Corporate Personhood

I'd like someone to talk me through the case against "corporate personhood", what they think it is and how we're harmed by it. I'll lay out a few of my questions and objections as a place to start, mostly summarizing material we covered in another thread:1) Since legal personhood - the notion that a corporation is a discreet legal entity that can own property and delegate agency - is the only reason a corporation can be sued in court, wouldn't we the people stand to lose quite a bit of our influence over corporations if we somehow dissolved corporate personhood? Consider the futility of trying to sue the Mafia or another organization that has no legal personhood. The loss of corporate personhood would drive all corporations into "organized crime" territory, at least in terms of trying to pursue civil remedy against them.2) There's frequently a need to get at the possessions of an organization in order to pursue civil remedies, criminal sanctions, and for probative discovery reasons. But the law should protect property owners from unlawful search and seizure - it's in the Constitution. Enormous erosions of our civil liberties have occurred as municipalities have sought ways to seize the property of organized crime. From RICO statutes, once used to prosecute Mafia crimes and now turned against union leaders, to civil forfeiture law where individuals not charged with crimes can have assets taken and auctioned against their will, now exploited to shore up budget shortfalls by police in municipalities that may have no significant drug problems. I submit that, in a world where corporations have no discreet legal identity, RICO and civil forfeiture would be the only way to get at the assets of a corporation, with the inevitable result of further municipal-level erosion of our civil rights.

I think your concern about who will own the property that a corporation owns if corporations are dissolved is misplaced. In essence, a corporation is simply a way for one or more people to own property in a way that their personal assets are protected, and a way for an entity to continue existence beyond the end of the lives of those who own it.If corporations were dissolved, people would still be able to own property together in groups. Instead, those groups would be partnerships rather than corporations. The main legal distinction between a partnership and a corporation is that partners are personally liable for partnership debts and obligations. Without a corporation, it may be more difficult to track down all the partners and all their assets, but not that much more difficult.I'm having a hard time imagining how the abuses of forfeiture laws would be any different for partnerships as opposed to corporations.

So, instead of corporate personhood we'd have partnership personhood. I don't understand what we'd gain. You'd still have enormous mega-partnerships making mega-donations to influence the political process. I'm having a hard time imagining how anything would be any different for partnerships instead of corporations.

There are practical limits on the size of partnerships. Millions can own a corporation through shares. Having millions of partners is impractical.As I said, the main difference between partnership ownership and corporate ownership is that partners are personally liable for partnership obligations. Ordinarily, corporate owners are not.I'm a little confused that in your second post, you seem to be shifting your concern from forfeiture abuse to corporate interference in the political process. Which problem do you want to address? Both?

But you can be an employee of a partnership, right? Like, all the people involved in Coca-Cola wouldn't all be partners, right? I guess if a law firm is a partnership, then certainly law firms have employees too, so I guess that answers my question. At this point the notion of shares as part-ownership of a corporation really is an abstraction; for the most part shares are traded for capital gains, not for dividends. Relatively few corporations even pay dividends these days. Given the vanishing significance of dividends there's no reason you wouldn't expect the stock markets to just switch over to derivatives based on hypothetical shares of mega-partnerships as though they could release shares; every partnership would have an associated finance organization that would control the number of such derivatives released. It'd be just like the stock market, only no dividends (which hardly anybody pays anyway.) I want to address the case for getting rid of "corporate personhood", whatever that's supposed to mean. Currently I'm waiting for some of the participants to come over here and make that case. You seem to be offering a case to get rid of corporations entirely. Which is fine but that's not the topic, I don't think. We can talk about it until Hooah gets here, if you want. I only mention interference in the political process because that's supposed to be the major point in favor of getting rid of corporate personhood, but I don't see how it changes anything to have partnerships instead of corporations in that regard. I'm struggling to see any difference at all.

Perhaps this is getting far afield from what you wanted to talk about, but in the context of the question of ownership, the impact of shares is the voice that the shareholder has in the operation of the corporation. Obviously, this can vary greatly depending on whether there are 2 shareholders each owning 50% of the stock or millions of shareholders each holding a miniscule percentage of the stock. But in essence, shares are how many different people own and control (in varying degrees) a corporation, as opposed to how a partnership is owned. Well, I'm not offering a case for getting rid of corporations at all. I began simply by discussing the particular problem you laid out about forfeiture.As I understand the notion of "corporate personhood," it's the legal fiction of treating corporations in some respects as though they were people and granting them some of the rights that people have. The abolition of corporate personhood, or the curtailing of the number of rights that we decide corporations are entitled to, would at first blush appear to have nothing to do with a corporation's status as a legal entity apart from its owners (depending on what rights we decide to eliminate).Obviously, to the extent that a particular corporation may exist only as a way for its owners to exercise First Amendment rights, disallowing corporations that right would effectively put an end to that kind of corporation. However, it certainly would not prevent a typical business corporation, say WidgetsRUs Ltd, from manufacturing and selling widgets. Nor would it prevent the corporation from owning property or incurring liabilities. And it would have no effect on the ability of anyone from making any claim against the corporation that they felt they had.

Much stock traded is non-voting, and certainly someone with but a handful of shares in Google (315 million shares outstanding) has no capacity to influence the corporation whatsoever. Google doesn't pay dividends, so again we're looking at a stock for which the sole market interest is in its capital appreciation. Speculation, in other words, in its purest form. And that can be done with derivatives. For some reason people like their meaningless pieces of paper that go up and down in value for no reason to have the names of corporations on them. Well, we can do that too, even in a world with no actual corporations. Right, but I think what people don't understand is that "in some respects as though they were people" is a description of the ability of corporations to be considered discreet legal entities that can own property, delegate agency - as in, appoint or designate people to act on behalf of the corporation, for instance to hire a lawyer to represent them - and appear in court.All that stuff is legal personhood. That's what legal personhood refers to. Taking that stuff away removes the ability to stand before a corporation in a court of law and make claims against it. Absent corporate personhood we're left with something akin to the prosecutions of mobsters - where it's a major legal struggle even to admit in point of fact that there is a Mafia that the defendant has ties to. Imagine trying to sue tobacco companies in a world where you have to sue each and every tobacco executive individually, and each and every executive says "RJ Reynolds? There's no such thing as RJ Reynolds. That's just a stereotype about Carolinans, that we're all involved in quote-tobacco activities-unquote!"In the real world, dealing with the Mafia was so difficult on its own that legislators jumped at the chance to erode civil liberties with new tools like RICO. I don't think it's unreasonable to fear the erosion of civil liberties as legislators and prosecutors scrambled for replacements for the traditional tools used to prosecute corporations. If there's no corporation, then what is the claim being made against? That's the problem. If the corporation isn't a legal person then its not something you can sue, because it can't appear in court. Just like how you can't sue the Mafia, or the color blue, or Mozart's "Die Fleidermouse."

Just wanted to get a link out to where we first started talking about this. Check Hooah's Message 262 and subsequent replies for background.

Actually it is possible to form partnerships and include a liability shield. For example LLP's have a liability shield. Many law form a special type of business entity in which partners are shielded from liability from the malpractice of their peers, but by state law, no lawyer can be shielded from his own malpractice.

I might share your fear if I had the first reason to suppose that laws that allow the creation of corporations were to be repealed and corporations were going to be no more. Do you have some reason to believe that that is imminent, or even being seriously discussed by anyone who has the ability to do that?

This is a false dichotomy. There is no reason why states could not enact legislation to allow a corporation to sued without granting the corporation personhood.In fact there is nothing special about the corporate form in this regard. LLCs, LLPs, and Corporations are all entities that are treated as persons under the law for some purposes (e.g. first amendment law, suing or being sued, holding real and intellectual property) but not for others.Generally speaking most laws that apply to persons do not automatically apply to business entities. Belaboring the obvious, business entities do not collect social security or unemployment. They cannot vote or get married.The basis for the legal fiction of giving a business entity personhood is that failing to do so infringes on the free speech or other rights of the business owner. We don't grant business entities rights so that we can sue them.

They aren't people.That was easy.Jon

Therefore they don't have any rights and cannot be sued... er, wait. Flippancy usually is!

From Message 262, Does forced corporate dissolution count?

From Message 262, The fallacy here, of course, is the implicit assumption that "personhood" is an all or nothing proposition. There are certain rights of personhood that a corporation may never exercise by virtue of the nature of what a corporation is. A corporation cannot engage in the free exercise of religion. To talk about infringing a corporation's reproductive freedom is nonsense.In addition, there's nothing inherently irrational about deciding that a corporation may have some rights accorded to people (the right to own property and access to the courts) and still deciding that other rights (freedom of speech, for example) shall not be accorded to a corporation.