First National Bank of Boston v. Bellotti of 1978
The case centered around a Massachusetts law that prohibited corporations from making expenditures to influence the outcome of ballot initiatives unless the issue directly related to the corporation’s business, property, or assets. The law was aimed at limiting corporate influence in political processes and ensuring that corporate resources, primarily from shareholders, were not used for political purposes unrelated to the corporation’s interests. In 1976, Massachusetts voters were set to decide on a proposed constitutional amendment that would allow the state to impose a graduated income tax. The First National Bank of Boston and other corporations wanted to spend money to oppose the amendment, arguing that it would negatively affect the business climate. The Massachusetts Attorney General, Francis X. Bellotti, warned the corporations that such expenditures would violate the state law. The corporations filed a lawsuit, claiming that the Massachusetts law infringed upon their rights to free speech. They argued that the law unconstitutionally restricted their ability to participate in public debate on important political issues.
The Massachusetts Supreme Judicial Court upheld the state law, ruling that the state had a legitimate interest in limiting corporate spending to prevent undue influence in political campaigns and corporations did not have the same free speech rights as individuals when it came to political matters unrelated to their business. The corporations appealed the decision to the U.S. Supreme Court.
On April 26, 1978, the U.S. Supreme Court issued its decision, ruling 5–4 in favor of the bank and striking down the Massachusetts law. The majority opinion, written by Justice Powell, asserted that the First Amendment protects the right to free speech regardless of the speaker’s identity, whether an individual or a corporation. Powell emphasized that ballot initiatives are a form of public discussion on political issues, where the free flow of information and ideas is essential. By restricting corporate expenditures, the Massachusetts law limited the information available to voters, which undermined the democratic process.
The Court rejected Massachusetts’s argument that the law was necessary to prevent corporate domination of the political process. Powell argued that the state failed to demonstrate how corporate expenditures would lead to corruption or distort the debate on ballot initiatives. Powell highlighted that the case dealt with ballot initiatives, not candidate elections. He noted that concerns about quid pro quo corruption, which are central to campaign finance laws for candidates, were less applicable in the context of ballot measures.
Justice White warned that the decision could lead to undue corporate influence in politics, threatening the democratic process and distorting public debate. He argued that corporations are legal fictions, artificial entities that do not have the same First Amendment rights as individuals.
Justice Rehnquist believed that states should have the power to regulate corporate political activity to protect the public from potential abuses. He expressed concerns about corporations using their economic power to overwhelm individual voices in political discourse.
The ruling dealt a big blow to campaign finance laws by setting precedent that corporations have a constitutional right to participate in public political debates, including ballot initiatives. By emphasizing that the content of the speech, not the speaker, the Court opened the door for corporations to use their vast financial resources to shape public opinion on political issues.
Before Bellotti, many states had laws restricting corporate political expenditures, often justified by concerns about the disproportionate influence of corporations in the political process. Bellotti struck down Massachusetts’s state law and cast doubt on similar laws in other states, signaling that governments had limited ability to regulate corporate political activity.
The Court ruled that restrictions on corporate expenditures for ballot initiatives were unconstitutional because they didn’t involve the risk of quid pro quo corruption (e.g., bribery or undue influence on candidates). This narrow interpretation of corruption excluded concerns about broader systemic corruption, such as corporations distorting public discourse or drowning out individual voices with their financial power. The ruling weakened the justification for regulating corporate political activity, leaving fewer tools to address the broader impacts of money in politics.
The reasoning in Bellotti directly influenced later rulings that further eroded campaign finance regulations. Buckley v. Valeo (1976) had already struck down limits on personal and independent expenditures, emphasizing First Amendment protections for individuals. Bellotti extended these protections to corporations. Citizens United v. FEC (2010) built on Bellotti, removed limits on independent expenditures by corporations and unions in candidate elections, effectively allowing unlimited spending in politics.
In Bellotti, the Court suggested that disclosure laws could address concerns about corporate influence, rather than direct limits on expenditures. This shift signaled a retreat from substantive regulation of political spending and placed more reliance on transparency mechanisms, which many critics argue are insufficient to counteract the influence of massive financial contributions.
By allowing corporations to spend freely on ballot initiatives, Bellotti exacerbated concerns about inequality in political influence. Corporations, with their vast financial resources, could dominate public debates, drowning out the voices of individuals, grassroots organizations, and smaller groups. The decision raised concerns about a “pay-to-play” political system, where economic power translates directly into political influence. The Bellotti decision undermined democratic ideals by allowing corporations, which are not citizens and do not vote, to have a disproportionate impact on the political process. Unlike individuals, corporations act as entities with complex governance structures, raising questions about accountability for political activities, especially when shareholders may not support those activities.
The Bellotti ruling hurt campaign finance laws by expanding corporate political rights, limiting the government’s ability to regulate corporate influence, and paving the way for future decisions that further deregulated political spending. Critics argue that it undermined efforts to create a more equitable and transparent political process, leading to a system increasingly dominated by moneyed interests.