does not authorize the CDC to issue a Mask Mandate because the text suggests methods of preventing communicable diseases by active cleaning or preserving cleanliness. Masks “neither sanitize the person wearing a mask nor sanitizes the conveyance”. The text suggests methods of “identifying, isolating, and destroying the disease itself”.

Finally, § 264(a) extends to property whereas § 264(b)-(d) extends to personal liberty. It empowers authorities to detain and quarantine individuals who are traveling interstate or coming from a foreign country who are “reasonably believed to be infected with a communicable disease in a qualifying stage” and found upon examination to be infected. The Mask Mandate would then be considered the “conditional release” as it allows freedom of use of conveyances as well as freedom of movement of the individual. The Mask Mandate would violate both (c) and (d).

It surprises me when news pundits or people on the internet boil down a decision to one thing. There were many issues with the Mask Mandate that violated the law or exceeded its statutory authority. It is not simply that the Judge arbitrarily chose a definition to suit her decision, or that she spun her decision to match political ideologies.