Source: http://reclaimdemocracy.org/boston_v_bellotti/
Timestamp: 2019-04-19 18:34:05+00:00

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Editor’s note: If you seek only a summary of the case, please visit our web page on Eliminating Corporate Power Over Ballot Questions. You also can go directly to the dissent of Justice William Rehnquist.
Appeal from the Supreme Judicial Court of Massachusetts (No. 76-1172).
425 U.S. 748, 764 Pp. 776-783.
(b) The asserted justifications for the challenged statute cannot survive the exacting scrutiny required when the legislative prohibition is directed at speech itself and speech on a public issue. This statute cannot be justified by the State’s asserted interest in sustaining the active role of the individual citizen in the electoral process and preventing diminution of his confidence in government. Even if it were permissible to silence one segment of society upon a sufficient showing of imminent danger, there has been no showing that the relative voice of corporations has been overwhelming or even significant in influencing referenda in Massachusetts, or that there has been any threat to the confidence of the citizenry in government. And the risk of corruption perceived in this Court’s decisions involving candidate elections is not present in a popular vote on a public issue. Nor can the statute be justified on the asserted ground that it protects the rights of shareholders whose views differ from those expressed by management on behalf of the corporation. The statute is both underinclusive and overinclusive in serving this purpose, and therefore could not be sustained even if the purpose itself were deemed compelling. Pp. 788-795.
[ Footnote * ] Briefs of amici curiae urging reversal were filed by Henry Paul Monaghan for the Associated Industries of Massachusetts, Inc., et al., and by Jerome H. Torshen, Jeffrey Cole, Stanley T. Kaleczyc, Jr., and Lawrence B. Kraus for the Chamber of Commerce of the United States. William C. Oldaker filed a brief for the Federal Election Commission as amicus curiae urging affirmance. Briefs of amici curiae were filed by Mike Greely, Attorney General, and Jack Lowe, Special Assistant Attorney General, for the State of Montana; by James S. Hostetler for the New England Council; and by Ronald A. Zumbrun, Robert K. Best, John H. Findley, Albert Ferri, Jr., and W. Hugh O’Riordan for the Pacific Legal Foundation.
In sustaining a state criminal statute that forbids certain expenditures by banks and business corporations for the purpose of influencing the vote on referendum proposals, the Massachusetts Supreme Judicial Court held that the First Amendment rights of a corporation are limited to issues that materially affect its business, property, or assets. The court rejected appellants’ claim that the statute abridges freedom of speech in violation of the First and Fourteenth Amendments. The issue presented in this context is one of first impression in this Court. We postponed the question of jurisdiction to our consideration of the merits. 430 U.S. 964 (1977). We now reverse.
On September 22, 1976, the full bench directed the single justice to enter judgment upholding the constitutionality of 8. An opinion followed on February 1, 1977. In addressing appellants’ constitutional contentions, 5 the court acknowledged that 8 “operate[s] in an area of the most fundamental First Amendment activities,” Buckley v. Valeo, 424 U.S. 1, 14 (1976), and viewed the principal question as “whether business corporations, such as [appellants], have First Amendment rights coextensive with those of natural persons or associations of natural persons.” 371 Mass. 773, 783, 359 N. E. 2d 1262, 1269. The court found its answer in the contours of a corporation’s constitutional right, as a “person” under the Fourteenth Amendment, not to be deprived of property without due process of law. Distinguishing the First Amendment rights of a natural person from the more limited rights of a corporation, the court concluded that “whether its rights are designated `liberty’ rights or `property’ rights, a corporation’s property and business interests are entitled to Fourteenth Amendment protection. . . . [A]s an incident of such protection, corporations also possess certain rights of speech and expression under the First Amendment.” Id., at 784, 359 N. E. 2d, at 1270 (citations and footnote omitted). Accordingly, the court held that “only when a general political issue materially affects a corporation’s business, property or assets may that corporation claim First Amendment protection for its speech or other [435 U.S. 765, 772] activities entitling it to communicate its position on that issue to the general public.” Since this limitation is “identical to the legislative command in the first sentence of [ 8],” the court concluded that the legislature “has clearly identified in the challenged statute the parameters of corporate free speech.” Id., at 785, 359 N. E. 2d, at 1270.
The court also declined to say that there was “no rational basis for [the] legislative determination,” embodied in the second sentence of 8, that a ballot question concerning the taxation of individuals could not materially affect the interests of a corporation. Id., at 786, 359 N. E. 2d, at 1271. In rejecting appellants’ argument that this second sentence established a conclusive presumption in violation of the Due Process Clause, the court construed 8 to embody two distinct crimes: The first prohibits a corporation from spending money to influence the vote on a ballot question not materially affecting its business interests; the second, and more specific, prohibition makes it criminal per se for a corporation to spend money to influence the vote on a ballot question solely concerning individual taxation. While acknowledging that the second crime is “related to the general crime” stated in the first sentence of 8, the court intimated that the second sentence was intended to make criminal an expenditure of the type proposed by appellants without regard to specific proof of the materiality of the question to the corporation’s business interests. 6 Id., at 795 n. 19, 790-791, 359 N. E. 2d, at 1276 n. 19, [435 U.S. 765, 773] 1273-1274. The court nevertheless seems to have reintroduced the “materially affecting” concept into its interpretation of the second sentence of 8, as a limitation on the scope of the so-called “second crime” imposed by the Federal Constitution rather than the Massachusetts Legislature. Id., at 786, 359 N. E. 2d, at 1271. But because the court thought appellants had not made a sufficient showing of material effect, their challenge to the statutory prohibition as applied to them also failed.
Under no reasonably foreseeable circumstances could appellants obtain plenary review by this Court of the issue here presented in advance of a referendum on a similar constitutional amendment. In each of the legislature’s four attempts to obtain constitutional authorization to enact a graduated income tax, including this most recent one, the period of time between legislative authorization of the proposal and its submission to the voters was approximately 18 months. This proved too short a period of time for appellants to obtain complete judicial review, and there is every reason to believe that any future suit would take at least as long. Furthermore, a decision allowing the desired expenditures would be an empty gesture unless it afforded appellants sufficient opportunity prior to the election date to communicate their views effectively.
Nor can there be any serious doubt that there is a “reasonable expectation,” Weinstein v. Bradford, supra, that appellants [435 U.S. 765, 775] again will be subject to the threat of prosecution under 8. The 1976 election marked the fourth time in recent years that a proposed graduated income tax amendment has been submitted to the Massachusetts voters. Appellee’s suggestion that the legislature may abandon its quest for a constitutional amendment is purely speculative. 9 Appellants insist that they will continue to oppose the constitutional amendment, and there is no reason to believe that the Attorney General will refrain from prosecuting violations of 8. 10 Compare Nebraska Press Assn. v. Stuart, 427 U.S. 539, 546 -547 (1976), with Spomer v. Littleton, 414 U.S. 514, 521 (1974).
The court below framed the principal question in this case as whether and to what extent corporations have First Amendment [435 U.S. 765, 776] rights. We believe that the court posed the wrong question. The Constitution often protects interests broader than those of the party seeking their vindication. The First Amendment, in particular, serves significant societal interests. The proper question therefore is not whether corporations “have” First Amendment rights and, if so, whether they are coextensive with those of natural persons. Instead, the question must be whether 8 abridges expression that the First Amendment was meant to protect. We hold that it does.
The speech proposed by appellants is at the heart of the First Amendment’s protection.
310 U.S. 88, 101 -102 (1940).
The referendum issue that appellants wish to address falls squarely within this description. In appellants’ view, the enactment of a graduated personal income tax, as proposed to be authorized by constitutional amendment, would have a seriously adverse effect on the economy of the State. See n. 4, supra. The importance of the referendum issue to the people and government of Massachusetts is not disputed. Its merits, however, are the subject of sharp disagreement.
As the Court said in Mills v. Alabama, 384 U.S. 214, 218 (1966), “there is practically universal agreement that a major purpose of [the First] Amendment was to protect the free [435 U.S. 765, 777] discussion of governmental affairs.” If the speakers here were not corporations, no one would suggest that the State could silence their proposed speech. It is the type of speech indispensable to decisionmaking in a democracy, 11 and this is no less true because the speech comes from a corporation rather than an individual. 12 The inherent worth of the speech in terms of its capacity for informing the public does not depend upon the identity of its source, whether corporation, association, union, or individual.
The court below nevertheless held that corporate speech is protected by the First Amendment only when it pertains directly to the corporation’s business interests. In deciding whether this novel and restrictive gloss on the First Amendment comports with the Constitution and the precedents of this Court, we need not survey the outer boundaries of the Amendment’s protection of corporate speech, or address the abstract question whether corporations have the full measure of rights that individuals enjoy under the First Amendment. 13 [435 U.S. 765, 778] The question in this case, simply put, is whether the corporate identity of the speaker deprives this proposed speech of what otherwise would be its clear entitlement to protection. We turn now to that question.
The court below found confirmation of the legislature’s definition of the scope of a corporation’s First Amendment rights in the language of the Fourteenth Amendment. Noting that the First Amendment is applicable to the States through the Fourteenth, and seizing upon the observation that corporations “cannot claim for themselves the liberty which the Fourteenth Amendment guarantees,” Pierce v. Society of Sisters, 268 U.S. 510, 535 (1925), the court concluded that a corporation’s First Amendment rights must derive from its property rights under the Fourteenth.
-501 (1952) (footnote omitted) (emphasis supplied).
Yet appellee suggests that First Amendment rights generally have been afforded only to corporations engaged in the communications business or through which individuals express themselves, and the court below apparently accepted the “materially affecting” theory as the conceptual common denominator between appellee’s position and the precedents of this Court. It is true that the “materially affecting” requirement would have been satisfied in the Court’s decisions affording protection to the speech of media corporations and corporations otherwise in the business of communication or entertainment, and to the commercial speech of business corporations. See cases cited in n. 14, supra. In such cases, the speech would be connected to the corporation’s business almost by definition. But the effect on the business of the corporation was not the governing rationale in any of these decisions. None of them mentions, let alone attributes significance to, the fact that the subject of the challenged communication materially affected the corporation’s business.
The press cases emphasize the special and constitutionally recognized role of that institution in informing and educating the public, offering criticism, and providing a forum for discussion and debate. 17 Mills v. Alabama, 384 U.S., at 219 ; see [435 U.S. 765, 782] Saxbe v. Washington Post Co., 417 U.S. 843, 863 -864 (1974) (POWELL, J., dissenting). But the press does not have a monopoly on either the First Amendment or the ability to enlighten. 18 Cf. Buckley v. Valeo, 424 U.S., at 51 n. 56; [435 U.S. 765, 783] Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 389 -390 (1969); New York Times Co. v. Sullivan, 376 U.S. 254, 266 (1964); Associated Press v. United States,326 U.S. 1, 20 (1945). Similarly, the Court’s decisions involving corporations in the business of communication or entertainment are based not only on the role of the First Amendment in fostering individual self-expression but also on its role in affording the public access to discussion, debate, and the dissemination of information and ideas. 19See Red Lion Broadcasting Co. v. FCC, supra; Stanley v. Georgia, 394 U.S. 557, 564(1969); Time, Inc. v. Hill, 385 U.S. 374, 389 (1967). Even decisions seemingly based exclusively on the individual’s right to express himself acknowledge that the expression may contribute to society’s edification. Winters v. New York, 333 U.S. 507, 510(1948).
Section 8 permits a corporation to communicate to the public its views on certain referendum subjects – those materially affecting its business – but not others. It also singles out one kind of ballot question – individual taxation – as a subject about which corporations may never make their ideas public. The legislature has drawn the line between permissible and impermissible speech according to whether there is a sufficient nexus, as defined by the legislature, between the issue presented to the voters and the business interests of the speaker.
In the realm of protected speech, the legislature is constitutionally [435 U.S. 765, 785]disqualified from dictating the subjects about which persons may speak and the speakers who may address a public issue. Police Dept. of Chicago v. Mosley, 408 U.S. 92, 96 (1972). If a legislature may direct business corporations to “stick to business,” it also may limit other corporations – religious, charitable, or civic – to their respective “business” when addressing the public. Such power in government to channel the expression of views is unacceptable under the First Amendment. 21 Especially where, as here, the legislature’s suppression of speech suggests an attempt to give one side of a debatable public question an advantage in expressing its views to the people, 22 the First Amendment is [435 U.S. 765, 786] plainly offended. Yet the State contends that its action is necessitated by governmental interests of the highest order. We next consider these asserted interests.
The constitutionality of 8’s prohibition of the “exposition of ideas” by corporations turns on whether it can survive the exacting scrutiny necessitated by a state-imposed restriction of freedom of speech. Especially where, as here, a prohibition is directed at speech itself, 23 and the speech is intimately related to the process of governing, “the State may prevail only upon showing a subordinating interest which is compelling,” Bates v. Little Rock, 361 U.S. 516, 524 (1960); see NAACP v. Button, 371 U.S. 415, 438-439 (1963); NAACP v. Alabama ex rel. Patterson, 357 U.S., at 463 ; Thomas v. Collins, 323 U.S. 516, 530 (1945), “and the burden is on the government to show the existence of such an interest.” Elrod v. Burns, 427 U.S. 347, 362 (1976). Even then, the State must employ means “closely drawn to avoid unnecessary abridgment . . . .” Buckley v. Valeo, 424 U.S., at 25 ; see NAACP v. Button, supra, at 438; Shelton v. Tucker, 364 U.S. 479, 488 (1960).
The Supreme Judicial Court did not subject 8 to “the critical scrutiny demanded under accepted First Amendment [435 U.S. 765, 787] and equal protection principles,” Buckley, supra, at 11, because of its view that the First Amendment does not apply to appellants’ proposed speech. 24 For this reason the court did not even discuss the State’s interests in considering appellants’ First Amendment argument. The court adverted to the conceivable interests served by 8 only in rejecting appellants’ equal protection claim. 25 Appellee nevertheless advances two principal justifications for the prohibition of corporate speech. The first is the State’s interest in sustaining the active role of the individual citizen in the electoral process and thereby preventing diminution of the citizen’s confidence in government. The second is the interest in protecting the rights of shareholders whose views differ from those expressed by management on behalf of the corporation. However weighty these interests may be in the context of partisan candidate elections, 26 [435 U.S. 765, 788] they either are not implicated in this case or are not served at all, or in other than a random manner, by the prohibition in 8.
Preserving the integrity of the electoral process, preventing corruption, and “sustain[ing] the active, alert responsibility [435 U.S. 765, 789] of the individual citizen in a democracy for the wise conduct of government” 27 are interests of the highest importance. Buckley, supra; United States v. Automobile Workers, 352 U.S. 567, 570(1957); United States v. CIO, 335 U.S. 106, 139 (1948) (Rutledge, J., concurring); Burroughs v. United States, 290 U.S. 534 (1934). Preservation of the individual citizen’s confidence in government is equally important. Buckley, supra, at 27; CSC v. Letter Carriers, 413 U.S. 548, 565 (1973).
Appellee advances a number of arguments in support of his view that these interests are endangered by corporate participation in discussion of a referendum issue. They hinge upon the assumption that such participation would exert an undue influence on the outcome of a referendum vote, and – in the end – destroy the confidence of the people in the democratic process and the integrity of government. According to appellee, corporations are wealthy and powerful and their views may drown out other points of view. If appellee’s arguments were supported by record or legislative findings that corporate advocacy threatened imminently to undermine democratic processes, thereby denigrating rather than serving First Amendment interests, these arguments would merit our consideration. Cf. Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969). But there has been no showing that the relative voice of corporations has been overwhelming or even significant in influencing referenda in Massachusetts, 28 or that [435 U.S. 765, 790] there has been any threat to the confidence of the citizenry in government. Cf. Wood v. Georgia, 370 U.S. 375, 388 (1962).
Finally, appellee argues that 8 protects corporate shareholders, an interest that is both legitimate and traditionally within the province of state law. Cort v. Ash, 422 U.S. 66, 82-84 (1975). The statute is said to serve this interest by preventing the use of corporate resources in furtherance of [435 U.S. 765, 793] views with which some shareholders may disagree. This purpose is belied, however, by the provisions of the statute, which are both underinclusive and overinclusive.
The fact that a particular kind of ballot question has been singled out for special treatment undermines the likelihood of a genuine state interest in protecting shareholders. It suggests instead that the legislature may have been concerned with silencing corporations on a particular subject. Indeed, appellee has conceded that “the legislative and judicial history of the statute indicates . . . that the second crime was `tailor-made’ to prohibit corporate campaign contributions to oppose a graduated income tax amendment.” Brief for Appellee 6.
The overinclusiveness of the statute is demonstrated by the fact that 8 would prohibit a corporation from supporting or opposing a referendum proposal even if its shareholders unanimously authorized the contribution or expenditure. Ultimately shareholders may decide, through the procedures of corporate democracy, whether their corporation should engage in debate on public issues. 34 Acting through their power to elect [435 U.S. 765, 795] the board of directors or to insist upon protective provisions in the corporation’s charter, shareholders normally are presumed competent to protect their own interests. In addition to intracorporate remedies, minority shareholders generally have access to the judicial remedy of a derivative suit to challenge corporate disbursements alleged to have been made for improper corporate purposes or merely to further the personal interests of management.
Assuming, arguendo, that protection of shareholders is a “compelling” interest under the circumstances of this case, we find “no substantially relevant correlation between the governmental interest asserted and the State’s effort” to prohibit appellants from speaking. Shelton v. Tucker, 364 U.S., at 485 .
Note: To keep the size of this page manageable, footnotes and concurring and dissenting opinions are omitted. Many law websites host that material. We highly recommend reading the dissent of Justice William H. Rehnquist.
For an extensive collection of resources relating to the Bellotti case and stripping corporations of their power to influence ballot questions, see our library of resources on Corporations and Ballot Initiatives or on Corporate Personhood.
Of related interest: Memo by Justice Lewis Powell (author of the majority opinion) to the U.S. Chamber of Commerce, written weeks before his appointment to the Supreme Court, in which he called for an aggresive expansion of corporate legal and political power.

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