Taking brief relief from my burdens, I came upon Professor Bainbridge's comments regarding a recent Ninth Circuit decision:
The federal Ninth Circuit Court of Appeals recently held that a corporation can acquire a "racial identity" and therefore have standing to sue in its own name and right under federal civil rights laws on grounds that it was unlawfully discriminated against. This is, of course, just nuts.The Ninth Circuit's approach reifies the corporation, In other words, the court treats the corporation as an entity — or, more precisely, as a person — separate from its various constituents. Yet, there is no such thing as a corporate person. The corporation is simply a legal fiction - albeit a very useful one - by which we describe a complex set of contracts having as their nexus a board of directors.
Hmm. Without delving too far into the law, the Ninth Circuit's decision does seem quite nuts -- though perhaps not for the reason that Bainbridge cites. In fact, the notion of that a corporate entity is a legal "person" greater than its constituent contracts is well-established in law. A recent Supreme Court case involving a claim against Don King for racketeering makes the point:
This Court does not quarrel with the basic principle that to establish liability under §1962(c) one must allege and prove the existence of two distinct entities: (1) a “person”; and (2) an “enterprise” that is not simply the same “person” referred to by a different name. Nonetheless, the Court disagrees with the appellate court’s application of that “distinctness” principle to the present circumstances, in which a corporate employee, acting within the scope of his authority, allegedly conducts the corporation’s affairs in a RICO-forbidden way. The corporate owner/employee [Here, Don King], a natural person, is distinct from the corporation itself [Don King's wholly-owned corporation], a legally different entity with different rights and responsibilities due to its different legal status. The Court can find nothing in RICO that requires more “separateness” than that. ... And, linguistically speaking, the employee and the corporation are different “persons,” even where the employee is the corporation’s sole owner. Incorporation’s basic purpose is to create a legal entity distinct from those natural individuals who created the corporation, who own it, or whom it employs.
Cedric Kushner Promotions, Ltd. v. King et al. (Syllabus).
Professor Bainbridge's model of the corporation -- a complex set of contracts having as their nexus a board of directors ownership -- seems very useful in describing how the various component parts of a corporation interrelate. But a corporation has always been held in the law to be something more than its constituent contractual relationships. It is the "sum of the parts is greater than the parts" view that the Ninth Circuit applied in its decision, and, in my view (and the Supreme's view) it was right to do so.
So, though it may be true that the Ninth Circuit's decision is nuts (I'll reserve judgment for the moment, but I was not favorably impressed in my brief perusal of the Ninth Circuit's opinion) -- it's probably not nuts for the reason Professor Bainbridge posits.
I really, really hate the legal tradition of treating corporations as people. I base this in no sound legal reasoning, but only in the fact that I have a fairly good notion of what a person is and what rights a person deserves, and corporations are a fat middle finger to that notion.
Posted by: sidereal | July 29, 2004 at 01:14 PM
I really, really hate the legal tradition of treating corporations as people.
I'm pretty sure Professor Bainbridge would agree -- but that doesn't change the legal tradition.
Posted by: von | July 29, 2004 at 01:35 PM
Von, how long is this tradition? for some reason i thought this was a more recent phenomenon but you would certainly know this arena better than I.
Posted by: wilfred | July 29, 2004 at 02:43 PM
just remembered i saw something recently about this in "The Corporation", a very interesting documentary . There was a case profiled that changed the way the courts viewed Corporations and i thought it was within my lifetime, hence my question.
Posted by: wilfred | July 29, 2004 at 02:57 PM
It's my understanding that a corporation is entitled to the rights of a person, and quite frankly, I'm not aware of any rights people have that could be considered superfluous in a corporate context.
But designating a corporation as a minority is absurd. How do they intend do determine the minority status of corporations, precisely?
Posted by: Jonas Cord | July 29, 2004 at 04:41 PM
Why by the racial status of its mother and father of course! Judged by the 'one drop' rule I'm certain.
Corporations also have a gender, hair color, eye color and bone density dontcha know?
Haven't you heard of the hostile takeovers being prosecuted under the rape laws?
:)
Freaking crazy 9th Circuit.
Posted by: Sebastian Holsclaw | July 29, 2004 at 05:41 PM
Von, how long is this tradition?
My recollection is that the "corporation as (unnatural) person" meme started in earnest right before the turn of the century. I could be way off, though.
Posted by: von | July 29, 2004 at 05:51 PM
That should be "turn of the last century [i.e., 1900]," of course.
Posted by: von | July 29, 2004 at 06:16 PM