Property v. Liberty: The Supreme Court’s Radical Break with Its Historical Treatment of Corporations

by Ruth H. Bloch and Naomi R. Lamoreaux

Ruth H. Bloch is professor emerita in the Department of History at UCLA. She is the author of Visionary Republic: Millennial Themes in American Thought, 1756-1800 and Gender and Morality in Anglo-American Culture, 1650-1800. Naomi R. Lamoreaux is Stanley B. Resor Professor of Economics and History at Yale University, chair of the History Department, and a research associate at the National Bureau of Economic Research. She is the author of The Great Merger Movement in American Business, 1895-1904 and Insider Lending: Banks, Personal Connections, and Economic Development in Industrial New England. Bloch and Lamoreaux are working together on a book covering the history of privacy rights in America and on papers entitled "Corporations and the Fourteenth Amendment" and "Legal Constraints on the Development of American Non-Profit Groups, 1780-1900."

In their briefs to the Supreme Court, counsel for Hobby Lobby Stores, Inc., and Conestoga Wood Specialties Corporation cited the Court's 2010 Citizens United decision in support of their claim that "First Amendment protection extends to corporations." In its June 30 decision, however, the Court dodged the constitutional issue and instead based its finding in favor of the companies on its interpretation of the Religious Freedom Restoration Act (RFRA) of 1993. Justice Samuel A. Alito Jr. declared in his majority opinion (1) that corporations are persons within the meaning of the Act; (2) that the Affordable Care Act's requirement that employers offer insurance coverage for contraception substantially burdens the exercise of religion; and (3) that the government has less burdensome ways of providing employees with access to contraception. In this comment we focus on the first of these three findings and show that the decision's narrow claims are belied by the broad language of the opinion. We then trace the history of the Supreme Court's jurisprudence on corporate rights and show that Alito's opinion breaks with a long line of decisions beginning in the 1880s that treated for-profit corporations as "persons" under the Constitution only for the purpose of protecting the property rights-not the liberties-of individual members.

Alito claims that the majority's ruling is based narrowly on statute and that it is limited in its application to closely held, family run corporations whose members share sincere religious beliefs. However, at various points in his opinion Alito indulges in a more expansive logic that belies these disclaimers, suggesting that the decision has larger constitutional ramifications and that the extension of free-exercise rights potentially applies to corporations whose members disagree about religious matters and even to large, public companies. In determining, for example, that RFRA's definition of a person includes corporations, Alito is not content to reference the Dictionary Act. Pouncing on the admission by the Department of Health and Human Services "that a nonprofit corporation can be a 'person' within the meaning of RFRA," he goes on to assert that "no known understanding of the term 'person' includes some but not all corporations" (pp. 19, 20). He goes even further when he points out that "a corporation is simply a form of organization used by human beings to achieve desired ends" and that when the courts extend rights to corporations ("whether constitutional or statutory") the purpose is to protect the rights of the people who make them up. "Protecting the free-exercise rights of corporations like Hobby Lobby, Conestoga, and Mardel protects the religious liberty of the humans who own and control those companies," he proclaims, just as "protecting corporations from government seizure of their property without just compensation protects all who have a stake in corporations' financial well-being" (p. 18). Of course the latter is a constitutional matter.

This expansive language is at odds with the way the Court has treated corporations historically. Although the justices have always shown concern for the constitutional rights of people associated in corporations, in all but the most special circumstances they have traditionally limited the rights they extended to business corporations to protections for property, not liberty. Beginning in 1886, for example, with the case Santa Clara v. Southern Pacific Railroad, Justice Stephen J. Field led the Supreme Court in parsing the various clauses of the Fourteenth Amendment so as to limit the constitutional protections afforded corporations. In Santa Clara and several follow-on cases the Court treated the equal protection and due process clauses as applying to corporate property. However, in Paul v. Virginia (1869) and Pembina Consolidated Silver Mining and Milling Company (1888) it ruled that the privileges and immunities of citizens did not extend to corporations, and inNorthwestern National Life Insurance Company v. Riggs (1906) it held that the liberty protected by the Fourteenth Amendment was "the liberty of natural, not artificial persons." Nor did the Court ever determine that corporations were "persons whom a State may not deprive of 'life'" (Wheeling Steel Corporation v. Glander, 1949). Field laid out the logic of this parsing as early as 1882 in his circuit court opinion in the Railroad Tax Cases. The Fourteenth Amendment, he declared, protected the property of corporations because corporate property "in fact" belonged to "the corporators," but it did not protect the life and liberty of corporations because "the lives and liberties of the individual corporators are not the life and liberty of the corporation." ...

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