Hobby Lobby and Social Justice: How the Supreme Court Opened the Door for Socially Conscious Investors

30 Pages Posted: 16 Aug 2014 Last revised: 19 Jun 2015

See all articles by Michele Benedetto Neitz

Michele Benedetto Neitz

University of San Francisco - School of Law

Date Written: August 4, 2014

Abstract

In Burwell v. Hobby Lobby, the Supreme Court upended the traditional foundations of corporate law. By allowing corporations to exercise legally recognized religious rights, the Court changed the very nature of a corporate entity. Moreover, the Court defied the conventional doctrine providing that the purpose of a corporation is to make profit for its shareholders. The case is being both praised and denounced by observers, but no one has yet fully analyzed how the Court’s reasoning paved the way for social impact investors to use the corporate form as a vehicle to achieve their objectives.

This Article is the first to connect the Hobby Lobby case to shareholder activism for social justice causes. The Article considers the existing methods by which advocates can use shareholder activism to create meaningful social change. The Article next examines how the Court’s expansion of the rights of corporate “persons” in Hobby Lobby created new legal arguments for corporate social responsibility advocates. For example, after Hobby Lobby, corporations can be considered moral “persons” who do not need to consider shareholder wealth maximization as the highest priority. This reasoning presents an exciting opportunity for investors trying to influence corporations to act in socially or environmentally beneficial ways. Accordingly, the Article will propose two ways social investors can act now to take advantage of Hobby Lobby’s extraordinary impact on corporate law doctrines: (1) Creating an innovative classification of stock to expand the voting rights of socially conscious investors, and (2) Shifting investments away from benefit corporations to larger and more influential companies. In the wake of Hobby Lobby, this Article forecasts the emergence of a new legal chapter in corporate social responsibility: Corporations as tools for generosity, not greed.

Keywords: Hobby Lobby, Social Justice, Corporate Law, Shareholder Activism, Corporate Social Responsibility, shareholder wealth maximization

JEL Classification: M14, K22

Suggested Citation

Neitz, Michele Benedetto, Hobby Lobby and Social Justice: How the Supreme Court Opened the Door for Socially Conscious Investors (August 4, 2014). 64 SMU L. Rev. 243 (2015), Available at SSRN: https://ssrn.com/abstract=2480640

Michele Benedetto Neitz (Contact Author)

University of San Francisco - School of Law ( email )

2130 Fulton Street
San Francisco, CA 94117
United States

HOME PAGE: http://https://www.usfca.edu/law/faculty/michele-neitz

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