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I haven't read the full Sotomayor transcript, but this overall quote exists in the context of a debate about whether corporations are allowed political free spe

I haven't read the full Sotomayor transcript, but this overall quote exists in the context of a debate about whether corporations are allowed political free speech, and I have some strong guesses about which side Sotomayor is on. Your point about employees and shareholders enjoying free speech qua individuals makes ethical sense, but have you considered that treating the corporation as proxy for the rights of its human owners or agents would conflict with the idea of corporate severability, the legal framework which protects shareholders from direct legal liability for wrongdoing carried out on behalf of a corporation by its officers? Corporate severability is bogus. Shareholders should be held to the same level of criminal liability as anyone else who knowingly profits from criminal acts. In practice, this would be rare, as shareholders in public companies would not knowingly profit from criminal actions, because if the actions were publicly known, they would be immediately stopped.

anigbrowl 17y ago
Your guesses are no more than preconceptions, and asserting that she's wrong on the basis of what you imagine her views to be is a poor standard for evaluating anyone. Your argument for why 'corporate severability is bogus' is mistaken, I believe, but first I must correct myself - 'severability' was not the right word to use, and refers to the validity of a contract if one of its terms is violated. What we are actually discussing is the idea of limited liability - I apologize for the mistake. Anyway, I guess what you're saying that that the issue of shareholders' limited liability is bogus because they can't be profiting from criminal behavior they don't know about, and when such criminal behavior is discovered it is stopped so there is no profit. I am unpersuaded. This is like saying that if I am arrested immediately after robbing a bank, I should not be penalized because I haven't had an opportunity to spend any of the money yet and therefore derived no benefit from its theft. Surely, when a company is found guilty of some abuse (eg Pfizer's recent $2.5bn fine), haven't shareholders already enjoyed the profits in the form of dividends? OK, so after such a fine there won't be any more fat dividends for a while, but this is of no consequence to the shareholder who has already sold his holdings I'm afraid I see the doctrine of unlimited corporate rights but totally limited liability as a clear case of moral hazard.
- bokonist 17y ago
  Your guesses are no more than preconceptions, and asserting that she's wrong on the basis of what you imagine her views to be is a poor standard for evaluating anyone. I will bet you $25 that she will not vote in favor of corporations having the right to free speech. As for the criminal liability issue: Imagine you loan money to a friend. Your friend tells you he is going to use the loan to buy a bus ticket to a job interview. Your friend promises to pay you back plus 20% in a week. That friend then uses the money to buy a gun, and uses the gun to rob a gas station. He pays you back the money, with interest. You do not know about the crime, but you have profited from criminal actions. A court would likely not hold you criminally responsible, as long as you had no reason to suspect your friend of using the money to engage in criminal actions. It would probably require you to pay back the money. If you knew your friend was going to use the money to buy a gun, then you indeed would be criminally liable. If there was a "wink wink" arrangement (ie, you say to your friend, "here's some money, turn it into more money, but don't break the law, wink, wink"), you could be held criminally responsible. Figuring out if you knew the intentions of your friend is a judgement call. Likewise, if I invest in a corporation that I know to be engaging in criminal acts, I should be criminally liable for those actions. If I invest in a corporation that is secretly engaging in criminal acts, and I have taken reasonable precautions to ensure that my money is not being used for criminal acts, then I should not be criminally liable. If the company is later convicted for criminal/third party tort charges, and the amount of the fine exceeds the liquidation value of the company, it would make sense to claw back into previously paid dividends, the same way as you confiscate any blood money.
  - anigbrowl 17y ago
    I will bet you $25 that she will not vote in favor of corporations having the right to free speech. And maybe you're right, but in this case all she did was point out that the plaintiff's argument would raise such a question and might result in an excessively broad ruling for such a narrow problem. what she did and what we might do in the future are two entirely different things, and you are applying your opinion about the latter to the former with no basis in fact. I know, I'm being pedantic here, but I think you're reading far too much into what she actually said. Edit: I'm more and more confused about where you think she would be wrong anyway if the did vote this way, since you do don't think corporations should enjoy the status of legal persons. How would a suggestion that corporations don't enjoy constitutional protections infringe on the individual rights of those shareholders? Presumably, even if DownWithPedro Corp is forbidden from advertising on the eve of the election, I could still write an impassioned screed on the same subject in my own name. to be honest, I think the reason this particular company (in the lawsuit under discussion) exists is not to make a profit but to protect its investors from the financial risks of being sued for libel if they released the film as a group of individuals without the benefit of limited liability. If the company is later convicted ... make sense to claw back into previously paid dividends ... I agree with most of what you say. We are not so far apart on the possible implementations. My beef is not with the basics of capitalism per se, but the fact that nowadays at least, arcane corporate structures are all too often employed to diffuse responsibility to the point of meaninglessness. In the Pfizer case I mentioned, one sales manager got 6 months of house arrest plus a $100 fine, which I frankly thought was just as unfair to Pfizer shareholders as to consumers. A few years back I thought Sarbanes-Oxley would lead to meaningful reforms in comporate decision making and risk management, but the events of the last 2 years have proved me woefully mistaken :-/
billswift 17y ago
I understood that "limited liability" refers only to the financial liability of shareholders being limited to what they have invested in the corporation, their not being personally liable for any debts of the corporation, in other words. "Limited liability" does NOT protect shareholders, management, or anyone else involved from actually criminal actions they may participate in.

anigbrowl 17y ago

Your guesses are no more than preconceptions, and asserting that she's wrong on the basis of what you imagine her views to be is a poor standard for evaluating anyone. Your argument for why 'corporate severability is bogus' is mistaken, I believe, but first I must correct myself - 'severability' was not the right word to use, and refers to the validity of a contract if one of its terms is violated. What we are actually discussing is the idea of limited liability - I apologize for the mistake. Anyway, I guess what you're saying that that the issue of shareholders' limited liability is bogus because they can't be profiting from criminal behavior they don't know about, and when such criminal behavior is discovered it is stopped so there is no profit. I am unpersuaded. This is like saying that if I am arrested immediately after robbing a bank, I should not be penalized because I haven't had an opportunity to spend any of the money yet and therefore derived no benefit from its theft. Surely, when a company is found guilty of some abuse (eg Pfizer's recent $2.5bn fine), haven't shareholders already enjoyed the profits in the form of dividends? OK, so after such a fine there won't be any more fat dividends for a while, but this is of no consequence to the shareholder who has already sold his holdings I'm afraid I see the doctrine of unlimited corporate rights but totally limited liability as a clear case of moral hazard.

bokonist 17y ago
Your guesses are no more than preconceptions, and asserting that she's wrong on the basis of what you imagine her views to be is a poor standard for evaluating anyone. I will bet you $25 that she will not vote in favor of corporations having the right to free speech. As for the criminal liability issue: Imagine you loan money to a friend. Your friend tells you he is going to use the loan to buy a bus ticket to a job interview. Your friend promises to pay you back plus 20% in a week. That friend then uses the money to buy a gun, and uses the gun to rob a gas station. He pays you back the money, with interest. You do not know about the crime, but you have profited from criminal actions. A court would likely not hold you criminally responsible, as long as you had no reason to suspect your friend of using the money to engage in criminal actions. It would probably require you to pay back the money. If you knew your friend was going to use the money to buy a gun, then you indeed would be criminally liable. If there was a "wink wink" arrangement (ie, you say to your friend, "here's some money, turn it into more money, but don't break the law, wink, wink"), you could be held criminally responsible. Figuring out if you knew the intentions of your friend is a judgement call. Likewise, if I invest in a corporation that I know to be engaging in criminal acts, I should be criminally liable for those actions. If I invest in a corporation that is secretly engaging in criminal acts, and I have taken reasonable precautions to ensure that my money is not being used for criminal acts, then I should not be criminally liable. If the company is later convicted for criminal/third party tort charges, and the amount of the fine exceeds the liquidation value of the company, it would make sense to claw back into previously paid dividends, the same way as you confiscate any blood money.
- anigbrowl 17y ago
  I will bet you $25 that she will not vote in favor of corporations having the right to free speech. And maybe you're right, but in this case all she did was point out that the plaintiff's argument would raise such a question and might result in an excessively broad ruling for such a narrow problem. what she did and what we might do in the future are two entirely different things, and you are applying your opinion about the latter to the former with no basis in fact. I know, I'm being pedantic here, but I think you're reading far too much into what she actually said. Edit: I'm more and more confused about where you think she would be wrong anyway if the did vote this way, since you do don't think corporations should enjoy the status of legal persons. How would a suggestion that corporations don't enjoy constitutional protections infringe on the individual rights of those shareholders? Presumably, even if DownWithPedro Corp is forbidden from advertising on the eve of the election, I could still write an impassioned screed on the same subject in my own name. to be honest, I think the reason this particular company (in the lawsuit under discussion) exists is not to make a profit but to protect its investors from the financial risks of being sued for libel if they released the film as a group of individuals without the benefit of limited liability. If the company is later convicted ... make sense to claw back into previously paid dividends ... I agree with most of what you say. We are not so far apart on the possible implementations. My beef is not with the basics of capitalism per se, but the fact that nowadays at least, arcane corporate structures are all too often employed to diffuse responsibility to the point of meaninglessness. In the Pfizer case I mentioned, one sales manager got 6 months of house arrest plus a $100 fine, which I frankly thought was just as unfair to Pfizer shareholders as to consumers. A few years back I thought Sarbanes-Oxley would lead to meaningful reforms in comporate decision making and risk management, but the events of the last 2 years have proved me woefully mistaken :-/

billswift 17y ago

I understood that "limited liability" refers only to the financial liability of shareholders being limited to what they have invested in the corporation, their not being personally liable for any debts of the corporation, in other words. "Limited liability" does NOT protect shareholders, management, or anyone else involved from actually criminal actions they may participate in.