Respectfully submitted by Lawrence E. Rafferty (rafflaw)-Weekend Contributor
We have heard the phrase for quite some time now. “Corporations are people”. It sounds so simple, but what does it mean in practice? The corporate structure is designed to protect individual shareholder assets from creditors of the corporation. If you maintain your corporate structure requirements and corporate book, the individual’s assets cannot be attached or claimed by a creditor of the corporation.
Corporations are also afforded special tax breaks and tax rates that individual persons cannot take advantage of. How has the Hobby Lobby decision altered or not altered the corporate veil protection provided to corporations?
Mother Jones described very simply what the corporate veil does. “Here’s one more reason to worry about the Supreme Court’s Hobby Lobby decision, which allowed the arts and crafts chain to block insurance coverage of contraception for female employees because of the owners’ religious objections: It could screw up corporate law.
This gets complicated, but bear with us. Basically, what you need to know is that if you and some friends start a company that makes a lot of money, you’ll be rich, but if it incurs a lot of debt and fails, you won’t be left to pay its bills. The Supreme Court affirmed this arrangement in a 2001 case, Cedric Kushner Promotions vs. Don King:
linguistically speaking, the employee and the corporation are different “persons,” even where the employee is the corporation’s sole owner. After all, incorporation’s basic purpose is to create a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it, who own it, or whom it employs.” Mother Jones
While the Kushner case gave a very succinct definition of the protections provided by the corporate structure, it did not get in the way of the Hobby Lobby majority that further extended the concept that corporations are people. If corporations truly are people and can make decisions based on its owners religious beliefs, how can that corporation take advantage of the protections that the fictional entity was designed to provide?
Can corporations still take advantage of the corporate tax breaks in lieu of the Hobby Lobby decision? Will creditors be able to use the Hobby Lobby decision to attack any corporation that takes advantage of the Hobby Lobby decision to avoid what may be additional costs in including contraception in the health insurance plans for its employees?
Forty-five law professors signed an amicus brief for the Hobby Lobby court suggesting that allowing the piercing of the corporate veil for the religious claims of its owners could have unforeseen circumstances.
“By letting Hobby Lobby’s owners assert their personal religious rights over an entire corporation, the Supreme Court has poked a major hole in the veil. In other words, if a company is not truly separate from its owners, the owners could be made responsible for its debts and other burdens.
If religious shareholders can do it, why can’t creditors and government regulators pierce the corporate veil in the other direction?” Burt Neuborne, a law professor at New York University, asked in an email.
That’s a question raised by 44 other law professors, who filed a friends-of-the-court brief that implored the Court to reject Hobby Lobby’s argument and hold the veil in place. Here’s what they argued:
Allowing a corporation, through either shareholder vote or board resolution, to take on and assert the religious beliefs of its shareholders in order to avoid having to comply with a generally-applicable law with a secular purpose is fundamentally at odds with the entire concept of incorporation. Creating such an unprecedented and idiosyncratic tear in the corporate veil would also carry with it unintended consequences, many of which are not easily foreseen.” Mother Jones
Those unforeseen circumstances that the friend of the court briefed warned about have occurred in past decisions where the Supreme Court claimed their decision was one limited to specific narrow circumstances. One author gave examples of how the Supreme Court’s allegedly narrow decision in Bush v. Gore was used by later courts.
“As Alito no doubt knows, that’s not how Supreme Court jurisprudence works. The justices often try to limit their decisions to a narrow set of facts. But they’re still setting legal precedent, and their logic is certain to be used in future cases in lower courts—often in unintended ways. There are no take-backsies for Supreme Court decisions.
Bob, Esq:
I didn’t call you a neocon. I equated their opinion with yours.
The distinction you keep avoiding is that one is legally accountable and the other is not. Both derive and rely on human action and both have legal status. No lawyer seriously disputes that. The difference is in the relative immunity corporations enjoy from human punishment.
The endowment of unalienable rights is from the law not some Santa Claus in the sky.If we’re back to the Hobbesian argument so be it, but there are no human rights in a state of nature save only those secured by the law of the jungle. You can go to Syria to prove that fact.
Bob, Mespo is seeing conservatives EVERYWHERE nowadays. Even in his dreams, err nightmares.
if you have to find excrpts from liberal sources like Mother Jones and other liberal periodicals & cannot quote from the decision directly and cannot say “this is why I with what the Court said,” your article is not very convincing.
Mark,
Cherry picking?
The entire basis of our disagreement came down to your refusal to recognize the distinction between the individual endowed with inalienable rights and a creature of statute.
http://jonathanturley.org/2010/01/21/supreme-court-rules-5-4-against-campaign-limitations-in-the-hillary-the-movie-case/#comment-106496
I find it amusing that you group me with neo-cons; knowing full well how much I despise them.
But then again who ever said you were a man of principle; right Monsieur Villeforte?
Bob, Esq:
Like I said Bob, you’re the master of cherry pick. Thanks for getting it half right. We’ll let the readers decide if I liked the opinion and why. Your opinion means as much to me as the rest of the deluded neo-con horde.
Squeeky:
“If the arguing does get tough, I will give Fabia a call. But I think I am more than holding my own.”
***********************
Well, if you think so that’s all that matters.
@messpoo
I am glad to take my chances arguing! Since it is my hypothetical, I get to set forth the facts. Therefore, driver negligence was NOT the basis of the claim by Plaintiff Mary against Defendant Bob ‘s Gourmet Pizza, Inc. Bob, the owner, was NOT a named defendant in the original lawsuit.
Obviously, Mary ‘s attorney did not think he needed to name Bob since he was operating under the mistaken idea that he could proceed against Bob under a separate action of “piercing the veil.” I guess poor Mary ‘s lawyer read some silly amicus brief about the topic??
And you need to read more carefully. I did NOT say there was no proximate cause. . .I said driver negligence was not the proximate cause.
So, put that in your little pipe and smoke it!!!
Squeeky Fromm
Girl Reporter
PS : If the arguing does get tough, I will give Fabia a call. But I think I am more than holding my own.
And the link to that post by Mespo is here:
http://jonathanturley.org/2010/01/21/supreme-court-rules-5-4-against-campaign-limitations-in-the-hillary-the-movie-case/#comment-106213
Gee Mark,
Is that all you said?
I seem to recall that you welcomed the fact that the majority in Citizens United ignored the very definition of a corporation; i.e. that it is “regarded In law as having a personality and existence DISTINCT from that of its several members.”
Mespo to Greg after he cited the dissent in Citizens United by Stevens:
Greg:
“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”
***********
Just as there is no limitation on the application of these rights to only US citizens I see no limitation as to natural persons either thus suggesting their derivatives also enjoy these rights. I agree that a collection of natural persons in the form of a corporation does not shed its collective right to speak, and I see nothing in Stevens’ summary that persuades me that the founders were anything other than cautious in their approach to the exercise of corporate economic power. They spoke as much with their legislation as with their judicial opinions and there is a dearth of evidence that they intended to limit the free speech of corporations in the manifest public policy of the United States.
While I appreciate your wanting to let Stevens serve as your mouthpiece, your supported thoughts would be more welcome.
Squeeky:
“Uh, you are ASSUMING negligence on the part of the driver was a proximate cause.”
**********************
Do you really want to argue tort law with a tort lawyer? It was your example and you blew it. As most any lawyer here knows, if there is no proximate cause there is no liability for either Bob The Owner, Bob The Employee, The Corporation (under respondeat superior) or even Bob The Builder. Don’t get in the swamp with the alligators.
Bob, Esq:
As usual Bob, Esq. you simplify to the point of contradiction or merely obfuscate what I said. What I said was that corporations should have as much constitutional leeway as their legal accountability allows. Thus if they want human rights they take human punishments like the death penalty. I also said I welcomed the Citizens United decision to let the public see how much of the political process was corrupted by corporate money instead of hiding it behind trade groups:
“As no fan of big corporations, I welcome the decision. Unleashed by this opinion, the corporations, as they overstep, will do directly what they now do indirectly through trade groups etc. Once the public sees these wolves in their wolves clothing I think we will see the backlash that I have been waiting for, for a lot of my adult life. We may actually get a participatory democracy again instead of a populace that cedes their interests to those with enough money of charisma to make them think that it’s ok to merely get along with their own personal lives. Self-governance just isn’t that easy, and corporations would do well to remember that most favorable decisions come with unintended consequences. All persons, even the merely legal ones, answer in the court of public opinion. No one wants to be a pariah when you have to sell things and services to stay afloat. Can you say “W. R. Grace, Johns Manville, Phillip Morris, A.H. Robins, ….””
@Messpoo
Uh, you are ASSUMING negligence on the part of the driver was a proximate cause. If you are just deadset against there being 2 Bobs, then assume the accident was solely due to the corporation’ s failure to properly maintain the vehicle’ s brakes. Or, that a dangerously over -cooked pizza exploded temporarily blinding the driver.
Geesh. This ain’ t that hard.
Squeeky Fromm
Girl Reporter
Squeeky:
Nice try. The state doesn’t matter as Bob is always personally liable. Keep swinging you’ll get it right sooner or later.
Mespo: “Wrong again, Bob.”
Gee Mark; I’m wrong?
So four and a half years ago you did not agree with the majority’s ruling in Citizens United?
I’m wrong?
Are you sure?
John:
“It has been a long, difficult road for the collectivists to nullify the freedom of citizens to run businesses, in fact all industries, without governmental interference, …”
********************
Not sure where you got your revisionist history from but businesses in the US have always been regulated and constrained by government action since the time of the Constitution. You might recall George Washington himself sent troops to western Pennsylvania to rein in a group of lassez fair absolutists like yourself. Most curious is where you ever got the idea that business is somehow exempt from laws or regulation. That’s not in Wealth of Nations or any other classic interpretation of capitalism. In fact, it’s a new phenomena from the likes of the Robber Barons of today.
@messpoo
Actually, it would depend on which state the accident occurred in, and the nature of the accident. I did not have Bob as a named defendant in order to separate the nature of the claim. You assumed differently.
But, if you want to quibble. . . Simply assume Bob the driver is Bob Smith, an employee, and it is Bob Jones who is the owner. Same result. Now, what is your next objection???
Squeeky Fromm
Girl Reporter
Oh what a tangled web we weave,
When first we practice to deceive.
It has been a long, difficult road for the collectivists to nullify the freedom of citizens to run businesses, in fact all industries, without governmental interference, and to keep government within its limits, clearly delineated in the Preamble, of Justice, Tranquility, Common Defence and General Welfare (deliberately excluding individual welfare AKA redistribution of wealth), leaving as the “blessings of liberty” all endeavors, businesses and industries to be conducted in the free markets of the private sector, including those of education, charity and healthcare, in stark contrast to the control of the economy and redistribution mandated by the Communist Manifesto.
Squeeky:
“There is no dispute that Defendant Bob ran over Plaintiff Mary with his car while delivering a pepperoni pizza for his incorporated pizza parlor. And we done won all the pizza ovens and mozzerella cheese inventory in a separate action against Bob ‘s Gourmet Pizza, Inc.
Now, we ‘re asking you to pierce the corporate veil and give us Bob ‘s house ’cause his employee insurance plan didn ‘t pay for abortifacients!!!
——
See, it just don’ t make any sense. Look, you can always run this kind of stuff by me first before you post it, if you are unsure.”
************************
Ah, Defendant Bob is just as liable in your scenario as his corporation since he did the running down and his house is already at risk. Corporate status protects owners not actors unless, like in your example, they are one in the same.
Congrats on finding the example that torpedoes your argument. You and your BFF should stick to psychology. You won’t look quite as silly.
Bob, Esq:
Wrong again, Bob.
Rafflaw: “Bush v. Gore, the 2000 Supreme Court case that shut down the Florida recounts and handed Bush the presidency, is the most famous example of the Supreme Court trying to dissuade other federal courts from referencing its decision in future rulings.
“Our consideration is limited to the present circumstances,” the majority wrote in that opinion. ”
Ah, who could forget…
“Perhaps nothing Scalia et al. did revealed their consciousness of guilt more than the total lack of legal stature they reposed in their decision. Appellate court decisions, particularly those of the highest court in the land, all enunciate and stand for legal principles. Not just litigants but the courts themselves cite prior holdings as support for a legal proposition they are espousing. But the Court knew that its ruling (that differing standards for counting votes violate the equal protection clause) could not possibly be a constitutional principle cited in the future by themselves, other courts or litigants. Since different methods of counting votes exist throughout the fifty states (e.g., Texas counts dimpled chads, California does not), forty-four out of the fifty states do not have uniform voting methods, and voting equipment and mechanisms in all states necessarily vary in design, upkeep and performance, to apply the equal protection ruling of Bush v. Gore would necessarily invalidate virtually all elections throughout the country.
This, obviously, was an extremely serious problem for the felonious five to deal with. What to do? Not to worry. Are you ready for this one? By that I mean, are you sitting down, since if you’re standing, this is the type of thing that could affect your physical equilibrium. Unbelievably, the Court wrote that its ruling was “limited to the present circumstances, for the problem of equal protection in election processes generally presents many complexities.” (That’s pure, unadulterated moonshine. The ruling sets forth a very simple, noncomplex proposition–that if there are varying standards to count votes, this violates the equal protection clause of the Fourteenth Amendment.) In other words, the Court, in effect, was saying its ruling “only applied to those future cases captioned Bush v. Gore. In all other equal protection voting cases, litigants should refer to prior decisions of this court.” Of the thousands of potential equal protection voting cases, the Court was only interested in, and eager to grant relief to, one person and one person only, George W. Bush.6 Is there any limit to the effrontery and shamelessness of these five right-wing Justices? Answer: No. This point number six here, all alone and by itself, clearly and unequivocally shows that the Court knew its decision was not based on the merits or the law, and was solely a decision to appoint George Bush President.”
— Vincent Bugliosi, “None Dare Call It Treason”
http://www.thenation.com/article/none-dare-call-it-treason?page=full#