Tag Archives: courts

IS  IT REAL OR MERELY FICTION ?

Louise Annarino

June 26,2012

When presidential candidate Mitt Romney declared “Corporations are people, my friend… of course they are. Everything corporations earn ultimately goes to the people. Where do you think it goes? Whose pockets? Whose pockets? People’s pockets. Human beings my friend” 1, he was combining two fictions: political argument and legal principle. He made the statement to explain why he would not reduce the deficit or protect social security and medicare by raising taxes on corporations. His economic policy has always been based on a long-ago disproven “trickle down” theory, and is consistent with the above comment. Theoretically, if one becomes rich off corporate success one does not need social security nor medicare.

But a theoretically consistent analysis does not mean the premise of the theory is correct. One must ask, how many Americans will achieve such success? How many Americans are given “golden parachutes”2 when they are fired or severance packages designed to maintain their employed-level lifestyle when they retire?3  Not public employees! Yet, Romney sided with Wisconsin Governor Walker and Ohio Governor Kasich in decrying the excessive retirement benefits available to public workers.4 Governor Kasich and candidate Romney share another commonality; their pursuit of personal wealth resulted in reduction or loss of pension and retirement benefits for hundreds of thousands of workers: In Kasich’s case, Ohio public employees including state workers,teachers,law enforcement and fire personnel; and, in Romney’s case workers in companies his equity firm salvaged or savaged.

Courts have used the concept of legal fiction since ancient Rome. “This jargon refers to the law’s ability to decree that something that’s not necessarily true is true. It’s somewhat like a person in a discussion agreeing to accept an opinion as fact for the sake of argument in order to move the discussion along. Legal fiction helps to move proceedings along.”7 Corporate personhood is one such legal fiction.It is employed simply to determine the legality of corporate agreements (contracts) and business proceedings. However, we all understand that this is FICTION and not REALITY. Therefore, it is incumbent that such a discussion tool be used judiciously by our courts. Corporations have super-human qualities which must be constrained when using the legal fiction of personhood.

How do courts use legal fiction? Not always with judicial restraint. For example,In CITIZENS UNITED the U.S. Supreme Court recognized corporations as “persons” entitled to the 1st. Amendment political speech protections of human beings, opening a floodgate for unchecked billions of dollars of corporate donations. Last week in KNOX v SEIU “The five conservative justices, led by Justice Samuel Alito, and two concurring liberals,…held that, from now on, non-members have to specifically tell the union to take money out of their paychecks for political purposes; that is, they have to opt in.6,8 It makes sense that an individual worker cannot be forced to donate to a political effort he does not support. Unions allow workers to opt out of such political funds. Now, workers must opt in. This change restrains union efforts to effect political change on behalf of its members. Must corporations likewise now seek approval of each investor before donating to political candidates, campaigns, PACS, and SUPERPACS? Or, does corporate personhood override the 1st. Amendment rights of investors? Why are unions treated less like persons than corporations? Whether one agrees or not that the Supreme Court used this fiction judiciously in CITIZENS UNITED, courts ought to at least use it consistently. Stare Decisis, another legal term, requires such consistency. If such a shareholder challenge should come before the court it would help answer any question one has regarding the politicization of our highest court. Can you imagine a campaign finance system where investors must opt in before corporations can make political donations?

As politicians move to raise money and seal the deal with voters, one can merely hope the misleading conflation of legal fiction with political fiction will stop.Mr. Romney’s corporations are people comment sounded a false note; and, it may be why his comment was greeted with such disdain. Despite his intentions, It just sounded wrong to average citizens who could care less about legal fiction while dealing with real life. Most of us would agree with Elizabeth Warren’s political commentary, that corporations are not human beings, despite a legal fiction used solely for judicial argument.7 Mothers don’t tuck-in corporations. Fathers don’t shoot hoops with them. Voters don’t vote for corporations; they vote for a man or woman who understands their reality and will not harm them. The rest is fiction.

1. .http://technorati.com/politics/article/video-mitt-romney-says-corporations-are/  Romney made these remarks at the Iowa State Fair in August, 2011.
2. http://abcnews.go.com/blogs/business/2012/01/golden-parachutes-21-ceos-landed-100m-plus/ So-called golden parachutes are contractual provisions that compensate executives, if they are terminated without cause.
3. http://money.cnn.com/2012/02/09/news/economy/romney_taxes/index.htm  Romney “is still pulling in millions from Bain Capital, a private equity firm he founded in the mid-1980s and retired from in 1999.Of course, it’s common for retiring executives to walk away with big retirement packages. But Romney pays only a 15% tax rate on his take, unlike executives at corporations, who typically pay 35%.Why? Because Romney was a partner in a private equity firm and some of the money he still receives from Bain — $13 million over the past two years — is “carried interest.”
4. http://www.aflcio.org/Blog/Political-Action-Legislation/Romney-Finds-Soul-Mate-in-Walker-s-Assault-on-Workers-Retirement-Security “Romney’s focus on pension cuts isn’t surprising. After all, in his role as corporate raider and takeover king at Bain Capital, workers’ pensions were often the first thing to go.”
5. http://www.examiner.com/article/huge-lehman-brother-payouts-report-recalls-ohio-gov-kasich-s-time-at-the-firm “Former Congressman John Kasich clearly was not a banker, but he found a home at Lehman nonetheless. As a one-time Ohio State Senator and then as a Congressman for 18 years, Kasich had easy access to many doors. Among them were doors to Ohio pension funds.According to published reports at the time, Kasich opened doors for Lehman Brother’s private equity department and investment officials at the Ohio Police & Fire Pension and the Ohio Public Employees Retirement System in 2002. Kasich made the case that Lehman would be a good broker for real estate and other investments.Lehman Brothers losses at Ohio pension funds.When all was said and done, after the nation went spinning into what is now called the Great Recession, the Ohio Treasurers office, which acts as custodian but does not invest pension monies, calculated that the funds had a combined $480 million loss in market value solely from Lehman investments. Other sources, using different calculations, said the direct losses were closer to $220 million.”
6.  http://mnlabor.wordpress.com/2012/06/25/how-the-supreme-courts-knox-v-seiu-decision-could-dismantle-union-security-around-the-country-news-politics-alternet/ “The public sector union contract has to cover all the workers in the agency, not just card-carrying members– and  all the workers benefit from the resultant pay raises, health benefits, pensions and other goodies. So non-members are expected to contribute something to the direct cost of negotiations. (Workers who don’t support the union shouldn’t get to enjoy the better pay and working conditions that their union colleagues fought for, but employers haven’t historically been willing to pay people less for NOT being union members. They much prefer to bribe, cajole and threaten workers to reject the union.).Public sector unions have been major political players, too (see: Scott Walker’s targeting of Wisconsin’s public employee unions).This is partly because fundraising for politics has been relatively simple: with everyone’s full knowledge and ample notice given (called “Hudson notices”), a percentage of both members’ and non-members’ funds could go toward political work. Anyone could opt out of this political fund, and their money would be reimbursed.”
7. http://www.examiner.com/article/elizabeth-warren-educates-mitt-romney-explaining-why-corporations-are-not-people “Mitt Romney tells us in his own words, ‘I think corporations are people.’ No, Mitt, corporations are not people. People have hearts, they have kids, they get jobs,” Ms. Warren said. “Learn the difference…And Mitt, learn this,” she continued as she strongly delivered the night’s best line, “We don’t run this country for corporations, we run it for people.”
8. http://www.afj.org/connect-with-the-issues/the-corporate-court/knox-v-seiu.html Service Employees International Union (SEIU) represents 1.8 million people in health care and public service. Non-member public employees are required by California state law to pay SEIU a “fair share fee” to defray the costs of union representation on their behalf. To that end, each year SEIU sends its non-members a notice, as required by the Supreme Court, which informs non-members of their fair share fee and of their right to object to paying non-chargeable expenditures including money spent for political advocacy. Those fees are calculated based upon expenses during the previous year and do not take into account unforeseen expenses.In 2005, SEIU issued a valid annual notice informing non-members of the percentage of their dues which would be allocated to union representation and gave them 30 days to opt-out of paying amounts associated with non-representation functions. The notice stated that dues were subject to change based on actual costs. A month later, SEIU imposed an emergency temporary assessment fee to defend against attacks on union plans and charged non-members who objected to the increase the percentage set forth in the initial notice as the amount associated with union representation. A group of nonmember state employees in California challenged this practice in a class action suit against SEIU.Employees claim that SEIU’s failure to send out a supplemental notice when the union imposed a special assessment violated employees First and Fourteenth Amendments rights by forcing non-union employees to subsidize union political activities. SEIU counters that its notice was constitutionally and legally sufficient because the Supreme Court has recognized that the notice did not require an exact determination of the yearly expenditures, but merely a good prediction based upon the previous year’s audits. The Court previously recognized the impossibility of anticipating expenditures at the outset of the fee year and that once the union sent the original notice it need not send a second notice speculating how a fee increase might be spent. The district court found for the employees, but the U.S. Court of Appeals for the Ninth Circuit reversed, finding that a temporary fee increase did not require an additional notice.