CORPORATE SPEECH AS COMMERCIAL SPEECH: A RESPONSE TO MAYER'S NIKE V. is:A5/i:F ANALYSIS Jeffrey Nesteruk hbstract: Raising the issue of corporate moral agency in our examination of the morality of corporate speech is important for two fundamental reasons. Each reason suggests we exercise caution in conflating corporations and individuals as the law often does. First, raising the issue of corporate moral agency is important to the aim of providing a framework for ethically evaluating corporate speech. It is tempting to proceed as if the nature of corporate speech is self-evident. But this is hardly the case. Corporations are not natural persons, and we mustn't assume corporate speech is indistinguishable from human speech. Before we can ethically evaluate corporate speech, we must first clarify what corporate speech is. This requires an understanding of the fundamental nature of the corporate entity, including its moral status. Second, raising the issue of corporate moral agency is important if we wish to promote morally responsible corporate speech. Any diminished moral capacity on the corporation's part would suggest a core role for the strong legal reinforcement of any ethical aspirations here. In promoting morally responsible corporate speech, ethical injunctions uncoupled from an effective legal regime may hold only limited promise. Introduction Professor Mayer has enriched our understanding of the Nike case by exploring the broader moral dimensions of corporate free speech. In examining the ethics of corporate speech, he wishes to move beyond "any legal distinctions between commercial and political speech in First Amendment jurisprudence."' This broader moral analysis is illuminating in that significant ethical issues are often obscured by the technicalities of the law here. Developing such a broader moral analysis of corporate speech can also deepen our understanding of the legal distinctions in this area. This is particularly true of the fundamental principle of First Amendment law implicated in the Nike case: the legal distinction between commercial and political speech. Probing the moral underpinnings of the Nike case suggests a new way of thinking about this distinction as applied to corporate entities. In exploring "the question of what kinds of corporate speech—to the public and to lawmakers—are ethically sound,"^ Professor Mayer draws creatively upon Integrative Social Contracts Theory. I'd like to sketch a new legal perspective on © 2007. Business Ethics Quarterly, Volume 17, Issue 1. ISSN 1052-150X. pp. 97-103 BUSINESS ETHICS QUARTERLY corporate speech by exploring a bit what Professor Mayer's application of ethical theory to the morality of corporate speech presupposes: the corporation's status as a moral agent, as an entity capable of moral choice. Only if corporations are capable of moral choices does it make sense to subject such choices to moral evaluation. The Issue of Corporate Moral Agency Raising the issue of corporate moral agency in our examination of the morality of corporate speech is important for two fundamental reasons. Each reason suggests we exercise caution in conflating corporations and individuals as the law often does.^ First, raising the issue of corporate moral agency is important to the aim of providing a framework for ethically evaluating corporate speech. It is tempting to proceed as if the nature of corporate speech is self-evident. But this is hardly the case. Corporations are not natural persons, and we mustn't assume corporate speech is indistinguishable from human speech."* Before we can ethically evaluate corporate speech, we must first clarify what corporate speech is. This requires an understanding ofthe fundamental nature ofthe corporate entity, including its moral status. Second, raising the issue of corporate moral agency is important if we wish to promote morally responsible corporate speech. Any diminished moral capacity on the corporation's part would suggest a core role for the strong legal reinforcement of any ethical aspirations here. In promoting morally responsible corporate speech, ethical injunctions uncoupled from an effective legal regime may hold only limited promise. The debate over corporate moral agency is a rich and ongoing one, and I will not cover its entirety here. Rather, I will focus on a particular facet of the debate, one that brings to the fore the corporation's diminished moral capacity. This particular facet emphasizes the significance of the corporation's profit-making aim.' An important part of the significance of the profit-making aim for corporate moral agency is this: To the degree corporate decision-making has a structural bias^ toward profit-making,' corporate choices lack a key feature of the moral decision-making of individuals.* The structural bias I have in mind here derives more from the corporation's economic character than its legal nature.' While corporations may have legal flexibility, their economic character can constrain their freedom considerably. My analysis here is aimed primarily at large, publicly held corporations where the structural pressures of shareholders and capital markets create the drive to maximize short-term share prices.'" Moral agency for individuals" occurs within the context of competing ends or goals. Within this context, the essence of moral choice lies in evaluating the relative worthiness of such ends or goals. When structurally informed by its profit-making aim, corporate decision-making has an instrumental character. It is about the means to an end—profit—that is already given and never subject to moral scrutiny. '^ This aspect of the corporate moral agency debate has a special legal significance. Philosophically, there is an intimate connection between corporate moral agency CORPORATE SPEECH AS COMMERCIAL SPEECH and corporate rights." If the corporation's profit-making end diminishes corporate moral agency, then the law needs to attend to this end in how it conceptualizes corporate rights,'"* including the corporate right to free speech.'^ The Distinctive Character of Corporate Speech Corporate acts of speech are obviously a subset of corporate choices. Thus, if corporate choices are instrumentally aimed at profit, then at bottom so are the kinds of speech in which corporations engage. In this way, the fundamental character of corporate decision-making gives to corporate speech a particular quality. It is a quality that is not necessarily revealed in the content of the speech, at least in an immediate way. The quality is rather derived from the underlying motivation of the speech—it is speech informed and inspired by the profit-making aim. In a certain sense, speech informed and inspired by profit has a plainly commercial character. For profit ultimately depends on the buying and selling of goods and services. But the commercial character of corporate speech does not reside in the propositions it espouses. Because it is rooted in the motivational underpinning of the speaker, the commercial character of corporate speech can range across its particular advocacies, whether an advocacy aims at promoting a product or arguing a public policy position. Viewing the moral status of the corporation in this way has significant implications for the law's central distinction between commercial and political speech when this distinction is applied to corporations. To begin with, it shows how one legal definition of commercial speech that Professor Mayer mentions—speech that "does no more than propose a commercial transaction'"^ is clearly inadequate in the corporate context. For the commercial character of corporate speech does not reside fundamentally in such speech's propositional content. Rather, the commercial character of such speech arises out of the way such speech lacks the dynamic of individual moral choices. It depends not on what the corporate entity says but its structural motivations for speaking. Thus, in the corporate context, this legal definition of commercial speech would miss much speech that in fact has a commercial character and would thus, under current First Amendment law, be subject to greater restriction. Rather, in viewing the moral status ofthe corporation in the way I have described, a second legal definition of commercial speech Professor Mayer mentions—speech as "expression solely related to the economic interests of the speaker and its audience""— appears more pertinent. By pointing to the underlying interests involved in the speech, this second definition, as Professor Mayer notes, has a motivational focus. It thus speaks directly to the particular quality ofthe commercial character of corporate speech—this quality residing not in the content of the speech, but its underlying motivation. But with this second definition, another difficulty arises. The particular bias of corporate speech stems from its profit-making aim. As profit making is itself BUSINESS ETHICS QUARTERLY an economic aspiration, this structural bias means the underlying motivation of a corporation is one solely related to its economic interests. Thus, on this second definition, since all corporate speech springsfi-om "the economic interests of the speaker,'"* then all corporate speech could be conceived of as commercial speech. To put the point more provocatively, corporate speech is by definition commercial speech. Pohtical speech, as practiced by individuals, is not a practical possibility for corporations. Given current First Amendment jurisprudence, this would mean that all corporate speech is subject to the greater restrictions allowed on commercial speech. A Proposal for a Rebuttable Presumption But while there is something to recommend in this position, it plainly goes too far. While there may be a profit-making bias in corporate speech, this bias does not operate in a way that is fuUy determinative of such speech. This is because the profit-making end, by its very nature, allows considerable leeway. Many morally motivated actions can be framed as having a profit-making rationale." Viewed imaginatively, profit-making is full of moral possibilities. Any proposal for legal reform thus requires considerable flexibility. What I propose is to legally acknowledge the distinctive commercial character of corporate speech, but to do so in a case such as Nike as a rebuttable presumption with the burden of proof being on the corporate speaker. That is to say, the law is entitled to consider corporate speech as commercial speech, unless the corporation in an instant case can reveal its motivation to be substantially related to more than its economic interests. Such a proposal for legal reform reflects what the corporate moral agency question brings to the fore. This is the way in which the corporate decision-making process can differ from the dynamic of individual moral choice. Understanding the fundamental nature of the corporate entity helps to clarify the distinctive profit-oriented quality of corporate speech. This proposal takes specific account of the structural bias toward profit in corporate speech. It takes account of this bias through the presumption of characterizing corporate speech as commercial speech. When this bias predominates, corporate speech lacks the moral richness of individual choice and, thus, is properly subject to the greater legal restrictions accorded commercial speech. In effect, the law provides external regulation to compensate for the lack of the internal self-regulation of moral evaluation. But the proposal also holds open the possibility that underlies Professor Mayer's project. This is the potential for promoting more morally responsible corporate speech. This proposal does so by making its presumption a rebuttable one. By making use of a rebuttable presumption, this proposal allows corporations to receive full First Amendment protection for their speech. But it requires that before corporations receive the kind of protection individuals receive in their acts of political speech. CORPORATE SPEECH AS COMMERCIAL SPEECH corporations earn it. Corporations can earn it by engaging in speech in which profit itself is fully subject to moral evaluation.^" Corporations could show they are engaging in such speech by reference to the character of their own internal decision-making processes.^' Courts would look toward the efforts of corporations to develop their own decision-making processes in ways that promote the inclusion of competing ends or goals beyond profit into the dynamic of corporate choices. There are a number of imaginative possibilities here of which judges could easily take note. Corporations, to cite a few examples, might (a) add to their boards independent directors charged with special responsibilities for other-than-profit goals, such as employee welfare or environmental protection; (b) develop audited social responsibility statements, as Professor Mayer suggests; or (c) create effective corporate credos that demonstrably cultivate cultures of corporate good citizenship. Structured in this way, the proposal has the potential to buttress and advance Professor Mayer's efforts to promote more morally responsible corporate speech. This is because of the specific ways the proposal taps the power of law to reinforce the ethical aspirations of corporations as they seek to contribute to our public discourse. It taps the power of law in two particular ways. To begin with, the proposal makes use of a general legal standard rather than a bright-line legal rule capable of mechanical application. It thus will require interpretation by judges on a case- by-case basis. In this way, the proposal promotes judicial discretion in the ethical evaluation of corporate speech, rather than relying simply on the corporation's own moral self-evaluation. In corporate speech cases, it is important to look beyond the corporation's own moral self-evaluation. For the bias present in the corporation's speech is likewise present in any of its self-evaluative efforts. Professor Mayer's highlighting of corporate actions in free speech areas suggests the corporate record of self-evaluation in this regard is not a promising one." He notes, "[C]orporations often seek an unlevel playing field when it comes to matters of speech."^^ The second way in which the proposal taps the power of law to promote the ethical aspirations of corporations is through its avoidance of an absolute rule. An absolute rule of First Amendment jurisprudence that characterized corporate speech as commercial speech would fail to promote the corporate moral development that Professor Mayer and I hope for. It would instead institute a legal characterization that reinforces the prevailing tendency of corporations toward profit-informed speech. The law should rather act as a countervailing force to the structural bias towards profit in corporate speech. This is precisely what a rebuttable presumption does. This is because it holds out the greater constitutional protection accorded political speech as a legal incentive for corporations to engage in morally richer speech and reflection. Such an incentive would reinforce and encourage the corporation's own moral growth and development. BUSINESS ETHICS QUARTERLY Conclusion Both Professor Mayer and I hope to promote the ethical aspirations of corporations as they contribute to our public discourse. The ethical analysis Professor Mayer provides helps to illuminate many moral dimensions of corporate speech. Building upon his analysis, I've tried here to explore what else might be necessary to foster the sustained development of the ethical aspirations of corporations. Such development requires a careful attention to the distinctive nature of the corporation and the particular profit-informed quality of corporate speech. It also requires reinforcing corporate ethical aspirations through a legal regime tailored to the special character of corporate speech. The rebuttable presumption I have proposed attempts to do this by recognizing the profit-informed quality of corporate speech, yet encouraging its richer moral possibilities. Notes 1. Don Mayer, Kasky v. Nike and the Quarrelsome Question of Corporate Free Speech, 17 Bus. ETHICS Q. 65, 81 (2007). 2. Id. at 88. 3. For an account of the historical struggles of the law in conceptualizing the corporation, see Herbert Hovenkamp, The Classical Corporation in American Legal Thought, 76 GEO. L.J. 1593 (1988). For a work offering a multidisciplinary look at the corporation, including its conceptual status, see CORPORATIONS AND SOCIETY: POWER AND RESPONSIBILITY (Warren Samuels and Arthur Miller, eds.) (1987). 4. Professor Mayer at one point alludes to this, asking, "Should corporations have the same free speech rights as natural persons?" Mayer, supra note 1, at 70. 5. For an excellent analysis and critique of how the corporation's profit-making aim influences its character and actions, see LAWRENCE E. MITCHELL, CORPORATE IRRESPONSIBILITY: AMERICA'S NEWEST EXPORT (2001). 6. This is a view of the corporation that Thomas Donaldson has referred to as the Structural Restraint view. See THOMAS DONALDSON, CORPORATIONS AND MORALITY 23-24 (1982). On this view, the corporate entity is not a moral agent due to the manner in which its structure controls its decision-making. For an influential argument favoring this view, see John Ladd, Morality and the Ideal of Rationality in Formal Organizations, 54 MONIST 488 (1970). 7. An economic analysis of corporate law has provided a normative basis for this profit- making aim. Frank Easterbrook and Daniel Fischel warn against broadening the corporation's goals. "One reason is obvious: a manager told to serve two masters (a little for the equity holders, a little for the community) has been freed of both and is answerable to neither. Faced with a demand from either group, the manager can appeal to the interests of the other. Agency costs rise and social wealth falls." FRANK H. EASTERBROOK & DANIEL R. FISCHEL, THE ECONOMIC STRUCTURE OF CORPORATE LAW 38 (1991). 8. For a full development of my own view of how corporate decision-making differs from individual moral choice, see Jeffrey Nesteruk, Bellotti and the Question of Corporate Moral Agency, 1988 COLUM. BUS. L. REV. 683. 9. But Lawrence Mitchell does insist on the role of legal constraints in corporate decision- making. See MITCHELL, supra note 5. CORPORATE SPEECH AS COMMERCIAL SPEECH 10. To be sure, there are many companies—companies such as Johnson & Johnson and the New York Times—that transcend this characterization of large, publicly held corporations. Within the context of this analysis, such companies should be regarded as exemplars of what the proposed rebuttable presumption (see infra notes 19-23 and accompanying text) is designed to foster in a larger number of companies: the integral inclusion of ends or goals beyond profit into corporate decision-making. 11. For the argument that corporations too are full-blown moral agents, see PETER FRENCH, COLLECTIVE AND CORPORATE RESPONSIBILITY (1984). 12. See Nesteruk, supra note 8, at 698-99. 13. Within the law, the connection has revolved around the law's treatment of the corporation as a person. For an historical account of the law's treatment of the corporation as a person, see Gregory Mark, The Personification of the Business Corporation in American Law, 54 U. CHI. L. REV. 1441 (1987). 14. For an insightful analysis of organizational rights, see MEIR DAN-COHEN, RIGHTS, PERSONS, AND ORGANIZATIONS: A LEGAL THEORY FOR BUREAUCRATIC SOCIETY (1986). 15. For example, diminished corporate moral agency would limit the corporation's capacity for self-fulfillment, a key value underlying the First Amendment. For an assertion of this value, see THOMAS EMERSON, THE SYSTEM OF FREEDOM OF EXPRESSION 6 (1970). If corporate speech fails to embody fully this key value of the First Amendment, then corporate speech may be deserving of less First Amendment protection. 16. Mayer, supra note 1, at 72. 17. Id. 18. Id. On the analysis I am pursuing here, even when a corporate speaker makes appeals to its audience's non-economic interests, this will not alter the fundamental character of corporate speech. For, as I have argued, the particular quality of corporate speech springs not from its ostensible content, but from its underlying motivation. 19. Ian Lee makes this point. "[T]here is almost always a plausible profit-oriented rationalization for an act of corporate social responsibility." Ian Lee, Is There a Cure for Corporate "Psychopathy?" AM. BUS. L.J. (forthcoming). 20. For another proposal that would grant corporations a measure of freedom from government regulation in exchange for instituting a more effective form of self-regulation, see JAY SIGLER & JOSEPH MURPHY, INTERACTIVE CORPORATE COMPLIANCE: AN ALTERNATIVE TO REGULATORY COMPULSION (1988). 21. Peter French deserves credit for focusing inquiry into corporate moral agency on the corporation's own decision-making structure. See FRENCH, supra note 11. 22. Mayer, supra note 1, at pp. 77-81. 23. W.,at81.