Corporate Disobedience

Abstract

Corporate law has long taken a dim view of corporate lawbreaking. Corporations can be chartered only for lawful activity. Contemporary case law characterizes intentional violations of law as a breach of the fiduciary duties of good faith and loyalty. While recognizing that rule breaking raises significant social and moral concerns, this Article suggests that corporate law and academic debate have overlooked important aspects of corporate disobedience.

This Article provides an overview of corporate disobedience and illuminates the role that it has played in entrepreneurship and legal change. Corporations violate laws for a variety of reasons, including as part of efforts at innovation, in battles of federalism, in taking stances against moralistic laws, in asserting claims for rights, and as part of general business lobbying to shape the law. To the extent that innovation or legal change can benefit society, some of this activity has the potential to provide social value.

This central insight and argument leads to additional contributions to corporate law and legal theory. First, examining the full spectrum of corporate disobedience reveals that corporate law’s requirement of lawful conduct embeds particular social values into the corporate code. It conveys the principle that corporations should pursue legal change through established and lawful democratic processes. Second, this examination shows that fiduciary duty law is ultimately not an effective or fine-tuned mechanism for policing corporate disobedience. Third, the Article provides a conceptual framework highlighting several features of corporate disobedience that might bear on its normative assessment.

Keywords: Corporations, corporate law, corporate disobedience, fiduciary duties, good faith, loyalty, entrepreneurship, innovation, federalism, corporate lobbying, corporate rights, corporate personhood, civil disobedience, legal theory

JEL Classification: K20, K22, O30, O35, O38