Freedom of Speech for Corporations

The first ten amendments to the U.S. Constitution, also known as the Bill of Rights, were ratified by an emerging America in 1791. They were intended to curtail governmental power and safeguard individual liberties.

The First Amendment’s free speech clause reflects these democratic ideals. It reads:

“Congress shall make no law…abridging the freedom of speech.”

From this language, we can see that the constitutional right to free speech begins as a limitation on Congress, our federal legislature. Through the passage of the Fourteenth Amendment and the doctrine of incorporation, the U.S. Supreme Court has determined this limitation on Congress actually extends to governmental entities of any type and at any level.

What Does Free Speech Mean?

The First Amendment protects our free speech rights from government action restricting them. In this context, government action is often referred to as state action.

This protection generally applies to government regulation of private speech but not government speech. Likewise, it doesn’t typically apply to private regulation of speech. However, the Court has established limited circumstances where private actors may be considered state actors in this context.

Of course, this right to free speech (or freedom from restriction) is not absolute. Supreme Court precedent has established several categories of permissible restrictions on speech. Likewise, the Court has established legal standards and frameworks for determining whether a government restriction on speech violates the First Amendment.

The Supreme Court has also determined that free speech includes free expression. This means that protected speech can include forms of non-speech, including conduct and the written word.

For example, messaging on a T-shirt or refusing to salute the American flag are considered speech or expression protected by the First Amendment.

Are There First Amendment Rights on Social Media?

The First Amendment right to free speech generally protects private speech from governmental restrictions. It doesn’t protect against speech restrictions imposed by private entities.

Social media sites are generally owned and operated by private companies. As a result, they’re not bound by the First Amendment. Accordingly, any regulations they may impose on speech are not subject to First Amendment protections.

What Is Commercial Speech?

Commercial speech, or speech by corporations, is speech that proposes a commercial transaction. It also includes some expression related to the economic interests of the speaker and its audience.

A common example of commercial speech is a particular product or service advertisement. Such speech can also take the form of a corporation speaking on a matter of public concern.

Standards for Commercial Speech Restrictions

In 1980, the Court determined that commercial speech is entitled to First Amendment protection in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York.

In doing so, the Court established the intermediate scrutiny standard of review for commercial speech restrictions. This means that government regulations of commercial speech must meet the Central Hudson test to be upheld.

However, if a government restriction specifically targets commercial speakers for unfavorable treatment, a more rigorous standard of review might be warranted. This stems from the principle that the government cannot limit speech simply because it opposes the message conveyed, a core tenet of the First Amendment.

Do Corporations Have First Amendment Free Speech Rights?

Before Central Hudson, the Supreme Court held that commercial speech wasn’t entitled to First Amendment protection.

In 1942, the Supreme Court declared that the First Amendment didn’t protect commercial speech in Valentine v. Chrestensen. In this case, the Court reviewed a local ordinance banning the distribution of “commercial and business advertising matter” in the streets. A city cop told businessman Chrestensen that, unlike advertisements, materials dedicated to information or public protest could freely be disseminated.  

As a result, Chrestensen produced and disseminated two-sided leaflets in public. One side of the pamphlets promoted his submarine tour enterprise, while the reverse side featured a protest against the city's refusal to grant specific docking privileges.

After the police tried to stop him from disseminating the two-sided leaflet, Chrestensen sued. He contended the local ordinance violated his First Amendment rights. The matter ultimately went to the Supreme Court.

The Court affirmed the state’s right to restrict commercial speech and upheld the ordinance as applied to Chrestensen’s two-sided pamphlets. Although one side included non-commercial speech, the Court explained that this didn’t protect corporations from government speech restrictions.

The Court also established the Chrestensen doctrine. The doctrine provided that commercial speech, or expression promoting commercial activities, isn’t entitled to First Amendment protection. According to the doctrine, this holds true regardless of how the expression is communicated.

How Has the Supreme Court Interpreted the First Amendment to Corporate Speech?

The Court adhered to the Chrestensen doctrine for over two decades. Its approach, however, began to shift in the 1970s. It started to move in the direction that commercial speech did have some social value and was thus entitled to constitutional protection, though not at the same level as non-commercial speech.

Bigelow v. Virginia

In the 1975 Bigelow v. Virginia case, the Court addressed a state law criminalizing publications that encouraged abortion. In Bigelow, a Virginia newspaper editor published an advertisement informing readers that safe and legal abortions were available in New York. The ad also provided details on how to go about getting an abortion in New York.

The state convicted the editor for violating the state statute. The Supreme Court, however, reversed the conviction. The Court held the statute, as applied here, unconstitutionally violated the editor’s First Amendment rights.

The Court rejected the state court’s ruling that the First Amendment doesn’t protect paid commercial speech. In doing so, the Supreme Court cited its 1964 holding in New York Times v. Sullivan. The New York Times Court clarified that speech doesn’t lose First Amendment protection just because it appears in the form of a commercial ad.

The Bigelow Court held the same here. It found that the ad included content beyond pure commercial speech. Viewing the ad as a whole, it communicated information about matters of potential public concern. It included non-commercial information about how to lawfully go about obtaining an abortion in New York.

Although Virginia sought to limit its residents' access to this information, the First Amendment banned the state from keeping truthful information from them. The Court thus determined that the restriction as applied here was unconstitutional. However, dissenting Justices Rehnquist and White found the ad to be a “classic commercial proposition” that didn’t enjoy First Amendment protection.

The following year, the Court explicitly established for the first time that purely commercial speech is entitled to First Amendment protection. It explained that there’s a consumer interest in the unrestricted stream of commercial information.

This interest is just as strong, if not stronger, than the interest in current political issues. As the Court noted, “the free flow of commercial information is indispensable” to a free enterprise system.

The Central Hudson Test

In 1980, the Court established the standard for analyzing the constitutionality of commercial speech restrictions in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York. In Central Hudson, the Court reviewed a New York state public service commission policy prohibiting all utility companies’ promotional ads encouraging the use of electricity.

Central Hudson Gas & Electric contended the policy violated its First Amendment commercial speech rights. The Court recognized that commercial speech is protected by the First Amendment. The Court also acknowledged the important role commercial speech can play in sharing information with consumers and the general public.

It then established a four-part test for determining whether a restriction on commercial speech is constitutional. Specifically, the Central Hudson test requires that:

• The commercial speech isn’t misleading and doesn’t pertain to illegal activity.
• The government restriction serves a substantial state interest.
• The government restriction directly advances that substantial state interest.
• The government restriction isn’t more extensive than necessary to advance that state interest.

In other words, the restriction must be narrowly tailored.

But, commercial speech restrictions needn't meet any standard if they pertain to illegal activity or speech that’s inherently misleading.

As the Court explained, the “government may ban forms of communication more likely to deceive the public than to inform it, or commercial speech related to illegal activity.”

Applying its four-part test, the Central Hudson Court acknowledged that commercial speech is less protected than non-commercial speech. It also recognized the state’s interest in conserving energy.

However, the Court determined the policy was more extensive than necessary. The restriction prohibited all promotional ads regardless of their effect on energy consumption, including ads for energy-saving products.

As a result, the Court found the regulation wasn’t narrowly tailored and thus violated the First Amendment. The Court clarified that narrowly tailored doesn’t necessarily mean a perfect fit in the context of commercial speech. But, it must be reasonable. In other words, its scope should be proportionate to the governmental interest served.

Nike v. Kasky

In 2003, the Supreme Court agreed to review Nike v. Kasky. In this case, Nike launched a public relations campaign to address widespread concerns about labor practices in its factories abroad. Lawyer Marc Kasky sued Nike under California law for the allegedly false and misleading statements in these campaigns.

Nike asserted that the First Amendment barred Kasky’s claims. It contended that its statements denying problematic labor conditions at its factories weren’t commercial speech because they didn’t appear in advertisements. Rather, they were included in press releases and letters and addressed matters of public concern.

Conversely, the Court may have regarded the statements as commercial speech. This is because the statements might have affected consumer purchasing decisions and opinions about Nike as a business.

However, the Supreme Court never decided on the matter. It returned the case to the state court because of a procedural issue. The parties settled out of court before resolving the First Amendment question. The answer to this threshold question would have determined whether Nike’s statements were commercial speech entitled to less protection under the First Amendment or noncommercial speech entitled to more protection.

Does the First Amendment Protect Corporate Political Speech?

Commercial speech may take on a political dimension, for instance, when a corporation donates to political candidates. Consequently, limitations on corporate speech often manifest as campaign finance regulations that cap contributions and expenditures.

These restrictions involve political speech and often trigger First Amendment challenges. Depending on the restriction at issue, courts typically evaluate the constitutionality of these regulations using strict scrutiny or exacting scrutiny standards.

Strict scrutiny requires that the restriction serve a compelling state interest in the least restrictive manner. Exacting scrutiny doesn’t require the least restrictive means, though it does require a narrowly tailored restriction.

The Federal Election Commission (FEC)

The Federal Election Commission (FEC) was established in 1975. This federal regulatory body aims to protect the integrity of the campaign finance process. It also administers and enforces federal campaign finance laws.

Shortly after that, several important Supreme Court decisions evaluated the impact of campaign finance law on First Amendment protections.

Buckley v. Valeo

In 1976, the Supreme Court heard Buckley v. Valeo. The Buckley Court addressed the constitutionality of several provisions of the Federal Election Campaign Act (FECA). The provisions dealt with limits on campaign contributions and expenditures.

The Court ruled that the FECA's contribution limits are constitutionally valid, whereas the expenditure limits are not. Both affect First Amendment rights, but contribution limits impose a lesser burden on speech.

Thus, they’re evaluated using a less difficult standard than expenditure limits. Conversely, expenditure limits substantially burden speech. They are evaluated using the strict scrutiny standard.

Austin v. Michigan Chamber of Commerce

Over a decade later, in 1990, the Court heard Austin v. Michigan Chamber of Commerce. In this case, a nonprofit corporation challenged the constitutionality of a state law. The Michigan law prohibited corporations from using their general treasury funds for independent expenditures.

This refers to expenses for communications that directly support or oppose a clearly identified candidate. They’re considered independent because they aren’t made in coordination with the candidate, their campaign, or their political party. In Austin, the Michigan law allowed corporations to establish political action committees (PACs) with separate funds for purely political purposes.

The Court upheld the restriction as constitutional because it was narrowly tailored to advance anti-corruption interests. It also allowed corporations to still “express their political views” through their PACs.

Williams-Yulee v. Florida Bar

In 2002, the Court addressed a provision in Florida's Code of Judicial Conduct in Williams-Yulee v. Florida Bar. The provision banned judicial candidates from personally soliciting campaign funds.

The Court upheld the restriction as constitutional. It reasoned that the state's interest in protecting the public’s confidence in the judicial system was compelling. The restriction was narrowly tailored to support this interest. Thus, it didn’t unnecessarily burden the candidates’ free speech rights.

McConnell v. FEC

The following year, the Court decided the McConnell v. Federal Election Commission case. The McConnell Court reviewed a challenge to certain provisions of the Bipartisan Campaign Reform Act (BCRA).

Most notable was the Court’s decision to uphold a provision banning the use of soft-money. This means funds given to political parties for a use other than candidate support or opposition.

It reasoned that the restriction served the state's interest in preventing corruption and the appearance of it. It also served the state's interest in preventing distortion of public support for certain political ideas.

Citizens United v. FEC

In the landmark Citizens United v. Federal Election Commission case, the Supreme Court overturned McConnell in part and Austin. The Citizens United Court reviewed the BCRA’s restrictions on corporations’ unions’ use of corporate treasury funds for independent expenditures and electioneering communications.

The Court struck down the restrictions as unconstitutional. It reasoned those limits on corporate spending for political communication during a campaign amount to a ban on speech. It held that “the government may not suppress political speech on the basis of the speaker’s corporate identity.”

Essentially, Citizens United recognized the First Amendment rights of corporations as no different from those of individuals. This controversial ruling has been deeply polarizing.

These and other Supreme Court cases have generated substantial public debate. On one hand, some support broadening First Amendment protections for corporate speech. On the other hand, some are concerned it allows for undue influence by corporations. The past one hundred years illustrate considerable shifts in the Court’s treatment of commercial speech. This trend is likely to continue with the emergence of the digital age.