FEC v. NATIONAL CONGRESSIONAL CLUB

On May 15, 1986, the U.S. District Court for the Eastern District of North Carolina issued a consent order agreed to by the Federal Election Commission and three defendants: the National Congressional Club (NCC), a multicandidate political committee; NCC's treasurer, R.E. Carter Wrenn; and Jefferson Marketing, Inc. (JMI), a North Carolina corporation that provides media services to political committees. Plaintiff and defendants agreed that:

• Since NCC and JMI had operated as a single entity,1 NCC and its treasurer, R.E. Carter Wrenn, had violated section 434 of the election law by failing to report JMI's financial activity; and
• Within 30 days of the court's order, defendants would pay a $10,000 civil penalty to the U.S. Treasury for these violations.

Furthermore, defendants no longer contested the FEC's allegation that JMI had violated section 441b of the election law by charging less than the fair market value for services JMI had provided to federal candidates.

In the order, defendants also agreed to establish themselves as separate entities, despite their contention that they had already done so in 1983. In this regard, the following changes would be made:

• Thomas Ellis and R.E. Carter Wrenn would resign as directors of the Educational Support Foundation, Inc., JMI's sole shareholder;
• JMI would liquidate its outstanding debt to NCC within 12 months of the date of the consent order;
• Employees who began working for NCC after the date of the consent order, and who were later employed by JMI, would not be credited with benefits and seniority accrued during their employment by NCC; and
• As long as he remained an NCC officer, R.E. Carter Wrenn would not act as JMI's director, officer or employee.

After NCC and JMI have made these changes, they will be considered separate entities. However, the FEC reserved the right to file suits and claims against JMI if JMI fails to charge the fair market value for services the organization provides to federal political committees and candidates.

Within 90 days of the consent order, NCC agreed to amend its FEC reports to disclose JMI's financial activity with regard to federal elections during the period from December 1978 to the present.

The suit grew out of an administrative complaint filed by Congressman Charles Rose. In that case, the Commission found probable cause to believe respondents had violated the law; yet, it failed to resolve the matter through conciliation. Thus, on February 7, 1985, the agency filed suit.

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

1 Evidence noted in the consent order for defendants' operation as a single entity included: JMI's financial dependence on NCC, NCC's control over JMI's voting stock and Mr. Wrenn's involvement in JMI's decision-making process.

FEC v. NATIONAL MEDICAL POLITICAL ACTION COMMITTEE

On May 27, 1998, the U.S. District Court for the District of Columbia entered an order submitted by the parties requiring the National Medical Political Action Committee (NMPAC) and its treasurer to pay a $10,000 civil penalty to the FEC for failing to file 14 disclosure reports in a timely manner during 1992, 1993 and 1994. In a stipulation, both parties had agreed to the facts and to the final order and judgment.

NMPAC had filed all the reports that were due during 1992 and 1993 on May 12, 1994. NMPAC also failed to file on time six other reports due in 1994 and 1995. These tardy filings violated 2 U.S.C. §434(a)(4)(i), (ii), (iii) and (iv).

In addition to finding that NMPAC had violated the Act, the court permanently enjoined the PAC from failing to file reports within the time limits set out by Commission regulations.

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

FEC v. NCPAC (84-0866)

On May 16, 1986, the U.S. District Court for the Southern District of New York granted the FEC's motion for summary judgment in FEC v. National Conservative Political Action Committee (NCPAC). (Civil Action No. 84 Civ. 0866 (GLG).) The court ruled that expenditures made by NCPAC in its campaign to defeat Senator Moynihan's 1982 reelection effort constituted excessive in-kind contributions to Bruce Caputo. The court found that NCPAC had further violated the election law by failing to properly report these expenditures as "in-kind" contributions. Accordingly, on June 13, 1986, the court imposed a $15,000 civil penalty on NCPAC and ordered the PAC to file amended reports with the FEC within 30 days of the court's order.

Background

During the 1981-82 election cycle, as part of its strategy to defeat Senator Moynihan, NCPAC established a political action committee, "New Yorkers Fed Up with Moynihan." NCPAC also hired Arthur J. Finkelstein Associates, a polling and political consulting firm, to develop a media strategy to advocate Senator Moynihan's defeat, conduct and analyze polls, and select election issues on which Senator Moynihan was most vulnerable. From April 1981 until August 1982, NCPAC spent $73,755 on its anti-Moynihan campaign. During this time, the Finkelstein firm also worked for Bruce Caputo's campaign.

In March 1981, Mr. Caputo announced that he would seek the Republican Party's nomination for Mr. Moynihan's Senate seat, and he retained Mr. Finkelstein as a paid political consultant. By March 1982, when Mr. Caputo withdrew from the Senate race, his campaign committee had paid Mr. Finkelstein's firm $28,000 to assist in all aspects of Mr. Caputo's Senatorial primary campaign.

In January 1982, the FEC received a complaint from the New York State Democratic Committee alleging that independent expenditures reported by NCPAC for its anti-Moynihan campaign were actually in-kind contributions to the Caputo campaign. In September 1983, the FEC found probable cause to believe that NCPAC's expenditures were, in fact, contributions. NCPAC had therefore exceeded the election law's contribution limits and had violated the disclosure requirements. After failing to reach a conciliation agreement with the respondent, the FEC filed suit against NCPAC on February 6, 1984.

NCPAC did not deny that, on its face, the election law limits the amount of such contributions. NCPAC claimed, however, that, in making the expenditures, it had relied in good faith on an FEC advisory opinion issued to the PAC in March 1980.

The Court's Ruling

The district court concluded that NCPAC could not rely on the FEC's advisory opinion because "the distinctions between the facts as they actually unfolded and the facts addressed in the FEC's advisory opinion are patent." The court found that Moynihan and Caputo were "for all practical purposes, opponents" during the primary season. The court also noted that the Finkelstein firm's role in both "the NCPAC and Caputo efforts was far more significant than that of a vendor of advertising services or a polling company. Finkelstein was NCPAC's key strategist. He formulated and directed the execution of NCPAC's plan to defeat Senator Moynihan.... Simultaneously, he served as the chief architect of Bruce Caputo's campaign." The court concluded that NCPAC's coordination with the Caputo campaign "far exceeded the 'communication' sanctioned by the FEC" in its advisory opinion. Under these circumstances, the court concluded that "NCPAC's anti-Moynihan expenditures must be deemed contributions to the Caputo campaign" rather than independent expenditures.

On July 17, 1986, the defendants filed an appeal with the U.S. Court of Appeals, 2nd Circuit. (Civil Action No. 86-6139) Both parties filed a Stipulation for Withdrawal of Appeal on August 27, 1986. The defendants were ordered to pay the FEC's taxation of costs and on February 3, 1987, the district court issued an Acknowledgment of Satisfaction of Judgment, thereby closing the matter.

Source: FEC Record, July 1986, p. 6; and April 1980, p. 4.

National Conservative Political Action Committee: FEC v., 647 F. Supp. 987 (S.D.N.Y. 1986).

FEC v. NCPAC (85-2898)

On April 29, 1987, the U.S. District Court for the District of Columbia granted plaintiff's motions for summary judgment and dismissal of defendants' counterclaim in FEC v. National Conservative Political Action Committee (Civil Action No. 85-2898). The court found that the defendants had violated the law by failing to include a statement in their solicitation material clearly identifying the person who paid for
the communication.

Background

During the 1984 election cycle, NCPAC mounted a $10 million independent expenditure campaign advocating the reelection of President Reagan. As part of this project, NCPAC mailed out materials urging the reelection of the President and soliciting contributions to finance its expenditures for this effort. The solicitation material did not identify who paid for it. Under the Act and Commission regulations, any communication which expressly advocates the election or defeat of a clearly identified candidate or which solicits contributions must clearly display a disclaimer identifying the person(s) who paid for the communication. 2 U.S.C. §441d(a)(3).

On April 23, 1985, after attempting to resolve this enforcement matter through informal methods of conciliation, the Commission filed suit against the defendants in the U.S. District Court for the District of Columbia. In its complaint, the FEC sought the following:

• A judgment declaring that the defendants violated the law by failing to include a proper disclaimer in their solicitation material;
• An order permanently enjoining the defendants from repeating the violation;
• An assessment of a civil penalty; and
• An award of attorney's fees and costs incurred by the FEC.

In their counterclaim, the defendants sought review of the FEC's decision to bring this action pursuant to the Administrative Procedure Act (APA), 5 U.S.C. §701 et seq. The defendants claimed that the FEC decision was "final agency action" within the meaning of section 704 of the APA and, therefore, reviewable. Furthermore, the defendants claimed that the FEC decision was "arbitrary, capricious, and an abuse of discretion under the APA" because the Commission had declined to initiate a civil enforcement action in another similar case. Finally, in denying the alleged violation of the Act, the defendants argued that the use of the NCPAC postal frank and other references throughout the material made it quite clear who paid for the communication. In their view, therefore, a specific disclaimer was not necessary.

Court's Ruling

In ruling that the defendants had violated 2 U.S.C. §441d(a)(3), the court said that "the Act and regulations do not provide for disclaimers by inference and the court is consequently of the view that these repeated references to NCPAC which appear within the materials do not satisfy section 441d's disclaimer requirement."

The court also dismissed the defendants' counterclaim. Citing an earlier Supreme Court case, the court held that the initiation of enforcement proceedings does not constitute "final agency action" and is, therefore, not subject to judicial review under the APA. Regarding the defendants' allegation that the FEC exercised selective prosecution against NCPAC, the court ruled that one isolated instance of nonenforcement was not evidence that NCPAC was being singled out for prosecution and that even if it were, defendants produced no evidence demonstrating that this action resulted from an improper motive.

Finally, the court assessed a civil penalty of $3,000 against the defendants. On June 27, 1987, the defendants filed a motion to stay the decision.

Source: FEC Record, July 1987, p. 5.

National Conservative Political Action Committee: FEC v., No. 85-2898 (D.D.C. April 29, 1987) (unpublished opinion).

FEC v. NCPAC (83-2823)

In September 1980, the U.S. District Court for the District of Columbia ruled that Section 9012(f) was unconstitutional as applied to Americans for Change, Americans for an Effective Presidency and FCM, three multicandidate political committees (not affiliated with any parent organization). This provision of the Presidential Election Campaign Fund Act prohibits unauthorized committees (i.e., those not authorized by a candidate) from making expenditures exceeding $1,000 to further the election of a publicly funded Presidential nominee in the general election. The committees had planned to make expenditures in excess of $1,000 to support the Republican Presidential nominee's general election campaign.

On January 19, 1982, the Supreme Court voted 4 to 4 to affirm the D.C. district court's September decision, with Justice Sandra O'Connor not participating. However, since the high Court's vote on the suit had been equally divided, its affirmance had no precedential value. Subsequently, the FEC issued advisory opinions to NCPAC and FCM in which the FEC stated that Section 9012(f) may be enforced.1

In an effort to obtain a final ruling by the high Court on Section 9012(f)'s constitutionality, the FEC filed a new suit with the U.S. District Court for the Eastern District of Pennsylvania on June 14, 1983. (FEC v. NCPAC and FCM; Civil Action No. 83-2823.) This suit was consolidated with another suit, Democratic National Committee (DNC) v. NCPAC (Civil Action 83-2329), which had been filed on May 1, 1983. The FEC intervened in that suit as defendants and argued that the DNC lacked statutory and constitutional standing to bring that action. In the consolidated suits, plaintiffs asked that a three-judge panel of the court be convened to declare that:

• Expenditures (in excess of $1,000) that NCPAC and FCM each intended to make on behalf of the publicly funded Republican Presidential nominee in 1984 would be prohibited by, and in violation of, 26 U.S.C. §9012(f)(1); and
• Section 9012(f)(1), as applied to the defendant committees, was constitutional.

District Court's Ruling

On December 12, 1983, the Pennsylvania district court first ruled that the Democrats had standing to bring suit. The court then held that Section 9012(f) was unconstitutional on its face because it violated First Amendment rights of free speech and association. The court based its finding on the Buckley v. Valeo opinion. That opinion, the court said, allows "restrictions on true campaign speech only to prevent corruption or its appearance." The court concluded that "plaintiffs have produced virtually no evidence of actual corruption and little admissible evidence of the appearance of corruption." The court held the view that "modest expenditures by political committees...[such as the defendant committee] have almost no potential to corrupt or to create the appearance of corruption.... "

On December 16, 1983, the FEC filed an appeal of this decision with the Supreme Court.

Supreme Court's Ruling

On March 18, 1985, the Supreme Court handed down a ruling in FEC v. National Conservative Political Action Committee (NCPAC) (CA No. 83-1032), which affirmed the Pennsylvania district court's decision that 26 U.S.C. §9012(f) was unconstitutional on its face because the provision violated First Amendment rights of free speech and association. However, the Court reversed the district court's holding that the Democratic Party and the Democratic National Committee (the Democrats) had standing to file a suit regarding Section 9012(f)'s constitutionality and instructed the lower court to dismiss the Democrats' suit.

The Democrats Lack Standing to Bring Suit

In reversing the lower court's ruling that the Democrats had standing to bring suit, the Supreme Court noted that, while the Fund Act authorized the Democratic National Committee to bring "appropriate" suit,2 such private suits "to construe or enforce the Act are inappropriate interference" with the FEC's "responsibilities for administering and enforcing the Fund Act."

Section 9012(f) Violates the First Amendment

The Court noted initially that "the expenditures at issue are squarely prohibited by §9012(f)." Nevertheless, since the committees' allegedly independent expenditures on behalf of President Reagan's campaign "produc[ed] speech at the core of the First Amendment and implicat[ed] the freedom of association, they [were] entitled to full protection under that Amendment." The Court stated that in a Presidential election, "allowing the presentation of [political] views while forbidding the expenditure of more than $1,000 to present them is much like allowing a speaker in a public hall to express his views while denying him the use of an amplifying system."

The Court therefore concluded that "Section 9012(f)'s limitation on independent expenditures by political committees is constitutionally infirm, absent any indication that such expenditures have a tendency to corrupt or to give the appearance of corruption. But even assuming that Congress could fairly conclude that large-scale political action committees have a sufficient tendency to corrupt, §9012(f) is a fatally overbroad response to that evil. It is not limited to multimillion dollar war chests, but applies equally to informal discussion groups that solicit neighborhood contributions to publicize views about a particular Presidential candidate."

Finally, the Court held that "section 9012(f) cannot be upheld as a prophylactic measure deemed necessary by Congress. The groups and associations in question here, designed expressly to participate in political debate, are quite different from the traditional organizations organized for economic gain [e.g., corporations and labor organizations] that may properly be prohibited from making contributions to political candidates."

Source: FEC Record, January 1984, p. 8; and May 1985, p. 6.

National Conservative Political Action Committee: FEC v.; Democratic Party of U.S. v. National Conservative Political Action Committee; 578 F. Supp. 797 (E.D. Pa. 1983) (three-judge court) aff'd in part, rev'd in part, 470 U.S. 480 (1985).

1 For a summary of AO's 1983-10 and 1983-11, see p. 2 of the July 1983 Record.

2 Under Section 9011(b)(1) of the Fund Act, the national committee of a political party, the FEC and individuals eligible to vote for President may file appropriate actions which seek to implement or construe provisions of the Fund Act.

FEC v. NEA

On July 20, 1978, the U.S. District Court of the District of Columbia granted the Commission's motion for summary judgment in this case. The FEC had filed suit against the National Education Association (NEA), its separate segregated fund (NEA-PAC) and eighteen of its state affiliates seeking to enjoin them from collecting political contributions by means of a "reverse checkoff" procedure. Under this procedure, a political contribution is automatically deducted from a member's salary along with his/her dues payment. The contribution is subsequently refundable upon written request by the member.

In addition to granting summary judgment, the court issued the following orders:

• Defendants are permanently enjoined from using the reverse check-off procedure to collect political contributions to NEA-PAC.
• Defendants, in consultation with the Commission, must prepare a plan by which its members will be informed of the suit and the decision of the court. In addition, the plan must provide a method by which the members are afforded an opportunity to obtain, at no expense to them and with minimal effort, a refund of any monies deducted from the paychecks through the reverse check-off. The plan must be presented to the court by August 25, 1978.
• Defendants' counterclaim against the Commission was dismissed.

On November 2, 1978, the U.S. District Court for the District of Columbia ordered the NEA to obtain written affirmation from participants in the reverse check-off programs of their intent to make a political contribution to its separate segregated fund, NEA-PAC. The court set April 1, 1979, as the deadline for obtaining each member's written consent to the contributions they had made through the reverse check-off procedure. NEA was further required to return funds to individuals who do not submit the affirmation.

Source: FEC Record, September 1978, p. 4; and January 1979, p. 3.

National Education Association: FEC v., 457 F. Supp. 1102 (D.D.C. 1978).

FEC v. NOW

On May 11, 1989, the U.S. District Court for the District of Columbia issued a memorandum opinion granting the defendant's motion for summary judgment in FEC v. National Organization for Women (NOW). The court found that the election law's prohibitions against corporate political expenditures did not apply to a series of direct mailings sent as part of a NOW membership drive because the materials did not contain express advocacy.

Background

The agency filed suit against NOW, a nonprofit corporation, in August 1987 after failing to reach a conciliation agreement with the organization in a compliance matter generated by a 1984 complaint from the National Conservative Political Action Committee.

The FEC charged that three direct mailings sent by NOW during the 1984 election cycle contained communications connected with several U.S. Senate elections. The letters mentioned several Senators who were running for reelection in 1984, including Jesse Helms and Strom Thurmond. Although NOW had established a separate segregated fund for political activities, the expenditures for the mailings were made with money from its general treasury. The FEC charged that these expenditures constituted violations of 2 U.S.C. §441b, which prohibits all corporations from making expenditures in connection with federal elections.

District Court Decision

In finding that now's financing of the preparation and distribution of the letters in question with money from its corporate treasury did not constitute a violation of the election law, the court primarily addressed the issue of express advocacy.

Citing the Supreme Court's 1986 ruling in FEC v. Massachusetts Citizens for Life, Inc. (MCFL), the court reasoned that section 441b's prohibition against expenditures made "in connection with" federal elections did not broaden the general definition of "expenditure" given in section 431(9)(a)(i) of the Act, i.e., disbursements, gifts and other types of payments made "for the purpose of influencing" federal elections. The court determined that section 441b's prohibition against expenditures made "in connection with" federal elections could only be interpreted as prohibiting expenditures made "for the purpose of influencing" federal elections. Further citing MCFL and other Supreme Court decisions, the district court concluded that this interpretation of the definition of "expenditure" required that the communication expressly advocate the election or defeat of a candidate. Express advocacy, in the court's view, had to include "an explicit and unambiguous reference" to a candidate, as well as a clear exhortation to vote for or against that candidate. Using this interpretation of express advocacybased on MCFL, the appeals court ruling in FEC v. Furgatch, and other decisionsthe court found that now's letters did not contain any language that expressly advocated the election or defeat of any candidate.

The court found that the central purpose of each of the mailings was apparently to expand the organization's membership, not to tell recipients how to vote. While the letters named some Senators who were candidates, they also mentioned some who were not running for reelection in 1984. Moreover, Senators were named mainly in the context of their opposition to causes embraced by now. The letters called for a variety of actions by the recipients in support of the organization and its causes. Such actions included, for example, communicating support for the equal rights amendment to the recipients' own Senators, and making contributions to now. The letters "fail[ed] to expressly tell the reader to go to the polls and vote against particular candidates." Since the letters were "suggestive of several plausible meanings...now's letters fail the express advocacy test proposed by the ninth circuit in Fugatch."

The district court added that, since the actual distribution of the letters was conducted by an outside direct mail contractor that did not inform now of where the mailings would be sent, NOW "clearly lacked the intent to influence" any particular senatorial election.

The court decided that the now mailings constituted discussion of political issues, protected by the first amendment, rather than an attempt to influence the election or defeat of any candidates because the letters did not contain express advocacy.

The FEC appealed the decision. In October 1991, however, following the supreme court's denial of the Commission's petition for a writ of certiorari in Faucher v. FEC, the commission filed a motion to dismiss the appeal. The U.S. Court of Appeals for the District of Columbia Circuit granted the motion on October 11, 1991.

Source: FEC Record, July 1989, p. 7; and November 1991, p. 1.

FEC v. NOW, 713 F. Supp. 428 (D.D.C. 1989), appeal dismissed (D.C. Cir. Oct. 11, 1991).

FEC v. NRA

On April 27, 1983, the U.S. District Court for the District of Columbia issued a consent decree resolving claims brought by the FEC against the National Rifle Association of America (NRA), an incorporated association; the Institute for Legislative Action (ILA), NRA's lobbying organization; and the NRA Political Victory Fund (PVF), NRA's separate segregated fund (Civil Action No. 81-1218).

The FEC filed suit against the defendants in May 1981, claiming that they had violated 2 U.S.C. §441b(a), which prohibits corporations from making contributions in connection with federal elections. Specifically, the FEC alleged that:

• NRA and ILA had made corporate expenditures in connection with the 1978 and 1980 Congressional elections and the 1980 Presidential elections;
• NRA and ILA had made corporate contributions to PVF in the form of advanced payments of expenditures on behalf of PVF, for which they were later reimbursed by PVF; and
• PVF had received corporate contributions by accepting (and subsequently reimbursing) the advanced payments of expenditures by NRA and ILA.

On January 6, 1983, the court dismissed, without prejudice, a portion of the FEC's claims, namely, allegations related to NRA's purchase of certain goods and services for PVF that had resulted in a violation of 2 U.S.C. §441b(a). The court found that it did not have subject matter jurisdiction over these specific factual allegations because the FEC had not undertaken conciliation with respect to them.

By the terms of the court's April 27 consent decree, the defendants agreed that:

• They will no longer engage in those activities alleged in the FEC's complaint which were not dismissed as part of the court's January 6, 1983, order.
• They will no longer spend corporate funds in connection with any federal election or otherwise engage in political activities prohibited by 2 U.S.C. §441b(a).
• They will limit partisan communications to NRA's restricted class of personnel (as specified by 2 U.S.C. §431(8)(B)(vi)).
• They will limit corporate expenditures in connection with federal elections to those exempt activities explicitly permitted by the Act and FEC regulations.

Source: FEC Record, June 1983, p. 11.

National Rifle Association: FEC v., 553 F. Supp. 1331 (D.D.C. 1983).

FEC v. NRA POLITICAL VICTORY FUND

On December 6, 1994, the Supreme Court ruled that the FEC lacked standing to independently bring a case under Title 2 of the U.S. Code before the Supreme Court. In future cases, the FEC must seek authorization from the U.S. Solicitor General if it wishes to represent itself in Title 2 cases. (Civil Action No. 93-1151.)

This decision brought to an end the FEC's legal efforts to enforce a finding that the NRA contributed corporate monies to its separate segregated fund, the NRA Political Victory Fund. (Corporations are prohibited sources of contributions under 2 U.S.C. §441b(a).) In November 1991, the U.S. District Court for the District of Columbia had ruled in favor of the FEC and had imposed a $40,000 penalty on the defendants. On appeal, the U.S. Court of Appeals for the District of Columbia reversed the district court's ruling on the grounds that the FEC's two nonvoting, ex officio members, the Secretary of the Senate and the Clerk of the House, sat on the Commission in violation of the Constitution's separation of powers.

District Court Ruling

In a November 15, 1991, order, modified on December 11, the U.S. District Court for the District of Columbia found that a $415,745 payment made by the National Rifle AssociationInstitute For Legislative Action (ILA) to NRA's separate segregated fund was a corporate contribution in violation of 2 U.S.C. §441b(a). (The ILA is a component of NRA, a nonprofit corporation.) (Civil Action No. 90-3090.) The court ordered defendants ILA, the NRA Political Victory Fund (the separate segregated fund) and the Fund's treasurer to pay a $40,000 civil penalty. The court also ordered defendants to comply with 11CFR 114.5(b)(3) in future transactions. Under that regulation, a corporation may reimburse its separate segregated fund (SSF) for expenses that the corporation could lawfully have paid as an administrative or solicitation expense, but the reimbursement must be made no later than 30 days after the SSF's payment.

Application of Section 114.5(b)(3)

The payment at issue originated from transactions that took place in March and July 1988, when ILA paid for two solicitation mailings. The Fund reimbursed ILA $415,745, the full cost of the mailings, on August 1. ILA returned that amount to the Fund on October 20--81 days after the August payment. Because this reimbursement was made after the 30-day period specified in section 114.5(b)(3), the court found that the October 20 payment was not a permissible reimbursement of solicitation expenses, as defendants had argued, but was instead an illegal corporate contribution to the Fund. The court observed that the October 20 payment was not used to pay for the solicitation material purchased in March and July. By defendants' own account, the money was returned to the Fund to bolster its budget for campaign activities related to the 1988 elections.

Application of MCFL

The court also rejected defendants' argument that the October 20 payment was permissible under the Supreme Court's decision in FEC v. Massachusetts Citizens for Life, Inc. (MCFL), 479 U.S. 238 (1986). MCFL permitted a nonprofit corporation to make independent expenditures if, among other conditions, the corporation had a policy of not accepting donations from business corporations and labor unions. The district court found MCFL inapplicable here because the ILA does receive
corporate donations.

Constitutional Status of FEC

Defendants also argued that the FEC lacked authority to bring suit because the FEC is a constitutionally flawed agency. They first claimed that the appointment of Commission members impermissibly restricts the appointment power granted the President under Article II because, under the Federal Election Campaign Act, the President is prevented from appointing more than three Commissioners from the same political party. Defendants further claimed that, because the President cannot control or remove Commissioners, the execution of the law does not rest with the President, an infringement of the sole executive power vested in the President under Article II. The court, however, ruled that the defendants did not have standing to raise these claims: "[D]efendants have raised an issue that bears on the rights of a third party, namely the President, and not on their own legal interests."

Defendants also argued that the statute's designation of the Clerk of the House and the Secretary of the Senate as nonvoting Commission members violated the separation of powers. Finding no showing that the nonvoting members participated in any decisions involving the present case, the court said that there was "no need to concern itself" with this argument.

FEC Requests Change in Civil Penalty

In its original order of November 15, the court had imposed a civil penalty in the amount of the FEC's total costs in investigating and prosecuting the violation, the amount to be calculated by the FEC.

On December 2, the FEC filed a motion asking the court to amend the civil penalty so that it reflected the amount necessary to deter similar violations rather than the costs of the agency's enforcement efforts, which the FEC viewed as unrelated to the violation at issue. The FEC also noted that such a penalty would be time consuming and burdensome to calculate.

In an amended opinion issued on December 10, the court ordered defendants to pay a $40,000 penalty. In imposing that amount, the court considered the defendants' bad faith, the injury to the public, the defendants' ability to pay and the need to vindicate the FEC's authority. The court concluded: "Because of the deliberate nature of defendants' actions, the Court must impose a substantial penalty in order to deter them from repeating this violation." The court added that defendants could have accomplished their objective legitimately if they had used proper fiscal planning.

Appeals Court Ruling

On October 22, 1994, the U.S. Court of Appeals for the District of Columbia ruled that the composition of the Federal Election Commission "violates the Constitution's separation of powers."

Under the Federal Election Campaign Act (FECA), the President appoints the Commission's six voting members, and Congress designates two non-voting ex officio members. The court found that "Congress exceeded its legislative authority when it placed its agents, the Secretary of the Senate and the Clerk of the House of Representatives, on the independent Commission as non-voting ex officio members."

The court rejected the Commission's contention that the ex officio members play an "informational or advisory role." The court noted that "advice...implies influence, and Congress must limit the exercise of its influence...to its legislative role." The court added that the "mere presence" of the Congressional representatives "has the potential to influence the other Commissioners." Citing legislative history, the court concluded that Congress intended the ex officio members to "serve its interests while serving as commissioners." Ultimately, the court said, "the mere presence of agents of Congress on an entity with executive powers offends the Constitution."

Based on a severability clause in the FECA, the court concluded that "the unconstitutional ex officio membership provision can be severed from the rest of" the statute, permitting a reconstituted Commission to continue to operate. The court added that Congress was not, in this instance, required to amend the statute.

The court rejected two other Constitutional challenges raised in the case; one regarding the Commission's bipartisan composition and the other, its status as an independent agency. The NRA had argued that:

• The "FECA's requirement that '[n]o more than 3 members of the Commission...may be affiliated with the same political party,' 2 U.S.C. §437c(a)(1) (1988), impermissibly limits the President's nomination power under the Appointments clause;" and
• The FEC's independence denies the President "sufficient control over the Commission's civil enforcement authority, a core executive function."

The court found the first of these challenges to be nonjusticiable because it is the Senatorial confirmation process, and not the statute itself, that arguably restrains the President. Indeed, the court noted that "without the statute the President could have appointed exactly the same members" to the Commission.

The court also upheld the FEC's status as an independent agency, citing a number of court cases that specifically sanction such entities.

The appeals court ruling reversed a district court decision that the NRA had violated 2 U.S.C. §441b(a) by contributing corporate funds to its separate segregated fund, the NRA Political Victory Fund. Having ruled on the Constitutional issue, the appeals court did not consider the merits of the case.

Commission Response

Following the appeals court's decision, the Commission took several steps to ensure the uninterrupted enforcement of the federal election law. The agency:

• Reconstituted itself as a six-member body, comprising only those commissioners appointed by the President;
• Ratified, in its reconstituted form, the regulations, forms, advisory opinions, audits, compliance matters and litigation issued and/or initiated by the former Commission; and
• Filed a petition for a writ of certiorari with the Supreme Court.

Supreme Court Decision

In December 1994, the Supreme Court ruled that the FEC lacked standing to independently bring Title 2 cases before the Court. As a result of the ruling, the FEC will have to seek authorization from the U.S. Solicitor General if it wishes to represent itself in Title 2 cases.

The FEC's petition to the Supreme Court was filed within the 90-day filing period mandated by law, but it was filed without the authorization of the Solicitor General. The Court contrasted the language at 2 U.S.C. §437d(a)(6) with that of 26 U.S.C. §§9010(d) and 9040(d) to reach the conclusion that the FEC lacked standing to bring this case. The Title 2 statute empowers the FEC "to . . . appeal any civil action . . . to enforce the provisions of the" Federal Election Campaign Act. It fails, however, to explicitly provide the FEC with the authority to file a writ of certiorari or otherwise conduct litigation before the Supreme Court. By contrast, the Court stated, the Title 26 statute does specifically provide the FEC with the authority "to petition the Supreme Court for certiorari to review" judgments in actions to enforce the Presidential election fund laws. The Court interpreted the discrepancy in the language of these two statutes to indicate congressional intent to restrict the FEC's independent litigating authority at the Supreme Court level to those matters involving the Presidential election laws.

The Court rejected the Commission's argument that, in the past, it had represented itself before the High Court. The Court pointed out that none of those cases had challenged the FEC's standing to petition the Court for a writ of certiorari.

Although the Solicitor General authorized the FEC's petition, this action came months after the 90-day filing period had closed--"too late in the day to be effective."

The FEC's petition for a writ of certiorari, therefore, was dismissed for want of jurisdiction. The action left standing the ruling of the court of appeals.

Source: FEC Record, January 1992, page 7; December 1993, p. 2; and February 1995, p. 1.

NRA Political Victory Fund: FEC v., 778 F. Supp. 62 (D.D.C. 1991), No. 90-3090 (D.D.C. Dec. 10, 1991), rev'd, 6 F.3d 821 (D.C. Cir. 1993), cert. dismissed for want of jurisdiction, 115 S. Ct. 537 (Dec. 6, 1994).

FEC v. NRSC (93-1612)

On June 12, 1995, the U.S. District Court for the District of Columbia found that, as stipulated by both parties in a Stipulation to Final Judgment, the National Republican Senatorial Committee (NRSC) violated 2 U.S.C. §§441a(h) and 434(b) by directing the redesignation of contributions it received and by failing to properly report this activity.

The FEC was precluded from collecting civil penalties in this case because in a February 24, 1995, decision, the court ruled that the 5-year statute of limitations had expired.

This case had been dismissed in November 1993, but was reopened in 1994, as explained below.

Dismissal and Reopening of Case

The court had dismissed the suit on November 24, 1993, based on an October 1993 appellate court holding that the FEC's composition was unconstitutional and that the agency therefore lacked authority to bring an enforcement action. FEC v. NRA Political Victory Fund (NRA). In that case, the appeals court held that the presence of two Congressionally-appointed ex officio members on the Commission violated the Constitution's separation of powers.

On December 2, 1993, the Commission moved for reconsideration of the dismissal based on FEC actions immediately following the NRA ruling: The agency reconstituted itself as a six-member body entirely composed of Commissioners appointed by the President; ratified its earlier findings in enforcement cases; and authorized ongoing litigation, including FEC v. NRSC.

Due to the FEC's remedial actions, the district court reversed its earlier decision that NRA was a basis for dismissal, and the case was reopened on February 8, 1994.

Statute of Limitations

In a second stage of the case, on February 24, 1995, the court ruled that the FEC was precluded from recovering monetary penalties in the action because the 5-year statute of limitations expired before the suit was filed. (The statute of limitations, however, does not apply to injunctive and declaratory relief.)

The statute of limitations at 28 U.S.C. §2462 1 applies in all instances except those involving other statutes in which Congress specifically included another time limitation. The court ruled that the Federal Election Campaign Act does not contain such an alternative statute of limitations. Accordingly, the court applied the 5-year limit to this case.2

In applying §2462, the court determined that the statute of limitations started running from the date of the alleged violationsthe period between November 1985 and November 1986. Since the time between the dates of the violations and the date the FEC filed this case with the court exceeded the 5-year statute of limitations, the FEC could not pursue the imposition of civil penalties.

The case then proceeded to a final stage.

Stipulation to Final Judgment

In its original suit, the FEC had alleged that during the 1986 election cycle the NRSC, having exhausted its contribution and coordinated party expenditure limits on behalf of Republican Senate candidate Jim Santini, contacted its contributors and asked them to redesignate a portion of their NRSC contributions to Mr. Santini. The NRSC then forwarded these newly earmarked contributions to the Santini committee.

Under 11 CFR 110.6(d)(2), the full amount of a contribution earmarked by a contributor at the direction of an intermediary counts against both that contributor's and that intermediary's contribution limit for the recipient. In the matter at hand, this rule caused the NRSC to exceed its contribution limit for Mr. Santini by $183,500$104,200 of which was the total value of the earmarked contributions and $79,300 of which was the cost of securing the redesignations (an in-kind contribution).

In the Stipulation to Final Judgment, the NRSC admitted to engaging in the alleged conduct, but stated that it offered this admission only to bring this case to a close. In addition, the NRSC agreed to accept, in all future matters, the FEC's position that this conduct constitutes violations of 2 U.S.C. §§441a(h) and 434(b), and 11 CFR 110.6(d)(2). Furthermore, the NRSC agreed that through December 31, 1998, it would report all contributions that it asks contributors to redesignate to candidates as contributions from both itself and the contributor.

Source: FEC Record, January 1994, p. 12; April 1994, p. 7; April 1995, p.4; and August 1995, p. 4.

National Republican Senatorial Committee: FEC v., No. 93-1612 (TFH) (D.D.C. June 24, 1994); (D.D.C. Feb. 24, 1995)(opinion); (D.D.C. June 12, 1995).

1 That provision reads: "Except as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued."

2 This conclusion is inconsistent with the U.S. District Court for the Central District of California's denial of defendant's motion to dismiss in FEC v. Williams. In that case, Larry Williams argued that because the 5-year statute of limitations in §2462 had expired, the court should dismiss the case. The court rejected this motion without issuing an opinion. FEC v. Williams, No. CV 93-6231 ER.

FEC v. NRWC (77-7125)

NRWC v. FEC (78-0315)

On December 13, 1982, the Supreme Court issued a unanimous decision reversing a decision by the U.S. Court of Appeals for the District of Columbia Circuit in FEC v. National Right to Work Committee (NRWC) (U.S. Supreme Court No. 81-1506). In its opinion, the Court held that some 267,000 individuals solicited by NRWC for contributions to its separate segregated fund during 1976 did not qualify as solicitable "members"1 of NRWC under 2 U.S.C. §441b(b)(4)(C). (NRWC is a nonprofit corporation without capital stock, which advocates voluntary unionism.)

Complaints

In November 1977, the FEC filed suit against NRWC (FEC v. NRWC, Civil Action No. 77-7125) claiming that, since both NRWC's bylaws and the articles of incorporation it had filed with Virginia stated that NRWC had no members, NRWC had violated section 441b(b)(4)(C) of the Act by soliciting funds to its separate segregated fund from persons other than members. (Under this provision, corporations without capital stock may pay the costs of soliciting contributions from their members to their separate segregated funds.) NRWC contended, on the other hand, that its solicitations were permissible since those persons solicited were "members" of NRWC, within the meaning of the Act and FEC regulations.

After receiving notice of the FEC's intent to file a civil action, NRWC filed suit in October 1977 (NRWC v. FEC, Civil Action No. 78-0315), seeking injunctive and declaratory relief and challenging the constitutionality of sections 441b(b)(4)(A) and (C) of the Act, which, together, prohibit nonstock corporations from soliciting persons other than their "members." Among its constitutional claims, NRWC asserted that section 441b(b)(4)(C) was unconstitutionally vague and infringed on the First Amendment rights of free speech and association of those persons solicited by NRWC.

In February 1978, the cases were consolidated for argument before the U.S. District Court for the District of Columbia.

District Court Ruling

Referring to NRWC's articles of incorporation and bylaws, the district court found that NRWC was organized without members. The court held that NRWC had violated Section 441b(b)(4)(C) by soliciting contributions to its separate segregated fund from persons who were not members of NRWC. The court found that the legislative history of the Section 441b membership exception required a limited definition of "members." The court defined "members" as those "...persons who have interests and rights in an organization similar to those of a shareholder in a corporation and a union member in a labor organization. To read the exception more broadly would be to upset the symmetry of the statutory scheme." (501 F. Supp. 422, 432 (D.D.C. 1980)) The court noted that no class of persons solicited by NRWC had been given any such participation rights in NRWC.

Appeals Court Ruling

On September 4, 1981, reversing the district court's ruling, the appeals court held that the term "member" set forth at Section 441b(b)(4)(C) "...necessarily includes those individuals solicited by NRWC.... " The appeals court concluded that the district court's definition of "member" was "...so narrow that it infringes on associational rights." The court noted that two identifiable public interests served by the Act (i.e., to eliminate the appearance or actuality of corruption in federal elections and to prevent coercive contributions) were not "...served by restricting the solicitation activities of a nonstock corporation organized solely for political purposes." The court found that, "as to the first interest, we believe that solicitation [alone] will neither corrupt officials nor distort elections." As to the second interest, the court found that "...the individuals from whom NRWC solicits contributions, unlike employees of a corporation or members of a labor union, clearly are not subject to coercion." In the court's opinion, "the NRWC operation...ensures that NRWC accurately identifies and solicits only those individuals who share a similar political philosophy and who have evidenced a willingness to promote that philosophy through support of the Committee."

On October 19, 1981, the Commission filed a petition with the appeals court for a rehearing of the case and a suggestion for an en banc rehearing. On November 13, 1981, the U.S. Court of Appeals for the District of Columbia Circuit, sitting en banc, denied the FEC's suggestion for a rehearing of National Right to Work Committee, Inc. (NRWC) v. FEC (Civil Action No. 80-1487). On December 15, the Commission voted to petition the Supreme Court for a writ of certiorari.

Supreme Court's Ruling

In rejecting the appeals court's reasoning, the Supreme Court held that the "persons solicited by NRWC were insufficiently attached to the corporation to qualify as members under Section 441b(b)(4)(C) of the Act." In this regard, the Court noted that the legislative history of Section 441b(b)(4)(C) indicated that " 'members' of nonstock corporations were to be defined, at least in part, by analogy to stockholders of business corporations and members of labor unions. The analogy to stockholders and union members suggests that some relatively enduring and independently significant financial or organizational attachment is required to be a 'member' under 441b(b)(4)(C)." The Court found that those individuals solicited by NRWC through "random mass mailings" failed to meet this membership requirement: "Among other things, NRWC's solicitation letters did not mention membership, its articles of incorporation disclaim the existence of members, and members play no part in the operations or administration of the corporation." Consequently, the Court found that the respondent's arguments would "virtually excise from the statute the restriction of solicitation to 'members'.... " and would "open the door to all but unlimited corporate solicitation."

The Court found that the Act's restrictions on solicitations by nonstock corporations did not raise "any insurmountable constitutional difficulties." The First Amendment "associational rights asserted by respondent...are overborne by the interests Congress has sought to protect in enacting Section 441b." In this regard, "the statute reflects a legislative judgment that the special characteristics of the corporate structure require particularly careful regulation." Moreover, the Court noted that "the governmental interest in preventing both actual corruption and the appearance of corruption of elected representatives has long been recognized [by the Court], First National Bank of Boston v. Bellotti, 435 U.S. at 787, n.26, and there is no reason why it may not in this case be accomplished by treating unions, corporations, and similar organizations differently from individuals. California Medical Association v. FEC, 435 U.S. 182, 201 (1981)."

As to the defendants' claim that Section 441b(b)(4)(C) was unconstitutionally vague, the Court maintained that "there may be more than one way under the statute to go about determining who are 'members' of a nonprofit corporation, and the statute may leave room for uncertainty at the periphery of its exception for solicitation of 'members.' However, on this record we are satisfied that NRWC's activities extended in large part, if not in toto, to people who would not be members under any reasonable interpretation of the statute. See Broadrick v. Oklahoma, 413 U.S. 601 (1973)."

Remand to Appeals Court

The Court then remanded the case to the appeals court to consider, among other things, "the...imposition of a $10,000 civil penalty" on NRWC for unlawful solicitations to its separate segregated fund. On September 2, 1983, the appeals court found that the district court had erred in finding NRWC's violation to be "knowing and willful." The appeals court therefore concluded that the $10,000 civil penalty imposed by the district court was unwarranted.

Remand to District Court

After the case had been remanded to the district court, the court accepted a consent order on October 4, 1984, which provides that:

• NRWC, ERCC and any of their agents will not solicit contributions to ERCC from persons other than NRWC's members. See 2 U.S.C. §441b(b)(4).
• Within thirty days of the date of the consent order, NRWC and ERCC will mail refunds totalling $67,401.62 to those individuals unlawfully solicited on June 21 and September 9-15, 1976. (The court will grant extensions for reasonable delays.)
• Each refund will be accompanied by a letter informing the contributor that the courts have determined that the solicitation constituted a violation of the law's prohibition on corporate contributions which was not knowing and willful. 2 U.S.C. §441b.
• The refund checks will expressly, and in bold print, require deposit within 30 days from the date drawn.
• NRWC and ERCC will report to the FEC on the status of the refund checks indicating whether they were undeliverable, cleared through the bank or remained outstanding.
• Within 30 days of the consent order, NRWC and ERCC will pay a $5,000 civil penalty (without interest) to the U.S. Treasury.
• Within 30 days of the consent order, NRWC and ERCC will pay FEC court costs from the district court proceeding amounting to $4,483.64 (without interest).
• Within an agreed upon time, NRWC and ERCC will donate to the Salvation Army: any contribution refunds that were undeliverable; all checks which remain outstanding; and $15,000 in lieu of the interest accrued from April 24, 1980, on refundable contributions, NRWC's civil penalty and the FEC's court costs. Once NRWC and ERCC have satisfied these conditions, the parties will file a joint motion to:
  • Have the Aetna Casualty and Surety Company released from any and all obligations under the Supersedes Bond filed with the district court in these actions; and
  • Have all NRWC and ERCC contributor information which was filed under seal with the district court returned to NRWC and ERCC. In addition, the FEC will return to NRWC and ERCC all contributor information that the defendants presented to the FEC under seal, together with all copies, lists, summaries or digests made from them.

Source: FEC Record, November 1981, p. 3; January 1982, p. 7; February 1983, p. 3; November 1983, p. 6; and January 1985, p. 7.

National Right to Work Committee: FEC v., 501 F. Supp. 422 (D.D.C. 1980), rev'd, 665 F.2d 371 (1981), rev'd, 459 U.S. 197 (1982), on remand, 716 F.2d 1401 (1983).

1 As defined by 11 CFR 114.1(e), "'Members' mean all persons who are currently satisfying the requirements for membership.... A person is not considered a member...if the only requirement for membership is a contribution to a separate segregated fund."

FEC v. NRWC (90-0571)

On February 15, 1996, the U.S. District Court for the District of Columbia ruled that the FEC was barred from suing for a civil penalty in this case because the 5-year statute of limitations had expired. 28U.S.C. §2462. Additionally, the court ruled that injunctive relief was not warranted because the defendant had not violated the law again for more than 10 years.

Background

The National Right to Work Committee (NRWC) is a nonprofit corporation that defends workers' rights to refuse to join or support a labor union. In 1984, the NRWC spent $100,000 to hire private detectives to infiltrate the AFL-CIO, the National Education Association (NEA) and the Mondale for President Committee for the purpose of gathering evidence that the unions were using their general treasury monies to provide support to Walter Mondale's Presidential effort. (The use of labor union money in connection with a federal election is prohibited by 2 U.S.C. §441b.) The NRWC used the information gathered by its hired detectives to file administrative complaints with the FEC.

In October 1984, the NEA filed an administrative complaint with the FEC that accused the NRWC of violating the same federal election laws that the NRWC had accused the NEA of violating. The NEA complaint contended that the NRWC's payment of $100,000 represented illegal contributions and expenditures because the payments funded the services of detectives who, in the course of conducting their clandestine information gathering, rendered services to the Mondale campaign.

On May 23, 1989, the Commission found "probable cause" that the NRWC had violated §441b. On March 13, 1990, the FEC filed this lawsuit.

Statute of Limitations

In general, federal government agencies must initiate proceedings to assess civil penalties, fines and forfeitures within 5 years from "the date when the claim first accrued." 28U.S.C. §2462. In FEC v. National Republican Senate Committee, the court ruled that this statute of limitations applied to the FEC and that the statute of limitations began to run when the alleged offense was committed. The FEC conceded that the NRWC's hired detectives ceased their undercover operations by September 1984. The court noted that the Commission did not file this lawsuit until March of 1990. The court concluded that the 5-year statute of limitations ran out on this case and the FEC was therefore barred from pursuing a civil penalty in this matter.

Furthermore, the court ruled that because the FEC failed to put forth any compelling evidence that the NRWC had violated the law since 1984, it was both unnecessary and unwarranted to issue injunctive relief.

Source: FEC Record, April 1996, p. 11.

National Right to Work Committee: FEC v., No. 90-0571 (D.D.C. Feb. 15, 1996).

FEC v. NEW REPUBLICAN VICTORY FUND

On June 23, 1986, the U.S. District Court for the Eastern Division of Virginia, Alexandria Division, approved a consent order between the Commission and defendants, the New Republican Victory Fund (the Fund), a nonconnected political committee, and the Fund's treasurer, Charles R. Black, Jr. The consent order provides that defendants violated section 434(a)(4)(A) of the election law during the 1984 election cycle by:

• Failing to file the Fund's October quarterly, year-end and post-general election reports; and
• Filing its July quarterly report approximately 64 days late.

Within 30 days of filing the consent order, the defendants agreed to:

• File these reports; and
• Pay a $2,350 civil penalty to the U.S. Treasurer.

The consent order concluded a suit filed by the FEC on April 18, 1986.

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

FEC v. NEW YORK STATE CONSERVATIVE PARTY STATE COMMITTEE/1984 VICTORY FUND (87-3309)

On April 17, 1990, the U.S. District Court for the Southern District of New York issued a final consent order and judgment declaring that the New York State Conservative Party State Committee/1984 Victory Fund made excessive contributions in connection with a 1982 direct mail project for Florence M. Sullivan, a Republican candidate in the 1982 Senatorial primary election in New York. (Civil Action No. 87-3309). The order included a $15,000 civil penalty.

The consent order stated that the defendants first made a $4,980 in-kind contribution to the Sullivan for Senate Committee by paying for the printing of direct mail literature. Subsequently, the defendants allowed the Sullivan Committee to use the Victory Fund's nonprofit postal permit, saving the Sullivan committee $24,852.15 on postage (i.e., the difference between the usual bulk rate for the Sullivan letters and the postage actually paid using the nonprofit permit). These in-kind contributions exceeded the $5,000 per candidate, per election limit for multicandidate committees, set forth at 2 U.S.C. §441a(a)(2)(A).

In addition, the order stated that the Victory Fund failed to report the in-kind contribution of the postage costs, in violation of 2 U.S.C. §434(b).

The consent order required the Victory Fund to amend its reports and pay a $15,000 civil penalty.1 Finally, the defendants were permanently enjoined from future similar violations.

Source: FEC Record, June 1990, p. 7.

1 Payment of the civil penalty in this consent order will also satisfy two prior outstanding default judgments in FEC v. 1984 Victory Fund (Civil Action Nos. 86-3891 and 85-8384). See the March 1987, June 1986 and December 1985 issues of the Record for more information on those suits.

FEC v. ORTON

On April 27 and 28, 1997, the U.S. District Court for the District of Utah, Central Division, approved the parties' settlement that required Utahns for Ethical Government (UEG) to pay a $9,000 civil penalty to the FEC for violations of the Federal Election Campaign Act (the Act) and to amend their termination report so that all of their expenditures would be reported as in-kind contributions to Orton for Congress. UEG also had to either refund $1,800 in impermissible corporate contributions or remit that same amount to the U.S. Treasury.

The violations resulted from UEG's involvement in the 1990 general election campaign for the 3rd Congressional District seat in Utah. UEG, a single-candidate political committee registered with the FEC, supported William Orton over his opponent, Karl Snow.

The settlement states that UEG accepted corporate contributions and contributions in the name of another, in violation of the Act. 2 U.S.C. §§441b(a) and 441f. The committee reported receipts of in-kind contributions of $1,000 from Sherman Fugal and of $800 from Jayson Fugal. In fact, these contributions were actually from Fugal & Fugal, Inc., a corporation, d/b/a Peggy Fugal Advertising.

The settlement also states that, although UEG included disclaimers on its advertisements that opposed Mr. Orton's opponent, the disclaimers failed to include a statement indicating whether the ads had been authorized by a candidate or candidate committee. Additionally, UEG failed to file a statement of organization with the Commission within 10 days of becoming a political committee, as required by 2 U.S.C. §433(a).

The settlement includes no judicial determination as to whether expenditures of $11,452, made by UEG to pay for ads opposing Mr. Orton's opponent, were in fact excessive contributions to Mr. Orton. The Commission, in its administrative proceedings, had found probable cause that UEG's expenditure had been coordinated with the Orton campaign, based on the fact that a former Orton campaign volunteer had participated in some UEG activities. Under the law, any expenditure made in cooperation with or at the suggestion of a candidate or his campaign is considered a contribution. 2 U.S.C. §441a(a)(7)(B)(i). In prior enforcement matters, the Commission had interpreted this provision to cover situations where the spender's activity was based on knowledge of official campaign strategy, the source of which was the candidate or the campaign. The defendants disagreed with the finding, arguing that the Commission had no direct evidence of the alleged violation.

The claims against all the defendants, including Mr. Orton and his campaign committee, will be dismissed with prejudice once UEG pays the fine and amends its reports.

Source: FEC Record, June 1997, p. 6.

FEC v. PARISI

On October 31, 1996, the U.S. District Court for the Southern District of New York assessed a $30,000 civil penalty against Angelo Parisi for exceeding the contribution limits of the Federal Election Campaign Act.

The lawsuit against Mr. Parisi grew out of an administrative complaint filed with the FEC in 1994 by the Center for Responsive Politics.

Among the violations, the FEC uncovered the following transactions:

• Contributions in excess of the individual $25,000 annual limit. 2 U.S.C. §441a(a)(3). Mr. Parisi made $33,942 in contributions in 1991, $66,262 in contributions in 1992 and $40,405 in contributions in 1993.
• Contributions in excess of the $20,000 per individual limit on contributions to a national political party committee. 2 U.S.C. 441a(a)(1)(B). Mr. Parisi gave $27,262 to the National Republican Senatorial Committee (NRSC) and $22,750 to the National Republican Congressional Committee in 1992. He also gave $24,655 to the NRSC in 1993.
• Contributions in excess of the $5,000 annual limit on contributions to a PAC. 2 U.S.C. §441a(a)(1)(C). In 1991, Mr. Parisi gave $6,200 to American Citizens for Political Action.

Because of unusual mitigating circumstances, all but $5,000 of the penalty was suspended. However, Mr. Parisi will be required to pay the remaining $25,000 if he violates the contribution limits again.

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

FEC v. PHILLIPS PUBLISHING

On July 16, 1981, the U.S. District Court for the District of Columbia denied an FEC petition for court enforcement of two subpoenas the Commission had issued to Phillips Publishing, Inc. (FEC v. Phillips Publishing, Inc., Civil Action No. 81-0079). The court granted the respondent's motion to enjoin any further FEC investigation of either Phillips Publishing, Inc. or its biweekly newsletter, The Pink Sheet on the Left (The Pink Sheet).

FEC's Claim

The FEC had issued the subpoenas to the staff of Phillips Publishing, Inc. as part of an investigation into a complaint filed by the Kennedy for President Committee on March 18, 1980. The Kennedy Committee claimed that the publishing company had distributed a promotional mailing for The Pink Sheet that expressly advocated the defeat of Senator Edward Kennedy (D-Mass.) in his bid for the 1980 Presidential nomination. The Kennedy Committee alleged that, in making expenditures for the mailing, the respondent had violated the following provisions of the Act:

• §433, by failing to register as a political committee;
• §434(c)(1), by failing to report independent expenditures for the mailing in excess of $250;
• §435(b),1 by failing to include a notice on the mailing indicating that committee reports were available at the FEC and could be purchased;
• §441(b), by making a prohibited corporate expenditure advocating the defeat of a candidate in a federal election; and
• §441(d), by failing to identify who had paid for and authorized the mailing.

In responding to these allegations, Phillips Publishing, Inc. contended that, since The Pink Sheet was a periodical and was not controlled by any political party, candidate or committee, the promotional mailing constituted a news activity exempted from the Act's definition of contribution or expenditure. 2 U.S.C. §431(9)(B)(i). In finding reason to believe the alleged violations had occurred, the FEC concluded that this issue, as well as others, had to be investigated further to make a factual determination with regard to the respondent's claim that the promotional mailing constituted an exempted news activity. Based on a facial comparison, the Commission noted, for example, that the title of the solicitation letter was not printed in the same format as that of the regular Pink Sheet newsletter, that the mailing did not contain legends normally carried on The Pink Sheet and that the respective contents of the mailing and The Pink Sheet were dissimilar. Moreover, the promotional mailing was not distributed through the facilities of a periodical
publication.

On April 8, 1981, after company officials to whom the subpoenas had been directed failed to respond, the Commission filed its petition with the district court. On May 29, 1981, Phillips Publishing, Inc. filed a motion to dismiss the FEC's petition and a motion to bar any further investigation of The Pink Sheet and the promotional mailing.

District Court Ruling

In denying the FEC's petition for enforcement of the subpoenas, the court found that the FEC had sufficient information to determine that the mailing met the criteria for the news story exemption. "As early as April 1980, the FEC received responses from Phillips Publishing, through its counsel, stating that The Pink Sheet and its publisher 'are not political committees, do not solicit or receive any political contributions, or make any contributions to any candidate.... '" Moreover, the court said, "...the solicitation letter was to publicize The Pink Sheet and to obtain new subscribers, both of which are normal, legitimate press functions.... " The court concluded, therefore, that the FEC's petition for further information should be denied.

Motion to Appeal Withdrawn

On October 30, 1981, the U.S. Court of Appeals for the District of Columbia Circuit granted the FEC's motion to withdraw its appeal of FEC v. Phillips Publishing, Inc. (Civil Action No. 81-2015). In a motion filed on October 21, 1981, the Commission stated that it was withdrawing the appeal "in the interest of judicial economy," but that it continued to believe "the district court's decision was erroneous."

Source: FEC Record, September 1981, p. 2; and December 1981, p. 6.

Phillips Publishing, Inc.: FEC v., 517 F. Supp. 1308 (D.D.C. 1981).

1 This section was stricken from the Federal Election Campaign Act (the Act) by the 1979 Amendments to the Act (Pub. L. No. 96-187, January 8, 1980).

FEC v. POLITICAL CONTRIBUTIONS DATA

On August 21, 1991, the U.S. Court of Appeals for the Second Circuit ruled that Political Contributions Data, Inc., did not violate 2 U.S.C. §438(a)(4) by selling, for profit, individual contributor information copied from FEC reports. (Civil Action No. 91-6084.) This ruling reversed the district court's decision.

On June 17, 1993, the court of appeals also reversed the district court's ruling on attorneys' fees. The appellate court held the FEC liable for payment of PCD's attorneys. On February 22, 1994, the Supreme Court denied the FEC's petition for review of that decision.

Background

Section 438(a)(4) protects information on individual contributors (including names, addresses, occupations and employers) that is disclosed on reports filed with the FEC. Under section 438(a)(4), information copied from such reports "may not be sold or used by any person for the purpose of soliciting contributions or for commercial purposes...." (The names and addresses of political committees, however, may be used for solicitation purposes.)

In AO 1986-25, issued to Public Data Access, Inc. (PDA), the Commission considered PDA's proposed sale of information on individual contributors that was compiled from FEC reports. The Commission concluded that the proposed sale would be for "commercial purposes" and would therefore violate section 438(a)(4).

After the opinion was issued, PDA established Political Contributions Data, Inc. (PCD), a for-profit corporation, which then sold lists of individual contributor information compiled from FEC reports. PCD marketed two standard reports: a list of contributions made by officers and upper-level employees of the 700 largest U.S. corporations; and a list of individuals contributing $500 or more, sorted by congressional district.

The Commission filed suit in August 1989 alleging that PCD had violated section 438(a)(4).

District Court Decision

On December 19, 1990, the U.S. District Court for the Southern District of New York ruled that PCD's sale of contributor lists violated the "commercial purposes" prohibition. (Civil Action No. 89-CIV-5238.) In reaching this decision, the district court found that the FEC's determination in AO 1986-25 was reasonable. The Commission had concluded that PDA's for-profit status indicated a commercial purpose. The Commission also concluded that PDA could not claim the exception for media use of contributor information under 11CFR 104.15(c) because PDA's lists would have a commercial value to list brokers and because the FEC information contained in the lists was not incidental to the sale of the communication (as in a newspaper) but was instead the primary focus of the communication.

The court also considered but rejected PCD's constitutional challenges to section 438(a)(4). The court imposed a $5,000 penalty against PCD but stayed payment pending the resolution of PCD's appeal.

Court of Appeals Decision

The court of appeals rejected the Commission's conclusion in AO 1986-25 as an unreasonable interpretation of section 438(a)(4) and 11CFR 104.15(c). The court instead found that PCD's sale of contributor lists was permissible under those provisions.

Under section 104.15(c), the use of information copied from FEC reports "in newspapers, magazines, books or other similar communications is permissible as long as the principal purpose of such communications is not to communicate any contributor information...for the purpose of soliciting contributions or for other commercial purposes." [emphasis added]

The court found that PCD's contributor lists qualified as "other similar communications" and that PCD's sale of FEC information did not violate the commercial purposes prohibition: "The absence from PCD's reports of mailing addresses and phone numbers, as well as the caveat on each page against solicitation and commercial use, make it virtually certain that these reports will be used for informative purposes (similar to newspapers, magazines, and books...), not for commercial purposes (similar to soliciting contributions or selling cars)."

The court based this conclusion on its interpretation of the commercial purposes prohibition: "The §438(a)(4) prohibition is only violated by a use of FEC data which could subject the 'public-spirited' citizens who contribute to political campaigns to 'all kinds of solicitations,'" such as commercial solicitations for magazine subscriptions or credit cards. The court said that this reading of the prohibition balances the need to protect the privacy of individual contributors with statutory intent to promote public disclosure of campaign finance information.

Finding the PCD did not violate section 438(a)(4), the court remanded the case to the district court with instructions to dismiss the FEC's complaint.

Application for Attorneys' Fees

District Court

On December 19, 1991, PCD applied to the district court for an award of $55,022 in attorneys' fees and other expenses pursuant to the Equal Access to Justice Act (EAJA). 28 U.S.C. §2412(d)(1)(A). To be considered by a court, an application for attorneys' fees must be filed within 30 days of the date the judgment has become final. Citing judicial precedent, the district court said that "a judgment has been found to be final when the 'losing party asserts that no further appeal will be taken.'" The court found that the FEC provided "clear and unequivocal notice" that it would not appeal the court of appeals' decision in a letter from the FEC's attorney to PCD's attorney. The letter, which stated the FEC's reasons for not pursuing an appeal, was dated October 30, 1991; accordingly, the court found that the deadline expired 30 days later, on November 29, 1991, nearly a month before PCD filed its application for attorneys' fees. The court therefore denied the application because it was filed late. 807 F. Supp. 311 (S.D.N.Y. 1992).

The district court also said that defendants' application would have to be denied on the grounds that the FEC's position was "substantially justified."1 Applying criteria set forth by the Supreme Court in Pierce v. Underwood, 487 U.S. 552 (1988), the court found that the FEC's position had a "reasonable basis both in law and fact" and "could satisfy a reasonable person."

Appeals Court

Reversing the district court decision, the U.S. Court of Appeals for the Second Circuit, on June 17, 1993, found that PCD had filed its application for attorney's fees within 30 days of the "final judgment," as required under the EAJA. (No. 92-6240.) The court said that, in this instance, the date of "final judgment" was the last day the Commission could have applied for a writ of certiorari with the Supreme Court.

The appeals court also found that the FEC's position on the "sale or use" restriction was not "substantially justified." The court found that the 1991 appeals court ruling, which had held the FEC's interpretation to be "unreasonable," precluded the current panel from finding the agency's position "substantially justified" under the EAJA. "This is so," the court reasoned, "because the legal standards which governed the merits phase of this litigation are precisely those to be applied to the EAJA question." The court also relied on Oregon Natural Resources Council v. Madigan, 980 F.2d 1330 (9th Cir. 1992), a decision which was issued after this appeal had been filed.

Supreme Court

On February 22, 1994, the U.S. Supreme Court denied the FEC's petition to review the appellate court judgment. The FEC was required to pay PCD's attorneys $54,610.

In its Supreme Court petition, the FEC argued that the Second Circuit's ruling contradicted legislative intent as well as the Supreme Court's own rulings and those of other appellate courts. The FEC's brief quoted the Supreme Court in Pierce v. Underwood, where the Court observed that a court's agreement or disagreement with the government "does not establish whether its position was substantially justified. Conceivably, the Government could take a position that is not substantially justified, yet win; even more likely it could take a position that is substantially justified, yet lose."(487 U.S. 552, 569 (1988).)

The Solicitor General, who filed a friend of the court brief supporting the FEC's petition, said that the PCD holding "seriously expands the government's liability for attorney fees under EAJA."

Source: FEC Record, February 1991, p. 8; May 1991, p. 7; October 1991, p. 11; October 1992, p. 10; August 1993, p. 6; and May 1994, p. 4.

FEC v. Political Contributions Data, Inc., 753 F. Supp. 1122 (S.D.N.Y. 1990), rev'd, 943 F.2d 190 (2d Cir. 1991).

1 Attorneys' fees must be awarded to the prevailing nongovernment party unless the court finds the position of the federal agency to have been substantially justified. 28 U.S.C. §2412(d)(1)(A).

FEC v. POPULIST PARTY (88-0127)

On March 22, 1989, the U.S. District Court for the District of Columbia issued a final consent order and judgement in FEC v. Populist Party (Civil Action No. 88-0127). By the terms of the consent order, the court declared that the Populist Party, a political committee, and Willis Carto, acting as treasurer, violated the election law and regulations by:

• Failing to file 1985 mid-year and year-end reports on time (2 U.S.C. §434(a)(4)(A)(iv));
• Failing to file, in a timely manner, amended Statements of Organization reflecting Mr. Carto's role as treasurer of the committee and a change in the committee's campaign depository (2 U.S.C. §433(c));
• Failing to file, in a timely manner, quarterly reports for April, July and October 1986 (2 U.S.C. §434(a)(4)(A)(i));
• Failing to file in a timely manner, a 1986 post-general election report (2 U.S.C. §434(a)(4)(A)(iii));
• Failing to disclose in any report the purpose of approximately $8,000 in operating expenditures made to one payee (2 U.S.C. §434(a)(4)(A)(iii));
• Failing to disclose, in a timely manner, the receipt of a $500 contribution from an individual (2 U.S.C. §434(b)(3)(A));
• Failing to disclose and continuously report certain outstanding debts and obligations, amounting to approximately $299,817 (2 U.S.C. §434(b)(8), 11 CFR 104.11); and
• Knowingly accepting corporate contributions (2 U.S.C. §441b(a)).

The court also found that the corporations had violated the law in making contributions to the committee. The Spotlight, a weekly newspaper, and its owner, Cordite Fidelity, Inc., had made $10,479 in prohibited corporate contributions; Liberty Lobby, Inc., had contributed $7,500. The court also found that Mr. Carto, in his capacity as a director or officer of both corporations (in addition to being treasurer of the Populist Party), had violated 2 U.S.C. §441b(a) by consenting to the corporate disbursements.

The consent order required the defendants Populist Party, Liberty Lobby, Inc., Cordite Fidelity, Inc., The Spotlight and Mr. Carto, both personally and as treasurer of the Populist Party, to pay a civil penalty of $20,000 within 20 days; the defendants were jointly and severally liable for the payment. The court also permanently enjoined the defendants from similar future violations of the election law.

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

FEC v. POPULIST PARTY (90-0229 and 90-7169)

On May 31, 1991, the U.S. Court of Appeals for the District of Columbia, in a per curiam decision, granted the FEC's motion for summary reversal of a district court order that had imposed a date by which the Commission had to conclude its investigation of the Populist Party. (Civil Action No. 90-7169.) The appeals court said the district court had exceeded its jurisdiction by setting the deadline.

The FEC had filed suit in the U.S. District Court for the District of Columbia seeking enforcement of subpoenas and orders the agency had issued to the Populist Party and other respondents in an internal enforcement case (Matter Under Review or MUR). The district court, on October 18, 1990, ordered the respondents to furnish the information to the Commission by November 15, 1990. The court, however, also ordered the agency to conclude its investigation by November 29, 1990. The FEC appealed this portion of the order, and the district court granted a stay of the deadline pending resolution of the appeal.

In its motion for summary reversal of the district court order, the FEC argued that the court had exceeded its limited jurisdiction under 2 U.S.C. §437d(b), the subpoena enforcement provision of the Federal Election Campaign Act (the Act). The FEC said: "Section 437d(b) bestows no license on the court to decide where the Commission's limited resources will be directed or to determine how the underlying investigation should be run."

The FEC also argued that the Act does not provide for judicial review of the length of a Commission investigation that arises from an agency-generated enforcement case, such as the case involving the Populist Party. But even in cases that originate from outside parties, only the complainants--not the respondents--have the right to seek judicial review of an investigation's pace. 2 U.S.C. §437g(a)(8).

The appeals court found the merits of the Commission's position "so clear as to justify summary action."

Source: FEC Record, August 1991, p. 11.

FEC v. POPULIST PARTY (92-0674)

On April 20, 1995, the U.S. District Court for the District of Columbia issued a consent order and judgment stating that defendants violated the Federal Election Campaign Act (the Act) by making and accepting corporate and excessive contributions in 1984, and ordering defendants to pay a $20,000 civil penalty for these violations.

Specifically, the court, by agreement of the parties involved, determined that:

• Liberty Lobby, Inc., and Cordite Fidelity, Inc., violated 2 U.S.C. §441b(a), which prohibits the use of corporate money in connection with federal elections, by providing services (in-kind contributions) to the Populist Party in the amount of $268,056 and $82,346, respectively;
• Willis A. Carto, the director of both corporations and treasurer of the Populist Party, violated 2 U.S.C. §441b(a) by consenting to the provision of the corporate services mentioned above;
• Blayne Hutzel, comptroller of both corporations, violated 2 U.S.C. §441b(a) by accepting corporate services, loans and payments valued at $352,903 on behalf of the Populist Party;
• The Populist Party violated 2 U.S.C. §441b(a) by accepting the above corporate contributions and other corporate contributions, for a total of $368,303 in illegal corporate money;
• The Populist Party violated 2 U.S.C. §441a(f), which prohibits committees from accepting contributions in excess of established limits, by accepting contributions from individuals in excess of their annual limit of $5,000 per party committee;
• The Populist Party violated 2 U.S.C. §441a(a)(1)(A) and (C) by making excessive contributions to the Maureen Salaman for Vice President Committee and the Bob Richards for President Committee; and
• The Bob Richards for President committee violated 2 U.S.C. 441a(f) by accepting $9,756 in excessive contributions from the Populist Party.

Source: FEC Record, July 1995, p. 9.

Populist Party: FEC v., No. 92-0674(HHG) (D.D.C. Apr. 20, 1995).

FEC v. RE-ELECT HOLLENBECK TO CONGRESS

On June 16, 1986, the U.S. District Court for the District of Columbia denied the Commission's motion for summary judgment and entered a judgment for the defendants in FEC v. Re-Elect Hollenbeck to Congress Committee (Civil Action No. 85-2239). The court held that the Re-Elect Hollenbeck to Congress Committee (the Hollenbeck Committee), Representative Hollenbeck's principal campaign committee for his 1982 reelection effort, and the Hollenbeck Committee's treasurer, David I. Korsh, had not knowingly violated the election law by accepting an excessive contribution from the New Jersey Republican State Committee.1

Background

In 1982, when the New Jersey Republican State Committee (the State Committee) made a $5,000 contribution to the Hollenbeck Committee, the State Committee had not achieved multicandidate committee status2 because it had not yet satisfied the six-month registration requirement. Consequently, the State Committee was only eligible to make a contribution of up to $1,000 per election to each candidate, and the Hollenbeck Committee could legally receive only $1,000 for the primary election.

On learning of the State Committee's excessive contributions, the FEC initiated enforcement proceedings against the State Committee, the campaign committee of each New Jersey Republican incumbent and their respective treasurers. When the Commission failed to reach a settlement with the Hollenbeck Committee, the agency filed a suit against the Committee in which it asked the district court to: (1) assess a $5,000 civil penalty against the defendants for violating 441a(f) of the Act in accepting the State Committee's excessive contribution and (2) order the Hollenbeck Committee and its treasurer to refund the excessive portion of the contribution (i.e., $4,000) to the State Committee.

Acknowledging receipt of the $5,000 contribution, the Hollenbeck Committee denied "knowingly accepting" an illegal contribution. The Committee argued that it had "erroneously assumed that the State Committee had qualified for the status of a multicandidate political committee."

The Court's Ruling

The court noted that, under FEC regulations, a campaign commitee's "treasurer shall make his or her best efforts to determine the legality of any contribution"3 made to the campaign. The court observed that this regulation was "not unduly burdensome. It does not place an affirmative obligation upon the treasurers to verify the legality of every contribution. Rather, it requires verification of contributions that 'appear to be illegal,' including those exceeding $1,000 that do not appear to come from a multicandidate committee."

In ruling that the Hollenbeck Committee should not be held liable for the State Committee's excessive contribution, the court held that the State Committee's contribution to the Hollenbeck Committee "would appear to be legal to any reasonable treasurer.... "

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

1 On July 25, 1986, the U.S. District court for the District of New Jersey found that another New Jersey House incumbent campaigning for reelection in 1982 had knowingly accepted an excessive contribution from the New Jersey Republican State Committee. See FEC v. Dramesi for 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 committees, have made contributions to five or more candidates for federal office. 2 U.S.C. §441a(a)(4); 11 CFR 100.5(e)(3).

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

FEC v. RHOADS FOR CONGRESS

On May 2, 1986, the U.S. District Court for the Northern District of Illinois approved a consent order between the Commission and the Rhoads for Congress Committee (the Committee), Mark Q. Rhoads' principal campaign committee for his 1982 Illinois House race, and the Committee's treasurer, William E. Naegel. Defendants acknowledged that they had violated section 441a(f) of the election law by accepting excessive contributions from:

• Mary G. Rhoads, the candidate's mother, who made the excessive contributions by personally endorsing and providing security for two loans, portions of which (i.e., $17,000) were accepted by the Committee;1 and
• The Mid-America Conservative Political Action Committee (MAPAC), a nonconnected PAC. (At the time MAPAC made the excessive contributions, its per election limit was $1,000, rather than $5,000, because the PAC had not yet qualified for multicandidate status.)

Defendants agreed to pay a $2,000 civil penalty within 30 days of the court's order.

Source: FEC Record, June 1986, p. 9.

1 Under the election law and FEC regulations, endorsements and guarantees of loans, including those made by the candidate's family, count as contributions to the extent of the outstanding balance of the loan. 2 U.S.C. §431(a)(A)(i) and 11 CFR 100.7(a)(1)(i)(C).

FEC v. RICHARDS FOR PRESIDENT (88-2832)

On March 22, 1989, the U.S. District Court for the District of Columbia issued a final consent order and judgment in FEC v. Bob Richards for President Committee, Washington, D.C. (Civil Action No. 88-2832). The Richards (Washington) committee is a nonauthorized committee affiliated with the Waco, Texas, Bob Richards for President Committee, Mr. Richards' principal campaign committee for his 1984 Presidential campaign.

By the terms of the consent order, the court declared that the Richards (Washington) committee violated the election law and FEC regulations by:

• Failing to file an amended Statement of Organization (FEC Form(1) reflecting its affiliation with the Richards (Texas) committee (2 U.S.C. §433(c));
• Using Mr. Richards' name in its committee name (a nonauthorized committee may not use a candidate's name in its committee name) (2 U.S.C. §432(e)(4));
• Knowingly accepting an excessive contribution in the form of a $60,000 loan from the Populist Party (2 U.S.C. §441a(f));
• Transferring $5,000 to the Richards (Texas) committee from funds derived from excessive (i.e., prohibited) contributions (11 CFR 102.6(a)(1)(iv)); and
• Failing to include an authorization notice in a solicitation letter that expressly advocated Mr. Richards' election (2 U.S.C. §441d(a)).

The consent order required the defendants to:

• File the amended Statement of Organization, reflecting the Richards (Washington) committee's affiliation with the Richards (Texas) committee, with the Commission within 20 days; and
• Pay a civil penalty of $15,000 within 20 days.

The court also permanently enjoined the defendants from future similar violations of the election law.

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

FEC v. RICHARDS FOR PRESIDENT (89-0254)

On June 29, 1989, the U.S. District Court for the District of Columbia granted the FEC's motion for summary judgment in FEC v. Bob Richards for President Committee, Waco, Texas (Civil Action No. 89-0254). The court ordered the defendants to comply fully with the terms of a conciliation agreement entered into with the Commission a year before. Under that agreement, the defendant had admitted to several violations of the Federal Election Campaign Act and had agreed to pay a civil penalty of $12,000 and to file various reports and statements required under the election law.

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

Bob Richards for President Committee, Waco, Texas: FEC v., No. 89-0245 (D.D.C. June 29, 1989) (memorandum opinion).

FEC v. RODRIGUEZ

On October 28, 1988, the U.S. District Court for the Middle District of Florida granted the FEC's motion for a default judgment in a case that the FEC had reopened against Cesar Rodriguez in June 1988 (Civil Action No. 86-687-CIV-T-10).

In 1994, Mr. Rodriguez was held in contempt for failing to pay a $5,000 penalty imposed by the court.

Background

In its original complaint against Mr. Rodriguez, filed in November 1986, the FEC asked the district court to declare that, during 1980, Cesar Rodriguez had violated §441f of the election law by accepting contributions for the Carter/Mondale Presidential Committee which were made by one person in the names of other persons. Specifically, on behalf of Alan Wolfson, Mr. Rodriguez had solicited contributions to the Carter/Mondale Presidential Committee and had subsequently reimbursed each contributor for his or her contribution.

District Court Action

The Florida district court, on May 5, 1987, denied the Commission's motion for summary judgment. The court held that the defendant had aided and abetted a violation of the first clause of 2 U.S.C. §441f ("No person shall make a contribution in the name of another...") rather than the last clause of §441f, as the Commission had alleged ("No person shall knowingly accept a contribution made by one person in the name of another..."). Based on this finding, the court directed the Commission to address the question of whether the agency "can effectively amend the complaint and go forward with this case, or whether it must begin again under the governing statute at the administrative level."

On May 20, 1987, the FEC notified the court that it had decided to reopen its own administrative proceedings in the case. Based on these proceedings, the Commission subsequently found probable cause to believe that Mr. Rodriguez had violated the election law by assisting in the making of contributions in the name of another. Failing to reach conciliation with the defendant, the Commission on March 15, 1988, again initiated a civil suit against Mr. Rodriguez.

Rather than bringing a new complaint against Mr. Rodriguez for this violation, however, the FEC decided to ask the court to:

• Reopen the file on the FEC's original complaint; and
• Accept an amended complaint reflecting the agency's new findings.

In its October 1988 default judgment, the court decreed that:

• Mr. Rodriguez violated 2 U.S.C. §441f by knowingly assisting in the making of contributions in the name of another.
• Mr. Rodriguez was required to pay, within 15 days of the court's entry of the judgment, a $5,000 civil penalty, together with $22.95, to cover costs incurred by the FEC in the suit.

Finally, the court enjoined Mr. Rodriguez from future, similar violations of the election law.

Contempt Ruling

Four years later, in November 1992, the penalty remained unpaid. At a December 1992 contempt hearing, the FEC and the defendant told the judge that they had reached a tentative settlement under which Mr. Rodriguez was to pay $300 per month while the FEC looked into his financial position. But he later refused to make the payments or to provide information on his finances.

In February 1994, the FEC again requested that the court hold Mr. Rodriguez in contempt. In granting that request on March 31, 1994, the court ordered him to pay the $5,000 penalty, plus interest, and $100 per day until the penalty is repaid. The court also ordered him to reimburse the FEC for its costs in the contempt proceeding.

Source: FEC Record, August 1988, p. 6; January 1989, p. 10; and June 1994, p. 5.

FEC v. Rodriguez, No. 86-687-CIV-T10 (M.D. Fla. Nov. 12, 1986).

FEC v. ROSE

ROSE v. FEC

First Suit

On February 22, 1984, the U.S. District Court for the District of Columbia issued an order granting Congressman Rose's petition to dismiss a suit he had filed against the Commission on June 13, 1983. (Charles E. Rose v. FEC; Civil Action No. 83-1687.) Pursuant to the election law's procedures for obtaining administrative relief, Congressman Rose had asked the court to issue an order directing the FEC to take final action on his administrative complaint within 30 days. (See 2 U.S.C. §437g(a)(8)(A) and (C).)

In his suit, Congressman Rose stated that he had filed an administrative complaint with the FEC alleging that:

• A marketing company had contributed to his opponent in the Democratic primary (in violation of 2U.S.C.§441b and 11 CFR 114.2).
• The primary opponent had paid for political broadcasting time with a personal check (in violation of 2 U.S.C. §432(h)(1) and 11 CFR 102.10).
• The principal campaign committee of Congressman Rose's primary election opponent had made excessive in-kind contributions to the general election campaign of the Republican candidate opposing Congressman Rose (in violation of 2U.S.C.§§441a(a)(1)(A) and 441b; and 11 CFR 110.1(a) and 114.2).
• The Congressional Club, which owned the marketing company (cited above), had failed to report the election activities of the company (in violation of 2 U.S.C. §§434(b), 441a and 441b; and 11 CFR 104.3, 110 and 114.2).

After the Commission petitioned the U.S. District Court for the Eastern District of North Carolina to enforce subpoenas issued as part of its investigation into Congressman Rose's complaint, he requested that his suit be dismissed.

Second Suit

Congressman Charles E. Rose repetitioned the U.S. District Court for the District of Columbia to issue an order requiring the FEC to take action on his administrative complaint filed with the FEC in October 1982. On February 22, 1984, Congressman Rose dismissed his first petition because the FEC had filed subpoena enforcement actions with the district court for the Eastern District of North Carolina as part of its investigation into his complaint.

Claiming that the FEC had taken no subsequent action on his complaint, Congressman Rose had filed a second petition with the D.C. district court (Civil Action No. 84-2278).1 Pursuant to 2 U.S.C. §437g(a)(8), he asked the court to:

• Declare that the FEC's continued failure to act on his administrative complaint was contrary to law;
• Issue an expedited order directing the FEC to act on his complaint within 30 days; and
• Retain jurisdiction over his petition in the event the FEC fails to take action on his complaint.

On October 4, 1984, the district court found that the FEC had acted contrary to law by failing to resolve the complaint. However, after reviewing the case on appeal, on October 24, 1984, the appeals court summarily reversed the district court's original decision and remanded the case to the district court for reconsideration.

Upon reconsideration, the district court again granted the plaintiff's motion for summary judgment. On October 31, 1984, the court issued an order stating that the FEC's delay in acting on Congressman Rose's administrative complaint was contrary to law. The court concluded that a variety of factors had unreasonably delayed the conclusion of the investigation into Congressman Rose's administrative complaint and ordered the FEC to conform its conduct to the decision within 30 days of the order. See 2U.S.C.§437g(a)(8).

On July 24, 1984, the FEC appealed the district court's determination that the agency was liable for these litigation expenses.

Appeal by FEC

On December 2, 1986, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion in FEC v. Congressman Charles E. Rose (Civil Action No. 85-1455), which reversed an earlier decision by the U.S. District Court for the District of Columbia. The appeals court determined that the FEC was not liable for litigation costs and attorney's fees which Congressman Rose incurred in a suit he had brought against the FEC. The appeals court concluded that, under the statute governing such fee awards, the Equal Access to Justice Act, "the district court [had] erred in holding that the FEC's position in the case was not 'substantially justified.'" The appeals court therefore remanded the case to the district court, with orders to dismiss Congressman Rose's application to have the FEC bear his court costs.

Appeals Court Ruling

Initially, the appeals court noted that its determination concerning the FEC's liability for Congressman Rose's litigation costs and attorney's fees should be based on the Equal Access to Justice Act (EAJA), as amended in 1985. Under the 1985 amendments to this statute, a government agency is not liable for litigation costs and attorney's fees if the agency can show "that both its position in the litigation and its conduct that led to the litigation were substantially justified." To determine whether a government agency's actions were "substantially justified," the court may not use the standard used to challenge an agency's action on an administrative complaint (i.e., whether the action was "arbitrary and capricious"). Rather, in applying the EAJA standard, the court "is obliged to reexamine the facts under a different legal standard to determine whether that conduct is slightly more than reasonable."

While the appeals court found that the district court had used the "correct legal standards" in making its determination with regard to the FEC's liability, the appeals court nevertheless concluded that the district court "fell into error in applying those standards." The court concluded that "the FEC's handling of Congressman Rose's administrative complaint was 'substantially justified.' Far from suggesting unjustifiable delay, the record demonstrates prompt and sustained agency attention to Representative Rose's complaint and thorough consideration of the issues it raised."

The court also found that the FEC's litigation position was substantially justified. "The Commission, in truth, had no practical alternative to defending against Congressman Rose's action. It cannot be forgotten that the Congressman was advancing interpretations of the Campaign Act that would have drastically altered the agency's operations. And the arguments are dead wrong."

The appeals court rejected Congressman Rose's argument that the Act required the FEC to act on his administrative complaint within a 120-day time frame. Instead, the court confirmed the FEC's argument that the FEC's handling of the complaint should be judged under the deferential standard of review prescribed in the Administrative Procedures Act.

Source: FEC Record, August 1983, pp. 9-10; April 1984, p. 10; October 1984, p. 9; December 1984, p. 4; and February 1987, pp. 7-8.

Rose: FEC v., 608 F. Supp. 1 (D.D.C., rev'd, 806 F.2d 1081 (D.C. Cir. 1986).

1 See also National Congressional Club v. FEC.

FEC v. SAILORS' UNION OF THE PACIFIC POLITICAL FUND

On January 6, 1986, the U.S. District Court, Northern District of California issued an opinion granting defendants' motion for summary judgment in FEC v. Sailors' Union of the Pacific Political Fund (Civil Action No. 84-7763-WWS). The court ruled that the separate segregated funds of three maritime unions, the Sailors' Union of the Pacific Political Fund, the Maritime Firemen's Union Political Fund and the Seafarers' Political Donation, were not affiliated. Accordingly, the defendant committees were not subject to a single $1,000 limit on contributions they made to California Governor Jerry Brown's 1982 Senate primary campaign. (Affiliated political committees, on the other hand, are subject to a single contribution limit on both contributions they make and receive. 2 U.S.C. §441a(a)(5).)

On September 15, 1987, the Court of Appeals for the Ninth Circuit affirmed the district court's ruling (Civil Action No. 86-1775).

Background

On December 10, 1984, the FEC filed suit against the defendant political committees in the district court. The Commission asked the court to:

• Declare that, by virtue of their affiliation, the committees had violated 2 U.S.C. §441a(a)(2)(A) by, together, contributing more than $5,000 to Governor Brown's primary; and
• Order the three committees to disclose their affiliation by amending their respective statements of organization.

In its suit, the FEC argued that the three committees' respective parent organizations were affiliated on two grounds:

• The parent organizations were parts of the Seafarers' International Union (SIU).
• The parent organizations were subject to SIU's control.

The defendant political committees contended, on the other hand, that the three unions were not controlled by SIU and, further, that the independent histories, structures and management of the unions demonstrated that they did not meet the criteria for affiliation.

District Court Ruling

The district court ruled that the member unions of the Seafarers' Union were an "association of independent unions" and, as such, were not affiliated. Accordingly, the unions' separate segregated funds were not affiliated political committees. The court found that "the [Seafarers] constitution embodies the rules that govern the relationship of these unions and those rules preserve their independence, a fact confirmed by the undisputed evidence of their past conduct." The court said that "other than having the power to collect dues, Seafarers has no power over the affairs of its member unions."

Appeals Court Ruling

The court decided that it would examine the organizational authority of Seafarers in order to determine whether its member unions were affiliated under 2 U.S.C. §441a(a)(5). The court, in making this decision, looked to the legislative history for guidance: "Various comments in the records of both the House and Senate suggest that...Congress intended to aggregate campaign contributions of locals of international unions but did not intend to aggregate contributions of member unions of labor federations."

The court then examined the relationship between the Seafarers' International Union and its member unions to determine whether the degree of control Seafarers exercised over them was closer to the highly intrusive authority of the United Steelworkers of America, the international union which the court had adopted as a model, or the less restrictive authority of a federation of unions, like the AFL-CIO. Acknowledging that Seafarers had powers beyond those of the AFL-CIO (the authority to regulate dues, audit members and appoint financial custodians for members), the court nevertheless judged that "the level of authority exercised over locals by traditional international unions like the Steelworkers far exceeds the level of control that Seafarers may exercise under its constitution." Noting that Seafarers' authority was more like the limited power of the AFL-CIO, the court concluded that two of the member unions were independent of Seafarers and that their separate segregated funds were not, therefore, subject to a common contribution limit.

The court pointed out that one might question the autonomy of the third union and Seafarers because one individual was president of both organizations. However, the court did not have to decide the question because the three member unions involved would still not be subject to a single contribution limit.

Source: FEC Record, February 1986, p. 3; and November 1987, p. 6.

Sailors' Union of the Pacific Political Fund: FEC v., 624 F. Supp. 492 (N.D. Cal. 1986), aff'd, 828 F.2d 502 (9th Cir. 1987).

FEC v. AL SALVI FOR SENATE (98C-4933)

On February 26, 1999, the FEC appealed this case to the U.S. Court of Appeals for the Seventh Circuit. The U.S. District Court for the Northern District of Illinois, Eastern Division, had dismissed this case on the grounds that it was identical to a case the Commission had previously filed in the court. That first case (98-1321) was dismissed on technical grounds. In both suits, the FEC asked the court to find that the Al Salvi for Senate Committee misreported or failed to report more than $1.1 million in contributions and loans during the 1996 election cycle.

More specifically, the Commission alleged that the Committee:

• Reported bank loans to Mr. Salvi as personal loans from the candidate, never identifying the source of the funds;
• Failed to report debts to the candidate;
• Failed to file 48-hour notices for personal advances from the candidate; and
• Failed to disclose campaign-related payments by the candidate to vendors and a bank.

In addition to asking the court to find that the Committee violated federal election law, the FEC asked the court to assess a civil penalty against the Committee and its treasurer and to enjoin them from committing further violation of the Federal Election Campaign Act.

Source: FEC Record, April 1998, p. 4; October 1998, p. 2; and April 1999, p. 5.

Al Salvi for Senate Committee: FEC v., 1999 WL 167009 (N.D. Ill. Mar. 23, 1999).

FEC v. SAVAGE FOR CONGRESS '82

On June 8, 1984, the U.S. District Court for the Northern District of Illinois entered a default judgment against Gus Savage for Congress '82, the principal campaign committee of Congressman Gus Savage (D-IL), and Thomas J. Savage, the campaign's treasurer. The Savage campaign had failed to answer the FEC's suit against the campaign (FEC v. Gus Savage for Congress '82 Committee; Civil Action No. 84-C1076; January 6, 1984).

Court Order

Pursuant to the FEC's petition for a declaratory judgment, the court ordered the Savage campaign to file, within 30 days, the following reports required by the election law:

• The July and October quarterly reports, the pre- and post-general election reports and the year-end report required during the 1982 election year (see 2 U.S.C. §434(a)(2)(A)(i)-(ii); and
• The mid-year report required during the 1983 nonelection year (see U.S.C. §434(a)(2)(B)(i)).

The court further ordered the Savage campaign to file all reports due in the future and assessed a $5,000 civil penalty against the campaign.

Denial of Contempt Petition

On April 12, 1985, the U.S. District Court, Northern District of Illinois, Eastern Division, denied the Commission's petition to hold in civil and criminal contempt Gus Savage for Congress '82 (the Committee), the principal campaign committee for Congressman Gus Savage's 1982 reelection campaign, and Thomas Savage, the Committee's treasurer. The court found that, after the Commission's filing of the contempt petition, the Committee had brought itself into compliance with a default judgment entered against it on June 8, 1984. The Committee had filed the reports required by the default judgment and had established a satisfactory schedule for repaying the $5,000 civil penalty imposed by the default judgment.

Source: FEC Record, July 1984, p. 7; and June 1985, p. 3.

Gus Savage for Congress '82 Committee: FEC v., 606 F. Supp. 541, (D. Ill. 1985).

FEC v. FRIENDS OF SCHAEFER

SCHAEFER v. FEC

These suits arose from an FEC enforcement proceeding against Friends of Schaefer and J. Michael Schaefer, as treasurer. Mr. Schaefer was a 1986 Senatorial candidate in Maryland. The agency filed suit against the respondents on May 15, 1991.

Penalty Claims Against Schaefer

On April 19, 1991 (after the FEC had notified him of its intention to file suit), Mr. Schaefer filed an adversary proceeding against the FEC in the U.S. Bankruptcy Court for the Southern District of California, where he had filed for bankruptcy. In Schaefer v. FEC (No. 91-9024), he argued that the FEC had failed to file a proof of claim with the court and therefore could not make a claim against him with respect to the payment of any civil penalty that might result from the agency's enforcement efforts.

The FEC asked the court to dismiss Mr. Schaefer's adversary proceeding or, alternatively, to refer the matter to the federal district court, which was the proper forum to litigate campaign finance issues. On July 2, 1991, the bankruptcy court denied the FEC's motion to dismiss and also denied the alternative motion, stating that it should be brought before the district court. The FEC then asked the U.S. District Court for the Southern District of California to take jurisdiction over this issue. (FEC v. Friends of Schaefer, No. 91-0650, was then pending in that court.)

The district court consolidated the two cases. On November 25, 1991, the court held that, because a civil penalty is a nondischargeable debt, the FEC could enforce a civil penalty against Mr. Schaefer, regardless of the agency's failure to file a claim in bankruptcy court. (Judgment was entered April 3, 1992.)

Contempt Motion

On May 16, 1991, claiming that the Bankruptcy Code barred the FEC from filing suit against him, Mr. Schaefer moved that the bankruptcy court hold FEC Chairman John Warren McGarry in contempt of court and incarcerate him until the FEC's district court case was dismissed. The FEC opposed the motion, arguing that the provision cited by Mr. Schaefer did not apply to a government agency enforcing its regulatory power. The bankruptcy court agreed with the FEC and, on October 28, 1991, ordered Mr. Schaefer to pay the FEC $750 in sanctions for filing a frivolous motion.

FECA Violations

On April 7, 1992, the district court entered a final judgment in FEC v. Friends of Schaefer and ordered defendant Schaefer to pay a $3,000 civil penalty.

The court found that Mr. Schaefer and his committee had violated the Federal Election Campaign Act by:

• Failing to file a Statement of Candidacy and Statement of Organization on time;
• Accepting an excessive contribution (Mr. Schaefer received a $30,000 loan from an individual, deposited the money in his personal account and then loaned the money to his committee);
• Failing to continuously report the loan until it was extinguished;
• Knowingly accepting a $28,000 loan from a corporation (Mr. Schaefer obtained a $28,000 margin loan drawn on his account with Charles Schwab & Co. and then loaned the funds to his committee); and
• Failing to file three reports on time (they were filed between two months and over one year late).

Based upon Mr. Schaefer's continuing refusal to remedy several of the violations, the court enjoined him from committing similar violations for one year, unless the FEC demonstrates that an extension is necessary.

Source: FEC Record, June 1992, p. 6.

FEC v. SPEELMAN

On January 28, 1991, the U.S. District Court for the District of Maryland issued a consent order and judgment in which the FEC and Harry Speelman agreed that defendant Speelman exceeded the contribution limits of the Federal Election Campaign Act by making a total of $11,470 in contributions to American Citizens for Political Action during 1987. These contributions exceeded the $5,000 per year limit under 2 U.S.C. §441a(a)(1)(C). The court permanently enjoined Mr. Speelman from future similar violations of the Act. Because of extenuating circumstances that came to the agency's attention after it had filed this suit, the Commission agreed to drop its request for a civil penalty and court costs. (Civil Action No. 90-2190.)

Source: FEC Record, March 1991, p. 10.

FEC v. SURVIVAL EDUCATION FUND

In a January 12, 1994, decision, the U.S. District Court for the Southern District of New York ruled that communications paid for by Survival Education Fund, Inc. (SEF) and National Mobilization for Survival, Inc. (NMS) did not violate the prohibition on corporate expenditures or the disclaimer requirements.

The U.S. Court of Appeals for the Second Circuit, on September 12, 1995, affirmed that the two nonprofit corporations did not violate the corporate prohibition but reversed the district court's ruling on the disclaimer violation.

On September 3, 1996, the district court issued a consent order imposing a $2,000 penalty against the SEF for failing to comply with the disclaimer rules of 2 U.S.C. §441d(a)(3). The parties agreed to the district court's imposition of the $2,000 penalty and dismissal of the case.

Background

The defendant corporations paid $16,500 to distribute about 30,000 copies of two letters critical of President Reagan, who was up for reelection. The first letter, mailed in July 1984--four months before the Presidential general election--asked readers to complete and return a "special election-year ANTI-WAR BALLOT" seeking "your No vote for President Reagan" on several policies pursued by his administration. The ballots, which were to be forwarded to the President, ended with the statement: "My vote in the November election will be influenced by your response to these demands." The second letter, a "1984 election survey," was headed "Ronald Reagan: Four More Years?" and asked readers to express their views on predictions that a second Reagan term would bring arms escalation, war in Central America and "life-threatening cuts in human services." The letter said that the survey results would be used "to educate Americans who will be voting."

District Court Decision

In ruling that SEF did not violate the prohibition on corporate expenditures (2 U.S.C. §441b(a)), the district court relied on Supreme Court cases that interpreted §441b as applying only to communications that expressly advocate the election or defeat of a candidate in words such as "vote for," "elect," "support," "cast your ballot," "Smith for Congress," "vote against," "defeat," and "reject."1

Based on those rulings, the district court concluded that "[b]oth letters fell short of expressly advocating how the readers should vote." The court commented: "Obviously, the courts are not giving a broad reading of this statute." In the court's view, "...expressions of hostility to the positions of an official, implying that official should not be reelectedeven when that implication is quite cleardo not constitute express advocacy which runs afoul of the statute."

Appeals Court Decision

Corporate Expenditure

The appeals court declined to address the express advocacy question and instead used different grounds to affirm the district court's decision that defendants' letter did not violate §441b. The appeals court accepted SEF's argument that SEF was within the class of nonprofit advocacy corporations whose independent campaign advocacy the Supreme Court has found to be exempt from the prohibition in §441b(a) because of the First Amendment. The appeals court relied on the Supreme Court's ruling in FEC v. Massachusetts Citizens for Life (MCFL) to support this idea. In that case, the Supreme Court concluded that the prohibition on corporate expenditures could not be applied to independent political communications made by certain nonprofit groups. The Court determined that MCFL, a nonprofit corporation formed for antiabortion advocacy, had three characteristics that made it "more akin to voluntary political associations than business firms." MCFL, 479 U.S. at 251. The Court ruled that a corporation was allowed to make independent expenditures if:

• Its purpose was promoting political activities as opposed to amassing capital;
• It lacked shareholders or other persons having a claim on its assets or earnings; and
• It was not formed by a labor or corporate organization and had a policy of refusing contributions from such entities.

The appeals court rejected FEC arguments that SEF did not qualify under these terms because, unlike MCFL, it did not have an express policy against accepting contributions from corporations or labor unions, and had in fact accepted corporate contributions. The court maintained that the core concerns of MFCL are the amount of for-profit corporate funding a nonprofit receives, rather than the establishment of a policy not to accept corporate contributions. Day v. Holahan, 34 f.3d 1356 (8th Cir. 1994), cert. denied, 115 S. Ct. 936 (1995). The court determined that the evidence did not show that SEF received a significant amount of corporate contributions.

Disclaimer

With regard to the disclaimer issue, the appeals court reversed the district court ruling and upheld the FEC's arguments that SEF and NMS violated §441d(a)(3) in the July 1984 mailing. The court found that even if the communication itself did not expressly advocate the defeat of a candidate (Mr. Reagan), it was a solicitation for funds that "would be used to advocate President Reagan's defeat at the polls, not simply to criticize his policies during the election year." The letter read: "your special election-year contribution today will help us communicate your views to hundreds of thousands of members of the voting public (emphasis added), letting them know why Ronald Reagan and his anti-people policies must be stopped."

Section 441d(a)(3) requires disclaimers in political communications that either expressly advocate election or defeat of a clearly identified candidate, or solicit contributions. The appeals court only addressed the second category in this case and concluded that requiring disclosure of the identity of a group that is soliciting a contribution does not run afoul of the First Amendment.

The court concluded that §441d(a)(3) serves several compelling interests that justify any infringement on SEF's First Amendment rights. The government has an interest, the court reasoned, in ensuring that contributors know whether they are donating their money directly to a candidate or, instead, to independent critics of another candidate. Further, disclosure of the identity of the sponsor of a solicitation helps private contributors determine whether a new contribution would cause them to exceed their aggregate contribution limit for that group.

Thus, the application of §441d(a)(3) to SEF and NMS does not conflict with the Supreme Court's recent decision in McIntyre v. Ohio Elections Commission. In that case, the Supreme Court ruled unconstitutional a state law banning the distribution of anonymous campaign literature. The Supreme Court determined that Ohio "had not shown that its interest in preventing the misuse of anonymous election-related speech justified a prohibition of all uses of that speech."

Source: FEC Record, March 1994, p. 1; December 1995, p. 4; and November 1996, p. 6.

Survival Education Fund, Inc.: FEC v., No. 89 Civ. 0347 (TPG) (S.D.N.Y. Feb. 25, 1992); 1994 WL 9658 (S.D.N.Y. Jan. 12, 1994); 65 F.3d 285 (2d Cir. 1995).

1 FEC v. Massachusetts Citizens for Life, Inc., 479 U.S. 238, 248-248 (1986); Buckley v. Valeo, 424 U.S. 1, 44 n. 52 (1976).

FEC v. TAYLOR CONGRESSIONAL COMMITTEE

On June 22, 1988, the U.S. District Court for the District of Columbia issued a default judgment in a suit that the FEC brought against the Taylor Congressional Committee, the principal campaign committee for Clarence Taylor's 1984 House campaign, and the Committee's treasurer, Richard L. Smith. (FEC v. Taylor Congressional Committee; Civil Action No. 88-0453 (SSH).)

In the default judgment, the district court decreed that:

• Defendants had violated the terms of a conciliation agreement that they had entered into with the FEC in February 1988. (In the agreement, the defendants had agreed to pay a $1,500 civil penalty in two equal installments.)
• Defendants had to pay the $1,500 penalty, an additional $500 penalty for violating the terms of the conciliation agreement and a small fee to cover the FEC's court costs in the case. These penalties had to be paid within 15 days from the date the court entered the default judgment against defendants.

Finally the court enjoined defendants from future similar violations of the election law.

Source: FEC Record, January 1989, p. 10.

FEC v. THORNTON TOWNSHIP REGULAR DEMOCRATIC ORGANIZATION

On September 19, 1988, the U.S. District Court for the Northern District of Illinois issued a final consent order and judgment in a suit the FEC has filed in July 1988 against the Thornton Township Regular Democratic Organization (TTRDO) and its treasurer.

In its suit, the FEC claimed that defendants violated the election law when they sponsored a direct mail solicitation to approximately 18,000 registered Democratic voters at a costs of approximately $4,371. In the consent order, the district court decreed that TTRDO violated the election law by:

• Failing to register and report with the FEC as a political committee when its costs for the direct mail solicitation exceeded $1,000 (2 U.S.C. §433(a) and 434); and
• Failing to include on the solicitation a disclaimer notice stating that TTRDO had sponsored the solicitation and that the solicitation was not authorized by any candidate's campaign committee. (2 U.S.C. §441d(a)(3)).

The district court further ordered defendants to pay a $2,000 civil penalty within 30 days of the court's order.

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

FEC v. WALSH FOR CONGRESS

1985 Court Orders

On September 20, 1985, the U.S. District Court for the Eastern District of Michigan, Southern Division, issued an opinion which held the Kirk Walsh for Congress Committee (the Committee) and its treasurer, Kirk Walsh, in contempt for failing to comply with a default judgment entered against the Committee in April 1985. (Civil Action No. 84-9802.)

In the April 1985 default judgment, the court had ordered the Committee, Mr. Walsh's principal campaign committee for his 1980 House campaign, to take the following actions within 30 days:

• File a 30 day post-general election report for 1980 and mid-year and year-end reports for 1981, 1982 and 1983;
• Pay a $5,000 civil penalty to the U.S. Treasury; and
• Pay court costs incurred by the FEC in pursuing the action.

In its contempt order, the court ordered the Committee and Mr. Walsh to comply with the default judgment by October 11, 1985. In the event the Committee failed to meet the deadline, the court would assess a fine of $2,000 and $100 per day until the Committee fully complied with the court's orders.

The court also ordered the Committee and Mr. Walsh to pay costs and attorney fees incurred by the Commission in bringing this action.

July 1986 Court Order

On July 28, 1986, the district court issued another order after the Committee and Mr. Walsh had failed to comply with the court's September 1985 contempt order. In its order of July 1986, the court required the Kirk Walsh for Congress Committee (the Committee) and its treasurer, Kirk Walsh, to:

• Provide the FEC with accurate reports of campaign finance activity from 1980 through 1986; and
• Pay a $5,000 civil penalty to the U.S. Treasurer, in addition to the $5,000 civil penalty the court had assessed against the Committee in September 1985.

The court also ordered the Committee and Mr. Walsh to comply with its order by August 28, 1986. (Civil Action No. CA84-CV-9802) In the event that the Committee failed to meet the deadline, the court would assess a fine of $200 per day, beginning August 15, 1986, and continuing until the defendants had fully complied with the court's order.

Source: FEC Record, November 1985, p. 5; and September 1986, p. 7.

Kirk Walsh for Congress Committee: FEC v., No. 84-CV-9802-PH (E.D. Mich. August 5, 1986) (memorandum opinion and order, supersedes July 28, 1986).

FEC v. WEBB FOR CONGRESS

On January 2, 1991, the U.S. District Court for the Eastern District of North Carolina, Raleigh Division, granted the FEC's motion for summary judgment against William Woodward Webb, a 1986 House candidate, his principal campaign committee and the committee treasurer. (Civil Action No. 89-664-CIV-5-BO.) The court found that defendants had violated 2 U.S.C. §441a(f) by knowingly accepting an excessive contribution in the form of a $19,000 loan from the candidate's mother. Defendants argued that the loaned funds were not subject to the contribution limits because they were Mr. Webb's own funds under the definition of a candidate's "personal funds" in FEC rules: "gifts of a personal nature which had been customarily received prior to candidacy." 11CFR 110.10(b)(2).

The court ruled that, while Mrs. Webb's loan to her son "may have been intended to be... similar to those gifts she had given to him prior to his candidacy, this gift was distinct in the fact that it was given to Mr. Webb's election committee and not to Mr. Webb directly....Merely because Mr. Webb had received gifts in the past [from his mother] it does not follow that this particular loan was customary or of a personal nature as required by 11CFR 110.10(b)(2). This gift was made at the request of Mr. Webb and as a direct result of his candidacy." The court also found that defendants had violated 2 U.S.C. §434(b) by falsely reporting Mr. Webb, rather than his mother, as the source of the $19,000 loan.

The court fined the defendants $5,000 and permanently enjoined them from future violations of the Federal Election Campaign Act.

Source: FEC Record, February 1991, p. 10.

FEC v. WEINBERG

On September 14, 1989, the U.S. District Court for the District of Columbia issued a final order and default judgment in FEC v. Mark R. Weinberg (Civil Action No. 89-0416 RCL)). The court found that Mr. Weinberg had violated the terms of a conciliation agreement he had entered into with the Commission in 1988 (MUR 2073) and directed him to pay additional penalties.

Under the terms of the 1988 agreement, Mr. Weinberg had agreed to pay a $17,000 civil penalty for violations of sections 441a(a)(1)(A) and (3) of the election law. When the defendant failed to pay the first installment on the penalty, the Commission filed suit pursuant to 2 U.S.C. §437g(a)(5)(D).

On August 15, 1990, the court granted the FEC's petition to hold Mr. Weinberg in contempt of court after Mr. Weinberg had failed to pay the civil penalties included in the conciliation agreement and consent order.

Under the terms of the 1990 order, Mr. Weinberg had to pay:

• An additional fine of $10,000 and $500 per day until he complies with the court's prior order of September 1989;
• Post-judgment interest to the Commission (at a rate of 8.27 percent) until he complies with the September 1989 order; and
• Court costs and attorneys' fees incurred by the Commission in prosecuting the contempt proceeding.

Source: FEC Record, November 1989, p. 5; and October 1990, p. 8.

FEC v. WEINSTEN

On June 8, 1979, the U.S. District Court for the Southern District of New York issued a consent judgment in a suit which the FEC had filed against Milton Weinsten and the Winfield Manufacturing Company on March 2, 1978.

In its suit, the Commission alleged that Milton Weinsten, President of Winfield Manufacturing (a government contractor), used corporate funds to reimburse employees of Winfield Manufacturing Company for contributions they made to the 1976 Presidential primary campaign of Milton Shapp.

The consent decree stated that use of corporate funds in this manner had violated the Act's prohibitions against:

• The use of corporate funds in connection with Federal elections (2 U.S.C. §441b);
• Contributions by government contractors (2 U.S.C. §441c); and
• Contributions made in the name of another (2 U.S.C. §441f).

The court levied a civil penalty of $5,000, enjoined the defendants from future violation of the Act, and retained jurisdiction over the case for three years to ensure compliance with the provisions of the decree.

Source: FEC Record, September 1979, p. 5.

Weinsten: FEC v., 462 F. Supp. 243 (S.D.N.Y. 1978).

FEC v. WEST VIRGINIA REPUBLICAN STATE EXECUTIVE COMMITTEE

On January 18, 1991, the U.S. District Court for the Southern District of West Virginia entered a judgment that was agreed to by the FEC and the defendant committee. (Civil Action No. 2:90-0898.) The parties agreed to the following points:

• In conducting a phone bank voter drive on behalf of the Presidential ticket--an exempt party activity--the committee also mentioned the names of House and Senate candidates but failed to report any part of the phone bank expenditures as contributions allocated to the House and Senate candidates, in violation of 2 U.S.C. §434(b).
• The committee incorrectly reported as "operating expenditures" certain disbursements for newspaper advertisements that advocated the defeat of a federal candidate, a second violation of 2 U.S.C. §434(b).
• The committee used its nonfederal account to make the phone bank and newspaper ad expenditures described above, a violation of 11CFR 102.5(a).
• The committee failed to itemize certain contributions and transfers it received and failed to disclose year-to-date totals, a third violation of 2 U.S.C. §434(b).

The court issued a consent order imposing a $2,000 civil penalty against the committee and permanently enjoining it from future similar violations.

Source: FEC Record, March 1991, p. 10.

FEC v. WILLIAMS

On January 31, 1995, the U.S. District Court for the Central District of California granted the FEC's motion for summary judgment and denied the defendant's motion for summary judgment.1 The court ordered Larry R. Williams to pay $10,000 in civil penalties and enjoined him for 10 years from making contributions in the name of another and exceeding the $1,000 individual contribution limit to a federal candidate.

On December 26, 1996, the U.S. Court of Appeals for the Ninth Circuit reversed a district court ruling and dismissed this case.

On December 8, 1997, the U.S. Supreme Court denied the U.S. Solicitor General's petition asking the Court to review this case.

Background

Jack Kemp's 1988 Presidential campaign had a fundraising program which enabled anyone who contributed $1,000 to purchase a Super Bowl ticket for $100 from the Philadelphia Eagles. Mr. Williams, a campaign fundraiser at the time, purchased 40 tickets from the Eagles at the $100 special price and then offered them to employees and friends in exchange for a $1,000 contribution to the campaign. He then advanced or reimbursed 22 of his employees and friends $1,000 each to make a contribution to the Kemp campaign.

Additionally, Mr. Williams contributed $1,694 on his own behalf to the Kemp campaign.

District Court Decision

Mr. Williams argued that the FEC v. NRA Political Victory Fund ruling2 precluded the FEC from pursuing this case because the structure of the agency violated the separation of powers doctrine.

The court denied the defendant's motion because the court did not believe that the presence of the ex officio members on the Commission rendered the Commission's actions unconstitutional under the separation of powers doctrine. The court reasoned that this doctrine was not violated because the ex officio members did not "hold an 'Office Under the United States'" and because the ex officios merely exercised an advisory role and could not vote on Commission action. In its opinion, the court disagreed with the reasoning in the FEC v. NRA Political Victory Fund decision, and cited the decisions of the Court of Appeals for the Ninth Circuit in Lear Siegler, Inc. v. Lehman and Commodities Futures Trading Commission v. Schor in support of its conclusion.3

Further, the court stated that even if the presence of the ex officio members were deemed unconstitutional, the de facto officer doctrine established in Buckley v. Valeo applied and the case could continue. In Buckley v. Valeo, the Supreme Court accorded validity to the FEC's past actions even though the composition of the Commission in 1976 violated the separation of powers doctrine.

Lastly, the court rejected the defendant's arguments that the Act was unconstitutionally vague, that the FEC waived its right to impose a civil penalty by not pursuing its claims in bankruptcy court or that the defendant suffered prejudice as a result of an excessive delay in the prosecution of this action.

The court concluded that Mr. Williams committed the following violations of the Federal Election Campaign Act:

• Contributions in the name of another. It is illegal to make a contribution in the name of another. Mr. Williams violated this provision of the law when he advanced or reimbursed $1,000 to 22 contributors. 2 U.S.C. §441f; and
• Exceeding the $1,000 contribution limit for individuals. It is illegal for an individual to give more than $1,000 per election to any federal candidate. Mr. Williams made $28,694 in contributions to a single candidate, exceeding his legal limit (11 CFR 110.1(b)(1)).

Appeals Court Decision

In a split decision, the appeals court reversed the district court's order. The appeals court held that the general five-year statute of limitations at 28 U.S.C. §2462 applied to the FEC's action seeking to assess civil penalties against Mr. Williams.4 The court ruled that the time limit started running at the time the alleged offenses occurrednot at the time they were reported. The court also found that §2462 barred the FEC from seeking injunctive relief because the "claim for injunctive relief is connected to the claim for legal relief."

The allegations involved acts that took place in 1987 and early 1988. The court found that the statute of limitations had run out in 1992 and early 1993. The FEC did not file a lawsuit against Mr. Williams until October 1993, though the Commission had begun to respond to the administrative complaint in late 1988 and had attempted to reach a conciliation agreement in 1993.

The FEC argued that the statute of limitations should be temporarily tolled (i.e., the clock stops ticking) any time before the agency receives a complaint and during mandated periods of review and conciliation attempts that generally must occur before a lawsuit can be filed. However, the court was not moved by the FEC's arguments. It said that, although the doctrine of "equitable tolling"5 applies in principle to §2462, it is not applicable to the Williams case. The Commission had ample opportunity through its normal disclosure and investigatory processes, the court stated, to learn of Mr. Williams's alleged violations of the Act.

Supreme Court Action

On December 8, 1997, the U.S. Supreme Court denied the U.S. Solicitor General's petition asking the Court to review this case.

Source: FEC Record, April 1995, p. 5; February 1997, p. 3; November, 1997, p. 2; and January 1998, p. 3.

Williams: FEC v., No. CV 93-6321-ER(BX) (C.D. Cal. Jan. 31, 1995), rev'd 104 F.3d 237 (9th Cir. 1996), cert. denied 118 S. Ct. 600 (1997).

1 Previously, Mr. Williams had moved to dismiss this case pursuant to the 5-year statute of limitations in 28 U.S.C. §2462. The court dismissed this motion without issuing an opinion.

2 In the NRA case, the Court of Appeals for the District of Columbia concluded that the presence of the ex officio members on the Commission violated the separation of powers principle. The Commission has since reconstituted itself so as to exclude the ex officios from its body.

3 Citing Lear Siegler, the court found that Congress did not usurp an executive function by placing the ex officio members on the Commission because the ex officio members did not vote. Additionally, quoting the Schor decision, the court held that the presence of the ex officio members on the Commission did not impermissibly undermine the executive branch's role.

4 The appeals court cited several cases to back up its claim that the Act is indeed subject to 28 U.S.C. §2462: 3M Co. v. Browner, 17 F.3d 1453 (D.C. Cir. 1994); FEC v. National Republican Senatorial Comm., 877 F.Supp. 15 (D.D.C. 1995) and FEC v. National Right to Work Comm. Inc. 916 F.Supp. 10 (D.D.C. 1996).

5 Equitable tolling provides that "where a plaintiff has been injured by fraud and remains in ignorance of it without any fault or want of diligence or care on his part, the bar of the statute does not begin to run until the fraud is discovered." Holmberg v. Armbrecht, 327 U.S. 392, 397 (1946).

FEC v. WOFFORD

On March 27, 1996, the U.S. District Court for the Middle District of Pennsylvania accepted the January 1, 1996, recommendation of the magistrate judge in this case; a $15,000 civil penalty was imposed on the Citizens for Wofford committee and its treasurer for accepting contributions in excess of the per-election limits. 2 U.S.C. §441a(f).

This case involved an FEC enforcement action born out of the 1991 Pennsylvania special election to fill a U.S. Senate seat. The Democratic party nominated Harris Wofford on June 1, 1991. The party chose not to certify him to the state as the Democratic nominee until September 5, however, because the Republican party did not nominate his opponent, Richard Thornburgh, until then.

Mr. Wofford's principal campaign committee, Citizens for Wofford, regarded contributions received after June 1 but before September 5 as primary election contributions. In doing so, contributors were able to give twice as much to Mr. Wofford's general election effort; contributors gave up to their per-election limit for his primary election effort after the fact and again to his general election effort.

The court determined that contributions received after June 1 should have been treated as general election contributions. 11CFR 110.1(b)(2) and (3).

Although the amount of unlawful contributions received by the defendants was stipulated to have been $198,075, the court did not issue a higher civil penalty because "there is not a basis presented upon which one may reasonably infer that the defendants acted in bad faith" and because the committee had less than $15,000 in assets and was $70,000 in debt. The court concluded: "A fine in the amount of $15,000 would be adequate to vindicate all of the interests of the Commission and of the public in this case."

Source: FEC Record, June 1996, p. 4.

FEC v. WOLFSON

On February 6, 1986, the U.S. District Court for the Middle District of Florida, Tampa Division, issued an order granting the FEC's motion for summary judgment in a suit which the FEC had brought against Allen Wolfson on October 7, 1985. (FEC v. Allen Z. Wolfson; Civil Action No. 85-1617-CIV-T-13.)

As requested by the FEC, the court found that Mr. Wolfson had violated the election law by making contributions to authorized candidate committees which exceeded the law's monetary limits (2 U.S.C. §441a(a)(1)(A)) and which were made in the names of other persons (2 U.S.C. §441f).

The court permanently enjoined Mr. Wolfson from further violations of the election law and imposed a $52,000 civil penalty on him.

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

FEC v. CHARLES WOODS FOR U.S. SENATE

On January 16, 1998, the U.S. District Court for the District of Nevada ordered Charles Woods, two of his corporations, and Charles Woods for U.S. Senate (the Committee) to pay the FEC $50,000 for violating the Federal Election Campaign Act's (the Act's) ban on corporate contributions, and for failing to file 48-hour notices for $28,000 in contributions that came in during the waning days of the 1992 primary campaign. The court also issued a permanent injunction against future violations.

The court granted the FEC's motion for summary judgment and imposed the civil penalty because of the extent of the violations and the unambiguous nature of the sections of the Act in question in this case.

The Committee served as the principal campaign committee for Mr. Woods, who was seeking the 1992 Democratic nomination for the Senate in Nevada. During the election cycle, Quinn River Ranch, which was wholly owned by Mr. Woods, contributed $290,000 to the Committee. A subsidiary of another corporation that Mr. Woods owned, WTVY-FM, also made an impermissible contribution when it used its American Express credit card to charge $1,426.23 in expenses for the Committee.

The Act at §441b(a) prohibits corporations from making contributions in connection with a federal election, and prohibits political committees from accepting such contributions. Both Quinn River Ranch and WTVY were wholly owned by Mr. Woods. Nonetheless, the Act makes no distinction for closely-held corporations when applying the 441b(a) prohibition. The statute makes it unlawful for "any corporation whatever" to make contributions in connection with a federal election.

The law also provides for the timely filing of disclosure reports with the Commission for contributions received after the 20th day but more than 48 hours before an election. 2 U.S.C. §434(a)(6)(A).

Source: FEC Record, March 1998, p. 3.

FEC v. WORKING NAMES

First Judgment

On May 19, 1988, the U.S. District Court for the District of Columbia granted the FEC's motion for a default judgment against Working Names, Inc., a corporation that provides mailing list services, and the corporation's president, Meyer T. Cohen.

The FEC had filed a motion for the default judgment in April 1988, after the defendants had violated the terms of a conciliation agreement entered into with the FEC in September 1986. Under the terms of the conciliation agreement, the defendants had agreed to pay a $2,000 civil penalty for violating 438(a)(4) of the election law and section 104.15 of FEC regulations. Specifically, the defendants had rented to two organizations a mailing list containing a name obtained from a listing of contributors disclosed on an FEC report. Under the election laws names of contributors (other than political committees) that are disclosed on FEC reports may not be copied and used for commercial or solicitation purposes.

The court ordered the defendants to comply with the terms of the conciliation agreement within 15 days of the court's judgment. The court further decreed that the defendants pay $2,000 for violating the terms of the conciliation agreement and awarded the Commission its costs for the litigation. The court also permanently enjoined the defendants from future violations of the election law.

FEC's Contempt Petition

On May 10, 1990, after defendants had paid only $100 toward the $4,000 in assessed penalties, the court granted the FEC's petition to hold the defendants in contempt of court for failing to pay the civil penalties assessed in the previous year's default judgment. The court ordered defendants to pay the prior penalties plus $75 per day for each day the assessments remain unpaid. The late charge was to increase to $150 per day after June 17, 1990. Additionally, defendants had to pay interest on the unpaid civil penalties and court costs.

On February 28, 1991, the court issued a consent order in which defendants agreed to pay $15,000 to settle the dispute. The order declared that defendants had violated the sale and use restrictions and permanently enjoined them from further violations of the law. The Commission agreed to waive the accumulated contempt penalties and additional costs awarded in May 1990.

Source: FEC Record, July 1988, p. 6, July 1990, p. 4, and May 1991, p. 7.

FEC v. WRIGHT

On November 12, 1991, a U.S. district court ordered James C. Wright, Jr., former Speaker of the U.S. House of Representatives, to answer the FEC's questions in connection with an administrative complaint filed against him. The court also ordered Mr. Wright to pay the FEC's court costs.

The former Speaker appealed the judgment on January 9, 1992. However, he later filed a motion to dismiss the appeal as moot since he and the FEC had reached a settlement with respect to the administrative complaint (MUR 2649). The FEC did not object to the motion, and on May 1, 1992, the U.S. Court of Appeals for the Fifth Circuit dismissed the appeal. (Civil Action No.
92-1033.)

Background

In July 1988, Citizens for Reagan filed an administrative complaint alleging that Speaker Wright violated 2 U.S.C. §441i. That provision, now repealed, prohibited a federal officeholder from accepting more than a $2,000 honorarium for a speech, appearance or article. The complaint specifically alleged that Speaker Wright, during 1985 and 1986, accepted excessive honoraria disguised as proceeds from the sale of his book, Reflections of a Public Man. In January 1990, the Commission found reason to believe Mr. Wright had violated §441i and opened an investigation into the matter. When he refused to comply with an FEC order seeking answers to questions about his appearances and the sale of his book, the agency asked the district court to enforce
the order.

District Court Decision

In its November 12, 1991, judgment, the court concluded that the FEC's order complied with a three-pronged test for validity: the investigation was for a lawful purpose; the information sought was relevant; and the agency's demand was reasonable. The court therefore ordered Mr. Wright to answer the FEC's questions. In reaching its decision, the court considered but rejected Mr. Wright's arguments, which challenged the FEC's authority to investigate his activities.

(Mr. Wright also filed a motion asking the court to dismiss the lawsuit, arguing that, with the repeal of §441i in August 1991, the FEC lost jurisdiction to bring the action. On October 16, 1991, for the reasons discussed below, the court denied Mr. Wright's motion.)

Speech or Debate Clause

Former Speaker Wright relied on the speech or debate clause in the Constitution for several of his arguments. The clause states that "for any Speech or Debate in either House, they [Senators or Representatives] shall not be questioned in any other Place." Article I, Section 6.

Mr. Wright contended that the clause nullified the FEC's authority to seek answers to questions on activities that took place when he was a House Member. The court, however, found that the clause did not apply to the FEC's questions, which concerned activities that occurred "outside, and away from, the House" and which were "totally unrelated to anything done in the course of the legislative process...."

Mr. Wright also argued that the FEC violated the clause because, in deciding to pursue an investigation, the agency relied on "speech or debate" material, namely, a report prepared by an outside counsel at the request of the House Committee on Standards of Official Conduct when that body was investigating the sale of the Speaker's book. The court rejected the argument, pointing out that the report lacked any "speech or debate" content but merely contained findings related to the Speaker's financial affairs. Moreover, the court said that the relevant findings in the report (i.e., his alleged circumvention of the honoraria limit) were "independent of anything that occurred in any kind of House proceeding."

The former Speaker again invoked the speech or debate clause with respect to his testimony before the House Committee, arguing that the clause immunized him from having to answer the FEC's questions on the same matters. However, because he testified before the Committee "in his capacity as a witness and not in his legislative capacity," the court found no merit to this argument

Finally, he argued that the Constitution's self-discipline clause, when read with the speech or debate clause, effectively allocated to the House the sole authority to enforce violations of the honorarium limit by Members. The self-discipline clause states, in part: "Each House may determine the Rules of its Proceedings [and] punish its Members for disorderly Behavior...." Article I, Section 5. The court rejected this argument for two reasons. First, it "is tantamount to a contention that the relevant provisions of the Act are unconstitutional." Second, it "fails to recognize that the standards of conduct and rules of enforcement found in the Act are, indeed, self-disciplinary rulesthe combined votes of the two Houses created the statutory provisions in question."

Repeal of §441i

In another line of argument, Mr. Wright claimed that the FEC no longer had authority to investigate or enforce §441i because of recent legislation: The Ethics Reform Act of 1989 (effective January 1, 1991), which prohibited House Members from accepting honoraria and amended §441i to remove House Members from its scope; and the repeal of §441i later that year, on August 14.

The court first noted that the Ethics Reform Act effectively repealed §441i insofar as it applied to House Members. The court went on to point out that, if Congress had intended to eliminate the FEC's authority to enforce §441i violations occurring before the repeal, the legislation would have expressed that intent. "Thus, to this day," the court stated, "§441i is deemed to be in full force and effect as to any conduct of Wright occurring before the date of its repeal."

Source: FEC Record, July 1992, p. 8.

FEC v. Wright, 777 F. Supp. 525 (D.C.N.D. Tex. 1991).

FIRST NATIONAL BANK OF BOSTON v. BELLOTTI

On April 28, 1978, the Supreme Court issued an opinion in First National Bank of Boston v. Bellotti.1 The Court struck down a Massachusetts statute which severely restricted the participation of banks and corporations in state ballot measures.

Background

First National Bank of Boston and four other banks and corporations (hereafter referred to collectively as First National) wanted to make expenditures for advertisements criticizing a proposed constitutional amendment which authorized the state legislature to impose a graduated income tax on individuals. The proposal was to be submitted to voters in a referendum in November 1976.

A Massachusetts law (chapter 55, 8 of the Massachusetts General Laws) prohibited contributions or expenditures by any bank or corporation for the purpose of "influencing or affecting the vote on any question submitted to the voters, other than one materially affecting any property, business or assets of the corporation." The law further specified that questions submitted to voters concerning the taxation of individuals did not materially affect the property, business or assets of the corporation.

Massachusetts Attorney General Francis X. Bellotti notified First National that the banks's expenditures would be illegal and that he intended to enforce 8 against it.

In April 1976 First National filed a suit challenging §8's constitutionality. The suit was subsequently submitted to the Supreme Judicial Court of the Commonwealth of Massachusetts. The plaintiffs claimed that the statute violated the First Amendment, the due process and equal protection clauses of the Fourteenth Amendment and similar provisions of the Massachusetts Constitution. They also claimed that §8, as it applied to their expenditures, was unconstitutional because the adoption of a graduated personal income tax would indeed materially affect their businesses in a number of specified ways.2

In September 1976 the Supreme Judicial Court of Massachusetts upheld the constitutionality of §8 and dismissed First National's claims. The decision was appealed to the United States Supreme Court.

The Federal Election Commission submitted an amicus curiae brief supporting the Massachusetts court's decision.

Supreme Court Decision

In ruling on First National Bank v. Bellotti, the Supreme Court first determined whether the case was moot. The suit reached the Court in November 1977, by which time the referendum of November 1976 had already resulted in the defeat of the proposed constitutional amendment. The Court denied that, since the controversy surrounding 8 was likely to occur again (because the law remained in force in Massachusetts and because the proposed constitutional amendment authorizing the tax had already been presented as a referendum four times in that state), the case was not moot.

On the merits, the Massachusetts court had asked whether corporations had First Amendment rights. "Instead," the Supreme Court observed, the lower court should have asked "whether 8 abridge[d] expression that the First Amendment was meant to protect." The Supreme Court maintained that it did.

Referring to the proposed advertisements, the Supreme Court said, "It is the type of speech indispensable to decision-making in a democracy, and this is no less true because the speech comes from a corporation rather than an individual. The inherent worth of the speech in terms of its capacity for informing the public does not depend on the identity of its source."

The Supreme Court also faulted the lower court's ruling that corporations could only claim a right to free speech on the subject of a referendum if they demonstrated that they would be materially affected by it.

The Court said that freedom of expression for communications businesses had been protected because such protection was necessary to insure the free flow of information and ideas to the public.

The Court also struck down the law's proscription against corporate discussion of ballot questions concerning personal income taxes. The Justices held that "the legislature is constitutionally disqualified from dictating the subjects about which persons may speak and the speakers who may address a public issue." The Court then considered whether the restrictions in 8 were nonetheless justified by a compelling state interest. Bellotti claimed that the restrictions on free speech by corporations were justified by the state's interest in: (1) "sustaining the active role of the individual citizen in the electoral process and thereby preventing diminution of the citizen's confidence in government" and (2) "protecting the rights of shareholders whose views differ from those expressed by management on behalf of the corporation."

The Court acknowledged that these interests were of the "highest importance," but it found that there was no evidence to corroborate such claims in this case.

Further, the Court maintained that "the risk of corruption perceived in cases involving candidate elections...simply is not present in a popular vote on a public issue."

As for the notion that the law's restrictions protected shareholders by preventing corporate expenditures to further views with which shareholders disagreed, the Court said this alleged purpose was belied by other facts. For example, in Massachusetts a corporation could legally lobby on behalf of its interests in the legislature even though the corporate viewpoint on any legislative question might differ from that of some of its shareholders. On the other hand, the law forbade the corporation from spending money to oppose or support a referendum, "even if its shareholders unanimously authorized the contribution or expenditure."

The Court deemed §8 to infringe on protected political speech without any compelling state interest supporting the regulation.

First National Bank of Boston v. Attorney General, 371 Mass. 773, 359 N.E.2d 1262 (Mass. 1977), rev'd sub nom, First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978).

1 The other complainants in this suit were New England Merchants National Bank, The Gillette Company, Digital Equipment Corporation and Wyman-Gordon Company.

2 With regard to contributions and expenditures made to influence the election of candidates, the Court observed: "Appellants do not challenge the constitutionality of laws prohibiting or limiting corporate contributions to political candidates or committees, or other means of influencing candidate elections.... The overriding concern behind the enactment of statutes such as the Federal Corrupt Practices Act [the forerunner of the Federal Election Campaign Act] was the problem of corruption of elected representatives through the creation of political debts.... The importance of the governmental interest in preventing this occurrence has never been doubted. The case before us presents no comparable problem, and our consideration of a corporation's right to speak on issues of general public interest implies no comparable right in the quite different context of participation in a political campaign for election to public office. (Footnote 26)"

FREEDOM REPUBLICANS v. FEC

On April 7, 1992, the U.S. District Court for the District of Columbia remanded this case to the FEC, ordering the agency "with all deliberate speed...[to] begin rulemaking proceedings designed to consider the means through which the FEC will ensure compliance with Title VI of the Civil Rights Act...." Title VI bars racial discrimination in any program receiving federal funds.1

On January 18, 1994, finding that Freedom Republicans lacked standing to bring suit, the U.S. Court of Appeals for the District of Columbia vacated the judgment of the district court and remanded the case with instructions to dismiss. On October 3, 1994, the Supreme Court refused to review that decision, and on December 7, 1994, the case was dismissed by the district court. (Civil Action No. 92-0153 (CRR).)

Background

The plaintiffs in this case--The Freedom Republicans, Inc., and its President, Lugenia Gordon--alleged that the Republican Party's delegate selection process discriminated against African Americans in violation of Title VI. (Plaintiffs had made similar allegations in an administrative complaint, which FEC staff dismissed for lack of jurisdiction.) Claiming that the FEC was responsible for ensuring that the convention funding program complied with Title VI, plaintiffs asked the court to order the agency to conduct an investigation of the Republican Party's delegate selection procedures and to adopt Title VI regulations on delegate selection.

Plaintiffs additionally claimed that Title VI prohibited the FEC from providing any public funds to the Republican Party for its 1992 national convention because of the Party's alleged discriminatory delegate process. In moving for partial summary judgment, however, plaintiffs asked the court to consider only their request for a rulemaking.

The FEC asked the court to dismiss the case, arguing, among other things, that plaintiffs lacked standing to bring suit; that they had not exhausted administrative remedies; that Title VI did not apply to the public funding programs the FEC administers; and that the FEC did not have authority to issue delegate selection regulations under Title VI.

District Court Ruling

Finding that Title VI applies "to the FEC as well as to both major political parties and other recipients of federal funds," the court granted plaintiffs' motion for partial summary judgment and denied the FEC's motion to dismiss. The court held that the FEC was obligated to adopt rules that would ensure enforcement of Title VI in the delegate selection process.

Plaintiffs' Standing to Bring Suit

The agency argued that plaintiffs lacked standing to bring suit. (The FEC contended that the jurisdiction of the courts can be invoked only when an individual plaintiff has suffered actual injury and that plaintiff Gordon made no such allegation. The FEC similarly argued that Freedom Republicans failed to allege injury to its members sufficient to invoke the court's
jurisdiction.)

The court, however, held that Freedom Republicans had standing to sue on behalf of its members because the organization satisfied the three criteria set forth in Hunt v. Washington State Apple Advertising Commission.2 First, the individual members of the group could themselves have brought action under Title VI, which "entitles the Plaintiffs to a private right of action against the agency for dereliction of its enforcement duties." Second, the interests Freedom Republicans sought to protect were germane to its purpose, namely, "advancing the interests of African Americans through, and within, the Republican Party." And third, "the presence of individuals who have actually been denied delegate status on the basis of racial discrimination is not necessary" when an organization challenges an agency's interpretation of law, "such as the FEC's interpretation of the applicability of Title IV."

Administrative Remedies

The FEC also contended that the plaintiffs had failed to pursue an administrative remedy still open to them: to petition the agency to issue a rulemaking on Title IV. The court pointed out that the administrative complaint plaintiffs had filed with the agency "put the FEC on sufficient notice of Plaintiffs' desire for a rulemaking."

Application of Title IV

The FEC contended that Title IV3 was not applicable to the public funding of national nominating conventions because of First Amendment concerns (i.e., government control over the selection of delegates to the party conventions). The court, however, said that there were numerous cases in which First Amendment rights were overridden "by the need to prevent state-sponsored discrimination."

The court rejected the FEC's argument that convention funding does not qualify as "federal financial assistance" because Title VI applies only to programs where funding is provided to a nonfederal entity, which then provides the assistance to the ultimate beneficiaries. In the court's view, convention funding meets this test because the funds "enable the party to provide a platform for other, ultimate beneficiaries, such as Republican candidates and party members."

Responding to the FEC's argument that Congress never intended for the agency to have any control over the internal workings of the parties, the court said that there was nothing in the legislative history suggestive of Congress's desire to prevent the FEC from enforcing Title VI.

Court of Appeals Ruling

The U.S. Court of Appeals for the District of Columbia concluded that Freedom Republicans had no standing to bring suit against the Commission for the purpose of pressuring the Republican Party to change its delegate-selection rules. The court found that Freedom Republicans failed to meet two requirements for standing under Article III of the Constitution.

First, the organization failed to show that the allegedly discriminatory delegate-selection process was caused by the authorization of federal funding to the Republican convention. The court said that "the injury alleged in Freedom Republicans' complaint is not fairly traceable to any encouragement on the part of the government, but appears instead to be the result of decisions made by the Party without regard to funding implications." Second, Freedom Republicans failed to show that court action or action by the FEC would likely redress the injury. The court found no "adequate likelihood, as opposed to speculation, that the Party would choose to change its time-tested delegate-selection mechanism rather than forego the convention funding."

Accordingly, on January 18, 1994, the court vacated the judgment of the district court and remanded the case with instructions to dismiss.

Petition to Supreme Court; Dismissal

On October 3, 1994, the Supreme Court denied Freedom Republicans' petition for a writ of certiorari. The district court dismissed the case on December 7, 1994.

Source: FEC Record, June 1992, p. 7; March 1994, p. 3; and February 1995, p. 6.

Freedom Republicans, Inc. v. FEC, 788 F. Supp. 600 (D.D.C. 1992), rev'd, 13 F.3d 412 (D.C. Cir.), cert. denied, 115 S. Ct. 84 (1994).

1 In response to the FEC's motion to amend judgment, and over the objection of plaintiffs, the court revised its order on May 4, 1992, to make clear that the order referred to a rulemaking governing the delegate selection process of federally funded national party conventions. The amended order also made clear that the court did not impose a deadline for the promulgation of the rules.

2 432 U.S. 333, 97 S.Ct. 2434 (1977).

3 Title VI states: "Each Federal agency... which is empowered to extend Federal financial assistance to any program or activity, by way of grant, loan, or contract...is authorized and directed to effectuate the provisions of section 2000d of this title...by issuing rules, regulations or orders of general applicability which shall be consistent with achievement of the objectives of the statute authorizing the financial assistance." 42U.S.C. §2000d-1.

FROELICH v. FEC

The U.S. Court for the Eastern District of Virginia, Alexandria Division, dismissed this suit on May 27, 1994, ruling that Francis E. Froelich and two other plaintiffs, all residents of Virginia, lacked standing to bring suit.

On June 14, 1995, the U.S. Court of Appeals for the Fourth Circuit affirmed the district court's decision and found the appeal to be without merit.

In their suit, plaintiffs claimed that the Federal Election Campaign Act was unconstitutional to the extent that it allowed House and Senate candidates to accept out-of-state contributions. They argued that such contributions to the announced U.S. Senate candidates from Virginia (also named in the suit) allowed non-Virginians to participate in the process of electing a Senator and diluted the value of the plaintiffs' participation. They further claimed that nonresident contributions created the appearance that an elected Senator is answerable to nonresident contributors. These alleged consequences of nonresident contributions, they argued, violated the 17th Amendment's guarantee that two Senators from each state shall be "elected by the people thereof."

The district court, however, ruled that plaintiffs' claims were too general, lacking the factual specificity necessary to establish standing for judicial review. The court said that the "abstract question of wide significance" and "general grievances" presented by the plaintiffs were more properly addressed by Congress. The court commented that if it were to uphold plaintiffs' claims, it would be "making legislative policy" and consequently "improperly interfering" with the legislative branch.The court of appeals affirmed the district court's decision.

Source: FEC Record, August 1994, p. 9; and August 1995, p. 5.

Froelich v. FEC, 855 F. Supp. 868 (E.D. Va. 1994); No. 94-1777 (4th Cir. May 27, 1994).

FULANI v. FEC (94-1593)

On February 9, 1995, the U.S. Court of Appeals for the District of Columbia dismissed this case.

Dr. Fulani and her principal campaign committee for the 1994 Presidential race had asked the court to review an FEC decision to conduct an investigation into the campaign's finances pursuant to the public funding statute. 26U.S.C. §9039(b).

The court dismissed the case because the action in question was not a final agency action and was therefore not subject to judicial review under 26U.S.C. §9041(a), as previously construed by the court.

Source: FEC Record, October 1994, p. 9; and April 1995, p. 6.

Fulani v. FEC, No. 94-1593 (D.C. Cir. Feb. 9, 1995).

FULANI v. FEC (94-4461)

On April 12, 1995, the U.S. District Court for the Southern District of New York dismissed this case as moot.

Plaintiffs had sought to restrain the FEC from taking any action in an enforcement matter because the administrative complaint that originated the case included unsworn attachments.

When the complainant filed a sworn statement verifying the attachments, plaintiffs' arguments were rendered moot.

Source: FEC Record, August 1994, p. 11; and June 1995, p. 12.

Fulani v. FEC, No. 94-4461 (S.D.N.Y. Apr. 12, 1995).

FULANI v. FEC (97-1466)

On June 23, 1998, the U.S. Court of Appeals for the District of Columbia Circuit denied a petition from Dr. Lenora B. Fulani and the Lenora B. Fulani for President Committee to review the FEC's final repayment determination for the committee's financial transactions during the 1992 Presidential campaign. The FEC had determined that Dr. Fulani and her committee had to repay the U.S. Treasury $117,269 in public matching funds.

Dr. Fulani received about $2 million for the 1992 campaign, under the Presidential Primary Matching Payment Account Act. Under the Matching Payment Act, eligible candidates can use matching funds only for qualified campaign expenses. Committees that receive such funds are also subject to an audit by the FEC and the requirement to make repayments to the U.S. Treasury if the audit reveals that they made nonqualified campaign expenses or received payments in excess of their entitlement. Commission regulations allow a candidate to contest the initial repayment determination by submitting written materials and by requesting an oral hearing before the Commission issues a final repayment determination. The regulations further state that, if the candidate does not contest an initial repayment determination, it becomes final 30 days after a candidate is served written notice of the determination.

Dr. Fulani did not contest the Commission's initial repayment determination, which concluded that Dr. Fulani owed the Treasury $1,394. Dr. Fulani had already repaid this amount. The Commission, however, held its final determination in abeyance after a former Fulani campaign worker came forward to challenge the accuracy of some of the documentation on which the FEC had based its initial repayment determination. The FEC continued to investigate--though hampered by a lack of cooperation from committee staff and vendors--and issued a second initial repayment determination, this time, in the amount of $612,557. Dr. Fulani contested this determination, and, in its final repayment determination, the Commission reduced the amount to $117,269. Dr. Fulani asked for a rehearing, which was denied by the Commission, and then brought the matter before the appellate court. Dr. Fulani challenged the FEC's authority to issue a second repayment determination and, in the alternative, argued that the Commission's findings that she and her committee owed $18,768 in nonqualified disbursements to a vendor and $73,750 in unsubstantiated payments to individuals by check were unreasonable.

Dr. Fulani and the committee first argued that the Matching Payment Act contemplates only one repayment determination and that the FEC had no authority to make a second one in their case. Commission regulations, however, allow additional repayment determinations after a final determination has been made "where there exist facts not used as the basis for a previous final determination." 11 CFR 9038.2(f). The court agreed with the Commission that the statute is silent on this matter and the agency's regulation is a reasonable construction of the Act.

Dr. Fulani also argued that the FEC had no authority to hold its first repayment determination in abeyance because the determination became final when Dr. Fulani did not object to it within the designated 30-day period. The court agreed with the Commission that it makes no difference whether the first initial repayment determination had become final or had been suspended because the FEC's own regulation explicitly authorizes it to make additional repayment determinations on the basis of new facts.

Dr. Fulani also argued that, even if the Commission is authorized to make a second repayment determination, it did not issue that determination within the three-year period the statute requires. Although the Commission, in fact, did issue the second initial determination just before the three-year period ended, Dr. Fulani stated that the determination figure ($612,557) was drawn up just to meet the deadline and was not the product of a thorough examination and audit. But the court found that the obstacles the Commission encountered in investigating the committee understandably led it to draw all inferences against the committee. "When a candidate seeks to frustrate and delay a government investigation, it can hardly be heard to complain that the product is insufficiently thorough," the court stated.

The court also affirmed the Commission's determination on the merits and its denial of Dr. Fulani's petition for a rehearing. In regard to the payments to the vendor, the court stated that Dr. Fulani failed to offer a timely explanation of the payments. In regard to the Fulani committee's payments by check to individuals, the court deferred to the Commission's construction of its own regulations even when it found that the "FEC's reading of its regulation admittedly is not obvious."

Source: FEC Record, August 1998, p. 6.

Fulani v. FEC, 147 F.3d 924 (D.C. Cir. June 23, 1998).

FUND FOR A CONSERVATIVE MAJORITY v. FEC (80-1609)

On October 19, 1983, the U.S. District Court for the District of Columbia issued an order denying the Fund for a Conservative Majority's (FCM's) petition for further relief in a consolidated suit originally decided by the court in September 1980. (Common Cause v. Harrison Schmitt [FEC Intervenor]; FEC v. Americans for Change;1 Civil Action Nos. 80-1609 and 80-1754.) The court also denied a motion filed by the National Congressional Club (NCC) and the National Conservative Political Action Committee (NCPAC) to intervene in FCM's petition and dismissed the petition with prejudice.

In FEC v. NCPAC and FCM 2 the U.S. District Court for the Eastern District of Pennsylvania on December 12, 1983, refused to allow the FEC to implement 26 U.S.C. §9012(f). (Civil Action No. 83-2823.) The Federal Election Commission filed an appeal with the Supreme Court on December 16.

Background

In its September 1980 ruling, the U.S. District Court for the District of Columbia held that Section 9012(f) was unconstitutional as applied to Americans for Change, Americans for an Effective Presidency and FCM, three multicandidate political committees (not affiliated with any parent organization). They had planned to make expenditures in excess of $1,000 to support the Republican Presidential nominee's general election campaign.

On January 19, 1982, the Supreme Court voted 4 to 4 to affirm the D.C. district court's September decision, with Justice Sandra Day O'Connor not participating. However, since the high Court's vote on the suit had been equally divided, its affirmance had no precedential value. Subsequently, the FEC issued advisory opinions to NCPAC and FCM in which the FEC stated that Section 9012(f) may be enforced.3

District Court's Ruling

On June 16, 1983, FCM filed a petition with the D.C. district court. (Civil Action No. CA 80-1609) Citing the D.C. district court's 1980 ruling in the first suit, FCM asked the court to:

• Order the FEC to dismiss its suit against NCPAC and FCM in the Pennsylvania district court;
• Prohibit the FEC from filing suits in state and federal courts which seek to enforce or to construe Section 9012(f)(1);
• Direct the FEC to withdraw an advisory opinion (AO 1983-11) issued to FCM on May 18, 1983, which stated that FCM would be subject to the $1,000
  spending limit imposed by Section 9012(f)(1) should FCM make expenditures on behalf of the publicly funded Republican Presidential nominee in 1984; and
• Direct the FEC to issue an alternative advisory opinion to FCM stating that FCM's proposed expenditures would not be subject to Section 9012(f)(1).

In dismissing FCM's petition, the D.C. district court judges found no merit to FCM's contention that the FEC could not file suit in the Pennsylvania district court because the issues raised by the suit had already been resolved by the D.C. district court's ruling in 1980.4 The D.C. district court found, to the contrary, that the FEC's second suit raised new issues. "The controversy in the original suit decided by the [D.C. district] court stemmed from FCM's planned expenditures for then-Presidential hopeful Reagan's 1980 campaign, not from planned expenditures by other parties [i.e., NCPAC], and not from FCM's planned expenditures for the 1984 presidential election." The court also cited legal precedent which permitted federal agencies "to relitigate substantially legal issues raised by different transactions or events, after adverse decisions elsewhere." Western Oil and Gas Association v. Environmental Protection Agency, 633 F.2d 803, 808.

Furthermore, the D.C. district court found that, in filing its second suit with the Pennsylvania district court, the FEC had not intended to undermine the D.C. district court's ruling in the first suit. The court conceded that the "constitutional issues remained unsettled" as a result of the high Court's evenly divided decision.

Since the high Court has not yet resolved the constitutionality of Section 9012(f), the D.C. district court asserted that, as the federal agency charged with enforcing the provision, the "FEC must legitimately be permitted to retry the legal issue of section 9012(f)'s constitutionality" until "it is finally settled by the Supreme Court." The district court maintained that Congress had placed a special importance "on FEC participation in actions construing the Fund Act, and on quick Supreme Court review."

The D.C. district court also found that FCM had provided no evidence to indicate that the FEC's second suit had caused it "unwarranted inconvenience or harm." Moreover, the D.C. district court held that in attempting to enjoin the FEC from seeking a resolution of Section 9012(f)'s constitutionality in the Pennsylvania district court, FCM should directly petition the Pennsylvania district court.

Source: FEC Record, January 1984, p. 8.

1 See FEC v. Americans for Change.

2 See FEC v. National Conservative Political Action Committee and Fund for a Conservative Majority.

3 For a summary of AO's 1983-10 and 1983-11, see p. 2 of the July 1983 Record.

4 Under the doctrine of collateral estoppel, when an issue of ultimate fact has been determined by a valid judgment, that issue cannot be relitigated between the same parties.

FUND FOR A CONSERVATIVE MAJORITY v. FEC (84-1342)

On February 26, 1985, the U.S. District Court for the District of Columbia granted summary judgment to the FEC in Fund for a Conservative Majority v. FEC. (Civil Action No. 84-1342.) The court held that the Commission was justified in refusing to disclose documents pertaining to the agency's audit and review procedures, which FCM sought under the Freedom of Information Act (FOIA). (FCM is a nonconnected political committee, which the FEC had proposed to audit based on the Commission's review of FCM's reports and its determination that FCM had not met the agency's requirements for substantial compliance with the law's reporting provisions.)

In its suit, FCM challenged the FEC's refusal to disclose documents setting forth the agency's threshold requirements for auditing committees, as well as FEC staff recommendations detailing FCM's failure to meet them. In upholding the FEC's action, the court noted that the agency had justifiably withheld information exempt under section 552(b)(2) of the FOIA. Under this provision, "matters that are...related solely to internal personnel rules and practices" may be exempted from disclosure. The FEC's action met the standards for applying this exemption, which were set forth in Crooker v. Bureau of Alcohol, Tobacco and Firearms, (670 F.2d 1051, D.C. Cir. 1981). First, the undisclosed information was "predominantly internal," and did not constitute "secret law." In this regard, the court noted "the Commission's threshold requirements are not secret law because they made 'no attempt to modify or regulate public behavioronly to observe it for illegal activity.'" Id. at 1075. "The information at issue here is simply used to review Commission reports for substantial compliance with [the reporting] rules" published in the U.S. Code and accompanying regulations. "The plaintiff's argument that it is 'in the dark' as to how to pass that review is especially weak in light of the many letters it has received from the Commission, advising and pointing out apparent reporting inconsistencies and irregularities."

Under the second standard for applying the exemption for internal practices, the disclosed information must "significantly risk circumvention of agency regulations and statutes." (See Crooker at 1074.) In this instance, the court agreed with the Commission that disclosure of the threshold requirements "would enable unscrupulous political committees to tailor their reports to avoid being audited, and ignore statutory reporting requirements that are not central to the internal review procedures."

The FEC had also invoked section 552(b)(7)(E) of the FOIA to justify withholding portions of agency documents pertaining to the compliance thresholds FCM had failed to meet. This provision exempts " 'investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would...disclose investigative techniques.'" The court found that the information withheld by the FEC met the requirements of this exemption, specifically, the information: (1) constituted an " 'investigative record'" and (2) had been " 'compiled for law enforcement purposes.'" Pratt v. Webster, 673 F.2d 408, 413 (D.C. Cir. 1982). The court pointed out that the federal election law specifically requires the Commission to review Committee reports.

Source: FEC Record, June 1985, p. 3.

Fund for a Conservative Majority v. FEC, No. 84-1342 (D.D.C. February 26, 1985).

GALLIANO v. U.S. POSTAL SERVICE

On January 8, 1988, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion in Ralph J. Galliano v. U.S. Postal Service, which reversed a decision by the U.S. District Court for the District of Columbia dismissing the plaintiff's suit. The appeals court found that specific provisions of the Federal Election Campaign Act (FECA) control, in part, the application of 39 U.S.C. §3005 to political solicitations named in the plaintiff's suit. The appeals court therefore returned the case to the district court with instructions for the court to remand it to the U.S. Postal Service. In light of the appeals court opinion, the Postal Service must reconsider its decision concerning the political solicitations named in the case.

Background

During 1983 and 1984 the Congressional Majority Committee (CMC), a multicandidate political committee, mailed out letters soliciting contributions to CMC's independent expenditure project, Americans for Phil Gramm in '84 (APG), supporting then-Congressman Gramm's candidacy for the U.S. Senate. The disclaimer notices in the first mailing failed to state that the solicitation was not authorized by any candidate.

In subsequent solicitation mailings, however, CMC did include such a disclaimer.

Alarmed that the APG solicitations were potentially misleading contributors and diverting funds away from his own authorized campaign committee, Congressman Gramm, a Republican from Texas, filed a complaint with the FEC against CMC, alleging that CMC had violated the election law by:

• Using Gramm's name in the title of its independent expenditure project (2 U.S.C. §432(e)(4)); and
• Failing to clearly state in its solicitations that CMC had not been authorized by Congressman Gramm (2 U.S.C. §441d(a)(3)).

The Commission found probable cause to believe that CMC had violated the election law by failing to include a disclaimer notice in its first solicitation mailings. The Commission was evenly divided, however, on the issue of whether CMC had violated the law by including Congressman Gramm's name in the title of its independent expenditure project. In July 1985 the Commission entered into a conciliation agreement with CMC and closed the file on the case.

After filing his complaint with the FEC, Congressman Gramm took two other steps: He filed a suit with the District Court for the Eastern District of Virginia and a complaint with the U.S. Postal Service.

In the suit he filed with the Virginia district court,1 Gramm claimed that CMC's use of his name in the title of the independent expenditure project had violated a Virginia law against unauthorized use of a person's name. Nevertheless, the district court denied Congressman Gramm's request for injunctive relief, stating that "the Federal Election [Campaign] Act arguably provides the exclusive remedy for the plaintiff's allegation.... "

In the complaint he filed with the U.S. Postal Service, Congressman Gramm asserted that CMC's solicitations contained false representations and thus violated 39 U.S.C. §3005, a provision governing postal fraud outside the purview of the FECA.

The Postal Service found, among other things, that the committee's solicitation mailings implicitly made the false representation that Americans for Phil Gramm in '84 was authorized to collect funds for Congressman Gramm's campaign, and that the funds would be spent by Gramm's authorized committee. The Postal Service further concluded that the disclaimer notice required by the election law (Section 441d(a)(3)) did not adequately inform the recipients that the solicitation was not authorized by Congressman Gramm.

District Court Ruling

On August 7, 1985, Ralph J. Galliano, chairman of CMC, along with CMC and APG (hereafter collectively referred to as APG), contested the Postal Service's decision in the U.S. District Court for the District of Columbia. The district court affirmed the Postal Service's decision and dismissed APG's suit.

On November 13, 1986, Mr. Galliano appealed the district court decision. At the request of the U.S Court of Appeals for the District of Columbia Circuit, the FEC filed a friend of the court brief, which addressed the issue of whether specific provisions of the FECA would displace the application of 39 U.S.C. §3005 to the political solicitations named in the suit.

FEC's Amicus Brief

In its brief the FEC noted that Congress had enacted two provisions of the election law "to ensure the public is informed of the true source of political solicitations and whether they are authorized by a candidate." First, Section 432(e)(4) requires committees authorized by candidates to adopt a name which includes the candidate's name; it requires unauthorized committees to adopt a name which does not contain the name of any candidate. Second, Section 441d(a)(3) requires that fundraising solicitations by unauthorized committees state clearly the committee's name and "that the communication is not authorized by any candidate or candidate's committee."

Further, the FEC argued, since Congress had granted the agency exclusive jurisdiction over provisions of the law, "matters covered by the Act must be brought before the Commission in the first instance even if another statute might otherwise arguably be applicable."

The FEC went on to note that "the courts have long recognized that tension between a statute of general application and a statute specifically addressed to a particular subject must be resolved in favor of the specific statute." The Commission therefore argued that, while Section 3005 may be applied generally to protect the public from "fraudulent political fundraising schemes," this provision cannot be applied "in a manner that overrides the exclusive jurisdiction of the Commission to deal with those matters Congress has specifically resolved in the FECA." Thus, the Commission concluded that "the Postal Service's decision should be reversed only to the extent that it interferes with the exclusive jurisdiction of the Commission and specific provisions of the FECA."

Appeals Court Ruling

Reversing the district court ruling, the appeals court held "that the FEC is the exclusive administrative arbiter of questions concerning the name identifications and disclaimers of organizations soliciting political contributions. As to representations not specifically regulated by FECA, however,... nothing in or about the Act limits the 39 U.S.C. §3005 enforcement authority of the Postal Service."

The court held that the FECA's disclaimer requirements for political solicitations maintained a proper balance between protection of First Amendment rights of free speech and the public's right to be protected from fraudulent solicitations. The court said that "a fine balance of interests was deliberately struck by Congress in the name and disclaimer requirements of FECA...We believe they were meant to provide a safe haven to candidates and political organizations with respect to those organizations' names and sponsorship. If FECA requirements are met, then as we comprehend that legislation, no further constraints on names and disclaimers may be imposed by other governmental authorities."

The court concluded, however, that solicitations for political contributions were not "entirely immune from Postal Service scrutiny under Section 3005. Apart from the name of a political organization and the presence or absence of sponsorship disclaimer, much may appear in a solicitation for political contributions that could materially deceive readers and thereby constitute a false representation under 3005."

Source: FEC Record, January 1988, p. 7; and March 1988, p. 9.

Galliano v. United States Postal Service, 836 F.2d 1362 (D.C. Cir. 1988).

1 See Friends of Phil Gramm v. Americans for Phil Gramm in '84, 587 F. Supp. 767 (E.D. Va. 1986).

GELMAN v.FEC (80-1646)

On July 22, 1980, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion affirming the FEC's determination that Lyndon H. LaRouche had failed to reestablish his eligibility for primary matching funds in the Democratic Presidential primary held in Michigan on May 20, 1980. In its May 28, 1980, ruling, the Commission found that Mr. LaRouche had failed to receive at least 20 percent of all votes cast for Democratic contenders in the Presidential primary, the minimal amount necessary to reestablish eligibility.

Felice M. Gelman and Citizens for LaRouche, Inc. had filed a petition on June 11, 1980, contending that the Commission should have applied the definition of "candidate" provided by 26 U.S.C. §9033(2) in determining whether Mr. LaRouche had reestablished his eligibility for primary matching funds. That provision stipulates that, for purposes of establishing initial eligibility for primary matching funds, a Presidential primary candidate must be "actively conducting campaigns in more than one State." In calculating total votes in the Michigan Democratic primary, Mr. LaRouche argued, this definition of "candidate" would have excluded votes cast for a candidate who had ceased to campaign actively in more than one state and votes cast for "uncommitted" delegates (i.e., those not pledged to any specific candidate). The FEC argued that the provisions of 26 U.S.C. §9033(c)(4)(B) required the Commission to count total votes cast for all Presidential primary candidates in a particular primary including all votes cast for inactive or write-in candidates or "uncommitted" delegates.

In upholding the FEC's method of determining Mr. LaRouche's reeligibility for primary matching funds, the court maintained "...petitioners' narrow focus on the word 'candidate', to the exclusion of the phrase within which that word appears, results in a strained and artificial construction that is at odds with the Act's underlying concern that federal matching funds should go only to those candidates who have demonstrated at least minimal public support for their candidacies."

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

Gelman v. FEC, 631 F.2d 939 (D.C. Cir.), cert. denied, 449 U.S. 876 (1980).

GELMAN v. FEC (80-2471)

On March 11, 1981, the U.S. District Court for the District of Columbia denied plaintiffs' motion to find the FEC in contempt of court for failing to obey the court's October 24, 1980, order in the suit, Felice M. Gelman and Citizens for LaRouche v. FEC (Civil Action No. 80-2471). In that order, the court ruled that, although the Commission had undertaken an investigation pursuant to 26 U.S.C. §9039(b), the FEC had to notify the Citizens for LaRouche Committee of any investigations conducted of contributors to Mr. LaRouche's 1980 primary campaign, pursuant to 2 U.S.C. §437g(a)(2). Pursuant to the court's order, the FEC undertook no further investigations into the Committee's affairs.

In denying plaintiffs' motion, the court noted that the investigation cited by the LaRouche Committee in its contempt of court motion referred to a separate investigation the Commission had undertaken in March 1981, pursuant to 2 U.S.C. §437g(a)(2). That investigation resulted from the Audit Division's identifying a matching fund contribution that the LaRouche Committee may have submitted with false documentation. The court observed that the FEC had afforded plaintiffs the required notice before proceeding with this investigation.

Source: FEC Record, May 1981, p. 7.

Gelman v. FEC, 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9139 (D.D.C. 1980).

GLENN PRESIDENTIAL COMMITTEE v. FEC

On June 23, 1987, the U.S. Court of Appeals for the District of Columbia Circuit affirmed the FEC's final repayment determination of May 15, 1986, with respect to the John Glenn Presidential Committee, Inc. (the Committee), the principal campaign committee for Senator Glenn's publicly funded 1984 Presidential primary campaign (Civil Action No. 86-1348.)

Background

The Committee had asked the appeals court to review the repayment determination, which found that the Committee had made nonqualified campaign expenses (amounting to $248,004.62) as a result of exceeding its spending limits for the Iowa and New Hampshire primaries, and which required the Committee to repay $74,955.62 to the U.S. Treasury.1

The Committee had asserted that the state expenditure limits in 2 U.S.C. §441a(b)(1)(A) were unconstitutional. The Committee had also contested the FEC's determination in three specific areas, involving the FEC's allocation of the Committee's expenditures for telephone calls, public opinion polls, and buttons and bumper stickers.

Appeals Court Ruling

The court found no constitutional infirmity in the FEC's actions taken under 26 U.S.C §9038(b)(2), the provision of the President Primary Matching Payment Account Act which authorizes the recoupment of federal funds. The court noted that 26 U.S.C. §9038(b) allows the recoupment of public monies only.

Regarding the FEC's application of its regulations concerning the allocation of expenditures in three specific areas, the court found that the FEC ruled rationally and had not abused its authority.

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

John Glenn Presidential Committee, Inc. v. FEC, 822 F.2d 1097 (D.C. Cir. 1987).

1 The public funding statutes require Presidential primary candidates to repay the U.S. Treasury for nonqualified campaign expenses (26 U.S.C. §9038(b)(2)). Under the statute, spending in excess of the state-by-state spending limits is considered one type of nonqualified expense. When a campaign incurs nonqualified expenses, the campaign must repay that portion of the nonqualified expenses which represents public matching funds.

GOLAND v. U.S.

U.S. v. GOLAND

On May 21, 1990, the U.S. Court of Appeals for the Ninth Circuit affirmed the district court's decision to dismiss the suit and to deny appellant's motion to certify constitutional challenges to the Federal Election Campaign Act. (Civil Action No. 89-55422.) Appellant Michael R. Goland had claimed that the First Amendment guaranteed his right to make unlimited anonymous contributions to candidates.

Background (U.S. v. Goland)

On December 14, 1988, a federal grand jury in Los Angeles indicted Mr. Goland for violations of the Federal Election Campaign Act and criminal statutes stemming from his activities during the 1986 Senatorial election in California. According to the indictments, he advanced $120,000 to a media company to produce advertisements for Ed Vallen, a third-party candidate for the Senate seat. Mr. Goland actually wanted Democratic Senator Alan Cranston to win the election and financed the last-minute Vallen effort in order to divert votes from the Republican candidate, Ed Zschau. Mr. Goland tried to conceal his identity as the donor of the $120,000 contribution by funneling the money through 56 persons, who were later reimbursed by Mr. Goland. The Vallen campaign, uninformed of the true source of the contribution, reported the money as contributions from the 56 individuals.

The federal grand jury indicted Mr. Goland on criminal violations, charging that he had knowingly and willfully caused the treasurer of the Vallen campaign to make false statements to the FEC for the purpose of concealing his $120,000 contribution. 18 U.S.C. §§371 and 1001. Additionally, Mr. Goland was charged with violating the Federal Election Campaign Act (the Act) by exceeding the $1,000 contribution limit and by making a contribution in the name of another. 2 U.S.C. §§441a and 441f.

District Court Decision

On March 13, 1989, after the December 1988 criminal indictment, Mr. Goland filed civil suit in the U.S. District Court for the Central District of California. (Civil Action No. 89-1480.) Pursuant to 2 U.S.C. §437h, he sought immediate certification by the district judge of three constitutional challenges to the Act, as applied. He claimed that the Act's contribution limits and disclosure provisions violated his constitutional rights. He further claimed that the First Amendment protected his right to make unlimited anonymous contributions to a third-party candidate. Mr. Goland also sought a stay of the pending criminal proceeding. On May 1, 1989, the court dismissed the suit with prejudice, finding that the Supreme Court had already addressed appellant's constitutional questions in Buckley v. Valeo. Concluding that the constitutional claims were frivolous under Buckley, the court denied plaintiff's motion for certification and stay. Mr. Goland immediately filed an appeal.

Appeals Court Decision

On May 11, 1989, the appeals court denied his motion for a stay of the criminal trial but agreed to review the district court's dismissal of the constitutional questions. In its opinion of May 21, 1990, the court affirmed the district court's judgment, denying appellant's constitutional challenges and dismissing the suit.

The appeals court first considered whether Mr. Goland had standing to bring a constitutional challenge. The court found that "Goland satisfies the traditional standing criteria: he has alleged an actual or threatened injury; that injury was caused by the challenged act; and that injury is apt to be redressed by a favorable decision." The court observed that "[a] successful constitutional challenge to FECA provisions would give at least partial redress to Goland."

The appeals court ruled that the district court was acting within its discretion by dismissing the suit once it found the constitutional issues were frivolous. A complaint is frivolous when none of the legal points are arguable on their merits. In this case, the issues raised by Mr. Goland had already been resolved by the Supreme Court in Buckley v. Valeo, 424 U.S. 1 (1976).

Appellant argued that Buckley did not resolve the issues he raised. He claimed that the reasoning the Supreme Court applied in upholding the contribution limitsto prevent quid pro quo corruption or the appearance of corruptiondid not apply to his claim. There was no opportunity for exacting a quid pro quo deal since he sought to keep his identity secret. Further, because the candidate (Vallen) had no chance of winning the election, he would not be in a position to exchange official favors for money.

The court rejected this argument, pointing out that there is no assurance that a donor's identity will remain secret forever and, even if there were, the Act's disclosure provisions prohibit anonymous contributions exceeding $50. (See 2 U.S.C. §432(c)(2).) Moreover, Buckley upheld the application of contribution limits to minor party candidates as well as to candidates likely to win. Id. at 30-31.

Appellant Goland also argued that the Act's disclosure requirements as they relate to anonymous contributions to a third-party candidate were unconstitutional on their face and as applied to him. He based his claim on the historic constitutional protection given to anonymous political speech, citing several Supreme Court cases.

The court found that Mr. Goland could not avail himself of this protection. The Supreme Court in Buckley carefully considered the danger posed by compelled disclosure but held that state interests justified the indirect burden imposed by the Act's disclosure requirements on First Amendment interests. The appeals court concluded: "the [Supreme] Court carved out a narrow exception to the line of cases Goland relies on, and that exception encompasses Goland's activities."

In response to appellant's emphasis on the minor party status of the recipient candidate, the court stated that the Buckley Court provided an exception to the disclosure provisions for those parties that could show a "reasonable probability" that disclosure would subject their contributors to "threats, harassment, or reprisals." Id. at 74. The appeals court noted that appellant Goland "[did] not even attempt to make such a showing." The court also observed that Mr. Goland "was not promoting a reviled cause or candidate."

Finally, Mr. Goland argued that the substantial state interests that the Buckley Court found to justify the disclosure requirements did not apply to anonymous contributions made to a candidate with whom the donor disagrees.

The appeals court found no merit in this argument, observing that one purpose behind the disclosure provisions is "to keep the electorate fully informed of the sources of campaign funding....There is valuable information to be gained by knowing that Vallen took $120,000 from a Cranston supporter." Another purpose behind the Act's disclosure provisions is "to gather the data necessary to detect violations of the contribution limits." The court said that if Goland's position were adopted, one could avoid the contribution limits simply by making an anonymous contribution.

Source: FEC Record, August 1990, p. 9.

Goland v. United States, 903 F.2d 1247 (9th Cir. 1990).

1 The first criminal trial, which concluded on July 10, 1989, resulted in a mistrial because of a hung jury. On September 19, 1989, a federal grand jury returned a superseding indictment charging additional violations of the Act's contribution limits and of criminal statutes. The second trial ended on May 3, 1990. Mr. Goland was convicted on one misdemeanor count of making an excessive contribution. He was acquitted on four other counts of conspiracy and making false statements. The jury deadlocked on one felony count of making false statements. On July 16, 1990, Mr. Goland received a federal prison sentence of 90 days on the one conviction (excessive contribution).

GOTTLIEB v. FEC

On May 8, 1997, the U.S. District Court for the District of Columbia granted the FEC's motion to dismiss this case in which Alan Gottlieb and others had asked the court to order the FEC to take action on an administrative complaint that the Commission had voted to dismiss.

On May 22, 1998, the U.S. Court of Appeals for the District of Columbia Circuit affirmed the lower court ruling that dismissed this case for lack of standing. The appeals court rejected the arguments the appellants had presented in an effort to bring suit against the FEC after the agency had dismissed their administrative complaint.

Background

Alan Gottlieb, together with several other voters and organizations, had filed an administrative complaint with the FEC in March 1995 alleging that President Clinton's 1992 campaign received $1.4 million in excess entitlement allowed under the Presidential Primary Matching Payment Account Act. According to the complaint, the excess entitlement occurred because, following President Clinton's nomination, his campaign transferred $1.4 million in private primary contributions to his General Election Legal and Accounting Compliance Fund (GELAC Fund) instead of using the funds to pay his primary debts. According to appellants, the transfer violated 11 CFR 9003.3(a)(1), as it was written at the time of the alleged violation, because the regulation permitted transfers of funds only in excess of amounts needed to pay primary debts.

The Commission dismissed the administrative complaint after deadlocking in a 3-3 vote. Mr. Gottlieb then filed suit, asking the district court to find that the FEC's actions had been contrary to law.

District Court Ruling

The district court found that the appellants did not have standing (under Article III of the U.S. Constitution) to pursue their claims in court because they had not been harmed by the Commission's decision.

Appeals Court Ruling

In affirming the lower court, the appellate court called Mr. Gottlieb's claims of injury "speculative" and "amorphous."

Source: FEC Record, July 1997, p. 5; July 1998, p. 4.

Gottlieb v. FEC, 143 F.3d 618 (D.C. Cir. May 22, 1998).

GRAMM v. FEC

During October 1985, the U.S. District Court for the Northern District of Texas, Dallas Division, issued two rulings concerning an FEC audit of the Friends of Phil Gramm, the principal campaign committee for Texas Senator Phil Gramm's 1984 Senate campaign. On October 18, the court granted the FEC's motion to dismiss Friends of Phil Gramm v. FEC, a suit filed by the Gramm Committee challenging the audit. (Civil Action No. CA3-85-1164-7.) On October 31, the court determined that the Committee must comply with the FEC's audit. (FEC v. Friends of Phil Gramm; Civil Action No. CA3-1507-7.)

Background

In papers filed with the court, Friends of Phil Gramm (the Committee) alleged that, based on a complaint filed against the Committee and on information gathered through internal procedures, in March 1985 the Commission found "reason to believe" that the Committee had violated several provisions of the Federal Election Campaign Act (the Act). The agency then authorized an audit of the Committee to investigate whether the alleged violations had occurred. (The "reason to believe" finding is a statutory prerequisite to an investigation into possible violations.)

On June 19, 1985, the Gramm Committee filed a suit in the Northern District of Texas to enjoin the FEC from auditing the Committee. The Committee claimed that the Commission had to begin the audit within the time frame established under Section 438(b) of the Act. The Commission argued that Section 438(b) (including its time limits) was not applicable to the Gramm audit, which had been authorized under Section 437g(a)(2). The Gramm Committee also contended that the Commission was required to attempt conciliation before conducting the audit.

Subsequently, the Commission subpoenaed certain materials necessary for the audit. When the Committee refused to comply, the Commission filed a suit which asked the Texas district court to enforce the subpoena.

District Court's Ruling

In its memorandum opinion of October 18, dismissing the Committee's suit, the court noted that the time limit of Section 438(b) "is inapplicable to an audit scheduled under §437" and found the audit "well within its [§437's] parameters." Rejecting the Committee's claim concerning conciliation, the court stated that "the FEC is entitled to conduct its audit and gather the necessary information...before it attempts to conciliate with the violator." In its October 31 ruling, the court determined that the Gramm Committee must comply with the FEC's subpoena.

Source: FEC Record, January 1986, p. 10.

GROVER v. FEC

On May 21, 1996, the U.S. District Court for the Southern District of Texas granted the FEC's motion to dismiss this suit.

Henry C. Grover had filed the suit on January 16, 1996, claiming that the $1,000 limit on contributions from individuals and Congress's failure to pass laws to prevent "soft money"1 from influencing federal elections were unconstitutional impediments to his primary campaign efforts. (Mr. Grover eventually lost the March 12 Texas Republican Senatorial primary.) He asserted that the $1,000 contribution limit and alleged "soft money laundering" (i.e., the redistribution of soft money raised by party committees to favored federal candidates) gave incumbent office holders such an overwhelming advantage that only independently wealthy challengers could run competitive campaigns against them.

The court, however, dismissed the case based on the FEC's arguments that: (1) Mr. Grover's claim was moot since the primary was over and relief no longer available; (2) the contribution limits had already been upheld by the Supreme Court in Buckley v. Valeo; and (3) the "soft money" issues were political and therefore outside judicial authority. The court said: "It is Congress that passed the laws and it is Congress that must engage in any necessary repairs."

Source: FEC Record, July 1996, p. 6.

1 "Soft money" refers to funds raised and spent outside the limits and prohibitions of federal election law, including money that exceeds federal limits and money from corporate and labor treasury funds. Soft money may not be used in connection with federal elections but may be used for other purposes, such as nonfederal elections (subject to state law).

HETTINGA v. FEC

Pursuant to 2 U.S.C. §437g(a)(8), on July 12, 1984, Mr. Ralph M. Hettinga sought injunctive relief against the FEC for failing to act on his administrative complaint within 120 days. The suit was filed in the U.S. District Court for the District of Columbia. (Civil Action No. 84-2082) In the complaint filed with the FEC on March 6, 1984, Mr. Hettinga had alleged that eight unions had violated 2 U.S.C. §441b by making prohibited in-kind contributions to the Mondale Presidential campaign. The unions had allegedly provided telephone services and equipment and office space to the Mondale campaign at less than fair market value.

On July 24, 1984, the court issued an order requiring the FEC to submit information on its handling of Mr. Hettinga's complaint (i.e., a chronology of events with regard to the FEC's processing of the complaint). This submission, as well as all future submissions, was subject to a protective order issued by the court. By the terms of the protective order, plaintiff and defendant agreed that:

• Plaintiff's counsel would share information or documents concerning the administrative complaint only with the plaintiff and his legal staff;
• Plaintiff's counsel would explain the terms of the protective order to anyone with access to the information; and
• All court filings pertaining to the complaint would be filed under seal.

Stating that it could not determine whether plaintiff had met the burden for injunctive relief until after the court had examined the FEC documents, the court denied plaintiff's motion for injunction, without prejudice.

On August 8, 1985, the court granted the FEC's motion to dismiss the suit and ordered the records unsealed.

Source: FEC Record, September 1984, p. 11.

HOLLENBECK v. FEC

On July 27, 1998, the U.S. District Court for the District of Columbia granted the FEC's motion to dismiss this case for lack of standing.

Thomas Hollenbeck, a Pennsylvania resident, had filed suit against the FEC after it had dismissed his administrative complaint alleging that a 1994 candidate for federal office had accepted excessive loans.

In order to show standing, a plaintiff must meet the requirements found in Article III of the Constitutioninjury in fact, causation and redressability. The court concluded that Mr. Hollenbeck did not meet the requirements for standing because he failed to allege a "concrete and particularized injury" that came about as a result of a violation of the Federal Election Campaign Act. Mr. Hollenbeck, the court said, only vaguely alleged an injury, claiming violations of his First and Fourteenth Amendment rights and the need to protect the public from abuses by federal candidates.

Source: FEC Record, April 1998, p. 4; September 1998, p. 4.

HOOKER v. FEC

On October 23, 1996, the U.S. District Court for the Middle District of Tennessee dismissed this case for lack of prosecution.

John Jay Hooker, who billed himself as a potential candidate for the presidency in 1996, had asked the court to declare it unconstitutional for candidates who seek federal office to accept out-of-state contributions for their campaigns.

He also had asked the court to issue a permanent injunction against candidates who solicit, accept or use contributions from outside their home states; force the sitting Congress to address the situation; and notify states that they have a right to prohibit out-of-state contributions in federal elections.

Source: FEC Record, January 1997, p. 5.

HOPFMANN v. FEC

Background

In filing the suit with the U.S. District Court for the District of Columbia in December 1982, Mr. Hopfmann petitioned the court to declare that the FEC's dismissal of an administrative complaint, which he had filed in September 1982 against Senator Edward M. Kennedy (D-Mass.) and the Committee to Re-Elect Senator Kennedy, was contrary to law. See 2 U.S.C. §437g(a)(8)(A). Mr. Hopfmann also asked the district court to certify to a U.S. appeals court certain constitutional challenges involving FEC actions and the Federal Election Campaign Act (the Act). 2 U.S.C. §437h.

In seeking the Massachusetts State Democratic Party's endorsement as candidates for the U.S. Senate, both Mr. Hopfmann and Senator Kennedy participated in the Party's May 1982 pre-primary convention. Under the Party's "15 percent Rule," only candidates receiving at least 15 percent of the votes cast at the Party's pre-primary convention appear on the state's primary ballot. Senator Kennedy obtained ballot access by receiving at least 15 percent of the votes cast at the convention. Mr. Hopfmann, on the other hand, failed to receive ballot access because he received less than 15 percent of the total votes cast.

In the administrative complaint he had filed with the FEC, Mr. Hopfmann claimed that, since the convention vote had resulted in the Party's exclusive endorsement of Senator Kennedy, the convention had the authority to nominate a candidate and therefore met the election law's definition of an "election."1 Based on this assumption, Mr. Hopfmann alleged that Senator Kennedy and his campaign committee had failed to file timely pre-election reports and may have received excessive contributions. See 2 U.S.C. §§434(a),(b) and 441a(f), respectively.

District Court's Ruling

On March 8, 1984, the U.S. District Court for the District of Columbia issued an opinion in Alwin E. Hopfmann v. FEC, which granted both the FEC's motion for summary judgment and its motion to dismiss certain constitutional challenges brought by Mr. Hopfmann in the suit. (Civil Action No. 82-3667)

The district court found that the FEC's decision to dismiss the complaint was "'sufficiently reasonable' to merit [the] Court's deference." Specifically, the court held that the FEC General Counsel's report on the complaint adequately set out the Commission's reasons for dismissing the case. Moreover, the FEC's determination was consistent with previous FEC decisions.

With regard to constitutional challenges raised by Mr. Hopfmann, the court concluded that "plaintiff's challenges do not raise substantial constitutional questions, are frivolous and are not based on any coherent legal theory."

Appeals Court's Ruling

On May 13, 1985, the U.S. Court of Appeals for the District of Columbia Circuit affirmed the district court's ruling that the FEC's decision to dismiss an administrative complaint filed by Alwin Hopfmann was not contrary to law (Civil Action No. 82-03667). The appeals court also affirmed the district court's decision to dismiss the constitutional questions involving FEC actions and the election law. The court found that Mr. Hopfmann's "appeal was so meritless as to be frivolous" and, as a penalty, ordered him to pay the Commission's attorneys' fees. Moreover, the appeals court found that Mr. Hopfmann's appeal "should properly be dismissed in view of appellant's failure to comply with orders of this court." The appeals court's ruling followed a July 1984 ruling in which the court had denied expedited consideration of Mr. Hopfmann's appeal.

In affirming the district court's decision that the FEC's dismissal of Mr. Hopfmann's complaint was "'sufficiently reasonable' to merit [the] Court's deference," the appeals court noted that the agency "has consistently held that in order for a convention to constitute an 'election' under 2 U.S.C. §431(1)(B), the convention must actually nominate a candidate, rather than...narrow the field of candidates on the primary ballot....Inasmuch as write-in candidates were permitted by state law in the 1982 Massachusetts primary, Senator Kennedy did not secure the Democratic nomination until he won the party's primary. In consequence, the Massachusetts Democratic Convention of 1982 was not an 'election' under the FECA." Consequently, there were no separate reporting requirements for the convention.

As to Mr. Hopfmann's constitutional claims, the court found that "it is not within the FEC's province to determine whether Massachusetts' primary system satisfies the federal Constitution. That is a claim that Mr. Hopfman must make, if at all, to the courts; we take note in this respect of an adverse decision in litigation brought by Mr. Hopfmann claiming that the Massachusetts system was unconstitutional. Hopfmann v. Connolly, 746 F.2d 97 (1st Cir. 1984)."

The court described one of Mr. Hopfmann's court papers as "filled with invective and scurrilous comments...." Since he had failed to comply with two court orders, the court found dismissal of his appeal justifiable under court rules. The court stated that "having considered the merits of the case, we conclude that the appeal is in any event utterly without merit....We firmly admonish counsel for appellant to refrain in any future filings in this court from engaging in unprofessional,
inappropriate comments and outrageous name-calling." On July 19, 1985, the court denied Mr. Hopfmann's petition for rehearing en banc.

Petition for Certiorari

On December 26, 1985, the Supreme Court denied a petition for a writ of certiorari filed by Mr. Hopfmann. He had sought Supreme Court review of the appeals court ruling.

On May 5, 1986, the Supreme Court denied Mr. Hopfmann's petition for rehearing.

Source: FEC Record, May 1984, p. 8; September 1984, p. 11; July 1985, p. 7; September 1985, p. 3; February 1986, p. 3; and June 1986,
p. 9.

Hopfmann v. FEC, No. 84-5201 (D.C. Cir. May 13, 1985) (unpublished opinion), aff'd, 762 F.2d 138 (D.C. Cir.), cert. denied, 474 U.S. 1038 (1985).

1 The Act defines an election to include "a convention or caucus of a political party which has authority to nominate a candidate." 2 U.S.C. §431(1)(B).