First National Bank of Boston v. Bellotti

• Decision Date: 26 April 1978
• Docket Number: No. 76-1172,76-1172
• Parties: FIRST NATIONAL BANK OF BOSTON et al., Appellants, v. Francis X. BELLOTTI, etc
• Court: U.S. Supreme Court

435 U.S. 765

98 S.Ct. 1407

55 L.Ed.2d 707

FIRST NATIONAL BANK OF BOSTON et al., Appellants,

v Francis X. BELLOTTI, etc.

No. 76-1172.

Argued Nov. 9, 1977.

Decided April 26, 1978.

Rehearing Denied June 26, 1978.

See 438 U.S. 907, 98 S.Ct. 3126.

Syllabus

Appellants, national banking associations and business corporations, wanted to spend money to publicize their views opposing a referendum proposal to amend the Massachusetts Constitution to authorize the legislature to enact a graduated personal income tax. They brought this action challenging the constitutionality of a Massachusetts criminal statute that prohibited them and other specified business corporations from aking contributions or expenditures "for the purpose of . . . influencing or affecting the vote on any question submitted to the voters, other than one materially affecting any of the property, business or assets of the corporation." The statute specified that "[n]o question submitted to the voters solely concerning the taxation of the income, property or transactions of individuals shall be deemed materially to affect the property, business or assets of the corporation." On April 26, 1976, the case was submitted to a single Justice of the Supreme Judicial Court of Massachusetts on an expedited basis and upon agreed facts. Judgment was reserved and the case was referred to the full court. On September 22, 1976, the court directed entry of a judgment for appellee and issued its opinion upholding the constitutionality of the statute after the referendum, at which the proposal was rejected. Held :

1. The case is not rendered moot by the fact that the 1976 referendum has been held and the proposal for a constitutional amendment defeated. The 18-month interval between legislative authorization of placement of the proposal on the ballot and its submission to the voters was too short for appellants to obtain complete judicial review, and likely would be too short in any future challenge to the statute; and in view of the number of times that such a proposal has been submitted to the electorate, there is reasonable expectation that appellants again will be subjected to the threat of prosecution under the statute. Weinstein v. Bradford, 423 U.S. 147, 149, 96 S.Ct. 347, 348, 46 L.Ed.2d 350. Pp. 774-775.

2. The portion of the Massachusetts statute at issue violates the First Amendment as made applicable to the States by the Fourteenth. Pp. 775-795. (a) The expression proposed by appellants, namely, the expression of views on an issue of public importance, is at the heart of the First Amendment's concern. There is no support in the First or Fourteenth Amendment, or in this Court's decisions, for the proposition that such speech loses the protection otherwise afforded it by the First Amendment simply because its source is a corporation that cannot prove, to a court's satisfaction, a material effect on its business. Although appellee suggests that this Court's decisions generally have extended First Amendment rights only to corporations in the business of communications or which foster the self-expression of individuals, those decisions were not based on the rationale that the challenged communication materially affected the company's business. They were based, at least in part, on the Amendment's protection of public discussion and the dissemination of information and ideas. Similarly, commercial speech is accorded some constitutional protection not so much because it pertains to the seller's business as because it furthers the societal interest in the "free flow of commercial information." Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748, 764, 96 S.Ct. 1817, 1827, 48 L.Ed.2d 346. Pp. 776-783.

(b) The asserted justifications for the challenged statute cannot survive the exacting scrutiny required when the legislative prohibition is directed at speech itself and speech on a public issue. This statute cannot be justified by the State's asserted interest in sustaining the active role of the individual citizen in the electoral process and preventing diminution of his confidence in government. Even if it were permissible to silence one segment of society upon a sufficient showing of imminent danger, there has been no showing that the relative voice of corporations has been overwhelming or even significant in influencing referenda in Massachusetts, or that there has been any threat to the confidence of the citizenry in government. And the risk of corruption perceived in this Court's decisions involving candidate elections is not present in a popular vote on a public issue. Nor can the statute be justified on the asserted ground that it protects the rights of shareholders whose views differ from those expressed by management on behalf of the corporation. The statute is both underinclusive and overinclusive in serving this purpose, and therefore could not be sustained even if the purpose itself were deemed compelling. Pp. 788-795.

371 Mass. 773, 359 N.E.2d 1262, reversed.

Francis H. Fox, Boston, Mass., for appellants.

Thomas R. Kiley, Boston, Mass., for appellees.

Mr. Justice POWELL delivered the opinion of the Court.

In sustaining a state criminal statute that forbids certain expenditures by banks and business corporations for the purpose of influencing the vote on referendum proposals, the Massachusetts Supreme Judicial Court held that the First Amendment rights of a corporation are limited to issues that materially affect is business, property, or assets. The court rejected appellants' claim that the statute abridges freedom of speech in violation of the First and Fourteenth Amendments. The issue presented in this context is one of first impression in this Court. We postponed the question of jurisdiction to our consideration of the merits. 430 U.S. 964, 97 S.Ct. 1642, 52 L.Ed.2d 354 (1977). We now reverse.

I

The statute at issue, Mass. Gen. Laws Ann., ch. 55, § 8 (West Supp. 1977), prohibits appellants, two national banking associations and three business corporations,¹ from making contributions or expenditures "for the purpose of . . . influencing or affecting the vote on any question submitted to the voters, other than one materially affecting any of the property, business or assets of the corporation." The statute further specifies that "[n]o question submitted to the voters solely concerning the taxation of the income, property or transactions of individuals shall be deemed materially to affect the property, business or assets of the corporation." A corporation that violates § 8 may receive a maximum fine of $50,000; a corporate officer, director, or agent who violates the section may receive a maximum fine of $10,000 or imprisonment for up to one year, or both.² Appellants wanted to spend money to publicize their views on a proposed constitutional amendment that was to be submitted to the voters as a ballot question at a general election on November 2, 1976. The amendment would have permitted the legislature to impose a graduated tax on the income of individuals. After appellee, the Attorney General of Massachusetts, informed appellants that he intended to enforce § 8 against them, they brought this action seeking to have the statute declared unconstitutional. On April 26, 1976, the case was submitted to a single justice of the Supreme Judicial Court on an expedited basis and upon agreed facts, in order to settle the question before the upcoming election.³ Judgment was reserved and the case referred to the full court that same day.

Appellants argued that § 8 violates the First Amendment, the Due Process and Equal Protection Clauses of the Fourteenth Amendment, and similar provisions of the Massachusetts Constitution. They prayed that the statute be declared unconstitutional on its face and as it would be applied to their proposed expenditures. The parties' statement of agreed facts reflected their disagreement as to the effect that the adoption of a personal income tax would have on appellants' business; it noted that "[t]here is a division of opinion among economists as to whether and to what extent a graduated income tax imposed solely on individuals would affect the business and assets of corporations." App. 17. Appellee did not dispute that appellants' management believed that the tax ould have a significant effect on their businesses.⁴ On September 22, 1976, the full bench directed the single justice to enter judgment upholding the constitutionality of § 8. An opinion followed on February 1, 1977. In addressing appellants' constitutional contentions,⁵ the court acknowledged that § 8 "operate[s] in an area of the most fundamental First Amendment activities," Buckley v. Valeo, 424 U.S. 1, 14, 96 S.Ct. 612, 632, 46 L.Ed.2d 659 (1976), and viewed the principal question as "whether business corporations, such as [appellants], have First Amendment rights coextensive with those of natural persons or associations of natural persons." 371 Mass. 773, 783, 359 N.E.2d 1262, 1269. The court found its answer in the contours of a corporation's constitutional right, as a "person" under the Fourteenth Amendment, not to be deprived of property without due process of law. Distinguishing the First Amendment rights of a natural person from the more limited rights of a corporation, the court concluded that "whether its rights are designated 'liberty' rights or 'property' rights, a corporation's property and business interests are entitled to Fourteenth Amendment protection. . . . [A]s an incident of such protection, corporations [also] possess certain rights of speech and expression under the First Amendment." Id., at 784, 359 N.E.2d, at 1270 (citations and footnote omitted). Accordingly, the court held that "only when a general political issue materially affects a corporation's business property or assets may that corporation claim First Amendment protection for its speech or other activities entitling it to communicate its...