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Do Corporations Have the Right to Free Political Speech?

[1/21/10 update: The Supreme Court voted 5-4 to gut campaign-finance law. For more on the ramifications of the decision, see: Supreme Court to Business: Here's a Blank Check to Buy Elections]

In the trailer for "Hillary:
The Movie
," the former Democratic presidential candidate
is described as "driven by power," "steeped in
sleaze," "deceitful," and "worse than
Richard Nixon." The theme of the documentary couldn't be
clearer. Of course, there's nothing wrong with making a critical
movie about a politician — unless, that is, you're an organization
trying to distribute that movie during an election. That's called
electioneering, and it's prohibited by campaign-finance law. Or is

The Supreme Court kicked off its term by hearing a second round
of arguments in the case about "Hillary: The Movie." But
now the matter has become much larger than the original question about whether
a nonprofit has the right to broadcast its film during an election. The
justices must decide if nonprofits and for-profits, like individuals, have a constitutionally
protected right to political speech.

The case in brief:

The conservative-leaning nonprofit Citizens United distributed
its film in theaters and on DVD in 2008. When the group tried to advertise the
documentary and broadcast it via a cable video-on-demand service, the Federal
Election Commission stepped in to ban it, saying that it violated current
campaign-finance law because it was timed to coincide with the presidential
primary. Citizens United responded by suing the FEC, arguing that it had
infringed on the organization’s right to political speech protected
by the First Amendment.

Under current campaign-finance law, both corporations and nonprofits
are barred from funding advertisements that explicitly encourage the support or
defeat of political candidates as an election draws near. But they are allowed
to fund so-called “issue” advertisements that educate
people about a specific issue. Over the years, however, the line between the
two types of ads has become increasingly fuzzy. Organizations have gotten
around the ban on candidate-centric ads by avoiding certain trigger words such
as “elect,” “support,” or “defeat.”

Why it matters:

Under the original href="">McCain-Feingold Act,
passed to strengthen campaign-finance law, issue advertisements were off limits
to companies. But in 2007, the href="">Supreme
Court invalidated that specific provision. Now an even more central portion
of the law hangs in the balance: Can corporations directly fund advertisements
that mention federal political candidates?

If the court decides to reverse prior decisions that largely
upheld the constitutionality of the current law — and experts say
asking for a second oral argument is an indication it may do so — it
would open the floodgates. We would see “much more spending by
corporations on elections and issue ads than we’ve ever seen before,”
says Greg Garre, the head of Latham & Watkin’s Supreme Court
group and a former solicitor general.

Even before the McCain-Feingold law temporarily curbed
funding, organizations spent more than half a billion dollars on them in the
1999-2000 election cycle, according to the Annenberg Public Policy Center. If
the court decides that corporations are now free to support advertisements for
specific candidates — a right they have not had since 1947 —
it would upend our current system for regulating political contributions.

Unsurprisingly, Sens. John McCain, R-Ariz., and Russell
Feingold, D-Wisc., have both filed briefs backing the Federal Election
Commission. Meanwhile, freedom of speech advocates and the U.S. Chamber of
Commerce support Citizens United. In its brief, the Chamber says it, too, has
had its right to free speech restricted, which prevented it from doing more to “convey
the views of the business community” during election time.

Legal experts say several of the more conservative justices
seemed sympathetic to the idea that corporations have rights just as
individuals do. Given the court’s makeup and its decision to rehear
the case focusing on its broader implications, Garre says a departure from
previous precedent wouldn’t be all that surprising.

“If you go by the rule that the side that gets
asked the most questions is the side that’s going to lose, I think it’s
clear in this case the government could lose,” Garre says.

Other cases to watch:

  • Sarbanes-Oxley: The post-Enron reform law that companies love to hate.
  • Botched pension plans: Who determines how much retirees get?

  • Corporate fraud: Is the language that helped take down Conrad Black and Bernard Madoff too broad?

  • Patent law: Is it outdated in this digitally driven, idea-oriented era?