Looking Back at Citizens United Part 1: The Case
A decade and a half later and people are still arguing about it
I was browsing over at X.com, as is my wont (I tweet using the handle @PrawfBainbridge), and was surprised to see a rash of recent posts about the Supreme Court’s decision in Citizens United v. FEC.1
There’s a lot of misunderstanding out there about Citizens United, so it seemed like an appropriate topic. It’ll take multiple posts. At a minimum, I plan on this post covering what the case actually held (and the dissents), a post on common misconceptions, a post on the traditional First Amendment aspects of the case, and a post on the corporate governance implications.
What Happened
Citizens United was (and still is) a non-profit organization funded mostly by private donations, although it did (and, presumably, still does) receive some funding from for-profit companies. CU created Hillary: The Movie, a ninety minute documentary criticizing then-Senator Hillary Clinton for use during her run for President in 2008.
CU sought to distribute the film through cable video-on-demand within 30 days of the 2008 primaries. CU also wanted to create three commercials to advertise the movie.
Federal campaign finance law—specifically 2 U.S.C. § 441(b), as amended by § 203 of the Bipartisan Campaign Finance Reform Act of 2002 (BCRA)—prohibited corporations and unions from spending money from their general treasury2 to fund an '“independent expenditure” or “electioneering communication” that expressed support for or opposition to a federal candidates election. (Although CU tried to argue to the contrary, the SCOTUS majority concluded that the documentary and the tv ads were electioneering communications.)
Fearful of being fined or prosecuted under federal law, CU filed suit in the United States District Court for the District of Columbia seeking declaratory and injunctive relief from § 441(b) relating to their film, as well as the disclaimer and disclosure requirements contained in §§ 201 and 311 of the BRCA.3
The case was assigned to a three judge panel, which dismissed the request for declaratory and injunctive relief and granted summary judgment in favor of the FEC based upon its interpretation of McConnell v. FEC4 and Austin v. Michigan Chamber of Commerce.5
The SCOTUS Majority Opinion
Writing for a 5-4 majority, Justice Kennedy held that § 441b's prohibition on corporate independent expenditures violated the First Amendment. After determining that the constitutional issues could not be avoided, Kennedy expressly overruled Austin and the portion of McConnell had upheld BCRA § 203's facial validity.
In brief, Kennedy’s opinion held that:
The government may not suppress independent political speech based solely on the speaker’s corporate identity.
Corporations and unions may make independent political expenditures from general treasury funds.
Direct contributions to candidates remain subject to regulation.
Disclaimer and disclosure requirements are constitutionally permissible
Chief Justice Roberts and Justices Scalia and Alito joined Justice Kennedy’s opinion in its entirety. Justice Thomas issued a separate opinion joining the portions of Kennedy’s opinion setting out the first three holdings, but dissented from the portion—Part IV of the opinion—setting out the last holding. Justice Stevens filed an opinion concurring in part and dissenting in part, in which Justices Ginsburg, Breyer, and Sotomayor joined. Stevens et al. joined Part IV, giving it a majority, but dissented from the portions laying out the first three holdings. Chief Justice Roberts filed a concurring opinion in which Alito joined. Scalia filed a concurring opinion in which Alito joined and Thomas joined in part. In short, it was a mess. But unlike some SCOTUS messes, there was a majority for each portion of Kennedy’s 6opinion.
Kennedy began by observing that Hillary: The Movie criticized a candidate for President, which is precisely the sort of political speech at the core of the First Amendment. Drawing on First National Bank of Boston v. Bellotti,7 Kennedy reaffirmed that the First Amendment’s protection extends to corporations and that political speech does not lose constitutional protection simply because its source is a corporation. The statute was, in his framing, a speaker-based restriction under which some speakers—such as individuals and media corporations—could speak freely, while ordinary corporations and unions could not use their general treasury funds for equivalent political advocacy. Kennedy held that such identity-based drawing lines are constitutionally suspect.
There were basically three lines of defense advanced for drawing such lines:
The anti-distortion rationale accepted in Austin.
The anti-corruption rationale accepted in Buckley v. Valeo.
The shareholder protection rationale.
Austin
Austin had upheld corporate expenditure limits on the theory that the wealth accumulated by incorporated entities through state-conferred privileges—such as limited liability and perpetual life—could distort the political process. But Kennedy rejected that rationale outright, holding that the First Amendment does not permit the government to seek to equalize speakers' influence or to suppress speech because some speakers are wealthy or powerful.
Roberts’ concurrence was mainly concerned with defending in more detail the decision to overturn Austin. His opinion was a response to Justice Stevens’ dissent, which strongly objected to overruling Austin and (part of) McConnell. Stevens argued that stare decisis, the relatively recent nature of those cases, the fact that Congress had relied on them, and that campaign finance regulation was an area where legislative judgment deserved respect all argued against overturning those decisions.
Personally, I’ve never bought Steven’s last point. It seems to me that campaign finance is an area in which the legislature deserves zero deference and a great deal of skepticism. Perhaps I am unduly cynical, but it seems to me that the whole purpose of campaign finance law is to protect incumbents from well-financed challengers.
Buckley
Buckley held that direct corporate or union contributions to candidates were justified by the need to prevent corruption or the appearance of corruption. But Kennedy narrowly defined the sort of corruption that justified campaign finance laws as quid pro quo bribery. In his view, independent expenditures, by definition, are not coordinated with candidates and therefore do not create the same danger.
Different Framing
Setting aside technical legal disputes such as stare decisis, the disagreement between Kennedy and Stevens comes downs to framing. Kennedy framed the case as one involving government regulation of speech about elections, which invoked the most rigorous First Amendment scrutiny. Stevens framed the case as an issue of democratic integrity being brought into question through corporate wealth.
Once you recognize that framing, the continuing disagreement over Citizens United starts to make more sense. Are you more worried about regulation of speech or about the potential for corruption and distortion of political discourse by wealth inequalities?
Speaking for Myself
I cpme down squarely on the side that worries about government regulation of core political speech and thinks that the First Amendment should be applied with strict scrutiny to such laws. I do so mainly because of a point Chief Justice Roberts made in his concurrence:
The Government urges us in this case to uphold a direct prohibition on political speech. It asks us to embrace a theory of the First Amendment that would allow censorship not only of television and radio broadcasts, but of pamphlets, posters, the Internet, and virtually any other medium that corporations and unions might find useful in expressing their views on matters of public concern. Its theory, if accepted, would empower the Government to prohibit newspapers from running editorials or opinion pieces supporting or opposing candidates for office, so long as the newspapers were owned by corporations—as the major ones are. First Amendment rights could be confined to individuals, subverting the vibrant public discourse that is at the foundation of our democracy.
Hence, as I sarcastically tweeted the other day:
558 U.S. 310 (2010).
As Gibson Dunn explained in a no-action request filed with the SEC on behalf of ExxonMobil:
While the Court did not explicitly define the term “general treasury funds” in Citizens United, the Court seems to use the term to represent the opposite of segregated corporate funds, also known as Political Action Committees. See id. at 887 (“Corporations and unions are barred from using their general treasury funds for express advocacy or electioneering communications. They may establish, however, a ‘separate segregated fund’ (known as a political action committee, or PAC) for these purposes.”), This is a specialized use of the term that shareholders voting on the proposal could not be expected to understand. Moreover, even this usage of the term is not well established or well-defined. See Frances R. Hill, Implications of Citizens United for the 2010 Election and Beyond, A.L.I., A.B.A. 103, 118 (2010) (questioning whether “treasury funds,” as used in Citizens United, is a “term of art or a general reference encompassing funds from any and all sources controlled by the corporation”).
Exxon Mobil Corp, 2013 WL 287993, at *11 (Mar. 15, 2013).
As the SCOTUS explained, the disclosure and disclaimer requirements provided that:
… televised electioneering communications funded by anyone other than a candidate must include a disclaimer that “‘_______ is responsible for the content of this advertising.’ ” The required statement must be made in a “clearly spoken manner,” and displayed on the screen in a “clearly readable manner” for at least four seconds. Ibid. It must state that the communication “is not authorized by any candidate or candidate’s committee”; it must also display the name and address (or Web site address) of the person or group that funded the advertisement.
The court upheld those requirements.
540 U.S. 93 (2003).
494 U.S. 652 (1990). The Panel stated that the film was essentially an advertisement against Senator Clinton and therefore could be regulated. The Supreme Court granted probable jurisdiction and directed both parties to file new briefs regarding whether Austin and that part of McConnell that addresses corporate speech should be overturned.
424 U.S. 1 (1976).
435 U.S. 765 (1978).