The law isn’t my field so I’m not taking a side on this, I just think an interesting conversation can be had.
Well, “piercing the corporate veil” is a long-running topic of discussion, both academic and judicial. And, yes, it works both ways. If a corporation can’t have a belief, can it have an intention? And, if it can’t have an intention, can it be guilty of any crime with an intentional element (which is most crimes, and certainly most serious crimes)? To solve this problem, the corporate veil is frequently pierced to impute to the corporation the mental state of the individuals who control it. What they intend, the corporation intends, and so the corporation can be convicted of a crime involving intent (or negligence, or recklessness).
It’s just wrong to suggest that any breach in the corporate veil means that the veil disappears entirely. That’s a classic slippery-slope argument. The fact is that corporations are already convicted of crimes, but the assets of their controllers are not seized to pay the fines, and the controllers aren not jailed - unless the controllers have also, independently, been convicted of crimes.
It’s reasonable to ask whether piercing the corporate veil is appropriate in the HL case. From what I’ve read, the fact that HL was a closely-held family-run corporation was a relevant factor in the decision; I doubt that the case is authority for the proposition that every corporation can have a religious belief imputed to it. You can still argue the case over whether it’s right to impute a religious belief to any company, or to HL in particular, but the notion that doing so completely dissolves the separate personality of every corporation, or inexorably leads to that, is not one I take seriously.
As is so so very often the case, regardless of whether the matter involves human rights, property rights, gun rights, or a disputed election, the Supreme Court split 5-4 with the 5 Justices appointed by Republicans approving the ascendancy of corporations over people, and the four Justices appointed by Democrats dissenting.
In post-modern America the debate is increasingly less about
… What human rights should be extended to corporations?
and increasingly more about
… What corporate property rights should be denied to humans?
Yep. “Closely held” applies to a small subset of corporations.
How does a ruling that strengthens the PEOPLE’s right to keep and bear arms amount to the ascendency of corporations over people?
Mileage no doubt varies from jurisdiction to jurisdiction, and from one legal issue to another, but your example is unconvincing and doesn’t obviously evidence an understanding of the corporate veil.
The corporate veil covers the shareholders, not the corporation. Companies have long had liability both civil and criminal for the things they do. Corporate intent for criminal purposes is another issue and a *non sequitur *in this context.
The issue is why shareholders should in future be permitted (for example) to escape liability for the company’s debts, when those shareholders are are so closely identified with a company that their religious views permit the company to escape what would otherwise be its legal obligations.
Aren’t some churches actually incorporated? I know they’re generally 501©(3) corporations but does that make a difference?
The corporate veil, as I understand it, is the barrier which the (fictitious, artificial) person of the company puts between the (natural) persons who establish/own/control the company and the rest of the world.
I have a judgment against GE for (say) some breach of contract or act of negligence. I can enforce that judgment against the assets of GE, but not against the assets of the stockholders, even though the profit or gain accruing to GE from the contract concerned ultimately flowed back to them. Why? GE acts as a “corporate veil” between me and them.
Similarly, I obtain a conviction against GE for some crime, and a fine is imposed. GE has to pay the fine, but I cannot chase the assets of any natural person, even though a natural person may be the one who actually perpetrated some or all of the elements of the crime (particularly the mental elements). Why? Again, the corporate veil.
If the latter is not an example of the “corporate veil” at work well, fair enough. Perhaps the term “corporate veil” is only properly used with respect to the shield a company offers to the stockholders personal assets. But, if that’s the case, I don’t see how HL threatens it. The point in HL, I think, is that a corporation - at least, a closely-held family corporation like HL - is treated as capable of having religious belief, and therefore of enjoying first amendment free exercise rights. I can see how that’s problematic; how can a fictitious, artificial person have a belief?
But if (as the OP suggests) you’re going to see that has having implications for the corporate veil, then it seems to me you must be invoking a concept of “corporate veil” which involves more than simply the distinction between corporate assets and the stockholders’ personal assets. It seems to me that you’re suggesting that it also embraces the distinction between the stockholders beliefs and the company’s beliefs. And, if belief, why not other states of mind?
In short, if imputing belief to a company is seen as piercing the corporate veil, then imputing any other state of mind must be seen in the same way. Or am I missing something?
I’m open to correction by someone better informed, but I think the legislation contained exemptions which would benefit primarily religious employers like churches, diocese, etc but which didn’t extent to HL.
if by “small” you mean [url=]90%, based on the IRS’ definition of “closely held”, which was apparently operative in the decision.
Though, possibly, closely-held companies are the employers of only a small subset of the workers within the scope of the Obamacare regime.
The corporate veil is what prevents the fine being payable by the shareholders. That’s true.
However, after that, what you are saying gets confused. If any natural person (shareholder or whoever) committed all the elements of a crime they will probably be charged with it: the fact that they carried out this crime in concert with or for a company won’t protect them. There is no corporate veil in that respect.
The usual reason natural persons who had some involvement in a corporate crime are not charged is because they didn’t commit every element of the offence, or because it is an offence that only applies to a company.
I can’t speak for the OP but for my part I don’t think there is any firm necessary logical path that leads inevitably from from this decision to a decision that stockholders in closely held companies should no longer get the benefit of the corporate veil.
Rather it is a philosophical or policy question: is it appropriate to allow stockholders to have a company that is in effect their alter ego when it suits them, but a seperate legal entity for which they are not responsible when it does not?
Right, so. We use the terminology differently, but I think we’re agreed on this point.
Didn’t we answer that long ago? Once society took the decision that I could incorporate a limited liablity corporation, with myself as the dominant or sole stockholder, to carry on a trade, business or enterprise controlled and directed (and quite possiby performed) wholly by me, with the profits coming back to me in the form of dividends, with the benefit of limited liablity, does that not mean that your question has been answered, “yes”?
The corporation is my alter ego, in the sense that it is in substance me who is founded and is carrying on the corporation’s enterprise and I can carry it on as I wish, and close it down or transfer it back to myself whenever I like. But my financial exposure is limited to what I have invested or committed to invest in the corporation.
It is not merely terminology; as I’ve said, the corporate veil has previously been something that protects the shareholders from financial liability, but this decision is one in which the company is being protected by the beliefs of its shareholders. These two things are not even close to being the same.
No, not at all. Protection of shareholders in return for fostering a willingness to invest in potentially risky enterprises is a compromise that seems to have been agreed upon. Agreeing to this compromise does not imply that further compromise has been or should be agreed. It’s open for debate.
Oh, sure. I take your point.
But the limited liability corporation is not confined to being a vehicle through which people invest in an enterprise with which they have no other connection but the investment. The great majority of corporations, in fact, do not serve this function. And closely-held corporations, in particular, do not typically serve this function. As pointed out, a corporation can also be used by someone who has established, and is running, an enterprise as a structure for limiting his personal exposure to the financial risks attendant upon the enterprise without sacrificing his involvement in or control of the enterprise. (And that would be a fairly common function for a closely-held corporation.) We have long accepted that as a proper function of a corporation (and I think there are good arguments for saying that this is a reasonable and socially beneficial thing to do).
if you phrase the question as you did in post #12:
. . . I think the only honest the answer is that we have been doing that for a long time, and it’s probably too late to ask if it’s appropriate. The real question is not whether we should allow people to have it both ways, but to what extent should we allow this. Where, exactly, do we draw the line?
Maybe the question is this. If a corporation is sufficiently the alter ego of an individual (or a small group of individuals) that we can impute their mental state to the company for the purposes of the criminal law, is it appropriate to refuse to impute their mental state to the company for other legally relevant purposes?
Or, if a corporation can have an intention, why can’t it have a belief?
You’re joking right?
One of the few human rights not yet granted to corporations is the right to vote. Thus the vested interests depend on the votes of the particularly ignorant voters. And, no matter what your personal feelings about guns are, few if any rational observers would argue that the many MANY American voters who choose candidates based almost solely on gun rights are well informed.
Hope this helps.
Around 52% of the workforce, so a literal majority of them, if that percentage is accurate.
The RFRA? No, it didn’t.
Here is a relevant part of the Dictionary Act, 1 USC § 1, whose purpose is to define words used in any Act of Congress:
And here is the RFRA, 42 USC § 2000bb:
Wow.
No, that doesn’t help. So – if I follow your logic here – you’re saying that a court ruling that strengthens the people’s right to keep and bear arms is, in fact, strengthening the ascendancy of corporations over people.
But I don’t quite get the “because” part. According to you, the many voters who are single-issue gun voters are not well-informed, and corporations don’t have the right to vote, so… um… that?
I’m sorry, but this seems to be a pretty good example of a non sequiter. Could you break it out more simply, or syllogisticaly, so I can follow the steps of reasoning? Or if someone else gets the point, could you step in and give it a try?
Because I am lost.
Bricker, I think that septimus is looking at it as court rulings strengthening the ascendancy of gun manufacturers over people who want less guns on the streets. Obviously you see things differently, but I think that’s what he’s saying.