This document provides an overview of a law school module on corporations and politics. It discusses the history of corporate personhood under the Constitution from the founding era through recent Supreme Court cases. Key topics covered include the rise of general incorporation laws in the 1800s, early cases defining corporate rights, campaign finance laws like FECA and Citizens United, and debates around the influence of money in politics. The module aims to analyze how Supreme Court jurisprudence and campaign finance regulations have shaped and limited corporate political activities over time.

1. CORPORATIONS
MODULE 2: POLICY
LESSON 3: POLITICS
Professor Seth C. Oranburg
Duquesne University School of Law
Spring 2020
1© 2020 Seth C. Oranburg

2. Learning Objectives
■ Recall the history of corporate influence over politics and legal
efforts to curtail it
■ Analyze campaign finance regulations and their impact
■ Describe the Citizens United decision and how it related to
prior Supreme Court precedent
■ Analyze how the Citizens United decision changed campaign
finance
■ Evaluate whether social media has changed the nature or cost
of political speech
■ Discuss the impact of money on politics
© 2020 Seth C. Oranburg 2

3. A Brief History of Corporations
and the Constitution
© 2020 Seth C. Oranburg 3

4. 1787 – The Founding
■ Very few business corporations existed
■ “Corporations” were mainly churches, charities,
and municipalities
■ Incorporating required an act of state congress
– No “free incorporation”
■ Constitution does not expressly refer to
corporations
© 2020 Seth C. Oranburg 4

5. General Incorporation Laws
(“Free Incorporation”)
■1811 – New York
■1816 – New Jersey
■1837 – Connecticut
■1883 – Delaware
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6. 1819 – Dartmouth College
■ Corporation is an “artificial being” that
“possesses only those properties which
the character of its creation confers upon it
either expressly or as incidental to its very
existence”  limited corporate rights
■ Yet a corporate charter is a binding
contract between the state and the
promoters
© 2020 Seth C. Oranburg 6

7. Antebellum Corporate
Jurisprudence – Contraction
■SCOTUS further limits corporate
rights
■E.g., out-of-state corporations are not
“citizens” under the Privileges and
Immunities Clause of Art. IV;
therefore, states can regulate or even
keep out corporations chartered in
other states
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8. Late 1800s Jurisprudence –
Expansion of Corporate Power
■ States increasingly allowed free incorporation
■ Size and number of business corporations grew
exponentially
■ SCOTUS recognizes that a corporation is a “person”
under the 14th Amendment
– Corporation get rights to equal protection and due
process
– Corporations gain constitutional protection over
their contract and property interests
© 2020 Seth C. Oranburg 8

9. 1883 – Pendleton Civil Service
Reform Act
■ President Andrew Jackson introduced the
“spoils system” in 1828, whereby political
supporters would receive government positions
upon a candidate’s victory
■ The Pendleton Act attempted to end this
system by requiring that federal government
jobs shall be awarded upon merit
– Created the Civil Service Commission to
enforce the law
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10. 1906 – Hale v. Henkel –
Contraction
■ Constitutional protections do not apply to
business corporations’ non-commercial
activities
■ Corporation is not a “person” for purpose
of privilege against self-incrimination
■ But corporation can still claim 4th Am.
Protections against unreasonable
searches and seizures
© 2020 Seth C. Oranburg 10

11. 1907 – Tillman Act
■Prohibits corporations from
spending treasury funds on
campaign contributions or
ads to any particular
candidate
© 2020 Seth C. Oranburg 11

12. 1939 – Hatch Act
■“An Act to Prevent Pernicious
Political Activities”
■Prohibits federal employees in the
executive branch from engaging in
political activity
– Except the President, VP, and a
few other designed officials
© 2020 Seth C. Oranburg 12

13. 1971 – Federal Elections
Campaign Act (FECA)
■ Allowed corporations and unions to establish Political Action
Committees (PACs)
■ PACs receive contributions directly from shareholders,
executives, and employees, with their consent – but PACs
cannot accept general treasury funds
– PACs can spend these moneys on political campaigns
■ Corporations can spend treasury funds on “issue ads” and
donations to charitable and educational organizations
including “think tanks” that advocate political views
– So long as treasury funds do not go toward any particular
candidate
© 2020 Seth C. Oranburg 13

14. 1978 – Civil Service Reform
Act
■Reaffirmed the intent of the
Pendleton Act in the wake of the
Watergate scandal
■Split the Civil Service
Commission into three new
agencies
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15. Lobbying
■ Corporations can lobby members of
Congress
■ Lobbyists must register and disclose any
payments they receive
■ Note that many activities you might think
of as lobbying – TV ads, congressional
testimony, letter writing campaigns, etc. –
and not subject to lobbyist disclosure rules
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16. 1978 – First National Bank of
Boston v. Bellotti
■ SCOTUS invalidated a MA law that banned
corporations from placing political ads for or
against pending referenda
■ Held that the state failed to show compelling
justification for targeting the corporate speech
– No showing “that the relative voice of
corporations has been overwhelming or even
significant in influencing reference in
Massachusetts.”
© 2020 Seth C. Oranburg 16

17. 1986 – Federal Election
Committee v. MCFL
■The federal ban against using
treasury funds to finance voting
advocacy is invalid against
nonprofits who are “formed for
the express purpose of
promoting political ideas”
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18. 1986 – Austin v. Michigan
Chamber of Commerce
■ The federal ban against using treasury
funds to finance voting advocacy is valid
against for-profits corporations
– Given the “unique legal and economic
characteristics” of corporations,
regulations are needed to avoid “the
corrosive and distorting effects of
immense aggregations of wealth”
© 2020 Seth C. Oranburg 18

19. c.f. Bellotti with Austin
■Why was the regulation in Bellotti
unconstitutional, yet permitted in
Austin?
■Tensions in SCOTUS
jurisprudence heralded a new case
on the horizon to resolve the
issue…
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20. 20
See Citizens United
© 2020 Seth C. Oranburg

21. 2010 – Citizens United v. FEC
■ Permitted campaign “expenditures” but not
campaign “contributions”
■ Based on the aggregate (contractarian) theory
of corporations
■ Trusts “corporate democracy” to protect
shareholder rights
■ Does not require corporations to report how
much they spend on political speech
© 2020 Seth C. Oranburg 21

22. Aftermath
■ Scholars and pundits disagree on whether and how
Citizens United impacted politics
■ Total political campaign spending seems to have
increased dramatically
■ Disclosure of who is contributing those funds seems
to have decreased
■ Presidential candidates appear to be spending more
time fundraising smaller contributions from more
people and groups
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23. Conclusions
■ Corporate influence over political actors has
troubled this country almost since its inception
■ Many laws have been enacted to keep money
out of politics, but their success has been limited
■ Citizens United is a landmark case in that it
enables direct corporate spending on political
messages
■ But the impact of Citizens United on the overall
political landscape remains somewhat unclear
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24. END OF
POLICY MODULE
Corporations 2020
24© 2020 Seth C. Oranburg