After its recent decision in Citizens United, the Supreme Court was accused by many of opening the floodgates with respect to the ability of corporations to spend money to promote their political interests. Many feared that corporate America gained a legally intractable foothold in the political process as a result. Though the seemingly unlimited ability of corporations to make expenditures in the political arena doesn’t perhaps have the same potential for corruption, either real or supposed, that unlimited contributions might have, the concerns expressed by the critics are not unfounded. At the same time, while the decision upset some, others applauded the protections afforded to free speech in the political arena and the increased abilities of corporations to self-advocate. However, despite its polarizing nature, most on either side can agree that the court left many questions unanswered in its opinion. Indeed, many of the issues either left unaddressed by the Court or created by it are concerning even to those who agree with its final holding.
For example, while expenditures were addressed, it is unclear what bearing the ruling might have on a potential challenge to contribution limits for corporations in the future. It is also unclear just who is represented when a corporation spends money; is it the shareholders, the workers, or the executives? Perhaps it is the board? This remains unclear. Additionally, the implications for unions are not necessarily clear, though it seems that worker’s rights groups may have the ability to spend funds for political purposes as well. Finally, in declining to address the implications for foreign firms, the Court not only virtually penciled in a future oral argument on the matter, but also left open the potential for confusion by both citizens and the foreign-based companies who employ them, sell to them, and do business with them.
It is also true that, despite President Obama’s pleas to aides and congressional staffers to solve them, the Court may have closed the door on many potential legislative remedies to these problems. If the reaction of at least one side of the aisle during the State of the Union was any indication, the legislature would certainly be willing to oblige the President. However, as Justice Stevens noted on more than one occasion in his dissent, the majority has in many respects tied the hands of Congress. His analysis regarding the lack of Congressional ability to regulate media corporations, even with exemptions, in this First Amendment sensitive sector is merely the best example of this. See footnote 75.
However, one legislative solution to the problems created by the court’s decision could be the mandating of strict disclosures in regards to expenditures. Though not every problem would be solved with strict disclosures, many of the most pressing, including possible corruption and violations of shareholder rights, could be remedied with the help of disclosure and filing requirements. Additionally, a strict disclosure regime could lead to further benefits in the future as companies attempt to manage their relationships more effectively.
Though such a regime could take many forms, one avenue to accomplish and regulate strict disclosure could be securities law. Some ideas might include a compulsory section on a company’s website with a clear statement of total amounts spent for political purposes, jurisdictions the money was spent in, and a brief statement of the company’s position on the political topic it spent money on. This could be provided on a rolling monthly, quarterly, annual and five year basis. Similar disclosures could be mandated for quarterly and annual filings. These types of measures would address shareholders rights, giving owners the ability to vote with their feet if corporations are thought to be spending money inappropriately or on the ‘wrong’ issues. They would also go some way toward combating corruption, as it would be obvious what positions corporations were advocating for.
Though not every company that plans to spend money for political purposes is publicly held, many issue some form of securities, whether equity or debt, which create disclosure requirements. For the rare private company which has no connection to securities regulators, the same website requirements could be mandated, with the Electoral Commission taking the place of, or working with, securities regulators in these situations. In any case, many of the companies which would be capable of spending the potentially excessive amounts of money that the dissent in Citizens would be concerned with are subject to some form of securities regulation, and would therefore be caught in this broad net.
Not only could securities laws address some of the most flagrant issues created by the Court in Citizens, it is likely that such laws would survive the scrutiny of the Court if a challenge to such laws ever arose. While it is true that Justice Thomas voiced his opinion that at least some disclosure laws are unconstitutional in his partial concurrence (though even he might not ultimately vote against disclosures; in previous dissenting opinions, he expressed his confidence that disclosure laws are a sufficient safeguard against the ills of both contributions and expenditures) it is difficult to believe that he would be able to cobble together even a plurality were the question of disclosure ever to make its way to the court. Certainly the dissenting justices in Citizens, as well as Justice Kennedy, and possible one or both of Justices Roberts and Alito would be in favor of disclosure laws. Perhaps even Justice Scalia, despite often advocating for breaking through the ceilings of both contribution and expenditure spending limits, would accept disclosure laws as an appropriate remedy to unbridled spending.
There would, of course, be problems with a disclosure approach, whether based in securities law or otherwise. The most obvious one might be the question of foreign firms and where they might fit into a disclosure regime. It is not likely that the Congress would look favorably upon foreign firms in disclosure legislation due to the increased potential for corruption. For example, who is to say that a domestic company wouldn’t use a foreign arm to avoid or manipulate disclosure? What about a scenario where a foreign government created a corporation (indeed, many government already run corporations in the form of sovereign wealth fund investment arms inter alia) which used expenditures in their interest.
The most likely scenario would be for Congress to use the legislation to put at least some controls on expenditures by carving out domestic companies as the only ones who could make expenditures. To do this, it might explicitly define the companies who could be involved in the expenditures regime, possibly using domestic holdings, American workforce, or domestic subsidiaries as some sort of minimum criteria.
The Court, perhaps significantly, declined to address foreign companies (creating the aforementioned problems with foreseeability as well as how ‘foreign’ is defined in an ultra-globalized economy) in its Citizens decision. However, and despite the likelihood of challenges, it is probably most likely that the Court would show due deference to, and accept, the potential rationales of the legislature that security, safety, and foreign influence would be significant enough factors to limit participation in the regime. In any case, it is a virtual certainty that any foreign company willing to spend enough money on US political questions to trigger disclosure requirements would have minimum contacts sufficient to be hauled into court if it was suspected that they were cheating, offering one last safeguard to foreign influence.
In addition to foreign influence, there are other problems with disclosure. For example, many ‘stockholders’ are actually mutual fund holders who may or may not have any real idea of what they own, and even then perhaps only on a quarterly (and therefore a necessarily ‘rearview mirror’) basis. Additionally, it is no certainty that even those who desire to keep up with the spending habits of the companies they own or buy products from would understand disclosures that are made. However, as a practical matter, most people don’t understand lobbying or the current state of expenditures and contributions as the system stands currently either. At least with new laws, people might start to take notice in these issues and become more informed and knowledgeable, impacting their purchasing decisions and therefore impacting the behaviors of the companies they own and patronize.
This possible new interest in firm spending activities could lead to benefits in addition to the aforementioned shareholder’s rights and anti-corruption that might not be immediately apparent. For example, if citizens showed enough concern about corporate issue advertising it is likely that consumer rights organizations, both on the right and the left, would take up the banners of their respective causes and provide clear statements of what is being done by certain companies. This could actually add to the political debate as many Americans already get their news and facts from partisan web- and cable-based sources and may be more inclined to view politicized reports of which companies are either strong or weak on the issues that concern them. One could easily imagine a sporting goods company unabashedly funding commercials supporting gun owner’s rights, with gun owners most likely being grateful as a result. Certainly this would avoid the taint of extremely large contributions to the campaign of a gun-friendly Congressman while being in the company’s, and thus shareholder’s, interests.
Additionally, many more companies may simply choose to stay above this fray of being seen as conservative- or liberal- friendly. Some may eschew the opportunity to make issue expenditures altogether, or certainly curtail their spending activities, leading to just the solution to the problems that critics of the Citizens decision have. Taken to a possible point in the future, consumer rights groups might even take on the chore of providing certification for companies, similar to how companies gain LEED certifications or environmental certifications currently, whereby they could be seen as ‘Politically or Idealogically Neutral’ or “Non-Partisan Approved.’ This could even open up opportunities for companies to gain new investment if this was seen as a criteria for socially responsible investing companies and funds in the future.
The holding of Citizens United is a controversial one. This is, in part, because it can be logically and skillfully debated by those on either side with everyone involved being rightfully able to claim that they support freedom, free speech, and a fair political process. What is less subject to debate is the fact that issues were created and problems left unaddressed by the decision. Despite this, the worst of them can be remedied, at least in part, via the type of legislation proposed above. If a new, strict disclosure regime were enacted, it would likely escape judicial scrutiny and alleviate many of the problems the Court created. Additionally, it could well lead to additional benefits as companies either purposely court consumers and shareholders via clear spending patterns, or possibly strive to avoid the taint of partisanship in future dealings altogether. Therefore, in the end, and with the help of disclosures, the Citizens decision may actually solve many of the problems which it created.