Constitutionalizing Corporate Law
The Supreme Court has recently decided some of the most important and controversial cases involving the federal rights of corporations in over two hundred years of jurisprudence. In rulings ranging from corporate political spending to religious liberty rights, the Court has dramatically expanded the zone in which corporations can act free from regulation. This Article argues these decisions represent a doctrinal shift, even from previous cases granting rights to corporations. The modern corporate rights doctrine has put unprecedented weight on state corporate law to act as a mechanism for resolving disputes among corporate participants regarding the expressive and religious activity of business corporations. The result is a new reliance on state corporate law that gives a quasi-constitutional dimension to governance rules that were developed in a different era and with a different focus.
The Article further illuminates the specific areas of mismatch between modern corporate rights doctrine and state corporate law. This examination offers two insights often overlooked in contemporary debate. First, it provides a deeper grounding for understanding where the Court has gone wrong and the importance of corporate governance proposals raised in the aftermath of its recent decisions such as Citizens United v. Federal Election Commission. Second, the Article shows that the significance of the Court’s decision in Burwell v. Hobby Lobby Stores, Inc. extends beyond issues of women’s rights and sexual orientation, as is often emphasized. The decision undermines the very assumptions on which corporate law has been built: that private ordering and external regulations can be relied upon to address concerns that corporate law has been given a pass to ignore.
Associate Professor of Law, Loyola Law School, Los Angeles. Thanks to participants at the 2015 Annual Meeting of the American Political Science Association, the National Business Law Scholars Conference, the 2015 Annual Meeting of the Law and Society Conference, the Fiduciary Law Workshop at BYU Law School, the Junior Business Law Conference at the University of Colorado at Boulder, and faculty workshops at University of San Diego School of Law, Wake Forest University School of Law, and Pepperdine University School of Law. For helpful conversations and comments, I also thank Afra Afsharipour, Adam Badawi, Stephen Bainbridge, Jordan Barry, Brad Bernthal, Margaret Blair, Vince Buccola, Anthony Casey, David Ciepley, Elisabeth de Fontenay, Sarah Haan, Jennifer Hill, Kathryn Judge, Paul Miller, James Nelson, Alan Palmiter, Frank Partnoy, Sabeel Rahman, Elizabeth Sepper, Andrew Schwartz, Gordon Smith, Holger Spamann, Andrew Verstein, Adam Winkler, and Yesha Yadav.