July 16, 2014
Hobby Lobby and Competing Interests Within the Corporation
Posted by Elizabeth Pollman

Thanks to the Conglomerate for hosting this excellent symposium.  I’d like to pick back up an issue that I briefly blogged about earlier this month, which is whose interests to consider as being represented by the corporation and how to handle questions of corporate rights when people associated with the corporation have competing interests at stake.

This is a difficult issue—one that the Supreme Court has not adequately explained in the 200+ years in which it has been answering questions of how to treat corporations under the Constitution.  I hope to explore it in more depth in some of my current projects … here I thought I’d just draw attention to a passage of the Hobby Lobby majority opinion which I think is particularly thought-provoking on this point.  Justice Alito wrote:

As we will show, Congress provided protection for people like the Hahns and Greens by employing a familiar legal fiction: It included corporations within RFRA’s definition of “persons.”  But it is important to keep in mind that the purpose of this fiction is to provide protection for human beings.  A corporation is simply a form of organization used by human beings to achieve desired ends.  An established body of law specifies the rights and obligations of the people (including shareholders, officers, and employees) who are associated with a corporation in one way or another.  When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people.  For example, extending Fourth Amendment protection to corporations protects the privacy interests of employees and others associated with the company.  Protecting corporations from government seizure of their property without just compensation protects all those who have a stake in the corporations’ financial well-being.  And protecting the free-exercise rights of corporations like Hobby Lobby, Conestoga, and Mardel protects the religious liberty of the humans who own and control those companies.

It’s interesting that Justice Alito chose to use examples dealing with constitutional rights in this passage while elsewhere stating in the opinion that the ruling was only on the statutory question under RFRA, and the Court was not reaching the First Amendment claim.  

Putting that aside, there’s the point reflected in this paragraph that corporate rights are generally derivative in nature.  That is, corporations have been at times accorded constitutional (or statutory) protections in order to protect natural persons involved in or associated with corporations.  Margaret Blair and I have been working on an article, forthcoming in William & Mary Law Review, which traces Supreme Court jurisprudence and the derivative nature of corporate constitutional rights…. but we also show something that Justice Alito didn’t address which is that the rationale for according derivative rights to corporations also suggests limitations to such rights, and that the Court has drawn limits in the past.

Further, Justice Alito’s choice of examples doesn’t fully grapple with the complexity of the issue because with the Fourth Amendment and property/takings examples it seems likely that the people associated with a corporation would have common interests that are being protected.  It’s also curious that Justice Alito refers to protecting the interests of “employees and others associated with the company” when referencing Fourth Amendment protections and “all those who have a stake in the corporations’ financial well-being” when referencing property protections – but only to those “humans who own and control” the corporations when considering free-exercise rights.

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