Shareholder Activism by Public Pension Funds and the Rights of Dissenting Employees Under the First Amendment

78 Pages Posted: 31 Jan 2015

See all articles by Eric Alden

Eric Alden

Northern Kentucky University, Chase College of Law

Date Written: 2010


Public pension funds enjoy significant voting power in the U.S. publicly traded corporations by virtue of the aggregated retirement assets at their disposal. Many funds are engaged in a concerted drive to assert shareholder control rights with respect to such corporations and to effect a host of environmental, social, and governance reforms in American business. Although many public-sector employees may applaud the goals and objectives of these public pension funds, not all will. This Article argues that dissenting employees whom the law compels to contribute to such funds have a First Amendment right to object to having their pro rata portion of publicly traded shares held by such funds voted by fund administrators for the purpose of advancing goals of a political or ideological nature not germane to the fund’s core mission of providing retirement benefits to participants. This argument, which has not been addressed by courts or the academic literature, would extend firmly established First Amendment caselaw to a novel area of application.

In making this argument, this Article addresses the Supreme Court’s developing government speech doctrine, under which citizens may challenge compelled support of private speech but have no First Amendment right not to fund government speech. The Article argues that the political and ideological activities of a public pension fund, at least in the case of the leading public pension fund, CalPERS, should be treated as those of the public pension fund itself, and not ascribed to the state, for purposes of the First Amendment. The Article suggests using an “independent instrumentality” test to ascertain whether the relevant legislature has by statute created a body not subject to effective control by the executive branch of government, such that courts should not attribute the instrumentality’s political and ideological activities to the government for the purposes of the government speech doctrine.

Note: (The Article was published under the name Eric John Finseth. In connection with his relocation to the northern Kentucky/Cincinnati area, the Author anticipates adding the name of his close relatives in that region, which is Alden, to the end of the family name, hence Eric John Finseth Alden, or Eric Alden day-to-day. The change has already been effectuated for professional purposes.)

Keywords: shareholder activism, public pension funds, CalPERS, First Amendment, government speech doctrine, opt-out rights, Keller, Abood, Lehnert

Suggested Citation

Alden, Eric, Shareholder Activism by Public Pension Funds and the Rights of Dissenting Employees Under the First Amendment (2010). Harvard Journal of Law and Public Policy, Vol. 34, No. 1, 2010, Available at SSRN:

Eric Alden (Contact Author)

Northern Kentucky University, Chase College of Law ( email )

Nunn Hall
Highland Heights, KY 41099
United States
859-572-5520 (Phone)

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