In a bid to curtail the influence of corporations on U.S. elections, progressive advocates are promoting a novel legal strategy that could see companies facing lawsuits from their own shareholders over political donations, according to a new report from Bloomberg.
The Center for American Progress, in its latest report, argues that investors have the standing to sue if they disapprove of how their money is being spent on political causes, potentially making executives of publicly traded companies more hesitant to make such contributions.
Tom Moore, a senior fellow at the Center for American Progress and co-author of the analysis, believes this threat of legal action could significantly impact the 2024 elections. “I am not going to lose any sleep if the next time a CEO wants to contribute corporate funds to a super PAC, her general counsel says, ‘Well, that could get us sued,'” Moore stated.
The report highlights several major U.S. companies, including Chevron Corp., Occidental Petroleum Corp., and Coinbase Inc., that have made substantial donations to super PACs supporting Republican candidates and cryptocurrency-friendly legislation.
If this new strategy leads to a wave of shareholder lawsuits, it could disproportionately affect Republicans, as their allied super PACs receive more funding from industries such as oil and gas, tobacco, and private prisons.
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However, some campaign finance lawyers remain skeptical about the viability of this approach.
Major US companies could face lawsuits from their own shareholders for making political donations, according to a new legal strategy https://t.co/epNOAQDcvp
— Bloomberg (@business) April 24, 2024
Jason Torchinsky, an attorney with Holtzman Vogel and former general counsel to President George W. Bush’s 2004 reelection campaign, questions the harm shareholders could demonstrate, given the relatively small amount companies spend on politics compared to their overall profits. “No one’s holding a gun to your head saying own shares of a particular company,” Torchinsky added. “You can sell.”
Despite these reservations, the report has garnered support from prominent critics of the Citizens United ruling, such as Senator Sheldon Whitehouse, a Democrat from Rhode Island, who praised the initiative for finding “new and innovative ways to fight the decision and the damage the decision has done to our democracy over the last decade.”
The Citizens United ruling in 2010 paved the way for an unprecedented surge in outside group spending on federal elections, with super PACs alone spending $2.6 billion to influence voters in the 2020 election, compared to just $63 million in 2010.
As the debate over corporate influence in elections continues, some local jurisdictions have taken matters into their own hands.
Minnesota, Seattle, and San Jose have all passed measures prohibiting companies with foreign shareholders from spending money to influence elections, including ballot initiatives. Although Minnesota’s law has been temporarily blocked by a federal judge, the courts are still determining its fate.
The progressive push for shareholder lawsuits against companies making political donations is a concerning development, as it appears to be a selective tactic aimed primarily at corporations that support Republican candidates.
While the report claims to be an effort to reign in corporate influence on elections, it is likely that progressives will target companies based on their political leanings rather than applying this strategy uniformly.
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This selective application of pressure on corporations is a troubling trend that could have far-reaching consequences for free speech and the democratic process.
