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Supreme Court limits First Amendment rights of US companies’ foreign affiliates
MarkThomas / Pixabay
Supreme Court limits First Amendment rights of US companies’ foreign affiliates

The US Supreme Court ruled 5-3 Monday that requiring foreign groups to have explicit policies opposing prostitution and sex trafficking in order to receive federal funds applies to US companies’ foreign affiliates because they do not possess First Amendment rights.

The court stated that there are two fundamental principles that lead to this decision. First, foreign citizens outside of the US and its territories do not have rights under the US Constitution. Second, separately incorporated organizations are separate entities with “distinct legal rights and obligations.”

The case, Agency for International Development v. Alliance for Open Society International, Inc., raised the question of whether the federal government violated the First Amendment by prohibiting a US company’s foreign affiliate from receiving federal funding because it had not made an explicit policy statement. The specific law at issue was the US Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003, which required that American and foreign organizations have an explicit policy opposing prostitution and sex trafficking in order to receive federal funds. In 2013, this stipulation, known as the Policy Requirement, was deemed an unconstitutional restraint on free speech when applied to American organizations. But whether it applied to a domestic company’s foreign affiliate was an open question until Monday.

In the opinion of the court, Justice Brett Kavanaugh wrote, “it is long settled as a matter of American constitutional law that foreign citizens outside U.S. territory do not possess rights under the U.S. Constitution,” and “it is long settled as a matter of American corporate law that separately incorporated organizations are separate legal units with distinct legal rights and obligations.” Together, these “two bedrock principles of American constitutional law and American corporate law … lead to a simple conclusion: As foreign organizations operating abroad, plaintiffs’ foreign affiliates possess no rights under the First Amendment.”

Additionally, Kavanaugh rejected the plaintiff’s claims that an affiliate’s claims might be wrongly attributed to the parent organization, a US company, and that the court’s 2013 decision included both American organizations and their affiliates. To dismiss the first claim, Kavanaugh stated:

the United States is not forcing plaintiffs to affiliate with foreign organizations. Plaintiffs are free to choose whether to affiliate with foreign organizations and are free to disclaim agreement with the foreign affiliate’s required state of policy. Any alleged misattribution in this case and any effect on the American organization’s message of neutrality toward prostitution stems from their choice to affiliate with foreign organizations, not from U.S. Government Compulsion.

In rejecting the second claim, the court stated that this view is incorrect and that the 2013 decision was limited to American organizations.

Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito and Neil Gorsuch joined Kavanaugh’s opinion.

Thomas filed a concurring opinion to state that he disagrees with the 2013 decision. In his concurrence, he wrote “[t]he First Amendment does not mandate a viewpoint-neutral government,” so the government may condition funds on an affirmation that each organization can accept or reject.

Justice Stephen Breyer wrote the dissent, which Justices Ruth Bader Ginsberg and Sonia Sotomayor joined. In his dissent, Breyer said that the question at hand is not about foreign entities, but rather US-based entities and their protection under the First Amendment. Breyer’s dissent states that the corporate structure plays little role in an American company’s First Amendment protection. “[O]ur First Amendment precedents leave no doubt that corporate formalities have little to say about the issue now before us. We have made clear again and again (and again) that speech may be attributed across the corporate lines in the First Amendment context⁠—including in our previous opinion in this very case.” In concluding, Breyer wrote,

I fear the Court’s decision will seriously impede the countless American speakers who communicate overseas in a similar way. That weakens the marketplace of ideas at a time when the value of that marketplace for Americans, and for others, reaches well beyond our shores.

Justice Elena Kagan did not take part in the consideration or decision of the case.