A Corporate Right to Privacy

The following post comes to us from Elizabeth Pollman, Associate Professor, Loyola Law School, Los Angeles, and is based on her forthcoming article in the Minnesota Law Review entitled “A Corporate Right to Privacy.” The full paper is available here.

The debate over the scope of constitutional protections for corporations has heated up with law scholars from a variety of fields weighing in on Citizens United and Hobby Lobby. Despite the volume of commentary and analysis on these important cases and the issues they raise, other areas concerning the nature and scope of corporate rights have been left unexplored. This article takes up one of those unexplored questions—whether corporations have, or should have, a constitutional right to privacy.

The Supreme Court has never squarely answered whether corporations have a constitutional right to privacy—either under its decisional autonomy or informational privacy line of cases. Scholars and courts sometimes cite United States v. Morton Salt, a case from 1950, as establishing that corporations have no constitutional right to privacy, but that wasn’t the holding of the case and it pre-dated the Court’s privacy jurisprudence. In the more recent AT&T v. FCC case, AT&T claimed a “personal privacy” exemption under FOIA to prevent the public disclosure of its documents. However, as AT&T made no constitutional privacy claims, the Court decided the case as a matter of statutory interpretation. Meanwhile, other federal and state courts have split on the corporate privacy issue, with some courts rejecting claims out of hand or with flawed reasoning, and some courts recognizing a limited right to corporate privacy in contexts like discovery and subpoenas, but without delineating the scope of the right.

After establishing the open question, the article attempts to find a path forward by examining why corporations receive any constitutional protection and how the Supreme Court has made these determinations in the past. Although the Court has not articulated a consistent framework, it has nonetheless often relied on a rationale of corporations as associations of persons from whom rights can be derived. The article traces the Court’s jurisprudence to illustrate this derivative basis for corporate rights, and it gives a taste of a more detailed analysis and study of the issue that Margaret Blair and I have been working on in another forthcoming article (The Derivative Nature of Corporate Constitutional Rights, forthcoming William & Mary Law Review 2015). The Court has not accorded rights to corporations qua corporations; rather, the Court has recognized that a corporation can be accorded protections in order to protect the rights of individuals associated through the corporate form. Thus, the article asserts that in determining whether to accord a right to a corporation, we must look to whether the purpose of the right is served by according it to the corporation in question—that is, whether it is necessary to protect natural persons—and if the right is of a type that inheres only in an individual capacity or if it can be held derivatively.

One of the key insights that comes with articulating this approach is that the derivative nature of corporate rights requires paying attention to distinctions between different corporations. While some corporations can be understood as associations of their members, from whom a right could be derived, other corporations cannot be fairly regarded as representing any particular natural person or group of natural persons.

The article applies this insight and approach to the corporate privacy question, observing that because corporations exist along a spectrum—from large, publicly traded corporations constituted purely for business purposes to smaller organizations with social, political, or religious purposes—the existence of a corporate privacy right will and should vary. In most circumstances, and with respect to most corporations, according a privacy right would not serve the purpose of such a right because people are not involved in the corporation in a way that warrants that protection. Yet a categorical denial of privacy rights to corporations may also be unwise in our world of diverse corporations, particularly given the evolving and indeterminate concept of privacy.

Coming to this understanding requires grappling with what the constitutional right to privacy is aimed at protecting and whether privacy can be conceived of as including groups. Further, it requires looking into different types of corporations and examining whether there are persons involved who would have a privacy interest at stake that would be protected by granting the corporation a right to privacy. It is this sort of engagement with the different types of organizations operating through the corporate form that is needed for line-drawing in the realm of corporate constitutional rights. As it is often said in corporate governance, one size does not fit all.