Portal:Corporate Rights/Developing Issues

'Do Corporations Have a Right to Personal Privacy?'
In its 2010-2011 term, the U.S. Supreme Court will consider whether corporations have the same rights to personal privacy as living, breathing human beings. On January 19, 2011, the Court heard oral argument in the case AT&T v. FCC, which considers the definition of "personal privacy" under the Freedom Of Information Act (FOIA).

The Court agreed to review the decision of the Third Circuit Court of Appeals, which held that corporations are entitled to "personal privacy" under FOIA. FOIA requires government agencies to release documents within the agency's possession upon request. However, under FOIA exemption 7(C), an agency is not required to release records "compiled for law enforcement purposes... that could reasonably be expected to constitute an unwarranted invasion of personal privacy."

The AT&T case arose from an FCC investigation into allegations of AT&T overcharging customers; in the course of the investigation, the FCC obtained a range of documents from AT&T. Subsequently, CompTel, a trade association representing some of AT&T's competitors, filed a FOIA request for all correspondence contained in the FCC's investigation file on AT&T. AT&T opposed the request, arguing that it possessed "personal privacy" protected by FOIA exemption 7(c).

Although FOIA defines a "person" to “include an individual, partnership, corporation, association, or public or private organization other than an agency,” it does not define "personal privacy." The Third Circuit conducted a strict statutory analysis to determine that corporations are entitled to "personal privacy" under FOIA. The Third Circuit did not cite Citizens United as precedent for its decision.

January 19, 2011 Oral Argument: Corporate Persons May Have Privacy, but not "Personal Privacy" 

In oral argument, the U.S. Supreme Court appeared skeptical about extending FOIA's "personal privacy" exemption to corporations, while acknowledging that corporations have many rights as "legal persons," and that they may even possess "privacy." Chief Justice Roberts stated "Corporations have private property. They have private documents. The concept [of privacy] certainly applies in the corporate context as it does in the individual."

The Court's opposition to AT&T's case appeared to have less to do with the concept of extending privacy rights to corporations, and more to do with the construction of "personal" as it relates to corporations as a legal "person." Justice Roberts appeared to draw a line between a corporation being a "person with privacy" and possessing "personal privacy:" "I don't think there's much to the argument that because "person" means one thing, "personal" has to be the same relation." The Chief Justice said he could come up with "many examples where the adjective was very different from the root noun . . . you have craft and crafty. Totally different. Crafty doesn't have much to do with craft. Squirrel, squirelly. Right?”

Justice Scalia, who testified to the Senate in 1981 that corporations were not covered by the exemption, stated the word "personal, yes, can indeed apply to corporations sometimes; but there are certain phrases where it certainly does not. For example, you talk about personal characteristics. That doesn't mean the characteristics of General Motors. You talk about personal qualities. It doesn't mean the qualities of General Motors."

While the Court may decide that corporations are not included in FOIA's "personal privacy" exemption, there are many indications the decision will establish a clear right to corporate privacy in many contexts.


 * Several watchdog groups and civil liberties organizations have filed an amicus brief in the Supreme Court case, arguing that, if the Court accepts AT&T's arguments, "it is not hard to imagine how documents on the BP oil spill, or coal mine explosions, or the misdeeds of Bernie Madoff's investment firm might be significantly harder to find." More importantly, it would affect the free flow of information FOIA guarantees, and contribute to additional delays in an already lengthy FOIA process. The brief also notes that FOIA already offers corporations substantial protections, allowing for corporations to protect trade secrets and other information.
 * The amicus brief was signed by the Electronic Frontier Foundation (EFF), Citizens for Responsibility and Ethics in Washington (CREW), the American Civil Liberties Union (ACLU), the American Library Association (ALA), the Association of Research Libraries (ARL), the National Security Archive, and OpenTheGovernment.org.

Will Class Actions be Extinguished?
In another case involving AT&T, AT&T Mobility vs. Concepcion, the telecom giant seeks to greatly weaken rules regarding an individual's right to join class-action lawsuits, one of the most powerful legal tools available to citizens and consumers.

Class actions allow everyday Americans to join together and bring a single lawsuit in cases of widespread violations of individual rights. Class actions are particularly useful when individual damages are relatively small, and it would be difficult or cost-prohibitive to bring an individual suit-- a class action allows wronged persons to band together, making their claims more effective and efficient. Class actions primarily aim at deterring corporate misconduct regarding misleading consumer practices, unfair hiring practices, product defects, toxic pollution, civil rights violations, and other abuses. Class action suits have been highlighted in popular culture in films like Michael Clayton (which dealt with a corporation’s violent reaction to a class action lawsuit filed by persons sickened by health effects from its lethal pesticides) or Erin Brockovich (involving a class-action suit against the world's largest utility company for contaminating the water supply with cancer-causing chemicals).

The AT&T Mobility vs. Concepcion case arose from a class-action lawsuit against AT&T by consumers alleging unfair trade practices-- individuals in California signed a contract with AT&T for wireless service because they were promised free cell phones, but were later hit with hidden fees and charges. The wireless contract stated that disputes with AT&T must be resolved by an arbitrator, not through litigation; however, California law requires that so-called “arbitration clauses” do not prohibit individuals from joining with other similarly-affected persons and bringing a class-action claim. Specifically, AT&T is challenging the California law on grounds that the Federal Arbitration Act (passed in 1932 to allow an alternative forum to resolve disputes besides courts) prohibits states from mandating that class arbitration be available as a part of every arbitration agreement.

However, as stated by the Los Angeles Times’ David Lazarus, “the basic question before the court is whether companies can bar class actions in the fine print of their take-it-or-leave-it contracts with customers and employees.” If the court decides in favor of AT&T, corporations could effectively prevent consumers from bringing class action lawsuits by including arbitration clauses in all contracts, removing a legal tool that deters businesses from engaging in unfair, deceptive, or harmful practices. AT&T’s case is backed by other telecom companies as well as the American Bankers Association, the Financial Services Roundtable and the U.S. Chamber of Commerce.