First National Bank of Boston v. Bellotti

Supreme Court of the United States
435 U.S. 765, 98 S.Ct. 1407, 55 L.Ed.2d 707 (1978)

ELI5:

Rule of Law:

A state cannot prohibit business corporations from making expenditures to influence the outcome of a referendum, as such a prohibition on speech violates the First Amendment. The protection of speech does not depend on the identity of the speaker, but rather on the importance of the speech to open, public discourse.

Facts:

Massachusetts enacted a statute, Mass. Gen. Laws Ann., ch. 55, § 8, which prohibited business corporations from making expenditures to influence the vote on any referendum question, unless that question materially affected the corporation's property, business, or assets.
The statute explicitly stated that a referendum solely concerning the taxation of individuals would be deemed not to materially affect a corporation's business.
A referendum was proposed to amend the Massachusetts Constitution to permit the legislature to impose a graduated income tax on individuals.
First National Bank of Boston and several other business corporations (appellants) wished to spend money to publicize their views opposing the proposed amendment.
The appellant corporations believed that a graduated personal income tax would have a seriously adverse effect on the state's economy, which would in turn harm their businesses.
The Attorney General of Massachusetts, Francis X. Bellotti (appellee), informed the corporations that he would enforce the statute against them if they made the planned expenditures.

Procedural Posture:

First National Bank of Boston and other corporations filed a lawsuit in the Massachusetts Supreme Judicial Court seeking a declaration that the state statute was unconstitutional.
The case was submitted on agreed facts to a single justice of that court, who reserved decision and referred the case to the full court.
The full bench of the Massachusetts Supreme Judicial Court, the state's highest court, upheld the constitutionality of the statute.
The corporations then appealed the decision to the Supreme Court of the United States.

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Issue:

Does a Massachusetts statute prohibiting business corporations from making expenditures to influence the vote on a referendum proposal that does not materially affect their business, property, or assets violate the First Amendment as applied to the states through the Fourteenth Amendment?

Opinions:

Majority - Justice Powell

Yes, the Massachusetts statute violates the First Amendment. The proper constitutional question is not whether corporations have First Amendment rights, but whether the statute abridges expression that the First Amendment was meant to protect. The speech at issue, regarding the merits of a proposed tax, is at the heart of the First Amendment's protection of free discussion of governmental affairs. The inherent worth of speech in its capacity to inform the public does not depend on the identity of its source, be it a corporation or an individual. The state's asserted interests in preventing corporate domination of the electoral process and protecting minority shareholders are not compelling enough to justify this restriction on political speech. There was no showing that corporate speech had been overwhelming in Massachusetts referenda, and the Court found that the concept of restricting speech of some to enhance the voice of others is 'wholly foreign to the First Amendment.' Furthermore, the statute was both underinclusive and overinclusive to protect shareholders, who have remedies through corporate democracy and derivative suits.

Concurring - Chief Justice Burger

Yes. This concurrence agrees with the majority opinion but writes separately to highlight the difficulty of distinguishing between non-media corporations, like the appellants, and large media conglomerates. If the Massachusetts law were upheld, it could create a justification for imposing similar speech restraints on media corporations, which also amass vast wealth and influence through the state-provided corporate form. The Framers did not intend for the Press Clause to confer a special status on the 'institutional press' that is not extended to all who wish to express ideas. The First Amendment belongs to all who exercise its freedoms, not to a specific category of entities.

Dissenting - Justice White

No, the Massachusetts statute does not violate the First Amendment. A state may prevent corporate management from using the corporate treasury to propagate views that have no connection to the corporate business. Corporate speech is not fungible with individual speech because it does not further the principal First Amendment value of self-expression. States grant corporations special advantages, such as limited liability, which allow them to accumulate wealth; a state has a compelling interest in preventing that state-created wealth from being used to gain an unfair advantage in the political process. Additionally, the state has a strong interest in protecting shareholders from being compelled to financially support political or ideological causes with which they disagree and which are unrelated to the corporate purpose.

Dissenting - Justice Rehnquist

No, the Massachusetts statute does not violate the First Amendment. Corporations are artificial entities created by law and possess only those properties that their charters confer. The liberty protected by the Fourteenth Amendment is the liberty of natural, not artificial, persons. While corporations are entitled to due process protection for their property, the right of political expression on matters not materially affecting their business is not a necessary incident of their existence. States can reasonably fear that corporations will use their economic power to obtain undue political benefits, and it is constitutionally permissible for a state to restrict such activity.

Analysis:

This decision was a landmark in establishing First Amendment protection for corporate political speech. It fundamentally shifted the focus of constitutional analysis from the identity of the speaker to the societal value of the speech in contributing to public debate. By applying strict scrutiny to a law restricting corporate expenditures on a referendum, the Court set a high bar for such regulations. This case laid the doctrinal foundation for subsequent major campaign finance decisions, most notably Citizens United v. FEC, which extended this reasoning to allow for independent political expenditures by corporations in candidate elections.

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