Reflecting the Democrat mania to control free speech, Minnesota Democrats enacted a law conflicting with the proposition that corporations have a constitutional right to speak independently about politics. I learned about the law from the December 18 Wall Street Journal column “Minnesota’s Xenophobic Restrictions on Speech” by Brad Smith and Eric Wang.
The “xenophobia” flagged in the Journal headline is entirely pretextual. The subhead homes in on the problem: “[The] ban on political speech by ‘foreign influenced’ companies defies U.S. Supreme Court precedent.”
The law in issue is now codified at Minn. Stat. § 211B.15. The text of the statute is accessible here.
The Minnesota Chamber of Commerce filed a lawsuit to enjoin enforcement of this blatantly unconstitutional law. The case is pending before Minnesota federal district judge Eric Tostrud. As Smitha and Want anticipated at the top of their column, Judge Tostrud held a hearing on the chamber’s motion for a preliminary injunction this past Monday.
I doubt that the law is original with Minnesota Democrats. I would guess they’re just trying to keep up. Smith and Wang get to the heart of the matter:
While Citizens United and other judicial decisions have loosened restrictions on corporate political speech, courts have upheld longstanding bans on political speech by foreign nationals. Therefore, Minnesota and other opponents of corporate speech now seek to redefine large swaths of American businesses as “foreign influenced” to stop their political engagement. Seattle, St. Petersburg, Fla., and Alaska have joined Minnesota in passing laws banning political speech by so-called foreign-influenced corporations. Lawmakers in numerous other states and Congress have introduced similar bills.
The Minnesota law is typical of these measures, making Monday’s hearing an early test of their constitutionality. The law defines “foreign-influenced corporations” as including any U.S. company in which a single foreign investor has “direct or indirect beneficial ownership” of as little as 1% of total equity. This status also may be triggered if hundreds or even thousands of foreign stockholders collectively own 5% of shares. It doesn’t require these stockholders to be of the same nationality or to collude to influence so much as the corporate cafeteria menu.
The law’s breadth is matched by its vagueness. Foreign-influenced status also may be triggered if any foreign investor “participates directly or indirectly in the corporation’s decision-making process with respect to the corporation’s political activities in the United States.” If a single foreign stockholder casts a proxy vote on an activist-shareholder proposal, that could bring the state’s corporate speech ban into effect.
The charade is obvious: The left-wing Center for American Progress estimates that 98% of publicly traded companies would trigger these thresholds. Many privately held business likely would as well. Once defined as foreign-influenced, a corporation is prohibited from making contributions or independent expenditures to promote or oppose candidates for public office. This includes lobbying legislators and the governor on appointed positions. The ban further applies to corporate activities that promote or oppose ballot measures. Foreign-influenced corporations also may not contribute to organizations that support or oppose candidates or ballot measures. The Minnesota law even seems to ban companies from engaging in these activities at the federal level, despite federal law to the contrary.
By the way, the law incorporating this monstrosity (and worse) is titled Democracy for the People Act. Shouldn’t that be Our Democracy for the People Act? Or “Our Democracy”™ for the People Act? It might more aptly have been titled DFL Forever Act. That’s the gist of it and that’s what it’s all about.
The law in its entirety is to become effective on January 1. See the celebration here. Happy new year, Democrat style.
Yesterday Judge Tostrud issued a 34-page opinion and order preliminarily enjoining enforcement of the challenged provisions of the act. MPR’s Brian Bakst covered the ruling here. I have embedded Judge Tostrud’s opinion and order below for those who want the gory details. We will continue to follow this symptomatic case.
Minnesota Chamber of Commerce v. Choi by Scott Johnson on Scribd