A Radical Revision of Corporate Constitutional Rights: Applying a Supplemented Carolene Products Framework to the Corporate Context
By Griffin Richie ‘25
In United States v. Carolene Products Company (1938), the Supreme Court held that the Commerce Clause granted Congress the power to restrict shipments of certain milk substitutes. Although a case about the congressional regulation of filled milk may seem utterly trivial, Carolene Products remains highly relevant to the Court’s current framework for rights enforcement. In perhaps the most famous footnote in Supreme Court history, the Carolene Products majority sketched out the Court’s new philosophy of judicial review. Shirking the Lochner-era “presumption of liberty” for legislation affecting the “right to contract” and other dubious, judge-made “fundamental” rights, the majority henceforth subjected the textual guarantees of the Constitution, the rights intrinsic to political participation, and the rights of “discrete and insular minorities” to a higher standard of judicial scrutiny. (1) This understanding of judicial rights enforcement is largely exemplary and, with minor supplements, provides a fantastic framework for the Court’s ongoing jurisprudence. When applying this salient and holistic framework to the sphere of corporate rights, it is clear the Court should radically scale back its corporate rights enforcement and grant significant deference to legislatures.
1. Defense of Carolene Products and the Proper Scope of Judicial Rights Enforcement
The Carolene Products framework is best understood as an attempt to strike the optimal balance between the “desire to defer to the democratic process and the desire to protect important values.” (2) Our constitutional democracy is a constrained majoritarian system. The “majoritarian” aspect recognizes that institutions of representative democracy will generally act in accordance with public interest or quickly self-correct erroneous decisions. Since legislators are beholden to their constituents, they are incentivized to pursue policies that align with the people’s interests. If the legislature errs and implements a widely unpopular statute, then the people can simply vote out those legislators during the next election cycle. Thus, the powerful check of elections ensures representative democracy generally works toward its intended aims. However, the “constrained” aspect enters the equation because there are a few instances in which majoritarian processes cannot self-correct. In these select cases, the judiciary must subject legislation to stricter scrutiny because the democratic process itself is defective vis-á-vis the promotion of prized democratic values. “By excluding these marginal situations from the norm,” the Court thus exhibits a “double fidelity to democracy”: first, because it recognizes the value of the democratic process, and second, “because it intervenes in those… abnormal cases in which the democratic ideals that justify judicial deference have been disserved.” (3)
By carefully balancing these democratic demands, the Carolene Products framework is generally correct in determining the select cases that warrant heightened judicial intervention. Laws infringing the guarantees of the Bill of Rights deserve heightened scrutiny because they impinge on values that We the People have explicitly determined are especially salient. Laws that deleteriously affect political participation deserve heightened scrutiny because they undermine the very rationale for deference to political processes. The outputs of representative democracy, i.e., laws, are only presumed to uphold the will of the people if the inputs, i.e., political participation, are pure. Therefore, laws that affect the inputs of representative democracy and taint the process itself must be subjected to intense inspection. Finally, laws that contravene the rights of “discrete and insular minorities” should receive heightened judicial review because it is uniquely onerous for these groups to overturn said legislation. If these groups were already disadvantaged to the point that a noxious, targeted law could receive majority support, then it is unlikely that they, now even more disadvantaged, will suddenly possess the political clout to repeal this legislation. If anything, disempowerment breeds more disempowerment, and this feedback loop taken to the extreme results in outcomes that are anathema to democracy.
Despite the clear benefits of the Carolene Products framework, detractors continue to criticize its basic assumptions and various applications. Opponents often argue that it is antithetical to the core demands of the Constitution, pointing out that “[t]here is nothing in the text of the Constitution generally prioritizing which rights should be enforced or providing the Court with discretion to enforce some kinds of claims but not others.” (4) Although appealing at first glance, this argument misunderstands the nature of rights and the actual demands of the Constitution. Every law in some sense infringes upon some liberty interest. For example, a city’s placement of traffic lights at an intersection impedes one’s right to drive their car in any way they please. Thus, subjecting all laws that affect a liberty interest to heightened judicial scrutiny is both wildly unnecessary and “unduly limit[s] the ability of the democratic process to govern.” (5) Furthermore, the Constitution does provide a blueprint for which rights should be enforced. For one, it specifically lists out various rights in the first eight amendments that We the People have agreed are fundamental. Although this list is evidently not exhaustive, the fact that the Framers enumerated certain rights indicates that those rights were intended to receive special treatment. (6) If not, then why even bother wasting the ink to list those rights in the first place? For these reasons, the Carolene Products framework’s differential treatment of liberty interests is constitutionally permissible.
Furthermore, detractors of the Carolene Products framework denounce its treatment of economic rights. They argue this framework has relegated economic rights to the “bottom rung on the ladder of constitutional rights,” which flies in the face of the Framers’ understanding of the “primacy of property rights.” (7) According to this line of reasoning, Carolene Products’ establishment of a “hierarchy of rights, with property rights situated squarely at the bottom,” is to blame for recent erroneous developments in economic jurisprudence, such as the “cases involving the taking of private property via eminent domain.” (8)
However, this argument, when wielded against holdings about textual protections, is a blatant misrepresentation of the framework itself. In footnote 4, the Carolene Products majority explicitly declared that heightened judicial scrutiny will occur when “legislation appears on its face to be within a specific prohibition of the Constitution.” (9) Therefore, the Court’s failure to adequately enforce the Takings Clause and other economic rights provisions in the Constitution is not attributable to the Carolene Products framework. Furthermore, the Carolene Products framework’s relegation of unenumerated economic rights is indeed a positive development. Considering the arguments for the inclusion of unenumerated economic rights in the 14th Amendment are dubious at best and the Court’s previous forays into unenumerated economic rights enforcement generated disastrous ends, the Court’s decision to defer to legislatures on economic matters is wise. (10) (11) While there are certainly persuasive critiques of the Court’s current approach to deference, i.e., its utilization of the “modern” rational basis test instead of the “classical” rational basis test, these problems are not inherent to the Carolene Products framework and their solutions do not require its elimination. (12)
However, the Carolene Products framework is not entirely perfect, as it fails to identify another bucket of rights that deserve judicial enforcement. In addition to the explicit guarantees of the Bill of Rights, the Court should grant enhanced protection to fundamental unenumerated rights. The inclusion of these rights aligns with the Framers’ belief, codified in the Ninth Amendment, that “fundamental rights exist that are not expressly enumerated in the first eight amendments.” (13) To determine which unenumerated rights qualify as fundamental, history and tradition should “guide and discipline” the inquiry, but evolving social consensus must play a salient role. (14) If rights were solely defined by history and tradition, then practices now regarded as anachronistic and deleterious “could serve as their own continued justification” and practices that have recently gained widespread social acceptance would remain unprotected and unrecognized. (15) Thus, rights that have been shirked or disregarded throughout history but are now celebrated as core components of American democracy must be regarded as fundamental. (16) To prevent this “evolving social consensus” factor from simply being an avenue for the justices to masquerade their own values as fundamental rights, the Court can investigate trends in state constitutional and statutory law. This “counting analysis” will inject objectivity into the inquiry and ensure the enshrinement of fundamental rights remains principled.
In all, the Carolene Products framework, with the addition of fundamental unenumerated rights, should determine when it is appropriate for the Court to engage in rights enforcement. Thus, the Court should only subject legislation to stricter scrutiny in two general cases: when the legislation transgresses a right that is necessary to prevent the derailment of democratic processes toward antidemocratic ends, and when the legislation transgresses a right the people have decided is so vital that it should not be subject to the whims of the legislature. (17) (18)In all other cases, the Court should defer to legislatures.
2. Application of the Supplemented Carolene Products Framework to Corporate Constitutional Rights
When analyzing corporate rights through this supplemented Carolene Products lens, it is clear corporate rights should receive minimal judicial protection. The Court has defined corporate rights far too broadly and thus unduly usurps the people’s right to legislate on salient issues. However, it is important to first observe the nature of corporations and their rights before analyzing the specific demands of the Carolene Products framework.
Corporations, as currently defined by state law, are more than just amalgamations of individuals– they are specific entities that receive special privileges, i.e., “limited liability, perpetual life, and favorable treatment of the accumulation and distribution of assets,” above and beyond what typical groups of individuals receive. (19) Therefore, corporate rights do not refer to an individual’s exercise of their own constitutional rights within a corporate space. For example, even if there were no corporate rights, a McDonald's employee could not be arrested without cause just because they were in the middle of their morning shift. The question of corporate rights is whether the property, assets, and activities of the corporate entity itself should receive heightened protection. To continue the McDonald’s example, if corporations lacked eminent domain protections, then the state could seize a McDonald’s restaurant at any point, provide no compensation, and turn the Golden Arches into a beautiful park. Clearly, corporate rights are inherently different from individual rights: they cover different spheres of protection. As a result, the former cannot be derived from the latter. Key ontological distinctions between corporate rights and individual rights further illuminate this fact.
First off, corporate rights are inherently pro tempore, whereas individual rights are by definition fundamental to constrained majoritarian democratic systems. Ultimately, corporations are legal fictions. They are useful constructions that receive special privileges to deliver societal benefits, e.g., wealth accumulation. There is nothing inevitable or pre-political about corporations and their current allocation of rights, duties, and privileges: they exist solely for the pleasure of society. If tomorrow, the vast majority of the American populous suddenly believed that corporations were deleterious entities, state and federal laws could be reformed such that corporations would lose their collection of privileges and disappear as formal institutions.
Furthermore, there is a powerful recourse for corporate rights violations that is simply unavailable for individual rights violations. If the government grossly transgresses corporate rights, then individuals can simply dissolve their corporate forms and continue to live life with minor impediments. Even the staunchest proponents of corporate rights recognize this reality, conceding that the abolition of corporate rights would not radically uproot people’s lives: “Even if the government abolished the corporate form, most companies would continue to engage in the same business or nonprofit activities– but under different, and probably less efficient, legal statuses.” (20) However, if the government grossly transgresses individual rights, then individuals cannot “dissolve their bodies”. There is no comparable escape from government oppression.
These observations have enormous implications for the scope of corporate constitutional rights. Right off the bat, it seems extremely dubious that corporate rights should receive any constitutional protections. Since corporations as formal institutions only exist because of state law, it seems logical that the state should maintain plenary regulatory authority over these entities. Furthermore, the fact that corporate rights violations impose relatively minute burdens and disabilities means that deference to legislatures on these questions seems sensible: the Court should not micromanage legislation when it does not need to. Although these arguments are powerful, the supplemented Carolene Products framework does require a baseline of corporate constitutional rights.
However, corporations do not derive any rights from the first general category of the Carolene Products framework. This is first evident by the temporary nature of corporations: if they were indispensable to democracy, they could not disappear through a revision in state law. Furthermore, rights intrinsic to political participation are a prime illustration of the disparate impact of corporate rights violations and individual rights violations. If corporations lost these rights, then natural persons would simply utilize different avenues for their exercise. For example, if corporations lost the right to engage in “electioneering communication”, then people would just stop using the corporate form to spread their thoughts about particular candidates. (21) They would still be able to express their ideas as individuals and utilize their individual resources to disseminate information. Although the loss of this corporate right would arguably impose costs on our democratic process, it would obviously not derail democracy. Corporations are not necessary for the dissemination of electioneering communication, and other avenues provide a meaningful platform for individuals to express their desires and for the public to receive valuable information.
Moreover, the American Founding demonstrates that democracy operates just fine without corporations, and by extension, corporate rights. In 1789, the current corporate model was nowhere to be found. Very few corporations even existed, and those that did “were authorized by grant of a special legislative charter…that specified the corporation’s powers and purposes.” (22) Clearly, the absence of the modern corporation, and a fortiori the absence of corporate rights, does not derail democracy. While corporate rights may aid broader democratic goals, they are not required for democracy. Therefore, they do not deserve heightened scrutiny under the first plank of the supplemented Carolene Products framework.
Furthermore, corporate rights should receive very little protection under the second plank of the supplemented Carolene Products framework. An originalist understanding of the Bill of Rights largely precludes the possibility of corporate rights. It was widely understood at the Founding that corporations “had to be closely scrutinized by the legislature because their purposes had to be made consistent with public welfare.” (23) The individualized charter mode of incorporation reveals the “cloud of disfavor under which corporations labored” at our nation’s Founding. (24) The Framers thought these “soulless” entities, much like factions, “could concentrate the worst urges of whole groups of men.” (25) Given the Framers’ distrust of corporations, it seems unlikely they would have empowered these entities with sacred constitutional rights. Moreover, since the existence of corporations “was thought to rest entirely in a concession of the sovereign,” it is nonsensical that the Framers would have envisioned corporations to then possess rights against that very sovereign. (26)
Moreover, there is a noticeable dearth of originalist support for couching corporate rights in the 14th Amendment. Perhaps because the Framers of the 14th Amendment and the public alike were more focused on other aspects of the amendment, viz., its bold affirmation of equal citizenship and its radical transformation of federalism, the question of corporate rights was largely neglected. Therefore, a lower court, in County of Santa Clara v. Southern Pacific Railroad Company (1883), and the Supreme Court, in Santa Clara County v. Southern Pacific Railroad Company (1886) affirmed the presence of corporate rights in the 14th Amendment by relying on pragmatic arguments and judicial fiat, respectively. In County of Santa Clara, Justice Field argued that the absence of certain corporate constitutional rights would essentially render corporations obsolete: for example, if corporations held “all their property…at the will of the state… there would be little security in the possession of property held by such a tenure, and of course little incentive to its acquisition and improvement.” (27) (28)
Outside of this holding, proponents of corporate constitutional rights have invoked similar pragmatic defenses. For example, Ilya Shapiro, a senior fellow and director of constitutional studies at the Manhattan Institute, argued that “corporations must have some constitutional rights– or there would be little incentive to form them in the first place.” (29) The Court has largely agreed with this pragmatic approach, shirking philosophical questions about the “essence” of a corporation to instead analyze the “practical effects” that flow from the recognition of various corporate rights. (30)
These pragmatic arguments highlight that certain corporate rights should be protected under the “fundamental unenumerated rights” component of the supplemented Carolene Products framework. As long as corporations remain entrenched in the fabric of American life, the inclusion of corporate rights in this bucket makes sense from an “evolving social consensus” standpoint. Notably, the complete absence of constitutional rights would entirely decimate the utility of corporations. As Justice Field observed, if corporations lacked, say, property rights, then corporate property could be seized at any moment. In light of this threat, people would have no desire to join and form corporations and risk losing that property, so corporations would wither away into the night. Therefore, the ubiquity of corporations and laws enshrining their privileged status is an implicit recognition of society’s demand for a baseline of corporate constitutional rights. Essentially, corporations should possess the constitutional rights necessary for their preservation because the people believe corporations should be preserved. This understanding of corporate rights comports with their temporary nature: since the social consensus on corporate rights is not fixed, corporations should enjoy these rights as long as they remain favored in American society.
Thus, the Court should only invalidate legislation that impinges on corporate rights if said legislation would destroy the incentive to join a corporation and thus render the corporate form obsolete. This deferential approach allows states to retain maximum flexibility in the corporate realm. States can optimally shape corporate status to fit society’s needs and quickly self-correct in light of new developments. These benefits would be difficult to achieve with the “wooden application of judge-made rules.” (31) Furthermore, there are few downsides to this approach. It is unlikely this deference would lead to an explosion of laws that grossly harm corporations since these entities can employ their vast resources to influence the political process. Notably, many of the corporate rights protected under this new standard overlap with individual rights. (32) However, the scope of these rights is not coterminous. The corporation only receives the right up until the point where it is essential to the maintenance of the corporate form. (33)
Ultimately, this revised understanding of corporate rights has radical implications for the Court’s jurisprudence. The Court should dramatically scale back its corporate rights enforcement and reconsider past cases that painted corporate rights with a broad brush. Citizens United v. Federal Election Commission (2010) is one such case. In this controversial ruling, the Court, by the narrowest of margins, “at the request of no party to suit,” held that the First Amendment prohibits limitations on corporate independent expenditures for electioneering communication. While it is undeniable that corporations should possess some political speech rights, the law at hand in Citizens United did not even approach the outer limits of these rights. This modest “time, manner, and place” regulation only foreclosed one specific avenue of corporate expenditure (the use of general treasury funds) for a limited time period (30 days before primary elections and 60 days before general elections). (34) (35) Therefore, this law did not eliminate corporations’ ability to spend money and produce content in elections. Corporations were still free to spend infinite funds and spread ideas “wherever and whenever” they wanted through their political action committees (PACs). (36) Furthermore, corporations could still create content during those very windows as long as the content did not explicitly advocate for a specific candidate. Thus, this law is clearly permissible under the revised standard for corporate rights.
However, some argue this restriction on corporate expenditure and content production is harmful to democracy. Since the public must be well-informed to select the best-suited representatives, restrictions on speech will only reduce the quality of ideas and thus harm the people’s ability to discharge their democratic duty. On the other hand, some contend that unlimited corporate expenditures in elections would create a “worse-informed public” and facilitate the corporate capture of our democratic process. (37) This disagreement highlights the benefits of deference in the corporate rights context. Since many debates over corporate rights are highly controversial and have no obvious answer, the legislature qua the mouthpiece of the people, not nine unelected, unaccountable judges, should decide these important democratic questions.
3. Conclusion
In all, the Carolene Products framework, when supplemented to include fundamental unenumerated rights, is the proper blueprint for determining the Court’s role in rights enforcement. This framework instructs the Court to provide minimal protections for corporate rights. In light of this radical reconception of corporate rights, the Court should practice deference toward state legislatures and revisit decisions that unduly arrogated the people’s ability to resolve salient and timely corporate matters.
Endnotes
(1) United States v. Carolene Products Company, 304 U.S. 144, 152 (1938).
(2) Erwin Chemerinsky, “The Rational Basis Test Is Constitutional (and Desirable),” Georgetown Journal of Law & Public Policy 14 (2016): 405.
(3) Levinson, Balkin, Amar, Siegel, and Rodriguez. Processes of Constitutional Decisionmaking: Cases and Materials, Eighth Edition. 1052.
(4) John McGinnis, “Reforming Constitutional Review of State Economic Legislation,” Georgetown Journal of Law & Public Policy 14 (2016): 522.
(5) Chemerinsky, “The Rational Basis Test,” 406.
(6) Per the Ninth Amendment, which reads: “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”
(7) Nicholas M. Gieseler and Steven Geoffrey Gieseler, “Strict Scrutiny and Eminent Domain After Kelo,” Journal of Land Use 25 (2010): 192, 194.
(8) Id. at 203-204.
(9) United States v. Carolene Products Company, 304 U.S. 144, 152 (1938).
(10) Although this endnote will certainly not do the topic justice, I will briefly sketch out responses to the common arguments in favor of unenumerated economic rights. First off, proponents claim that “the Fourteenth Amendment was ratified at least in part to assure the constitutionality of the objectives of the Civil Rights Act of 1866. And that Act was aimed at preventing discrimination against African Americans in their exercise of economic rights like the right to contract.” McGinnis, “Reforming Constitutional Review”, 528. However, since the Civil Rights Act of 1866 never enshrined any positive economic rights, but rather attached a nondiscrimination condition to the provision of economic rights, this argument’s premise does not support its conclusion. Furthermore, proponents claim that the 14th Amendment Privileges or Immunities Clause was designed to protect the same rights as Article IV’s Privileges and Immunities Clause. Moreover, the main persuasive authority for the scope of the Privileges and Immunities Clause, the well-known case Corfield v. Coryell, 6 F. Cas. 546 (1823), included economic rights such as the right to occupation. However, this argument proves too much, as Corfield also included “the elective franchise” as a privilege and immunity of citizenship, and the Privileges or Immunities Clause of the 14th Amendment was near-universally understood to not include political rights. Therefore, the presence of a right in Corfield is not sufficient for its inclusion in the 14th Amendment.
(11) Namely, the Court began to function as a superlegislature, inverted the “presumption of constitutionality” normally awarded to the states’ exercise of police power, and justified the invalidation of legislation on pretextual grounds even when there were bona fide police power justifications.
(12) See, e.g., Jeffrey D. Jackson, “Classical Rational Basis and the Right to Be Free of Arbitrary Legislation,” Georgetown Journal of Law & Public Policy 14 (2016): 493-515.
(13) Griswold v. Connecticut, 381 U.S. 479, 492 (1965) (Goldberg, J., concurring).
(14) See Lawrence v. Texas, 539 U.S 558, 572, as cited in County of Sacramento v. Lewis, 523 U.S. 833, 857 (1998) (Kennedy, J., concurring).
(15) Obergefell v. Hodges, 576 U.S. __ (slip op. at 18).
(16) This approach is entirely consistent with the originalist understanding of the Constitution. See Obergefell, 576 U.S. (slip op. at 18) (“The generations that wrote and ratified the… Fourteenth Amendment did not presume to know the extent of freedom in all of its dimensions, and so they entrusted to future generations a charter protecting the right of all persons to enjoy liberty as we learn its meaning.”). By encoding the Constitution with “majestic generalities”, e.g., “liberty” in the Due Process Clause of the 14th Amendment, the Framers recognized that evolving social consensus would give meaning to the nature and scope of its substantive guarantees. See William Brennan, “The Constitution of the United States: Contemporary Ratification.”
(17) The rights “intrinsic to political processes” and the rights of “discrete and insular minorities” fall under this general category.
(18) The textual guarantees of the Constitution and fundamental unenumerated rights fall under this general category. The people have decided these rights are uniquely salient, either by putting pen to paper in 1791 or 1868 or by reaching a clear consensus via state constitutional or statutory law.
(19) Citizens United v. Federal Election Commission, 558 U.S. 310, 351-352 (2010).
(20) Ilya Shapiro and Caitlyn W. McCarthy, “So What If Corporations Aren’t People?” John Marshall Law Review 44 (2011): 714.
(21) Defined in Citizens United as “speech that expressly advocates the election or defeat of a candidate.” Citizens United v. Federal Election Commission, 558 U.S. 310, 310 (2010).
(22) Citizens United v. Federal Election Commission, 558 U.S. 310, 432 (2010) (Stevens, J., concurring in part).
(23) Id. at 123, citing Ronald E. Seavoy, The Origins of the American Business Corporation, 1784-1855: Broadening the Concept of Public Service During Industrialization (Contributions in Legal Studies).
(24) Id. at 123.
(25) Id. at 123.
(26) Id. at 124.
(27) Prior to oral arguments, Chief Justice Waite infamously declared, “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.” Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394, 396 (1886).
(28) County of Santa Clara v.Southern Pacific Railroad Company, 18 F. 385, 405 (1883). (emphasis added).
(29) Shapiro and McCarthy, “So What If Corporations Aren’t People”, 709.
(30) Brandon L. Garrett, “The Constitutional Standing of Corporations,” University of Pennsylvania Law Review 163 (2014): 128-129.
(31) Citizens United v. Federal Election Commission, 558 U.S. 310, 487 (2010) (Stevens, J., concurring in part)
(32) The aforementioned due process property rights are one example.
(33) Notably, this understanding of differential rights is entirely consistent with existing doctrine. When the Court ruled in Oklahoma Press Publishing Co. v. Walling (1946) on the scope of corporations’ search and seizure protections, they recognized that “corporations are not entitled to all of the constitutional protections which private individuals have in these and related matters.” Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 205 (1946).
(34) Ronald Dworkin, “The Decision That Threatens Democracy,” New York Review of Books (2010), 1.
(35) Otherwise, corporations that were specifically formed to disseminate political ideas would be obsolete and other corporations would not be able to speak out against laws that threaten their existence.
(36) Citizens United v. Federal Election Commission, 558 U.S. 310, 398 (2010) (Stevens, J., concurring in part).
(37) Dworkin, “The Decision That Threatens Democracy,” 2.
