First National Bank of Boston v. Bellotti

On April 28, 1978, the Supreme Court issued an opinion in First National Bank of Boston v. Bellotti.[1] The Court struck down a Massachusetts statute which severely restricted the participation of banks and corporations in state ballot measures.

Background

First National Bank of Boston and four other banks and corporations (hereafter referred to collectively as First National) wanted to make expenditures for advertisements criticizing a proposed constitutional amendment which authorized the state legislature to impose a graduated income tax on individuals. The proposal was to be submitted to voters in a referendum in November 1976.

A Massachusetts law (chapter 55, 8 of the Massachusetts General Laws) prohibited contributions or expenditures by any bank or corporation for the purpose of "influencing or affecting the vote on any question submitted to the voters, other than one materially affecting any property, business or assets of the corporation." The law further specified that questions submitted to voters concerning the taxation of individuals did not materially affect the property, business or assets of the corporation.

Massachusetts Attorney General Francis X. Bellotti notified First National that the banks's expenditures would be illegal and that he intended to enforce 8 against it.

In April 1976 First National filed a suit challenging §8's constitutionality. The suit was subsequently submitted to the Supreme Judicial Court of the Commonwealth of Massachusetts . The plaintiffs claimed that the statute violated the First Amendment, the due process and equal protection clauses of the Fourteenth Amendment and similar provisions of the Massachusetts Constitution. They also claimed that §8, as it applied to their expenditures, was unconstitutional because the adoption of a graduated personal income tax would indeed materially affect their businesses in a number of specified ways.[2]

In September 1976 the Supreme Judicial Court of Massachusetts upheld the constitutionality of §8 and dismissed First National's claims. The decision was appealed to the United States Supreme Court.

The Federal Election Commission submitted an amicus curiae brief supporting the Massachusetts court's decision.

Supreme Court decision

In ruling on First National Bank v. Bellotti, the Supreme Court first determined whether the case was moot. The suit reached the Court in November 1977, by which time the referendum of November 1976 had already resulted in the defeat of the proposed constitutional amendment. The Court denied that, since the controversy surrounding 8 was likely to occur again (because the law remained in force in Massachusetts and because the proposed constitutional amendment authorizing the tax had already been presented as a referendum four times in that state), the case was not moot.

On the merits, the Massachusetts court had asked whether corporations had First Amendment rights. "Instead," the Supreme Court observed, the lower court should have asked "whether 8 abridge[d] expression that the First Amendment was meant to protect." The Supreme Court maintained that it did.

Referring to the proposed advertisements, the Supreme Court said, "It is the type of speech indispensable to decision-making in a democracy, and this is no less true because the speech comes from a corporation rather than an individual. The inherent worth of the speech in terms of its capacity for informing the public does not depend on the identity of its source."

The Supreme Court also faulted the lower court's ruling that corporations could only claim a right to free speech on the subject of a referendum if they demonstrated that they would be materially affected by it.

The Court said that freedom of expression for communications businesses had been protected because such protection was necessary to insure the free flow of information and ideas to the public.

The Court also struck down the law's proscription against corporate discussion of ballot questions concerning personal income taxes. The Justices held that "the legislature is constitutionally disqualified from dictating the subjects about which persons may speak and the speakers who may address a public issue." The Court then considered whether the restrictions in 8 were nonetheless justified by a compelling state interest. Bellotti claimed that the restrictions on free speech by corporations were justified by the state's interest in: (1) "sustaining the active role of the individual citizen in the electoral process and thereby preventing diminution of the citizen's confidence in government" and (2) "protecting the rights of shareholders whose views differ from those expressed by management on behalf of the corporation."

The Court acknowledged that these interests were of the "highest importance," but it found that there was no evidence to corroborate such claims in this case.

Further, the Court maintained that "the risk of corruption perceived in cases involving candidate elections...simply is not present in a popular vote on a public issue."

As for the notion that the law's restrictions protected shareholders by preventing corporate expenditures to further views with which shareholders disagreed, the Court said this alleged purpose was belied by other facts. For example, in Massachusetts a corporation could legally lobby on behalf of its interests in the legislature even though the corporate viewpoint on any legislative question might differ from that of some of its shareholders. On the other hand, the law forbade the corporation from spending money to oppose or support a referendum, "even if its shareholders unanimously authorized the contribution or expenditure."

The Court deemed §8 to infringe on protected political speech without any compelling state interest supporting the regulation.

FOOTNOTES:

[1] The other complainants in this suit were New England Merchants National Bank, The Gillette Company, Digital Equipment Corporation and Wyman-Gordon Company.

[2] With regard to contributions and expenditures made to influence the election of candidates, the Court observed: "Appellants do not challenge the constitutionality of laws prohibiting or limiting corporate contributions to political candidates or committees, or other means of influencing candidate elections.... The overriding concern behind the enactment of statutes such as the Federal Corrupt Practices Act [the forerunner of the Federal Election Campaign Act] was the problem of corruption of elected representatives through the creation of political debts.... The importance of the governmental interest in preventing this occurrence has never been doubted. The case before us presents no comparable problem, and our consideration of a corporation's right to speak on issues of general public interest implies no comparable right in the quite different context of participation in a political campaign for election to public office. (Footnote 26)"

Source:   First National Bank of Boston v. Attorney General, 371 Mass. 773, 359 N.E.2d 1262 ( Mass. 1977), rev'd sub nom, First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978).