Facts
- Several national banks and business corporations sought to spend corporate funds to oppose a proposed Massachusetts constitutional amendment authorizing a graduated personal income tax.
- A Massachusetts criminal statute prohibited specified corporations from making contributions or expenditures to influence a vote on a ballot question unless the question “materially affect[ed]” the corporation’s property, business, or assets.
- The statute also stated that ballot questions “solely concerning the taxation of the income, property or transactions of individuals” were not deemed to materially affect corporate property, business, or assets.
- The Massachusetts Attorney General advised that corporate spending to oppose the graduated income-tax proposal would violate the statute.
- The corporations filed suit alleging the restriction violated the First and Fourteenth Amendments.
- The Massachusetts Supreme Judicial Court upheld the statute and ordered judgment for the Attorney General, even though the referendum had already occurred and the proposal had been defeated.
- The corporations appealed directly to the U.S. Supreme Court.
Issues
- Whether the challenge was moot after the referendum concluded and the proposal was defeated.
- Whether the First and Fourteenth Amendments permit a state to prohibit corporate expenditures to influence referendum votes unless the ballot question materially affects the corporation’s business or property.
Decision
- The Supreme Court held the case was not moot under the “capable of repetition, yet evading review” exception.
- The Court reversed and held the challenged statutory restriction unconstitutional.
- The Court ruled that Massachusetts could not bar corporate expenditures advocating a position on a ballot question based on corporate speaker status and the statute’s “materially affect” limitation.
- The Court concluded the asserted state interests (preventing corporate domination, protecting shareholders, and maintaining referendum integrity) did not justify this restriction on political expression concerning ballot questions.
Legal Principles
- Discussion and advocacy concerning ballot questions are core political speech protected by the First Amendment and applicable to the states through the Fourteenth Amendment.
- The government generally may not restrict political speech because of the identity of the speaker, including when the speaker is a corporation.
- The First Amendment prohibits the state from limiting the information available to voters by excluding certain speakers from public debate on matters submitted to the electorate.
- A statute conditioning a corporation’s ability to speak on whether a ballot question “materially affects” the corporation operates as a content- and speaker-based restriction that requires the most demanding justification.
- The state may not equalize political influence by suppressing speech from disfavored speakers.
Conclusion
The Court invalidated Massachusetts’ prohibition on corporate spending to influence referenda except on issues materially affecting corporate interests, holding that ballot-question advocacy is protected political speech and cannot be suppressed based on the corporate identity of the speaker or the subject matter limitation imposed by the statute.