FEC v. AFSCME-PQ

On July 10, 1990, the U.S. District Court for the District of Columbia granted the FEC's motion for summary judgment, ruling that the American Federation of State, County and Municipal Employees-P.E.O.P.L.E., Qualified (AFSCME-PQ), the separate segregated fund of AFSCME, and its treasurer, William Lucy, violated the law when they delayed the disclosure of in-kind contributions to the 1982 and 1984 Indiana House campaigns of Representative Frank McCloskey. (Civil Action No. 88-3208.) On October 31, 1991, the court assessed a civil penalty of $2,000 against the defendants.

During September of 1982 and 1984, AFSCME-PQ established telephone banks that were used in part to advocate the election of Representative McCloskey. Instead of reporting these in-kind contributions at the time they were made (i.e., when the services were provided on behalf of the candidate), AFSCME-PQ reported them after it paid the bills for the services, some months after the services were provided.

Although AFSCME-PQ claimed that the in-kind contributions were reported on time (i.e., when the funds were disbursed), the court disagreed, citing the statutory requirement that a committee must disclose the name and address of "each political committee which has received a contribution from the reporting committee during the reporting period, together with the date and amount of any such contribution." 2 U.S.C. §434(b)(6)(B)(i). Because AFSCME-PQ reported on a monthly basis, the contributions should have been disclosed in the months immediately following the making of the contributions, i.e., the operation of the phone banks.

Penalty

In its October 1991 ruling on the penalty, the court observed that, although there was no bad faith by the defendants, "there is always harm to the public when the FECA is violated." Considering the maximum penalty of $10,000 inappropriate here, the court said a $2,000 penalty would serve the public's interest "by punishing a violation of the plain language of the statute." The court declined, however, to permanently enjoin defendants from future violations of 2 U.S.C. §434(b). The court pointed out that defendants cured the violation and have since complied with the reporting provision. Because "there has been no showing of a reasonable likelihood that the defendants will commit future violations," the court decided the public interest would not be substantially advanced by an injunction.

Source: FEC Record, October 1990, p. 7; and January 1992, p. 7.

FEC v. AMERICAN INTERNATIONAL DEMOGRAPHIC SERVICES

On February 10, 1986, the U.S. District Court for the Eastern District of Virginia issued an order permanently enjoining American International Demographic Services, Inc. (A.I.D.S.) and its Vice President, Ernest Halter, from using FEC campaign finance information for commercial purposes. The court imposed a $3,500 civil penalty on the defendants for illegal use of the information. (Civil Action No. 85-0437-A.)

Background

The Federal Election Campaign Act states that "...any information copied from reports or statements may not be sold or used by any person for the purpose of soliciting contributions or for commercial purposes, other than using the name and address of any political committee to solicit contributions from such committee." 2 U.S.C. §438(a)(4). While the Commission has allowed FEC information on political committees to be used for contribution solicitations, the agency has forbidden the use of individual contributor information for commercial purposes (e.g., product advertisements) or for solicitations.

The defendants' violation of this provision involved their illegal use of two FEC computer tapes containing individual contributor information that had been disclosed on FEC reports filed by political committees. The tapes had been purchased by Mr. Halter's wife on behalf on the Voter Information Council PAC (VICPAC), a nonconnected political committee she had established in April 1982. (Mrs. Halter claimed she had purchased the tapes to purge outdated information on lists owned by VICPAC and by her.) As part of an agreement A.I.D.S. had entered into with Working Names, Inc., a list management company, Mr. Halter subsequently transferred the two FEC tapes to the company. Working Names used the tapes, along with two other FEC tapes, to create four mailing lists which the company marketed to list brokers and mailers.

The defendants' illegal use of FEC contributor information was discovered by the National Republican Congressional Committee (NRCC) when a direct mail piece was addressed to "Kane Orsell," a fictitious contributor NRCC had listed on a report filed with the FEC. (FEC regulations allow a political committee to "salt" its FEC report with up to ten fictitious names and addresses for purposes of detecting such illegal use of its contributor names. 11 CFR 104.3(e).) The mailing was sent by the American Legislative Exchange Council, which had rented its list of addresses from a broker that Working Names had supplied with lists. (The Council had purchased the list for a one-time use.)

After tracing original ownership of the mailing list back to A.I.D.S., NRCC held a meeting with Mr. Halter in which he agreed, among other things, to take the names of NRCC contributors off the list broker market and to provide NRCC with a list of the direct mail companies that had rented the names. Mr. Halter failed to do any of these things. Consequently, on September 28, 1982, the NRCC filed a complaint against both Mr. Halter and A.I.D.S. with the FEC. After investigating the matter, the FEC found probable cause to believe that the defendants had violated the election law. Subsequently, when defendants failed to enter into a conciliation agreement with the agency, the FEC brought suit against them in the district court.

FEC's Suit

In its suit, the FEC asked the court to declare that Mr. Halter and A.I.D.S. had violated Section 438(a)(4) by using reports filed with the FEC for commercial purposes. Specifically, the FEC asked the court to find that defendants used FEC information to: a) prepare contributor listings they rented to various organizations through a broker and b) increase the commercial value of contributor listings they already had.

Court's Ruling

After examining the evidence presented for its consideration at trial, the court found that "the defendants willfully violated the Act by having Working Names manage the [two FEC computer] tapes for the purpose of renting them out to brokers and mailers." Mr. Halter filed an appeal with the U.S. Court of Appeals, 4th Circuit on March 31, 1986.

Appeals Court Ruling

On February 2, 1987, the U.S. Court of Appeals for the Fourth Circuit dismissed FEC v. Ernest Halter (Appeal No. 86-1560). The court's action responded to Mr. Halter's request for a dismissal of his appeal.

Source: FEC Record, April 1986, p. 8; and April 1987, p. 7.

American International Demographic Services, Inc.: FEC v., 629 F. Supp. 317 (E.D. Va. 1986).

FEC v. AMERICANS FOR JESSE JACKSON

On May 19, 1987, the United States District Court for the District of Maryland issued a consent order in FEC v. Americans for Jesse Jackson (Civil Action No. Y-86-3766). Americans for Jesse Jackson was a 1984 political committee that was not authorized by Presidential primary candidate Jesse Jackson. In the consent order, the parties agreed that Americans for Jesse Jackson violated the Act in several ways:

The defendant agreed to pay a civil penalty of $500 and to file all outstanding reports with the Committee within 30 days.

Source: FEC Record, August 1987, p. 9.

FEC v. AMERICA'S PAC

In a default judgment entered on January 14, 1993, the U.S. District Court of the Central District of California ordered America's PAC (a state committee) and Neil Barry Rincover, as executive director and acting treasurer, to pay a $25,000 civil penalty for violating the Federal Election Campaign Act. (Civil Action No. CV-92-2747-LGB.)

The court found that defendants failed to forward a $2,000 earmarked contribution from the Physicians Interindemnity/PAC to Bill Press, a U.S. Senate candidate. The acceptance of the earmarked contribution caused America's PAC to become a federal political committee with registration and reporting obligations. The court ruled that the defendants, by failing to fulfill those obligations, violated 2 U.S.C. §§433(a) and 434(a)(1). The court also found that they violated §432(b)(1) by failing to forward the earmarked contribution and the required information to the candidate. Finally, because the check contained corporate funds, the court found that defendants knowingly accepted a prohibited contribution, in violation of §441b(a). They were ordered to pay a $25,000 penalty, refund the $2,000 contribution to the PAC and file a Statement of Organization and required reports, all within 15 days.

Furthermore, given defendants' default in the litigation, the court found there was a likelihood that defendants would repeat the violations and therefore enjoined them from further violations of the provisions cited above.

Contempt Ruling

On May 23, 1994, America's PAC and Mr. Rincover, were held in civil contempt by the district court for failing to comply with the January 1993 default judgment.

Earlier, on April 18, 1994, responding to an FEC petition, the court had ordered the defendants to show cause why they should not be held in contempt. That same day, Mr. Rincover filed a motion to set aside the January 1993 default judgment. (America's PAC never responded to the order to show cause.)

The court, however, rejected Mr. Rincover's motion, finding that his claims did not indicate the "extraordinary circumstances" necessary for the court to set aside a judgment. The court therefore ordered Mr. Rincover and America's PAC to comply with the January 1993 order within 30 days or pay $50 for each day of delay. Exercising its discretion, the court reduced the penalty to $5,000 because all the violations stemmed from a single incident.

Source: FEC Record, April 1993, p. 10; and August 1994, p. 8.

America's PAC: FEC v., No. 92-2747 LGB (Tx) (C.D. Cal. May 23, 1994).

FEC v. ANDERSON FOR SENATOR

Background

On May 7, 1984, the FEC filed suit in the U.S. District Court for the Eastern District of Pennsylvania, seeking action against three defendants: the Tom Anderson for Senator Committee, the principal campaign committee of Mr. Anderson's 1980 Senate campaign; the Pennsylvania Service Station Dealers Association (the Association), an incorporated trade association; and Mary Anderson, the candidate's wife (Civil Action No. 84-2180).

Specifically, the FEC asked the court to declare that:

Consent Order: Mrs. Anderson

On December 11, 1984, the U.S. District Court for the Eastern District of Pennsylvania issued a consent order resolving claims the Commission had brought against Mary Anderson.

Within 30 days of signing the consent order, Mrs. Anderson agreed to pay a $350 civil penalty to the U.S. Treasury for having exceeded the election law's contributions limits. 2 U.S.C. §441a(a)(1)(A). By cosigning a $50,000 campaign loan with her husband, the candidate, Mrs. Anderson had made a $25,000 contributions to his Senate campaign. The law limits contributions from all individuals, including spouses, to $1,000 per candidate, per election.

Consent Orders: Association and Campaign

During February 1985, the U.S. District Court for the Eastern District of Pennsylvania issued separate consent orders resolving claims the Commission had brought against the Association and the Anderson campaign. Within 30 days of signing their respective consent orders, defendants agreed to comply with the following terms:

Source: FEC Record, July 1984, p. 8; February 1985, p. 6; and August 1985, p. 8.

FEC v. BANK ONE

On May 20, 1987, the United States District Court, Southern District of Ohio, Eastern Division, approved a consent order between the Commission and the defendants in FEC v. Bank One, Columbus, N.A. (Civil Action No. C2-86-1082.) Defendants were: the John Glenn Presidential Committee, Inc., William R. White, treasurer, and Senator John Glenn (Glenn Committee); and Bank One, Columbus, N.A., Ameritrust Company National Association, BancOhio National Bank and the Huntington National Bank (the Banks).

Background

The FEC alleged that $2 million in loans made by the Banks to the Glenn Committee in 1984 were not made on a basis that assured repayment and, therefore, were in violation of 2 U.S.C. §441b(a). After failing to resolve the matter through the conciliation process, the FEC filed suit in federal court on September 9, 1986, and asked the court to find that:

The FEC also asked the court to assess a civil penalty against each defendant amounting to the greater of $5,000 or 100 percent of the amount involved in each defendant's violation.

Consent Order

The consent order contained the following:

Source: FEC Record, November 1986, p. 6; and July 1987, p. 5.

Bank One, Columbus, N.A.: FEC v., No. C-2-86-1082 (S.D. Ohio 1987).

FEC v. BEATTY FOR CONGRESS

On January 15, 1987, the U.S. District Court for the Southern District of New York granted the FEC's application for a default judgment in FEC v. Beatty for Congress Committee (Civil Action No. 86-Civ-3894- [RLC]). The court's default judgment decreed that the Beatty for Congress Committee, the principal campaign committee for Vander L. Beatty's 1982 House campaign, and the committee's treasurer, Edward Myers, Jr., violated the election law on several counts.

The court imposed a $5,000 civil penalty on the defendants for each violation and required the defendants to pay the FEC's court costs and attorney's fees. On March 31, 1987, the defendant entered a motion to vacate the default judgment.

On March 21, 1988, the U.S. Court of Appeals for the Second Circuit dismissed the appeal of Mr. Myers in FEC v. Beatty for Congress Committee and Edward Myers (Civil Action No. 88-6011). The FEC and Mr. Myers had filed a Stipulated Dismissal and Settlement Agreement with the court.

Background

On May 16, 1986, the FEC filed suit with the U.S. District Court for the Southern District of New York against the Beatty for Congress Committee and against the committee's treasurer, Mr. Myers. The FEC asked the court to find the defendants in violation of federal campaign finance laws on the following counts:

The Commission also asked the court to find the defendants in violation of the FECA's recordkeeping and reporting laws on the following counts:

District Court Ruling

In granting the default judgment against Mr. Myers and the Beatty Committee in January 1987, the court imposed a $5,000 civil penalty for each of the violations. The court denied a motion by Mr. Myers to vacate the default judgment against him in October 1987. Mr. Myers appealed the default judgment to the U.S. Court of Appeals for the Second Circuit.

Court of Appeals

In March 1988, the appeals court dismissed the case after a stipulated agreement was reached between the FEC and Mr. Myers.

By the terms of the agreement, Mr. Myers would withdraw his appeal of the district court's October 1987 decision in the case. The court's decision denied Mr. Myers' motion to set aside the default judgment the court had entered against him in January 1987. That decision had imposed a $5,000 civil penalty on the defendants for each of 17 independent violations of the election law. In addition, the parties agreed that:

Source: FEC Record, June 1986, p. 9; March 1987, p. 6; and June 1988, p. 9.

Beatty for Congress: FEC v., No. 86 Civ. 3894, (S.D.N.Y. Oct 23, 1987) (unpublished opinion).

FEC v. JEFFREY BELL

On April 14, 1980, the U.S. District Court for the District of New Jersey issued a consent judgment agreed to by the Commission and defendant Jeffrey Bell. The Commission had filed suit on January 21, 1980, alleging that the defendant had violated 2 U.S.C. §441a(f) by accepting excessive contributions from his mother, Marjorie Bell, during his 1978 Senatorial campaign in New Jersey. Mr. Bell agreed to pay a civil penalty of $1,500 levied by the court.

Source: FEC Record, June 1980, p. 8.

FEC v. MARJORIE BELL

On April 10, 1980, the U.S. District Court for the District of Columbia issued a consent judgment agreed to by the Commission and defendants Marjorie Bell, the Bell for Senate Committee and its two treasurers, Andrew P. Napolitano and James S. Wagner. The Commission had filed suit on July 20, 1979, claiming that Marjorie Bell had violated the contribution limits of 2 U.S.C. §441a(a)(1)(A) and 441a(a)(3); and that the Bell Committee and its two treasurers had violated 2 U.S.C. §441a(a)(1)(A) and 441a(a)(3); and that the Bell Committee and its two treasurers had violated 2 U.S.C. §441a(f) by knowingly accepting excessive contributions, and 2 U.S.C. §434(b) by failing to report the actual source of the contributions. Marjorie Bell agreed to pay a civil penalty of $500 levied by the court. The Bell for Senate Committee agreed to pay a civil penalty of $4,500 levied against both the Committee and its officers. The Committee also agreed to amend reports filed with the Commission to indicate that Marjorie Bell was the actual source of $52,400 reported as loans from Jeffrey Bell to the Committee.

Source: FEC Record, June 1980, p. 8.

FEC v. BOOKMAN & ASSOCIATES

On May 2, 1989, the U.S. District Court for the Northern District of Georgia, Atlanta Division, issued a final consent order and judgment in FEC v. Ron Bookman & Associates (Civil Action No. 1:88-CV-1807-JTC). The consent order declared that Bookman & Associates, a Georgia corporation, made a $150 contribution to a federal candidate. The Act prohibits corporations from making contributions or expenditures in connection with federal elections. 2 U.S.C. §441b.

The order also declared that Ron Bookman, as president of the company, had violated the law by consenting to the making of the contribution. Section 441b also prohibits corporate officers and executives from consenting to the making of contributions and expenditures.

The consent order included a $500 civil penalty and permanently enjoined the defendants from similar future violations of the Act.

Source: FEC Record, June 1989, p. 8.

FEC v. BRYANT CAMPAIGN COMMITTEE

On September 1, 1989, the U.S. District Court for the Northern District of Texas issued a final consent order and judgment in FEC v. John Bryant Campaign Committee (Civil Action No. CA3-89-1694). The consent order decreed that the committee and its treasurer, Ken Molberg, had violated the election law by accepting a $2,000 excessive contribution from an individual. 2 U.S.C. §441a(f). The order also decreed that the defendants had unlawfully used information contained in another committee's reports for soliciting individuals. 2 U.S.C. §438(a)(4). The consent order included a $500 penalty and a permanent injunction against future similar violations of the law.

Source: FEC Record, November 1989, p. 4.

FEC v. BULL FOR CONGRESS

On June 8, 1990, the U.S. District Court for the District of Maine imposed civil penalties on defendants Chipman C. Bull for Congress, the principal campaign committee for Mr. Bull's 1984 House campaign, and Denise M. Deshane, the committee treasurer, for violating several provisions of the Federal Election Campaign Act. (Civil Action No. 88-0037-B.) In earlier rulings of September 13, 1989, and January 9, 1990, the court found that defendants had violated the law by:

In its June 8 order, the court adopted the civil penalties recommended by a United States Magistrate and assessed a penalty of $18,437.50 against the committee and a $500 penalty against the treasurer.

Source: FEC Record, August 1990, p. 11.

FEC v. CALIFORNIA DEMOCRATIC PARTY

On June 11, 1998, the U.S. District Court for the Eastern District of California denied the California Democratic Party's (CDP's) motion to dismiss a complaint filed against it by the FEC. The FEC alleged that the CDP violated the Federal Election Campaign Act (the Act) when it used only nonfederal funds to pay for a voter registration drive conducted by a ballot measure committee instead of allocating the costs between its federal and nonfederal accounts.

Background

Taxpayers Against Deception-No on 165 (No on 165) was a state political committee organized to defeat a California ballot initiative of the same name. Proposition 165 was designed to reduce state spending on welfare and other social programs and was supported by the state's Republican governor, Pete Wilson. No on 165's strategy was to register prospective voters who supported its efforts to defeat the initiative, and who would likely support Democratic candidates who also were on the ballot during the same electionincluding federal candidates. The CDP ultimately spent $719,000 from its nonfederal account to aid No on 165 in its registration effort, with most of that money being used to register Democratic voters. The CDP did not report the disbursement to the FEC.

The FEC alleged that the CDP used prohibited funds in connection with a federal election, failed to allocate voter registration payments between its federal and nonfederal accounts and failed to report the amounts that should have been allocated. 11 CFR 102.5(a)(1)(i), 104.10(b)(4) and 106.5(d) and 2 U.S.C. §441b(a).

District Court Decision

The court rejected the CDP's arguments for dismissing the case.

The CDP first argued that, since it did not conduct the voter drive, the money it gave to No on 165 was not subject to the allocation regulations. The Commission argued that the CDP's contributions were subject to the regulation because the situation as presented was no different than if the CDP had conducted the voter registration drive itself or hired someone to do so. The court pointed out that the FEC had claimed that the CDP knew that No on 165 would use the money to register Democrats who ostensibly would vote in the general election for both state and federal candidates. Further, the FEC had alleged that No on 165 provided the CDP with weekly updates on the success of the voter drive, with success being measured by the number of Democrats registered. The court said, "it is conceivable that these facts, if proven, could show that the voter registration drive was conducted on behalf of the CDP."

The CDP also argued that it was not subject to the FEC's allocation rules because the voter drive did not urge the support of or opposition to federal candidates. The court rejected this argument because the FEC's regulation at 11 CFR 106.5(a)(2)(iv) explicitly states the opposite, namely that party committees must allocate generic voter drive costs "that urge the general public to register [to vote] without mentioning a specific candidate." The court pointed out that the allocation rules expressly state that no candidate need be mentioned, and that the FEC's interpretation of this rule is entitled to deference.

The CDP also maintained that the FEC did not have the authority to promulgate allocation rules. The court pointed out, however, that the Act's legislative history demonstrates that Congress anticipated the allocation of federal and nonfederal funds when it enacted the 1979 statutory provisions on voter registration activities.

The CDP argued that the allocation regulations as applied are unconstitutional because they restrict the CDP's ability to engage in issue advocacy and curtail its freedom to associate with people with whom it shares the same political leanings. The court stated that the CDP had engaged in activity that went beyond issue advocacy when it contributed money to register Democrats to vote in a federal election. Consequently, the court concluded, the CDP had not shown that the allegations limit its right to engage in issue advocacy.

The court also rejected the CDP's assertion that the regulation impermissibly infringes its freedom of association rights. It stated: "The Supreme Court has made clear that associational rights may beoverborne by the interests Congress has sought to protect in enacting 441b," the provision prohibiting corporate/labor activity. The court added that the regulation is tailored to restrict only funds that would be illegal under 2 U.S.C. §441b.

The court also dismissed former CDP treasurer Gary Paul as a defendant in this case. Mr. Paul was not the committee's treasurer at the time of the alleged violations, and is not currently the treasurer of the CDP.

Source: FEC Record, August 1998, p. 5.

FEC v. CALIFORNIANS FOR A STRONG AMERICA (88-1554)

On November 14, 1988, the U.S. District Court for the Central District of California granted the FEC's motion for a default judgment against the Californians for a Strong America (CSA), a nonconnected political committee, and CSA's treasurer Albert J. Cook. (Civil Action No. 88-1554-AWT.)

In the judgment, the court declared that the defendants had violated 2 U.S.C. §434 (a)(4)(A)(i) and (iv) by failing to file reports covering 1986 activity, that is, two quarterly reports and a year-end report. Accordingly, the court:

Source: FEC Record, January 1989, p. 9.

1 See "Contempt Ruling," next column.

FEC v. CALIFORNIANS FOR A STRONG AMERICA (88-6449)

On June 22, 1989, the U.S. District Court for the Central District of California issued a final order and default judgment in FEC v. Californians for a Strong America. (Civil Action No. CV-88-6449-AWT(Ex).) The court decreed that the committee and its treasurer, Albert J. Cook, had violated the election law by:

The court ordered the defendants to comply with the law's reporting requirements within 15 days of the judgment and to pay a civil penalty of $15,000 ($5,000 for each violation). The court also ordered the defendants to pay the FEC's court costs and to refrain from future similar violations of the election law.

Contempt Ruling

On August 13, 1993, the district court held defendants in contempt of court for failing to pay the two $15,000 civil penalties stemming from this and a previous case (No. 88-1554, summarized in the preceding column). By then, the penalties had been outstanding for over three years. In both cases, defendants never responded to the FEC's suits, and the judgments were by default. Defendants also failed to file responses or appear before the court in the contempt proceedings.

The court ordered defendants to pay the penalties, plus accrued back interest, by August 31, 1993. Thereafter, they were to pay an additional $100 per day until they completed payment. Furthermore, if they failed to make full payment by September 30, the court said it would issue a warrant for the arrest of Mr. Cook.

Source: FEC Record, September 1989, p. 8; and October 1993, p. 1.

FEC v. CALIFORNIANS FOR DEMOCRATIC REPRESENTATION

On January 9, 1986, the U.S. District Court for the Central District of California ruled that Californians for Democratic Representation (CDR), a nonprofit organization registered with the California Fair Political Practices Commission, had violated various provisions of the Federal Election Campaign Act in the course of conducting a slate mail program during 1982. (Civil Action No. 85-2086.)

Background

CDR's slate mail program consisted of political ads distributed through direct mail to the general public. In addition to endorsing ballot issues and state and local candidates, CDR's slate mail program endorsed federal candidates active in California's 1982 primary and general elections. Candidates could purchase advertising space from CDR at fair market value. (A candidate's ad might include, for example, his/her photograph and a write-up.) CDR also listed candidates who did not purchase advertising space, at no charge to them.

Court's Ruling

The court ruled that those federal candidates who had paid for advertising space in CDR's slate mailings had not contributed to CDR; nor did their advertising space constitute in-kind contributions from CDR to the candidates.

On the other hand, the court found that costs incurred by CDR for listing federal candidates free of charge in mailings constituted expenditures by CDR on behalf of the candidates, which were subject to the election law. (Nine federal candidates were listed free of charge in mailings for the primary elections, and three candidates were listed in general election mailings.) Accordingly, the court found the CDR had violated the election law by failing to register and report as a political committee when these expenditures exceeded $1,000 during 1982. See 2 U.S.C. §§431(4)(A), 433 and 434.

Finally, the court ruled that CDR's ads failed to state who paid for them and whether or not the candidates had authorized the mailings. See 2 U.S.C. §441d(a).

The court imposed a $15,00 civil penalty on the defendants. Subsequently the court denied defendants' motion to have the penalty reduced.

Source: FEC Record, March 1986, p. 8.

Californians for Democratic Representation: FEC v., No. 85-2086-JMI, (C.D. Cal. Jan. 9, 1986) (unpublished opinion).

FEC v. CAMPAIGN RESOURCE TECHNOLOGIES

On August 3, 1987, the U.S. District Court for the District of Arizona, Tucson Division, approved a final consent order and judgment between the Commission and defendants Campaign Resource Technologies, Inc. (CRT) and John Kaur (Civil Action No. CTV 86-448 TUC ACM).

During the 1983-84 Presidential election cycle, the Bergland for President Committee (the Committee), the principal campaign committee for David Bergland's 1984 Presidential campaign, contracted with CRT for certain campaign services. CRT, in turn, subcontracted certain services to John Kaur, who was doing business as Digitgraph Computer Systems Company (Digitgraph).

In the consent order, defendants CRT and John Kaur agreed that they violated 2 U.S.C. §432(b) by failing to forward to the Committee's treasurer, within 10 days, approximately $6,000 in campaign contribution checks received by CRT and Digitgraph on behalf of the Committee.

The court imposed a $5,000 civil penalty which the defendants agreed to pay within 30 days of filing the consent order. The court also permanently enjoined the defendant from future similar violations of the Act.

Source: FEC Record, September 1987, p. 8.

FEC v. CARTER COMMITTEE FOR A GREATER AMERICA

On July 21, 1986, the U.S. District Court for the Northern District of Georgia approved a consent order between the Commission and the Jimmy Carter Committee for a Greater America, a nonconnected political committee, and the Committee's treasurer, Chip Carter. The consent order provides that defendants violated sections 434(a)(4)(A)(i) and (iii) of the election law during the 1983-84 election cycle by failing to meet the filing deadline for 1984 post-general election and year-end reports.

Within 30 days of filing the consent order, the defendants agreed to pay a $250 civil penalty to the U.S. Treasurer.

The consent order concluded a suit filed by the FEC on April 7, 1986 (Civil Action No. C86-774A).

Source: FEC Record, September 1986, p. 7.

FEC v. CAULDER

On June 16, 1992, the U.S. District Court for the Eastern District of Pennsylvania ruled that Michael Caulder violated 2 U.S.C. §432(b)(3) by knowingly and willfully commingling his personal funds with $51,600 belonging to Alerted Democratic Majority, a political committee. (Defendant had embezzled the committee's funds and supplied false information on the committee's FEC reports in order to disguise the embezzlement.)

The court imposed a $103,200 civil penalty against Mr. Caulder but, in view of his depleted financial situation, suspended all but $3,000 of the penalty, to be paid in monthly installments. The court also permanently enjoined him from violating §432(b)(3) and from engaging in any activity that would result in his being responsible for political committee funds, accounts, financial records or FEC reports.

The FEC may request full payment of the suspended penalty if it discovers that defendant made inaccurate or misleading representations during the litigation or that he violated any terms of the court order. The FEC may also request full or partial payment of the penalty should Mr. Caulder's financial circumstances improve. The court's order and judgment were agreed to by both the FEC and Mr. Caulder. (Civil Action No. 91-CV-5906.)

Source: FEC Record, August 1992, p. 13.

FEC v. CHRISTIAN ACTION NETWORK

On June 28, 1995, the U.S. District Court for the Western District of Virginia, Lynchburg Division, dismissed this case. The FEC had brought suit against the Christian Action Network (CAN) for making independent expenditures1 with corporate funds, for failing to include the proper disclaimer on its political communications and for failing to file the required reports with the FEC.

On August 2, 1996, the U.S. Court of Appeals for the Fourth Circuit, in an unpublished opinion, upheld the district court's dismissal of this case. The court of appeals, finding "no error" in the district court opinion, affirmed that court's decision. Following, on April 7, 1997, the Fourth Circuit granted a request from the CAN that the FEC pay its attorney fees and other costs associated with this case. The court remanded the case to the district court to set the amount to be awarded.

District Court Decision

The communications in questiona television advertisement and two newspaper advertisements that ran during the weeks leading up to the 1992 Presidential general electionassailed then-candidate Bill Clinton's alleged position on homosexual issues.

The court ruled that the communications were outside the Commission's jurisdiction because they did not expressly advocate the election or defeat of Mr. Clinton.

The court reached this conclusion on the basis of the Supreme Court's decision in Buckley v. Valeo. In that case, the Supreme Court said that, for a communication to be considered an independent expenditure and thus subject to FEC regulation, it must expressly advocate the election or defeat of a clearly identified candidate.2 In reviewing relevant court decisions since Buckley, the court found that "political expression, including discussion of public issues and debate on the qualifications of candidates, enjoys extensive First Amendment protection" and that the courts "have adopted a strict interpretation of the 'express advocacy' standard . . . . Thus, courts generally have been disinclined to entertain arguments made by the Commission that focus on anything other than the actual language used in an advertisement."

In arguing the case, the FEC had relied on the Court of Appeals for the Ninth Circuit's decision in FEC v. Furgatch. In that case, the appeals court considered the timing and context of a communication in determining the existence of express advocacy. The FEC stressed that those elements were important here as well: the CAN television advertisement aired in the weeks leading up to the 1992 general election, and, although the ad did not contain words that expressly advocated Mr. Clinton's defeat, its imagery, music, editing, coloring, etc. clearly conveyed that message.

The FEC also pointed out that the newspaper adsboth of which referred to the "voting public" and one of which referred to a Presidential debate scheduled for that dayconveyed a message identical to that of the television ad. Viewed collectively, the FEC contended, the three ads sent voters the message to vote against Mr. Clinton and his policies in the November elections.

The court recognized the validity of the Furgatch approach but noted that the Furgatch court stated that the context and timing of a communication were peripheral to the actual words themselves, and therefore should be given only limited weight when determining the presence of express advocacy.

Focusing on the words contained in the ads, the court said there was no call for electoral action. The newspaper ads' reference to the "voting public" "does not per se translate into an exhortation to vote."

Finding that express advocacy was absent from the ads, the court concluded that "the Defendants' advertisements represent the very type of issue advocacy the Buckley Court sought to exempt from government regulation."

Source: FEC Record, September 1995, p. 2; October 1996, p. 1; and May 1997, p. 5.

Christian Action Network: FEC v., 894 F. Supp. 946 (W.D. Va. 1995), aff'd per curiam, 92 F.3d 1178 (4th Cir. 1996).

1 An independent expenditure is an expenditure made without any coordination with a candidate's campaign for a communication which expressly advocates the election or defeat of a clearly identified candidate for federal office.

2 The court listed the following examples of words that constitute express advocacy: "vote for," "elect," "support," "cast your ballot for," "Smith for Congress," "vote against," "defeat," "reject."

FEC v. CHRISTIAN COALITION

On May 13, 1997, the U.S. District Court for the District of Columbia denied the Christian Coalition's motion for partial dismissal of this case.

The decision meant that the FEC was able to seek declaratory and injunctive relief for all of the alleged violations of the Federal Election Campaign Act (the Act), but was not able to obtain civil penalties for any of the violations that occurred more than five years before the lawsuit was filed.

On August 2, 1999, the district court granted in part and denied in part motions for summary judgment by both the Federal Election Commission (the "FEC" or "Commission") and the Christian Coalition (the "Coalition").

1997 District Court Decision

Statute of Limitations

The Coalition sought dismissal of those portions of the FEC's suit that concerned prohibited activities that had occurred more than five years before the suit was filed--essentially the activities that related to the 1990 election cycle.

At 28 U.S.C. §2462, the law provides for a five-year statute of limitations for certain law enforcement proceedings. The Coalition argued that that time limit started running at the time that the alleged offenses occurred--not when they were reported to the FEC by the Democratic Party of Virginia. The FEC argued that the time began running when it was notified through the administrative complaint process. Because its investigatory powers and resources are limited, the FEC said that it had no way of knowing about the Coalition's alleged conduct until a complaint was filed with the agency.

The court rejected the FEC's argument, citing the ruling of the U.S. Court of Appeals for the District of Columbia Circuit in 3M v. Browner.1 In that case, the appeals court ruled that an agency's failure to detect violations does not negate the inherent difficulties faced by bringing a case to court long after the alleged violation has occurred. The appeals court noted: "nothing in the language of §2462 even arguably makes the running of the limitation period turn on the degree of difficulty an agency experiences in detecting violations."

The court, however, agreed with the FEC that §2462 provides no shield for the Coalition from declaratory or injunctive relief. At 2 U.S.C. §437g(a)(6), the FEC has the authority to seek injunctive relief separate from its authority to seek legal remedies (e.g., civil fines, penalties and forfeitures).

1999 District Court Decision

The Commission had alleged that the Coalition had made three expenditures for communications that expressly advocated the election or defeat of clearly identified candidates. The court held that the following two communications did not contain express advocacy and, therefore, did not violate the Federal Election Campaign Act's (the "Act") ban on corporate contributions and expenditures made in connection with federal elections:

The court held that a third communication, a 1994 mailing by the Georgia Christian Coalition, did expressly advocate the election of then-Speaker Newt Gingrich in violation of the Act. The court also held that the Coalition violated the Act by making a prohibited corporate contribution to Oliver North's Senate campaign by giving it a mailing list.

The Commission also alleged that the Coalition coordinated its voter guides during the 1990, 1992 and 1994 elections with various federal candidates. In all but one instance, the court decided that there was no coordination. In one election campaign, Oliver North's 1994 U.S. Senate campaign in Virginia, the court determined that there were contested issues to be resolved after a future hearing.

Background and Holding

The Christian Coalition is a nonprofit, nonstock corporation, originally incorporated in Virginia and doing business in the District of Columbia. In 1992 both the Democratic Party of Virginia and the Democratic National Committee filed complaints against the Coalition with the FEC. The two complaints were merged. The Commission found probable cause to believe the Coalition had violated the Act and attempted conciliation with the Coalition. After that attempt failed, the Commission filed this lawsuit in 1996.

The court determined that the two main issues in the litigation were:

Express Advocacy. With regard to the first issue, the court concluded that an express advocacy communication is one that a reasonable person would understand contains an explicit directive--using an active verb (or its functional equivalent)that unmistakably exhorts the audience to take electoral action to support or defeat a clearly identified candidate. The verb (or its functional equivalent) must be considered in the context of the entire communication, including temporal proximity to the election.

Corporate Coordinated Expenditure. With respect to the second issue, the district court limited its decision to "expressive coordinated expenditures" by corporations. The court explained that an "expressive coordinated expenditure" is an expenditure for a communication that (although not containing express advocacy) is "made for the purpose of influencing a federal election in which the spender is responsible for a substantial portion of the speech and for which the spender's choice of speech has been arrived at after coordination with the campaign." Such expenditures are coordinated if the candidate requests or suggests the expenditure, or if the spender engages in substantial discussion or negotiation with the campaign about the communication's content, timing, location, mode, intended audience or volume.

Express Advocacy Issues

Express Advocacy Standard. The FEC alleged that in three instances the Coalition used general treasury funds to finance independent communications that contained express advocacy (i.e., expressly advocated the election or defeat of a clearly identified candidate) and thereby violated §441b of the Act, which prohibits corporations and unions from making expenditures in connection with federal elections.

Based on decisions by the Supreme Court and lower courts in other jurisdictions, the district court held that, in order for an expenditure to contain express advocacy and, if made by a corporation, violate §441b of the Act, the following attributes are necessary:

The court said that it is a pure question of law as to whether a reasonable person would understand the communication to expressly advocate a candidate's election or defeat. Once the identity of the speaker (organization paying for the communication) and the content of the communication are proven, a court must determine whether the communication contains express advocacy "solely as a matter of law."

Ralph Reed's 1992 Montana Speech. The FEC alleged that the Christian Coalition used general treasury funds to pay travel expenses and compensation to Ralph Reed, then-Executive Director of the Coalition, for a speech that expressly advocated the defeat of Pat Williams, the Democratic U.S. Representative from Montana's First District. The court held that, while Reed's speech made references to the Democratic incumbent, it did not direct the audience to do anything. He predicted that "victory will be ours" and that "we're going to see Pat Williams sent bags packing . . . in November." The court said this was "prophecy rather than advocacy," because Reed's speech did not contain an explicit exhortation to the audience to take action to defeat Representative Williams. "[I]t can only be concluded that Reed exhibited precisely the 'ingenuity and resourcefulness' in his verb choice that the Buckley Court envisioned possible to circumvent the prohibition on express advocacy. As others have acknowledged, results such as this appear unsatisfyingly formalistic, allowing precisely the sort of communications Congress sought to prohibit to remain immune from liability. . . . But the Supreme Court felt that the First Amendment required a choice between a toothless provision and one with an overbite; results such as this flow directly from that choice."

"Reclaim America" 1994 Mailing. The FEC alleged that portions of a mass mailing called "Reclaim America" included prohibited express advocacy. The Commission argued that, when read in conjunction with the enclosed Christian Coalition scorecard (rating incumbents on specific votes), the cover letter could only be understood to urge support of those incumbents rated favorably and defeat of those rated unfavorably.

Though acknowledging that the cover letter contained explicit directives (e.g., "stand together," "get organized"), the court concluded that a reasonable person could understand the cover letter as a directive to engage in lobbying or issue advocacy with all candidates. The scorecard did not identify which incumbents were candidates in 1994 and did not provide an electoral endorsement of any particular candidate. As a result, there was no express advocacy, and the expenditures did not violate §441b.

Georgia Mailing in 1994. The FEC alleged that a mailing by the Georgia Christian Coalition state affiliate (for which the Coalition admitted it was responsible and liable) contained a cover letter from the Coalition's state chair expressly advocating the re-election of Congressman Newt Gingrich. The mailing also contained a copy of the Coalition's nationwide Congressional scorecard.

The court held that, unlike the other two communications discussed above, "the Georgia mailing was expressly directed at the reader-as-voter." The cover letter announced upcoming primary elections and enclosed two items "[to] help you prepare for your trip to the voting booth." The second item was the congressional scorecard. The letter stated that Newt Gingrich, a Christian Coalition "100 percenter," was the only incumbent facing a primary opponent. The letter also exhorted the voter to take the scorecard to the polls in the general election. "While marginally less direct tha[n] saying 'Vote for Newt Gingrich,' the letter in effect is explicit that the reader should take with him to the voting booth the knowledge that Speaker Gingrich was a 'Christian Coalition 100 percenter' and therefore the reader should vote for him. While the 'express advocacy' standard is susceptible of circumvention by all manner of linguistic artifice, merely changing the verb 'vote' into the noun, 'trip to the voting booth' is insufficient to escape the limited reach of 'express advocacy.'"

Coordination Issues

Corporate Coordinated Expenditures. The court explained that §441b of the Act prohibits corporations from making any contributions or expenditures in connection with any federal election, and the Supreme Court, in Buckley v. Valeo, established that expenditures made in coordination with a campaign are contributions. The court further stated that, in FEC v. Massachusetts Citizens For Life, the Supreme Court "determined that Congress plainly intended the Act to reach corporate expenditures in connection with a federal election. . . . Under that construction, it is manifest that the Coalition's expenditures on voter guides fall within Congress's intended scope for §441b."

The district court went on to distinguish "expressive coordinated expenditures" from other coordinated expenditures. According to the court, an "expressive coordinated expenditure" is an expenditure "for a communication made for the purpose of influencing a federal election in which the spender is responsible for a substantial portion of the speech and for which the spender's choice of speech has been arrived at after coordination with the campaign." The court distinguished this type of coordinated expenditure from other types such as coordinated expenditures for noncommunicative materials (e.g., food or travel expenses for campaign staff).

The court held constitutional that portion of the FEC's regulations that would treat, as contributions, "expressive coordinated expenditures" made at the request or suggestion of the campaign. In the absence of a request or suggestion from the campaign, the court explained, an expressive expenditure is still coordinated where the candidate or his agent exercises control over the communication, or where there has been substantial discussion or negotiation between the campaign and the spender about such things as the contents, timing, location, mode, intended audience, or volume of the communication. A substantial discussion, the court explained, is one from which the spender and the campaign emerge as partners (not necessarily equal partners) or joint venturers in the expressive expenditure. "This standard limits §441b's contribution prohibition on expressive coordinated expenditures to those in which the candidate has taken a sufficient interest to demonstrate that the expenditure is perceived as valuable for meeting the campaign's needs or wants."

The court stated that, under this standard, a voter guide would be considered a coordinated expenditure if the conversation between the spender and the campaign went well beyond inquiry and included, for example, discussion or negotiation over the selection and phrasing of issues to be included in the candidate survey or voter guide. "Coordination requires some to-and-fro between corporation and
campaign . . . ."

With respect to get-out-the-vote ("GOTV") telephone activity, the court held that the level of discussion must involve negotiation regarding such things as the contents of the scripts, when the calls are to be made, location or the audience--including which databases will be used to choose call recipients or the number of people to be called.

Using this standard, the court evaluated the facts surrounding the Coalition's expenditures for voter guides involving the following campaigns.

Bush/Quayle '92 Presidential Campaign. The court held that the Coalition's voter guides and GOTV expenditures, in connection with the 1992 Presidential election, did not qualify as coordinated expenditures--primarily because the court concluded that the Bush/Quayle '92 campaign staff, armed with foreknowledge of the Coalition's plans, chose not to respond to the Coalition's implicit offers to discuss those plans. Although Pat Robertson (Chairman of the Board and former President of the Coalition) and Reed had special access to the Bush/Quayle '92 campaign, and Reed had extensive discussions with campaign staff regarding the campaign's thinking on strategic issues, and the Coalition told the campaign it intended to issue voter guides, "the Coalition did most of the talking." Moreover, there was no request or suggestion by the candidate that the Coalition make expenditures for the voter guides. The corporation's possession of "insider" knowledge from the campaign did not, in itself, establish coordination. More overt acts are required, the court said.

Helms for Senate 1990, Inglis for Congress 1992 and Hayworth for Congress 1994. With regard to three Congressional campaigns (Helms for Senate in 1990, Inglis for Congress in 1992 and Hayworth for Congress in 1994), the court found no coordination. In each case, someone was simultaneously involved in both the Coalition and the campaign, but the court said that such "insider trading" was not sufficient to establish coordination without more overt acts such as expenditures being made at the suggestion or request of the campaign.

North for Senate 1994. In one case, North for Senate in 1994, the Coalition gave to Oliver North's campaign a list of previous delegates to the Virginia Republican convention who were also supporters of the Coalition. The court determined that such lists have commercial value, and therefore the contribution of the list to the North campaign was a prohibited corporation contribution.

The Coalition also distributed voter guides in Virginia in 1994. However, there is a material question of fact as to whether North's campaign manager discussed with Reed which issues should be included in the voter guide. That issue, along with the fair market value of the mailing list, will be determined in later court proceedings.

National Republican Senatorial Campaign Committee. The FEC also had alleged that the Coalition had coordinated with the National Republican Senatorial Campaign Committee to create and distribute voter guides in several states the NRSC considered key in the 1990 elections. The NRSC had contributed $64,000 to the Coalition but had not become a partner in the voter guides by discussing their contents or points of distribution. The court concluded, therefore, that the Coalition had not violated the Act since there had been no discussion or negotiation with regard to the contents or distribution of the voter guides.

Further Proceedings

As described above, the court intends to hold further proceedings to determine whether the Coalition coordinated its expenditures with the North campaign, the value of the list provided to the North campaign and the cost of the Georgia mailing. After these matters are decided, the court will determine the appropriate civil penalty. To avoid delaying any appeal until after the remaining issues are decided, the court entered final judgment on those matters that had been resolved, and also stated in its opinion that its decision "involves controlling questions of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation."

Source: FEC Record, July 1997, p. 2; September 1999, p. 4.

Christian Coalition: FEC v., 965 F. Supp. 66 (D.D.C. 1997); 52 F. Supp.2d 45 (D.D.C. 1999).


1 3M Co. v. Browner, 17 F.3d 1453 (D.C. Cir. 1994).

FEC v. CITIZENS FOR DEMOCRATIC ALTERNATIVES IN 1980

FEC v. FLORIDA FOR KENNEDY

FEC v. MACHINISTS NON-PARTISAN POLITICAL LEAGUE

FEC v. WISCONSIN DEMOCRATS FOR CHANGE IN 1980

Between December 1980 and January 1981, the FEC filed four separate suits in U.S. district courts seeking enforcement of subpoenas it had issued to three "draft Kennedy" political committees registered with the Commission, which had been engaged in promoting the Presidential candidacy of Senator Edward Kennedy during 1979, and to the Machinist Non-Partisan Political League (MNPL), the separate segregated fund of the International Association of Machinists, which had supported the formation of "draft Kennedy" groups in several states during 1979. The Commission filed suit against MNPL and Citizens for Democratic Alternatives in 1980 in the U.S. District Court for the District of Columbia (FEC v. Citizens for Democratic Alternatives in 1980, Civil Action No. 800-0009 and FEC v. Machinists Non-Partisan Political League, Civil Action No. 79-0291), against Wisconsin Democrats for Change in 1980 in the U.S. District Court for the Western District in Wisconsin (FEC v. Wisconsin Democrats for Change in 1980, Civil Action No. 80-C-124) and against the Florida for Kennedy Committee in the U.S. District Court for the Southern District of Florida (FEC v. Florida for Kennedy Committee, Civil Action No. 79-5964-CIV-JLK).

Background

The suits resulted from defendants' failure to comply with subpoenas to produce information, which the FEC had issued as part of an investigation of alleged violations of the election law. 2 U.S.C. §437d. The FEC had received a complaint from the Carter/Mondale Presidential Committee, Inc. on October 4, 1979, alleging that nine named political committees were affiliated within the meaning of 2 U.S.C. §433, 441a(a)(5) and 11 CFR 110.3(a)(1)(ii)(D). The complaint claimed that, as affiliated political committees, the nine committees were subject to a single $5,000 limit on contributions they accepted from a multicandidate committee. 2 U.S.C. §441a(a)(1)(C)(2)(C). The complaint further alleged that the draft committees had received, and MNPL had given to them, contributions in excess of the $5,000 limit. 2 U.S.C. §441a(a).

After finding reason to believe that the draft committees and MNPL had violated the Act, the Commission issued 13 subpoenas to various draft committees and to MNPL in an effort to investigate the draft committees' alleged affiliation.

Continued refusal by the four defendants to comply with their subpoenas prompted the FEC to seek enforcement of the subpoenas in the U.S. district courts. The FEC argued that the subpoenas clearly conformed to the guidelines for the enforcement of an administrative agency's subpoenas established by the Supreme Court in United States v. Morton Salt Co. Specifically, the FEC's inquiries were authorized by 2 U.S.C. §437d(a)(1), they were not too indefinite and the information they sought was reasonably relevant to the FEC's investigation. Further, in seeking court-mandated enforcement of the subpoenas, the Commission had followed the procedures prescribed by 2 U.S.C. §437d(b).

Defendant committees raised collateral issues that challenged the Commission's jurisdiction over political committees organized to draft candidates for federal office and that raised First Amendment questions. Defendants argued that, for purposes of the Act, the Supreme Court had restricted the definition of a "political committee" in Buckley v. Valeo to a group whose major purpose is to influence the nomination or election of a candidate. (Buckley v. Valeo, 424 U.S. at 79.)

District Court Rulings

The district courts ordered enforcement of the Commission's subpoenas. The courts maintained that the subpoenas met the guidelines for enforceability and were within the authority of the agency.

The Wisconsin Democrats for Change in 1980 complied with the Wisconsin district court's subpoena enforcement order. However, Citizens for Democratic Alternatives in 1980 and MNPL filed notices appealing the D.C. district court's decisions to the U.S. Court of Appeals for the District of Columbia Circuit, and the Florida for Kennedy Committee filed a notice appealing the Florida district court's decision to the U.S. Court of Appeals for the Fifth Circuit.

The Florida for Kennedy Committee was granted its application for a stay of the district court's order pending its appeal. The D.C. district and appeals courts denied the stay applications requested by Citizens for Democratic Alternatives in 1980 and MNPL; the Supreme Court also denied a further application made by MNPL. The appellants then produced all documents requested by the Commission.

Appeals Court Decision: MNPL and Citizens for Democratic Alternatives in 1980

On May 19, 1981, the appeals court for the D.C. circuit issued its opinions in FEC v. MNPL and FEC v. Citizens for Democratic Alternatives in 1980. The appeals court found that the Commission "lacked subject matter jurisdiction over the draft activities it sought to investigate." (FEC v. MNPL, slip op. at 7; FEC v. Citizens for Democratic Alternatives in 1980, slip op. at 2). The appeals court vacated the D.C. district court's orders enforcing the subpoenas and remanded the cases to the district court for further proceedings consistent with its ruling. The appeals court limited its decision to the provisions of the Federal Election Campaign Act prior to the 1979 Amendments: "Whatever the post-1979 situation, it is clear to us that in this case the contribution limitations did not apply to the nine groups whose activities did not support an existing 'candidate.'" (FEC v. MNPL, slip op. at 31.) The court did note that the 1979 Amendments to the Act appeared to require that "draft" committees comply only with the Act's reporting requirements.

The appeals court departed from the standard for judicial review of agency subpoenas and established a new "extra careful scrutiny" standard for judicial enforcement of FEC subpoenas. The appeals court reasoned that such a standard was warranted since "the activities which the FEC normally investigates differ in terms of their constitutional significance" from those of concern to other federal agencies. On June 9, 1981, the Commission decided to seek review of the D.C. appeals court's decisions by petitioning the Supreme Court for a writ of certiorari. On October 13, 1981, the Supreme Court denied the petition.

Appeals Court Decision: Florida for Kennedy Committee

On August 2, 1982, the U.S. Court of Appeals for the Eleventh Circuit issued an opinion overturning a ruling of the U.S. District Court for the Southern District of Florida in FEC v. Florida for Kennedy Committee (FKC) (Civil Action No. 80-6013). 681 F.2d 1281 (11th Cir. 1982). The appeals court, with Judge Clark dissenting, found that the Commission lacked subject matter jurisdiction over the FKC's activities. The appeals court therefore reversed the district court's order enforcing subpoenas that the Commission had issued to FKC.

Relying on the Supreme Court's decision in NAACP v. Alabama (357 U.S. 499 [1958]), the appeals court maintained that the usual standard for judicial review of agency subpoenas did not apply in the FEC's case. The appeals court reasoned that "the FEC [must] prove to the satisfaction of the courts that it has statutory investigative authority" before the courts may order enforcement of FEC subpoenas. The appeals court then found that "committees organized to 'draft' a person for federal office" are not "political committees" within the purview of the Act and are not, therefore, subject to the Commission's investigative authority.

Judge Clark, in his dissent to the majority opinion, concluded that the statutory language and legislative history both demonstrated that "draft" committees fall within the jurisdiction of the Act. Judge Clark argued that to exempt draft committees from the Act "would leave a significant portion of political activity outside the coverage of the Act, a construction rejected by the Supreme Court." Judge Clark also found the court's reliance on NAACP v. Alabama to be inappropriate.

On September 22, 1982, the Commission filed a petition with the appeals court for a rehearing of the suit and a suggestion for a rehearing en banc, which was denied October 8, 1982.

Source: FEC Record, July 1981, p. 5; December 1981, p. 6; and November 1982, p. 6.

Citizens for Democratic Alternatives in 1980: FEC v., 655 F.2d 397 (D.C. Cir.), cert. denied, 454 U.S. 897 (1981).

Florida for Kennedy Committee: FEC v., 492 F. Supp. 587 (S.D. Fl. 1979), rev'd, 681 F.2d 1281 (11th Cir. 1982).

Machinists Non-partisan Political Action Committee: FEC v., 655 F.2d 380 (D.C. Cir. 1981), cert. denied, 454 U.S. 897 (1981).

FEC v. CITIZENS FOR LaROUCHE

On September 17, 1984, the U.S. District Court for the District of Columbia issued an order in FEC v. Citizens for LaRouche (Civil Action No. 83-0373), which granted summary judgment in favor of the FEC and dismissed the defendants' counterclaims.

Background

On February 9, 1983, the FEC filed suit against Lyndon H. LaRouche and the Citizens for LaRouche (CFL), Mr. LaRouche's principal campaign committee for his publicly funded Presidential campaign in 1980. In the suit, the FEC asked the district court to declare that the LaRouche campaign had violated a conciliation agreement entered into by CFL with the FEC. The Commission claimed that the campaign had failed to pay any portion of the $15,000 civil penalty stipulated in the agreement. The conciliation agreement had resulted from an enforcement action in which the FEC had found probable cause to believe that, among other violations, the LaRouche campaign had accepted unlawful contributions in 1979 and 1980.

In its suit, therefore, the FEC had asked the district court:

Mr. LaRouche and the LaRouche campaign admitted that it had failed to pay any portion of the civil penalty. The defendants maintained, however, that the entire written conciliation agreement had been voided by the FEC's alleged breach of both the written agreement and a supplemental oral agreement that allegedly had been reached between the campaign and FEC attorneys. As a result, the defendants claimed, the FEC could not recover the civil penalty.

District Court Ruling

The court noted that, under the election law, a conciliation agreement may only be entered into with the affirmative vote of four Commissioners. See 2 U.S.C. §437g(a)(4)(A)(i). The court found, therefore, that it had to base its consideration of the case exclusively on the terms of the written conciliation agreement approved by the Commission. The Commission had not voted on the terms of the alleged oral agreement; nor had the written conciliation agreement made reference to a supplemental oral agreement.

The court noted that, to file a civil action against parties that violate the terms of a conciliation agreement, "the Commission need only establish that the person has violated, in whole or in part, any requirement of such a conciliation agreement.... " See U.S.C. §437g(a)(5)(D). Since the LaRouche campaign admitted that it had never paid the civil penalty required by the conciliation agreement, the court found that "the FEC is entitled to declaratory relief in this action and receipt of an accelerated payment of $15,000 from defendant CFL."

The court further found that the candidate, Lyndon H. LaRouche, must also be held liable for the unpaid civil penalty. The court cited the letter of agreements that Mr. LaRouche had entered into with the FEC as a condition of matching fund eligibility. Under the agreements, both Mr. LaRouche and his campaign committee were held liable for any civil penalties assessed against his campaign. Finding no merit to the campaign's counterclaim for damages resulting from "fraudulent inducement and fraudulent actions by the FEC," the court dismissed the counterclaim "for failure to state a claim upon which relief can be granted."

Source: FEC Record, November 1984, p. 6.

Citizens for LaRouche: FEC v., 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9214, (D.D.C. 1984).

FEC v. CITIZENS FOR THE REPUBLIC

On March 1, 1979, the U.S. District Court for the District of Columbia granted summary judgment to Citizens for the Republic (CFR), defendants in a suit filed by the FEC. In granting judgment to the defendant, the court found that there was no genuine issue as to any material fact.

On August 11, 1977, the Commission found reasonable cause to believe that Citizens for the Republic (formerly Citizens for Reagan, principal campaign committee for former Presidential candidate Ronald Reagan) had violated the Act by failing to report or make best efforts to report the occupations and principal places of business of 35% of those persons who had contributed an aggregate of $100 or more to the candidate, as required by 2 U.S.C. §434(b)(2). On June 23, 1978, the Commission filed suit after unsuccessfully trying, for almost a year, to resolve the matter through conciliation, as required by 2 U.S.C. §437g(a)(5)(A).

The defendant maintained that:

The Commission argued that:

In finding for the defendant, the court concluded that the Commission "had a duty to give more...detailed guidance by regulation." In the absence of such guidance, the efforts made by the Reagan Committee were best efforts.

Source: FEC Record, May 1979, p. 2.

FEC v. CITIZENS PARTY (86-3113)

On July 31, 1987, the U.S. District Court for the District of Columbia entered a default judgment against the Citizens Party, a political party committee, and the party's acting treasurer, Kirby Edmonds, for the respondents' failure to timely pay in full a previously agreed upon civil penalty, in violation of the terms of a conciliation agreement they had entered into with the FEC on March 20, 1986. (FEC v. Citizens Party; Civil Action No. 86-3113 (OG).)

The court also: (1) ordered the defendants to pay interest on the $1,250 unpaid balance of the civil penalty for the period from June 18, 1986, to December 8, 1986, and (2) permanently enjoined the defendants from further violations of the agreement.

Source: FEC Record, March 1987, p. 6.

FEC v. CITIZENS PARTY (87-1577)

On May 1, 1989, the U.S. District Court for the Northern District of New York entered a consent order and judgment in FEC v. Citizens Party (Civil Action No. 87-CV-1577). The judgment declared that the Citizens Party, a political committee, and its treasurer, Kirby Edmonds, knowingly and willfully violated the election law by failing to file four reports in a timely manner: a 1985 year-end report and three 1986 quarterly reports (April, July and October). The consent order and judgment also assessed a civil penalty of $10,000 against the committee. Mr. Edmonds was personally assessed a $500 penalty.

Source: FEC Record, July 1989, p. 7.

FEC v. CLARK

On April 23, 1987, the U.S. District Court for the Middle District of Florida issued a consent order in FEC v. John R. Clark, Jr. (Civil Action No. 86-1841-CIV-T-17B). In the order, the FEC and Mr. Clark agreed that:

Finally, Mr. Clark assured the court that, in the future, he would fully comply with the election law.

Source: FEC Record, June 1987, p. 6.

FEC v. CLITRIM

On February 2, 1980, the U.S. Court of Appeals for the Second Circuit remanded FEC v. Central Long Island Tax Reform Immediately et al. to the District Court for the Eastern District of New York with an order to dismiss the suit.

The FEC originally filed the suit on August 1, 1978, alleging that violations of the Act occurred when the Central Long Island Tax Reform Immediately Committee (CLITRIM) published a pamphlet for general circulation in October 1976 at a cost of more than $100. The FEC claimed that, in publishing and distributing the pamphlet, defendants violated the following provisions of the Act:

In its motion to dismiss the case, CLITRIM argued that, in its Buckley v. Valeo decision, the Supreme Court had specifically mandated that the Act be amended to regulate only expenditures or communications by persons "expressly advocating the election or defeat of a clearly identified candidate." Buckley v. Valeo, 424 U.S. 1, 43 (1976). Further, "express advocacy" must include at least one of the phrases suggested by the Court in Buckley: "'vote for', 'elect', 'support', 'cast your ballot for', 'Smith for Congress', 'Vote Against', 'defeat', 'reject.'" (424 U.S. 1 (1976) at 52). CLITRIM pointed out that the TRIM Bulletin did not contain any of the terms of "express advocacy" spelled out in Buckley.

Responding to this argument in one of its reply briefs filed with the court of appeals, the FEC maintained that the CLITRIM/National TRIM bulletin was not merely an informational or educational compilation of Congressional voting records. The bulletin discussed TRIM's position on the issue of high taxes and big government, identified federal candidates, critiqued their position on the issue of high taxes and big government and urged the voter to vote with TRIM. The Commission interpreted these communications as "express advocacy" communications within the meaning of 2 U.S.C. §434(e) and as construed by the Supreme Court in Buckley, 424 U.S. at 44, n. 52.

In reaching its decision to dismiss the case, the court of appeals concluded that the CLITRIM Bulletin did not "expressly advocate" the election or defeat of a candidate within the meaning of 2 U.S.C. §§434(e) and 441d. Since, as interpreted by the court, these provisions of the Act did not apply to defendants' conduct, the court concluded the constitutional issues raised by defendants in the case would not represent a case ripe for consideration by the court.

On February 25, 1980, National TRIM and John W. Robbins, intervenor in the case, petitioned the court of appeals for a rehearing. Defendants sought injunctive relief from FEC enforcement proceedings brought against local TRIM committees which were not affected by the court's February 2 order to dismiss the case. On March 5, 1980, the petition for rehearing was denied by the court of appeals.

Source: FEC Record, April 1980, p. 7.

Central Long Island Tax Reform Immediately Committee: FEC v., 616 F.2d 45 (2d Cir. 1980) (en banc).

FEC v. COLORADO REPUBLICAN FEDERAL CAMPAIGN COMMITTEE

In April 1986--four months before the Democratic primary and seven months before the November general election--the Colorado Republican Federal Campaign Committee (the Committee) ran a $15,000 radio ad in response to a series of television ads sponsored by the Senatorial campaign committee of then-Congressman Tim Wirth, a Democrat. The ad contrasted Mr. Wirth's statements in his TV ads with his Congressional voting record, and concluded with the words: "Tim Wirth has a right to run for the Senate, but he doesn't have a right to change the facts."

Under the Federal Election Campaign Act (the Act), the Committee was authorized to spend up to a certain limit on coordinated party expenditures made "in connection with the general election campaign" of the Republican Party candidate running in the U.S. Senate race in Colorado. 2 U.S.C. §441a(d)(3). The Committee, however, had assigned its entire 1986 spending authority to the National Republican Senatorial Committee.

In its campaign finance reports, the Committee characterized the ad as a generic voter education expense that was not subject to the §441a(d) limits. The FEC, however, viewed it as a coordinated party expenditure and filed suit against the Committee for violating the Act's expenditure limits and reporting requirements for this type of expenditure. The Committee counterclaimed with a First Amendment challenge to the constitutionality of the §441a(d) limits.

District Court Decision

On August 31, 1993, the U.S. District Court for the District of Colorado granted summary judgment to the Committee. The court held that the Committee's $15,000 expenditure for a radio ad, because it did not contain "express advocacy," was not subject to the coordinated party expenditure limit.

The court first rejected the Committee's argument that the ad was an "independent expenditure" (rather than a coordinated expenditure)and thus not subject to spending limits--because it was aired before the Republican candidate had been nominated. The court noted that the FEC and the courts have said that party committees are incapable of making independent expenditures. The court concluded that the Committee's expenditure "was made on behalf of the Republican candidate, whomever that might be; and it is irrelevant that no particular person had been designated."

In considering whether the ad was subject to the coordinated party expenditure limits at 2 U.S.C. §441a(d), the district court concluded that only communications that expressly advocate the election or defeat of a candidate qualify as coordinated party expenditures. The court decided that the radio ad did not contain express advocacy, and therefore was not a coordinated party expenditure.

The district court reasoned that in FEC v. Massachusetts Citizens for Life (MCFL), the Supreme Court established that the presence of express advocacy determined whether or not an independent expenditure was made "in connection with" a federal election. Although the MCFL decision dealt with independent expenditures rather than coordinated party expenditures, the district court noted that §441a(d) also includes the phrase "expenditure in connection with" a federal election. The court therefore followed a common law rule: a phrase recurring in a statute is to be interpreted consistently.

The district court then referred to the list of words and phrases, contained in the Supreme Court's Buckley v. Valeo decision as examples of express advocacy. Finding that the Committee's ad did not contain any of these words or phrases, the district court ruled that the expenditure for the ad did not constitute a coordinated party expenditure and therefore did not count toward the Committee's §441a(d) limit.

Appeals Court Decision

On June 23, 1995, the U.S. Court of Appeals for the Tenth Circuit reversed the district court's ruling that express advocacy is a defining feature of coordinated party expenditures. Further, it concluded that the Act's limitation of these expenditures does not violate the Committee's First Amendment rights. The court remanded the case to the district court with instructions to enter judgment in favor of the FEC and to impose on the defendant a proper civil penalty under 2 U.S.C. §437g(a)(6).

Coordinated Party Expenditures and Independent Expenditures

The court of appeals observed that both Buckley and MCFL distinguish between these two types of expenditures:

"The Supreme Court cases have distinguished between the potential for corruption that attaches to contributions and coordinated party expenditures, and those that might develop from independent expenditures, finding less inherent risk in the latter."

The court of appeals also noted that Buckley struck down the Act's limits on independent expenditures as an unwarranted infringement on the First Amendment rights of individuals but upheld the Act's limits on party expenditures because they served the substantial government interest of preserving the integrity of the electoral process. The validity of this interest has been reinforced in subsequent court case decisions.

In the appeals court's view, the distinctions made in these precedents indicate that the phrase "expenditures in connection with" should not be construed the same way with respect to independent expenditures and coordinated party expenditures.

Rather, the court held that judicial deference was due to the Commission's interpretation of its statute. Advisory Opinions 1984-15 and 1985-14 establish the Commission's criteria for determining whether or not a party expenditure counts against the §441a(d) limit: an expenditure counts against the limit if it is made for a communication that (1) clearly identifies a candidate and (2) contains an electioneering message. The presence of express advocacy is not a factor in this determination.

The court then found that the ad identified a candidate (Mr. Wirth) and "unquestionably contained an electioneering message," since it sought to diminish public support for Mr. Wirth and garner support for the then-yet-to-be-named Republican nominee. Consequently, the court reasoned that the radio ad resulted in an "expenditure made in connection with" an election and thus counted against the Committee's §441a(d) limit.

The First Amendment and the
Government's Interest

Citing the reasoning of the Supreme Court in Buckley and subsequent cases, the court of appeals ruled that, as with contribution limits, the coordinated party expenditure limits are a justifiable infringement on the First Amendment rights of party committees.

"The opportunity for abuse is greater when the contributions (or in the instant case, coordinated party expenditures) derive from sources inherently aligned with the candidate, rather than with independent expenditures."

The coordinated party expenditure limits were adopted because of Congressional concern that unchecked party spending would give citizens who make large contributions to party committees undue influence on elected officials. The court concluded that the §441a(d) limits diminish this potential with a minimal impact on the important role of political parties. This follows the precedent set in Buckley that found that these and other contribution and expenditure limits served the overriding government interest of preserving the integrity of the electoral process.

Appeal to Supreme Court

The Commission appealed the Tenth Circuit's decision to the Supreme Court. Oral arguments were presented on April 15, 1996.

Supreme Court Decision

On June 26, 1996, the U.S. Supreme Court ruled that the coordinated party expenditure limits at 2 U.S.C. §441a(d) could not be constitutionally applied to the radio ad aired by the Committee. The Court found that the ad was not coordinated with any candidate; rather it was an independent expenditure that could not constitutionally be subject to the coordinated party expenditure limit.

The FEC had concluded that political parties, because of their special function, are incapable of making electoral expenditures that are "independent" of their own candidates, since the sole reason for a political party's existence is to elect its candidates to public office.

The Court disagreed, stating that, with reference to the radio ad, there was no evidence of coordination between the Committee and the three candidates who were then seeking the Republican Senate nomination. Rather, the ad "was developed by the Colorado Party independently and not pursuant to any general or particular understanding with a candidate." The Court also found that the potential for, or appearance of, corruption, which the Buckley Court found sufficient to justify limiting contributions, was not present to the extent that would justify limiting such independent spending by political parties on behalf of their candidates. Accordingly, the Court concluded that the First Amendment precludes application of the §441a(d) limits to independent campaign expenditures by political parties.

This decision pertained to party spending in connection with congressional races. The Court warned that this opinion does not "address issues that might grow out of the public funding of Presidential campaigns."

The Court decided not to address a constitutional challenge to the §441a(d) coordinated limits brought by the Committee. Instead, the Court chose to "defer consideration of the broader issues until the lower courts have reconsidered the question in light of our current opinion."

This decision vacated the 10th Circuit Court of Appeals' judgment. The case was remanded to the lower courts for further proceedings consistent with this decision.

Concurring and Dissenting Opinions Accompanying This Judgment

Justice Breyer wrote the plurality opinion announcing the judgment of the Court. Although seven Justices concurred in the judgment, only Justices O'Connor and Souter joined Justice Breyer's plurality decision. There were also two separate concurring opinions and one dissent which the remaining Justices signed on to, as follows:

District Court Decision on Remand

On February 23, 1999, the district court granted the Committee's motion for summary judgment on its counterclaim, ruling that the coordinated party expenditure limits are unconstitutional and cannot be enforced against the Committee. The court denied the FEC's cross motion for summary judgment and dismissal of the amended counterclaim.

In the district court's view, the FEC needed to demonstrate that:

The court said that the FEC had to show that coordinated party expenditure limits prevent corruption or the appearance of corruption. The FEC had to do more than show "the opportunity" for corruption.

The FEC argued that generous contributors could demand special favors of candidates via their party committee contributions; and that party committees could withhold or grant unlimited coordinated expenditures in order to exact a quid pro quo from candidates who needed financial assistance. The court rejected the first argument, saying that the FEC had shown that large contributors to parties had obtained access to elected officials, but such access did not constitute corruption. The court rejected the analogy to unlimited soft money donations because they may not be used to make coordinated party expenditures. Moreover, because of the limits on individual contributions, the court found the contributor-to-party-to-candidate scenario "an unlikely avenue of corruption."

As to the second argument, the court stated that party committees, by their nature, exert some influence over candidates. "[A] political party's decision to support a candidate who adheres to the parties' beliefs is not corruption. Conversely, a party's refusal to provide a candidate with electoral funds because the candidate's views are at odds with party positions is not an attempt to exert improper influence."

Furthermore, the court stated that in Buckley v. Valeo the Supreme Court's concern with corruption was related to large individual financial contributions--not contributions from party committees.

Finally, the court stated: "The FEC cannot rely on general public dissatisfaction with parties and politicians and the amount of money in the political process . . . to support its claim that the party coordinated expenditure limit serves a compelling purpose and is narrowly tailored to accomplish that purpose."

The court concluded that the FEC had failed to offer relevant, admissible evidence that suggested coordinated party expenditures had to be limited to prevent corruption or its appearance. The court also stated that coordinated party expenditures were "indistinguishable in substance" from the candidate's campaign expenditures. Since, under Buckley, candidate expenditures cannot be limited, coordinated party expenditures also cannot be regulated.

Source: FEC Record, November 1993, p. 1; August 1995, p. 1; August 1996, p. 1; and April 1999, p. 1.

Colorado Republican Federal Campaign Committee: FEC v., 839 F. Supp. 1448 (D. Colo. 1993); 59 F.3d 1015 (10th Cir. 1995), rev'd, 116 S. Ct. 2309 (1996), on remand, 41 F. Supp.2d 1197 (D. Colo. 1999).

FEC v. COMMITTEE FOR A CONSTITUTIONAL PRESIDENCY­McCARTHY '76

On March 7, 1979, the U.S. District Court for the District of Columbia granted summary judgment to the Committee for a Constitutional PresidencyMcCarthy '76, defendants in a suit filed by the FEC on August 22, 1977.

The FEC alleged that the defendants had improperly classified a series of payments (speaking fees from universities) as "other receipts" rather than as "contributions," and requested a mandatory injunction from the court requiring the defendant to amend its reports accordingly.

The court agreed with both parties that there were no material issues in dispute. The court also agreed with the FEC that the payments in question were, in fact, "contributions" rather than "other receipts." However, while the court concluded that the defendant may have committed a technical error, it declined to enter the requested order for the following reasons:

This public interest in disclosure is already satisfied by the detailed information supplied by the defendant. Furthermore, a court-imposed remedy would not ensure better compliance in the future since a candidate who acted in the same manner today would probably not be considered in violation of the Act due to the "best efforts" amendment.

Source: FEC Record, June 1979, p. 6.

Committee for A Constitutional PresidencyMcCarthy '76: FEC v., 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9074 (D.D.C. 1979).

FEC v. COMMITTEE OF 100 DEMOCRATS

On September 30, 1993, the District Court for the District of Columbia granted the Commission's motion for summary judgment against the Committee of 100 Democrats, the Committee to Elect Fusco to Congress (formerly Throw the Rascals Out) and Dominick A. Fusco, the treasurer of both committees.

The court ruled that Mr. Fusco and the committees had violated the terms of two conciliation agreements related to an FEC enforcement action (MUR 3148). The court ordered the defendants to comply with the agreements, assessed $1,000 penalties against each committee and enjoined the defendants from future violations of the agreements.

Noting that Mr. Fusco was named as a party to the conciliation agreements and had signed them both, the court concluded that his "status as a party to each of the agreements subjects him to personal liability for their violation." As a result, the court held Mr. Fusco and the committees "jointly liable" for compliance with the conciliation agreements and payment of the additional penalties.

To comply with the conciliation agreements, the Committee of 100 Democratsand Mr. Fusco, as its treasurerhad to register with the Commission and file the appropriate reports of receipts and disbursements. Mr. Fusco and his Committee to Elect Fusco to Congress were to pay the FEC a $3,500 civil penalty. The court directed the defendants to comply with its order within 10 days.

Payment Schedule

In a court document filed September 13, 1994, the parties in this suit agreed to a schedule for paying the $5,500 in total penalties owed by the three defendants.

The stipulation agreement required the defendants to pay the penalties in monthly installments. If payments were late, interest would accrue on the entire unpaid balance until it was fully paid. Moreover, if defendants failed to carry out their obligations, they would be required to reimburse the FEC for costs and attorneys' fees expended on the case since the September 1993 judgment.

Source: FEC Record, December 1993, p. 3; and November 1994, p. 9.

Committee of 100 Democrats: FEC v., 844 F. Supp. 1 (D.D.C. 1993).

FEC v. COMMITTEE TO ELECT BENNIE BATTS

On February 14, 1989, the U.S. District Court for the Southern District of New York granted the FEC's motion for summary judgment in FEC v. Committee to Elect Bennie O. Batts (Civil Action No. 87-5789(GLG)). The committee was Mr. Batts' principal campaign committee for his unsuccessful 1984 primary campaign in New York's 20th Congressional District.

The court found that the committee and its acting treasurer, Evelyn Batts (the candidate's wife), violated the election law by:

The court also found that Mrs. Batts personally violated the election law by making excessive contributions from her personal account.

Observing that the committee's violations had resulted from "at most...sloppy bookkeeping and unprofessional behavior," and that there was no implication that the defendants had been "motivated by personal gain," the court assessed civil penalties of $100 against the committee and its acting treasurer, Mrs. Batts. The court also assessed a $1 civil penalty against Mrs. Batts personally. In addition, the court permanently enjoined the defendants from similar future violations of the election law.

Source: FEC Record, May 1989, p. 8.

FEC v. DSCC (95-2881)

On January 16, 1997, the U.S. District Court for the Northern District of Georgia, Atlanta Division, ruled that the Democratic Senatorial Campaign Committee (DSCC) violated the Federal Election Campaign Act (the Act) when it contributed $17,500 to a Senatorial candidate's runoff election after having already contributed the same amount during the primary and general elections.

The second contribution violated the Act at §441a(h), which sets a $17,500 limit for national committeessuch as the DSCC and the National Republican Senatorial Committee (NRSC)when giving to a candidate for the U.S. Senate.

On July 7, 1997, the court ordered the DSCC to pay a $175 penalty for violating the Act during the 1992 Senatorial race. The sum amounts to 1 percent of the DSCC's violation of $17,500.

Background

The excessive contribution was made during the unusual circumstances surrounding the 1992 Senatorial campaign in Georgia. A state law, which has since been changed, required that the winner of the Senate seat receive a majority of the vote.

Former Senator Wyche Fowler Jr., a Democrat, had a plurality in the general election in 1992, receiving 49 percent of the ballots cast. Republican Senator Paul Coverdell, who challenged Mr. Fowler in the race, came in second with 48 percent of the vote. Because no candidate received a majority of votes, a runoff election was held between the two men. Mr. Coverdell won that race with 51 percent of the vote.

During the primary and general elections, the DSCC contributed $17,500 to Mr. Fowler's campaign, and then contributed another $17,500 to his runoff election.

District Court Finds for FEC

The court ruled in the FEC's favor. The court held that the language and legislative history of the Act, coupled with accepted principles of statutory construction, support the view that §441a(h) precluded the DSCC from making a second contribution of $17,500.

The court pointed out that, unlike individuals and other committees, national committees have a higher contribution limit under §441a(h) and greater discretion in allocating the sum during the length of a campaign. For example, individuals have a $1,000 contribution limit per election (primary, general and runoff), per candidate. Multicandidate PACs have a $5,000 contribution limit per election, per candidate. The court held that national committees, such as the DSCC, may allocate part or all of their $17,500 contribution limit to a Senatorial candidate at any stage of the election campaign.

The DSCC had argued that the FEC had erroneously interpreted the $17,500 limit with respect to post-general election runoffs and that Congress had intended the statute to be part of an effort to expand the role of national committees. However, the court said that the language of §441a(h) was unambiguous and that, even if it were not, the FEC's interpretation of it would be entitled to deference. In AO 1978-25, the court pointed out, the Commission had confirmed that §441a(h) did indeed establish a single contribution limit without regard to whether there were primary, general or runoff elections.

The DSCC had also argued unsuccessfully that the unusual nature of the Georgia majority-winner rule was not taken into account when Congress adopted the statute, and that, had its members known of such a scenario, it would have drafted the law differently. The court said that such speculation would not cause the court to disregard the language of the law.

The court rejected the DSCC's claim that its First and Fifth Amendment rights of freedom of association and equal protection were violated. The DSCC said the law denied them the freedom to associate with Mr. Fowler's campaign because "no committee would ever reserve funds for the uncertain prospect of a runoff." It also pointed out that other types of committees and individuals were able to contribute to Mr. Fowler's runoff election.

The court said that, while a difficult allocation issue confronted the DSCC, the law does not infringe on its right to associate with whomever it wishes. The DSCC lawfully made more than $200,000 in coordinated expenditures under 2 U.S.C. §441a(d)1 in support of Mr. Fowler's runoff campaign. Further, the DSCC does not have to be treated the same as other types of committees in respect to contribution limits. "Party committees, individuals, and other organizations and corporations are not similarly situated entities for election regulation purposes," the court said.

Pursuant to a prior agreement of the parties, the court ordered briefing on the appropriate sanctions for DSCC's violation of §441a(h).

Penalty

In determining an appropriate penalty, the court considered these four factors:

The court found that the DSCC did act in good faith because it had believed that it was acting lawfully when it made the second $17,500 contribution. The court also determined that the second contribution did no harm to the public. While the FEC had argued that "any violation of the [Act's] limits undermines a public perception of integrity of the election process," the court disagreed with such a blanket assertion. It also found that the FEC did not require vindication in this case and noted that the DSCC's ability to pay did not justify assessing it with a large penalty, which is what the FEC had requested.

In its deliberations, the court also considered the penalty negotiated with the NRSC in a conciliation agreement for a violation of a different provision of the Act2 U.S.C. §441din connection with the same election. That penalty amounted to 1 percent of the approximately $500,000 violation, or $5,000.

Source: FEC Record, March 1997, p. 2; and August 1997, p. 3.

1 Under 2 U.S.C. §441a(d), the national party is entitled to make limited expenditures for the general election in cooperation with the candidate (in addition to the contributions it is otherwise entitled to make).

FEC v. DRAMESI FOR CONGRESS

On July 25, 1986, the U.S. District Court for the District of New Jersey granted the FEC's motion for summary judgment in FEC v. Dramesi for Congress Committee (Civil Action No. 85-4039). The court found that the John A. Dramesi for Congress Committee's treasurer, Russell E. Paul, had violated 2 U.S.C. §441a(f) by knowingly accepting an excessive contribution from the New Jersey Republican State Committee (the State Committee) and ordered Mr. Paul to pay a $5,000 civil penalty to the U.S. Treasurer.1 The court had previously entered a $5,000 default judgment against the Dramesi Committee for accepting the excessive contribution.

In 1990, the U.S. District Court for the District of New Jersey granted a motion by the FEC to hold the committee and Mr. Paul, as treasurer, in contempt of court for failing to pay the penalties imposed in 1986 (FEC v. Dramesi for Congress Committee, No. 85-4039(MHC) (D.N.J. Sept. 5, 1990) (unpublished opinion)).

Background

In 1982, when the State Committee made a $5,000 contribution to the Dramesi Committee, the State Committee had not achieved multicandidate status because it had not yet satisfied the six-month registration requirement.2 Consequently, the State Committee was only eligible to make a contribution of up to $1,000 per election to each Republican Congressional candidate in New Jersey, and the Dramesi Committee could legally receive only $1,000 for the primary election.

On learning of the State Committee's excessive contributions to Republican House candidates, the FEC initiated enforcement proceedings against the State Committee. When the Commission failed to reach a settlement with the Dramesi Committee, the agency filed a suit against the Committee and its treasurer in which it asked the court to: (1) assess a $5,000 civil penalty against the Committee for accepting the State Committee's excessive contribution and (2) order the Dramesi Committee to refund the excessive portion ($4,000) to the State Committee.

The Court's Ruling

The court observed that, under the FEC regulations, the treasurer of a political committee has to "'make his or her best efforts to determine the legality of a contribution.'"3 The court therefore found that "Mr. Paul...had a duty to determine [the contribution's] propriety. Instead, he merely assumed from the source of the contribution that it was legal."

Nor did the court find any merit to defendant's contention that he had no way of knowing the contribution was illegal. The court noted that the defendant could have consulted the Index of Multicandidate Political Committees, an "exhaustive list of such eligible [multicandidate] committees, compiled by the FEC, [which] was readily available to the defendants."

The court therefore found that "Mr. Paul, as Treasurer of the Dramesi Committee, acted intentionally in accepting the $5,000 contribution in question, and was fully aware of the facts rendering his conduct unlawful." Accordingly, the court ruled that defendant "knowingly accepted" the State Committee's excessive contribution, in violation of 2 U.S.C. §441a(f).

FEC's Contempt Motion

Although finding the Dramesi committee in contempt, the court did not take any action against it since the committee is defunct. The court, however, rejected Mr. Paul's argument that he should not be held personally liable for payment of the penalty imposed against him. The court stated that, in its previous decision in this case, "we determined that Russell E. Paul's liability was distinct from the liability of the Committee." The court went on to state that, because "political committees have a tendency to dissolve after an unsuccessful campaign," Congress chose to hold an individualthe committee treasurerresponsible for compliance with the Federal Election Campaign Act. See 2 U.S.C. §432(a) and (c). It therefore follows that "an individual will also stand responsible for his indiscretions as a treasurer."

The court, in addition to holding Mr. Paul in contempt, ordered him to pay the $5,000 penalty within 30 days. The court imposed a $50 per day assessment if payment was not complete within 30 days. On January 2, 1991, the court issued stipulation and order in which Mr. Paul agreed to pay a total of $5,317 to the FEC. That amount represented the original $5,000 penalty, $91 in interest charges and $226 in FEC costs. The Commission agreed to waive the contempt penalties of $50 a day (which had been accumulating since the original contempt order in 1990) provided that Mr. Paul pay the $5,317 by March 1, 1991.

Source: FEC Record, September 1986, p. 6; November 1990, p. 9; and March 1991, p. 10.

Dramesi for Congress Committee: FEC v., 640 F. Supp. 985 (D.N.J. 1986).

1 On June 16, 1986, the U.S. District Court for the District of Columbia found that another New Jersey House incumbent campaigning for reelection in 1982 had not knowingly accepted an excessive contribution from the New Jersey Republican State Committee. See FEC v. Re-Elect Hollenbeck to Congress Committee.

2 Multicandidate committees may contribute up to $5,000 per election to a candidate's authorized committee(s) or any other political committee. To achieve multicandidate status, a committee must have more than 50 contributors, have been registered for at least six months and, with the exception of state party committee, have made contributions to five or more candidates for federal office. 2 U.S.C. Section 441a(a)(4); 11 CFR 100.5(e)(3).

3 See 11 CFR 103.3(b)(1).

FEC v. FORBES

On February 19, 1999, the U.S. District Court for the Southern District of New York dismissed this lawsuit after both parties asked for the action. The court order was preceded by the Commission's 4-2 vote to withdraw the lawsuit against 1996 Presidential candidate Malcolm S. "Steve" Forbes, Jr.

The FEC had asked the court in September 1998 to find that bi-weekly columns authored by the candidate in Forbes Magazine resulted in violations of the Federal Election Campaign Act by Mr. Forbes, the magazine, his 1996 committee and the corporation he controls.

Background

In November 1995, while running for the Republican nomination, Mr. Forbes took a leave of absence from Forbes, Inc., but continued to write the weekly column "Fact and Comment" for the company's flagship publication, Forbes Magazine. In addition, Mr. Forbes continued to be listed as editor-in-chief on the magazine's masthead, and he controlled the length, content and format of the articles. Excerpts of these columns also appeared in another Forbes publication, The Hills-Bedminster Press. The columns discussed some of the same themes Mr. Forbes pressed during his presidential campaign, including the flat tax, term limits, abortion and foreign intervention in Bosnia, and have been valued at $94,900.

The Commission contended that Mr. Forbes's columns were not bona fide news accounts and were not part of a general pattern of campaign-related news accounts that gave reasonably equal coverage to all opposing candidates. Furthermore, the Commission argued that Forbes, Inc., published the columns in consultation with Mr. Forbes while he was a candidate, thereby turning the corporation's expenditure for the columns--$94,900--into a contribution to the Forbes campaign.

In addition, the Forbes committee failed to report the value of the columns in any of its reports filed with the Commission. 2 U.S.C. §434(b)(2)(A).

The FEC asked the court to find that Forbes, Inc., made prohibited in-kind corporate contributions to the Forbes committee and that Mr. Forbes, in his capacity as CEO, violated the Act by consenting to the contributions. The FEC also asked the court to find that Mr. Forbes, the Forbes committee and the committee treasurer violated that Act when they knowingly accepted the prohibited in-kind contributions. The FEC asked the court to enjoin the defendants from violating the Act further and to assess a civil penalty against them.

Source: FEC Record, November 1998, p. 2; and April 1999, p. 5.

FEC v. FRANKLIN

On September 27, 1989, the U.S. Court of Appeals for the Fourth Circuit granted the FEC's motion for summary affirmance in FEC v. William Franklin (No. 89-1512). The appeals court remanded the case to the district court (Civil Action No. 89-324-N).

Background

In October 1988 Mr. Robb, the Democratic nominee for the U.S. Senate in Virginia, filed a complaint with the Commission alleging that Mr. Franklin's unknown employer had violated the election law by failing to report payments made to Mr. Franklin to investigate rumors linking the candidate with persons allegedly implicated in drug use or drug trafficking. Mr. Franklin was a private investigator and an attorney working in Virginia. Conducted during the height of the 1988 campaign, Mr. Franklin's investigation was the subject of several news stories.

The Robb campaign also alleged that the contribution limits may have been violated by Mr. Franklin's client.

After finding "reason to believe" that the law had been violated, the Commission sent Mr. Franklin a questionnaire about the nature and purpose of his investigation and asking on whose behalf it was conducted. Mr. Franklin answered some of the questions, but he refused to identify the person who had hired him, invoking attorney-client privilege. The FEC subsequently obtained a court order requiring Mr. Franklin to respond fully to the questions.

Along with ordering Mr. Franklin to identify his employer, the court ordered the FEC not to disclose the identity of that person until a formal enforcement action commenced, or the individual waived confidentiality, or until disclosure was mandated by the election law.

District Court Decision

Mr. Franklin challenged the FEC's actions on four grounds:

The court rejected all of these arguments.

In ruling on the FEC's jurisdiction, the court concluded that the Commission had fulfilled its statutory requirements in acting on the complaint to the extent that it was possible. The election law requires that the Commission notify respondents of complaints filed against them; the Commission must also give such persons the opportunity to respond to the allegations. 2 U.S.C. §437g(a)(1). Although the Commission did not know the name of the respondent, the court found that the Commission had "met the requirements of the law" by communicating with the unknown respondent through Mr. Franklin.

The court also rejected Mr. Franklin's argument that the Robb complaint was inadequate on the grounds that it did not identify the respondent or allege "a clear and concise recitation of the facts which describe a violation," as required under 11 CFR 111.4(d)(3). "While the complaint did not identify the respondent by name," the court said, "the complaint clearly identified the employer of Franklin as the respondent." The court further said that the regulations did not require "a complete factual and legal account of a violation." Filing a complaint is only the first step in the enforcement process, the court emphasized.

With regard to Mr. Franklin's charge that the Commission's "reason to believe" finding was contrary to law, the court observed that "agency actions are not generally ripe for judicial review" unless they constitute "final agency actions." In most cases, a "reason to believe" finding is a preliminary action in the enforcement process, leading to a formal investigation. It is not a final action. Furthermore, the court noted, "reason to believe" findings have not previously been reviewed by courts unless the alleged violation was novel or unless the press exemption to the reporting requirements was at issue. The Robb complaint involved neither novel issues nor the press exemption. Adding that Mr. Franklin had not demonstrated that an FEC investigation would injure himself or his client, the court rejected Mr. Franklin's argument that the Commission's finding was "contrary to law."

The court also found that Mr. Franklin had not established that the attorney-client privilege applied to his case. Although he was a practicing attorney, Mr. Franklin was questioned by the FEC about his activity as a private investigator. "Franklin has not demonstrated that the client retained him in his capacity as an attorney or that [he] provided legal advice to the client relating to Franklin's investigation," the court said.

For these reasons, the court ordered Mr. Franklin to provide written answers to the FEC's questions within 75 days. Furthermore, the court ordered that "upon pain of contempt, no member or employee of the FEC, or any other person, disclose to any person who is not a member or employee of the FEC with a need to know" the identity of Franklin's client in the Robb investigation. This protective order would apply unless and until a formal enforcement action was begun, or Franklin's client waived confidentiality restrictions, or disclosure was otherwise required by the law.

Mr. Franklin appealed the decision.

Appeals Court Decision

On September 27, 1989, the U.S. Court of Appeals for the Fourth Circuit granted the FEC's motion for summary affirmance. The appeals court remanded the case to the district court, which on September 29 ordered Mr. Franklin to provide the Commission with "full and complete answers to the extent of his knowledge to each and every question propounded to him" by the agency. The court ordered the defendant to provide the answers within 5 days.

On the direction of the appeals court, the district court also vacated a protective order that it had imposed in July.

Source: FEC Record, September 1989, p. 8; and March 1990, p. 13.

Franklin: FEC v., 718 F. Supp. 1272, aff'd in part, (E.D. Va.), 902 F.2d 3 (4th Cir. 1989).

FEC v. FREE THE EAGLE

FEC v. RUFFPAC

On June 5, 1995, the U.S. District Court for the District of Columbia issued consent judgments in these two cases. In both cases the FEC sought enforcement of conciliation agreements (MUR or Matter Under Review 2191) entered into by Free the Eagle and by RUFFPAC and Tammy J. Lyles. Ms. Lyles was the managing director of Free the Eagle and the treasurer of RUFFPAC.

In the stipulations for consent judgments, both defendants and Ms. Lyles admitted to being in breach of the conciliation agreement. Free the Eagle owed the Commission $5,000, and RUFFPAC and Ms. Lyles owed the Commission $8,000, both with interest accrued since November 15, 1994. Defendants and Ms. Lyles agreed to the following:

Additionally, a $5,000 civil penalty was assessed against each defendant under 2 U.S.C. §437g(a)(6)(A) for breach of the conciliation agreement. The FEC agreed to waive both civil penalties provided that all parties complied with the court's consent judgment order and that all payments were timely.

Source: FEC Record, August 1995, p. 5.

Free the Eagle: FEC v., No. 95-0297 (D.D.C. June 5, 1995). RUFFPAC: FEC v., No. 95-0296 (D.D.C. June 5, 1995).

FEC v. FRIENDS OF ISAIAH FLETCHER

On April 24, 1989, the U.S. District Court for the District of Maryland ruled that Friends of Isaiah Fletcher and Mr. Fletcher, as treasurer, violated section 434(a)(2)(A) of the election law by failing to file an October 1986 quarterly report. (Civil Action No. PN 88-2323.) The committee was Mr. Fletcher's principal campaign committee for his 1986 Congressional bid.

The court ordered defendants to pay a civil penalty of $5,000 and to pay the Commission's costs in the action. The court also permanently enjoined the defendants from similar future violations of the Act.

In March 1990, after the Fletcher campaign had failed to make any payments on the judgment, the FEC petitioned the court to (1) hold defendants in contempt for their failure to pay the assessments and (2) order defendants to pay the interest that had accrued on the penalty.

The court denied the motion but ordered defendants to begin paying the assessments in monthly installments of $300 each beginning June 15, 1990. The court also ordered Mr. Fletcher to file a statement profiling his financial situation.

After the defendants failed to comply with these orders, the court granted an FEC petition to hold them in contempt on February 5, 1991. The court ordered Mr. Fletcher and the committee to pay:

The case was closed on August 6, 1992, when the FEC notified the court that the committee and its treasurer, Mr. Fletcher, had paid the court-ordered penalty to the satisfaction of the agency.

Source: FEC Record, June 1989, p. 8; July 1990,
p. 4; April 1991, p. 6; and October 1992, p. 12.

FEC v. FUND FOR A CONSERVATIVE MAJORITY

On September 23, 1997, parties to this suit agreed to a final order and judgment by the U.S. District Court for the Eastern District of Virginia, Alexandria Division. Under that order, the defendants, Fund for a Conservative Majority (FCM) and its treasurer, Robert C. Heckman, agreed to pay a civil penalty of $2,500 for having violated the Federal Election Campaign Act (the Act).

Mr. Heckman failed to file the FCM's 1994 year-end report on time, a violation of 2 U.S.C. §434(a)(4)(A)(i). This section of the Act requires political committees other than authorized candidate committees to file quarterly reports during a year in which a general election is held. The report for the final quarter that ends on December 31 must be completed and returned to the FEC no later than January 31 of the following year.

The FCM's 1994 year-end report should have been submitted to the FEC by January 31, 1995. Mr. Heckman hand delivered a copy of the FCM's year-end report on September 7, 1995--nearly nine months late. He also delivered another copy of the report to staff of the Commission's Office of General Counsel on June 27, 1996--close to a year and a half after it was due.

Neither Mr. Heckman nor the FCM contested the Commission's allegations in this case. In addition to the civil penalty, the defendants were permanently enjoined from making similar violations of the Act.

Source: FEC Record, November 1997, p. 1.

FEC v. FURGATCH

FEC v. DOMINELLI

On November 20, 1984, the U.S. District Court for the Southern District of California dismissed FEC v. Furgatch (Civil Action No. 83-0596-GT[M]) on the ground that the case failed to state a justiciable claim. Based on its ruling in the Furgatch suit, on November 30, 1984, the court also dismissed a "virtually identical case," FEC v. Dominelli (Civil Action No. 83-0595-GT[M]).

More than two years later, however, the district court was reversed by the court of appeals, which ruled that the defendants had violated the election law and which remanded the cases to the district court.

On remand, the district court assessed a $25,000 civil penalty against Mr. Furgatch and permanently enjoined him from future similar violations of the election law (Civil Action No. 86-6047). Mr. Furgatch appealed the penalty and the injunction.

On March 8, 1989, the appeals court upheld the lower court's imposition of the civil penalty. However, the court vacated the permanent injunction against Mr. Furgatch and remanded it to the district court with instructions to limit its duration.

Background

In filing suit against Mr. Furgatch on March 25, 1983, the FEC claimed that he had violated the election law by failing to report independent expenditures of approximately $25,008. 2 U.S.C. §434(c). Mr. Furgatch incurred the expenditures for two political ads he placed in The New York Times and The Boston Globe, respectively, which the Commission alleged expressly advocated the defeat of President Carter in his 1980 reelection bid. The FEC also claimed Mr. Furgatch had violated section 441d of the law by failing to include an adequate disclaimer notice on the ad he placed in The Boston Globe.

In filing suit against Mr. Dominelli on the same day, the FEC had asked the court to find that he had failed to report independent expenditures amounting to $8,471. The FEC alleged that Mr. Dominelli had incurred the expenditures for an ad in a November 1980 issue of The Chicago Tribune, which expressly advocated President Carter's defeat.

District Court Ruling on the Furgatch Suit

In ruling on whether the political ads sponsored by Mr. Furgatch expressly advocated President Carter's defeat, and therefore constituted independent expenditures, the district court applied the standard contained in the Supreme Court's Buckley v. Valeo opinion.1 In Buckley v. Valeo, the Court had defined express advocacy as "communications containing express words of advocacy of election or defeat, such as 'vote for,' 'elect,' 'cast your ballot for,' 'Smith for Congress,' 'vote against,' 'defeat,' 'reject.'" Buckley v. Valeo, 424 U.S. 1, 44 (1976). The district court cited earlier district and appeals court decisions which emphasized that "neither the purpose nor the effect of a political advertisement is determinative of the issue of whether the ad expressly advocates the election or defeat of a clearly identified candidate." See FEC v. CLITRIM, 616 F.2d 45, 53 (2d Cir. 1980); FEC v. AFSCME, 471 F. Supp. 315, 316 (D.D.C. 1979). Applying this express advocacy standard to Mr. Furgatch's ads, the court found that the pivotal question was "whether the phrase 'Don't let him do it' [was] the equivalent of the expression 'vote against Carter.'" (The remainder of the language in the ad was beyond the election law's scope, the court concluded, because it contained only an implied message not to vote for President Carter.) Interpreting the word "it" in the phrase, the court concluded that the ad exhorted the reader not to let President Carter "hide his own record" or "degrade the electoral process and lessen the prestige of the office." The court then concluded that the phrase "Don't let him do it" did not constitute express advocacy. The court found that "the range of actions expressly recommended by the ad obviously did not include voting the President out of office." Consequently, the ad did not ask the reader to vote against the President.

Finally, the court noted that, since it had decided the case on grounds of statutory construction, it was not "necessary or desirable to [address] the defendants' constitutional challenges to sections 434(c) and 441d" of the election law.

On January 24, 1985, the FEC filed an appeal of the district court's decision with the U.S. Court of Appeals for the Ninth Circuit.

Appeals Court Ruling

On January 9, 1987, the U.S. Court of Appeals for the Ninth Circuit reversed the district court's decision in the case and confirmed the FEC's claim that Mr. Furgatch should be held liable for violations of the election law resulting from: his failure to report spending for the ads as independent expenditures and his failure to state in one of the ads that the communication was not authorized by a candidate or a candidate's committee.

Since FEC v. Dominelli presented "facts virtually identical" to those addressed in the Furgatch suit, the appeals court also reversed the district court's ruling in that case. (FEC v. Dominelli; Civil Action No. 85-5525)

In reversing the district court's ruling in the case, the appeals court rejected the "strictly limited" definition of express advocacy relied upon by the district court. (See discussion above.) Instead, the appeals court found that "context is relevant to a determination of express advocacy." The court therefore concluded that "[political] speech need not include any of the words listed in Buckley to be express advocacy under the Act, but must, when read as a whole, and with limited reference to external events, be susceptible of no other reasonable interpretation but as an exhortation to vote for or against a specific candidate." The appeals court stated that this standard for determining when political speech constitutes express advocacy would "preserve the efficacy of the Act without treading upon the freedom of political expression."

Elaborating on this standard, the appeals court held that a political communication constituted express advocacy if:

Conversely, the appeals court held that "speech cannot be express advocacy of the election or defeat of a clearly identified candidate when reasonable minds could differ as to whether it encourages a vote for or against a candidate or encourages the reader to take some other kind of action." In applying its express advocacy standard to Mr. Furgatch's ads, the appeals court held that it had "no doubt that the ads ask the public to vote against Carter." In reversing the district court's conclusion, the appeals court held that the "pivotal question is not what the reader should prevent Jimmy Carter from doing, but what the reader should do to prevent it [i.e., his reelection]." The appeals court noted that, although "we are presented with an express call to action" in the ad, we are not told "what action is appropriate." However, the court concluded, in the context of the message, "reasonable minds could not dispute that Furgatch's advertisement is urging readers to vote against Jimmy Carter." Moreover, the court held that its conclusion was "reinforced by consideration of the timing of the ad... timing the appearance of the advertisement less than a week before the election left no doubt of the action proposed."

Finally, the court held that Mr. Furgatch's ads were not the kind of "issue-oriented speech" excepted from the election law: "The ads directly attack a candidate, not because of any stand on the issues of the election, but for his personal qualities and alleged improprieties in the handling of his campaign. It is the type of advertising that the Act was enacted to cover."

The court did not explicitly discuss Mr. Furgatch's constitutional challenge to sections 434(c) and 441d of the election law, but noted that in deciding the case on grounds of statutory construction, it had "implicitly" dealt with the free speech issues raised in his suit.

On October 5, 1987, the U.S. Supreme Court denied a petition by Mr. Furgatch for a writ of certiorari in the suit.

District Court Judgment on Remand

On April 26, 1988, the district court entered a judgment requiring Mr. Furgatch to pay a $25,000 civil penalty and to comply with the FECA's reporting requirements within 30 days. The court also permanently enjoined the defendant from future similar violations of the election law. Mr. Furgatch appealed the judgment in the Ninth Circuit.

Mr. Furgatch petitioned the appeals court to find that the district court had abused its discretion in assessing a $25,000 penalty. He also asked the appeals court to find that the lower court's permanent injunction was not authorized by the election law, was impermissibly vague and was not imposed in compliance with Rule 65(d) of the Federal Rules of Civil Procedure.

Appeals Court Decision

In finding that the district court had not abused its discretion in imposing the civil penalty, the appeals court observed that the Federal Election Campaign Act (the Act) permits a court to assess a civil penalty "which does not exceed the greater of $5,000 or an amount equal to any contribution or expenditure involved" in the violation. 2 U.S.C. §437g(a)(6)(B). Since the total expenditures Mr. Furgatch had made for the ads amounted to $25,008, the district court had assessed a $25,000 penalty.

With regard to the permanent injunction, Mr. Furgatch had claimed that the Act permitted a court to issue an injunction only when a person "is about to commit" a violation of the law. The FEC claimed that the relevant statute, 2 U.S.C. §437g(a)(6)(B), gave a court the authority to issue an injunction on the basis of either a past or a threatened future violation. Admitting that the language of the statute did not clearly indicate whether Congress intended to limit injunctive relief to cases of imminent violations of the Act, the court cited legislative history to conclude that the FEC was correct in its interpretation of section 437g.

Nevertheless, the court said, the district court could not issue an injunction pursuant to section 437g(a)(6)(B) unless there was a likelihood of future violations. The court found that although the record supported a finding that Mr. Furgatch was likely to violate the election law again, it did not justify a permanent injunctionthat is, an injunction lasting the duration of his life.

In remanding the injunction to the lower court, the appeals court instructed it to limit the injunction to a "reasonable duration." The appeals court also required the district court to state, in compliance with Rule 65(d), the reasons for the injunction and the specific actions restrained by it.

On remand, the district court cited Mr. Furgatch's past violations of the election law as demonstrating that he was likely to violate the law again. As an additional reason for the injunction, the court pointed out that his conduct since the enforcement action was opened (in 1980) had shown "an absence of good faith efforts by Furgatch to cure his violations."

In accordance with the appeals court's ruling, the district court specified that the injunction prohibited Mr. Furgatch from committing further violations of sections 434(c) and 441d of the Act. Finally, the court limited the duration of the injunction to eight years.

Default Judgment Against Dominelli

Since Mr. Dominelli never responded to the FEC's complaint on remand, the agency asked the district court to issue a default judgment against him.

In response to the FEC's request, on March 14, 1988, the district court issued a judgment in which it decreed that:

Source: FEC Record, January 1985, p. 6; March 1987, p. 5; June 1987, p. 6; December 1987, p. 7; May 1988, p. 8; May 1989, p. 7; June 1989, p. 7; and February 1990, p. 7.

Dominelli: FEC v., No. 83-0595-GT(M) (S.D. Cal. 1984) (unpublished opinion), rev'd, 810 F.2d 205 (9th Cir. 1987).

Furgatch: FEC v., No. 83-0956-GT(M) (S.D. Cal. 1984), (unpublished opinion), rev'd, 807 F.2d 857 (9th Cir.), cert. denied, 484 U.S. 850 (1987), on remand (S.D. Cal. April 26, 1988) (unpublished order), aff'd in part, vacated and remanded in part, 869 F.2d 1256 (9th Cir. 1989).

1 An independent expenditure is an expenditure for a communication expressly advocating the election or defeat of a clearly identified candidate that is not made with the cooperation or prior consent of, or in consultation with, or at the request or suggestion of, any candidate or his/her authorized committees or agents. 11 CFR 100.16 and 109.1(a).

FEC v. GOPAC

On February 28, 1996, the U.S. District Court for the District of Columbia ruled in GOPAC's favor and dismissed this case. The FEC had asked the court to find that, under the Federal Election Campaign Act, GOPAC first qualified as a political committee in 1989 and as such was required to file and register with the FEC since then. GOPAC argued that it did not qualify as a political committee under the Act until 1991, at which time it did register with the FEC.

The court ruled that an organization's status as a political committee under the Act is properly determined by applying the "major purpose" test to narrow the statutory definition, which states that a political committee is any group that receives at least $1,000 in contributions or makes at least $1,000 in expenditures to support federal candidates. According to the court, the major purpose test serves as a bright line that separates groups that are political committees from those that are not; under the major purpose test, a group is a political committee if its major purpose is to elect a particular candidate or candidates for federal office.

FEC Administrative Activity

Following an investigation into an administrative complaint filed by the Democratic Congressional Campaign Committee in September 1990, the FEC found probable cause to believe that in 1989 GOPAC qualified as a political committee under the Act, and that, until 1991, GOPAC failed to abide by the Act's registration and disclosure requirements for political committees. This probable cause finding was based on a GOPAC solicitation that urged contributors to help "break the Democrats' stronghold on power" in the U.S. House of Representatives.

The FEC was unable to reach a conciliation agreement with GOPAC and filed this lawsuit on April 14, 1994. The FEC asked the court to impose civil penalties on GOPAC and to require GOPAC to file 1989 and 1990 disclosure reports.

Factual Background

In 1989, GOPAC's stated mission was: "to create and disseminate the doctrine which defines a caring, humanitarian, reform Republican Party in such a way as to elect candidates, capture the U.S. House of Representatives and become a governing majority at every level of government."

The court said that although this mission statement had as its ultimate objective the election of Republican candidates to the U.S. House of Representatives, GOPAC's direct support in 1989 and 1990 was for state and local candidates and not for any federal candidates.

GOPAC did develop and distribute materials espousing a set of ideas for Republican candidates, including federal candidates. GOPAC also targeted cash contributions to local and state candidates in areas where it hoped this support might indirectly influence the election of other candidates, including federal candidates, on the Republican ticket.

GOPAC also provided assistance to Congressman Newt Gingrich in 1989 and 1990, but the court said there was no material evidence that Congressman Gingrich used these funds for his 1992 reelection campaign as opposed to his work as GOPAC Chairman.

Legal Analysis

The Act defines a political committee as any group that receives at least $1,000 in contributions or makes at least $1,000 in expenditures for the purpose of influencing a federal election. 2 U.S.C. §431(4)(A).

In Buckley v. Valeo, the Supreme Court, citing First Amendment concerns, ruled that the definition of political committee "need only encompass organizations that are under the control of a candidate or the major purpose of which is the nomination or election of a candidate."

The FEC contended that the Buckley decision did not require a group to provide direct support to a specific federal candidate in order for the group to be considered a political committee under the major purpose test. Instead, the FEC argued that Buckley's definition of "political committee" encompassed groups organized to engage in partisan electoral politics or electoral activity. Accordingly, the FEC argued that if GOPAC's sole purpose was to advocate the election of Republicans as a class of candidates, then the purpose of its activities was by definition campaign related. And if its expenditures or contributions for these campaign-related activities exceeded $1,000, it qualified as a political committee under the Act.

The court disagreed because it found the term "partisan electoral politics" to be vague and therefore to chill the First Amendment rights of issue advocacy groups. The court quoted the Buckley decision: " . . . the distinction between discussion of issues and candidates and advocacy of election or defeat of candidates may often dissolve in practical application."

The court reasoned that a bright-line test was therefore required, so that contributors and committee treasurers could easily conform their conduct with the law and so that the FEC could easily identify violations and take quick and decisive action. The court concluded that the appropriate bright line was provided by limiting the definition of political committee to groups whose major purpose was the election of a particular federal candidate or candidates. The court said that this test drew two relatively clear lines: it distinguished between federal and nonfederal candidates; and it distinguished between groups that support particular federal candidates and those that lend general party support.

The court noted that the FEC conceded that there was no evidence of direct GOPAC support to federal candidates in 1989 and 1990. GOPAC's support appeared to have been limited to state and local candidates, to general nationwide dissemination of ideological materials and to Congressman Gingrich in his role as GOPAC chairman and not as a federal candidate. The court therefore ruled in GOPAC's favor and dismissed the FEC's complaint.

Source: FEC Record, April 1996, p. 1.

GOPAC: FEC v., 917 F. Supp. 851 (D.D.C. 1996).

FEC v. HALEY CONGRESSIONAL COMMITTEE

On February 24, 1987, the U.S. District Court for the Western District of Washington at Tacoma granted the defendants' motion for summary judgment in FEC v. Ted Haley Congressional Committee (Civil Action No. 85-1185). The district court dismissed the suit with prejudice, finding no violation of federal election law regarding contribution limitations (2 U.S.C. §441a(a)(1)(A) and 441a(f)). The court concluded, alternatively, that if there was a violation, no civil penalty would be assessed.

On July 22, 1988, the U.S. Court of Appeals for the Ninth Circuit issued a decision which reversed the district court ruling. Though finding that the defendants had, in fact, violated the contribution limitations, the appeals court upheld the lower court's refusal to assess a civil penalty.

On November 22, 1988, the court issued an amended judgment responding to the remand order.

Background

The Ted Haley Congressional Committee was the principal campaign committee for Mr. Haley's bid for a House seat in Washington's 1982 Congressional primaries. After the election, Mr. Haley obtained a $50,000 personal loan from a local bank to retire debts outstanding from his campaign. To secure the loan, Mr. Haley obtained guarantees from several friends, that is, the six other defendants in the suit. (Four of the defendants provided guarantees of $10,000 each; two provided guarantees of $5,000 each.) The loan and the guarantees were reported by Mr. Haley's campaign in its 1983 mid-year report. By the end of 1983, Mr. Haley had fully repaid the loan.

Under the election law and FEC regulations, an endorsement or guarantee of a loan, like a regular loan, counts as a contribution from the endorser or guarantor to the extent of his/her portion of the outstanding balance of the loan. 11 CFR 100.7(a)(1)(i)(C). Consequently, each guarantor for Mr. Haley's campaign loan exceeded his/her $1,000 limit for Mr. Haley's primary campaign. On October 30, 1984, the Commission therefore found reason to believe that:

On July 30, 1985, after attempting to resolve this enforcement matter through informal methods of conciliation, the Commission filed a suit against defendants in the U.S. District Court for the Western District of Washington.

District Court Ruling

The court found that "post-election loan guarantees, such as those made here, are presumptively for the purpose of influencing an election under the statute and regulations. This presumption, however, is not conclusive, but rebuttable. It simply allows the FEC to shift the burden of proof to defendants after a minimal showing."

The court held that the defendants had successfully rebutted this presumption by showing that the "facts [of the case] are not in issue, and that those facts lead to the legal conclusion that the guarantees in issue were not for the purpose of influencing any election." Thus the guarantees should not have been viewed as contributions (i.e., funds received to influence a federal election). As evidence that the loan guarantees were not made to influence a federal election, the court cited "the timing of the solicitation [of loan guarantees after the election], the nature of the relationships between Haley and the guarantors, their intent in making and accepting the guarantees and the facts and circumstances of Haley's [re]payment.... " of the loan.

The court also found "no justifiable ground" for assessing a civil penalty against defendants, even if it were to conclude the defendant had violated the election law. On April 23, 1987, the FEC filed an appeal with the U.S. Court of Appeals, 9th Circuit (Civil Action No.
87-3867).

Appeals Court Ruling

In reviewing the case on appeal, the appeals court held that, since Congress had not precisely addressed the issue of whether donations made to a campaign committee after the election constituted contributions for the purpose of influencing a federal election, the court could "not simply impose its own construction on the statute...." Rather, the court had to decide whether the FEC had based its interpretation of the statute on a "permissible construction.... "

The court found that the FEC's interpretation of the relevant statutory provisions through its regulations and advisory opinions was a "permissible" interpretation of the election law. For example, when the FEC promulgated a regulation in 1976 stating that post-election contributions were subject to limits, Congress did not disapprove it. In the court's view, "Congress' acquiescence [was] made more concrete in view of several advisory opinions the FEC has issued on the subject."

The appeals court therefore held that "the district court erred when it substituted its interpretation of the statute and regulations rather than giving deference to the FEC's interpretation of its enabling statute and its own promulgated regulations and advisory opinions...The appellees [the Haley Congressional Committee] cannot choose to ignore that interpretation of the regulatory scheme and urge this court to substitute its own construction for that of the FEC."

The appeals court found that the district court had not abused its discretion in finding that a civil penalty for the defendants' violations of the election law was "unwarranted." Consequently, the appeals court decided not to "disturb that finding and conclusion."

Finally, the appeals court vacated the district court's award of attorneys' fees to the defendants. Since the defendants were no longer the "prevailing party" in the case, the appeals court held that all parties to the suit had to bear their own litigation costs.

District Court Ruling on Remand

In its amended judgment, the district court:

Source: FEC Record, May 1987, p. 6; September 1988, p. 7; and January 1989, p. 9.

Ted Haley Congressional Committee: FEC v., 654 F. Supp. 1120 (W.D. Wash. 1987), rev'd, 852 F.2d 1111 (9th Cir. 1988).

FEC v. HALL-TYNER ELECTION CAMPAIGN

On September 22, 1981, the U.S. District Court for the Southern District of New York issued an order in FEC v. Hall-Tyner Election Campaign Committee (the Committee) granting the defendant's motion for summary judgment in the suit (Civil Action No. 78-3508). The Committee was the principal campaign committee for the 1976 Presidential and Vice Presidential nominees of the Communist Party, U.S.A. The district court ruled that the recordkeeping and disclosure requirements of the Act, as applied to the Committee, would abridge First Amendment rights to the Committee's supporters.

FEC's Claim

The FEC's suit arose from the Committee's failure to disclose on its reports the names and addresses of 424 contributors who had each made contributions of $100 or more. Instead, the Committee listed the contributors as "anonymous" (in violation of 2 U.S.C. §434(b)(2)). Moreover, the Committee's treasurer failed to keep records of contributions exceeding $50 from individuals who had elected to remain anonymous (in violation of 2 U.S.C. §432(c)). After attempting to resolve this matter through informal methods of conciliation, the Commission filed suit with the district court on August 1, 1978.

District Court Ruling

In ruling that the Committee did not have to comply with the Act's disclosure requirements, the district court noted that the Supreme Court had not created a blanket exemption for minor parties from the Act's disclosure requirements in its Buckley v. Valeo decision. The Supreme Court did conclude, however, that minor parties might not have to comply with the disclosure provisions when they had a chilling effect on contributors' rights of free association. Buckley v. Valeo, 424 U.S. at 72-74.

In order to exempt contributors from the disclosure requirements, the Court said that a minor party would have to demonstrate a "reasonable probability" that compelled disclosure of the names of contributors would "subject them to threats, harassment, or reprisals from either Government officials or private parties." Id. at 74. Under these circumstances, disclosure could "...instill sufficient fear in potential supporters of the organization to deter them from engaging in protected associational activity." Id. at 71. On examining the evidence presented by the Committee, the district court found that "the record plainly reflects an extensive history of governmental harassment and public hostility directed at the Party and its members and supporters." The district court concluded that "the substantial infringement of First Amendment rights demonstrated in the record cannot be justified by the governmental interests furthered by applying the FECA disclosure requirements to the defendants." Moreover, the court noted that "the governmental interest served in disclosing the source and amount of contributions is less substantial" in the case of a minor party. The district court cited the Supreme Court's holding in Buckley that "the undue influence of large contributions on officeholders" is reduced in the case of minor parties since their candidates are less likely to win an election. Id. at 70.

Similarly, the district court found that the Act's recordkeeping requirements also infringed on the contributors' free association rights, even though information recorded would not be publicly disclosed. The court cited an ongoing governmental investigation as evidence that records of contributors' names would subject them to undue harassment. The district court cited 12 affidavits submitted by anonymous individuals providing evidence of harassment. The district court found that the main governmental interest served by the recordkeeping requirements (i.e., effective monitoring and enforcement of the contribution limits) did not justify infringement of the contributors' First Amendment rights.

Appeals Court Ruling

On May 6, 1982, the U.S. Court of Appeals for the Second Circuit issued an opinion in FEC v. Hall-Tyner Election Campaign Committee (Civil Action No. 81-6229). The appeals court upheld an earlier ruling by the U.S. District Court for the Southern District of New York that the recordkeeping and disclosure requirements of the Act, as applied to the Hall-Tyner Campaign Committee (the Committee), would abridge First Amendment rights of the Committee's supporters.

In affirming the district court's decision, the appeals court found that the Committee had met the standard set forth in Buckley v. Valeo for exempting minor parties from the Act's disclosure requirements; i.e., the Committee had demonstrated a "reasonable probability" that disclosure of the names of its contributors would subject them to governmental or private harassment. Buckley v. Valeo, 424 U.S. at 72-74. Moreover, the appeals court cited the Court's holding in Buckley that the governmental interest served in disclosing the source and amount of contributions (i.e., "the undue influence of large contributions on officeholders") is less substantial in the case of a minor party with little chance of winning an election. Id. at 70. The appeals court concluded, therefore, that the governmental interest served in obtaining information on the Committee's contributors did not justify the chilling effect that disclosure would have on their First Amendment rights of free association.

Source: FEC Record, November 1981, p. 5; and July 1982, p. 7.

Hall-Tyner Election Campaign Committee: FEC v., 524 F. Supp. 955 (S.D.N.Y. 1981), aff'd, 678 F.2d 416 (2d Cir. 1982), cert. denied, 459 U.S. 1145 (1983).

FEC v. INTERNATIONAL FUNDING INSTITUTE

On July 10, 1992, the U.S. Court of Appeals for the District of Columbia Circuit, sitting en banc, upheld the constitutionality of 2 U.S.C. §438(a)(4). (Civil Action No. 91-5013.) That provision of the Federal Election Campaign Act (the Act) prohibits anyone from using, for solicitation or commercial purposes, the information on individual contributors listed in political committee reports filed with the FEC. On November 30, 1992, the U.S. Supreme Court denied a petition for review of the case.

On March 1, 1993, the U.S. District Court for the District of Columbia ordered defendants to pay an $18,000 civil penalty for knowing and willful violations of the sale or use restriction.

Background

According to the findings of fact in this case, International Funding Institute (IFI), through Robert E. Dolan, its sole stockholder and director, subscribed to an on-line data base service provided by Legi-Tech, Inc. (an amicus curiae in this action). The data base contained information on individual contributors compiled from FEC reports. IFI developed the contributor data into a mailing list, which it marketed through a broker. The broker, in turn, rented the list to about five customers, including American Citizens for Political Action, Inc. (ACPA), a political committee. (Mr. Dolan is also chairman and treasurer of ACPA.) ACPA used the list for several mailings, each soliciting about 5,000 individuals.

In an internal enforcement matter, the FEC found probable cause to believe that IFI, ACPA and Mr. Dolan, as ACPA treasurer, knowingly and willfully violated section 438(a)(4). Unable to reach a conciliation agreement with respondents, the agency filed suit against them in the U.S. District Court for the District of Columbia. (Civil Action No. 90-1623.)

Defendants asked the district court to dismiss the case, arguing that §438(a)(4) violated the First Amendment of the Constitution, both on its face and as applied to their conduct. The FEC moved to certify the constitutional question to the court of appeals. The district court granted the FEC's motion.

Court of Appeals Opinion

Level of Scrutiny

The court first examined what level of scrutiny it should apply to determine whether the use restriction of §438(a)(4) was constitutional. Noting some apparent conflicts in levels of scrutiny applied by the Supreme
Court in similar cases, the court "assumed"but did not decidethat §438(a)(4) was subject to intermediate scrutiny.

Quoting Seattle Times Co. v. Rhinehart, 467 U.S. 20, 32 (1984), the court explained the Supreme Court's criteria for intermediate scrutiny: it "require[s] only that the restriction further 'an important or substantial governmental interest unrelated to the suppression of expression' and [that it] be 'no greater than is necessary or essential to the protection of the particular governmental interest involved.'"

Governmental Interest

The FEC argued, inter alia, that §438(a)(4) was narrowly tailored to further an important governmental interest, that of protecting the value of a political committee's contributor list. The FEC further argued that this protection, in turn, preserves political discourse.

The court agreed: "Without the use restriction of §438(a)(4), innumerable entrepreneurs would, like the defendants here, be able freely to appropriate to themselves part of the value of the contributor lists compiled by reporting political committees. As a result, such committees would have less incentive to compile the lists in the first place. In other words, if the return on their investment in solicitation would be reduced by others using the resulting lists, political committees would not find it worthwhile to solicit as much as they now do; they would raise less money, spend less money, and correspondingly underwrite less political discourse....[T]he use restriction protects political discourse from the adverse effect that the disclosure requirement of the Act would otherwise have."

(The FEC also argued, based on legislative history, that §438(a)(4) furthers the governmental interest in protecting contributors from unwanted solicitations, but the court did not find it necessary to reach that argument.)

Defendants claimed that a political committee has no property rights in its contributor list because a list of names and addresses is not sufficiently original to warrant copyright protection. The court, however, observed that "Congress may recognize an intellectual property interest, narrower than copyright, that is not subject to the constitutional requirement of originality."

The court rejected defendants' alternative argument that §438(a)(4) is inconsistent with the First Amendment because it creates "a property interest in the political sympathies of another." Instead, the court said, the use provision "narrowly protects the value of the list itself in a particular use; it does not prevent one from soliciting a person who is on a committee's contributor list, so long as one does not obtain that person's name (directly or indirectly) from a list filed with the FEC."

Conclusion

The court held that, under an intermediate level of scrutiny, section 438(a)(4) is constitutional as applied to the defendants' conduct because it "advances an important governmental interest" (preserving the value of a political committee's contributor list) and "is no broader than is necessary to that task."

The court rejected defendants' second claim, that §438(a)(4) was unconstitutional on its face. Quoting Members of the City Council of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789, 798 (1984), the court said that a facial challenge can succeed "only if the statute may 'never be applied in a valid manner' or is 'written so broadly that [it] may inhibit the constitutionally protected speech of third parties.'" The defendants, the court said, failed to make such an argument.

The court remanded the case to the district court for proceedings consistent with its holding.

Defendants agreed to the district court's March 1993 order, which imposed the $18,000 penalty and also permanently enjoined defendants from future violations of the sale and use restriction.

Source: FEC Record, September 1992, page 11; January 1993, page 2; and May 1993, p. 2.

FEC v. KALOGIANIS

On March 25, 1997, the U.S. District Court for the District of New Hampshire ordered Anastasios Kalogianis to pay a $37,500 civil penalty to the FEC for making $249,000 in excessive contributions to the Tsongas for President Committee during the 1992 election cycle. Both parties to this suit agreed to the judgment and consent order.

Mr. Kalogianis made six loans to the Tsongas Committee. Although one of the checks was made payable to Nicholas Rizzo, the committee's chief fundraiser, the money was given with the intention that it be used in the Tsongas campaign.

The Federal Election Campaign Act (the Act) states that no person may make contributions to any federal candidate or his or her authorized candidate committee which, in the aggregate, exceed $1,000. 2 U.S.C. 441a(a)(1)(A). A contribution includes anything of value made by any person for the purpose of influencing a federal election, including loans. 2 U.S.C. §431(8)(A)(i). Further, Commission regulations state that a loan that exceeds the contribution limits of the Act is unlawful whether or not it is repaid. 11 CFR 100.7(a)(1)(i)(A). In addition to the civil penalty, Mr. Kalogianis was permanently enjoined from making similar violations of the Act.

Source: FEC Record, May 1997, p. 3.

FEC v. KOPKO

On June 8, 1992, the U.S. District Court for the Eastern District of Pennsylvania declared that Edward E. Kopko violated 2 U.S.C. §441f by making contributions in the names of others. In its complaint, the FEC had alleged that defendant Kopko had reimbursed twelve of his relatives and friends for their $250 checks to Alexander Haig's 1988 Presidential campaign. The court ordered Mr. Kopko to pay a $1,500 civil penalty and permanently enjoined him from violating §441f. Both the FEC and the defendant agreed to the entry of the order. (Civil Action No. 91-CV-7764.)

Source: FEC Record, August 1992, p. 11.

FEC v. LANCE

On July 2, 1981, citing a lack of appellate jurisdiction, the Supreme Court dismissed an appeal brought by T. Bertram Lance from the U.S. Court of Appeals for the Fifth Circuit, construed Lance's papers as a petition for a writ of certiorari and declined to hear the case. In FEC v. T. Bertram Lance (Civil Action No. 78-1859), the appeals court had affirmed an earlier decision by the U.S. District Court for the Northern District of Georgia, which ordered enforcement of a deposition the FEC had issued to Mr. Lance. Motions by the appellant to stay the appeals court's decision had been denied by the appeals court on February 19, 1981, and by the Supreme Court on March 11, 1981.

FEC's Claim

The FEC had issued the subpoena to Mr. Lance as part of an investigation into Mr. Lance's 1974 gubernatorial campaign in Georgia, which involved possible violations of 2 U.S.C. §441b (formerly 610 of the Federal Corrupt Practices Act). This provision prohibits national banks from making or candidates from accepting contributions in connection with any election to any political office.1 The Commission's investigation began in September 1977.

District Court Ruling

The district court ordered Mr. Lance to comply with the subpoena. The court reasoned that the subpoena was well within the Commission's "broad and inclusive" statutory authority to investigate violations of the Federal Election Campaign Act (the Act).

Appeals Court: Panel

A panel of the appeals court rejected the arguments made by Mr. Lance for quashing the subpoena and affirmed the district court order enforcing the subpoena. Specifically, Mr. Lance claimed that the FEC was investigating matters outside its jurisdiction. He contended that both the Constitution and the Act barred any FEC investigation of contributions made by national banks to his 1974 campaign. The panel responded to this claim by affirming the FEC's argument that it was "...specifically given authority over this provision." (P.L. 93-433, 88 Stat. 1281 (October 15, 1974).) "Moreover, the Supreme Court held that any party seeking enforcement of 610 (now 441b) after January 1, 1975, must seek redress with the Commission." Cort v. Ash, 422 U.S. 66 (1974).

Mr. Lance further claimed that the subpoena violated the equal protection and ex post facto provisions of the Constitution by attempting to apply §441b to campaign activities that occurred before the enactment of the FECA in 1975. The panel, on the other hand, affirmed the FEC's argument that these provisions presented no impediment to the FEC's investigation: "The prohibition against the making of campaign contributions by national banks has been in effect since 1907. Tillman Act, 34 Stat. 864. The mere recodification of 18 U.S.C. §610 as 2 U.S.C. §441b cannot absolve the respondent...from liability for substantive violations which were not changed by the incorporation of §441b into Title 2."

Appeals Court: En Banc

On January 16, 1981, the appeals court, sitting en banc, issued an opinion that adopted the earlier panel decision, affirmed the district court's subpoena enforcement order and rejected a claim, presented by Mr. Lance in his appeal, that §441b was unconstitutional on its face. The appeals court adopted three of the arguments given by the appeals court panel, but rejected the ex post facto argument, stating that it was not ripe for adjudication. The court concluded that the prohibition on unsound banking practices (extensions of credit to a campaign that are outside the ordinary course of business) did not violate the First Amendment because all the transactions in question involved "no speech elements at all." The bank drafts were transacted privately and were "...not the sort of public expression or support for Lance and his views that would make them even 'symbolic speech.'"

As to Mr. Lance's argument that §441b was unconstitutionally vague, the court noted, "The vagueness doctrine has been developed in the context of, and it is applicable to, penal statutes." The court concluded that the vagueness issue was not ripe for adjudication because the court was "...unwilling to assume that the present investigation of Lance will result in his criminal prosecution."

The court also rejected Mr. Lance's claim that §441b abridged Fifth Amendment rights by imposing greater restrictions on national banks in connection with elections than on other entities. The court held that since "...the Banks' contributions contain no cognizable elements of speech...we think the statute must be upheld if there is a rational relationship between the prohibition...and the purpose that prohibition serves.... Since we have no difficulty in concluding that a prohibition against banks engaging in unsound banking practices is rational, we reject Lance's equal protection claim."

As to the defendant's claim that the statute of limitations barred the investigation, the panel found that there was no statute of limitations applicable to a civil proceeding undertaken to enforce the Act. 2 U.S.C. §437g. The panel upheld the FEC's argument that the statute of limitations applied only to criminal prosecutions. "Even assuming arguendo that the three year statute of limitations was applicable to a future civil action brought by the Commission," the FEC argued, "the Commission has information suggesting that violations have occurred within the three years. Moreover, as noted, the existence of violations outside the statutory period themselves provide reason to investigate to ascertain whether further violations occurred within the three year period."

Finally, the defendant contended that, since the FEC already had information available to it from other government agencies, enforcement of the subpoena should be denied on grounds of undue burden and harassment. The panel rejected this claim, confirming the FEC's argument that "the existence of prior investigations by other agencies touching on similar issues does not preclude an agency from investigating matters within its jurisdiction." FEC v. Texaco, 555 F.2d at 878-79. The appeals court panel determined, however, that the constitutional challenges asserted by Mr. Lance should be heard by the court sitting en banc.

Source: FEC Record, September 1981, p. 1.

Lance: FEC v., 617 F.2d 365 (5th Cir. 1980), aff'd, 635 F.2d 1132 (5th Cir.) (en banc), appeal dism'd, cert. denied, 453 U.S. 917 (1981).

1 Under the Act, a loan from a national bank becomes a prohibited contribution if it is not made according to applicable banking laws and in the ordinary course of business. 2 U.S.C. §431(8)(B)(vii).

FEC v. LaROUCHE (94-0658)

On September 28, 1994, the U.S. District Court for the Eastern District of Virginia issued an order stipulated by the parties holding Lyndon H. LaRouche, Jr., and his 1988 Presidential campaign committee jointly and severally liable for repayment of $146,464.44 in Presidential primary matching funds--plus accrued interest--to the U.S. Treasury.

Background

Mr. LaRouche received $833,577 in 1988 primary matching funds. The Commission determined that he had to repay $151,260 in funds received in excess of his entitlement and funds spent on nonqualified campaign expenses. The campaign repaid part of that amount in February 1992, leaving $146,464 still outstanding.

The Commission claimed that, in a letter of September 22, 1992, it notified defendants that the repayment was due within 30 days. On October 22, instead of repaying the funds, Mr. LaRouche and his campaign filed suit against the FEC to challenge the repayment amount.1 They did not ask the FEC to stay the repayment until the court decided the case; nor did they deposit the repayment amount in an interest-bearing account. See 11CFR 9038.5(c).

The FEC asked the court to find that Mr. LaRouche and his 1988 Presidential primary campaign had violated the public funding law by failing to repay the remaining $146,464. The agency further asked the court to order Mr. LaRouche and his campaign to repay that amount--plus interest accruing from October 22, 1992--to the U.S. Treasury.

Stipulation

The order stipulated that a $158,304.84 check (the security), given to the court by Democrats for Economic Recovery--LaRouche in '92,2 be deposited into an interest-bearing account and used for the repayment, if appropriate.

The FEC agreed to refrain from all efforts to collect on the defendants' repayment obligation until after the Commission issued a final repayment determination with respect to the Presidential primary matching funds received by the LaRouche in '92 committee.

If the FEC's final repayment determination concluded that the LaRouche in '92 committee had at least $158,304.84 in excess campaign funds, then the court would release the security--plus interest--to the FEC as repayment of the defendants' repayment obligation. In this event, the FEC and the defendants would voluntarily dismiss all claims and counterclaims associated with this case.

If the FEC's final repayment determination for the LaRouche in '92 committee concluded that the committee did not have at least $158,304.84 in excess campaign funds, then the court would issue the FEC a check for that portion of the security equal to the amount of the committee's excess campaign funds. That amount would represent a partial repayment of the defendants' repayment obligation. The balance of the security (including accrued interest) would be returned to the LaRouche in '92 committee. In this event, the FEC could use any available legal procedures to collect the remaining amount owed by the defendants.

The Commission reserved the right to conclude that the LaRouche in '92 committee's payment to the court was not a qualified campaign expenditure (for the 1992 campaign) and to contest the sufficiency of the security to pay the defendants' obligation. The defendants and the LaRouche in '92 committee reserved the right to contest any Commission finding.

Source: FEC Record, July 1994, p. 3; and December 1994, p. 2.

1 The campaign did not contest the entire repayment amount but only $109,149 of the total. See LaRouche v. FEC (92-1555).

2 Democrats for Economic RecoveryLaRouche in '92 was Lyndon LaRouche's 1992 authorized Presidential campaign committee.

FEC v. LAWSON

On April 8, 1991, the U.S. District Court for the District of South Carolina, Greenville Division, granted the FEC's motion for default judgment. (Civil Action No. 6:90-2116-9.) The Commission claimed that Mark Lawson knowingly permitted his name to be used to effect a contribution made in the name of another, a violation of 2 U.S.C. §441f. The FEC alleged that, in 1982, Mr. Lawson received a $1,500 bonus from his employer, Robin's Mens Store, in order to make a $1,000 contribution two days later to the House campaign of Robin Tallon, Jr.

The court decreed that Mr. Lawson had violated §441f and ordered him to pay a $5,000 civil penalty within 10 days. The court also permanently enjoined Mr. Lawson from future violations of §441f.

Source: FEC Record, June 1991, p. 1

FEC v. LEE

On October 26, 1988, the U.S. District Court for the Central District of California entered a consent order in FEC v. Roger Lee (Civil Action No. 88-02640). The FEC filed the suit against Mr. Roger Lee, President and Director of the Bekins Company, alleging that Mr. Lee had violated section 441b(a) of the election law.

In his capacity as Chief Financial Officer of the Bekins Company, Mr. Lee consented to corporate reimbursements for employees who made contributions to Senator John Glenn's 1984 Presidential primary campaign.

In settlement of this litigation, Mr. Lee agreed to pay $5,000 civil penalty for these violations within 30 days of the court's order.

Source: FEC Record, December 1988, p. 8.

FEC v. LEGI-TECH

On February 16, 1996, the U.S. Court of Appeals for the District of Columbia Circuit reversed the district court's decision to dismiss the FEC's case against Legi-Tech, Inc. The district court had dismissed the case on October 12, 1994, based on the ruling of the U.S. Court of Appeals for the District of Columbia Circuit in FEC v. NRA Political Victory Fund.

On May 30, 1997, the U.S. District Court for the District of Columbia granted the FEC's motion for summary judgment and imposed a $20,000 civil penalty on Legi-Tech, after it used information obtained from disclosure reports filed with the FEC for commercial purposes in violation of the Federal Election Campaign Act (the Act).

Background

The Act requires political committees to identify each individual whose aggregate contributions exceed $200 in a calendar year by listing their name, mailing address, occupation and employer. 2 U.S.C. §434(b)(3)(A). The FEC must make disclosure reports available for public inspection and copying within 48 hours of receipt. However, "information copied from such reports or statements may not be sold or used by any person for the purpose of soliciting contributions or for commercial purposes." 2 U.S.C. §438(a)(4).

Legi-Tech, through its Campaign Contribution Tracking System (CCTS), devised a plan to provide paying subscribers with information about political contributors and their contributions. Starting with the 1984 election cycle, CCTS copied contributor information directly from disclosure reports filed with the FEC, entered this information into a computer database, added telephone numbers of contributors and sold the information to its customers. In all, the CCTS received $273,869 from at least 42 customers, including the International Brotherhood of Teamsters, Freedom Policy Foundation, National Association of Independent Schools and International Funding Institute, Inc. In addition, Legi-Tech was aware that some of its customers used the information to solicit contributors.

In 1985, the National Republican Congressional Committee (NRCC) filed an administrative complaint against Legi-Tech, alleging the company was using contributor information for commercial purposes. After an investigation of the complaint, the Commission found probable cause to believe that a violation of the Act had occurred and attempted to enter into a conciliation agreement with Legi-Tech. That effort failed, and the Commission filed suit.

District Court Decision

While the court was considering the FEC's suit, the U.S. Court of Appeals for the District of Columbia Circuit issued its decision in FEC v. NRA Political Victory Fund. In that decision, the appeals court ruled that the FEC's structure was unconstitutional because, by having the Clerk of the House and the Secretary of the Senate as nonvoting ex officio members, it violated the separation of powers principle.

Following the NRA decision, the FEC removed the ex officio members from its body and, in this new form, ratified its former actions and authorized its attorneys to continue litigation against Legi-Tech. The district court, however, said that these corrective measures were not enough. The court reasoned that, because enforcement proceedings against Legi-Tech had been initiated by an unconstitutionally structured FEC, the rule set forth in Harper v. Virginia Department of Taxation---that a newly enunciated rule of law must be retroactively applied to pending cases--had to be applied in this case. For this reason, the district court dismissed this case.

Appeals Court Decision

While the appeals court did not object to the district court's application of the Harper rule in this case, it disagreed that dismissal was the only remedy.

In its decision, the appeals court pointed out that: "Even were the Commission to return to square one--assuming the statute of limitations were not a bar--it is virtually inconceivable that its decisions would differ in any way the second time from that which occurred the first time."

Most of the Commissioners who originally voted to find probable cause that Legi-Tech had violated §438(a)(4) and, subsequently, voted to initiate a lawsuit against Legi-Tech, are still on the Commission and would likely vote the same way now as they had before, reasoned the court. The court noted that it can not "examine the internal deliberations of the Commission, at least absent a contention that one or more of the Commissioners were actually biased."

Therefore, instead of dismissal, the appeals court said that "the better course is to take the FEC's post-reconstitution ratification of its prior decisions at face value and treat it as an adequate remedy for the NRA constitutional violation."

District Court Ruling

The court rejected Legi-Tech's arguments, which were based, in part, on the corporation's contention that it was an organ of the press and was therefore entitled to use the contributor information in the way that it did. The court agreed with the Commission when it stated that a publisher's use of the names and addresses from disclosure reports filed with the FEC is permissible so long as that use is incidental to the sale of a larger publication. For example, a newspaper article that includes such information as part of the story is permissible. What is not permissible, the FEC contends, is when the use of contributor information is not incidental to the sale of the publication, but, in fact, the primary focus of the publication. AO 1981-38.

Because the Act does not explicitly state whether commercial activity like the CCTS's is protected, the court gave deference to the FEC's construction of §438(a)(4) as well as to its regulations and advisory opinions relevant to this issue. On that basis, the court rejected all of Legi-Tech's challenges.

Legi-Tech also argued unsuccessfully that §438(a)(4) violates the First Amendment in that it prevents "'the dissemination of the truth about political campaigns' and constitutes 'a content based restriction on core political speech.'"

The court, noting that the constitutionality of the statute already had been upheld in FEC v. International Funding Institute, restated that the statute "serves important governmental interests by minimizing the adverse effects of the Act's disclosure requirements." In addition, the statute also protects political committees' intellectual property. The commercial use of such information, as the NRCC contended in its original complaint, diminishes the economic value of contributor lists. The court also found that prohibiting commercial use of contributor information would make it more likely that individuals would continue to support financially the current private campaign financing system for U.S. elections. Legi-Tech's other First Amendment arguments also were rejected by the court.

Source: FEC Record, December 1994, p. 6; April 1996, p. 9; and July 1997, p. 4.

Legi-Tech, Inc.: FEC v., No. 91-0213 (JHG) (D.D.C. Oct. 12, 1994), (D.D.C. Mar. 1, 1995) (final judgment); 75 F.3d 704 (D.C. Cir. 1996); 967 F. Supp. 523 (D.D.C. 1997).

FEC v. LIBERAL PARTY FEDERAL CAMPAIGN COMMITTEE

Failing to resolve a complaint through the informal conciliation process mandated by the law (2 U.S.C. §437g(a)(4)(A)(i)), the FEC filed suit in the U.S. District Court for the Southern District of New York (Civil Action 84-CIV 5552). The Commission petitioned the court to:

On November 13, 1984, the court entered a default judgment against the Committee. Under the court order, within 30 days of the court's final judgment, the Liberal Party Federal Campaign Committee had to amend its reports and pay a $5,000 civil penalty to the U.S. Treasury. On June 25, 1985, the district court entered an order finding the Liberal Party Committee in civil contempt of its November 13 order. The court ordered that, if the Liberal Party Committee had not fully complied with the November 13 order by July 1, 1985, it would be required to pay a fine of $500 per day until compliance was completed.

Source: FEC Record, October 1984, p. 8; and March 1985, p. 3.

Liberal Party Federal Campaign Committee: FEC v., No. 84-Civ. 5552 (S.D.N.Y. June 25, 1985 contempt).

FEC v. LIFE AMENDMENT PAC (88-0860 and 89-1429)

On June 15, 1989, the U.S. District Court for the District of Washington issued a final order and default judgment in FEC v. Life Amendment PAC, Inc. (Civil Action No. C88-860Z). The court declared that the committee and its treasurer, Rick Woodrow, had violated 2 U.S.C. §434(a) by failing to file six reports during 1985, 1986 and 1987. The court ordered Life PAC to pay a civil penalty of $30,000($5,000 for each missing report).

The court also found that Mr. Woodrow and Citizens Organized to Replace Kennedy (C.O.R.K.), a political committee of which he was also treasurer, had failed to disclose debts and obligations in three 1986 reports, in violation of 2 U.S.C. §434(b)(8). The court ordered C.O.R.K. and Mr. Woodrow to file the missing Schedules C and D and to pay a $5,000 civil penalty. Permanently enjoining the defandants from future similar violations of the election law, the court also ordered them to pay the FEC's costs in the action.

On January 24, 1990, in another suit, the court granted the FEC's motion for a final order and default judgment against Life PAC (No. C89-1429Z (originally C89-1429WD)). The court found that Life PAC and Mr. Woodrow, as treasurer, had committed several violations of the election law and regulations. Unless otherwise noted, the following violations were found in connection with Life PAC's 1983 and 1984 disclosure reports:

For the violations cited above, the court ordered the defendants to pay a $55,000 civil penalty.

The court further declared that the defendants had knowingly and willfully committed the following violations:

For these knowing and willful violations, the court ordered the defendants to pay a civil penalty of $70,000, to amend and correct their reports and to pay the Commission's court costs. The defendants were permanently enjoined from future similar violations of
the law.

Motion for Contempt

On September 11, 1992, the court held defendants in the above cases in civil contempt of court for failing to comply with the court's earlier judgments against them.

Under the contempt orders, defendants in each suit must pay an additional penalty of $100 per month until they comply with the earlier order. The defendants were also ordered to pay the FEC up to a maximum of $1,000 as reimbursement for the agency's costs.

Source: FEC Record, October 1989, p. 11; April 1990, p. 7; and November 1992, p. 9.

FEC v. MAGGIN FOR CONGRESS COMMITTEE

On June 29, 1993, the U.S. District Court for the District of New Hampshire held defendants Elliott S. Maggin for Congress Committee and its treasurer, Andi T. Johnson, in civil contempt of court for failing to pay civil penalties and the FEC's costs and attorneys fees. (Civil Action No. C86-40-L.) The assessments had remained unpaid since they were imposed under an August 1986 court order.

The court further ordered Ms. Johnson to provide the FEC with financial records on her resources and liabilities within 20 days and to appear before the court 30 days after submitting the records. A $10,000 civil penalty and interest on the earlier penalties would be assessed against her if she failed to provide the information.

Under the 1986 judgment, the court found that the defendants had violated the Federal Election Campaign Act by failing to file a 1984 quarterly report. The court ordered each defendant to pay a $5,000 civil penalty and permanently enjoined them from further violations of the Act. Defendants were also ordered to pay $2,569 to cover the FEC's costs and attorneys fees.

Source: FEC Record, November 1993, p. 3.

FEC v. Maggin, No. C86-40-L (D.N.H. 1986)

FEC v. MANN FOR CONGRESS

On March 21, 1991, the U.S. District Court for the District of Columbia granted the FEC's motion for default judgment against Mann for Congress Committee and its treasurer, Terry L. Mann, for violating the terms of a conciliation agreement. (Civil Action No. 90-2419(LFO).) (Under the terms of the agreement, the committee and Mr. Mann had agreed to refund $17,746 in excess contributions, disclose the refunds on FEC reports and pay a $5,000 civil penalty.)

The court ordered defendants to comply with the agreement's terms within 10 days and pay the FEC an additional $5,000 civil penalty for violating the agreement. The court also permanently enjoined defendants from future violations of the conciliation agreement.

Source: FEC Record, May 1991, p. 7.

FEC v. MASTORELLI CAMPAIGN FUND

On March 28, 1983, the U.S. District Court for the District of New Jersey entered a default judgment against the defendants in FEC v. Nick Mastorelli Campaign Fund (Civil Action No. 82-0774F). The court decreed that the Mastorelli Campaign and its treasurer had violated provisions of the election law by:

The district court also found that certain contributors to the Mastorelli Campaign had violated the election law by:

The court permanently enjoined the defendants from any further violations of the election law. The court also assessed a $5,000 civil penalty against the Mastorelli Campaign and its treasurer as well as against each of the individual defendants named in the suit.

Source: FEC Record, May 1983, p. 7.

FEC v. MCCALLUM

On December 11, 1996, the U.S. District Court in Massachusetts issued a judgment and consent order to which both parties agreed. Under the order, Elkin McCallum must pay a $50,000 civil penalty to the FEC for making excessive contributions to the Tsongas for President Committee.

The FEC filed the lawsuit against Mr. McCallum alleging that he had made $250,000 in loans to Paul Tsongas's campaign in 1991 and 1992. These loans constituted excessive contributions. Specifically, the FEC alleged that Mr. McCallum had made the following contributions:

The Federal Election Campaign Act (the Act) states that an individual has a $1,000 contribution limit for a candidate or that candidate's authorized committee per election and that the definition of contribution includes loans. 2 U.S.C. §§431(8)(A)(i) and 441a(a)(1)(A). Additionally, FEC regulations make it unlawful for a person to make a loan that exceeds the contribution limits whether or not it is repaid. 11 CFR 100.7(a)(1)(i)(A).

In a settlement agreement, Mr. McCallum did not contest the allegations. In addition to the civil penalty, the court permanently enjoined Mr. McCallum from making excessive contributions.

Source: FEC Record, February 1997, p. 4.

FEC v. MCFL

In September 1978, Massachusetts Citizens For Life, Inc. (MCFL), a nonprofit corporation without members, printed 100,000 copies of a special election edition flyer captioned "Everything You Need to Vote Pro-Life." The publication contained the position of state and federal candidates on abortion-related issues. It included at least two exhortations to "vote pro-life" and the statement that "No pro-life candidate can win in November without your vote in September." Photographs of pro-life candidates were also included in the publication. To correct minor errors in the special election edition, MCFL subsequently issued a supplement to the edition.

MCFL distributed copies of the two special election editions to 5,985 MCFL contributors and 50,674 noncontributors. MCFL also sent copies to its local chapters for distribution, mailed out copies on request, and left copies in public areas for general distribution.

In response to a complaint filed with the Commission, the FEC found probable cause to believe that MCFL's expenditures for the publications (amounting to $9,812.76) had violated the Federal Election Campaign Act's (the Act's) ban on corporate spending in connection with federal elections. 2 U.S.C. §441b. After unsuccessfully attempting to conciliate the matter with MCFL, on February 22, 1982, the FEC filed suit against MCFL in the U.S. District Court for the District of Massachusetts. (Civil Action No. 82-609-G.)

District Court Ruling

On June 29, 1984, the U.S. District Court for the District of Massachusetts granted defendant's motion for summary judgment. The court found that, in publishing the special election editions of its newsletter in 1978, MCFL had not made prohibited corporate expenditures in connection with the Massachusetts primary campaigns of federal candidates. The court found that MCFL's expenditures were more properly characterized as independent expenditures and expenditures for news and editorial comments. As such, the court held that the expenditures were explicitly exempted from section 441b's prohibition on corporate spending.

In characterizing MCFL's expenditures for the special election editions as independent expenditures, the court held that the "publication was uninvited by any candidate and uncoordinated with any campaign."1

With regard to its characterization of MCFL's publication of the special election editions as exempt spending for a news story and news editorial,2 the court stated: "In our opinion, the compilation of voting records and questionnaire responses was news, probably not available elsewhere; and the call to vote pro-life in conjunction, incidentally, with a quotation from Thomas Jefferson, was editorial." The court further stated that the special election editions satisfied the statutory requirement that exempt stories may be published in a "periodical publication." The court noted that the special editions were similar in size, format and content to regular issues of MCFL's newsletter. Finally, the court maintained that "the legislative history of the newspaper exemption shows that Congress intended that it be a broad exemption, coextensive with the First Amendment."

Alternatively, the court held that, even if it had misconstrued MCFL's spending as exempt independent and news story/editorial expenditures, the statutory prohibition on corporate expenditures was unconstitutional as applied to MCFL's spending. The court found that applying the prohibition to MCFL's spending abridged the organization's free speech, press and association rights because the expenditures were: "(a) independent of any candidate or party, (b) by a nonprofit-making corporation formed to advance an ideological cause and (c) for the purpose of publishing direct political speech." Under these circumstances, the court concluded, the compelling governmental interest served by banning the special election editions as prohibited corporate expenditures (i.e., the prevention of real or apparent corruption in federal elections) was not justified. Specifically, since the court maintained that MCFL's publication of the special election editions was not coordinated with any candidates, the court followed the Supreme Court's determination in Buckley v. Valeo that their independence "alleviate[d] the danger that expenditures will be given as quid pro quo for improper commitments from the candidate." (See Buckley v. Valeo at 47.) In finding that the expenditures were independent, the court noted that they were too small (i.e., $80 per federal candidate) to have a corrupting influence on federal elections.

With regard to MCFL's role as a nonprofit corporation, the court held that, "by sharing its views on an important public issue" with the public, MCFL's expenditures for the special election editions advanced, rather than deterred, governmental interests by "promoting citizen responsibility."

Similarly, the court held that, if viewed as direct political speech, MCFL's financing of the special election editions "would seem to promote rather than undermine the honest functioning of representative government." Specifically, the court found that the special editions "sought to influence incumbents and candidates solely by means of informed voter reaction to the candidates' positions on an important public issue." Furthermore, the court found that "the corporate identity of the speaker does not deprive speech of what otherwise would be its clear entitlement to protection under the First Amendment. (First National Bank of Boston v. Bellotti, supra at 778-786)"

Appeals Court Ruling

On July 31, 1985, the U.S. Court of Appeals for the First Circuit ruled that MCFL's expenditures, were subject to the election law's prohibition on expenditures by corporations in connection with federal elections. This statutory ruling reversed that of the district court. At the same time, the appeals court affirmed the holding by the district court that, if applied to MCFL's expenditures, the Act's prohibition on corporate expenditures (2 U.S.C. §441b) would violate MCFL's First Amendment rights.

MCFL's Expenditures Fall within the Purview of Section 441b

In overturning the district court's ruling that section 441b(b)(2)'s ban on corporate expenditures did not apply to MCFL's expenditures, the appeals court concluded that section 441b prohibits expenditures in connection with federal elections, in general, as well as contributions specifically made to candidates for federal office.

The appeals court also rejected the district court's holding that, even if section 441b prohibited corporate expenditures in connection with federal elections, MCFL's publication expenditures were exempt from the prohibition because the publication did not expressly advocate the election or defeat of any particular candidate. To the contrary, the appeals court found that the publications did constitute express advocacy: "The MCFL Special Election Edition...explicitly advocated the election of particular candidates in the primary elections and presented photographs of those candidates only...." The appeals court added that it did not have to decide whether such spending was covered by section 441b because MCFL's flyers "would fit within the definition of expenditure, even if an express advocacy requirement were incorporated into the definition."

Finally, contrary to the district court, the appeals court found that the publications did not qualify for the news story exemption: "...the Special Editions may not be considered new stories, commentaries, or editorials because the editions were not distributed through the newsletter's facilities, were not published by the newsletter's staff, did not contain the newsletter masthead and were not limited to the usual MCFL newsletter circulation. " Nor did the expenditures qualify under the exemption as "normal functions of a press entity."

Prohibiting MCFL's Expenditures Is Unconstitutional

Nevertheless, the appeals court affirmed the district court's holding that §441b, as applied to MCFL's expenditures, was unconstitutional. The appeals court said that it did not believe that "the availability of alternative methods of funding speech [e.g., MCFL's establishment of a separate segregated fund] justifies eliminating the simplest method."

Furthermore, the court found that there was no substantial government interest (i.e., to prevent corruption or the appearance of corruption in federal elections) in prohibiting MCFL's expenditures for the publications. "Because MCFL did not contribute directly to a political campaign, MCFL's expenditures did not incur any political debts from legislators." The appeals court concluded that a ruling by the Supreme Court which upheld §44lb's ban on solicitations by another nonprofit corporation, the National Right to Work Committee, did not apply to MCFL's expenditures. "Unlike National Right to Work Committee, [MCFL's spending] involves a corporation's indirect and uncoordinated expenditures in connection with a federal election, not a solicitation for direct contributions to candidates."

The appeals court therefore affirmed the district court's ruling that section 441b was unconstitutional, as applied to MCFL's expenditures: "We therefore uphold that the application of section 441b to indirect, uncoordinated expenditures by a non-profit ideological corporation expressing its views of political candidates violates the organization's First Amendment rights."

Appeal to Supreme Court

On August 28, 1985, the Commission filed an appeal of the first circuit's decision with the Supreme Court. On January 13, 1986, the Court noted probable jurisdiction in this case. Oral argument was heard on October 7, 1986.

Supreme Court Decision

In FEC v. Massachusetts Citizens for Life, Inc. (MCFL) the Supreme Court of the United States decided, by a 5 to 4 vote, that the law's prohibition on corporate expenditures is unconstitutional as applied to independent expenditures made by a narrowly defined type of nonprofit corporation. The Court's December 15, 1986, decision affirmed an appeals court ruling.

Scope of Ruling

Acknowledging that "the class of organizations affected by our holding today will be small," the Court delineated the type of corporation which would be permitted to make independent expenditures under this ruling. "MCFL has three features essential to our holding that it may not constitutionally be bound by §441b's restriction on independent spending." These three criteria are as follows:

MCFL in Violation of §441b

The Supreme Court unanimously affirmed the appeals court ruling that, as the FEC had argued, MCFL's expenditures were in violation of §441b. In making this determination, the Court rejected MCFL's arguments to the contrary.

MCFL had contended that, in making its expenditures, it had not provided anything to a candidate. Because of this, its spending was not within the reach of §441b(b)(2), which defines "expenditure" to include anything of value provided to a candidate or political committee. The Court, in holding that 441b's scope is broader than MCFL's interpretation, stated that the legislative history "clearly confirms that §441b was meant to proscribe expenditures in connection with an election."

The Court also rejected MCFL's argument that its publication costs did not constitute prohibited expenditures because the material did not "expressly advocate" the election of candidates. Citing its opinion in Buckley v. Valeo, the Court noted it had previously concluded "that a finding of 'express advocacy' depended upon the use of language such as 'vote for,' 'elect,' 'support,' etc." Buckley, 424 U.S. 44, n. 52 (1976). Applying this test to the MCFL's publication, the court stated: "Just such an exhortation appears in the 'Special Edition.' The publication not only urges voters to vote for 'pro-life' candidates, but also identifies and provides photographs of specific candidates fitting that description. The Edition cannot be regarded as a mere discussion of public issues that by their nature raise the names of certain politicians. Rather, it provides in effect an explicit directive: vote for these (named) candidates. The fact that its message is marginally less direct than 'Vote for Smith' does not change its essential nature."

MCFL had also argued that its publication was a "Special Edition" of its regular newsletter and therefore payments for issuing the material were exempt from the definition of expenditure under the statute's exception for news stories, commentaries and editorials distributed through periodical publications and other news media. 2 U.S.C. §431(9)(B)(i). The Court did not need to rule on whether MCFL's newsletter qualified for the press exemption because it considered the "Special Edition" a campaign flyer rather than an issue of the newsletter. "No characteristic of the Edition associated in any way with the normal MCFL publication." The Court emphasized that it was essential to make a distinction between regular publications and campaign flyers "since we cannot accept the notion that the distribution of such flyers by entities that happen to publish newsletters automatically entitles such organizations to the press exemption."

Section 441b's Infringement on Free Speech

In determining whether §441b was unconstitutional as applied to MCFL's independent expenditures, the Court first examined the provision's effect on political speech protected by the First Amendment.

The FEC had argued that, although §441b prohibited MCFL from making expenditures from its corporate treasury funds, the law provided another avenue for MCFL to exercise political speech: It could establish a separate segregated fund (also called a political action committee or PAC) and make contributions and expenditures using money specifically solicited for the fund. The Court maintained that "even to speak through a segregated fund, MCL must make very significant efforts," and mentioned in particular the recordkeeping and solicitation requirements the law imposes on such funds. In conclusion, the Court stated: "These additional regulations may create a disincentive for such organizations to engage in political speech.... The fact that the statute's practical effect may be to discourage protected speech is sufficient to characterize §441b as an infringement on First Amendment activities."

Section 441b Unconstitutional as Applied

In ruling that 441b is unconstitutional as applied to MCFL's activities in this case, a decision from which four Justices dissented, the Court first explained that "[w]hen a statutory provision burdens First Amendment rights, it must be justified by a compelling state interest." The Court disagreed with the Commission's arguments that §441b's prohibition on MCFL's expenditures was justified.

The FEC had noted the long legislative history supporting §441b's prohibition on corporate activity and argued that the courts have consistently ruled that those restrictions are justified by the governmental interest in protecting the election process from the effects of the accumulation of wealth. After examining the legislative history and past Supreme Court decisions, the Court concluded that this governmental interest is valid with respect to expenditure restrictions applied primarily to profit-making corporations but not to corporations such as MCFL, "formed to disseminate political ideas." The Court, therefore, found no compelling justification for treating business corporations and MCFL alike "in the regulation of independent spending."

The Court also rejected the FEC's argument that §441b serves to prevent a corporation such as MCFL from spending individuals' money for political purposes that they might not support. The Court pointed out that individuals who contribute to MCFL do so because they support its political aims and expect that the organization will spend the funds "in a manner that best serves the shared political purposes of the organization and the contributor."

In responding to the Commission's argument that a contributor, while supporting the political views of MCFL, may not wish donations to be used to support or oppose particular candidates, the Court said that this problem could be resolved by "simply requiring that contributors be informed that their money may be used for such a purpose."

Finally, the FEC had maintained that, if the §441b prohibition were not applied to expenditures by corporations such as MCFL, then the political process would be in danger of corruption, since business corporations and labor unions could funnel undisclosed treasury funds into a nonprofit organization to be converted to political spending. In rejecting this argument, the Court cited 2 U.S.C. §434(c), which requires groups that are not political committees to report information on their independent expenditures once they exceed $250 in one year. In reporting under this provision, a group must include the identification of persons funding independent expenditures if they contribute an aggregate of over $200 during a year. "These reporting obligations provide precisely the information necessary to monitor MCFL's independent spending activity and its receipt of contributions," the Court stated. Furthermore, the Court pointed out that "should MCFL's independent spending become so extensive that the organization's major purpose may be regarded as campaign activity, the corporation would be classified as a political committee," subject to the restrictions and extensive reporting requirements the law applies to such entities.

In conclusion, the Court ruled that "§441b's restriction of independent spending is unconstitutional as applied to MCFL, for it infringes protected speech without a compelling justification for such infringement." However, the Court did not directly rule on the constitutionality of §441b's restrictions on "commercial enterprises," since that was not at issue in this suit.

Justice William J. Brennan, Jr., who wrote the majority opinion, was joined by Justices Thurgood Marshall, Lewis F. Powell, Jr. and Antonin Scalia and, in part, by Justice Sandra Day O'Connor.

Dissents

Chief Justice William H. Rehnquist, joined by Justices Byron R. White, Harry A. Blackmun and John Paul Stevens, dissented from "the conclusion that the statutory provisions are unconstitutional as applied to [MCFL]." Chief Justice Rehnquist observed that the differences between business corporations and corporations like MCFL "are 'distinctions in degree' that do not amount to 'differences in kind.'.... As such, they are more properly drawn by the legislature than the judiciary.... Congress expressed its judgment in §441b that the threat posed by corporate political activity warrants a prophylactic measure applicable to all groups that organize in the corporate form. Our previous cases have expressed a reluctance to fine-tune such judgments; I would adhere to that counsel here."

In his judgment, "[t]he three part test gratuitously announced in today's dicta...adds to a well-defined prohibition a vague and barely adumbrated exception certain to result in confusion and costly litigation."

Source: FEC Record, August 1984, p. 7; October 1985, p. 7; and February 1987, p. 4.

Massachusetts Citizens for Life, Inc.: FEC v., 589 F. Supp. 646 (D. Mass. 1984), aff'd, 769 F.2d 13 (1st Cir. 1985), aff'd, 479 U.S. 238 (1986).

1 The election law and FEC regulations define an independent expenditure as an expenditure for a communication expressly advocating the election or defeat of a clearly identified candidate that is not made with the cooperation or prior consent of, or in consultation with, or at the request or suggestion of, any candidate or his/her authorized committee or agents. 2 U.S.C. §431 (17); 11 CFR 110.16 and 109.1(a).

2 Under the election law and FEC regulations, a news story, commentary, or editorial by any broadcasting station, newspaper, magazine, or other periodical publication is not considered an expenditure, provided the station or publication is not owned or controlled by a political party, committee or candidate. 2 U.S.C. §431(9)(B)(i); 11 CFR 100.8(b)(2).

FEC v. MICHIGAN REPUBLICAN STATE COMMITTEE

On March 22, 1995, the U.S. District Court for the Western District of Michigan, Southern Division, dismissed this case pursuant to a stipulation by the parties.

The FEC originally charged that the Michigan Republican State Committee (MRSC) had knowingly accepted $5,550 in excessive contributions, had deposited $35,655 in impermissible contributions into its federal account, and had exceeded its coordinated party expenditure limit for a Senate candidate by $8,298.

The court issued a consent order on July 18, 1994, that resolved the excessive and impermissible contribution issues; the MRSC agreed to pay a $12,500 civil penalty and to transfer $35,655 from its federal account to its nonfederal accounts. The violation of the coordinated party expenditure limit, however, remained pending.

Subsequent to the consent order, the MRSC paid the civil penalty and transferred the nonfederal monies as agreed.

With regard to the remaining allegation, MRSC provided the FEC with documentation showing that the Senate candidate reimbursed the committee for the expenditures in question and therefore the committee did not exceed its coordinated party expenditure limit.

Source: FEC Record, September 1994, p. 8; and May 1995, p. 4.

Michigan Republican State Committee: FEC v., No. 5:94-CV-27 (W.D. Mich. July 18, 1994); (W.D. Mich. Mar. 22, 1995).

FEC v. MID-AMERICA CONSERVATIVE PAC

On October 30, 1992, the U.S. District Court for the Northern District of Iowa ordered the Mid-America Conservative PAC and its treasurer to pay a $10,000 civil penalty for failing to file several reports on time. (Civil Action No. C90-2093.) The court also permanently enjoined defendants from late filing of future reports.

The decision was based on a settlement agreement between both parties. Under the settlement procedures, defendants agreed to submit an offer of settlement to the Commission but also agreed to accept the FEC's final determination. The Commissioners unanimously voted to reject the defendants' proposal and to accept an alternative agreement submitted by the FEC's General Counsel. Defendants then objected to the agreement because the Commissioners had not considered the matter in a public session.

In granting the FEC's motion to enforce the settlement agreement, the court pointed out that the Commission had followed its usual procedures in considering and voting on the agreement. The court also noted that defendants could have specified that the agency follow special procedures but did not do so.

Source: FEC Record, December 1992, p. 7.

FEC v. MILLER

On April 23, 1993, the U.S. District Court for the District of Columbia signed a settlement agreed to by both parties. (Civil Action No. 92-2244(SS).) In the joint stipulation, Stefan Miller admitted that he had violated the terms of a conciliation agreement he had entered into with the Commission by failing to pay the $1,300 civil penalty. He further agreed to make monthly installments of $75 until the full amount is paid. If he fails to make a payment, the FEC may require that the entire amount be paid within 10 days.

Mr. Miller later filed a statement in which he maintained that he never agreed to enter into the conciliation agreement, which was signed by his attorney on his behalf. He said, however, that he would honor the terms of the stipulation.

Source: FEC Record, June 1993, p. 8.

FEC v. MINCHEW

On April 24, 1981, the U.S. District Court for the District of Columbia issued a judgment in favor of the FEC in the suit FEC v. Daniel Minchew (Civil Action No. 81-174). Declaring the defendant had violated the requirements of a conciliation agreement entered into with the FEC in October 1979, the court ordered Mr. Minchew to comply with the conciliation agreement and to pay a $4,000 civil penalty resulting from the agreement. The court also required the defendant to pay the costs of the civil action and to pay interest on civil penalty from the date of the court's order. Mr. Minchew had incurred the penalty for a violation of 2 U.S.C. §432(b): he had failed to provide Senator Talmadge's 1974 reelection committee with detailed accounts of campaign contributions, which he had received on the Senator's behalf, within the required five-day period.

Source: FEC Record, June 1981, p. 6.

FEC v. JOHN J. MURRAY FOR CONGRESS COMMITTEE

On September 10, 1996, the U.S. District Court for the Eastern District of Pennsylvania issued a consent order that the defendant committee, an authorized committee of a 1994 Congressional candidate in Pennsylvania, violated 2 U.S.C. §434(a)(6)(A) by failing to file a 48-hour notice disclosing the receipt of a $100,000 loan from the candidate. Under the 48-hour notice provision, a candidate committee must file a notice providing information on any contribution of $1,000 or more it receives after the 20th day but more than 48 hours before an election. The committee must file the notice within 48 hours of receiving the contribution.

The court awarded the FEC a $15,000 penalty but, because of the committee's financial circumstances (its lack of assets and $350,000 debt), the court suspended payment of all but $3,000.

Source: FEC Record, November 1996, p. 7