Court Opinion

ID: 9431957
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:33:42.758946+00
Date Added: 2024-06-11T17:23:31.227078
License: Public Domain

Justice Brennan,
concurring.
I join the Court’s opinion. As one of the “Orwellian” “censor[s]” derided by the dissents, post, at 679 (Scalia, J.); post, at 713 (Kennedy, J.), and as the author of our recent decision in FEC v. Massachusetts Citizens for Life, Inc., 479 U. S. 238 (1986) (MCFL), I write separately to explain my views in this case.
The Michigan law at issue is not an across-the-board prohibition on political participation by corporations or even a complete ban on corporate political expenditures. Rather, the statute merely requires those corporations wishing to make independent expenditures in support of candidates to do so through segregated funds or political action committees (PAC’s) rather than directly from their corporate treasuries.1 As the dissents observe, this restriction still must b© analyzed with great solicitude and care, because independent expenditures constitute expression “ ‘at the core- of ©ur electoral process and of the First Amendment? freedoms.”” Buckley v. Valeo, 424 U. S. 1, 39 (1976) (per curiam) (quot*670ing Williams v. Rhodes, 393 U. S. 23, 32 (1968)). I believe, however, that the dissents significantly overstate their case in several important respects and that the Court’s decision today is faithful to our prior opinions in the campaign financing area, particularly MCFL.
In MCFL, we held that a provision of the Federal Election Campaign Act of 1971 (FECA), as added, 90 Stat. 490, and amended, 2 U. S. C. § 441b, similar to the Michigan law at issue here, could not be applied constitutionally to a small, antiabortion advocacy group. In evaluating the First Amendment challenge, however, we “acknowledge^] the legitimacy of Congress’ concern that organizations that amass great wealth in the economic marketplace not gain unfair advantage in the political marketplace.” 479 U. S., at 263. Specifically, we noted that “[djirect corporate spending on political activity raises the prospect that resources amassed in the economic marketplace may be used to provide an unfair advantage in the political marketplace,” because “[t]he resources in the treasury of a business corporation . . . are not an indication of popular support for the corporation’s political ideas.” Id., at 257-258 (emphasis added). Instead, these resources reflect “the economically motivated decisions of investors and customers.” Id., at 258. A stockholder might oppose the use of corporate funds drawn from the general treasury — which represents, after all, his money — in support of a particular political candidate. See id., at 260, citing FEC v. National Right to Work Committee, 459 U. S. 197, 208 (1982), and Pipefitters v. United States, 407 U. S. 385, 414-415 (1972). The requirement that corporate independent expenditures be financed through a segregated fund or PAC expressly established to engage in campaign spending is designed to avert this danger. “The resources available to [a PAC], as opposed to the corporate treasury, in fact reflect popular support for the political positions of the committee.” MCFL, 479 U. S., at 258. We thus adopted the “ ‘underlying theory’” of FECA “‘that substantial general purpose *671treasuries should not be diverted to political purposes’ ” and that requiring funding by voluntary contributions guarantees that “ ‘the money collected is that intended by those who contribute to be used for political purposes and not money diverted from another source.’ ” Ibid, (quoting 117 Cong. Rec. 43381 (1971) (statement of Rep. Hansen)).2
The PAC requirement may be unconstitutional as applied to some corporations because they do not present the dangers at which'expenditure limitations are aimed. Indeed, we determined that Massachusetts Citizens for Life — the antiabortion advocacy organization at issue in MCFL — fell into this category.3 We nevertheless predicted that the *672class of exempt organizations would be small, see 479 U. S., at 264, and we set out three features of MCFL that were “essential” to our holding that it could not be bound by the restriction on independent spending. Id., at 263. First, the group “was formed for the express purpose of promoting political ideas, and [could not] engage in business activities.” Id. , at 264. Second, it “ha[d] no shareholders or other persons affiliated so as to have a claim on its assets or earnings. This ensure[d] that persons connected with the organization [had] no economic disincentive for disassociating with it if they disagree[d] with its political activity.” Ibid, (footnote omitted). Third, the group “was not established by a business corporation or a labor union, and it [was] its policy not to accept contributions from such entities. This prevented it] from serving as [a] condui[t] for the type of direct spending that creates a threat to the political marketplace.” Ibid.
The majority today persuasively demonstrates that the situation in this case is markedly different from that in MCFL. The Michigan State Chamber of Commerce (Chamber) is first and foremost a business association, not a political advocacy organization. See ante, at 661-665. The Michigan statute advances the interest identified in MCFL in two distinct ways, by preventing both the Chamber and other business corporations from using the funds of other persons for purposes that those persons may not support. First, the state law protects the small businessperson who does not wish his or her dues to be spent in support of political candidates, but who nevertheless wishes to maintain an association with the Chamber because of the myriad benefits it provides that are *673unrelated to its political activities. See ante, at 662-663. The bylaws state that the Chamber’s “objectives and purposes” shall be in part “[t]o analyze, compile and disseminate information on laws and regulations of interest to the members” and “[t]o further the training and education of the membership by means of educational materials, seminars, conventions, bulletins, newsletters, reports and technical materials.” App. 43a. To attract new members, Chamber advertisements promise a wide variety of services, including “regular and special publications, legislative briefings, group insurance, a business hot-line, and seminars.” Id., at 42a. Its advertising practices indicate that even the Chamber understands that membership is not a function of support for its political causes alone. A member faces significant disincentives to withdraw, even if he disagrees with the Chamber’s expenditures in support of a particular candidate.
In addition, the Michigan law protects dissenting shareholders of business corporations that are members of the Chamber to the extent that such shareholders oppose the use of their money, paid as dues to the Chamber out of general corporate treasury funds, for political campaigns. See MCFL, supra, at 260-261; cf. post, at 686 (Scalia, J., dissenting). The Michigan law prevents the Chamber from “serv[ing] as a conduit for corporate political spending.” Ante, at 664. Even Justice Kennedy, by repeatedly using the qualifier “nonprofit” throughout his opinion, appears to concede that the Michigan law legitimately may be applied to for-profit business corporations, or at least that the Court’s rationale might “suffice to justify restricting political speech by for-profit corporations.” Post, at 703 (dissenting opinion). If that is so, Justice Kennedy’s failure to sustain the statute as applied in this case is perplexing, because the Chamber, unlike other nonprofits such as MCFL, is clearly a conduit for corporations barred from making independent ex*674penditures directly.4 A corporation cannot under Michigan law make a contribution to a PAC out of its general treasury funds, see ante, at 664, n. 3, and we have upheld similar rules restricting the groups from whom PAC’s may solicit contributions. See FEC v. National Right to Work Committee, 459 U. S., at 207-211; California Medical Assn. v. FEC, 453 U. S. 182, 193-199 (1981) (plurality opinion). It is common ground that a segregated fund, even if it is a “nonprofit corporation,” cannot be used as a conduit for independent expenditures by business corporations; I find it unremarkable that the Chamber and other nonprofits cannot perform such a function either.
Of course, a member could resign from the Chamber and a stockholder could divest from a business corporation that used the Chamber as a conduit, but these options would impose a financial sacrifice on those objecting to political expenditures.5 See MCFL, 479 U. S., at 260. It is therefore irrelevant that “[t]o the extent that members disagree with a nonprofit corporation’s policies, they can seek change from within, withhold financial support, cease to associate with the group, or form a rival group of their own.” Post, at 710 (Kennedy, J., dissenting). Moreover, none of the alternatives proposed by Justice Kennedy would protect a captive *675stockholder of a business corporation that used the Chamber as a conduit.6 While the State may have no constitutional duty to protect the objecting Chamber member and corporate shareholder in the absence of state action, cf. Abood v. Detroit Board of Education, 431 U. S. 209, 232-237 (1977), the State surely has a compelling interest in preventing a corporation it has chartered from exploiting those who do not wish to contribute to the Chamber’s political message. “A’s right to receive information does not require the state to permit B to steal from C the funds that alone will enable B to make the communication.” Brudney, Business Corporations and Stockholders’ Rights Under the First Amendment, 91 Yale L. J. 235, 247 (1981). Cf. Communications Workers v. Beck, 487 U. S. 735 (1988); Machinists v. Street, 367 U. S. 740 (1961). We have long recognized the importance of state corporate law in “protect[ing] the shareholders” of corporations chartered within the State. CTS Corp. v. Dynamics Corp. of America, 481 U. S. 69, 91 (1987).
The Michigan law is concededly “underinclusive” insofar as it does not ban other types of political expenditures to which *676a dissenting Chamber member or corporate shareholder might object. See post, at 685-686 (Scalia, J., dissenting). The particular provision at issue prohibits corporations from using treasury funds only for making independent expenditures in support of, or in opposition to, any candidate in state elections. See ante, at 655-656. A corporation remains free, for example, to use general treasury funds to support an initiative proposal in a state referendum.7 See First National Bank of Boston v. Bellotti, 435 U. S. 765 (1978).
I do not find this underinclusiveness fatal, for several reasons.8 First, as the dissents recognize, discussions on candi*677date elections lie “at the heart of political debate.” Post, at 698 (Kennedy, J.); see also post, at 680, 692 (Scalia, J.). But just as speech interests are at their zenith in this area, so too are the interests of unwilling Chamber members and corporate shareholders forced to subsidize that speech. The State’s decision to focus on this especially sensitive context is a justifiable one.9 Cf. MCFL, 479 U. S., at 258, n. 11. Second, in light of our decisions in Bellotti, supra, Consolidated Edison Co. of New York v. Public Service Comm’n of New York, 447 U. S. 530, 533-535 (1980), and related cases, a State cannot prohibit corporations from making many other types of political expenditures. One purpose of the underinclusiveness inquiry is to ensure that the proffered state interest actually underlies the law. See, e. g., *678Florida Star v. B. J. F., 491 U. S. 524, 540 (1989); FCC v. League of Women Voters of California, 468 U. S. 364, 396 (1984). But to the extent that the Michigan statute is “underinclusive” only because it does not regulate corporate expenditures in referenda or other corporate expression (besides merely commercial speech), this reflects the requirements of our decisions rather than the lack of an important state interest on the part of Michigan in regulating expenditures in candidate elections. In this sense, the Michigan law is not “underinclusive” at all. Finally, the provision in Michigan corporate law authorizing shareholder actions against corporate waste might serve as a remedy for other types of political expenditures that have no legitimate connection to the corporation’s business. See Mich. Comp. Laws §600.3605 (l)(b) (1979);10 cf. Bellotti, supra, at 795.
For these reasons, I concur in the Court’s opinion.

 In MCFL, 479 U. S. 238 (1986), we observed that th'e.requirement that expenditures be made through PAC’s “is of course distinguishable from the complete foreclosure of any opportunity for political speechHhat we invalidated in the state referendum context in First National Bank of Boston v. Bellotti, 435 U. S. 765 (1978).” Id., at 259, n. 12.

 We cited with approval in First National Bank of Boston v. Bellotti, 435 U. S. 765 (1978), a discussion of the constitutionality of restrictions on union contributions and independent expenditures in candidate elections: “[T]he ban on union political contributions and expenditures is not total but applies only to general union funds. Contributions and expenditures made by a separate fund financed by voluntary contributions are specifically permitted, as are expenditures of general funds to solicit contributions to the separate fund. In order to engage in political discussion, a union need only convince its members that its views are sound enough to merit a contribution to a union political committee espousing the same political philosophy. The necessity of convincing union members of the value of such a contribution does not amount to a constitutionally invalid burden. After all, if union members are so unconvinced of the reasonableness of the union’s position that they refuse to support it, the argument for prohibiting the union from spending dues money to support its political views is greatly strengthened. ... In the case of unions, the statute strikes a legitimate and reasonable accommodation by distinguishing between the uses to which a separate, voluntary fund and the general treasury fund may be put.” Comment, The Regulation of Union Political Activity: Majority and Minority Rights and Remedies, 126 U. Pa. L. Rev. 386, 409 (1977) (cited in Bellotti, supra, at 788, n. 26).

 Justice Kennedy is mistaken when he suggests that by upholding the as-applied challenge in MCFL and rejecting it here, we are embarking on “value-laden, content-based speech suppression that permits some nonprofit corporate groups but not others to engage in political speech.” Post, at 695-696 (Kennedy, J., dissenting). The mere fact that some as-applied challenges succeed while others fail does not create a system of *672“speech suppression.” Whether an organization presents the threat at which the campaign finance laws are aimed has to do with the particular characteristics of the organization at issue and not with the content of its speech. Of course, if a correlation between the two factors could be shown to exist, a group would be free to mount a First Amendment challenge on that basis. Cf. Buckley v. Valeo, 424 U. S. 1, 97, n. 131 (1976). Neither appellee nor Justice Kennedy’s dissent has provided any reason to believe that such a relationship exists here.

 According to Justice Kennedy’s dissent, the majority holds that “it is now a felony in Michigan for the Sierra Club, or the American Civil Liberties Union” to make independent expenditures. Post, at 698. This characterization is inaccurate. Not only are those groups not part of the proceeding before us, but the dissent has overlooked the central lesson of MCFL that the First Amendment may require exemptions, on an as-applied basis, from expenditure restrictions. If a nonprofit corporation is formed with the express purpose of promoting political ideas, is not composed of members who face an economic incentive for disassociating with it, and does not accept contributions from business corporations or labor unions, then it would be governed by our MCFL holding.

 In addition, shareholders in a large business corporation may find it prohibitively expensive to monitor the activities of the corporation to determine whether it is making expenditures to which they object.

 Justice Kennedy’s argument is also inconsistent with his focus on nonprofit corporations. The leading theory of nonprofit enterprises holds that the rationale for use of the nonprofit form lies chiefly in the so-called “nondistribution constraint” — i. e., the fact that while ordinary business corporations have shareholders who are allowed to receive the residual earnings of the enterprise, the members of a nonprofit corporation are expressly prohibited from receiving any part of the assets or property of the corporation for themselves. See Hansmann, Reforming Nonprofit Corporation Law, 129 U. Pa. L. Rev. 497, 502-507, 557 (1981); Hansmann, The Role of Nonprofit Enterprise, 89 Yale L. J. 835, 843-845 (1980). The non-distribution constraint helps overcome contractual failure in situations where the activities of the corporation are difficult to monitor, by removing the “profit motive” and assuring those who contribute to, and contract with, the corporation that the nonprofit’s managers will not exploit informational deficiencies to pursue their own private interests. Hence, Justice Kennedy’s proposed reliance on a nonprofit’s donors to monitor and police the corporation’s activities overlooks the raison d’etre of the nonprofit form.

 This very “underinclusiveness” belies the dissents’ charge that the Michigan law is a broad restriction on corporate political expression; many avenues of communication are open to the Chamber. In addition, the segregated fund requirement in practice has not burdened significantly the Chamber’s speech with respect to candidate-oriented expenditures. The Chamber established a PAC in 1977 and has drawn from that fund in every election since then. The Chamber has an eligible class of about 50,000 individuals from whom it can solicit contributions to its PAC under the Michigan statute, and it has been quite successful in doing so. During the 1983-1984 election cycle, the Chamber PAC raised over $102,000, and its projected resources for the 1986 primary and general elections amounted to more than $140,000. See App. in No. 86-1867 (CA6), pp. 164, 184. The District Court found that “the record in this case amply demonstrates that the Chamber PAC frequently makes independent expenditures to influence political elections, and those efforts have been tremendously successful in electing Chamber PAC endorsed candidates.” App. to Juris. Statement 66a-67a.

 Justice Scalia also maintains that protection of dissenting shareholders cannot qualify as a valid state interest because shareholders purchase their stock on the understanding that the corporation will use their money for any profitmaking purpose, including support for political candidates with whom the shareholders may not agree. See post, at 686-687. We have already rejected this argument in the context of labor unions. See Abood v. Detroit Board of Education, 431 U. S. 209, 234-235 (1977); Machinists v. Street, 367 U. S. 740, 764 (1961). Rather than assuming that an employee accepts as “the deal,” post, at 686, that the union will use his dues for any purpose that will advance the interests of the bargaining unit, including political contributions and expenditures, we have determined that “the authority to impose dues and fees [is] restricted at least to *677the ‘extent of denying the unions the right, over the employee’s objection, to use his money to support political causes which he opposes,’. . . even though Congress was well aware that unions had historically expended funds in the support of political candidates and issues.” Ellis v. Railway Clerks, 466 U. S. 435, 447 (1984) (quoting Street, supra, at 768) (emphasis added).
Given the extensive state regulation of corporations, shareholder expectations are always a function of state law. It is circular to say, as does Justice Scalia, that if a State did not protect shareholders, they would have no expectation of being protected, and therefore that the State has no legitimate interest in protecting them. Justice Scalia concedes, as he must, that an expenditure “not plausibly tied to [a corporation’s] ability to make money for its shareholders” can be prohibited. Post, at 691. But States have always been permitted to define what qualifies as “plausibly tied” to the corporation’s purpose of making money, i. e., what qualifies as “corporate waste,” see Rogers v. Hill, 289 U. S. 582, 591-592 (1933), including wasteful speech, see Bellotti, 435 U. S., at 795; Cort v. Ash, 422 U. S. 66, 84 (1975). I believe it entirely proper for a State to decide to promote the ability of investors to purchase stock in corporations without fear that their money will be used to support candidates with whom they do not agree.

 As Justice Stevens notes in his concurring opinion today, post, at' 678-679, n., our decision in Bellotti expressly distinguished “state and federal laws regulating corporate participation in partisan candidate elections.” 435 U. S., at 788, n. 26 (emphasis added).

 1 express no definitive view of the proper interpretation of this provision of state law inasmuch as it is not part of the case before us.