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Join the conversation! There are now 31 comments on this chapter's page 59. Documents vs. Testimony. What are your thoughts?
  1. Andrew M. Farrell says

    Why would Gagster choose to incorporate in Fremont rather than Delaware?

    • Aha! Another myth to bust!

      Actually, the benefits of incorporating in Delaware are minimal for most corporations. Usually, you want to incorporate in the state where your business is actually located and does most of its transactions. If you incorporate somewhere else, you’re still going to have to register in your home state, this time as a “foreign” corporation.” (If you don’t, you expose your personal assets, the very thing you’re incorporating to avoid.) So you’ve just doubled your filing fees. And instead of dealing with legal matters simply and locally, you’ve compounded everything by bringing Delaware law into it. And you still have to pay taxes in your own state. (Yes. You do.) And the administrative hassle is a hassle. And eventually you’ll get sick of the hassle, and spend more dough to dissolve the Delaware corporation and re-incorporate in your actual state.

      Unless yours is a huge corporation with offices and businesses all over the country, incorporating outside your home state is usually a silly thing to do. (Talk to a knowledgeable lawyer first, regardless.)

        • My personal hypothesis, based on observations Delaware and other ‘havens’, is that the myth is fueled by one part marketing with two parts imitation.

          This is how I’ve seen the pattern play out:

          1) A few large corporations with special circumstances move in to benefit from the rules.

          2) Other smaller corporations and start-ups notice this. Believing that the corporations are successful in part BECAUSE of the environment of the haven (Delaware in the example), they follow suit.

          3) They fail to take full account of the costs and issues, as Nathan pointed out.

          4) While most will back out by this point after recognizing their mistake, a sizable minority will not. These people have convinced themselves that they are getting the best deal much to the chagrin of their accountants.

          5) The state profits off those caught in step 3 and 4. If it proves profitable enough to offer more cuts, The state restarts the process at step 1 through either new laws or marketing.

  2. alex n says

    Will there be another witness who will unfortunately try to invoke 5th amendment protection too late? I don’t understand how courts determine if a witness has waived this right.

  3. Where does this stand in relation to the Supreme court’s recent (sic) ruling re: corporate personhood? Or was that case only in relation to campaign contributions?

    • If you’re talking about the Citizens United case — that wasn’t a ruling about corporate personhood. Neither did it give corporations the right to make campaign contributions (they still aren’t allowed to). It just said corporations can’t be limited in how they spend their own money on their own political speech.

      If you’re talking about the McCutcheon case — that wasn’t about corporate personhood, either. It didn’t really have anything to do with corporations. It just said a person can’t be limited in the number of campaigns he contributes to. The base limit of how much he can contribute to any one candidate wasn’t erased, just the limit on all of his aggregate contributions.

      If you’re talking about the Hobby Lobby case — well, for one thing it hasn’t been decided yet. And it wasn’t about campaign contributions. It also strikes me as being more about the rights of the corporation’s owners rather than the rights of the corporation itself.

      The corporation’s owners have strong religious beliefs, and the government wants to compel them to provide insurance that violates those beliefs. The owners say the corporation should be allowed to decline such insurance on First Amendment freedom-of-religion grounds.

      It is clear that an association can have religious freedoms — a church, for example. But does that apply to a corporation, which is an association, but does not exist for any religious purpose but merely to do business? The circuits appear to be split on this.

      I personally would be very wary of arguing that a corporation I own is imbued with my own personal religious beliefs. Because the risk is that it no longer would be seen as a separate corporate entity, but rather my alter-ego. By insisting that the corporation has the right to act on my (the owner’s) personal religious beliefs, I risk losing all the protections that having a corporation gave me in the first place. It now becomes just something that I’m doing myself (or in partnership with my co-owners) rather than a separate entity doing things on its own, and now I’m personally liable for what it does, because it’s just me doing it.

      I’m curious to see how the Supremes come down on this. It really shouldn’t turn on corporate personhood, but rather the extent to which the religious beliefs are intrinsic to the corporation itself, as opposed to merely being those of its owners.

      • In a similar vein as this, If a corporate person has fewer rights than a person, in contradistinction, would a singular person, or sole proprietor, be not subject to the same business rules and regulations as a corporation? And what would that mean exactly? Could they ignore the health care law as it regards to employees, or be partial in their hiring policies? (partial as understood to be what would otherwise be considered “discriminatory” albeit not in fact)

        • My guess: They could, and they could be fired for failing to comply with the law. A corporation could choose not to discipline those who broke the law and cost them money in fines, but that might be a failure of their fiduciary duty to their shareholders.

        • I’ve known a few small business owners and asked about this. The below is my accumulated understanding:

          If you own the business I understand you can work as many hours as you want, and as many days back to back. Basically any restrictions that would involve a labor board go away. But that is only for the owner himself. Other than that nothing changes, because regulations usually apply to industries or to the entire employee/employer relationship, not specific types of businesses.

          • I’m curious where the state gained the power to regulate the private contracts between private parties. And when the people granted that power to it.

            A Corporation is incorporated for a public benefit so I can understand it being regulated, but a sole proprietor is merely a man acting in the capacity of a man and his personhood. Save Criminal contracts, and actions, and the torts proceeding therefrom, how does the state reach into the private life of a man to tell him what he may or may not do?

            • That’s not really what contracts law does. A contract is more than just an agreement — it is an agreement that the state can enforce. That’s not something the state imposed, but rather something people demanded of the state. The ability to rely on the state to enforce contracts is one of the core elements of the Rule of Law and economic freedom.

              If your question is more about regulating the employer-employee relationship, there’s a long history of labor relations behind that, which is far from the topic and hand and far too convoluted and complex to get into here. There are valuable debates to be had on that topic, but not here — save it for a more relevant forum.

            • the state gained that power because we the People gave it to ourselves in our role as the Government (‘by, of, anf for the P’). We did so because of the frequent harms and unfair and unethical labor practices oof companies, specifically in the guilded age and later.

              Read up on labor history, particularly the Gilded Age.

              Capitalism in an unfettered states tends to start behaving very badly to its workers. Things like the Triangle Waist Coat Fire, mandatory 80 hour work weeks (12hr a day 6 days a week, + 8 on sunday), extreme low/poverty level wages…..this starting to sound familiar kinda like present day?

              So long story short….thats where it comes from and why. also where the term “wage slave” comes from.

        • Honestly not sure how relevant it is, but remember a “corporation” isn’t necessarily a bunch of people. You can incorporate and be the only person involved in your business. You just need to keep your personal assets and business assets separate.

  4. Gregory Bogosian says

    This question is slightly off-topic. However, we know from the previous page that corporations have Fourth Amendment rights. So does the act of subpenaing a corporation, or an individual, for specific documents count as a seizure of those documents for Fourth Amendment purposes? If so, what determines whether that seizure is reasonable for Fourth Amendment purposes or not? If not, then why is it not a seizure?

    • It’s definitely a seizure for Fourth Amendment purposes, but you have to ask first whether the subpoenaed entity has a privacy right with respect to the demanded documents. Corporations don’t have the same privacy rights as a human being.

      Next you have to do a “reasonableness” analysis. And a subpoena is almost always going to be considered “reasonable” for Fourth Amendment purposes so long as it’s relevant to the government’s purpose, its demands are limited to that purpose, and it’s specific enough to comply with. Grand Jury subpoenas are presumed to be reasonable, but even administrative subpoenas are in practice treated as reasonable unless proven otherwise.

      The remedy, upon receiving a subpoena one believes to be unreasonable, is to move to “quash” it. Which is a much more delightful way to say “render null and void.” You’d have to make a showing that it’s overbroad, irrelevant, or not specific enough to comply with.

  5. Bill says

    So reasoning like this is how someone can be forced to divulge a computer password or safe combination? In that case, “tell me” does equal “give me” in a sense, especially if the person is a smarta$$ by choosing a password like “I_did_it”.

    • Indeed, due to cryptography (whose accessibility and widespread usage are fairly recent), “tell me the password” and “give me the document” may mean exactly the same thing. Does compelling a suspect to give up their passphrase infringe upon their privilege against self-incrimination?

      US case law on key disclosure is, so far, odd and inconsistent. I’m sure Nathan will add some more on this.

      As for the rest of the world, read and weep. If you live in the UK, weep like you’ve never wept before.

    • Actually, the courts in the US have so far ruled you can’t be forced to give a password, but you can be forced to give an unencrypted, human-readable copy of the data in question. See In re Boucher.

      • I’m not sure how accurate the advice is, but as a public servant, we have been informed that if we remotely access our school email (e.g., via home computer, iPhone, etc.), then those devices become subject to subpohena. It is a scarry time we line in…

        • A device is not a document. Based on the conversation above, I would guess that a subpoena which requested that a device be presented would fall into the “overbroad” or “not specific enough” category, since the device holds much more information that what is relevant to the question at hand.

  6. Barry says

    The Gagster boss seems to have found a razor since the last question…

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