M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Thursday, July 3, 2014

Hobby Lobby and the corporate law, quick thoughts

Lots of ink has already been spilt on the Hobby Lobby opinion.  I won't add to any of the discussion on contraception or even much about the RFRA claim.  I do want to say something about the Supreme Court's conception of the corporation, though.  That's where I think this case and the cases below all went off the rails.  Justice Alito describes the corporate form thusly:

A corporation is simply a form of organization used by human beings to achieve desired ends. An established body of law specifies the rights and obligations of the people (including shareholders, officers, and employees) who are associated with a corporation in one way or another. When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people. For example, extending Fourth Amendment protection to corporations protects the privacy interests of employees and others associated with the company. When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people...Corporations, “separate and apart from” the human beings who own, run, and are employed by them, cannot do anything at all.

This characterization is reminiscent of the Court's characterization of the corporate form in the Citizens United opinion.  There, the court repeatedly describes the corporate form as an "association of citizens" or an "association of individuals".  

The Supreme Court's understanding of the corporate form from both Citizens United and Hobby Lobby  is ... well ... novel.  I doubt there are many state courts in America that would immediately look through the corporate form to the personal interests of the officers or the employees and say that's what a corporation is all about.  In fact, if a court did, I wonder what would be left of the concept of limited liability and the strong public policy of corporate separateness - even where there might be only one shareholder.  

Still thinking about the implications of this.  But, I'm glad that state courts won't be looking to the US Supreme Court for guidance on the corporate law anytime soon.

Oh, and given the US Supreme Court's characterization above, there is no reason why corporations should not have the full array of constitutional protections afforded natural persons.  For example, corporations presently don't enjoy 5th Amendment protections, but given Alito's characterization above, there is no reason to believe they shouldn't have those rights and others.

-bjmq

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