Why We Need To Change Corporate Law
In the wake of Hobby Lobby case (and Citizen’s United, to be sure), I’ve seen a lot of Internet digital ink spilled over corporate personhood vs. legal entity recognition, and it seems eminently clear to me that the conflation is leading to some wicked problems.
Allow me to illustrate.
Let’s say Darsee Lett, the daughter of David Green, marries a secular Jew. Let’s say Darsee has 5% of the Hobby Lobby stock.
Darsee, regrettably, gets into a car accident and dies, and her husband inherits her 5%.
Her father, Green, according to Wikipedia, takes half of Hobby Lobby’s total pretax earnings and commits it directly to a portfolio of evangelical ministries and as of 2012 it has donated an estimated $500 million.
Here’s the questions to ask yourself:
Does Darsee’s husband have a right to sue David Green for violating his fiduciary responsibilities to Hobby Lobby stockholders by giving away half of the company’s profit?
If you answer “no” to that one, I’d be interested in how you justify that.
Should he win?
Absent a legal document that says this is an operational religious requirement for Hobby Lobby, the institution, vs. “What David Green likes to do”, it’s kinda hard to argue otherwise, isn’t it?
Is this affected at all by Darsee’s husband’s feelings regarding the destination of the funds?
And again, I’d be interested in how you justify that.
There are fundamental differences between a person – who has rights – and a corporation – which has legally recognized obligations and privileges.
Absent an incorporation document that includes some pretty specific outlining of what these “religious inclinations” may be, the very nature of a corporation’s inability to die and take its inclinations with it when the assets are distributed via a will and testament…
… means that necessarily, it is unclear at any given moment in time what to do when the corporation’s legal obligations come into conflict with “what the current owners and/or operators feel their religious inclinations actually are”.
I don’t think this is a sustainable position for corporate law.