Silencing Corporate Political Speech

W.C. Bunting

This Article categorizes corporate speech along two distinct dimensions: (1) commercial versus non-commercial, and (2) political versus non-political. Using this terminology, this paper introduces a novel taxonomy of corporate speech that includes a definition of pure political speech. The central claim set forth here is that pure political speech should not be permitted as a matter of state corporate law. Embedded within state corporate law must be a steadfast commitment to the simple proposition that market-based business entities must not influence what is considered right and wrong, either morally or regarding matters of public policy unrelated to its business operations. Recognizing the difficulties inherent in overcoming the business judgment rule protection enjoyed by corporate fiduciaries, the paper advances a different litigation theory to silence pure political speech grounded in the notion of shareholder oppression, contending that political speech by a business corporation ought to constitute prima facie evidence of oppressive conduct. Introducing the novel concept of an ideological dividend, this paper contends that pure political speech can be conceptualized as a form of unlawful shareholder oppression no different than a dividend paid to some shareholders of the corporation but not others.

In addition, this Article offers two concrete policy proposals to silence pure political speech: (1) modify shareholder oppression statutes to include pure political speech as a form of oppressive conduct, and (2) encourage courts to recognize political speech as prima facie evidence of oppressive conduct in a shareholder oppression claim. To support these policy proposals, the paper provides two justifications for why purely economic decisions should not be motivated by ideological considerations. First, permitting ideology to influence economic decision-making can result in a socially inefficient allocation of scarce resources. Second, allowing economic actors to sort by political ideology can exacerbate existing ideological divisions in a society already deeply divided.