Law and Disorder

$6,000,000,000: What’d it get them?

 By A.J. Wagner

Whew! It’s over. The commercials, the mailings and the phone calls have ended. All of that freedom of speech authorized by the Supreme Court in Citizen’s United has had its run for a few years. Thank goodness. Now let’s assess the impact.

For the media, Merry Christmas! Nearly six billion dollars was spent on campaigning this cycle with most of it going to electronic media. The networks, cable and Internet won the lottery without buying a ticket.

For stockholders, sorry for your luck. You would have been better off investing your dividends at the race track.

When the Supreme Court of the United States decided Citizens United v. FEC, the decision granted free speech to corporations while ignoring the question of how a company can spend its money – the shareholders’ money – in a speculative manner. So, if you own stock, Citizens United allows your money to be bet on candidates you may not like and whom you may believe will not act in your best interest.

There are some movements afoot to get a constitutional amendment that would undo the damage of Citizens United. Public Citizen is conducting a campaign called, “Democracy is for People.” To get on board with their effort, Google them, or any one of these organizations: Free Speech for People, People for the American Way or Move to Amend.

Last week, two states had non-binding referenda on the ballot to combat Citizens United. In Montana, where their State Supreme Court tried to overrule Citizens United only to be told by the United States Supremes “You can’t do that,” initiative 166 was passed with almost 75 percent of the vote proclaiming that corporations should not be entitled to constitutional protections because they are not human. In Colorado, 73 percent of the electorate voted to urge their congressional delegation to vote for and support a constitutional amendment prohibiting corporate cash in elections.

Although neither of these initiatives is enforceable, the near three-quarters of support they attained should give a clear signal to politicians that citizens are united in their opposition to Citizens United. National polls have shown this number to be as high as 85 percent.

A constitutional amendment would be the simplest way to overturn the Supreme Court’s misadventure, but, if you are a stockholder, there may be another way.

First, allow me this explanation of a for-profit corporation’s purpose. A for-profit corporation’s sole purpose is to make money. That’s it. A company is not to spend money unless there is a reasonable expectation of profit. Harvard Law Professors Victor Brudney and Allen Ferrell state the common law theory that applies: “The theory appears to be . . . that the legal function of the corporation and its management is to preserve and enhance the value of the assets for its stockholders. This can only be done legitimately if some net benefit to the corporation and its stockholders follows, or is reasonably expected to follow, from its use or expenditure of such assets.”

Money spent on political campaigns seldom creates a benefit for the corporation. Think of all that money spent on the Romney campaign. It’s gone. At best, there was less than a fifty percent chance that it would help the corporation to begin with. Even if the money had been spent on the winner, Barak Obama, it would likely have been wasted. Although the president was re-elected, there is a Republican House of Representatives standing in the way of his ability to accomplish whatever was hoped for from the supporting corporation. With the uncertainties of the political and legislative processes, it is hard to believe that any corporate organization’s donation can reasonably assure a good result for stockholders.

Add to that the possibility a company may be exposed for supporting a given candidate or cause. Opponents of that candidate or cause may then retaliate with a boycott that does harm to the company’s bottom line. This risk further subtracts from the ability to say political involvement by a corporation is good for the stockholder.

That said, a stockholder of a company that gives a political contribution may have the ability to sue the directors of the corporation for wasting his or her money.

There are some obstacles to this approach. First, we don’t know which corporations are giving their money away. Second, it would not be cheap to bring such a suit since the corporation would likely spend endless amounts of money to avoid a judgment from the court. Nonetheless, shareholders can take the threat of a lawsuit to stockholder meetings and demand that directors stop throwing their money away.

A constitutional amendment, a stockholders action or a boycott of businesses may take the excessive amounts of money back out of politics. More importantly, it would also get rid of most of those nasty commercials. Alleluia!

Disclaimer: The content herein is for entertainment and information only. Do not use this as a legal consultation. Every situation has different nuances that can affect the outcome and laws change without notice. If you’re in a situation that calls for legal advice, get a lawyer. You represent yourself at your own risk. The author, the Dayton City Paper and its affiliates shall have no liability stemming from your use of the information contained herein. 

A.J. Wagner is an attorney  with the law firm of Flanagan, Lieberman, Hoffman and Swaim at 15 W. Fourth Street in Dayton. A.J. and his firm would be glad to help you with all of your legal needs. You can reach A.J. at (937) 223-5200 or at

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A.J. Wagner is an attorney with the law firm of Flanagan, Lieberman, Hoffman and Swaim at 15 W. Fourth Street in Dayton. A.J. and his firm would be glad to help you with all of your legal needs. You can reach A.J. at (937) 223-5200 or at

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