Corporate Speech

According to legal scholars, such as Yale's Thomas Emerson (1963), at the core of a self-governing system's freedom of expression is a set of rights assured to individual members of society, which includes the right to form and hold beliefs and opinions on any subject, the right to communicate ideas, opinions, and information through any medium, and the right to remain silent. Constitutional theorists, such as Alexander Meiklejohn (1961) advocate for the freedom of citizens to express themselves and participate in government.

The U.S. Supreme Court's extension of free speech rights to organized entities rests largely on the First Amendment recognition of the public's right to receive information relevant to the self-governing process. It follows that noncommercial, or political, speech by corporations enjoys greater protection than commercial speech, such as advertisements, because it seeks solely to benefit the corporation's interests. The argument for lesser protection for commercial speech is also based on a desire to protect consumers from fraudulent and unethical practices and perceptions that this type of speech has a lesser value than political speech in democratic decision making.

Tracing the legal history of corporate speech reveals the importance of the distinction between commercial and political speech, the difficulties in drawing the line between them, and the vigorous debates that have ensued. The U.S. Supreme Court's ruling in the 1942 case, Valentine v. Chrestensen, established the precedent that commercial speech receives less protection than political speech. This restricted view was overturned in 1976 with the recognition that “some” purely commercial speech, if truthful and concerning a lawful product or service, should be protected in the interest of the free flow of information, in the seminal case Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council involving abortion advertising. A defining case in the regulation of commercial speech was the 1980 Central Hudson Gas & Electric Corp. v. Public Services Commission, which set up the four-part test for determining whether restrictions on commercial speech are constitutional. The case struck down a ban on electric utility advertising based on considerations of these questions:

• 1.
  Is the speech protected by the First Amendment, meaning is it truthful, nonmisleading, and concerning a lawful product or activity? (If yes, the court proceeds with the other prongs of the test; if no, the test ends and the speech can be regulated or banned altogether.)
• 2.
  Is there a substantial governmental interest in restricting the speech?
• 3.
  Is the governmental interest directly advanced by the regulation?
• 4.
  Is there a reasonable fit between the governmental interest and the regulation?

The test has been applied and reinforced in more recent cases to reject bans in liquor, casino, and tobacco ads.

When corporations began seeking the right to make political and social statements, the legal opinion prevailed that such statements were permissible only if the public issue materially affected the business interests of the corporation. As early as 1961, when an organization of railroad presidents conducted a publicity campaign advocating adoption and retention of laws regulating the trucking industry, the U.S. Supreme Court recognized the right of citizens to inform their government representatives of their desires about passage or enforcement of laws affecting business. The Court's decision in the 1978 landmark case First National Bank of Boston v. Bellotti rejected this restricted view of corporate freedom of expression and established the contribution of [Page 212]corporate public discourse to the self-governing process as the primary determinant of corporations’ rights to freedom of expression. As expressed in the ruling, this type of speech is “indispensible to decision-making in a democracy, and this is no less true because the speech comes from a corporation rather than an individual.” When two years later a privately held utility company was prevented from distributing a pronuclear power insert in its billing envelopes, the Supreme Court ruled in Consolidated Edison Company of New York v. Public Service Commission of New York that this violated the First Amendment and established the precedent that the state cannot confine corporate speech to specific issues absent a compelling state interest, using the three-part strict scrutiny justifications for limiting speech: (1) “a reasonable time, place, or manner; (2) a permissible subject-matter regulation; or (3) a narrowly tailored means of serving a compelling state interest.”

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