Wednesday, February 10, 2016

Citizens United vs. Friedrich

Mark Joseph Stern, writing for Slate about Hillary Clinton's NH concession speech, notes in passing a looming contradiction between the Friedrich vs. California Teachers case and the terrible Citizen's United decision.

Folks tend to remember the bizarre reasoning that corporations are people, money is free speech, and there is no appearance of corruption when a corporation hands an elected official a giant suitcase full of money. But one of the arguments that the Supremes rejected in Citizens United was this one:

This problem arises because of the structure of corporations: the owners of the corporations, the shareholders, do not control how the assets of the corporation are used; the managers do. This separation of ownership and control is known as the agency problem in corporate law. The agency problem presents the potential for the shareholders’ agents, corporate management, to use the shareholders’ property, the assets of the corporation, for management’s own purposes. One argument made in favor of limiting corporate expenditures is that management can use the assets of the corporations to support political causes shareholders do not agree with, thereby violating the shareholders’ rights of association. The potential violation of this right gives the government a compelling interest justifying speech limitations.

In other words, shareholders could find their corporate assets being used to support a political cause they do not support.

The Supremes were unimpressed, and rejected that argument when they decided Citizens United.

Yet it is, of course, the exact argument of the plaintiffs in Friedrichs, who don't want anybody to ever give fees to unions for political purposes.

Well, actually, it's not the same argument. It's a stronger one, since the CU argument involves shareholders' actual property, while Friedrichs involves taking up a separate collection for political purposes. Friedrich's doesn't want the union to be able to ask you to kick in for cab fare to drive me to a rally for a politician you hate; Citizens United says I can take a car we jointly own and drive it through your garden.

There is no reason to expect that this inconsistency will carry the day. But if Friedrichs wins against unions, as seems likely-ish, it will be one more sign that today's court believes that all corporations are people, and some people are more equal than others. 


  1. You miss an important point which is the right of Exit. If a shareholder disagrees with the political stance of a corporation, they can pull 100% of their money out. Teachers, on the other hand, are still forced to be paying into the union.

    Voluntary versus Mandatory is THE difference.

    1. Nobody is forced to be a teacher any more than they are forced to be a shareholder of a corporation. In stockholder terms, Friedrichs is arguing that I should be free to collect dividends without having to actually buy stock.

    2. I think there's some confusion. There are members. And there are non-members. Non-members pay fees to cover the cost of collective bargaining and contract enforcement. They don't have to pay for political activity. In fact, unions do expensive audits every year to determine exactly how much non-members are entitled to be refunded for political contributions. In Freidrichs, they are NOT arguing that members should be exempt from political contributions. They aren't even arguing that non-members should be exempt from political contributions! They are arguing that non-members should be excused from paying even that portion of money that goes solely to collective bargaining and contract enforcement. They claim that in itself is forced political activity. Indeed, nobody is forced to be a teacher. But Freidrichs will present union teachers with a choice: 1) pay all the costs of bargaining and enforcement for your "fellow" non-union teachers, or 2) quit.

  2. Michael, how do you earn money?

    I'd like to understand your story before jumping to any conclusions about your biases. And your weird capitalization of Exit.

  3. I think that you have this wrong: "Citizens United says I can take a car we jointly own and drive it through your garden."

    Unless I misunderstand, CU is more like "I can take your car that you own and drive it through your garden." Management doesn't have to own stock, does it?