In perhaps the most significant constitutional case of the year, the Supreme Court struck down 2 U.S.C. §441b, a federal statute which prohibits corporations from making independent expenditures from their general funds to finance speech expressly advocating the election or defeat of a candidate. The statute also prohibits “electioneering communication,” defined as broadcast, cable or satellite communication that refers to a clearly identified candidate for federal office and is made within a certain period of a primary or general election. Overruling Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), which had upheld a similar state law, and McConnell v. Federal Election Comm’n, 540 U.S. 93 (2003), the Court found both provisions of §441b to violate the First Amendment, although a separate majority of the Court upheld the statute’s disclosure and disclaimer requirements for electioneering communications, 2 U.S.C. §441d(d)(2).

The case before the Court concerned a documentary about then-Senator Hillary Clinton made available (for free) through a cable service’s video-on-demand distribution network during the 2008 presidential primary season. The documentary, entitled “Hillary: The Movie,” was released by Citizens United, a non-profit corporation, and generally criticized Clinton’s candidacy for the White House. The lower court had denied Citizens United injunctive and declaratory relief against the Federal Election Commission, finding “Hillary: The Movie” to fall squarely within the scope of the statute and its prohibitions.

Justice Kennedy, writing on behalf of himself, Chief Justice Roberts and Justices Scalia, Alito and Thomas, had to overcome a number of hurdles to reach the question of Austin’s continued validity. He specifically rejected a number of alternative narrow holdings (offered by both sides): that the video-on-demand distribution of the film did not offer sufficient public distribution to constitute electioneering communication; that the film was the functional equivalent of express advocacy (which can be restricted); that the Court find the statute unconstitutional only as applied to communications distributed through video-on-demand, as this opt-in forum for the publication of political information presents a lower risk of distorting the political process (a key component of McConnell); and that the Court create an exception to §441b for nonprofit corporate political speech funded overwhelmingly by individuals. Justice Kennedy thought that all of these options were impermissible departures from the clear statutory meaning and/or posed too great a threat of chilling protected speech.

The Court then laid out its basis for reexamining—and ultimately overruling—Austin and McConnell. Tracking the development of cases applying the First Amendment to corporations, the Court cited 23 opinions to support the proposition that corporations are entitled to free speech protections. While a small number of cases did allow restrictions on corporate speech, all (until Austin, in the Court’s view) survived strict scrutiny because of the presence of a sufficiently important government interest: “the prevention of corruption and the appearance of corruption.” The Court reaffirmed this basis as properly supporting the upholding of limits on direct contributions to candidates in a prior case, and noted a number of instances in which the Court ruled on narrower grounds rather than confirm broader restrictions of corporate speech on other justifications. (The Court did recognize the line of cases allowing speech restrictions based on the interest of allowing governmental entities to perform their functions, e.g., in the context of schools, prisons, and the military.)

For the majority, Austin represented a significant and improper departure from this line of reasoning, and was overruled. Austin upheld limitations on independent corporate expenditures for political speech on the basis of a governmental interest in “anti-distortion,” or the “interest in preventing the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideas.” Justice Kennedy attacking this justification as violative of the “rule that political speech cannot be limited based on a speaker’s wealth,” and cited Buckley to support his assertion that “First Amendment[] protections do not depend on the speaker’s financial ability to engage in public discussion.” Without Austin, §441b could not withstand the Court’s scrutiny.

Importantly, all the members of the Court other than Justice Thomas joined the portion of the opinion upholding the disclaimer and disclosure requirements of §441d(d)(2). Rejecting Justice Thomas’s contentions otherwise, here the Court found that the occasional burdens of complying with these provisions do not “impose [a] ceiling on campaign-related activities” and are justified “based on a governmental interest in providing the electorate with information about the sources of election-related spending.” While Citizens United argued that disclosure requirements could “chill donations to an organization by exposing donors to retaliation,” the Court found that transparency is an important compliment to the protections afforded to corporate speech, as it “enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

Justices Stevens, Breyer, Ginsburg and Sotomayor dissented. They first criticized the majority for intentionally seeking out the broadest holding rather than deciding the case on narrower grounds, such as those provided, or by finding the statute unconstitutional “as applied” to the facts before it rather than striking it down completely. The dissent also disagreed with how the majority applied stare decisis, declaring that “[t]he Court’s central argument for why stare decisis ought to be trumped is that it does not like Austin,” and pointing out that many of the arguments accepted by the majority were rejected in Austin and other cases.  It also took issue with the repeated word usage and treatment of §441b’s restrictions as a “ban,” as the statute prohibited a very narrow category of speech while allowing corporations to spend shareholders’ and officers’ personal funds through PACs, participate in “genuine issue advertising” and print, telephone, and Internet advocacy, distribute voting guidelines, underwrite voter registrations, host fundraising events and publicly endorse candidates through a press release and press conference.  Finally, the dissenters also rejected the majority’s assertion that this case does not implicate the governmental interests in proper functioning, pointing out that “Congress and half the state legislators have concluded. . . that their core functions of administering elections and passing legislation cannot operate effectively without some narrow restrictions on corporate electioneering paid for by general treasury funds.”

Chief Justice Roberts (joined by Justice Alito) wrote separately to defend that majority’s overruling of Austin and its progeny. Justice Scalia (with Justices Alito and Thomas) also wrote separately to address what they saw as the dissent’s improper evocation of “Original Understandings” as not being grounded in the text of the Constitution.