In January, I wrote about Senator Noreen Evans' introduction of a bill, SB 982, to require corporations to issue a report on planned political spending as well as expenditures for the previous fiscal year. Now, Assembly members Jared Huffman and Michael Allen have introduced a bill, AB 2050, that provides:
No domestic corporation may, directly or indirectly, make any monetary or other contribution of value to any candidate for city, county, city and county, or state office in this state or any other state.
The bill would also require every domestic corporation making any monetary contribution in excess of $1,000 to any candidate for federal office or any statewide ballot, referendum, or initiative voted on in California to make a specified disclosure to the Secretary of State within 10 days who would then be required to make the disclosure public, including on its Internet Web site.
As introduced, AB 2050 applies to "domestic corporations". Thus, the statute would apply to all corporation formed under California law - not just corporations formed under the General Corporation Law. Cal. Corp. Code § 167. Since the vast majority of publicly traded companies headquartered in California are not incorporated in California, this bill would have no effect on them. In contrast, Senator Evans' bill appears (although it is not entirely clear) to apply to corporations with a class of securities registered under Section 12 of the Securities Exchange Act of 1934 that have shareholders with “legal residency” in California.
Although AB 2050 casts a wide net, not every form of business entity will be caught in it. In addition to corporations formed in other states or under federal law, other types of business entities, such as limited liability companies, limited partnerships, business trusts, and unincorporated associations, would appear to be free from restraint. This unequal treatment of speakers is likely to generate constitutional questions. In Citizens United v. Federal Election Commission, 130 S.Ct. 876 (2010), Justice Anthony Kennedy wrote:
"Quite apart from the purpose or effect of regulating content, moreover, the Government may commit a constitutional wrong when by law it identifies certain preferred speakers. By taking the right to speak from some and giving it to others, the Government deprives the disadvantaged person or class of the right to use speech to strive to establish worth, standing, and respect for the speaker's voice. The Government may not by these means deprive the public of the right and privilege to determine for itself what speech and speakers are worthy of consideration. The First Amendment protects speech and speaker, and the ideas that flow from each."
For more on the multifarious California reactions to the Supreme Court's Citizens United decision, see:
