Friedrichs Amici Brief: Corporate Law Professors

In the run-up to oral argument in Friedrichs v. California Teachers Association, OnLabor will be reviewing some of the significant amicus briefs that have been filed in the case.

Earlier today, an amici brief in support of the Friedrichs respondents was submitted on behalf of nineteen corporate law professors. The brief — which is available for download here through SSRN) — is intended to “assist[] the parties and the Court in understanding corporate law and the rights of shareholders, insofar as that law and those rights are relevant to the questions presented in this case.” Although at first glance, Friedrichs may not appear to implicate questions of corporate law, amici observe that the Supreme Court “has often looked to the rights of corporate shareholders in determining the rights of union members and non-members to control the union’s use of their funds for political spending, and vice versa” (this point of comparison may be familiar to those of you who have read Prof. Sachs’s article on the political opt-out rights of union members vis-à-vis corporate shareholders).

Amici continue:

In [analyzing union member rights through the lens of shareholder rights], the Court has sometimes assumed that if shareholders disapprove of corporate political expression, they can easily sell their shares or exercise control over corporate spending. This assumption is mistaken. Because of how capital is saved and invested in corporations, most individual shareholders cannot obtain full information about corporate speech or political activities, even after the fact, nor can they prevent their savings from being used to speak in ways with which they disagree.

Union non-members are currently protected from being forced to fund union political expression or activity by opt-out rights under Abood v. Detroit Bd. of Ed. . . . and in this case plaintiffs seek the more expansive right to refuse to fund any union expression whatsoever. In contrast, individual shareholders currently have no “opt out” rights or practical ability to avoid subsidizing corporate political expression with which they disagree. Nor do individuals have the practical option to refrain from putting any of their savings into equity investments, as doing so would impose damaging economic penalties and ignore conventional financial guidance for individual investors. If the Court decides to give union non-members additional rights to refuse to contribute to union speech, the Court should not act on the erroneous belief that this will accord union non-members the same rights enjoyed by individual investors. Giving union non-members additional rights will only further increase the extent to which they enjoy greater rights than corporate shareholders.

The professors who signed on to the brief are tenured faculty hailing from Boston College, Columbia, Duke, Georgetown, Harvard, Michigan, NYU, Northwestern, Penn, Stanford, Widener, and Yale.

Enjoy OnLabor’s fresh takes on the day’s labor news, right in your inbox.