The Corporate Veil

corpEver since Citizens United, there has been a controversy in this country around the idea that corporations are people and money is speech. The singular inequity here is that corporations, if people, are not required to take the good with the bad, as actually living, breathing people do. Corporations are protected welfare queens playing with peoples lives on a rigged game board where the corporation always wins.

Alex Park, writing in Salon, offers this interesting view of the corporation with the underlying suggestion that it is a key reason why the Supreme Court would never rule in favor of Hobby Lobby, and if you think about it, why Hobby Lobby should have never pursued the issue.

That separation is what legal and business scholars call the
"corporate veil," and it's fundamental to the entire operation.
Now, thanks to the Hobby Lobby case, it's in question. By
letting Hobby Lobby's owners assert their personal religious
rights over an entire corporation, the Supreme Court has poked
a major hole in the veil. In other words, if a company is not
truly separate from its owners, the owners could be made
responsible for its debts and other burdens.

I remember starting a computer club back in the ’70s and discovering that it wasn’t so easy. You’d think a bunch of people would get together regularly, discuss computers, drink some orangeade, trade programming tips, swap pirated software, and gnaw on a cookie or two. But when we were deciding on the structure of the club and voting for the officers, one lawyerly type insisted that we had to incorporate, otherwise if someone choked on a cookie at a meeting and died, the officers of the club would be in peril of losing everything they owned: house, car, bank account, computer; however, if the club was a limited corporation, then only the corporation could be sued and the officers’ personal wealth (such as it was) would be protected.

So the choice was to pay a lawyer to write up some papers or take a chance on losing everything we held dear.

Hobby Lobby is a corporation and as such the owners and officers of the corporation are protected under that “corporate veil.” I first heard Mike Papantonio on the radio discuss this and, although he presented the legal position as the reason the Supreme Court would not rule in favor of Hobby Lobby, he grossly underestimated the stupidity of the ruling junta we call SCOTUS.

There has been a lot of discussion about how the Hobby Lobby ruling is going to create a lot of unexpected issues but this one might not have registered: now that the corporation is open to the personal beliefs of the owners and officers of the corporation, those unsuspecting people have abrogated the protection once afforded to them by that corporation. If the corporation is imbued with their religion then those owners and officers are personally liable for everything the corporation might suffer. So if a customer gets Hobby Lobby glitter in the eye and goes blind, the owner’s of Hobby Lobby may get sued and lose their family home; if kids are sniffing Hobby Lobby glue and end up in an institution with brain damage, the owner’s of Hobby Lobby may get sued and become legally responsible for supporting these kids for the rest of their lives; if a Hobby Lobby delivery truck goes out of control and mows down several pedestrians, the owner’s of Hobby Lobby may have to do hard time for wrongful death or even manslaughter.

I heard this morning that two new Hobby Lobby stores are opening in the Los Angeles area. If I was involved with those stores, I might consider closing them before I regret it.

And let’s not kid ourselves: just like the corporations which piled on immediately after the Hobby Lobby decision, insisting that they have religious beliefs that should exempt them from part of the ACA or government regulations in general, the Hobby Lobby decision may have people looking at the officers of General Motors and calling in their lawyers to see what they can get out of ‎Mary Barra, ‎Daniel Ammann, ‎Alicia Boler-Davis, or ‎Alan Batey. Add Mary Barra’s mea culpa to Hobby Lobby’s shredding of the corporate veil and it could get interesting.

reaganWill this be the end of Citizens United and corporate protection? Probably not, but we can dream, right? I suspect the corporations will handle this problem like they do all the others … throw high powered legal teams and beaucoup de money at it and bribe, bribe, bribe. As long as the government is based on greed and corruption, it should work out fine for the corporations.

Thank you Ronald Reagan.

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