Back in November I wrote two posts explaining the case involving Hertz corporation in the Supreme Court and predicted the outcome. I got the outcome right but missed that the decision would be unanimous. (The posts are here and here.)
The Court ruled in favor of the big corporations, as predicted, announcing a brand new rule: These fictions, these soulless creations of the law, must have a home and that home is, “the place where a corporation’s officers direct, control, and coordinate the corporation’s activities.” Call it the corporation’s “nerve center.” Corporations don’t have nerves, but let that pass.
Let me explain. Imagine that you lived in San Diego, flew to Sacramento and rented a car. Hertz cheated you out of a couple of dollars. In fact, it was cheating all California residents who rented its cars, but not very much, just a few dollars each. If you cheat enough people out of just a little bit of money, you end up with a lot of money yourself. But Hertz’s “nerve center” – and watch that metaphor, we’re assuming a corporation is a living entity with nerves which, of course, it isn’t; it’s a legal fiction – is in New Jersey.
When you and a great many of your fellow California citizens discover this cheating and you band together and sue Hertz in your California courts.
Not any more you don’t.
Now you have to sue Hertz in federal court, because your court, the one you pay state taxes to operate, might not be fair to Hertz; which, even though it has no real nerves, conducts its activities out of a “nerve center” in New Jersey.
This is all a sham, of course. Hertz doesn’t want you suing it in state court because that’s too easy for you and too hard for Hertz. Besides federal judges are going to favor Hertz. If you are going to sue Hertz, it wants you to sue it in federal court. That is why the national Chamber of Commerce, that bastion of huge U.S. corporations backed Hertz and is delighted with the outcome.
And why small businesses ought to be outraged, because it will end up hurting them even more than individuals. (I see that the CEOs of the eleven largest United States corporations had private meetings this week with the President and other meetings with Congressional leaders demanding that they get the same tax breaks in the new jobs bill that small businesses are getting. I know some small business people. None of them get invited to private meetings with the leaders of our government.)
The beauty of the court’s Hertz decision lies in the abstract subterfuge which allows even the justices on the Supreme Court to avoid the reality of what they’ve just done; given huge corporations another way of escaping responsibility by pretending they are real people.
Once, the law recognized that corporations aren’t real people. Writing for the Court in 1809, Chief Justice John Marshall correctly noted that corporations are, “invisible, intangible, and artificial. . .” and certainly not citizens. No more. Now the law must provide its creations with nice, safe, secure homes. Real people need shelter so these imagined children of the law must also.
And we must have “administrative simplicity.” That means you and your local business people can’t sue Hertz in your own state court system. Not only must Hertz be protected from your court’s “local prejudice”, it must have “administrative simplicity. ”
What’s more, at least according to the Court, you want it that way because it makes it easier on you. The new rule, “also benefits plaintiffs deciding whether to file suit in state of federal court.”
That’s a lie. You cannot pursue your lawsuit in your court. If you try, Hertz will haul you into federal court. And win.
Much more remains to be said about this case which is a huge victory for big American and foreign corporations, the second in as many months from the Supreme Court. In fact, this case is a bigger win for them than the campaign speech case last month. This one though flew mostly beneath the radar.
Small businesses may be the biggest losers of all. More on that the next time I mount my soapbox about this case.
But I’ve said enough for this post. If you want to read the Court’s opinion – written by Justice Breyer, that champion of abstractions – here it is. Not much news coverage is available. It rated a small entry in the Wall Street Journal, a crowing news release from the Chamber of Commerce, a legal blog explaining the decision, and a perceptive note from the American Bar Association.