S9, Ep2 | A Legal Strategy

[00:00:00] Lewis F. Powell: The First Amendment's primary concern, and therefore the court's concern, always has been the preservation of free and uninhibited dissemination of information and ideas.

[00:00:19] Amy: That is the late Justice Lewis Powell reading his majority opinion in the Supreme Court case First National Bank of Boston v. Bilotti.

[00:00:29] Lewis F. Powell: If the restrictive view of corporate speech taken by the Massachusetts Court were accepted, government would have the power to deprive society of the views of corporations on all issues other than those that could be proved to affect adversely their property or business interest.

Corporations thus could be prohibited from expressing views by advertisements or otherwise on all matters of general public interest. We view the Massachusetts court's decision as seriously restrict, restricting public access to major sources of educational ideas and information.

[00:01:18] Amy: It was April 1978. The U. S. had just weathered the OPEC oil embargo but was about to be plunged into another energy crisis, spurred by revolution in Iran. President Jimmy Carter was in the White House pushing energy efficiency programs and installing solar panels.

Exxon was ramping up research on renewable energy, lithium ion batteries, and this new thing called the greenhouse effect. At Mobil Oil, Herb Schmertz was focusing on controlling the narrative, which required bending not just the media itself, but also the laws governing media to his will.

[00:01:59] Herb Schmertz: It seems to me that society has given the press a great privilege, and that privilege is embodied in the First Amendment. That privilege is only going to survive so long as society believes that the press is doing things that are useful to society.

[00:02:14] Amy: Bellotti was a huge win for what Professor Robert Kerr calls the corporate free speech movement. We heard from Kerr in the last episode, too. He's the University of Oklahoma journalism professor who has written two books about mobile oil's involvement in that movement.

[00:02:32] Robert Kerr: I really think if, uh, Lewis Powell had not been on the court at that time, it probably would have gone the other way. The justices came very close to just resolving it on a procedural basis, where there wouldn't even be a First Amendment discussion. In the end, Justice Powell… I mean, you go through the, the justices papers, they have different conferences and he, he winds up saying, let me take a shot at a majority opinion, arguing the first amendment case here.

And he has a difficult time. You see how difficult a sale it was for justice Powell wound up for justices were rock solid against it. And a couple others were really a tough sell. He had to make some key changes. to the opinion that made it much narrower in, in legal terms to get the two he needed for a five justice majority.

So it winds up five to four. Uh, Powell wins this, uh, ruling. He wrote it very carefully to avoid the question of do corporations have First Amendment rights? He could tell he would lose on that. So he wrote it more, uh, does the First Amendment allow government to restrict on these ideas that the corporation wants to buy ads to get out to the public.

[00:03:52] Amy: Given his role in really advocating for the court to pick up the idea of corporate free speech and to let him use Bellotti to define it, it's important to understand here who exactly Justice Powell was in the history of corporate. power in the United States. Prior to his appointment to the Supreme Court by President Richard Nixon, Lewis Powell was a tobacco industry lawyer and lobbyist.

He sat on the board of Philip Morris from 1964 until his appointment to the court in 1971. And yes, Powell had tried to use a First Amendment argument to protect tobacco company rights, too, arguing that newspapers that refused to run the company's denials of the links between smoking and cancer were infringing on his clients free speech rights.

The argument didn't work then, but in Bellotti Powell Struck A Win For Corporate Free Speech Warriors Everywhere.. Just a few months before he accepted his appointment to the Supreme Court, Powell was commissioned by a friend of his at the U. S. Chamber of Commerce to draft a strategy for corporate America to deal with some of the social justice gains made during the 1960s.

Powell was especially concerned about all the conversations about corporate greed and corruption that people were constantly seeing on their TVs. You're accused of being anti business. Are you? No. Basically, the accusation is a mixture of, um, of terminology. What we're against are illegal, deceptive, fraudulent, collusive behavior.

And if they want to associate that with the term business, that's their own terminology, not ours. We'd like to separate the two. That's Ralph Nader. In the mid 1960s, Nader had taken on General Motors, arguing that its cars were unnecessarily unsafe and advocating for a seatbelt law. He won that fight and galvanized the American consumer movement while he was at it, taking aim not only at car companies, but also big oil, big ag, really any industry that had gotten so big, it seemed like the government was working for them instead of the people.

To Powell, this smelled like socialism, and he wasn't here for it. In his blueprint for the Chamber of Commerce, which came to be known as the Powell Memo, Powell laid the foundation for what would go on to become the corporate right wing in America. He took aim at so called liberal university campuses for indoctrinating young people against capitalism.

He suggested the creation of powerful conservative think tanks that could help push back against the naders of the world, sparking organizations like the Heritage Foundation. And he thought it might be a good idea for corporations to figure out how to write and disseminate sample legislation, especially at the state level, an idea that eventually became the American Legislative Exchange Council, or ALEC.

Today, ALEC writes sample legislation in partnership with different industry groups and then pushes it out to state politicians to get it passed. One of its big recent success stories is legislation that was written and proposed by the American fuel and petrochemical manufacturers. And has criminalized pipeline protest in about half of the states.

Before Powell hit the Supreme court, the court had never taken up a corporate free speech case. It had affirmed various other constitutional rights of corporations, but not. First Amendment rights. Then in 1975, the court took up a campaign finance case called Buckley v Valeo. It focused on the Federal Election Campaigns Act, which had been updated in the wake of Watergate to tighten restrictions on political contributions.

At issue was whether it had gone. too far. And in Buckley v. Valeo the court decided that yeah, it had. I called up Ben Feuer chairman of the Complex Appellate Litigation Group, years ago to explain the implications of Buckley v. Valeo to me. And his is still the most straightforward explanation I've found.

[00:08:30] Ben Feuer: Supreme Court said, look, we're going to allow the government to regulate. When a person casts tribute to a candidate because that looks like there might be corruption We don't want anybody with money whether it's a person of corporation anybody from just throwing money Get in, in a briefcase, giving it to a candidate saying, here, go, uh, go do

Um, cause it gets really close to a bribe. Right? Right. We don't want that. But the other idea, the idea that we can, the government can limit whether it's somebody spends money that they have mm-hmm. , um, for a candidate that's much.

[00:09:10] Amy: So the court decided to keep the limits on individual contributions to campaigns, but to remove regulations. On campaign expenditures, the law had limited both because even if you limit the amount, any one person can give, you can't really do anything about the fact that some people are friends with a lot of billionaires and some people are not.

The idea was to enforce some sort of equality between campaigns so that a candidate that had, for example, lots of corporate backers. wouldn't be able to drown out a candidate that only had grassroots support. If you've seen exactly that happening over the past couple of decades, this case is why. In its ruling on Buckley, the Supreme Court removed spending limits.

It said that while limits on contributions were needed to tamp down on corruption, or at least the appearance of it, a law regulating how much a campaign spent on messaging felt like a direct infringement on free speech rights. It was the first time the court had equated spending money with free speech.

[00:10:25] Ben Feuer: Because that isn't giving money in a briefcase to a candidate. That's, Hey, I've got some money and I want to use it to spread my ideas. That's what free speech is all about. If there's any area of speech where we want people to be able to speak freely without government regulation. It's got to be political speed because that's where people are sharing ideas about how the country should be run.

[00:10:51] Amy: Still, the Buckley v. Valeo ruling kept regulations in place that prevented corporations from spending directly from their corporate coffers to support a candidate. They were allowed only to spend through contributions to a political action committee, a PAC, or through a separate fund created solely for political contributions.

At the time, the idea was to limit not only companies, but also unions from overwhelmingly tipping elections. Both had big cash reserves in their treasuries, and this kept them from using the infinite money cheat when pursuing their political goals. Buckley was focused on federal election law, so it only limited spending on national political candidates.

Two years later, Powell spearheaded the opinion on Bellotti which got into political issue advertising and state level restrictions on political spending. At the federal level, citizens don't vote on particular policies. The people we've elected to handle those things do. But at the state level, voters have more say about both regulation and how the state spends its budget.

Powell's Bilotti declared it unconstitutional for a state to limit corporate campaigning. On a particular political issue or on a state referendum, they still couldn't spend directly from their corporate bank accounts or directly fund a particular candidate, but whatever money they could raise in a PAC or coalition, they could spend as much as they wanted on trying to pass or block a particular policy.

If Buckley cracked the door open for corporate free speech, Bellotti kicked it down. Here's Robert Kerr again on Bilotti's impact.

[00:12:45] Robert Kerr: It does open up the public square to the corporate voice more directly than ever before.

[00:12:51] Amy: Today we're going to dig into what exactly the Bilotti decision set in motion. We're going to look at Mobil's continued work on corporate free speech through the 80s and 90s, and how all of it connects back up to the arguments that oil companies are making about climate change in court today.

I'm Amy Westervelt, and this is Herb, a Drilled miniseries. Stay with us.

In the wake of Bellotti, over at Mobile Oil, Herb Schmertz and Rawleigh Warner continued to expand their issue advertising program and to advocate for the protection of corporate free speech. In 1981, Schmertz reported that Mobil's advertorials were running weekly in 14 newspapers across the country and one magazine, The Economist. Their more casual observations column, on the other hand, was running in more than 500 newspapers, reaching more than 40 million households per year. Surveys that the company had been conducting since it started its program in 1970 showed that by 1976, so just a few years into it, the public trusted Mobil's take on energy issues more than consumer action groups Or environmentalists.

That wasn't the end of the free speech battle. Mobil continued to look for ways to shape the legal foundation for corporate free speech too. They submitted amicus briefs in related cases whenever they could. Mobil had not filed a brief in Bellotti, opting instead to enthusiastically cheer the case and the ultimate ruling, and take a little credit for its own role in being the vanguard of the corporate free speech movement that got that case going.

In subsequent cases, the company got more directly involved. In one of his books about corporate free speech, Robert Kerr writes that, "over the course of the 1970s, Mobil contributed more than any other player to the construction of an ideology of corporate citizenship."

[00:15:18] Robert Kerr: Corporate lawyers, because there are so many of them and they have limitless funding, really, they will keep coming back with any, um, we talk about like a precedent, it's like a door being opened by even just a crack, then Anyone who has the resources can keep coming back and pushing on the door, trying to push it open a little bit farther in more creative ways.

[00:15:41] Amy: Throughout the 1980s and nineties, the company continued to reinforce that ideology, both in the press and in the courts. In 1980, it filed a brief in support of Consolidated Edison. Edison had been slipping political brochures into the envelope when it sent out bills to its customers. And the New York state government told them to cut it out.

Mobil argued that New York's ban on this practice constituted a, "full frontal assault on the core of the First Amendment." The Edison Electric Institute and the Chamber of Commerce, among various other business groups, echoed this argument in their briefs. And The Supreme Court agreed. It sided with Edison and struck the New York ban down.

In September 1980, the company used its weekly New York Times slot to thank the paper for giving it a platform, which Mobil described as "a great contribution to the free market of ideas." Mobil even considered buying its own paper on the heels of the Bellotti decision. They looked into purchasing both the Denver Post and the Oakland Tribune .

Despite the various cases that followed in Bellotti's footsteps, overturning state bans on various types of corporate campaigning, the Supreme Court showed little interest in expanding corporate speech further. Multiple cases throughout the 80s and 90s tried to take aim at the Federal Election Commission on behalf of various industries, but the court held firm.

[00:17:16] Robert Kerr: Three at the time, very big Supreme Court cases. And I'll call it them the other people's money cases. They were all against the federal election commission because that's where the, uh, federal regulations were that they were challenging, but they were corporate plaintiffs bringing different questions about federal campaign finance regulations that applied to corporate spending. And in every case, they were wanting to spend from their corporate treasuries. In every case, the court's reasoning and then their ruling served to say, yes, human beings can spend all they want on this. Um, and corporate PACs can spend basically all they want. And corporations can spend what they want when it's an initiative, a referenda.

But, if, if there are human candidates involved, if it's a, you know, a political campaign, who, who can be potentially corrupted by this, by the money. And if the money is coming from the treasury, that's the stockholder's money. Those two things, they walled off.

[00:18:24] Amy: Because human beings pushing for particular Issues are incorruptible. Okay. Anyway, the court kept ruling along these lines over and over again.

And then in 2003, ExxonMobil, the company formed after Exxon acquired Mobil in 1999, picked up the corporate free speech torch and filed a brief in a case that had nothing to do with the company or its industry, but represented a potentially big step forward for the corporate free speech movement.

[00:19:01] Nike news archival: A contractor making clothes for sportswear giant Nike has been caught using forced labor in Malaysia. Labor activists are accusing sportswear manufacturer Nike. of encouraging low wages and inhumane conditions at its factories in Indonesia.

[00:19:16] Mark Kasky: The Nike Code of Conduct stated we, they maintain the highest standards of worker safety and health and compensation. And use that really as to market their products. And so I felt very upset when I realized that a lot of the representations they were making might not be true. And that a lot of people in California were buying their products. Under false, uh, assumptions with, with, you know, misrepresentations. And so I called an attorney and said, uh, I wanna do something about this. What can we do? And that's how it got started.

[00:19:49] Nike news archival: The Supreme Court heard arguments in what some say could be one of the most important free speech cases in years at issue, is the extent to which the speech of corporations is protected by the First Amendment to the Constitution.

[00:20:02] Amy: If you, like me, were a college kid in the nineties, you remember the Nike sweatshop controversy. Several news reports accused Nike of using sweatshop labor. There were loads of journalists going undercover in factories and showing the world the human cost of their expensive sportswear. In response, Nike pointed to its commitment to transparency —sharing factory locations with independent third parties for audits— and its code of conduct which prohibited the sort of labor abuses activists and journalists were accusing them of. Mark Kasky, a California activist, called bullshit and sued the company under his state's false advertising laws.

The Kasky vs. Nike case and ExxonMobil's brief in it are another link in the chain between Mobil's work on corporate personhood in the 70s and what oil companies are arguing about climate change today.

Nike argued that its statements about its labor practices were not commercial speech, subject to fraud laws, but rather speech on issues of public importance, something the courts often call petitioning speech. It's also called political speech, and it's covered by the First Amendment.

Here is Nike's lawyer in that case, Lawrence Tribe, explaining to the Supreme Court justices that Nike was not intentionally misleading the public, it was just defending itself.

[00:21:33] Lawrence Tribe: In the mid 1990s, there was, of course, an intense debate on the pros and cons of globalization and of the impact of companies like Nike on workers in the third world .

Now the critics, many from pro labor groups, denounced Nike as the chief exemplar of the evils of globalization, arguing that Nike was simply shifting production to places where it could exploit the workforce and act in ways that were illegal and immoral. Uh, and the critics took much of their documentation from the media.

Of course, Nike disagreed, using the same media venues as the critics had used to document. What it thought were the connections between its presence and activities in countries like South Korea, Vietnam, and the development of technological expertise in those countries, as well as the expansion of job opportunities.

[00:22:26] Amy: Tribe also argued that what Kasky was asking of Nike, that it should just take the L ,was too big of an ask.

[00:22:35] Lawrence Tribe: The relief that is available and was requested by Mr. Kasky includes, and I don't think we should forget the importance of this, an adjudication that the defendant is guilty of an unlawful business practice. And in Nike's case, that would be no small matter. I mean, it would be said you're guilty of exploiting women and children in the third world, uh, guilty as charged. Uh, and not being honest about it, a scarlet letter.

[00:23:06] Amy: Also weighing in for Nike in this case was none other than Ted Olson. He's the lawyer we mentioned last episode, the guy who argued and won the Citizens United case. A partner at Gibson Dunn, the firm that represents Chevron and various other oil and gas companies, Olsen is also one of the founding fathers of the Federalist Society, known for its influence over Republican judicial nominations. He was actually Solicitor General of the United States at the time the Kasky case came around, but was given special leave to weigh in on this case.

In the brief it filed in the Nike case, Exxon argued that Nike's speech and speech by corporations on other matters of public concern merit the "highest level of First Amendment protection and is entitled to the same 'breathing space' as speech on matters of public concern by other speakers." It then goes on to specifically explain what kinds of issues they might be talking about, including, and I'm quoting here, "human rights abroad; global climate change; and environmental effects of business operations."

Remember, this was just a couple years after ExxonMobil had published ads in major national newspapers proclaiming climate science to be unsettled and then used that idea to successfully fight against the Kyoto Protocol, the first and still only binding climate treaty ever signed by world leaders. A legal precedent that let Exxon say whatever it wanted about climate change would have been very handy.

Ultimately, the Supreme Court decided not to weigh in on Kasky at all. The court kicked it back to the state courts and Nike settled out of court.

But the arguments, not just from Nike, but from Exxon and its fellow travelers, like the National Association of Manufacturers and the Pacific Legal Foundation, and of course, Olson would come back again. Just seven years later, Olson would stand before the court and make another free speech argument, this time taking aim at the justices long held rules on what corporations and PACs could spend money on.

In their ruling in Citizens United, the court overturned those precedents, those two main guardrails that Kerr mentioned before.

[00:25:39] Ruth Bader Ginsburg: Mr. Olson, are you taking the position that there is no difference in the First Amendment rights of an individual for purposes of campaign finance?

[00:25:51] Ted Olson: What the court has said in the First Amendment context, over and over again, is that corporations are persons entitled to protection under the First Amendment.

[00:26:01] Amy: In his majority opinion, Justice Kennedy relied almost exclusively on Bellotti, but he gave it a new spin. Here's Robert Kerr again.

[00:26:12] Robert Kerr: In Justice Kennedy's opinion in Citizens United, he talks about Bellotti a lot. He cites it 24 times. It's almost his entire argument is built on one case. And after he talks about Bilotti.

Then he says, and there the law stood until Austin. So he's referring from 1978 to 1990. He says nothing happened between there.

[00:26:38] Amy: But of course, something did happen during those years. And that something was that the Supreme Court justices came back again and again to reaffirm those two rules that Kerr mentioned earlier.

Companies could not spend money to elect a particular person to office, and they couldn't spend money from their corporate coffers. for anything political, period. Kennedy opted to ignore those precedents.

[00:27:05] Robert Kerr: Those cases, they're there. Anyone can look at the record. They were huge at the time. And he does later give a little bit of lip service to those cases, but a very brief, very dismissive, as if they don't matter at all. And they really did matter, despite all the case law saying what prior justices believed Bellotti meant. Kennedy just completely redefines it. And, um, it, it basically says that from now on, uh, corporations can spend directly from their treasuries.

[00:27:37] Amy: That happened in 2010. Just a few years later, Olson's firm, Gibson Dunn, would circle back to its other big free speech argument, the one it had tried out in the Nike case about corporate communications being protected political speech, and roll it out again.

This time, on behalf of oil companies, arguing that everything they've ever said about climate change was protected speech, even if they knew they weren't telling the whole truth. Ted Boutrous, another lawyer named Ted at Gibson Dunn, began arguing in various climate liability cases that everything oil companies have said about climate change was in the interest of shaping policy. And that makes it petitioning speech, protected by the First Amendment from accusations of fraud, even if what they said didn't reflect what they knew about the impacts fossil fuels were having on the climate. That's our story next time.