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IN THIS ISSUE

Front Page

Ms. Paterson Goes to Washington

Statewide Coalition Forms to Keep Extremists Off the Federal Bench

Notes on the Right: Extraordinary Circumstances: The Assault on the Judiciary

Linking Progressive Corporate Law with Social Justice Movements: A "First of Its Kind" Conference

EJS Amicus Brief Charges Unlimited Campaign Spending
Unfair to Communities of Color and the Poor

The Big Money Behind Ward Connerly

Law Review Summaries: Affirmative Action

Staff/Board News and Notes

Newsletter Editors:
Elaine Elinson
Joe Lucero

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Linking Progressive Corporate Law with Social Justice Movements: A “First of Its Kind” Conference

By Rico Oyola, Project Coordinator

In April the Equal Justice Society joined Seattle University’s School of Law Center on Corporations, Law & Society and UCLA School of Law’s Critical Race Studies Concentration to explore the linkages between progressive corporate law and social justice movements in a 3-day conference entitled “New Strategies for Justice: Linking Progressive Corporate Law with Social Justice Movements.”

The conference drew civil rights advocates, grassroots organizers, attorneys, environmental activists, law and Justice Corps students, and corporate law and critical race studies professors from all over the country.  “This is the first time where we have activists and corporate law scholars coming together,” said Kent Greenfield, a law professor at Boston College.

Nature of the Threat

At the opening plenary, conference organizers aimed to even out the diverse participants’ understanding of the role of corporations in our society.  “Corporations are endangering the environment, threatening human health, increasing wealth disparities, both nationally and globally, and are eroding our democracy,” explained Dana Gold of Seattle University, and chair of the conference.  “Progressive activists, who are working on these issues, often organize in silos seldom taking the time to unite across issue areas and examine the corporate law and the role of government regulation within these injustices.”

Gold’s analysis was echoed by a panel of legal and social justice practitioners, including Debbie Barker of the International Forum on Globalization, Professor Cheryl Harris from UCLA’s School of Law, and MacArthur Fellows Julie Su from the Asian Pacific American Legal Center and John Bonifaz from the National Voting Rights Institute who gave examples of injustices ranging from pollution in minority communities to the ever-growing problem of sweatshops at home and abroad.

Our keynote speaker was William Greider, national affairs correspondent for The Nation and author of The Soul of Capitalism: Opening Paths to A Moral Economy

Understanding Corporate Law

As many of the conference participants had little or not background in corporate law, law professors and others took on the task of outlining the basics. The introduction to corporate law was provided by Professor Scott Cummings of the UCLA School of Law, Daniel Greenwood from S.J. Quinney College of Law and from Thomas Joo of UC Davis’s School of Law.  Corporations are legal entities created by humans with only one acknowledged purpose: to make money for shareholders, they explained.  Corporations take control of their own assets, sell them, and make deals with owners who invest the capital. Corporations have limited liability, thus shareholders are not responsible when a corporation fails or causes harm to a community.  Corporations are free to transfer the responsibility of ownership, raise and control vast sums of money, while directors are allowed to make wrongful decisions and still not be accountable.

Adam Winkler and Devon Carbado from UCLA’s School of Law joined Richard Brooks from Yale University’s School of Law and Lee Cokorinos of the Capacity Development Group explained how the present corporate structure is defended by a conservative Chicago Law & Economics movement.  This movement’s dominant theory argues that market efficiency should be the sole reason allowed to influence business decisions. 

The dominant theory values shareholder wealth maximization over the reallocation of power to other needs such as labor unions, health care, safety or the environment.  Allowing market forces to determine all business strategy creates numerous problems, and, as Carbado illustrated, has an unequal impact on different racial groups with regard to jobs, raises, discrimination, pollution, promotion and services. 

Carbado further pointed out that, under the current paradigm, if minority groups wish to join and influence corporate leadership, they are forced to join a homogenous workplace, where efficiency and trust are based on how racially palatable the minority employee is.  Notions of racial inclusion and diversity are subservient to profit and market positioning.  Support for racial and gender diversity usually arise when it supports the need for short-term profit maximization, he asserted.

Corporate Personhood

At the heart of the social justice and corporate law dialogue was the controversial doctrine of corporate personhood.  In 1886 the U.S. Supreme Court decided in Santa Clara County v. Southern Pacific Railroad Company that a private corporation is a person and entitled to the legal rights and protections of the Constitution. As David Korten, business professor and chair of  Yes! Magazine, explains, “ The doctrine of corporate personhood creates an interesting legal contradiction. The corporation is owned by its shareholders and is therefore their property. If it is also a legal person, then it is a person owned by others and thus exists in a condition of slavery -- a status explicitly forbidden by the Thirteenth Amendment to the Constitution. So is a corporation a person illegally held in servitude by its shareholders? Or is it a person who enjoys the rights of personhood that take precedence over the presumed ownership rights of its shareholders? [i] ”

The second problem with corporate personhood is as a legal person the corporation is afforded  the Constitutional right of freedom of speech.  According to  EJS Board Member James Bronahan, a senior counsel with Morrison & Foerster, “Advertising speech is ok as long as everyone can talk.”

Dean Kellye Testy from Seattle University’s School of Law responded by noting that the corporate right to speech is distorted because the economic power of corporations is far more powerful than many nation states.  “The biggest mistake was to equate money as speech,” Dean Testy asserted.  “When corporations have the power to speak they do this in the form of campaign contributions to elected officials.”

“Corporations are effectively writing policies that become the law of the land,” insisted Jeff Milchen, Director of ReclaimDemocracy.org.  EJS Board member John Bonifaz noted that it requires more than $10 million dollars to run for the U.S. House of Representatives or Senate, and several hundred million dollars to run for President of the United States.

Unlike most individuals and non-profit advocacy groups, corporations can donate millions of dollars to political and public education campaigns, ultimately influencing, if not buying public policy.  The result is government-enacted regulation that is weak at best.   80% of the money in the political system is hard money, with $1.2 million coming from the real estate industry. Companies like MBNA, alone contribute $1.5 million to political candidates.  Iraq and Pentagon contractors contribute $214 million in donations to political campaigns.

What is to be done?

The first step to decreasing corporate power is to limit a corporation’s ability to affect public policy.  Conference participants proposed that social justice advocates should consider allocating staff and resources to support clean money or full public financing of local, state and federal election campaigns.  Once corporate influence in elections is recalibrated to the level of voters, a true “progressive project” for corporate reform will be able to take place.  The concept stems from Professor Eric Yamamoto of the University of Hawaii School of Law who defines a progressive project as one that seeks to eliminate subordination in all forms.

Seattle Law School Dean Testy asked a question that sits at the heart of the new progressive corporate law movement, “What do we want corporate power to be used for?”

One kind of answer was provided by Professor Joo who reminded the group that, “There is no specific legal duty to maximize shareholder wealth.  It is a political view. We can change accounting habits to view pay wage increases or providing a living wage as good for the corporation,” Joo asserted.   

Jill Ratner, president and program director of the Rose Foundation for Communities and the Environment cited several ways in which shareholders can actively contribute to corporate reform.  “Find out who are the shareholders.  They have a fiduciary responsibility. Go after members of the Board of Directors and find out who owns what?” Make use of divestment strategies where groups of shareholders can apply pressure to cut off capital that is facilitating unjust regimes.  “Focus on screening out investments that are in hazardous sectors such as mining, the military or engaged in pollution,” insisted Ratner.  Civil rights groups can advocates for greater corporate transparency and disclosure of business activities, she noted. 

Greenlining Institute’s Deputy General Counsel Itzel Berrio suggested more reliance on  regulatory processes.  “Follow corporate maneuvers as we do with civil rights law.  A corporate merger or expansion into a local community can create enormous opportunity to regional and federal civil rights efforts,” suggested Berrio.  For example, the 1977 Community Reinvestment Act (CRA) requires business investments to be proportional and responsible to the communities in which they operate and provides ample leverage to civil rights campaigns.  “Financial institutions profit significantly from their CRA investments.  In 2002 $1 trillion in investments went to low income communities,” she noted.  “Corporations look at minority communities.  Allegations of fraud are taken seriously and corporate misconduct and irresponsibility lead to close scrutiny of corporate practices.” 

Another reform movement underway is to ensure that corporate charters include environmental and social justice mandates.  Professor Greenfield reminded the groups that a corporation with public interest mandates, such as Fannie Mae (the private corporation that increases mortgage financing for low-income homebuyers), that violate their social, environmental and global justice charters can have their operating ability revoked.  Greenfield suggested a 3 Strikes campaign that mandates a corporation convicted of 3 repeated felonies that harm or endanger citizens, have their assets taken away and sold in public auction.

The conference validated the need for racial and environmental justice advocates to link up with electoral reform and other social justice advocates in new efforts to increase corporate responsibility.  Kimberly West-Faulcon, the Western Regional Director and Counsel for the NAACP Legal Defense Fund, said, “The hardest reason to leave our silos (that focus on race) is that we fear marginalizing our issues to the broader alliance’s goals.”  How will a new progressive corporate law movement place race and other important lenses in the forefront of the movement?, she asked.

The first step in strengthening this diverse progressive corporate law movement will be to articulate a vision for corporate social justice within the context of multiple racial, political, environmental, and cultural movements’ goals.  Dean Testy insists that, “The deepest of societal problems involve not just law, but many disciplines.” 

Though daunted by the tasks ahead, participants were encouraged by Professor Cummings summation that, “This conference is a sign of the vitality of the progressive movement.”