openpolitics.com

Anthony M. Kennedy

But under your position, if corporations A, B, and C, are called to Washington every Monday morning by a high-ranking administrative official or a high-ranking member of the Congress with a committee chairmanship and told to tow the line and to tell their directors and their shareholders what the policy ought to be, some other corporation can’t object to that during the election cycle.

The government silences a corporate objector, and those corporations may have the most knowledge of this on the subject.

Corporations have lots of knowledge about environment, transportation issues, and you are silencing them during the election.

 

.. Theodore B. Olson

What Bellotti also said is — and I think this is also in many decisions of this Court — the inherent worth of speech in terms of its capacity for informing the public does not depend upon the identity of the source, whether corporation, association, union, or individual.

 

.. Theodore B. Olson

–You said that repeatedly, including most recently in the Wisconsin Right to Life case.

And it first appeared in Buckley itself.

The distinction is very hard to draw between the interest that the speaker is addressing and whether it’s a candidate or an issue, because issues are wrapped up in candidates.

The corporation interest and the interests that its fiduciary officers are representing when it speaks on behalf of the corporation–

John Paul Stevens

I don’t think you are correct to say the Court said there was no distinction.

It said the distinction requires the use of magic words.

And that’s what they said in Wisconsin Right to Life, too.

Both of them said there is a distinction.

Theodore B. Olson

–Well, but the words–

John Paul Stevens

It’s difficult to draw in some cases, but nobody said there is no distinction that I am aware of.

Theodore B. Olson

–Well, what the Court — to use — to use the words of the Court, which occurred repeatedly, is that the distinction dissolves impractical application.

That, Justice Stevens, I think addresses the very commonsense point that when you are addressing an issue, whether you are addressing a referendum matter, whether it is a proposed legislation or a candidate that is going to raise taxes on the corporation, those distinctions dissolve.

It’s all First Amendment freedom.

.. Elena Kagan

Mr. Chief Justice and may it please the Court: I have three very quick points to make about the government position.

The first is that this issue has a long history.

For over 100 years Congress has made a judgment that corporations must be subject to special rules when they participate in elections and this Court has never questioned that judgment.

Number two–

Antonin Scalia

Wait, wait, wait, wait.

We never questioned it, but we never approved it, either.

And we gave some really weird interpretations to the Taft-Hartley Act in order to avoid confronting the question.

Elena Kagan

–I will repeat what I said, Justice Scalia: For 100 years this Court, faced with many opportunities to do so, left standing the legislation that is at issue in this case — first the contribution limits, then the expenditure limits that came in by way of Taft-Hartley — and then of course in Austin specifically approved those limits.

Antonin Scalia

I don’t understand what you are saying.

I mean, we are not a self — self-starting institution here.

We only disapprove of something when somebody asks us to.

And if there was no occasion for us to approve or disapprove, it proves nothing whatever that we didn’t disapprove it.

Elena Kagan

Well, you are not a self-starting institution.

But many litigants brought many cases to you in 1907 onwards and in each case this Court turns down, declined the opportunity, to invalidate or otherwise interfere with this legislation.

 

.. Elena Kagan

Well, I think Justice Stevens was right in saying that the expenditure limits that are in play in this case came into effect in 1947, so it’s been 60 years rather than 100 years.

But in fact, even before that the contribution limits were thought to include independent expenditures, and as soon as Congress saw independent expenditures going on Congress closed what it perceived to be a loophole.

So in fact for 100 years corporations have made neither contributions nor expenditures, save for a brief period of time in the middle 1940’s, which Congress very swiftly reacted to by passing the Taft-Hartley Act.

Now, the reason that Congress has enacted these special rules — and this is the second point that I wanted to make–

 

.. Elena Kagan

I would say either the quid pro quo interest, the corruption interest or the shareholder interest, or what I would say is a — is something related to the shareholder interest that is in truth my view of Austin, which is a view that when corporations use other people’s money to electioneer, that is a harm not just to the shareholders themselves but a sort of broader harm to the public that comes from distortion of the electioneering that’s done by corporations.

Antonin Scalia

Let’s — let’s talk about overbreadth.

You’ve — let’s assume that that is a valid interest.

What percentage of the total number of corporations in the country are not single shareholder corporations?

The local hairdresser, the local auto repair shop, the local new car dealer — I don’t know any small business in this country that isn’t incorporated, and the vast majority of them are sole-shareholder-owned.

Now this statute makes it unlawful for all of them to do the things that you are worried about, you know, distorting other — the interests of other shareholders.

That is vast overbreadth.

.. Antonin Scalia

Congress has a self-interest.

I mean, we — we are suspicious of congressional action in the First Amendment area precisely because we — at least I am — I doubt that one can expect a body of incumbents to draw election restrictions that do not favor incumbents.

Now is that excessively cynical of me?

I don’t think so.

Antonin Scalia

Congress has a self-interest.

I mean, we — we are suspicious of congressional action in the First Amendment area precisely because we — at least I am — I doubt that one can expect a body of incumbents to draw election restrictions that do not favor incumbents.

Now is that excessively cynical of me?

I don’t think so.

Elena Kagan

–I think, Justice Scalia, it’s wrong.

In fact, corporate and union money go overwhelmingly to incumbents.

This may be the single most self-denying thing that Congress has ever done.

If you look — if you look at the last election cycle and look at corporate PAC money and ask where it goes,

Antonin Scalia

Congress has a self-interest.

I mean, we — we are suspicious of congressional action in the First Amendment area precisely because we — at least I am — I doubt that one can expect a body of incumbents to draw election restrictions that do not favor incumbents.

Now is that excessively cynical of me?

I don’t think so.

Antonin Scalia

Congress has a self-interest.

I mean, we — we are suspicious of congressional action in the First Amendment area precisely because we — at least I am — I doubt that one can expect a body of incumbents to draw election restrictions that do not favor incumbents.

Now is that excessively cynical of me?

I don’t think so.

Elena Kagan

–I think, Justice Scalia, it’s wrong.

In fact, corporate and union money go overwhelmingly to incumbents.

This may be the single most self-denying thing that Congress has ever done.

If you look — if you look at the last election cycle and look at corporate PAC money and ask where it goes, it goes ten times more to incumbents than to challengers, and in the prior election cycle even more than that.

And for an obvious reason, because when corporations play in the political process, they want winners, they want people who will produce outcomes for them, and they know that the way to get those outcomes, the way to get those winners is to invest in incumbents, and so that’s what they do.

As I said, in double digits times more than they invest in challengers.

So I think that that — that that rationale, which is undoubtedly true in many contexts, simply is not the case with respect to this case.

Anthony M. Kennedy

But under your position, if corporations A, B, and C, are called to Washington every Monday morning by a high-ranking administrative official or a high-ranking member of the Congress with a committee chairmanship and told to tow the line and to tell their directors and their shareholders what the policy ought to be, some other corporation can’t object to that during the election cycle.

The government silences a corporate objector, and those corporations may have the most knowledge of this on the subject.

Corporations have lots of knowledge about environment, transportation issues, and you are silencing them during the election.

Elena Kagan

Well–

Anthony M. Kennedy

When other corporations, via — because of the very fact you just point out, have already been used and are being used by the government to express its views; and you say another corporation can’t object to that.

Elena Kagan

–Well, to the extent, Justice Kennedy, that you are talking about what goes on in the halls of Congress, of course corporations can lobby members of Congress in the same way that they could before this legislation.

What this legislation is designed to do, because of its anticorruption interest, is to make sure that that lobbying is just persuasion and it’s not coercion.

But in addition to that, of course corporations have many opportunities to speak outside the halls of Congress.

Elena Kagan

A lot of them do, which is a suggestion about how corporations engage the political process and how corporations are different from individuals in this respect.

You know, an individual can be the wealthiest person in the world but few of us — maybe some — but few of us are only our economic interests.

We have beliefs, we have convictions; we have likes and dislikes.

Corporations engage the political process in an entirely different way and this is what makes them so much more damaging.

John G. Roberts, Jr.

Well, that’s not — I’m sorry, but that seems rather odd.

A large corporation just like an individual has many diverse interests.

A corporation may want to support a particular candidate, but they may be concerned just as you say about what their shareholders are going to think about that.

They may be concerned that their shareholders would rather they spend their money doing something else.

The idea that corporations just are different than individuals in that respect, I just don’t think holds up.

Elena Kagan

Well, all I was suggesting, Mr. Chief Justice, is that corporations have actually a fiduciary obligation to their shareholders to increase value.

That’s their single purpose, their goal.

 

John G. Roberts, Jr.

So if a candidate — take a tobacco company, and a candidate is running on the platform that they ought to make tobacco illegal, presumably that company would maximize its shareholders’ interests by opposing the election of that individual.

Elena Kagan

But everything is geared through the corporation’s self-interest in order to maximize profits, in order to maximize revenue, in order to maximize value.

Individuals are more complicated than that.

So that when corporations engage the political process, they do it with that set of you know, blinders — I don’t mean it to be pejorative, because that’s what we want corporations to do, is to–

John G. Roberts, Jr.

Well, I suppose some do, but let’s say if you have ten individuals and they each contribute $1,000 to a corporation, and they say,

“we want this corporation to convey a particular message. “

why can’t they do that, when if they did that as partnership, it would be all right?

 

Elena Kagan

–Well, it sounds to me as though the corporation that you were describing is the corporation of a kind we have in this case, where one can assume that the members all sign on to the corporation’s ideological mission, where the corporation in fact has an ideological mission.

Antonin Scalia

General Kagan, most — most corporations are indistinguishable from the individual who owns them, the local hairdresser, the new auto dealer — dealer who has just lost his dealership and — and who wants to oppose whatever Congressman he thinks was responsible for this happening or whatever Congressman won’t try to patch it up by — by getting the auto company to undo it.

There is no distinction between the individual interest and the corporate interest.

And that is true for the vast majority of corporations.

Elena Kagan

Well–

Antonin Scalia

Yet this law freezes all of them out.

Elena Kagan

–To the extent that we are only talking about single shareholder corporations, I guess I would ask why it’s any burden on that single shareholder to make the expenditures to participate in the political process in the way that person wants to outside the corporate forum?

So single shareholders aren’t suffering any burden here; they can do everything that they could within the corporate form, outside the corporate form.

They probably don’t get the tax break that they would get inside the corporate form, but I’m not sure anything else is very different.

Antonin Scalia

Oh, he wants to put up a sign–

John Paul Stevens

Ultra Vires would take care of about 90 percent of the small corporations that Justice Scalia is talking about.

They can’t just — they can’t even give money to charities sometimes because of Ultra Vires.

Giving political contributions is not typical corporate activity.

 

.. Stephen G. Breyer

Is — I — I remember spending quite a few days one summer reading through 1,000 pages of opinion in the D.C. Circuit.

And I came away with the distinct impression that Congress has built an enormous record of support for this bill in the evidence.

And my recollection is, but it is now a couple of years old, that there was a lot of information in that which suggested that many millions of voters think, at the least, that large corporate and union expenditures or contributions in favor of a candidate lead the benefited political figure to decide quite specifically in favor of the — of the contributing or expending organization, the corporation or the union.

Elena Kagan

Yes, that’s–

Stephen G. Breyer

Now, it was on the basis of that, I think, that this Court upheld the law in BCRA.

But we have heard from the other side there isn’t much of a record on this.

So, if you could save me some time here, perhaps you could point me, if I’m right, to those thousand pages of opinion and tens of thousands of underlying bits of evidence where there might be support for that proposition?

Elena Kagan

–Yes, that’s exactly right, Justice Breyer, that in addition to just the 100-year-old judgment that Congress believes this is necessary, that very recently members of Congress and others created a gigantic record showing that there was corruption and that there was the appearance of corruption.

And in that record, many times senators, former senators talk about the way in which fundraising is at the front of their mind in everything that they do the way in which they grant access, the way in which they grant influence, and the way in which outcomes likely change as a result of that fundraising.

Stephen G. Breyer

BCRA has changed all that.

John G. Roberts, Jr.

Counsel, could I ask, it seems — to your shareholder protection rationale, isn’t it extraordinarily paternalistic for the government to take the position that shareholders are too stupid to keep track of what their corporations are doing and can’t sell their shares or object in the corporate context if they don’t like it?

Elena Kagan

I don’t think so, Mr. Chief Justice.

I mean, I, for one, can’t keep tack of what my — where I hold–

John G. Roberts, Jr.

Well, you have a busy job.

You can’t expect everybody to do that.

[Laughter]

Elena Kagan

–It’s not that — it’s not that I have a busy job.

John G. Roberts, Jr.

But it is extraordinary — I mean, the — the idea and as I understand the rationale, we — we the government, big brother, has to protect shareholders from themselves.

They might give money, they might buy shares in a corporation and they don’t know that the corporation is taking out radio ads.

John G. Roberts, Jr.

So it is — I mean, I understand.

So it is a paternalistic interest, we the government have to protect you naive shareholders.

Elena Kagan

–In a world in which most people own stock through mutual funds, in a world in which people own stock through retirement plans in which they have to invest, they have no choice, I think it’s very difficult for individual shareholders to be able to monitor what each company they own assets in is doing or even to know the extent of the–

Ruth Bader Ginsburg

–In that respect, it’s unlike the union, because the — the worker who does not want to affiliate with a union cannot have funds from his own pocket devoted to political causes.

But there is no comparable check for corporations.

Elena Kagan

–That’s exactly right, Justice Ginsburg.

In the union context, of course, it’s a constitutional right that the unions give back essentially the funds that any union member or employee in the workplace does not want used for electoral purposes.

The government has to keep an eye on their interests.

Elena Kagan