What a legal person is

Few phrases cause more confusion than "corporations are people." In law, a person is not necessarily a human being. A legal person is anything the law treats as holding rights and duties. Human beings are legal persons, but so are companies, cities, trade unions and charities. In 2017 New Zealand made the Whanganui River a legal person, with guardians appointed to speak for it, after a long struggle by the Māori iwi of the river.

So the real question is never whether a corporation is a person in the everyday sense. It is which rights and duties the law should give it, and why.

The case that was not quite decided

Americans often trace corporate personhood to an 1886 case, Santa Clara County v. Southern Pacific Railroad. Before the argument, Chief Justice Morrison Waite told the lawyers that the justices did not wish to hear argument on whether the Fourteenth Amendment's guarantee of equal protection applied to corporations, because they all believed it did. The Court then decided the case on narrower grounds. The famous statement appeared in a headnote written by the court reporter, J. C. Bancroft Davis, a summary that is not part of the opinion. Later decisions treated it as settled law anyway.

The Fourteenth Amendment had been adopted in 1868 to protect the rights of formerly enslaved people. Dissenting in a 1938 case, Justice Hugo Black looked back at how it had been used. He found that in its first fifty years only a tiny fraction of the cases that reached the Court invoked it to protect Black Americans, while about half asked for its protection of corporations. His point was that the amendment had served corporations far more than the Black citizens it was written for.

Which rights a corporation holds

Under American law today, corporations can own property, make contracts, sue and be sued, and claim due process before the government takes their property. Courts have drawn lines, though. In Hale v. Henkel (1906) the Supreme Court held that corporations cannot claim the privilege against self-incrimination, so a company must hand over its records even when they show wrongdoing, though it kept some protection against unreasonable searches.

Speech rights grew in the twentieth century. In First National Bank of Boston v. Bellotti (1978) the Court struck down a state ban on corporate spending on ballot measures, reasoning that the value of speech to listeners does not depend on who the speaker is. Later rulings extended this reasoning to spending in candidate elections. Religious claims came next. In Burwell v. Hobby Lobby (2014) the Court ruled that closely held companies could claim a religious exemption under a federal statute, the Religious Freedom Restoration Act, from a rule requiring their health plans to cover certain contraceptives.

The case for corporate rights

Defenders say corporate rights are really rights of the people behind the corporation. Most newspapers are corporations. If a company had no free speech rights, a government could censor a newspaper simply because it was incorporated. Churches, civil rights groups and unions often take corporate form too. Protecting company property from arbitrary seizure also protects the savings of shareholders, many of them ordinary workers through their pensions. On this view, denying rights to corporations would hurt the people who form them.

The case against

Critics answer that the rights in a constitution grow from human dignity: conscience, a voice in self-government, a body that can be imprisoned. A corporation has none of these. It cannot vote, suffer or pray. Treating it as a rights holder lets organizations with vast wealth claim protections designed for individuals, and turns tools meant to protect the weak into weapons for the strong. A middle position, sometimes called the derivative view, holds that a firm's rights should extend only as far as its members' rights require. A newspaper needs press freedom to do its job; an oil company may not need the same latitude to spend on elections.

For a course built on human dignity, the derivative view has obvious appeal: rights exist for people, and organizations get them only in service of people. But it leaves hard cases, since many organizations mix purposes, and judges must decide which rights are truly needed.

Worked example

Consider two corporations facing the same new state law, which bans companies from spending money to influence a vote on a local ballot measure. The first is a small newspaper company that wants to publish editorials and pay for leaflets urging a no vote. The second is a large mining company that wants to fund an advertising campaign against a measure that would tax its mines.

Under Bellotti, both would likely win, because the Court focuses on the speech rather than the speaker. A defender of corporate rights says that is right: voters deserve to hear every argument, and the mining company's workers and shareholders have a real stake. A critic says the outcome lets a single firm drown out citizens. A supporter of the derivative view would draw a line: the newspaper's members need corporate speech to exercise a free press, while the mining company's shareholders can still speak and give money as individuals. The question is what serves the human beings involved.