IAM v. FEC
On December 16, 1980, the U.S. District Court for the District of Columbia dismissed International Association of Machinists and Aerospace Workers (IAM) v. FEC (Civil Action No. 80-0354). The court's decision upheld an FEC determination dismissing an administrative complaint that IAM and six other parties had filed with the Commission. The court granted, however, plaintiffs' motion to have the court certify constitutional challenges raised in the suit to an en banc appeals court, pursuant to 2 U.S.C. §437h. Accordingly, on June 3, 1981, the district court certified to the U.S. Court of Appeals for the District of Columbia Circuit three questions as to the constitutionality of 2 U.S.C. §441b(b)(3). The FEC filed a motion to dismiss the claims on July 15, 1981.
Plaintiffs' Claim
In their suit, plaintiffs claimed that the FEC had acted contrary to law in dismissing an administrative complaint filed by plaintiffs on October 9, 1979. The complaint alleged that eleven corporations had systematically violated 2 U.S.C. §441b(b)(3) by soliciting contributions to their separate segregated funds (political action committees or PACs) from "unprotected" administrative personnel under "inherently coercive" conditions. Citing the Supreme Court's ruling in Civil Service Commission v. National Association of Letter Carriers (413 U.S. 548 (1973)), plaintiffs claimed that the corporate solicitation methods were coercive because immediate supervisors approached their employees for contributions at work. Plaintiffs cited a number of examples as evidence of coercion, including the fact that employees had made larger contributions, on the average, than members of the general public with comparable incomes and the fact that some of the PAC contributions were made to out-of-state candidates and to candidates whose party affiliation differed from that of the employees.
District Court Ruling: Merits of the Case
In reviewing plaintiffs' claims, the district court recognized the deference to be accorded the FEC's determination and concluded that the Commission's dismissal of IAM's complaint was not arbitrary, capricious or contrary to law. Applying the standard for permissible corporate solicitations set forth in Pipefitters Local Union No. 562 v. U.S. (407 U.S. 385 (1972)), and later codified in §441b(b)(3) of the Act, the court stated: "[N]owhere does FECA [Federal Election Campaign Act] forbid corporate supervisors from asking their subordinates for contributions as long as they comply with the provisions of Section 441b(b)(3)."1 The court concluded that "[p]laintiffs' presentation to the FEC, although detailed, is composed entirely of circumstantial evidence. Neither the administrative complaint nor the complaint in this Court, offers direct evidence of wrongdoing."
District Court Ruling: Constitutional Issues
Plaintiffs had also asked the district court to certify to the appeals court three constitutional challenges to Section 441b(b)(3) if the court upheld the FEC's determination to dismiss plaintiffs' administrative complaint. Plaintiffs claimed that the corporate solicitations described in its complaint violated:
The FEC moved that these challenges be dismissed on grounds that they failed to state a claim on which relief could be granted and plaintiffs lacked standing to raise the issues. The court found, however, that "...plaintiffs' claims are neither frivolous nor so insubstantial as to warrant dismissal for failure to state a claim." As to plaintiffs' standing to raise the constitutional issues, the court held that "...the plaintiffs have made a threshold showing of a 'distinct and palpable injury' of a level sufficient to satisfy Article III [of the Constitution]."
Appeals Court Ruling
On April 6, 1982, the U.S. Court of Appeals for the District of Columbia Circuit, sitting en banc, issued an opinion that rejected the three constitutional challenges to Section 441b(b)(3) of the election law. (Civil Action No. 81-1664) In separate decisions, the appeals court affirmed the district court's decision that the Commission's dismissal of the complaint was not contrary to law, and also ruled on each of plaintiffs' constitutional questions, as summarized below:
Is the asserted imbalance between corporations and labor unions under the 1976 FECA amendments [codified at 2 U.S.C. §441b(b)(3)] unconstitutional?
Plaintiffs claimed that, in permitting corporate PACs to solicit their executive and administrative personnel in addition to their shareholders, the 1976 amendments had violated Fifth Amendment rights of equal protection and First Amendment rights of free speech by upsetting the long-standing balance in political power that had existed between corporations and labor organizations prior to enactment of the 1976 amendments. They argued that Congress had not intended to tip this balance in favor of corporations; rather, Congress had not foreseen the effect of the amendments, namely, the proliferation of corporate PACs and their disproportionate influence on federal elections. Since there are many more corporations than labor organizations, plaintiffs claimed the imbalance is institutional and, consequently, cannot be corrected by labor organizations.
The appeals court found, however, that Congress had attempted to treat labor organizations and corporations in a comparable manner in both the 1971 and 1976 amendments, while taking into account the structural differences between them. By restricting corporate PAC solicitations to administrative and executive employees and shareholders in the 1976 amendments, Congress had restored a similar, if not identical, balance to that which had existed prior to the FEC's 1975 ruling in the SUNPAC advisory opinion (AO 1975-23). (The SUNPAC opinion permitted corporations to solicit not only their shareholders but all their employees as well.)
By including executive and administrative personnel in a corporation's solicitable personnel, Congress had taken into account the structural differences between labor organizations and corporations, while applying the standard for solicitable personnel even handedly. The appeals court noted that, in this regard, "it is...more likely that a corporation's career employees will identify with the corporate direction, purpose, and welfare than will a shareholder who does not own a controlling interest."
In affirming Congress' decision to shape the solicitation procedures of the election law to reflect differences in organizational structure, the appeals court cited recent rulings of the U.S. Court of Appeals for the Seventh Circuit that upheld the constitutionality of other solicitation arrangements. For example, in Bread PAC v. FEC, the court rejected a Fifth Amendment challenge to restrictions placed on a trade association seeking to solicit the solicitable personnel of its member corporations. Similarly, in California Medical Association v. FEC, the court rejected an equal protection challenge to a provision which prohibits unincorporated associations, unlike corporations and labor organizations, from spending unlimited funds to establish and administer a political action committee.
Furthermore, the appeals court cautioned that "the Constitution, as historically and currently interpreted, does not afford any guarantee against one person's or group's ability to fund more speech than can another. In fact, far from imposing on Congress an obligation to equalize the voices of corporate and labor PACs, the Constitution, as the Supreme Court now reads it, may forbid Congress to act in such a manner. See Buckley v. Valeo, 424 U.S. at 48-49."
Does the statute impair career employees' First Amendment right of political abstention by permitting the corporate PAC solicitation as detailed in the record?
Plaintiffs alleged that, even though Section 441b(b)(3) sanctions corporate PAC solicitations of executive and administrative personnel, these solicitations are inherently coercive, in violation of First Amendment free speech rights. As evidence of this coercion, plaintiffs pointed out that executive and administrative employees "give to the corporate political fund at rates and in amounts far beyond those which obtain when donors are not solicited to give to the institution that employs them." The appeals court said, however, "One could argue with equal force that career employees contribute to their corporate PACs out of a desire to further what they perceive to be their own best interests or the best interests of the corporation, and because they have the wherewithal to do so, not because they are coerced or intimidated."
Deferring to Congress' judgment, the appeals court further held that the 1976 amendments extended the same protections against coercion to corporate executive and administrative personnel that had been provided to union members and shareholders in the 1971 amendments. It had no "evident reason to believe that protections... relied upon to secure union members against union pressure would be less adequate in securing career employees against corporate pressure." The appeals court reasoned that a more important consideration was the risk of coercion that corporate solicitations posed for a corporation's hourly wage earners. "The statutory language plainly demonstrates that concern: solicitation of hourly employees is severely restricted; solicitation of career employees is generally permitted, but is brigaded with protections designed to prevent overreaching."
Nor did the court find any merit to plaintiffs' contention that the 1976 amendments constituted a form of government-compelled activism on the part of PAC contributors.
Does the use of general corporate assets to establish and support a corporate PAC violate the First Amendment rights of dissenting shareholders?
Plaintiffs claimed that the FECA provision permitting corporations to use treasury funds to establish and administer a PAC abridge the free speech rights of shareholders who objected to such use of corporate assets. The court found that the chief case cited by plaintiffs in support of their claim, Abood v. Detroit Board of Education, was not applicable. The appeals court pointed out that "in Abood the [Supreme] Court had held that the First Amendment prohibited a public employee union from requiring any employee 'to contribute to the support of an ideological cause he may oppose as a condition of holding a job." A corporate shareholder, the court reasoned, is under no such compulsion. Citing the Supreme Court's decision in First National Bank of Boston v. Bellotti, the appeals court said "[T]he shareholder invests in a corporation of his own volition and is free to withdraw his investment at any time and for any reason." 435 U.S. at 794 n. 34.
Supreme Court Ruling
On November 8, 1982, the Supreme Court issued a summary judgment affirming the April 6 decision by the U.S. Court of Appeals for the District of Columbia Circuit. (U.S. Supreme Court No. 82-284)
Source: FEC Record, September 1981, p. 3; September 1982, p. 4; and January 1983, p. 6.
International Association of Machinists v. FEC, 678 F.2d 1092 (D.C. Cir. 1982) (en banc), aff'd mem., 459 U.S. 983 (1982).
1 Under this provision of the election law, solicitations are considered noncoercive if they inform employees of: (1) the political purposes for which contributions will be used and (2) of their right to refuse to contribute without reprisal.
JONES v. FEC
On April 30, 1997, the U.S. District Court for the Eastern District of Michigan granted the FEC's motion to dismiss this case. The suit, seeking $249 trillion in damages, was filed in February 1997, by Alfonzo Jones, a Detroit resident who said, among other things, that the FEC acted contrary to law in not certifying him for public financing for the 1996 presidential campaign.
The court found that Mr. Jones failed to allege any facts in his suit that indicated that the Commission had illegally failed to provide him with public funds.
Source: FEC Record, June 1997, p. 7.
JORDAN v. FEC
The U.S. District Court for the District of Columbia granted summary judgment to the FEC on May 27, 1994, upholding the agency's dismissal of an administrative complaint filed by Absalom F. Jordan, Jr., against Handgun Control, Inc.
On November 3, 1995, the U.S. Court of Appeals for the District of Columbia Circuit remanded the case to the district court. The court of appeals instructed the district court to dismiss the case for lack of jurisdiction because Mr. Jordan had failed to file suit within 60 days after the FEC dismissed his complaint.
The district court dismissed the case on January 23, 1996.
Background
In his complaint, Mr. Jordan claimed that Handgun Control, Inc. (HCI) had violated the law by soliciting contributions from individuals who did not qualify as "members" because they lacked sufficient rights to participate in the governance of HCI.
Mr. Jordan's complaint raised the same membership issue as a succession of complaints filed against HCI by the National Rifle Association (NRA) between 1983 and 1992. The first NRA complaint resulted in a conciliation agreement requiring HCI to pay a civil penalty and to amend its bylaws to establish voting rights for its members.
Three more NRA complaints challenging HCI membership were dismissed by the FEC, which had already concluded that HCI members, under the new bylaws, had sufficient governance rights through their ability to vote for an at-large board member. The FEC's dismissals of the third and fourth complaints were affirmed by the D.C. Court of Appeals.
In dismissing the Jordan complaint, the FEC stated that his claims were "substantially similar" to those in the four NRA complaints, which had already been "conclusively resolved."
Definition of Member
Until recently, FEC regulations defined member simply as a person who satisfied the requirements for membership, but FEC advisory opinions had refined the term to mean persons who had some right to participate in the organization's governance and the obligation to pay regular dues.1 This reading was based on the Supreme Court's decision in FEC v. National Right to Work Committee (NRWC), 459 U.S. 197 (1982). The agency determined that HCI member's voting rights, under the new bylaws, were sufficient to satisfy this definition when the issue arose in three more NRA complaints.
Mr. Jordan challenged that interpretation, claiming that HCI's members were not solicitable because they lacked the power to remove management. He based his argument on the NRWC holding that members should be defined "at least in part, by analogy to stockholders of a business corporation."
District Court Ruling
Finding the FEC's definition of member to be reasonable, the court pointed out that, while the NRWC Court said that there had to be "some" attachment between the organization and its membership, that Court "certainly did not require that members be provided with the opportunity to seize total control of the organization, as plaintiff argue[d]."
Furthermore, the court said the FEC's refusal even to consider Mr. Jordan's claims was neither arbitrary nor capricious but, instead, made "perfect sense," considering that the agency had already conclusively resolved the HCI membership issue. The court said that a "scrupulous adherence to precedent is hardly arbitrary."
Court of Appeals Ruling
The court of appeals noted that the FEC dismissed Mr. Jordan's complaint on July 24, 1991, and that Mr. Jordan did not file suit with the district court until September 25, 1991. Under 2 U.S.C. §437g(a)(8)(B), a petition to review an FEC decision to dismiss an administrative complaint must be filed within 60 days after the date of dismissal. The court ruled that the 60-day period began when the Commission voted to dismiss the complaint, and not on the date of the FEC's letter informing Mr. Jordan of the dismissal. When Mr. Jordan received the FEC's letter informing him of the dismissal, he had 53 days left on the 60-day limit in which to file a suit. He did not file suit with the district court until 63 days after the FEC voted to dismiss his complaint. As a result, the court of appeals ruled that the courts lacked jurisdiction to review this case. On January 23, 1996, the district court carried out the appeals court's instructions to dismiss this case.
Source: FEC Record, August 1994, p. 9; and April 1996, p. 12.
Jordan v. FEC, No. 91-2428 (NHJ) (D.D.C. Feb. 25, 1993); (D.D.C. May 27, 1994) (opinion); No. 94-5216 (D.C. Cir. Nov. 3, 1995).
1 The FEC further clarified the definition of member at revised 11CFR 114.1(e), effective November 1993.
JUDD v. FEC
Keith Judd, a Texas resident and registered Presidential candidate in 2000, asked the U.S. Court of Appeals for the District of Columbia Circuit to find that the Presidential Primary Matching Payment Account Act is unconstitutional and to award him public funding for the election equal to that awarded President Bill Clinton during his 1996 reelection effort. On April 9, 1998, the court dismissed Mr. Judd's petition for lack of prosecution.
On August 20, 1998, the appeals court denied Mr. Judd's motion to have the court reexamine its decision to dismiss this case for lack of prosecution.
On November 4, 1998, the court denied Mr. Judd's request for a rehearing and a rehearing en banc of the court's decision to dismiss the case.
On February 22, 1999, the court denied a motion by Mr. Judd to vacate its ruling in the case.
Source: FEC Record, June 1998, p. 5; October 1998, p. 2; January 1999, p. 3; and April 1999, p. 5.
JUDICIAL WATCH, INC. v. FEC
On July 2, 1998, the U.S. District Court for the District of Columbia denied the FEC's motion to dismiss this lawsuit challenging the agency's dismissal of an administrative complaint filed by Judicial Watch, Inc. The court remanded the case to the FEC and ordered it to decide whether to pursue the administrative complaint within 120 days.
On May 7, 1999, the U.S. Court of Appeals for the District of Columbia Circuit reversed the lower court ruling and dismissed this case.
Background
In February 1998, Judicial Watch filed this lawsuit after the Commission voted to take no action on its administrative complaint, which alleged that the White House, Democratic National Committee (DNC), Department of Commerce and Clinton administration had sold seats on foreign trade missions for large campaign contributions to the DNC and the Clinton/Gore 1996 reelection campaign. Judicial Watch contended that the contributions violated 18 U.S.C. §600, a criminal statute which makes it unlawful to promise any special benefit or treatment as a reward for political activities in support of or opposition to a particular candidate, election or political event.
District Court Decision
The FEC moved to dismiss this case for lack of standing. In order to establish standing, a plaintiff such as Judicial Watch must show that it has suffered an injury in fact, that there is a causal connection between the injury and the conduct being complained about and that it is likely that the injury will be redressed by a favorable decision. The FEC claimed that Judicial Watch failed to allege an injury flowing from the Federal Election Campaign Act (the Act).
The court disagreed. It pointed out that, in FEC v. Akins, the U.S. Supreme Court concluded that, for purposes of standing, an injury was created when a plaintiff failed to obtain information that had to be publicly disclosed. Thus, affected voters who do not have access to such information have standing to sue. The district court held that, in this case, information that trade mission seats may have been exchanged for contributions to the DNC and Clinton/Gore committee was "important and useful to voters."
The FEC also argued that Judicial Watch did not have standing because its administrative complaint failed to identify violations of the Act over which the Commission had jurisdiction. The complaint only made allegations of bribery, not of reporting violations. The court stated, however, that no plaintiff is required to supply the FEC with a "legal theory" under the Act in order for the agency to pursue an administrative complaint. "At minimum, the FEC, as an agency acting in the public interest, should not interpret complaints narrowly," the court stated.
The court went on to note that the matters outlined in the administrative complaint could raise reporting issues. The court said a contribution in exchange for participation in trade missions could be classified as an offset to a contribution, a refund of a contribution or a disbursement. The DNC and Clinton/Gore committee might have had an obligation to report such transactions.
The court further noted that the FEC failed to notify Judicial Watch that its administrative complaint was technically deficient, as is required by 11 CFR 111.5. The court also stated that, "If the allegations were not within its prosecutorial jurisdiction, the FEC should have referred the matter to the Department of Justice or the appropriate agency."
The court also dismissed the FEC's argument that a huge backlog of cases at the agency requires it to dismiss administrative complaints such as the one filed by Judicial Watch without investigating them because of a lack of financial and human resources. The court said the FEC should have raised this issue in the administrative proceedings.
Appeals Court Decision
The appeals court found that Judicial Watch lacked standing to challenge the FEC's decision to dismiss an administrative complaint it filed with the agency.
In its memorandum opinion, the appellate court concluded that Judicial Watch failed to show that it suffered an injury stemming from the FEC's dismissal of its administrative complaint. The court said it was too late for Judicial Watch now to argue that its complaint should be read to allege reporting violations, and that the FEC's dismissal deprived the group and its members of information to which they are entitled. In Common Cause v. FEC, the appeals court had found that, if an organization has simply been "deprived of the knowledge as to whether a violation of the law has occurred," then its injury is no more than a general "interest in enforcement of the law" and not sufficient for standing.1
The court noted that Judicial Watch failed to make even a nominal allegation of reporting violations in its complaint. If, however, Judicial Watch has a viable claim of reporting violations, the court stated that it should file a new complaint with the FEC asserting those violations.
The appellate court also agreed with the FEC that the district court erred in granting summary judgment for Judicial Watch on the merits before the FEC had answered the complaint.
Source: FEC Record, April 1998, p. 4; September 1998, p. 3; and July 1999, p. 8.
Judicial Watch, Inc. v. FEC, 10 F. Supp.2d 39 (D.D.C. July 6, 1998).
1 Common Cause v. FEC, 108 F.3d 413 (D.C. Cir. 1997)
KAY v. FEC
On April 21, 1981, the U.S. District Court for the District of Columbia granted the FEC's motion for summary judgment in the suit Richard B. Kay v. FEC (Civil Action No. 80-3081) and denied plaintiff's cross-motion for summary judgment.
Background
Plaintiff filed this suit on December 2, 1980, seeking a declaratory judgment that the FEC had acted contrary to law in dismissing an administrative complaint that plaintiff had filed against the Plain Dealer Publishing Company of Cleveland and several of its officers and employees. Plaintiff, who had been a Presidential primary candidate in Ohio, alleged that a full-page chart published in The Plain Dealer before the 1980 Ohio Presidential primary was a political advertisement by the publishing company. The chart carried photographs of three major party Presidential candidates and summaries of their positions on nine campaign issues ranging from inflation to federal funds for abortions. Plaintiff alleged the ad constituted either a corporate expenditure or a corporate in-kind contribution both prohibited under the Act.
After investigating the complaint pursuant to the enforcement procedures of Section 437g(a) of the Act, the Commission, acting on a recommendation from the General Counsel to dismiss the complaint, found no reason to believe the Act had been violated. In his report to the Commission, the General Counsel observed that the "contents of this chart merely constitute an effort on the part of The Plain Dealer to report in an orderly manner for the benefit of its readers the issue stands and activities of the major candidates in the Ohio primary. In essence, The Plain Dealer was printing a news story in chart form." The General Counsel noted that the Act and Commission regulations specifically exempt such news stories from the definitions of "contribution" and "expenditure," provided the news corporation is not controlled by any political party, political committee or candidate. The General Counsel noted that there was no indication of such ownership or control of The Plain Dealer.
District Court Ruling
Holding that no material facts were in dispute and that applicable law was clear, the court found that: "The Commission's action, based on the General Counsel's recommendation that the publication be treated as a newspaper story, was plainly consistent with the law. The Plain Dealer was doing the main business of a newspaper: in its own way, it informed the public about issues which the public would decide."
As to plaintiff's claim that he did not receive reasonably equal news coverage in The Plain Dealer's circulation area, the court noted that a newspaper had no duty under the Act to give "equal time" to candidates. The court said, "To the extent that this 'equal time' concern was an element of plaintiff's complaint, the Commission quite properly ignored it." Plaintiff appealed the decision.
Appeals Court Ruling
On December 1, 1981, the U.S. Court of Appeals for the District of Columbia Circuit issued a judgment in Richard B. Kay v. FEC (Civil Action No. 80-3081), which upheld the district court's decision that the FEC's dismissal had not been contrary to law.
Source: FEC Record, June 1981, p. 6; and February 1982, p. 9.
Kay v. FEC, No. 80-3081 (D.D.C. April 20, 1981) (unpublished opinion), aff'd mem., 672 F.2d 894 (D.C. Cir. 1981).
KENNEDY FOR PRESIDENT v. FEC (81-2552)
On December 21, 1981, the U.S. District Court for the District of Columbia issued a consent order resolving claims brought by the Kennedy campaign against the Commission in Kennedy for President Committee v. FEC (Civil Action No. 81-2552). The court dismissed with prejudice all other pending judicial claims between the Kennedy Committee and the Federal Election Commission.
Plaintiff's Claims
In the suit, filed on October 21, 1981, the Kennedy Committee claimed that the FEC had violated the Government in the Sunshine Act (5 U.S.C. §552b) by:
Resolution of Claims
In the consent order, the FEC agreed to make available to plaintiff and the public portions of the transcript involving the FEC's consideration of the final Kennedy audit report at Commission meetings held on August 25 and 26 and September 15 and 16, 1981. The Commission also agreed to make available documents pertaining to those meetings. Both parties agreed, however, that the Commission could delete from these transcripts discussions related solely to FEC personnel matters, enforcement actions, litigation strategy and matters exempted from public disclosure by the Freedom of Information Act (FOIA). Similarly, the parties agreed that portions of the documents pertaining to those meetings could be withheld pursuant to various exemptions under the Freedom of Information Act.
The consent order expressly conditioned release of the transcripts on the parties' compliance with the following requirements:
Source: FEC Record, February 1982, p. 8.
KENNEDY FOR PRESIDENT v. FEC (83-1521)
On May 15, 1984, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion in Kennedy for President Committee v. FEC (Civil Action No. 83-1521), which reversed a repayment determination that the FEC had made with regard to the Kennedy for President Committee. The committee was established by Senator Edward M. Kennedy (D-Mass.) as his principal campaign committee for the 1980 Presidential primaries. On the same day, for reasons set forth in the Kennedy opinion, the court also vacated an FEC repayment determination with regard to the Reagan for President Committee, President Reagan's principal campaign committee for his 1980 Presidential primary campaign. The Reagan campaign had challenged an $87,708 repayment determination made by the FEC in June 1983. (Reagan for President Committee v. FEC; Civil Action No. 83-1666.)1 The appeals court then remanded both cases to the Commission for further proceedings consistent with its opinion in the Kennedy case.
Background to the Court's Ruling on the Kennedy Case
On April 14, 1983, based on findings of statutorily mandated audits of the Kennedy campaign, the Commission determined that the campaign had exceeded the 1980 state-by-state spending limits for publicly funded candidates by $14,889 in New Hampshire and by $40,611 in Iowa.2 FEC regulations require publicly funded Presidential primary candidates to repay to the U.S. Treasury nonqualified expenditures that are made with primary matching funds or private contributions.3 11 CFR 9038.2(b)(2)(i). Consequently, the Commission determined that the Kennedy campaign had to repay the full amount of nonqualified campaign expenditures incurred by the campaign (i.e., $55,500).
In its December 21, 1983, petition to have the court review the FEC's repayment determination, the Kennedy campaign had not challenged the FEC's determination with regard to the amount of nonqualified expenditures the campaign had incurred. Rather, the Kennedy campaign contended that the repayment formula spelled out in the FEC's regulations exceeded the Commission's statutory authority because it required the repayment of the entire amount of nonqualified expenditures. The Kennedy campaign argued that the election law required publicly funded campaigns to repay only the portion of their nonqualified expenditures made with primary matching funds. As an alternative to the FEC's repayment formula, the Kennedy campaign proposed that its repayment be calculated by "multiplying the total amount of [non]qualified expenditures by the proportion of matching funds to total campaign funds."
Appeals Court Ruling
The appeals court noted that Section 9038(b)(2) of the Presidential Primary Matching Payment Account Act did not provide a specific formula for determining repayments resulting from nonqualified campaign expenditures. Nevertheless, the court held that "the statute gives rise to a repayment obligation only when the FEC determines that federal matching funds were used for nonqualified purposes." The court reasoned that "if Congress had intended the total amount of every unqualified expenditure to be repaid, the statute would not have expressly limited the repayment obligation to unqualified expenditures paid out of matching fund sources." The court maintained, however, that the FEC should not be bound by the Kennedy campaign's proposed repayment formula but should have discretion "in formulating a proper method for calculating the amount of unqualified campaign expenditures attributable to matching fund sources."
The court noted that, in promulgating the repayment regulation that implements the statutory provision, the FEC had reasoned that "if a candidate spends private campaign contributions...on nonqualified campaign expenditures, those private funds would obviously not be available to defray the candidate's qualified campaign expenditures. The net result would be that the candidate would subsequently require more public funding to meet his or her qualified expenses. In essence, this additional public funding would restore private campaign funds diverted by the candidate to nonqualified campaign purposes." The court maintained, however, that the "Commission's regulation ...indulges the unreasonable presumption that all unqualified expenditures are paid out of federal matching funds." The court concluded that "the true 'net result' of the depletion of the overall campaign fund will be either an increase in the campaign's final deficit or a decrease in the campaign's final surplus. In the case of a deficit, the total federal funds would have been spent regardless of the unqualified expenditures. In the case of a surplus, the government is entitled to recover only its pro rata share of the final campaign surplus."
Source: FEC Record, July 1984, p. 6.
Kennedy For President Committee v. FEC, 734 F.2d 1558 (D.C. Cir. 1984).
1 Reagan For President Committee v. FEC, 734 F.2d 1569 (D.C. Cir. 1984).
2 Presidential primary campaigns that receive public funds must agree to limit spending to both a national limit and a separate limit for each state.
3 Nonqualified campaign expenditures include noncampaign-related expenses, certain expenditures made before or after candidacy and expenditures exceeding the limits for publicly funded Presidential primary campaigns.
KHACHATURIAN v. FEC
On May 17, 1993, the U.S. District Court for the Eastern District of Louisiana dismissed this case, ruling that Jon Khachaturian failed to raise a substantial constitutional challenge to the $1,000 contribution limit as applied to his independent candidacy. The district court had previously certified the constitutional questions to the U.S. Court of Appeals for the Fifth Circuit. The appeals court, however, concluded that the certification was premature and remanded the case to the district court with instructions to determine whether certification was merited. The district court found that it was not.
Mr. Khachaturian appealed that decision but, on October 13, 1993, the U.S. Court of Appeals for the Fifth Circuit dismissed his appeal at his own request.
Background
Mr. Khachaturian was an independent candidate for the U.S. Senate in Louisiana's 1992 open primary. His suit, filed shortly before the election, contended that the $1,000 limit on contributions from individuals (2 U.S.C. §441a(a)(1)(A)) discriminated against his candidacy because it prevented him from raising sufficient funds to compete effectively against the incumbent major-party candidate.1 He said that he had contribution pledges of $200,000 but could only accept $75,000 under the limit.
The district court certified his constitutional questions to the court of appeals in accordance with 2 U.S.C. §437h.2
(Mr. Khachaturian also asked the court to prohibit the FEC from enforcing the $1,000 limit against him and to order Louisiana's Secretary of State to place his name on the general election ballot even if he lost the primary. The court denied the motion.)
Remand by Court of Appeals
The court of appeals remanded the case to the lower court with instructions to determine whether Mr. Khachaturian's challenge was frivolous in light of Buckley v. Valeo. In that decision, the Supreme Court upheld the $1,000 contribution limit as constitutional on its face and rejected claims that it discriminated against independent and minor-party candidates. In order for Mr. Khachaturian to present a plausible challenge to the $1,000 limit as applied to his candidacy, the court of appeals said that he would at least have to provide factual support for his argument that "the $1,000 limit had a serious adverse effect on the initiation and scope of his candidacy."
Dismissal by District Court
The district court said that Mr. Khachaturian "fail[ed] to come even close" to alleging facts suggesting that amounts in excess of the $1,000 limit would have affected the outcome of the election. The court concluded: "The law is clear...that the $1,000 campaign contribution limit applies to minor party candidates....As a matter of law, the plaintiff fails to raise a colorable constitutional claim." The court therefore granted the FEC's motion to dismiss. (Civil Action No. 92-3232, Section F.)
Source: FEC Record, August 1993, p. 5; and December 1993, p. 3.
Khachaturian v. FEC, 980 F.2d 330 (5th Cir. 1992) (en banc); No. 92-3232 (E.D. La. May 10, 1993), on remand.
1 Mr. Khachaturian had made similar claims in an advisory opinion request in which he asked for an exemption from the $1,000 limit on constitutional grounds. In its response, AO 1992-35, the Commission said that it did not have jurisdiction to rule on the constitutionality of the limit but noted that the Supreme Court had upheld the limit in Buckley v. Valeo.
2 Section 437h states: "The district court immediately shall certify all questions of constitutionality of this [Federal Election Campaign] Act to the United States court of appeals for the circuit involved, which shall hear the matter sitting en banc."
KOCZAK v. FEC
On February 14, 1984, the U.S. Court of Appeals for the District of Columbia Circuit denied Mr. Stephen A. Koczak's petition for a writ of mandamus compelling certain FEC actions. (Stephen A. Koczak v. FEC, No. 84-5086, February 9, 1984.) In his suit, Mr. Koczak had asked the appeals court to order the FEC to:
Source: FEC Record, April 1984, p. 10.
1 Presidential primary candidates receiving public funds must agree to limit spending to a prescribed amount in each state. 11 CFR 110.8(a)(2).
KRIPKE v. FEC
On October 26, 1990, the U.S. District Court for the District of Columbia granted the FEC's motion for summary judgment, thereby dismissing Dr. Daniel F. Kripke's suit against the agency. Dr. Kripke alleged that the FEC had acted contrary to law by failing to act on his administrative complaint within 120 days. See 2 U.S.C. §437g(a)(8)(A). The court stated that "[t]here is no statutory requirement that the Commission act within 120 days." The court went on to say that, in ruling on an action such as Dr. Kripke's, the court "must presume valid action, act deferentially and withhold its hand unless it appears that the Commission has been arbitrary and capricious. [citations deleted.]"
In this case, the court found that there had been no unreasonable delay and that the agency had not acted arbitrarily or capriciously in its handling of the matter. Accordingly, the court granted summary judgment to the FEC.
Source: FEC Record, December 1990, p. 4.
Kripke v. FEC, No. 90-1597 (D.D.C. Oct. 26, 1990) (memorandum).
LaROUCHE v. FEC (92-1100)
On July 2, 1993, the Court of Appeals for the District of Columbia Circuit1 directed the Commission to certify matching funds to Lyndon LaRouche, Jr., for his 1992 Presidential primary campaign. The court held that the Commission did not have statutory authority to deny matching funds based on its conviction that Mr. LaRouche would fail to keep his promise to comply with the law.
The Supreme Court, without comment, refused to review the appeals court decision.
In February 1992, the agency determined that Mr. LaRouche's written agreement and certification to comply with the lawa requirement for receiving matching fundswere not made in good faith, based on his long record of noncompliance with the federal campaign law and his criminal indictments and convictions for fraud. The Commission therefore found he was not eligible for matching funds. Mr. LaRouche immediately challenged the decision in a suit filed with the D.C. Circuit.2
The court reversed the FEC's decision, holding that the statute did not grant the agency the authority to evaluate the reliability of a candidate agreement.
Mr. LaRouche had argued that the law's enforcement provisions, which grant the FEC the authority to take action with respect to past or ongoing violations of the law, implied a Congressional intent to withhold FEC authority to assess a candidate's future likelihood of violating the law. The court agreed, observing that the voters should be the ones to judge a candidate's integrity.
The court further noted that Congress intended public funds to be dispensed on a nondiscriminatory basis: "Any inquiry into the bona fides of candidates' promises would take the Commission into highly subjective territory that would imperil the assurance of even-handed treatment."
The FEC had argued that its position was supported by the court's decision in Committee to Elect Lyndon LaRouche v. Federal Election Commission (CTEL),3 where the court allowed the agency to consult reports filed by the candidate's past campaign when deciding whether to accept his current threshold submission for matching funds. The court, however, said that CTEL stressed the need to apply objective standards when evaluating a matching fund submission, quite different from the use of subjective criteria "to evaluate a candidate's character."
The court also rejected the FEC's claim that its position was upheld in another suit, In re, Carter-Mondale Reelection Committee, Inc.4 "We find nothing in Carter-Mondale to undermine CTEL's general view that in the absence of an explicit authorization by Congress the Commission may not deny funds on the basis of its view of a candidate's subjective intent."
The majority opinion was filed by Judge Williams; an opinion concurring in part and dissenting in part was filed by Judge Wald. She said that the Commission had exceeded its statutory authority only in its consideration of Mr. LaRouche's criminal convictions (mail fraud and conspiring to defraud the IRS), since they were not directly related to his campaign. However, she also said: "I do not believe that the statute requires that the FEC, in determining a candidate's eligibility for public monies, disregard evidence in its own files that indicates that a candidate may well intend to defraud the Commissionand the American taxpayer."
Source: FEC Record, September 1993, p. 3; and January 1994, p. 12.
LaRouche & Democrats for Economic Recovery '92 v. FEC, 996 F.2d 1263 (D.C. Cir.), cert. denied, 114 S. Ct. 550 (1993).
1 The three-judge panel consisted of Judges Wald, Buckley and Williams.
2 Commission actions under the Presidential public funding law are directly reviewable by this court. 2 U.S.C. §9041.
3 613 F.2d 834 (D.C. Cir. 1979).
4 642 F.2d 538 (D.C. Cir. 1980).
LaROUCHE v. FEC (92-1555)
On July 8, 1994, the U.S. Court of Appeals for the District of Columbia Circuit1 upheld an FEC determination ordering the 1988 LaRouche Presidential campaign to return $109,149 in federal matching funds to the U.S. Treasury.2 The court had previously denied the FEC's motion to dismiss this case. (Civil Action No. 92-1555.)
Background
On May 26, 1988, after receiving less than 10 percent of the vote in two consecutive primaries, Lyndon LaRouche became ineligible to receive matching funds to continue his campaign but was still entitled to matching funds to help defray preexisting net campaign debts of about $330,000. On that basis, the campaign continued to receive matching fund payments through October 1988. However, an FEC audit later found that, by July 22, the campaign had sufficient matching funds and private contributions received after the date of ineligibility (DOI) to satisfy the debt. The agency therefore ordered the campaign to return $109,149 in matching fund payments made after that date. This repayment determination was based on an FEC regulation, 11CFR 9034.1(b), which states that a candidate can receive post-DOI matching funds to the extent that, on the date of payment, the sum of matching funds and contributions "received on or after the date of ineligibility" [emphasis added] does not exceed remaining net debts.
The LaRouche campaign challenged the FEC regulation as unreasonable and contrary to the intent of the public funding statute to encourage participation in the political system. Specifically, the campaign argued that, under a fair reading of the statute and FEC regulations, the campaign was entitled to collect matching funds for contributions received after the DOI without having to credit the contributions against the net debts figure. Otherwise, the campaign said, the candidate would be limited in his ability to continue the campaign.
Ruling on Repayment Determination
In its July 1994 ruling, the court upheld the contested repayment determination, finding that the FEC's interpretation of its own regulation was "compelling" and its interpretation of the statute, reasonable. The statute "make[s] clear," the court said, "that Congress wished to restrict the availability of matching payments to candidates it considered viable."
The court rejected several other arguments made by the LaRouche campaign,
including the claim that the FEC's repayment determination had improperly
created a new rule to address post-DOI matching fund entitlements when the
candidate continues to campaign. The court said that
the Commission had merely concluded that "the existing rule was not
affected by Mr. LaRouche's decision, in 1988, to continue the good fight
rather than to wind up his campaign...."
Ruling on Motion to Dismiss
In an earlier ruling on April 20, 1993, the court rejected the FEC's argument that the case should be dismissed because the LaRouche campaign was late in filing its petition for review with the court.
Under the statute, petitions for review of repayment determinations must be filed "within 30 days after the agency action by the Commission for which review is sought." 26 U.S.C. §9041(a).
The FEC made its final repayment determination with respect to the 1988 LaRouche campaign on September 17, 1992, and notified the campaign in a letter dated September 22. The petitioners filed their petition with the court on October 22, 30 days after the September 22 letter date but 35 days after the September 17 determination.
The FEC argued that the statutory "agency action" language referred to the date the agency made the repayment determination. Because the petition was filed 35 days after that date, the FEC contended, it should be dismissed. The court, however, stated that "[b]oth the [Matching Payment Account] Act and the Commission's regulations lead us to conclude that the 30-day review period...runs from the notice date...." The court noted that, under 26 U.S.C. §9038(b)(1), "a candidate's repayment obligation matures only upon notice from the Commission" and that FEC regulations "repeatedly provide that a limitation period begins after the FEC gives notice of its decision...."
Holding that the 30-day period for filing a review petition began on September 22, the court found that the petition was filed on time and therefore refused to dismiss the case.
Source: FEC Record, June 1993, p. 8; and
September 1994, p. 7.
LaRouche Democratic Campaign '88 v. FEC, 990 F.2d 641 (D.C. Cir.
1993) (denying motion to dismiss); 28
F. 3d 137 (D.C. Cir. 1994) (affirming final repayment determination).
1 Petitions challenging FEC repayment determinations are filed with this court.
2 The entire repayment was $151,260; only $109,149 was contested.
LAROUCHE v. STATE BOARD OF ELECTIONS
On April 4, 1985, the U.S. Court of Appeals for the Fourth Circuit issued an opinion in LaRouche v. State Board of Elections which reversed a ruling by the U.S. District Court for the Western District of North Carolina concerning Mr. LaRouche's eligibility for the ballot. The district court had ruled that Lyndon H. LaRouche, a publicly funded Presidential primary candidate in 1984, had met the ballot access requirements for the state's 1984 Presidential primary. The appeals court found that the district court had erred in issuing a preliminary injunction to bar holding the primary election without Mr. LaRouche's name on the ballot. Finally, the appeals court noted that, although its ruling came after the 1984 Presidential primary and general elections had been held, the appeal was "not moot because it present[ed] facts which [were] 'capable of repetition, yet evading review.'" See 758 F.2d 998 (1985).
Background
To qualify for Presidential primary ballot access under North Carolina law, an individual must meet the eligibility requirements for Presidential primary matching funds spelled out in 26 U.S.C. §9033. Under this section, among other requirements, the candidate must agree to repay any funds which, based on an FEC audit of the candidate's campaign, are owed to the U.S. Treasury. 11 CFR 9033.1 and 9033.2.
On January 26, 1984, the Commission made an initial determination that Mr. LaRouche had not established matching fund eligibility for the 1984 election because he had failed to live up to this agreement to repay funds) in his 1980 campaign.1 Pursuant to the FEC's decision, the North Carolina State Board of Elections decided that Mr. LaRouche's name could not be placed on the state's 1984 Presidential primary ballot.
In response to the elections board's decision, Mr. LaRouche filed suit with the federal district court seeking an injunction to bar the primary election, unless the elections board placed his name on the ballot.
District Court Ruling
The district court found that the state's adoption of the federal matching fund eligibility requirements as part of the requirements for access to the state's Presidential primary ballot did not violate due process of law. Nevertheless, the court found that the board had erred in denying Mr. LaRouche ballot access. The court was persuaded by Mr. LaRouche's argument that the FEC's refusal to certify his eligibility for matching funds was erroneous. The court therefore issued a preliminary injunction barring the primary election. (Subsequently, the appeals court stayed the district court's injunction, and the primary election was held without Mr. LaRouche's name on the ballot.)
Appeals Court Ruling
The appeals court agreed with the district court's conclusion that the state could lawfully adopt the federal criteria. However, the appeals court found that "the record discloses that LaRouche had not complied with 26 U.S.C. §9033(a)(3), providing that the candidate agree to pay amounts owed based on FEC audits. Due to LaRouche's failure to honor his §9033(a)(3) agreement concerning the 1980 Presidential election, the FEC legitimately concluded that LaRouche's §9033(a)(3) agreement for the 1984 Presidential election was inadequate." Consequently, "since LaRouche did not fulfill all the federal criteria, the district court erred in enjoining the primary election from proceeding without LaRouche's name on the ballot."
Source: FEC Record, August 1985, p. 7.
1 On April 12, 1984, after Mr. LaRouche's 1980 campaign made the required repayments, the Commission certified that Mr. LaRouche was eligible for Presidential primary matching funds. 11 CFR Parts 9033 and 9036.
LEAGUE OF WOMEN VOTERS v. FEC
The League of Women Voters of the United States (LWVUS) filed a complaint in the U.S. District Court for the District of Columbia against the FEC asking that the court declare null and void that portion of the Commission's Policy Statement on Presidential Debates issued August 30, 1976, which prohibited contributions from corporations and labor organizations to the League of Women Voters Education Fund (the Fund) for purposes of defraying expenses related to the 1976 televised Presidential debates between Jimmy Carter and Gerald Ford, sponsored by the Fund. Such corporate and union contributions, the FEC had said in its statement, would be "in connection with" a federal election and would therefore be prohibited under the Act. The Policy Statement had expressed the Commission's view, however, that the Fund could accept funds from political action committees established by corporations or labor organizations to pay for the debates.
The Commission argued that the "court has no jurisdiction over this action because the Commission's policy statement is not a final agency action." The policy statement "expresses its view of what interpretation of the law it would seek to enforce..." and "...represents an attempt by the Commission to give informal advice in an unchartered area of the law."
The court denied the Commission's motion to dismiss, after which the Commission filed its answer to the original complaint.
Source: FEC Annual Report 1977, p. 20.
LYTLE v. FEC
On December 13, 1994, the U.S. District Court for the Middle District of Tennessee dismissed this case without prejudice due to plaintiff's failure to attend the December 9 initial case management conference. (Civil Action No. 3-94-0946.)
Terry L. Lytle, an independent U.S. Senate candidate, had asked the court to find it unconstitutional for U.S. Senate candidates in Tennessee to accept contributions from out-of-state sources.
The plaintiff argued that:
The plaintiff also had asked the court to remove the defendant candidates from the Senate race or postpone the Senate election and order them to refund all out-of-state contributions.
Source: FEC Record, January 1995, p. 10; and February 1995, p. 7.
Lytle v. FEC, No. 3-94-0946 (M.D. Tenn. Oct. 25, 1994).
MAINE RIGHT TO LIFE COMMITTEE v. FEC
On February 15, 1996, the U.S. District Court for the District of Maine ruled that the FEC's regulation at 11 CFR 100.22(b) exceeded the FEC's statutory authority because it broadened the definition of express advocacy beyond the Supreme Court's interpretation. Buckley v. Valeo and Massachusetts Citizens for Life v. FEC. This court case marked the first judicial review of the FEC's definition of express advocacy.
On October 18, 1996, the U.S. Court of Appeals for the First Circuit upheld the district court decision. The appeals court said it made its ruling "for substantially the reasons set forth in the district court opinion." The appeals court also cited FEC v. Christian Action Network, where a district court, in a decision summarily affirmed by the U.S. Court of Appeals for the Fourth Circuit, ruled that CAN's television and newspaper ads purchased as independent expenditures with corporate funds were not prohibited by 2 U.S.C. §441b because they contained no express advocacy.
On October 6, 1997, the Supreme Court denied the Solicitor General's request for it to hear this case.
Background
The Maine Right to Life Committee (MRLC) is a nonprofit membership corporation established for the purpose of advocating pro-life stances. MRLC uses its funds to create and distribute a newsletter that includes discussions of federal candidates' stances on pro-life issues.
Legal Analysis
The Federal Election Campaign Act (the Act) contains a broad prohibition against using corporate and labor organization money in connection with a federal election. 2 U.S.C. §441b.
The Supreme Court, citing First Amendment concerns, explicitly limited the scope of §441b in its Buckley and MCFL decisions. The Court held that the ban on corporate and labor organization money could only be constitutionally applied in instances where the money is used to expressly advocate the election or defeat of a clearly identified candidate for federal office. The Buckley decision listed examples of specific phrases that the Court said constituted express advocacy. The FEC incorporated this list in its definition of express advocacy at 11 CFR 100.22(a).
However, subpart (b) of 11 CFR 100.22 is based, inter alia, on the decision of the U.S. Court of Appeals for the Ninth Circuit in FEC v. Furgatch. The Furgatch case involved a communication that criticized President Carter and included the phrase: "Don't let him do it." The court held that this communication contained express advocacy and supported this conclusion by noting that the timing of the message coincided with the eve of the 1980 Presidential general election. The Court of Appeals reasoned that language may be said to expressly advocate a candidate's election or defeat if, when taken in context and with limited reference to external events, it can have no other reasonable interpretation.
District Court Decision
The court held that the Supreme Court's MCFL decision and a decision of the First Circuit in Faucher v. FEC supported using Buckley's list of phrases as a bright-line test to detect express advocacy. The rigid approach of a bright-line test, noted the court, avoids the chilling of free speech that occurs when the communicator is uncertain about whether or not his or her message contains express advocacy. Further, the idea that a message's content might become express advocacy as an election nears adds to the chilling effect of 11 CFR 100.22(b) on free speech.
The court recognized the difficulty the FEC faces in crafting a regulation that effectively defines express advocacy, but noted that the Buckley, Faucher and MCFL decisions required it to safeguard First Amendment interests over the interest of keeping corporate and labor organization money out of the electoral process. Based on these precedents, therefore, the court ruled that 11 CFR 100.22(b) was invalid because it defined express advocacy in broader terms than the Buckley, MCFL and Faucher decisions.
The court dismissed MRLC's other claims for injunctive and declaratory relief.
Appeals Court Decision
The U.S. Court of Appeals for the First Circuit upheld the lower court ruling that part of the FEC's regulation defining express advocacy (11 CFR 100.22(b)) was invalid.
Supreme Court Action
On October 6, 1997, the Supreme Court denied the Solicitor General's request for it to hear this case.
Source: FEC Record, April 1996, p. 9; December 1996, p. 1; and November 1997, p. 2.
Maine Right to Life Committee, Inc. v. FEC, 914 F. Supp. 8 (D.Me. 1996), aff'd, 98 F.3d 1 (1st Cir. 1996), cert. denied, 118 S. Ct. 52 (1997).
MARTIN TRACTOR CO. v. FEC
This suit, filed on July 7, 1978, challenged the constitutionality of
Section 441b of the Act, which limits solicitations by corporations and
their separate segregated funds (PACs) of voluntary contributions to
the PACs.
Plaintiffs' Arguments
Three corporations and their affiliated PACs, three executives and one hourly employee of one of the corporations were the plaintiffs in this suit. They sought injunctive relief and a declaratory judgment that 441b of Title 2 is an unconstitutional violation of plaintiffs' rights under the First and Fifth Amendments of the United States Constitution. Specifically, plaintiffs alleged that:
Plaintiffs argued that the harm brought about by Section 441b was actual, not hypothetical, because plaintiffs have limited their solicitation activities, fearing the imposition of the civil and criminal sanctions contained in the Act.
Commission's Arguments
The FEC petitioned the court to dismiss the suit, arguing first that the court lacked jurisdiction because:
The Commission also argued that the complaint did not present a "case or controversy" because plaintiffs can make no showing of present, direct injury resulting from Section 441b. The Commission made the additional argument that plaintiffs failed to state a complaint upon which relief could be granted. In response to the plaintiffs' contention that the term "solicitation" is impermissibly vague, the FEC argued that the term has been employed in a wide variety of federal statutes without further definition and with no apparent need to "guess at its meaning."
District Court Ruling
On November 18, the U.S. District Court for the District of Columbia granted the Commission's motion to dismiss the suit. The court said that the special provision of 2 U.S.C. §437h(a), expediting judicial review of constitutional issues, is inapplicable to the plaintiffs. The individual plaintiffs sue "not in their individual capacities but rather to vindicate the rights of the corporate entities. That derivative right was not the constitutional right of an 'individual eligible to vote' which Congress considered 'appropriate' for vindication in a declaratory judgment action under this section [437h]." Moreover, the court held that the plaintiffs presented no case or controversy sufficiently ripe for decision by a federal court. Plaintiffs filed an appeal.
Appeals Court Ruling
On May 8, 1980, the U.S. Court of Appeals for the District of Columbia Circuit affirmed the opinion of the district court (No. 78-2080).
Source: FEC Record, February 1979, p. 3.
Martin Tractor Co. v. FEC, 460 F. Supp. 1017 (D.D.C. 1978), aff'd, 627 F.2d 375 (D.C. Cir.), cert. denied, 449 U.S. 954 (1980).
McDONALD v. FEC
Background
Mr. George T. McDonald, a 1984 candidate for a House seat representing New York's 15th Congressional district, filed suit in the U.S. District Court for the District of Columbia seeking review of the FEC's dismissal of an administrative complaint (Civil Action No. 84-2710). In his complaint, filed with the FEC on May 9, 1984, Mr. McDonald claimed that Andrew Stein, a state official opposing him for the House seat, had used funds from his 1981 campaign committee for state office (Stein '81) to finance his 1984 Congressional campaign (Stein for Congress '84). Specifically, Mr. McDonald alleged that Mr. Stein had illegally used state campaign funds (consisting of corporate contributions and unrepaid loans) to make media expenditures for his Congressional candidacy.
On May 4, 1984, the respondent had submitted a request to the FEC for an investigation into specific expenditures made by the 1981 state campaign on behalf of Mr. Stein. The FEC then merged the respondent's request (i.e., a pre-MUR) with Mr. McDonald's administrative complaint.
Mr. McDonald asked the court to declare that:
District Court Ruling
On October 5, 1984, the U.S. District Court for the District of Columbia granted the FEC's motion to dismiss George T. McDonald v. FEC on grounds that Mr. McDonald had failed to pursue his legal claims and to meet the statutory deadline for filing his suit. See 2 U.S.C. §437g(a)(8)(B).
Source: FEC Record, October 1984, p. 9; and December 1984, p. 4.
McDonald v. FEC, No. 84-2710, (D.D.C. October 5, 1984).
McINTYRE v. OHIO
On April 19, 1995, the U.S. Supreme Court ruled that an Ohio regulation prohibiting anonymous political literature violated the First Amendment. This decision reversed the judgment of the Ohio Supreme Court.
[Although the FEC was not a party to this case, which involves state election law, the opinion is summarized here because the Court's holdings and rationale may have future relevance to aspects of federal election law.]
Background
In April 1988, Margaret McIntyre distributed leaflets she produced to persons attending a public meeting to discuss a referendum on a proposed school tax levy. These leaflets expressed Mrs. McIntyre's opposition to the levy. Ohio Code, §3599.09(A), requires political literature to include the name and address of the issuer. Some of Mrs. McIntyre's leaflets were anonymous, yet she continued to distribute them even after she was made aware of §3599.09(A).
The Ohio Elections Commission fined Mrs. McIntyre $100 for violating §3599.09(A). On review, the case climbed to the Ohio Supreme Court, which upheld the $100 fine.
The First Amendment and Overriding State Interests
In arriving at its decision to overturn the Ohio court's ruling, the U.S. Supreme Court first determined that anonymous political speech is protected under the First Amendment. In support of this notion, the Court stated that:
The Court recalled, for example, that the Federalist Papers, which favored the ratification of the Constitution, were published under fictitious names.
The Court's analysis focused on evaluating the state's interest in curbing anonymous speech. The Court cited First National Bank of Boston v. Bellotti as a precedent for applying the following test: A government-imposed infringement on the First Amendment is tolerable if the infringement serves an overriding public interest. Additionally, Talley v. California requires that laws must be narrowly tailored so as to impact only on speech that threatens the public interest.
In the case at hand, Ohio maintained that §3599.09(A) served the state's interest in preventing the dissemination of fraudulent and libelous statements.
The Court, however, found that Ohio has a number of other regulations aimed at preventing fraud and libel. While acknowledging that §3599.09(A) may help to enforce the other prohibitions against the dissemination of false political information, the Court did not believe this justified the broad prohibition at §3599.09(A).
Ohio also argued that the regulation, by requiring political messages to include the issuer's name and address, provided voters with information on which to evaluate the message's worth. The Court dismissed this argument by noting that in the case of a leaflet written by a private citizen who is not known by the recipient, the name has no significance.
The Court thus reasoned that Ohio's interests were not sufficient to justify an infringement upon the First Amendment.
Reconciling McIntyre with Buckley v. Valeo
In closing, the Court distinguished this case from its 1976 landmark decision in Buckley v. Valeo, which dealt with the constitutionality of the Federal Election Campaign Act. The Court explained that Buckley addressed the issue of mandatory disclosure of campaign-finance expenditures; it did not involve a prohibition of anonymous campaign literature.
The Court stated that: "Though ... mandatory reporting undeniably impedes protected First Amendment activity, the intrusion is a far cry from compelled self-identification on all election-related writings."
The Court pointed out that the law addressed in the Buckley decision is narrowly tailored to serve the public interest of campaign finance disclosure. The law regulates only candidate elections, and not referenda and other issue-based ballots. The Court stated, "In candidate elections, the government can identify a compelling state interest in avoiding the corruption that might result from campaign expenditures."
Source: FEC Record, June 1995, p. 12.
McIntyre v. Ohio, No. 93-986 (U.S. Supreme Court, Apr. 19, 1995).
MILLER v. FEC
On June 29, 1989, the U.S. District Court for the District of Columbia denied the plaintiff's motion for summary judgment in Harry P. Miller, Jr. v. FEC (Civil Action No. 89-0094).
Mr. Miller filed suit in January 1989 claiming that the Commission had
acted contrary to law in dismissing an administrative complaint that he
had filed the previous October against Bush-Quayle 88, the 1988 Republican
Presidential general election campaign committee. The complaint had alleged
that several Texas state officials had conducted fraudulent activities on
behalf of the Bush-Quayle campaign. Informed of the charges by the Commission,
the respondents denied any knowledge of the alleged violations. The Commission
subsequently voted to find "no reason to believe" that the violations
alleged by Mr. Miller had occurred and dismissed
the matter.
Finding that the Commission's dismissal of Mr. Miller's complaint was reasonable, the court said that the plaintiff failed to show that the FEC had before it any evidence of illegal activity. The court concluded, "Considering the unfocused allegations...and respondents' reply [indicating no knowledge of criminal activity], the FEC's decision to dismiss Mr. Miller's complaint was clearly not 'contrary to law.'"
On April 25, 1990, the U.S. Court of Appeals for the District of Columbia Circuit granted the FEC's motion for summary affirmance of the district court's decision in favor of the FEC. (Civil Action No. 89-5394.)
For the reasons stated in the district court opinion, the appeals court granted the FEC's motion for summary affirmance of the lower court decision, stating: "The merits of the parties' positions are so clear as to justify summary action."
Source: FEC Record, September 1989, p. 8; and October 1990, p. 7.
Miller v. FEC, No. 89-0094. (D.D.C. 1989) (memorandum opinion), aff'd mem., 923 F.2d 201 (Table) (D.C. Cir. 1990) (unpublished disposition).
MINNESOTA CITIZENS CONCERNED FOR LIFE v. FEC
On April 19, 1996, the U.S. District Court for the District of Minnesota ruled that the FEC's regulations defining and governing qualified nonprofit corporations (11CFR 114.10) were unconstitutional on First Amendment grounds.
On May 7, 1997, the U.S. Court of Appeals for the Eighth Circuit affirmed the district court's decision.
Legal Analysis
The Federal Election Campaign Act (the Act) contains a broad prohibition against using corporate and labor organization money in connection with a federal election. 2 U.S.C. §441b.
In FEC v. Massachusetts Citizens for Life (MCFL) 479 U.S. 238 (1986), the Supreme Court, citing First Amendment concerns, concluded that §441b could not constitutionally prohibit certain nonprofit corporations from making independent expenditures.1 In that case, the Supreme Court ruled that independent expenditures made by MCFL were exempt from the ban at §441b because MCFL had the following essential features:
The FEC promulgated the regulations at 11 CFR 114.10 to incorporate the MCFL decision into its regulatory framework. These regulations established a test to determine whether a corporation qualified for exemption from the Act's prohibition against corporate independent expenditures.
Minnesota Citizens Concerned for Life (MCCL), a nonprofit corporation, brought suit to challenge the constitutionality of the FEC's new regulations. MCCL alleged that it does not qualify to make independent expenditures under the FEC's regulations because:
District Court Ruling
The court noted that the U.S. Court of Appeals for the Eighth Circuit, in addressing a similar Minnesota state law, rejected the argument that MCFL had created a bright-line test for exemption from the Act's prohibition against corporate independent expenditures. Day v. Holohan (34 F.3d 1356 (8th Cir., 1994). Since the judicial district of Minnesota is in the eighth circuit, Day constituted controlling law in this district court. The court also noted the decision of the U.S. Court of Appeals for the Second Circuit in FEC v. Survival Education Fund, 65 F.3d 285 (2nd Cir., 1995).
The Day decision concluded that, by disqualifying from the independent-expenditure exemption those nonprofit, membership corporations that engaged in some business activities and/or accepted corporate donations, Minnesota's regulations were too restrictive and not narrowly tailored to serve a compelling governmental interest. Relying on Day, the district court ruled that these aspects of the FEC's regulations at 11CFR 114.10(c) were unconstitutional.
The Day decision, however, did not address other aspects of the FEC's regulations, which plaintiffs had challenged in this suit, including: the imposition of reporting requirements on those corporations that make independent expenditures under the MCFL exemption (11CFR 114.10(e)); and the requirement that exempt corporations disclose to their contributors that their donations may be used for political purposes (11CFR 114.10(f)).
Instead of deciding whether these parts of the regulation were independently unconstitutional, the district court found that the unconstitutional provision was not severable under the severability doctrine: A regulation that contains unconstitutional provisions must be stricken in its entirety unless that which remains after the unconstitutional provisions are excised is fully operative as law and the body enacting the regulation would have enacted the constitutional provisions even in the absence of those which are unconstitutional. Because the court found that the FEC's definition of a qualified nonprofit corporation at 114.10(c) was flawed and that that provision was not severable from the rest of 114.10, the court concluded that the entire provision at 114.10 was void.2
Appeals Court Ruling
The appeals court found that, contrary to the FEC's arguments, MCCL had standing to bring this case to court. It also found that MCCL's challenge to the regulations was "ripe" for judicial resolution, and, on the authority of the Day decision, the court then affirmed the district court's declaratory judgment voiding the Commission's regulations.
Article III standing requires that a party show actual injury, a casual relationship between that injury and the challenged conduct and the likelihood that a favorable decision by the court will redress the alleged injury.3 The FEC argued that MCCL lacked standing because voiding the statute would not redress its alleged injury. The FEC maintained that, even without the regulation, MCCL would have to prove that it was entitled to make independent expenditures under MCFL and Day. The appeals court found that MCCL had either to make significant changes to its operations or risk sanctions for violating FEC regulations and concluded that MCCL did not need to show that a favorable decision would relieve "every" injury. According to the appellate court, the district court redressed an injury for MCCL by declaring that it could continue to make independent expenditures if it met the exemptions defined in Day.
While the courts have been wary of pre-enforcement challengessuch as MCCL's challenge to the Commission's regulations before the organization has actually been alleged to have violated themthis stance is not always applicable. The Supreme Court has held that "the Administrative Procedure Act authorizes a pre-enforcement challenge to agency regulations if the issue is 'fit' for prompt judicial decision and if failure to review would cause significant hardship to the parties." In this case, the appeals court said that the legal issuewhether the Eighth Circuit's interpretation of MCFL in Day invalidates portions of the Commission's regulationswas "fit for prompt determination." Moreover, the court said, court action in this case would also relieve MCCL of a hardship because its representatives would now know that MCCL's methods of operation would be tested under Day, rather than under the Commission's regulations.
On the merits, the appellate court agreed with the district court that Day required voiding 11 CFR 114.10 (c)(2) and (c)(4). Only the court of appeals sitting en banc, the court noted, could overturn Day's interpretation of the Supreme Court's MCFL decision. Furthermore, because the district court found the remainder of 11 CFR 114.10 not to be severable from the invalid portionsa ruling the Commission had not appealed11 CFR 114.10 as a whole was properly declared void.
Source: FEC Record, June 1996, p. 3; and July 1997, p. 2.
Minnesota Citizens Concerned for Life: FEC v., 936 F. Supp. 633 (D. Minn. 1996), aff'd, 113 F.3d 129 (8th Cir. 1997).
1 An independent expenditure is an expenditure made without any coordination with a candidate's campaign for a communication which expressly advocates the election or defeat of a clearly identified candidate for federal office.
2 Although the court voided 11CFR 114.10 in its entirety, the court noted that the FEC had the authority to impose certification and reporting requirements and to require qualified nonprofits to inform potential donors that their donations could be used for political purposes. These provisions, had they not been inextricably linked to the unconstitutional provisions, would have been entitled to deference.
3 Lujan v. Defenders of Wildlife, 504-U.S. 555, 560-61 (1992).
MOTT v. FEC
District Court Ruling
On June 30, 1980, the U.S. District Court for the District of Columbia dismissed a suit in which Stewart R. Mott, Rhonda K. Stahlman and the National Conservative Political Action Committee (NCPAC) had sought declaratory and injunctive relief against the FEC. In its motion to dismiss the suit (Mott v. FEC, Civil Action No. 79-3375), the FEC argued that some of the claims presented in the suit were not ripe for consideration by the court while others failed to state a claim on which relief could be granted. In its role as amicus curiae, Common Cause had also filed a brief arguing dismissal of the suit.
Plaintiffs had challenged the constitutionality of provisions of the Act, FEC regulations, advisory opinions and other written interpretations which regulate independent political activity by prescribing limits on contributions from individuals, groups and political committees to other individuals, groups and political committees which make independent expenditures. Plaintiffs claimed that these provisions define the terms "contribution" and "expenditure" in overly broad and vague language.
Mr. Mott proposed that, together with other "like-minded individuals," he would purchase advertising space in The New York Times to express his views on political issues and expressly advocate the election or defeat of several clearly identified federal candidates. Specifically, he claimed that the First Amendment rights of those purchasing the ad would be restricted by provisions of the Act illegally requiring that:
The district court determined that the constitutional issues raised by Mr. Mott were not ripe for judicial decision in the absence of a more fully developed factual record. The claim that Mr. Mott wished to "join with others" in purchasing the advertising was broad enough to encompass a single purchase of advertising space as well as a series of advertisements and solicitations by a full-fledged political committee. Further, the court noted that Mr. Mott should have requested an advisory opinion from the FEC on the application of the Act to this proposed activity before seeking a review by the court. Both NCPAC and Ms. Stahlman challenged the constitutionality of limits on contributions by individuals to political committees which make independent expenditures. Ms. Stahlman's and NCPAC's claims raised three constitutional issues:
The district court pointed out that, in the Buckley v. Valeo decision, the Supreme Court had upheld the constitutionality of the contribution limits. (Buckley v. Valeo, 424 U.S. 1 at 38 (1976).) The district court said that, although the Supreme Court had not specifically addressed the $5,000 limit on individual contributions to political committees, its "reasoning...clearly indicated that the restriction is constitutional." The Supreme Court had reasoned that a limit on contributions infringed far less on First Amendment rights than did a limit on expenditures, because the contribution limits involved restrictions on indirect, rather than direct, political expression. Further, whatever infringement did occur was justified by the need to curb the "actuality and appearance of corruption" flowing from large individual contributions. (Buckley v. Valeo, 424 U.S. 1 at 26 (1976).)
Appeal
In appealing the district court's decision, NCPAC and Ms. Stahlman reasserted their constitutional challenges. They also asked the appeals court to find "erroneous" the district court's refusal to certify their challenges to the appeals court.
Appeals Court Ruling
On December 8, 1981, the U.S. Court of Appeals for the District of Columbia Circuit issued a memorandum decision in National Conservative Political Action Committee (NCPAC) and Rhonda K. Stahlman v. FEC (Civil Action No. 80-1949). Citing as precedent the Supreme Court's June 1981 decision in California Medical Assoc. (CMA) v. FEC, the appeals court rejected plaintiffs' constitutional challenges and affirmed the district court's disposition of the case.
The appeals court rejected plaintiffs' assertion that NCPAC was not subject to the CMA decision because it not only made contributions but made independent expenditures as well. The court said the CMA decision did apply because NCPAC's activity was not limited to independent expenditures. Moreover, the court held that limits on NCPAC contributors did not impermissibly infringe on their free speech rights because the contributions constituted "speech by proxy" since contributors had no voice in NCPAC's decisions concerning independent expenditures. 101 S.Ct. at 2721-22.
The appeals court also followed precedent set by the CMA decision in rejecting plaintiffs' assertion that unlimited contributions earmarked for NCPAC's independent expenditures would not "risk corrupting or appearing to corrupt the political process in the manner Congress sought to prohibit." 101 S.Ct. at 2723 n. 19; 494 F. Supp. at 137.
Source: FEC Record, September 1980, p. 7; and February 1982, p. 8.
Mott v. FEC, 494 F. Supp. 131 (D.D.C. 1980), aff'd mem. sub. nom. NCPAC v. FEC, 672 F.2d 896 (D.C. Cir. 1981).
NATIONAL CHAMBER ALLIANCE FOR POLITICS v. FEC
This suit challenged the constitutionality of Section 441b of the Act, which limits solicitations by corporations (and their separate segregated funds (PACs)) of voluntary contributions to the PACs.
Plaintiff's Arguments
On July 20, 1978, the National Chamber Alliance for Politics filed suit against the Federal Election Commission challenging the constitutionality of the PAC solicitation provisions and asking for injunctive relief. The plaintiffs included the Chamber of Commerce (a nonprofit corporation), its separate segregated fund, three executives of the two organizations and one board member of the Chamber of Commerce. Plaintiffs argued that, by enumerating those whom the corporation or PAC may solicit, 441b of the Act:
The plaintiffs argued that the harm brought about by Section 441b was actual, not hypothetical, because the plaintiffs have limited their solicitation activities, fearing the imposition of the civil and criminal sanctions contained in the Act.
Commission's Arguments
The Federal Election Commission petitioned the court to dismiss the suit, arguing, first, that the court lacked jurisdiction because:
The Commission also argued that the complaint did not present a "case or controversy" because the plaintiffs can make no showing of present, direct injury resulting from Section 441b. The FEC further argued that the plaintiffs failed to state a claim upon which relief could be granted because §441b did not violate the plaintiffs' First or Fifth Amendment rights. The Commission's arguments are summarized below:
District Court Ruling
On November 22, the court dismissed the suit. The court said that the special provision of 2 U.S.C. §437h(a), expediting judicial review of constitutional issues, is inapplicable to the plaintiffs. The individual plaintiffs sue "not in their individual capacities but rather to vindicate the rights of the corporate entities. That derivative right was not the constitutional right of an 'individual eligible to vote' which Congress considered 'appropriate' for vindication in a declaratory judgment action under this section (437h)." Moreover, the court held that the plaintiffs presented no case or controversy sufficiently ripe for decision by a federal court.
Appeals Court Ruling
The plaintiffs filed an appeal. On June 10, 1980, the U.S. Court of Appeals for the District of Columbia Circuit denied the appeal, holding that the plaintiffs' claims were not ripe for judicial review.
Supreme Court Action
On November 13, 1980, the Supreme Court denied a petition for a writ of certiorari filed by the National Chamber Litigation Center (a legal arm of the Chamber of Commerce of the U.S.) in the suit, National Chamber Alliance for Politics v. FEC (Civil Action No. 78-1333).
Source: FEC Record, February 1979, p. 3; and January 1981, p. 5.
National Chamber Alliance for Politics v. FEC, 627 F.2d 375 (D.C. Cir.), cert. denied, 449 U.S. 954 (1980).
NATIONAL COMMITTEE OF THE REFORM PARTY v. FEC
On February 27, 1998, the U.S. District Court for the Northern District of California dismissed this case after agreeing with the FEC that the plaintiffs had failed to state a claim upon which relief could be granted.
On February 9, 1999, the U.S. Court of Appeals for the Ninth Circuit affirmed the district court's decision. The district court had declined to certify claims brought by the National Committee of the Reform Party (the Committee) to an en banc panel of the appeals court. The district court had determined that the Committee lacked standing in regard to some of its claims and failed to state a claim on which relief could be granted with respect to its remaining claims.
Background
In this case, the Committee, the Reform Party of California, campaign committees of former Reform Party Presidential candidate Ross Perot and an individual voter who supported Mr. Perot in the 1996 Presidential election alleged that:
In addition to these claims, the Committee contended the Republican and Democratic defendants owed it damages under California and federal laws.
Appeals Court Decision
Issue Advertisements. The appellate court found that neither California nor federal law authorized the Committee's suit for damages related to issue advertisements produced by the Republican and Democratic committees. The FEC's power to sue alleged violators of the Federal Election Campaign Act (the Act) is the "exclusive civil remedy" for enforcement of the Act. 2 U.S.C. §437d(e). (Entities may, however, seek judicial review of the agency's dismissal of an administrative complaint alleging violations of the Act.) The Committee argued unsuccessfully that the FEC's "exclusive civil remedy" did not preclude the Reform Party Committee from acting as a private party and suing for damages.
Legislative history is instructive here, the court found. Before the 1976 amendments to the Act, there was confusion over just which agency should enforce the statute. In those amendments, Congress added the word "exclusive" to prohibit enforcement suits by other agencies. There is no indication that Congress was, at the same time, approving private suits. The U.S. Supreme Court has also noted that there is no authority supporting the contention that Congress intended to have anyone other than the government enforce the Act (FEC v. National Conservative Political Action Committee, 470 U.S. 480 (1985)).
In addition, the Commission has a process in place by which entities can pursue their charges that the Act or FEC regulations have been violated.
Commission Composition. The Act states that no more than three members of the Commission may be affiliated with the same political party. 2 U.S.C. §437c(a)(1). Commission seats historically have been equally divided between Democrats and Republicans only. Appellants claimed that this provision violates the Appointments Clause and their rights to free speech and equal protection. The court said that they lacked standing to raise this claim because they did not explain how the relief they requested--the invalidation of the party affiliation provision--would make minority party representation on the Commission more likely.
Fund Act. The Committee's facial challenge to the Fund Act, based on First Amendment and equal protection arguments, is foreclosed by Buckley v. Valeo, the court found. The Supreme Court held that the Fund Act "is a congressional effort, not to abridge, restrict, or censor speech, but rather to use public money to facilitate and enlarge public discussion and participation in the electoral process." Buckley went on to say that the public funding system does not discriminate against minor parties. "[T]he inability, if any, of minor-party candidates to wage effective campaigns will derive not from lack of public funding but from their inability to raise private contributions."
The Committee also argued that, as applied, the Fund Act "invidiously" discriminates against the Reform Party. The appellate court rejected this claim, concluding that the types of complaints expressed by the Reform Party were understood and taken into account by the Supreme Court when it rejected the claims of invidious discrimination in Buckley.
Source: FEC Record, January 1998, p. 2; April 1998, p. 4; and April 1999, p. 4.
NATIONAL CONGRESSIONAL CLUB v. FEC
On February 14, 1985, the National Congressional Club (NCC), a multicandidate political committee, and Jefferson Marketing, Inc. (JMI), a North Carolina corporation that provides media services to political committees, voluntarily dismissed a suit they had filed against the FEC. Plaintiffs had filed their suit with the U.S. District Court for the District of Columbia on January 29, 1985. (Civil Action No. 85-0299.)
In their suit, NCC and JMI sought action against the FEC with regard to the agency's processing of two compliance actions (i.e., matters under review or MURs). The compliance actions were filed against NCC and JMI by Congressman Charles E. Rose (MUR 1503) and the Democratic Party of North Carolina (MUR 1792). In his complaint, filed in October 1982, Congressman Rose alleged that, among other things, JMI had provided media services to his 1982 primary election opponents at less than fair market value, resulting in a prohibited corporate contribution from JMI to the candidates.1 In the ensuing investigation, the General Counsel's office also found that a special relationship may have existed between NCC and JMI. In MUR 1792, the Democratic Party of North Carolina included, among its claims, an allegation concerning the NCC/JMI relationship.
NCC and JMI asked the court to find that the FEC's actions with regard to MURs 1503 and 1792 violated the election law, as well as the First and Fifth Amendments, and were contrary to law. Plaintiffs based these claims on the following allegations:
NCC and JMI also sought an injunction requiring the Commission to comply with provisions of the election law and the Constitution.
Source: FEC Record, March 1985, p. 3.
1 See also Rose v. FEC.
NCPAC v. FEC
On February 15, 1978, the National Conservative Political Action Committee (NCPAC) filed suit against the Federal Election Commission challenging the legality of the Commission's regulation (11 CFR 110.1(g)(1)) and the Commission's Advisory Opinion 1978-1 which provide that the contribution limitations (2 U.S.C. §441a) do not apply to pre-1975 campaign debts. In the case of AO 1978-1, the Commission allowed the Democratic National Committee to retire pre-1975 debts without regard to the contribution limitations.
On April 28, 1978, the court granted the Commission's motion to dismiss with respect to AO 1978-1 and granted summary judgment with respect to 11 CFR 110.1(g)(1). The court cited the following reasons:
Source: FEC Record, June 1978, p. 7.
National Conservative Political Action Committee v. FEC, 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9057 (D.D.C. 1978), aff'd, 626 F.2d 953 (D.C. Cir. 1980).
NRA v. FEC (84-1878 and 86-2285)
On July 31, 1984, the U.S. District Court for the District of Columbia granted the FEC's motion to dismiss as moot a suit filed by the National Rifle Association (NRA) on June 19, 1984 (Civil Action No. 84-1878). In the suit, NRA had asked the court to declare that the FEC's failure to act within 120 days on an administrative complaint NRA had filed on December 1, 1983, was arbitrary, capricious, an abuse of power and contrary to law. (See 2 U.S.C. §437g(a)(8)(A).) The FEC had petitioned the court to dismiss the suit as moot because, on July 31, 1984, the Commission had entered into a conciliation agreement with the respondent, Handgun Control, Inc. (HCI), thereby resolving the claims in NRA's administrative complaint.
On October 19, 1987, the district court dismissed a second suit in which NRA challenged the FEC's dismissal of a subsequent administrative complaint alleging further violations of the election law by HCI (Civil Action No. 86-2285).
Background
At the time of the district court's decision in the second suit, NRA had filed a total of three administrative complaints with the FEC against HCI, an incorporated membership organization that supports restrictions on gun ownership. All three of NRA's complaints challenged HCI's status as a membership organization under the election law.
The first administrative complaint resulted in a conciliation agreement between the FEC and HCI in which the latter was required to reconstitute itself as a membership organization and to pay a $15,000 civil penalty. NRA had alleged that HCI at that time a nonprofit corporation without members and its separate segregated fund, HCI-PAC, had unlawfully solicited contributions from individuals beyond their solicitable class (i.e., the executive and administrative employees and their families). NRA's first lawsuit, charging that the FEC had violated the law by failing to act within 120 days of NRA's filing of the administrative complaint, was dismissed as moot after the conciliation agreement was achieved.
In its second and third administrative complaints, NRA alleged that HCI had not complied with the conciliation agreement and had violated §441b(b)(4)(A)(i) of the election law by soliciting contributions to its separate segregated fund from individuals who were not HCI members.
In dismissing NRA's second administrative complaint, the FEC found that HCI qualified as a membership organization, even though it had improperly applied the membership requirements retroactively to past contributors. With respect to NRA's third administrative complaint, the FEC found that the allegations were virtually identical to those raised in NRA's second complaint. Consequently, the agency dismissed the third complaint.
In its second suit NRA asked the court to declare that the FEC's dismissal of its third administrative complaint was contrary to law and to issue an order directing the FEC to initiate enforcement proceedings against HCI within 30 days of the court's order.
The FEC argued that, under §437g(a)(8)(B) of the election law, a party challenging the agency's dismissal of an administrative complaint must file suit within 60 days after the date of the dismissal. NRA did not petition for review of the FEC's dismissal of its second administrative complaint within the statutory time period. Instead, NRA reasserted its previously dismissed claim in a third administrative complaint, which the FEC contended amounted to nothing more than an attempt to obtain review beyond the 60-day period.
In dismissing NRA's suit, the court concurred with the FEC: "Regardless of how one would characterize the record herein, it is apparent that the issues and facts in all three complaints are substantially similar. More importantly, however, it is clear that the plaintiff failed to appeal the defendant's decision in the second complaint within the time period allowed by law."
On October 26, 1987, NRA filed an appeal of the district court decision with the U.S. Court of Appeals for the District of Columbia Circuit.
Source: FEC Record, September 1984, p. 11; and December 1987, p. 6.
National Rifle Assn. v. FEC, No. 86-2285 (D.D.C. Oct 19, 1987) (unpublished opinion), aff'd, 854 F.2d 1330.
NRA v. FEC (87-5373)
On August 5, 1988, the U.S. Court of Appeals for the District of Columbia Circuit issued a decision in National Rifle Association of America (NRA) v. FEC (Civil Action No. 87-5373), which affirmed an October 1987 decision by the U.S. District Court for the District of Columbia. In its decision, the district court found that a petition for review of the Commission's dismissal of an administrative complaint that NRA had filed against Handgun Control, Inc. (HCI) constituted an untimely appeal of an earlier FEC dismissal of another administrative complaint also filed by NRA against HCI. See 2 U.S.C. §437g(a)(8)(B).
Background
NRA's suit challenged the FEC's dismissal of NRA's third administrative complaint against HCI. NRA's third administrative complaint had alleged violations of the election law by HCI, an incorporated membership organization that supports restrictions on gun ownership. All three of NRA's administrative complaints challenged HCI's status as a membership organization under the election law.
The first administrative complaint resulted in a conciliation agreement between the FEC and HCI. In dismissing NRA's second administrative complaint, the FEC found that HCI had qualified as a membership organization by taking the steps specified in the conciliation agreement resulting from the first complaint, even though it had improperly applied the membership requirements retroactively to past contributors. With respect to NRA's third administrative complaint, the FEC found that the allegations were virtually identical to those raised in NRA's second complaint. Consequently, the agency dismissed the third complaint.
District Court Ruling
In a brief filed with the district court, the FEC argued that, under section 437g(a)(8)(B) of the election law, a party challenging the agency's dismissal of an administrative complaint must file suit within 60 days after the date of dismissal. NRA did not petition for review of the FEC's dismissal of its second administrative complaint within the statutory time period. Instead, NRA reasserted its previously dismissed claim in a third administrative complaint which, the FEC contended, amounted to nothing more than an attempt to obtain review beyond the 60-day period.
In dismissing NRA's suit, the court concurred with the FEC's argument. On October 26, 1987, NRA filed an appeal of the district court's decision with the U.S. Court of Appeals for the D.C. Circuit.
Appeals Court Ruling
In affirming the district court's dismissal of NRA's suit, the appeals court found that "the second and third NRA complaints [were] substantially similar by virtue of the fact that the legal question posed by both was the same: whether an organization that does not provide for an annual meeting at which members may participate in the conduct of corporate business may qualify as a membership organization under section 441b(b)(4)(C).... Having raised that issue in the second complaint and [having] failed to appeal the Commission's order, the NRA cannot obtain judicial review of the issue by the expedient of bringing it (albeit in a more concrete context) before the FEC once again."
The appeals court concurred with NRA's argument that, because it had dismissed the merits of NRA's argument in rejecting its third administrative complaint, the FEC had effectively reopened the issue and had rendered a decision that was, in principle, subject to court review. Nevertheless, the appeals court noted that NRA had failed to make this argument with the district court when the FEC moved to dismiss NRA's suit on grounds that the court lacked subject matter jurisdiction over it. The appeals court concluded that, "having failed to raise the reopening argument as the basis for jurisdiction in the District Court, the NRA is not at liberty to raise it for the first time on appeal."
Source: FEC Record, October 1988, p. 9.
National Rifle Association v. FEC, No. 86-2285 (D.D.C. Oct. 19, 1987) (unpublished opinion), aff'd, 854 F.2d 1330 (D.C. Cir. 1988).
NRA v. FEC (89-3011)
On February 27, 1992, the U.S. District Court for the District of Columbia rejected NRA's challenge to the FEC's dismissal of an administrative complaint. The court ruled that the statutory time bar removed its jurisdiction to review the FEC's decision, since the same issues were considered and dismissed in a previous complaint and NRA failed to challenge that decision within the 60 days allowed by law.
On February 25, 1993, the U.S. Court of Appeals for the District of Columbia Circuit, in a per curiam judgment, affirmed the district court's ruling (No. 92-5078).
NRA had filed several administrative complaints against Handgun Control, Inc. (HCI), an incorporated membership organization. The first complaint challenged HCI's status as a membership organization, alleging that it illegally solicited nonmembers for contributions to its separate segregated fund. This first complaint resulted in a conciliation agreement in which HCI paid a civil penalty and amended its bylaws to qualify as a membership organization with solicitable members.
NRA's second complaint, MUR 1891, alleged that HCI's membership still did not have sufficient rights to qualify as members. The Commission dismissed the complaint, concluding that HCI's amended bylaws satisfactorily established the rights of members by allowing them to participate in annual meetings and to elect a board director. NRA did not seek judicial review of the Commission's dismissal of MUR 1891.
The Commission also dismissed NRA's third complaint against HCI, MUR 2115, because the allegations were "virtually identical" to those raised in the second complaint. This time, NRA sought judicial review of the dismissal. Ruling on this suit, the district court held that NRA's petition constituted an untimely challenge to the FEC's dismissal of MUR 1891, since the issues in both MURs were substantially similar. A court of appeals affirmed that decision. National Rifle Association of America v. FEC, 854 F.2d 1330 (D.C. Cir. 1988).
NRA's most recent administrative complaint, the subject of the present suit, again challenged the status of HCI members. The FEC dismissed this fourth complaint, MUR 2836, because the issues had already been resolved in MUR 1891.
In this court case, NRA argued that the two MURs raised different issues, MUR 1891 dealing with member participation, and MUR 2836 focusing on member control. The court, however, found that "[d]espite the change in language, there remains no material variance between NRA's allegations in MUR 1891 and MUR 2836." The court therefore ruled that, because NRA did not appeal the FEC's decision in MUR 1891 within the 60 days allowed by law, it was barred from doing so in the present case.
The court also rejected NRA's argument that the FEC's dismissal of MUR 2836 qualified for judicial review because the FEC had considered the substantive merits of the complaint. The court found that the FEC did not consider the merits but simply stated that the issues had been resolved in MUR 1891.
The court ruled that it lacked jurisdiction by virtue of the 60-day time bar and accordingly granted the FEC's motion to dismiss the suit.
In affirming the lower court's decision, the appeals court found that the district court had "correctly concluded that appellant's fourth administrative complaint raised issues 'substantially similar' to those resolved in a previous complaint, and that appellant's petition for judicial review was therefore untimely."
Source: FEC Record, April 1992, p. 8; and April 1993, p. 10.
NRCC v. FEC (96-2295)
On November 18, 1996, the U.S. District Court for the District of Columbia issued an order instructing the FEC to supply the National Republican Congressional Committee (NRCC) with regular updates of its progress on the committee's administrative complaint against the actions of labor organizations during the 1996 election cycle. The order, which had been submitted by the parties involved in the suit, also dismissed this case without prejudice.
The NRCC had asked the court to force the FEC to take action, before the election, on three administrative complaints that it had filed with the FEC concerning the AFL-CIO and allied labor organizations. The NRCC had alleged that the labor groups were making massive expenditures coordinated with Democratic candidates, in violation of 2 U.S.C. §441b(a).
The NRCC had filed its administrative complaints with the FEC in February, March and April 1996 and had alleged that the FEC had not acted on those complaints by October 3, 1996, when the Republican committee filed its lawsuit. The NRCC said the FEC's delay could cause it irreparable injury and asked the court to order the FEC to take action before the election.
The settlement agreement requires the FEC to provide NRCC lawyers with confidential updates on the complaint until it is resolved or there is further action by the court.
Source: FEC Record, January 1997, p. 2.
NRSC v. FEC (94-0332)
On March 14, 1995, the U.S. Court of Appeals for the District of Columbia vacated the district court's decision of May 11, 1994, and ordered the court to dismiss the complaint against the FEC as moot. The district court had dismissed the case on the grounds that it was not ripe for adjudication.
District Court Decision
On May 11, 1994, the U.S. District Court for the District of Columbia dismissed this suit in which the National Republican Senatorial Committee (NRSC) had asked the court to stop the FEC from proceeding in an internal enforcement matter opened in 1991, MUR 3204. The NRSC claimed that the FEC's vote to find "reason to believe" that the committee had violated the law and the ensuing investigation were invalid because they took place when the composition of the FEC was unconstitutional. The court ruled that the case was not ripe for adjudication since the FEC had not yet taken "'concrete' action" in MUR 3204. But the court was doubtful whether NRSC would have succeeded on the merits even if its case had been ripe for review.
NRSC had relied on the October 1993 appellate court ruling in FEC v. NRA Political Victory Fund (NRA). In that case, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the FEC lacked authority to bring action against the NRA because the composition of the agency was unconstitutional.1
The court said that NRSC's reliance on NRA was "misplaced" because, in that case, the court of appeals was confronted with an otherwise final district court judgment obtained by an unlawfully constituted Commission against a respondent. By contrast, the court pointed out, in this case, NRSC had filed suit before the FEC had taken final action. The agency had not even voted on whether to find "probable cause to believe" that NRSC had violated the law, the next step in the enforcement process. The court said that the impending vote "will either confirm and ratify what was thought sufficient to warrant an investigation" in 1991, or the FEC will terminate the matter.
Concluding that the NRSC had filed its case prematurely, the court observed that, even had the case been ripe for judicial review, NRSC would have failed to satisfy the standards for a preliminary injunction to stop the FEC from proceeding in the MUR.
Appeals Court Decision
The NRSC's suit became moot because, after the district court's decision, the FEC closed MUR 3204 without finding probable cause to believe the NRSC had violated federal election law. The court of appeals therefore ordered the district court to dismiss the case as moot.
Source: FEC Record, July 1994, p. 2; and May 1995, p. 4.
National Republican Senatorial Committee v. FEC, No. 94-0332 (TJP) (D.D.C. May 11, 1994); No. 94-5148 (D.C. Cir. Mar. 14, 1995).
1 6 F.3d 821 (D.C. Cir. 1993). The court found that the presence of the Clerk of the House and the Secretary of the Senate as nonvoting, ex officio Commission members violated the Constitution's separation of powers doctrine. After the October 1993 NRA ruling was handed down, the FEC immediately reconstituted itself by excluding the ex officio members.
NRWC v. FEC (84-2955)
On September 21, 1984, the National Right to Work Committee (NRWC) and Mr. Ralph M. Hettinga filed suit in the U.S. District Court for the District of Columbia asking the court to declare that the FEC had acted contrary to law in failing to act on an administrative complaint within 120 days (Civil Action No. 84-2955).
In their administrative complaint filed with the FEC on May 18, 1984, plaintiffs had alleged that the Mondale for President Committee (the Mondale Committee) and numerous Mondale delegate committees were affiliated committees, subject to a single, shared contribution limit, and that they had violated 2 U.S.C. §441a by accepting excessive contributions. The complaint had further alleged that several union political action committees were also affiliated with each other and had also violated Section 441a by making excessive contributions to the Mondale Committee through the delegate committees.
On October 31, 1984, the district court ruled that the Commission had not acted contrary to law in its handling of the complaint. The court rejected plaintiffs' argument that 2 U.S.C. §437g(a)(8) requires the agency to resolve a complaint within 120 days. Rather, the court held that the time period "is jurisdictional in nature, marking the time at which judicial intervention is permissible if appropriate." The court further remarked that, after the 120-day period, "a court may declare agency inaction to be contrary to law...but has discretion to conclude otherwise."
Although plaintiffs wanted the court to order the FEC to resolve the complaint before the November 6 election day, the court denied the request, finding that the law "does not provide for pre-election resolution of every complaint...implicating the campaign of a candidate for office. Especially in an election year, the FEC workload exceeds its resources, and a decision to expedite the consideration of plaintiffs' complaint would necessarily delay resolution of other pending matters. The Commission's judgment as to the priority each case deserves...should not be ignored."
Source: FEC Annual Report 1984, p. 22.
National Right to Work Committee and Hettinga v. FEC, 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9225 (D.D.C. 1984).
NRWC v. THOMSON
CHAMBERLAIN v. THOMSON
On July 21, 1977, the U.S. District Court for the District of Columbia consolidated the two above-mentioned cases. The order stated that the cases "involve common questions of law and that consolidation will reduce cost and delay." Both suits alleged that the FEC had failed to act on complaints filed with the Commission against the National Education Association.
After oral hearings in the consolidated cases, on August 31, 1977, the court denied the Commission's motion to dismiss the complaints and granted the plaintiffs summary judgment. The court also ordered the Commission to proceed to a formal resolution of the complaints within 30 days.
After considering the context of this case, the court agreed with the plaintiffs' argument that the 90-day time period established by law must serve as a time limit for the formal resolution of complaints. The Federal Election Campaign Act (2 U.S.C. §437g(a)(9)(A))1 allows an "aggrieved party" to file suit against the FEC in district court if the Commission "fails to act" on a complaint within 90 days of its filing. The court stated that otherwise "the complaint process would be subverted through indefinite delays," and plaintiffs will be left "without any way of knowing whether any action at all has been taken on their complaints."
The court also stated that the delay by the Commission was unnecessary since the Commission's regulations specifically prohibit the acts cited in the complaints.
The Commission had thirty days in which to bring about a formal resolution of the complaints: dismissal, entry into a conciliation agreement or institution of a formal enforcement action.
Source: FEC Record, June 1977, p. 3; and October 1977, p. 3.
National Right to Work Committee v. Vernon W. Thomson; Paul E. Chamberlain v. Vernon W. Thomson, 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9042 (D.D.C. 1977).
1 The 1979 Amendments to the Federal Election Campaign Act extended the time limit from 90 days to 120 days. See 2 U.S.C. §437g(a)(8)(A).
OHIO DEMOCRATIC PARTY v. FEC (98-0991)
RNC v. FEC (98-1207 and 98-5263)
On June 25, 1998, the U.S. District Court for the District of Columbia denied motions by the Ohio Democratic Party (ODP) and the Republican National Committee (RNC) for a preliminary injunction to prevent the FEC from enforcing its allocation regulation found at 11 CFR 106.5 and interpreted in AO 1995-25. The regulation and advisory opinion require the plaintiffs to pay a portion of their federal election-related advertisement costs with hard money, or funds that comply with the law's contribution limits and prohibitions. Both committees filed suits charging that application of the allocation regulation to issue advocacy advertisements was unconstitutional. The two suits were subsequently consolidated.
On November 6, 1998, the U.S. Court of Appeals for the District of Columbia Circuit affirmed the lower court ruling that denied the RNC's and the ODP's motion for a preliminary injunction.
Background
The ODP and RNC charged that the FEC's allocation regulation violates the First and Fifth Amendments to the Constitution, and that the FEC lacks the authority to promulgate rules such as this. The ODP and RNC further alleged that the allocation regulation exceeds the FEC's authority because it regulates issue advocacy communications, not merely communications that expressly advocate the election or defeat of a federal candidate. The plaintiffs told the court that they would suffer irreparable harm if the injunction was not granted.
Rules for Preliminary Injunction
District Court Decision
In denying the motion for a preliminary injunction, the court stated that the ODP and RNC were not likely to prevail on the merits of their claims and that the plaintiffs would not suffer irreparable injury if the injunction was not issued.
First Amendment Challenge. The plaintiffs argued that no compelling interest supported the FEC's allocation regulations, but the court recognized that the regulation prevents the appearance of corruption that could result if soft money was spent to influence federal elections. As the court explained: "The FEC is not seeking a spending cap on advertisements that influence federal campaigns, but rather is attempting to ensure that political parties do not facilitate any impression that wealth can buy access to our important federal decision makers."
Fifth Amendment Challenge. The ODP argued that it and other party committees are being treated differently than other types of organizations since they must fund issue advertising with a mix of hard and soft money. Organizations that are not political committees, such as corporate and labor organizations, may fund issue advertising completely with nonfederal funds. The court recognized the party committees' "unique burden," but noted that party committees also have "special benefits" under the Act. The court concluded that the FEC should be given the opportunity to develop evidence of "special corruption problems" associated with the parties' use of soft money to finance ads that influence federal elections.
Regulatory Powers. The plaintiffs also argued that the FEC lacked the authority to promulgate the allocation rules. The court, however, pointed out that Congress gave the Commission extensive rulemaking and enforcement powers. Further, the court noted that the Commission had submitted the regulation in question to Congress for review, and neither chamber had disapproved it.
The court dismissed the plaintiffs' claims that they would suffer irreparable injury if the injunction was not granted. The court stated that: "Instead, it is the public who would be harmed if the FEC was enjoined from enforcing (its allocation regulations). If the public were to conceive that each Congressperson elected in the 1998 elections were improperly influenced by large donations to their political parties which were later funneled into issue advertisements with a clear electioneering message, public confidence in our system of government is likely to be further eroded."
Appeals Court Decision
On November 6, 1998, the appeals court affirmed the lower court ruling that denied the RNC's and the ODP's motion for a preliminary injunction. In September 1998, the appellate court had denied the parties' emergency motion for an injunction pending appeal of the district court decision.
In taking up the matter on a nonemergency basis, the appellate court stated that the RNC and ODP had failed to show that they were likely to be successful on the merits of the case or that they would suffer irreparable harm if an injunction were not granted.
The court found "scant" evidence the RNC and ODP would suffer irreparable harm, citing the two parties' own affidavits filed in this case. The RNC had stated that, if forced to follow the FEC's regulation, it would have "to divert hard money from federal, candidate support." Likewise, the ODP strategized that it would be able to spend more on issue advocacy advertisements and free up federal funds to support the election of federal candidates if it did not have to follow the allocation rule.
In light of such "weak evidence," the court stated that the RNC and ODP had to show an exceptional likelihood that they would succeed in this case on its merits. This they did not do. Thus, the court denied the injunction.
Source: FEC Record, August 1998, p. 5; November 1998, p.1; and January 1999, p. 2.
1 Cityfed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 746 (D.C. Cir. 1995).
ORLOSKI v. FEC
Background
On June 11, 1983, Mr. Orloski filed a complaint with the Commission concerning a picnic sponsored by a senior citizens group to allegedly influence the election of Mr. Orloski's general election opponent, Congressman Donald L. Ritter. Mr. Orloski claimed that the picnic was a political event and thus: (1) corporate funding of the picnic constituted prohibited contributions to Mr. Ritter's reelection campaign and (2) the senior citizens group's sponsorship of the event caused it to become a political committee subject to the Act.
The Commission had dismissed a similar complaint from Mr. Orloski a year earlier. While challenging the FEC's dismissal of his first complaint in the district court (Civil Action No. 83-0026), Mr. Orloski made factual allegations that were not contained in the original complaint. Accordingly, in May 1983, the district court issued an order and stipulation which dismissed the case but which allowed Mr. Orloski to file a second complaint with the FEC. The FEC considered Mr. Orloski's second complaint and, on October 4, 1983, once again found no reason to believe that the respondents named in the complaint had violated the election law. As a result of the FEC's action, Mr. Orloski decided to file a second suit against the Commission (Civil Action No. 83-3513).
Second Suit, District Court's Ruling
On December 6, 1984, the U.S. District Court for the District of Columbia granted the FEC's motion for summary judgment in Orloski v. FEC. The court found that the Commission's decision to dismiss Mr. Orloski's second administrative complaint was not arbitrary or capricious.
The district court concluded that the FEC had not acted contrary to law in finding "no reason to believe" that the respondents named in Mr. Orloski's second administrative complaint had violated the election law. The court held that the FEC had properly concluded that the picnic sponsored by the senior citizens was not a political event and therefore not subject to the prohibitions and requirements of the election law. Specifically, the court confirmed the FEC's determination that: (1) there were no communications at the picnic that expressly advocated Congressman Ritter's election or Mr. Orloski's defeat (e.g., name tags worn by Congressman Ritter's staff); and (2) there was no evidence to indicate that contributions to Congressman Ritter's campaign were either solicited or accepted at the picnic. The court concluded, "Orloski does not offer any compelling reason to believe the FEC was arbitrary in applying the two part test discussed above. Instead, Orloski attempts to convince the Court to apply a new test of holding any event not funded from funds appropriated to a congressional office to be a political event....There is simply no support in the statute, legislative history, or judicial decisions construing the Act to support this broad test of political events."
Nor did the court find merit in Mr. Orloski's contention that the election law requires the FEC to investigate a complaint unless the complaint fails to allege violations of the election law. The court found that "rather than requiring the Commission to investigate all facially valid complaints...the Commission may consider all the information before it and exercise its own informed discretion.... Thus the task of a court reviewing a Commission determination not to investigate a facially valid complaint is to determine whether on the basis of all the information available to the Commission, the decision not to investigate was arbitrary or capricious. Here it is clear....that the Commission's decision met this standard."
On January 9, 1985, Mr. Orloski appealed the district court's ruling.
Appeals Court's Ruling
On July 11, 1986, the U.S. Court of Appeals for the District of Columbia Circuit affirmed a district court decision that the Commission's dismissal of an administrative complaint filed by Mr. Richard Orloski in June 1983 was not arbitrary or capricious. (Civil Action No. 85-5012)
To determine whether the picnic sponsored by the senior citizens group was a political event, subject to the prohibitions and requirements of the election law, the FEC had applied a two-part test, i.e., (1) whether any communications at the picnic expressly advocated Representative Ritter's election and (2) whether contributions to Representative Ritter's campaign were either solicited or accepted at the picnic.
In deferring to the FEC's use of this two-part test for determining whether such events are political, the appeals court held that:
The court then affirmed as reasonable the FEC's use of this two-part test to dismiss Mr. Orloski's administrative complaint. While noting that one part of the test (i.e, whether contributions were solicited) was not relevant to the picnic, the court held that the respondents had "strictly adhered to the FEC's narrow guidelines" for the second part of the test. None of the communications made in conjunction with the picnic expressly advocated Congressman Ritter's reelection. Accordingly, since the FEC properly determined that the picnic was not a political event, the court also confirmed the FEC's determination that corporate funding of the picnic did not constitute prohibited contributions to Mr. Ritter's reelection effort.
Finally, the court rejected Mr. Orloski's procedural challenges to the FEC's dismissal of his complaint. Specifically, Mr. Orloski claimed that, after giving the respondents an opportunity to reply to the allegation in his administrative complaint, the FEC should either have: (1) allowed Mr. Orloski to answer the respondents' replies or (2) made its "reason to believe" determination solely on the basis of Mr. Orloski's allegations.
The court rejected these procedural challenges on grounds that:
Source: FEC Record, February 1984, p. 8; February 1985, p. 5; and September 1986, p. 5.
Orloski v. FEC, No. 83-3513 (D.D.C. Dec. 6, 1984) (mem. opinion), aff'd, 795 F.2d 156 (D.C. Cir. 1986).
PEROT '96 AND NATURAL LAW PARTY v. FEC AND THE COMMISSION ON PRESIDENTIAL DEBATES
On October 4, 1996, the U.S. Court of Appeals for the District of Columbia Circuit upheld a lower court ruling that dismissed lawsuits against the FEC and the Commission on Presidential Debates (CPD). The suits had been filed by two Presidential hopefuls who, among other things, sought to participate in the Presidential debates.
The Complaints
One suit was filed by Ross Perot and Pat Choate, the Presidential and Vice Presidential candidates for the Reform Party, and Perot '96. A similar suit was filed by the Natural Law Party (NLP) and its Presidential and Vice Presidential candidates, John Hagelin and Mike Tompkins.
The two campaigns filed the suits in U.S. District Court for the District of Columbia after the CPD excluded the candidates from a list of participants for three nationally televised debates. Previously, in September, Perot '96 and the NLP had filed administrative complaints with the FEC, but, because of procedures set forth in the Federal Election Campaign Act (the Act), resolution of those complaints was not expected before the debates started in October.
Both suits contended that the CPD had violated FEC rules governing nonpartisan candidate debates at 11 CFR 113.10 and the Perot suit alleged that the CPD's acceptance of corporate donations to pay for the debates violated the Act's ban on corporate contributions at 2 U.S.C. §441b.
The Perot suit asked the court:
The NLP suit asked the court:
District Court Decision
The court combined the suits for oral argument and dismissed both cases on October 1, 1996.
The court concluded that it had no jurisdiction in the matter. First, as mandated by Congress, the FEC has exclusive jurisdiction to hear complaints alleging violation of the Act, and the plaintiffs have no private right of action against the CPD. Second, the FEC has 120 days to act on an administrative complaint before the court may become involved. 2 U.S.C. §437g.1
In addition, the court weighed the potential damage to Mr. Perot, Dr. Hagelin and their running mates from not participating in the debates and found that such damage could be partially remedied in later court proceedingsfor example, before the next Presidential election four years from nowand that the damage they incurred did not "outweigh the public interest in allowing the debates to go forward without interference."
Specifically as to Mr. Perot's arguments, the court also found no likelihood of success on the merits of the claim that the CPD had violated the candidate's Constitutional rights because he had not shown that the CPD is a state actor2 or that the FEC had delegated any of its authority to the CPD. Also, the court upheld the FEC regulations at 11 CFR 110.13(a) that allow nonprofit, nonpartisan corporations to stage debates in certain circumstances and, under 11 CFR 114.4(f), to accept contributions from corporations to put on such events without the funds being considered illegal campaign contributions or expenditures.
Appeals Court Decision
Because of expedited procedures, the appeals court heard the case two days after the district court handed down its ruling. The appeals court affirmed the lower court's decision that it lacked jurisdiction to take action on the alleged violation of the Act or to order the FEC to resolve the complaints prior to the CPD-sponsored debate on October 6. In explaining this decision, the court said, "Congress could not have spoken more plainly in limiting the jurisdiction of federal courts to adjudicate claims under the FECA." The court said, "We assume that in formulating these procedures Congress...knew full well that complaints filed shortly before elections, or debates, might not be investigated and prosecuted until after the event."
The NLP's arguments that the delay would cause "irreparable harm" to its candidates and that the impending debates constituted extraordinary circumstances, requiring a waiver of the Act's procedures, were rejected by the court. Further, the court said that if it were to enjoin the CPD from carrying off the debates or selecting participants, it might risk violating the CPD's First Amendment rights.
The court also rejected Mr. Perot's allegation that the FEC had delegated its authority to the CPD by prescribing regulations that allow organizations that are staging debates to create their own "objective criteria" to determine who may participate. See 11 CFR 110.13(c). The court said, "A regulation's use of a term that may be susceptible to differing interpretations does not automatically result in a delegation of authority to entities that it governs." The court also observed that even if the FEC were to immediately revise its debate regulations (in response to the complaint), the agency could not complete the task in time for the debates. Under the Act, new regulations do not become effective until 30 legislative days after the FEC transmits them to Congress.
With regard to Mr. Perot's challenge to the debate regulations themselves, the appeals court observed that the district court had not had the benefit of the administrative record and that the issue had not been fully briefed. Consequently, the appeals court vacated the district court's decision upholding the regulation and remanded the claim to the district court with instructions to dismiss without prejudice. (Mr. Perot would then be free to file a new suit on the same issue.) In all other respects, the appeals court affirmed the district court's order.
Source: FEC Record, November 1996, p. 1.
Perot v. Federal Election Commission, 97 F.3d 553 (D.C. Cir. 1996).
1 Section 437g(a)(8) allows a complainant to file suit against the FEC only for dismissing his complaint or for failing to act on it within 120 days after the complaint was filed.
2 Only government entities (or state actors), not private groups, are subject to the Constitutional violations alleged by Mr. Perot.
PEROT '96 v. FEC (98-1022)
On April 12, 1999, the U.S. District Court for the District of Columbia dismissed this case with prejudice at the plaintiff's request.
Perot '96, the 1996 committee of former Reform Party Presidential candidate Ross Perot, had asked the court to find that the FEC acted contrary to law in dismissing an administrative complaint that Perot '96 had filed against the Commission on Presidential Debates (CPD). The CPD had sponsored the 1996 Presidential debates to which Mr. Perot was not invited to participate.
Perot '96 had asked the court to order the FEC to take action on the complaint or to find that the agency's regulations governing nonpartisan candidate debates were unconstitutional. 11 CFR 110.13 and 114.4(f).
Perot '96 contended--as it did in previous litigation--that the FEC lacked the authority to promulgate such regulations, and that the regulations constitute an illegal exception to the statutory ban on corporate contributions and expenditures under 2 U.S.C. §441b. While the law generally prohibits corporations from making contributions or expenditures in connection with federal elections, Commission regulations make an exception for bona fide nonprofit corporations to sponsor public debates among candidates, provided they follow rules for conducting such debates. 11 CFR 110.13 and 114.4(f). Perot '96 stated that, if the court finds that these regulations are unconstitutional, it should then declare that all expenditures made or contributions received by the CPD are unlawful under the Federal Election Campaign Act (the Act).
In September 1996, Perot '96 filed an administrative complaint alleging that the CPD had violated Commission regulations in the formulation of its debate participant selection criteria. Specifically, Perot '96 charged that the CPD had used subjective criteria to select debate participants, contrary to the Commission's regulations that state that objective criteria must be used in the selection process. It stated that such criteria as polling results and the opinions of journalists were too subjective. Perot '96 also charged that the Democratic and Republican national committees had colluded with the CPD, ensuring that their nominees would be debate participants and violating the debate regulations' proscription against CPD's selecting debate participants solely by their party affiliations.
In February 1998, the Commission voted to reject the FEC General Counsel's recommendation that the CPD had violated Commission regulations on debates and that, as a result, the CPD had made prohibited corporate contributions to the Clinton/Gore and Dole/Kemp committees, that those committees had accepted prohibited contributions, and that the CPD was a political committee that had failed to register or report.
Prior to the Commission's vote, in October 1997, Perot '96 had filed another lawsuit, charging the FEC with delaying its investigation of the administrative complaint (Perot '96 v. FEC, 97-2554). After the FEC dismissed the administrative complaint in February, both Perot '96 and the Commission agreed to the dismissal of that case.
Source: FEC Record, June 1998, p. 3; and June 1999, p. 1.
READER'S DIGEST ASSOCIATION v. FEC
On March 19, 1981, the U.S. District Court for the Southern District of New York denied a preliminary injunction sought by the Reader's Digest Association, Inc. (RDA) to bar an FEC investigation of RDA. The FEC had initiated the investigation as the result of a complaint brought against plaintiff in August 1980. The complaint alleged that RDA had violated 2 U.S.C. §441b(a) by making an "illegal corporate expenditure to negatively influence" the 1980 Presidential elections. On November 11, 1980, the Commission found "reason to believe" that RDA may have violated 441b(a) by distributing a video tape to major media outlets that provided a computer reenactment of Senator Edward Kennedy's automobile accident at Chappaquiddick. RDA had produced the tape in connection with the publication of an article on the accident, which appeared in Reader's Digest in February 1980. The court noted that the FEC's finding did not mention expenditures for researching and publishing the article itself.
The FEC sent the publishing company a letter requesting answers to 15
questions concerning the content of the video tapes, how RDA had obtained
the tapes and what use RDA had made of them. The FEC did not order a reply
to its questions; nor did it issue a
subpoena.
RDA's Claims
In its suit asking the court to bar the FEC investigation, RDA contended that responding to the FEC's investigation would have a "chilling effect" on its First Amendment right to comment freely on newsworthy events. Plaintiff asserted that publishers would be more reluctant to take on controversial political stories if they resulted in costly, time-consuming FEC investigations. Moreover, plaintiff claimed that expenditures for the tapes were news story expenditures explicitly exempted from the definition of "contribution" or "expenditure" by 2 U.S.C. §431(9)(B)(i). As such, the tapes constituted a type of press activity beyond the scope of FEC regulation.
FEC's Argument
The FEC, on the other hand, contended that its investigation was still in the preliminary stage, a fact that precluded any detrimental effect on RDA's news operations. Moreover, the FEC pointed out that since the Act's enforcement procedures provided RDA with an opportunity to respond to FEC findings at each stage of the investigation, the issues raised by plaintiff were not ripe for court action. The FEC further contended that the investigation was lawful and should not be barred.
District Court Ruling
The district court said that, "There should be no question that the FEC is authorized by statute to pursue its investigation at least for the limited purpose of determining whether the press exemption is applicable." Specifically, the court noted that the FEC's investigation must first determine "whether the press entity is owned by a political party or candidate and whether the press entity [was] acting as a press entity in making the distribution complained of ...or whether it was acting in a manner unrelated to its publishing function."
The court noted that the FEC had limited the scope of its investigation to distribution of the video tapes, suggesting to the court the FEC's recognition that the research and publication of the article were on their face exempt functions. The court therefore concluded that there was "no basis to grant the injunction sought by RDA" as long as the FEC investigation asked "the limited question of whether RDA was acting in its magazine publisher capacity in distributing the tape, so as to determine whether the press exemption is applicable, and so long as the investigation does not address itself to issues beyond this proper subject."
Pending a determination of whether RDA's distribution of the tapes is covered by the news story exemption, the court believed that certain types of questions would be beyond the permissible scope of an FEC investigation as, for example, inquiries into the information sources for the tape or what uses others made of the tape. The court did, however, approve the Commission's questions concerning distribution of the tape and its request for a copy of the tape.
The court noted that RDA could reapply for an injunction if the FEC pursued its investigation beyond the permissible scope outlined in its opinion.
Final Action by FEC and Court
In the ensuing investigation, the Commission did not uncover any evidence to suggest that the distribution was outside the scope of RDA's functions as a publisher. In August 1981, therefore, the Commission found no probable cause to believe RDA had violated 2 U.S.C. §441b.
On October 30, 1981, the U.S. District Court for the Southern District of New York issued a stipulation and order dismissing Reader's Digest Assoc., Inc. v. FEC (Civil Action No. 81 Civ. 596 (PNL)).
Source: FEC Record, May 1981, p. 5; and February 1982, p. 9.
Reader's Digest Association, Inc. v. FEC, 509 F. Supp. 1210 (S.D.N.Y. 1981).
REAGAN-BUSH COMMITTEE v. FEC
On December 10, 1981, the U.S. Court of Appeals for the District of Columbia Circuit denied an injunction barring the FEC from releasing an interim audit report of the Reagan-Bush Committee's (the Committee's) publicly funded general election campaign. The Committee had sought the injunction pending its appeal of an earlier decision by the district court, which had also denied its motion for an injunction (Reagan-Bush Committee v. FEC; Civil Action No. 81-1893). The appeals court found no merit in the Committee's argument that release of the interim audit report would cause the Committee "irreparable harm," especially "in the absence of clear Congressional intent that interim audit reports are not to be made public." Moreover, the court held that appellant's motion was "particularly inappropriate in the light of the well established policy that courts should not interfere in an interim agency action when Congress has enacted special statutory procedures for review of the final result."
Background
In filing its suit with the district court on August 10, 1981, the Committee had asked the court to issue an order:
District Court Ruling
In granting the FEC's motion for summary judgment in the suit, the district court ruled that the interim audit report was not a final FEC determination on repayments and that the "FEC audit process leading to repayment determinations is replete with procedural protections" that would allow the Committee to dispute any FEC audit findings before the Commission made a final repayment determination. Moreover, the court pointed out that repayment determinations and the procedure for enforcing violations of the election law are treated as two different functions under the statutory scheme and by the FEC in practice. The court concluded, therefore, that the Committee's "fears of disclosure of information relating to alleged violations are groundless.. .. "
Plaintiff further claimed that public disclosure of the interim audit report was barred by 2 U.S.C. §437g(a)(12). The court found, however, that this provision applied only to enforcement proceedings initiated under the Act (i.e., investigations into alleged violations of the Act); separate provisions spelled out procedures for conducting audits and making repayment determinations with regard to publicly funded Presidential candidates. (See 26 U.S.C. §9007(a) and (b).)
Refuting plaintiff's claim that the Presidential audit information could be disclosed only to Congress, the district court affirmed the FEC's argument that such reports must be made public by law. 26 U.S.C. §9007 and 9009(a). "The public has a right to know, and promptly, how its monies are spent by Presidential campaign committees." Moreover, the court affirmed the FEC's position that the audit report was subject to disclosure under the FOIA.
The district court also dismissed without prejudice plaintiff's petition for a court order requiring the FEC to disclose certain information the Committee had requested under the FOIA. The court found that the Committee had "never specified to the court which documents should be disclosed" and had "not challenged the FEC's assertion" that the FEC had substantially complied with the Committee's requests for information available under the FOIA.
The Commission released the final audit report for the Reagan-Bush campaign on December 11, 1981.
Source: FEC Record, February 1982, p. 7.
Reagan-Bush Committee v. FEC, 525 F. Supp. 1330 (D.D.C. 1981).
REILLY v. FEC
On October 18, 1996, the U.S. District Court for the Northern District of California, Oakland Division, dismissed this case.
Clinton Reilly, doing business as California Democratic Voter Checklist, asked the court to stop the FEC's investigation of him because he believed the Commission had no jurisdiction over his for-profit operation.
Mr. Reilly's slate mail business distributes lists of federal, state and local candidates and advocates their election or defeat. Mr. Reilly sold and donated space to candidates and initiative committees who wished to appear on a slate card that he distributed to voters. He said Checklist was not a political committee under the Federal Election Campaign Act (the Act).
As an alternative, Mr. Reilly asked the court to find that his business had no reporting obligations under the Act other than reporting free or reduced-cost space on the voting slate as independent expenditures.
In a related case, FEC v. California Democratic Voter Checklist, the court resolved many of the same issues raised in Reilly in the Commission's favor. Accordingly, both Mr. Reilly and the FEC agreed to the dismissal of this case.
Source: FEC Record, January 1997, p. 4.
REPUBLICAN PARTY OF KENTUCKY v. FEC
On October 26, 1992, the U.S. District Court for the District of Columbia dismissed this suit without prejudice, as stipulated by both parties. (Civil Action No. 91-1064 (SSH).) The Republican Party of Kentucky had filed suit alleging that the FEC had failed to act on the administrative complaint the Party had filed in October 1990. The complaint alleged that the Democratic Party of Kentucky had exceeded the limits on contributions and party expenditures.
In stipulating to the dismissal of the suit, both parties agreed to the following terms:
Source: FEC Record, December 1992, p. 7.
RIGHT TO LIFE OF DUTCHESS COUNTY, INC. v. FEC
On June 1, 1998, the U.S. District Court for the Southern District of New York determined that the Commission's regulation at 11 CFR 100.22(b), which defines "express advocacy," violates the First Amendment and enjoined the FEC from enforcing it. The court found that the regulation is "unconstitutionally overbroad" and beyond the scope of the Commission's statute limiting corporate contributions.
On July 20, 1998, the court granted the FEC's motion to clarify that its June ruling enjoined the FEC only from enforcing 11 CFR 100.22(b) against Right to Life of Dutchess County, Inc.
Background
Right to Life of Dutchess County, Inc., (RLDC) is a not-for-profit, membership corporation that advocates pro-life positions. RLDC said it does not intervene in political campaigns on behalf of or in opposition to any candidate for public office; nor does it support or oppose federal candidates. However, the group intended, especially in the lead-up to the federal primary and general elections, to produce and distribute communications to the general publicusing newsletters, voter guides, fliers and other methodsthat would comment favorably or unfavorably on the positions, qualifications and voting records (if applicable) of candidates running in 1998 primary and general elections. The court said there was little dispute that these publications were timed to influence voters when they went to the polls. RLDC contended that its proposed communications are permissible under the definition of "express advocacy" set forth in Buckley v. Valeo and Massachusetts Citizens for Life v. FEC (MCFL), but would violate 11 CFR 100.22(b).1
In MCFL, the Supreme Court held that the Federal Election Campaign Act's ban on corporate independent expenditures only applies when the money is used to "expressly advocate" the election or defeat of a clearly identified candidate for federal office. The Buckley decision lists examples of phrases that constitute express advocacy: "vote for," "elect," "support," "vote against," "defeat," "reject." These examples are codified in subsection (a) of 11 CFR 100.22. However, in subsection (b), the Commission further defines express advocacy as a communication that, when taken as a whole and with limited reference to external events (such as proximity to an election), can only be interpreted by a reasonable person as unambiguously advocating the election or defeat of a clearly identified candidate. This definition tracks the language of the U.S. Court of Appeals for the Ninth Circuit in FEC v. Furgatch.2
RLDC stated that its proposed communications would not contain any of the phrases listed in Buckley and that it intended to pay for them with corporate funds. The group contended that the threat of FEC enforcement action against it for exercising what it considers its constitutional rights has chilled the First Amendment guarantee of free expression.
District Court Decision
As a preliminary step, the court found that RLDC had standing to litigate this case. The court said that, in cases involving possible limits on First Amendment rights, a credible threat of prosecution is sufficient injury to confer standing.
The court held that the Commission's regulation is constitutionally invalid because it "encompasses substantially more communication than is permissible" under 2 U.S.C. §441b, as narrowed by the Supreme Court in Buckley and MCFL. It stated that the Supreme Court requirement of express or explicit words of advocacy (of the election or defeat of a candidate) is necessary to avoid prohibitions on "issue advocacy," which is not regulated by the FEC and is protected by the First Amendment. The court also enjoined the FEC from enforcing part (b) of the regulation.
The court dismissed the Commission's argument that RLDC could not bring a facial challenge against 11 CFR 100.22(b) and instead had to wait until it had actually been injured by the regulation. The court stated that a facial challenge may be brought when (1) a statute or regulation is substantially overbroad and (2) there is a realistic danger that the statute or regulation will significantly chill protected speech.
The court also rejected RLDC's argument that the New York district court was bound by the decision from the First Circuit appellate court in Maine Right to Life Committee, Inc., v. FEC,3 which found 11 CFR 100.22(b) to be unconstitutional. It is a well-settled principle in federal court that a decision in one circuit is not binding on federal courts in another circuit.
Source: FEC Record, July 1998, p. 3; September 1998, p. 3.
Right to Life of Dutchess County, Inc. v. FEC, 1998 WL 283305 (S.D.N.Y. June 1, 1998).
1 Buckley v. Valeo, 424 U.S. 1 (1976), and Massachusetts Citizens for Life v. FEC, 479 U.S. 238 (1986).
2 Furgatch v. FEC, 807 F.2d 857, (9th Cir. 1987).
3 Maine Right to Life Committee, Inc., v. FEC, 98 F.3d 1 (1st Cir. 1996) (per curiam).
RNC v. DNC AND FEC
On November 1, 1996, the U.S. District Court for the District of Columbia dismissed a lawsuit brought by the Republican National Committee (RNC) against the FEC and the Democratic National Committee (DNC). The suit was triggered by the DNC's initial decision not to file a pre-general election report.
The RNC filed the suit on the same day it filed an administrative complaint with the FEC alleging violations of the election law by the DNC.
In the lawsuit, the RNC claimed that the DNC had violated the law by failing to file the pre-general election report. The DNC responded that it had not made any contributions or expenditures on behalf of federal candidates that had not already been disclosed, so that, in its view, no report was required.
In the RNC's view, a political committee must file a pre-general election report if it receives contributions or makes expenditures on behalf of federal candidates during an election cycle and not just if it receives a contribution during the reporting period. Moreover, the RNC said that the DNC had, in fact, made contributions during the time period covered by the pre-general reportOctober 1-16because it had transferred thousands of dollars to the Democratic Congressional Campaign Committee and Democratic state committees.
The RNC asked the court to:
In a ruling from the bench, the court granted the FEC's motion to dismiss the case on the grounds that the court did not have jurisdiction in the matter. The court based its decision on the recent appellate court decision in lawsuits filed against the FEC by Presidential contenders Ross Perot and John Hagelin.
The Act gives the FEC exclusive jurisdiction to hear complaints alleging violations of the laws governing elections. In 2 U.S.C. §437g(a)(8), the law allows complainants to file suit against the FEC only for dismissing their complaint or for failing to act within 120 days after the complaint is filed. The RNC filed its lawsuit in district court the same day that it filed its administrative complaint with the FEC, falling well short of the 120-day period.
The court also dismissed the DNC from the complaint, saying that a private party had no right of action against another private party for alleged violations of the Act.
Thus, the court denied the RNC's request for injunctive relief against the DNC and the FEC.
Source: FEC Record, December 1996, p. 4.
RNC v. FEC (78-2783)
On June 16, 1978, the Republican National Committee (RNC) filed a suit against the Commission challenging the constitutionality of certain provisions of the Presidential Election Campaign Fund Act which affect Presidential candidates who accept public funds for the general election. (The RNC also requested injunctive relief and the convocation of a three-judge district court to hear the case, in accordance with 26 U.S.C. §9011(6).) The provisions which the RNC challenged stipulate that, in order to receive any federal funds, Presidential candidates of a major party must agree not to make qualified campaign expenses in excess of the amount of public funds they receive. Candidates must also certify that neither they nor any of their authorized committees will accept private contributions to defray qualified campaign expenses, except to the extent necessary to make up any deficiency in public funds. The RNC challenged these provisions on the following grounds:
The FEC filed a motion to dismiss the suit, arguing that plaintiffs' constitutional objections had been rejected by the Supreme Court in Buckley v. Valeo. Secondly, the Commission argued, plaintiffs' description of how the statutory scheme of the Act would impact on the 1980 Presidential campaign is speculative and does not present a "ripe" controversy necessary to the exercise of judicial power. Further, the suit presents political questions not subject to judicial resolution.
The U.S. District Court for the Southern District of New York denied without prejudice the Commission's motion to dismiss on November 30, 1978, and granted the RNC's motion to convene a three-judge district court to hear the case. It also denied the motion of Common Cause to intervene, but permitted them to file briefs amicus curiae.
Supreme Court Ruling
On April 14, 1980, the U.S. Supreme Court unanimously affirmed decisions by a three-judge court of the U.S. District Court for the Southern District of New York and the en banc United States Court of Appeals for the Second Circuit upholding the constitutionality of the Presidential Election Campaign Fund Act challenged in Republican National Committee v. FEC, originally filed on June 16, 1978. The Court also denied a petition for certiorari seeking review of the suit's dismissal by a single district judge.
Source: FEC Record, February 1979, p. 5; and June 1980, p. 7.
Republican National Committee v. FEC, 461 F. Supp. 570 (S.D.N.Y. 1978) (motion for the convening of a three-judge court granted D.C. Cir.), 487 F. Supp. 280 (S.D.N.Y. 1979) (three-judge court), 616 F.2d 1 (2d Cir.) (en banc), aff'd mem., 445 U.S. 955 (1980).
RNC v. FEC (94-1017)
On February 20, 1996, the U.S. Court of Appeals for the District of Columbia Circuit affirmed most of the district court's decision upholding the FEC's "best efforts" regulations. 11CFR 104.7(b). The only part of the district court's decision that the court of appeals did not affirm was the FEC's requirement that specific language accompany solicitations and follow-up requests for contributor information. The court of appeals found the mandatory language prescribed in the regulation to be misleading and therefore contrary to law.
The challenge to the "best efforts" regulations was filed by the Republican National Committee (RNC), the National Republican Senatorial Committee and the National Republican Congressional Committee.
The "Best Efforts" Rules
The Federal Election Campaign Act (the Act) requires political committees to show best efforts to obtain and report the name, address, occupation and employer of any individual who makes contributions of more than $200 in a single year to the committee. 2 U.S.C. §§431(13), 432(i) and 434(b)(3)(A).
In 1994, due to low rates of disclosure of contributor information, the FEC implemented a regulation that defined "best efforts" to obtain contributor information. 11CFR 104.7(b). This regulation required committees to place the following statement conspicuously on solicitation materials: "Federal law requires political committees to report the name, mailing address, occupation and name of employer for each individual whose contributions aggregate in excess of $200 in a calendar year."
Additionally, this regulation required committees to send a stand-alone, follow-up request for contributor information in instances where the contributor failed to respond to the original request or provided incomplete information. The follow-up request also had to include the statement noted above. Committees were allowed to include an expression of gratitude for the contribution in this follow-up request, but no other extraneous information was permitted.
District Court Decision
Granting summary judgment to the FEC on July 22, 1994, the U.S. District Court for the District of Columbia rejected the RNC's challenge to the "best efforts" regulations.
The RNC and the other plaintiffs had argued that the "best efforts" requirements violated free speech rights by impermissibly limiting the language and subject matter of solicitations. The court said that the committees' arguments failed because the best efforts regulations are not compulsory but "merely [provide] a 'safe harbor' for any committee that is unable to obtain all of the required information."
In a related argument, the RNC contended that the requirement for a follow-up request would curtail free speech by imposing additional costs on committees, leaving less money for political speech. The RNC claimed that this infringement was not justified by a compelling government interest because compliance with the disclosure requirements had been sufficiently high under the old rules.
Noting that the RNC did not introduce any evidence on the overall level of compliance, the court said that the added costs to the plaintiff committeesestimated at $1.50 to $6.00 per letterwas a "minimal burden" given the strong government interest in disclosure of contributor information. "This information," the court said, "provides an 'essential means' to uncover violations of the FECA [Federal Election Campaign Act}, is critical to informing the electorate..., and deters corruption or even the appearance of corruption in the political system."
In another line of argument, the RNC claimed that the revised regulations contradicted legislative intent, citing a statement in a 1979 House committee report that the best efforts provision in the Act (2 U.S.C. §432(i)) did not require committees to make multiple requests for information. Describing the 1979 report as merely one Congressional committee's post-enactment opinion that provided little assistance on how to interpret the intent of Congress in 1976, the court found it insufficient to overturn the FEC's interpretation of best efforts.
Appeals Court Decision
The Legality of a Stand-Alone, Follow-Up Request
The court of appeals found the FEC's "best efforts" regulations reasonable because nothing in the statute or its legislative history precluded the FEC from requiring committees to make more than one request for contributor information. Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984).
The court also concluded that the regulations were based on a reasoned analysis. Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 57 (1983). The court noted that the FEC was concerned about the number of committees submitting reports with a low rate of complete contributor information. The FEC held a public comment period and drafted 11CFR 104.7(b) based on the public comments it received. The court concluded, "the Commission's new regulation results from exactly the kind of agency balancing of various policy considerations to which courts should generally defer."
The Trouble With the Mandatory Language
The court did not question the FEC's authority to require specific language on a follow-up request for contributor information. However, the court found that the mandatory language at 11 CFR 104.7(b) was inaccurate and misleading.
The language was inaccurate, the court said, because the Act does not require committees to report full contributor information for each donor; rather, it only requires them to undertake "best efforts" to obtain it. The court found that 11CFR 104.7(b) had the effect of forbidding a more accurate paraphrasing of the law, such as: "Federal law requires us to use our best efforts to collect the information."
Additionally, the mandatory language was misleading, the court said, because it led readers to infer that federal law required contributors to disclose this information. In fact, neither the Act nor any other federal law requires contributors to do so.
For these reasons, the court ruled that the mandatory language at 11CFR 104.7(b) was unreasonable and contrary to law.
First Amendment Issues
The RNC and the other plaintiffs posed First Amendment issues with regard to both the stand-alone, follow-up notice and the specific mandatory language at 11CFR 104.7(b). Having invalidated the specific mandatory language on statutory grounds, the court only addressed the constitutional arguments put forth by the RNC with respect to the follow-up notice.
The RNC had argued that the requirement to incur additional costs to send out additional messages was not narrowly tailored to the interests the Supreme Court had identified in Buckley v. Valeo. The court of appeals, however, found that the best efforts provision was essentially a safe harbor for political committees that was added to the Act after the Supreme Court upheld a more stringent and absolute FEC requirement in Buckley. As an optional safe harbor, it was thus less burdensome than the absolute disclosure requirement that had previously been found consistent with the First Amendment.
The court also noted that the stand-alone request was a content-neutral restriction on speech and that the RNC had other avenues, besides the follow-up notice, for communicating with donors. The court found unconvincing the RNC's argument that the follow-up requirement sapped the committee's resources. The court noted that: "Even at the [RNC's] estimate of up to $6 per follow-up request, the cost is only about three percent of a $200 contribution, an amount not likely to inhibit political committees from 'speaking.'"
Source: FEC Record, September 1994, p. 8; and April 1996, p. 10.
Republican National Committee v. FEC, No. 94-1017 (JHG) (D.D.C. July 22, 1994); No. 94-5248 (D.C. Cir. Feb. 20, 1996).
RNC v. FEC (97-1552)
On April 7, 1998, the parties to this suit agreed to dismiss this case with prejudice and to pay their own legal expenses. The Republican National Committee (RNC) had asked the U.S. District Court for the District of Columbia to find that the FEC's dismissal of an administrative complaint it had filed with the agency was contrary to law.
In its initial administrative complaint, filed in 1995, the RNC had charged that the Democratic National Committee (DNC) had used impermissible nonfederal funds to pay all the expenses of a nationwide media campaign that highlighted the party's legislative proposals for health care reform. Commission regulations require that if a political committee has both federal and nonfederal accounts, then it must allocate its administrative and generic expenses between those two accounts. 11 CFR 102.5. The Commission did not have four votes to proceed against the DNC and, therefore, voted unanimously to close the case. The RNC had filed this lawsuit in response to that vote.
Source: FEC Record, June 1998, p. 4.
ROBERTSON v. FEC
On February 3, 1995, the U.S. Court of Appeals for the District of Columbia partially denied the petitioner's request for review of the FEC's final repayment determination; the court did grant the petition with respect to one of four disputed expenditures. The court also rejected petitioner's constitutional and statutory challenges.
Petitioner Marion (Pat) Robertson was an unsuccessful candidate for the 1988 Republican Presidential nomination. Petitioner's campaign received more than $10 million from the FEC-administered Presidential public funding program.
The FEC audits all campaigns which receive public funding and may seek a pro rata repayment for any expenditures that are in excess of statutory limits, that are not qualified campaign expenses, or that lack sufficient documentation to verify their campaign-related purpose.
After an audit and a public hearing, the FEC determined that petitioner was obligated to repay $290,793 in public funds. At issue were:
The FEC's Repayment Determination
The court examined the four expenditures in question and arrived at the following decisions with respect to each.
Iowa Limit
Petitioner argued that $14,000 of a $20,000 deposit for telephone service in Iowa should not be counted against his Iowa expenditure limit because it was later refunded to the committee. The court found, however, that the FEC had reasonably concluded that the evidence provided by Robertson's campaign committee did not establish that the refund was attributable to this Iowa deposit.
Transfer of Funds
Petitioner claimed that $17,000 purportedly transferred from the campaign's national account to its state accounts was incorrectly characterized as nonqualified expenditures. Petitioner did not present any supporting documentation to verify that this money actually had been deposited in the campaign's state accounts or had been spent on qualified campaign expenses. The court found the FEC's demand for such documentation to be reasonable.
Attendance at the 1988 Republican National Convention
Petitioner argued that $74,000 in costs associated with his attendance at the convention, after he had withdrawn from the campaign, constituted valid winding down costs for which he could receive public funding. In support of this position, he argued that video and audio recordings of his speech at the convention were offered as an inducement in a fundraising mailing to retire his campaign debt. The FEC rejected this line of reasoning and the court concurred.
New Hampshire Limit
Petitioner claimed that a $120,000 fundraising mailing was incorrectly allocated to the state's limit. FEC regulations provide that fundraising expenses need not be allocated to a state's expenditure limit unless incurred within 28 days of the state's primary. Petitioner presented dated checks showing that the postage had been purchased more than 28 days before the primary, and an affidavit from a campaign official asserting that the mailing had preceded the 28-day period. The Commission concluded that it could not be determined that the mailing had actually been sent before the 28-day period and therefore attributed its cost to the New Hampshire limit. The court reversed the Commission's finding on this issue because the Commission did not address what the court deemed to be unopposed evidence presented by plaintiff.
The Constitutional Challenge: Ex Officios
Petitioner's challenge was based on the court's decision in FEC v. NRA Political Victory Fund. In that case, the court held that the Commission's composition violated the principle of separation of powers because it included two nonvoting, ex officio members appointed by Congress. Petitioner argued that despite the Commission's subsequent removal of those members from its body and its ratification of all actions it had undertaken in petitioner's case up to that point, the FEC's proceedings in this case remained unconstitutional.
The court concluded that petitioner was estopped from challenging the constitutionality of the Commission's composition because he had already accepted $10 million in public funds authorized by the very Commission he now argued was unconstitutional.
"[A] party wishing to make such a challenge must do so before it accepts and spends federal fundsnot after, as a ploy to avoid its part of a bargain," the court stated in its opinion.
Statutory Challenge: Statute of Limitation
Petitioner based this challenge on a provision of the statute that required the Commission to issue petitioner a notice of a repayment determination within 3 years of the 1988 Republican nomination. Within that time frame, petitioner received a preliminary repayment calculation (contained in the FEC's interim audit report), which an FEC regulation says is sufficient to satisfy the 3-year requirement.
The court declined to resolve petitioner's challenge to the adequacy of the notification he received within 3 years. The FEC had concluded that petitioner had waived his right to address this issue because he had not raised it until his public hearing. Under the Commissions rules, such an issue must be raised in a candidate's written comments submitted to the Commission before the public hearing.
The court found that the FEC was within its rights in enforcing its own procedures in this manner. The court "cannot conclude that . . . the Commission's interpretation [of its regulations] is unreasonable."
Source: FEC Record, April 1995, p. 6.
Robertson v. FEC, No. 93-1698 (D.C. Cir. Feb. 3, 1995).
ROVE v. THORNBURGH
On November 30, 1994, the U.S. Court of Appeals for the Fifth Circuit ruled that the Federal Election Campaign Act (the Act) does not immunize a federal candidate, under state law, from personal liability for the debts of his unincorporated campaign committee. Karl Rove & Company may, under the laws of Pennsylvania and Texas, pursue monetary redress for unpaid campaign debts from Richard Thornburgh, a candidate for the U.S. Senate in a 1991 special election.
[Although the FEC was not a party to this suit, this case is summarized here because of the decision's relevance to federal campaigns.]
Background
In the course of his 1991 campaign, Mr. Thornburgh's unincorporated committee contracted with Rove & Company for mail solicitation services. A balance of $169,732 for these services remained outstanding after the election. Rove & Company brought suit against Mr. Thornburgh, his committee and the committee's treasurer. The district court found Mr. Thornburgh and his committee jointly and severally liable for breach of contract under the laws of Pennsylvania and Texas, but dismissed the claim against the committee treasurer for lack of personal jurisdiction.
Court of Appeals Decision
Mr. Thornburgh brought this appeal, arguing that the Act preempts state law and immunizes federal candidates from personal liability. He cited 2 U.S.C. §453 in support of this motion:
"The provisions of this Act, and the rules prescribed under this Act, supersede and preempt any provision of State law with respect to election to Federal office."
In rejecting this argument, the court noted that: §453 has had a historically narrow reading; that the FEC, in Advisory Opinion 1989-2, has deferred to state law in matters concerning liability for campaign debts; and that the Act does not address the issue of candidate liability for campaign debts anywhere in its provisions.
The court stated, "Although we recognize that Congress has constructed a somewhat analogousand anomalouslegal regime to shield candidates from liability for violations of [the Act], absent express direction from that branch, we decline to extend further such an apparently inequitable rule."
The court noted that federal candidates can protect themselves from personal liability in most states by incorporating their principal campaign committees, by stipulating in contracts that the candidate is not personally liable or by taking both steps.
Source: FEC Record, April 1995, p. 7.
Rove v. Thornburgh, No. 93-8451 (5th Cir. Nov. 30, 1994).
SATELLITE BUSINESS SYSTEMS v. FEC
On March 15, 1983, the U.S. District Court for the District of Columbia granted Satellite Business Systems' (SBS's) motion to dismiss, without prejudice, its suit against the FEC.
In its suit, filed in October 1982, SBS had claimed that the FEC had misconstrued section 441b(a) of the Act in an advisory opinion issued to SBS in March 1982. In that opinion (AO 1981-56), the Commission had stated that the Act barred SBS (a partnership of three corporations) from either establishing a separate segregated fund or making direct contributions for federal elections. SBS had asked the court to declare that:
SBS and four of its managerial personnel filed the motion to dismiss on March 4, 1983, stating that SBS was "not now in a position to commit the additional personnel and financial resources that it currently appears would be necessary to litigate..." the suit. In asking the court to dismiss its suit without prejudice, SBS argued that the FEC would not "suffer plain legal prejudice other than the mere prospect of a second lawsuit."
Source: FEC Record, May 1983, p. 6.
SEGERBLOM v. FEC
Pursuant to 2 U.S.C. §437g(a)(8)(A), Mr. Richard Segerblom asked the court to declare that the FEC acted contrary to law by failing to act on his administrative complaint within 120 days after he filed it.1 The complaint concerned potential violations of the election law by James Santini and the Santini for Senate Committee (the Committee), Mr. Santini's principal campaign committee for his 1982 Senate bid.
In the complaint, Mr. Segerblom claimed that the respondents had used contributions for Mr. Santini's general election campaign to pay expenses of his primary campaign. Mr. Segerblom further alleged that the Committee had fraudulently reported: (1) refunds of these general election contributions and (2) a zero balance for both the primary and general election accounts of the Committee.
Mr. Segerblom therefore asked the court to order the FEC to:
(U.S. District Court for the District of Columbia, Civil Action No. 86-2843, October 16, 1986.)
On December 15, 1986, an order of dismissal was filed by Mr. Segerblom and on the next day the case was dismissed.
Source: FEC Record, December 1986, p. 5.
1 Mr. Segerblom filed his original complaint with the FEC on March 28, 1986. On April 11, 1986, he filed a supplement to the complaint.
SIERRA CLUB v. FEC
Background
On July 31, 1984, the Sierra Club and its separate segregated fund, the Sierra Club Committee on Political Education (SCCOPE), filed suit against the FEC in the U.S. District Court for the District of Columbia (Civil Action No. 84-2354). The plaintiffs challenged the FEC's construction and application of 2 U.S.C. §441b in an advisory opinion the agency had issued to the Sierra Club on July 13, 1984. In the opinion, AO 1984-24, the Commission rejected the two financing methods proposed by the Club for selling its goods and services to SCCOPE as part of SCCOPE's in-kind contribution program for federal candidates.
The Sierra Club asked the court to declare that:
Plaintiff also asked the court to enjoin the FEC from commencing or continuing any enforcement proceedings designed to prevent SCCOPE from using Sierra Club goods and services for its in-kind contribution program.
District Court's Initial Ruling
On August 11, 1984, the district court issued an order dismissing the suit. The court ruled that the case was not ripe for its consideration became the Club had not exhausted the administrative remedies available to it before filing suit.
Appeals Court Remand to District Court
The Sierra Club appealed this ruling to the U.S. Court of Appeals for the District of Columbia Circuit. The appeals court treated the Club's motion to expedite the appeal as a motion for summary reversal. In its order of September 7, 1984, the appeals court granted this motion, reversing the district court's dismissal, and remanded the case to the district court for further consideration.
District Court's Second Ruling
On October 31, 1984, the district court granted the FEC's motion to dismiss the suit. In its November 5 opinion, the court upheld AO 1984-24 as a reasonable interpretation of the law's prohibition on corporate contributions, noting that "the Federal Election Commission is the type of agency to which considerable weight and deference should presumptively be accorded.... " The court also rejected the Club's claim that the opinion violated its First Amendment rights, which, the court stated, were "overborne by the interests Congress has sought to protect in enacting Section 441b."
Source: FEC Record, September 1984, p. 10; and FEC Annual Report 1984, p. 26.
Sierra Club v. FEC, 593 F. Supp. 166 (D.D.C.), rev'd mem. (D.C. Cir. 1984), on remand (D.D.C. Nov 5, 1984) (unpublished opinion).
SOCIALIST WORKERS PARTY v. FEC
On January 2, 1979, a three-judge panel in the U.S. District Court for the District of Columbia approved a consent decree in a suit by the Socialist Workers Party (SWP) against the FEC and Common Cause (which had intervened as co-defendant). In the consent decree the three parties agreed that, for a limited time, SWP would not be required to comply with certain disclosure provisions of the Act. Until the close of the FEC's reporting period for 1984, SWP will not be required to report the names, addresses and occupations of individuals who contributed $100 or more to SWP, or to identify recipients of SWP expenditures.
SWP had filed suit against the Commission in July 1976, alleging that specific sections of the Act deprived SWP and its supporters of certain First Amendment rights. The decree noted that SWP and those connected with it "had been subjected to systematic harassment." Citing the standard for the potential unconstitutional application of the disclosure provisions set forth in a 1976 Supreme Court decision (Buckley v. Valeo, 424 U.S.(1), the decree states that SWP had demonstrated at least "a reasonable probability that the compelled disclosure" of names of its contributors and recipients of its expenditures would continue to "subject them to threats, harassment, or reprisals from either government officials or private parties." (Buckley v. Valeo, 424 U.S. at 74). Consequently, the defendants concurred, without necessarily agreeing to all the facts presented, that SWP should not constitutionally be compelled to comply with the reporting requirements of the Act which require identification of individuals.
The decree also provided that:
The procedural disagreement between defendants and plaintiff, focusing on the duration of the decree and the mechanism by which it could be extended, was resolved so that:
Source: FEC Record, March 1979, p. 4.
Socialist Workers 1974 National Campaign Committee v. FEC, 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9068 (D.D.C. 1979).
SPANNAUS v. FEC (85-0404)
On August 26, 1986, the U.S. District Court for the Southern District of New York granted the FEC's motion for summary judgment in Spannaus v. FEC (Civil Action No. 85-Civ-0404 (LLS)). The Court dismissed plaintiffs' suit with prejudice. It held that Lyndon LaRouche's 1984 Presidential primary campaign committee and the campaign's treasurer, Edward W. Spannaus, had "failed to make even a preliminary showing of bad faith on the part of the Commission [in conducting investigations of the campaign's potential violations of the election law] or to allege facts sufficient to show an infringement of their First Amendment rights...."
Background
In a suit filed with the district court on January 16, 1985, plaintiffs asked the court to make the following declarations:
District Court's Ruling
The court affirmed the FEC's claim that, in initiating investigations against the LaRouche Campaign, the agency had followed procedures established by the Federal Election Campaign Act and FEC regulations and had undertaken each investigation "for legitimate purposes." Although plaintiffs asserted that the FEC had failed to respond to the LaRouche Campaign's inquiries concerning the agency's investigations into the campaign's activities, the court noted that plaintiffs had "failed to make even a preliminary showing of bad faith and accordingly are not entitled to discovery into the FEC's motives and activities."
With regard to alleged discriminatory enforcement of the election law, the court held that "plaintiffs have not alleged facts demonstrating unequal treatment under the Act."
Similarly, the court found no merit to plaintiffs' claim that their First Amendment rights had been abridged. The court concluded that "to the extent that the Commission's investigation has 'chilled' any volunteer activities on the part of contributors...that chill does not under the circumstances rise to a constitutional claim."
Appeals Court's Ruling
On October 28, 1986, the defendant filed an appeal with the U.S. Court
of Appeals, Second Circuit. The FEC filed a motion to dismiss the appeal
on November 12, 1986. The Court of Appeals affirmed the District Court's
ruling on March 3, 1987 (Civil Action No.
86-6229).
Source: FEC Record, October 1986, p. 6; and October 1987, p. 6.
Spannaus v. FEC, 641 F. Supp. 1520 (S.D.N.Y. 1986), aff'd mem., 816 F.2d 670 (2d Cir. 1987).
SPANNAUS v. FEC (91-0681)
On April 20, 1993, the U.S. Court of Appeals for the District of Columbia Circuit ruled on the 60-day deadline for requesting a court review of an FEC decision to dismiss an administrative complaint. No. 92-5191. The court held that the 60-day period begins on the date the FEC dismisses the complaint, based on a mandatory literal reading of the statute. The appellant, Edward W. Spannaus (treasurer of the LaRouche Democratic Campaign), had argued that the period should begin on the date the complainant receives notice of the dismissal. The ruling by the court of appeals affirmed the district court's dismissal of the suit. (Civil Action No. 91-0681.)
Under the Federal Election Campaign Act, a petition for judicial review must be filed "within 60 days after the date of the dismissal" of the complaint. 2 U.S.C. §437g(a)(8)(B). The court of appeals said that, in accordance with a Supreme Court decision on filing deadlines, the statutory language must be read literally. Therefore, based on the "date of dismissal" of the complaint, the court of appeals found that Mr. Spannaus filed his petition for review after the 60-day deadline.
(The Commission dismissed Mr. Spannaus's complaint on January 9, 1991. The notice of dismissal arrived at his post office box on January 28 and was claimed on February 2. He filed his petition for review with the district court on April 2, 1992.)
Mr. Spannaus said that he had relied on a district court opinion holding that the 60-day review period begins "when the complainant actually receives notice of the dismissal." Common Cause v. Federal Election Commission, 630 F. Supp. 508, 512 (D.D.C. 1985). The court of appeals, however, rejected that holding. Commenting on the appellant's reliance on Common Cause, the court stated that it "[could not] extend the filing deadline for Spannaus simply because he relied on an unreviewed and, we now hold, incorrect district court decision."
Mr. Spannaus alternatively argued that he should be granted a dispensation from the 60-day time period in light of his late receipt of the FEC's notice of dismissal. The court refused the request, noting that Mr. Spannaus "was less than fully diligent" in filing his review petition. The court pointed out that the FEC's notification letter "conspicuously stated the dismissal date and referred Spannaus to the appropriate review provision."
Source: FEC Record, June 1993, p. 7.
STAEBLER v. CARTER
On January 8, 1979, the U.S. District Court for the District of Columbia granted defendant Jimmy Carter's motion for summary judgment and upheld the President's recess appointment of John McGarry to the Federal Election Commission.
The action against President Carter was filed last October by former FEC Commissioner Neil Staebler. Mr. Staebler, whose term of office expired in April 1977, still held the seat (under the hold over provisions of 2 U.S.C. §437c(a)(2)(B)) to which Carter appointed Mr. McGarry on October 25, 1978. After the Senate had twice failed to act on Mr. McGarry's nomination, the President appointed him to the Commission during the 1978-79 congressional recess.
Mr. Staebler challenged the appointment on the grounds that:
The court determined that neither the statutory language nor the legislative history of the Act supported these premises.
The court concluded that a vacancy did exist, the President had the authority to make the McGarry appointment, and that Mr. McGarry is a lawful member of the Federal Election Commission.
This case, the court noted, involved not only the interests of the defendant and plaintiff, but also the proper distribution of power between the branches of government. Under the plaintiff's interpretation, it would be possible for a member of a Commission, once appointed and confirmed, to remain in office indefinitely. As long as the Senate did not act, either to confirm the nomination of a successor or to bring a nomination to a vote, the President would be powerless to protect the powers of appointment granted to him by Article II, Section 2 of the Constitution.
This argument is "especially compelling," the decision pointed out, when applied to the "politically sensitive" FEC. By providing the Senate with de facto authority to retain appointed officeholders, long beyond the expiration of their statutory terms, plaintiff's interpretation would facilitate the legislative domination of the FEC, which the Supreme Court condemned in Buckley v. Valeo. The court pointed out, however, that had the Senate rejected Mr. McGarry's nomination, the President would have been "unable to grant a recess appointment to McGarry."
Source: FEC Record, March 1979, p. 4.
Staebler v. Carter, 464 F. Supp. 585 (D.D.C.), appeal dism'd, 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9080 (D.C. Cir. 1979).
STARK v. FEC
On August 20, 1987, the U.S. District Court for the District of Columbia issued an order dismissing with prejudice a complaint brought by Congressman Fortney H. "Pete" Stark, a Democrat from California, in Stark v. FEC; (Civil Action No. 87-1024.) Congressman Stark had sought a court order requiring the FEC to act within 120 days on his administrative complaint, which he had filed in 1986 against his Republican opponent and the opponent's supporters. Since the FEC had taken final action on Congressman Stark's complaint by dismissing it on June 8, 1987, the court dismissed it on June 9, 1987, as moot.
On February 8, 1988, the court dismissed another suit brought by Congressman Stark against the Commission in Stark v. FEC; Civil Action No. 87-1700. The court found that the Commission had not acted contrary to law in dismissing, in a deadlock vote, Congressman Stark's complaint. The court accordingly granted judgment in the Commission's favor.
Background
Shortly before election day in 1986, Congressman Stark filed an administrative complaint that alleged, among other things, that excessive contributions made to Daniel M. Williams' 1986 Congressional campaign by the American Medical Association Political Action Committee (AMPAC) resulted in violations of the election law by both parties. (AMPAC is the separate segregated fund of the American Medical Association.) In the complaint, Congressman Stark also alleged other violations of the election law's contribution limits by the American Medical Association (AMA), AMPAC and certain state PACs affiliated with AMPAC.
After a preliminary review of the complaint as amended in February 1987, the General Counsel's Office recommended that the Commission find no reason to believe AMPAC's affiliates had violated the law.
With regard to the other allegation, the General Counsel recommended that the Commission find reason to believe that AMPAC had violated the law by making excessive contributions to the Williams campaign and that the Williams campaign had violated the law by accepting them. (See 2 U.S.C. §§441a(a) and (f).) The General Counsel's staff found that AMPAC had made three mailings to its membership describing Williams' positions on certain issues and advocating Williams' election. One of the mailings had also solicited funds for Williams' campaign. The solicitation mailing included pre-addressed envelopes for donors to mail their contributions directly to candidates and pledge cards pre-addressed to AMPAC, which AMPAC could use to verify donors' contributions.
AMPAC claimed that its spending for the mailings constituted independent expenditures. However, citing an advisory opinion that dealt with a similar situation (AO 1980-46), the General Counsel reasoned that AMPAC's expenditures for the solicitation mailing constituted in-kind contributions to the Williams campaign. (In AO 1980-46, the Commission had decided that expenditures by a PAC to facilitate earmarked contributions to candidates constituted in-kind contributions to candidates rather than independent expenditures on their behalf.)
Furthermore, the General Counsel found that, taken together, the circumstances of the mailings were sufficient to indicate that AMPAC and the Williams campaign might not have remained at arms length throughout the campaign. For example, the General Counsel found that AMPAC's substantial spending on behalf of the Williams campaign, when compared with the low spending by the campaign itself, raised questions concerning the independence of AMPAC's expenditures.
Pursuant to 2 U.S.C. §437g(a)(8)(C), Congressman Stark asked the court to declare that the FEC acted contrary to law by failing to act on his administrative complaint within 120 days after he filed it in October 1986. (Civil Action No. 87-1024, April 14, 1987.)
Congressman Stark further asked the court to:
On June 9, 1987, the Commission voted to accept the General Counsel's recommendation to dismiss the allegation concerning excessive contributions by AMPAC's affiliates. However, the Commissioners were divided by a series of 3-3 votes on the General Counsel's recommendation concerning AMPAC's alleged excessive in-kind contributions to the Williams campaign. Since the Commission can act only on "the affirmative vote of four members," the agency voted unanimously to close the enforcement file. Consequently, Congressman Stark's first suit was dismissed from the district court as moot following the Commission's final action.
District Court Ruling Second Suit
Congressman Stark filed a second suit asking the district court to find the FEC's dismissal of his administrative complaint to be contrary to law (Civil Action No. 87-1700, June 22, 1987).
Following a decision by the U.S. Court of Appeals for the D.C. circuit in Democratic Congressional Campaign Committee (DCCC) v. FEC (831 F.2d 1131 (D.C. Cir. 1987)), the district court held that it could review the case because the provision of the election law affording judicial review of dismissals "imposes neither vote count nor substantive-issue conditions on the right it confers." (See 2 U.S.C. §437g(a)(8)(A).)
The court noted, however, that, unlike the DCCC case, the Stark case included a statement from Commissioner Thomas Josefiak setting forth his reasons for voting against the General Counsel's recommendations. Commissioner Lee Ann Elliott filed a concurrence with that statement.
The court observed that in their statements the dissenting Commissioners had said that they disagreed with the conclusion of AO 1980-46, the advisory opinion that the General Counsel had cited in arguing that AMPAC's solicitation expenditures might be in-kind contributions. Thus, concluded the Commissioners, the rationale of that opinion should not be extended beyond the facts presented in that case. The Commissioners argued that independent expenditures (e.g., AMPAC's expenditures for contribution envelopes sent to candidate Williams' potential donors) did not lose their independence because the candidate subsequently derived indirect benefit from them.
Further, the dissenting Commissioners rejected the idea that a "dollar disparity" between AMPAC's spending and spending by the Williams campaign implied cooperation between the two committees. The Commissioners also rejected Congressman Stark's allegations concerning a "debate arrangement" made by AMPAC and the duplication of Williams' campaign materials by AMPAC for solicitation purposes.
In determining whether the dissenting Commissioners acted reasonably in voting to dismiss the Stark allegations, the court found that the DCCC case required "that the same deference be accorded the reasoning of 'dissenting' Commissioners who prevent Commission action by voting to deadlock as is given the reasoning of the Commission when it acts [by at least four affirmative votes] as a body to dismiss a complaint."
Accordingly, the court concluded that the dissenting Commissioners' statement of reasons was "'sufficiently reasonable,' if not 'the only reasonable [decision] or even the [one] the court would have reached' on the General Counsel's Report on his findings.... "
Source: FEC Record, June 1987, p. 6; September 1987, p. 8; October 1987, p. 6; and April 1988, pp. 8-9.
Stark v. FEC, 683 F. Supp. 836 (D.D.C. 1988).
STERN v. FEC
On December 11, 1990, The U.S. Court of Appeals for the District of Columbia Circuit affirmed the district court decision granting the Commission's motion for judgment on the pleadings. Philip M. Stern had claimed that the General Electric Company (GE) violated the Federal Election Campaign Act by making unlawful corporate expenditures for the establishment, administrative and solicitation expenses of its separate segregated fund, GE/PAC.
Background
Although section 441b(a) of the Federal Election Campaign Act prohibits corporations from using their general treasury funds to make contributions or expenditures in connection with a federal election, another provision of the Act specifically excludes from the definitions of contribution and expenditure the use of corporate treasury funds for "the establishment, administration, and solicitation of contributions to a separate segregated fund to be utilized for political purposes...." (Emphasis added.) 2 U.S.C. §441b(b)(2)(C). In his complaints filed with the FEC and the courts, Mr. Stern alleged that GE/PAC's contributions were not made for "political purposes" but, rather, were made to advance GE's lobbying interests. As a result, he claimed, GE's funding of the PAC resulted in prohibited corporate expenditures.
When the Commission dismissed his administrative complaint, finding "no reason to believe" that GE had violated the law, Mr. Stern sought judicial review of the agency's decision. The district court ruled that the Commission had not acted contrary to law in dismissing the complaint, holding that GE/PAC's direct contributions to the campaigns of federal candidates were permissible under any construction of "political purposes." The district court found it unnecessary to reach the question of whether lobbying was a permissible activity for a separate segregated fund, although the court characterized the Commission's positionthat separate segregated funds could be used "for any lawful purpose"as a reasonable interpretation of the Act.
Appeals Court Decision
In his arguments, Mr. Stern claimed that several types of contributions made by GE/PAC were not made for "political purposes":
The appeals court examined these claims but found that the GE/PAC's contributions did not violate the Act. Like the district court, the appeals court found no reason to reach the question of how the phrase "political purposes" should be interpreted. "Even under the narrowest possible definition urged by Sternnamely, that segregated funds may be used only 'in connection with an election'the GE/PAC practices he challenges do not violate the Act."
Source: FEC Record, November 1989, p. 4; and February 1991, p. 7.
Stern v. FEC, No. 89-0089 (D.D.C. 1989) (memorandum opinion), 921 F.2d 296 (D.C. Cir. 1990).
STERN v. GENERAL ELECTRIC CO.
On January 28, 1991, the U.S. Court of Appeals for the Second Circuit ruled that the Federal Election Campaign Act (the Act) does not preempt state law doctrine on corporate waste. Philip M. Stern, a General Electric (GE) stockholder, filed suit alleging that GE's funding of its separate segregated fund (GE/PAC) constituted a waste of corporate assets under state law.
The district court had dismissed the allegations, ruling that they were preempted by the Act. Reversing the district court decision on this issue, the appeals court held that the Act did not preempt Mr. Stern's allegations of corporate waste. The court, however, dismissed the allegations on other grounds but granted Mr. Stern leave to replead. With respect to Mr. Stern's allegations that GE violated federal lobbying and anti-bribery statutes, the appeals court affirmed the district court's dismissal of the claims.
Allegations of Corporate Waste
Mr. Stern alleged that GE's payment of GE/PAC's administrative and solicitation expenses constituted a waste of corporate assets under state law because:
In response, GE argued that the allegations should be dismissed because they fell within the FEC's exclusive jurisdiction under 2 U.S.C. §437c(b)(1). (Under that provision, the FEC has exclusive jurisdiction over civil enforcement of the Act.) The appeals court rejected this argument because Mr. Stern's allegations focused on GE's waste of corporate assets under state law rather than on whether GE's activities violated the Act.
In reversing the district court holding that the allegations of corporate waste were preempted by the Act, the appeals court pointed out the "narrow wording" of statute's preemption clause: the Act preempts "any provision of state law with respect to election to Federal office." 2 U.S.C. §453. The court said that Congress did not intend the Act to preempt the entire field of corporate political spending. That would result in a total absence of regulation on the appropriate amounts that corporations may spend on their PACs, since the Act is silent on this issue.
The court found that state regulation of corporate waste did not conflict with federal law in this case. The Act's provision allowing a corporation to pay for the costs of administering and soliciting contributions to a PAC (2 U.S.C. §441b(b)(2)(C)) was designed to limit, rather than encourage, corporate political spending "in order to preserve the integrity of the political process....Thus, state-law regulations that tend to reduce a corporation's support of its political action committee do not impede the FECA's goals."
The court, however, dismissed Mr. Stern's allegations of corporate waste because he failed to allege fraud or "bad faith" on the part of the company's directors. The court, however, granted Mr. Stern leave to replead these allegations.
Other Allegations
The court of appeals upheld the district court's dismissal of Mr. Stern's allegation that GE's administrative and solicitation payments for GE/PAC were actually lobbying expenditures that should have been reported pursuant to the Federal Regulation of Lobbying Act. Mr. Stern had alleged that the failure on the part of GE directors to comply with this statute exposed GE to prosecution under 2 U.S.C. §269 and therefore constituted a breach of fiduciary duty. The appeals court disagreed, finding that GE's spending did not constitute "direct communication" with government officials and therefore was not subject to the lobbying statute.
Similarly, the court of appeals upheld the district court's dismissal of Mr. Stern's allegation that GE directors exposed GE to liability by acquiescing in GE/PAC's violation of the federal anti-bribery statute. Mr. Stern had claimed that certain GE/PAC contributions violated the statute because they were given to "grandfathered" Members of Congress with the knowledge that the contributions might be converted to the candidate's personal use under 2 U.S.C. §439a. The appeals court said that because such use is lawful under the Act, the contributions did not violate the anti-bribery statute (18U.S.C. §203). Moreover, "[c]riminal intent under section 203 turns not on what the contributor expects the recipient to do with the money, but rather on what the contributor expects to receive for that money."
Source: FEC Record, July 1991, p. 6.
Stern v. General Electric Co., 924 F.2d 472 (2d Cir. 1991).
STOCKMAN v. FEC
In August 1996, a U.S. District Court in Texas dismissed Congressman Stephen E. Stockman's claim that the FEC had unreasonably delayed its investigation into his 1994 campaign. The court said: "There is no evidence showing that the time spent to investigate this matter is a product of anything other than the excessive demands on a strapped federal agency."
In an earlier decision, the court dismissed the claim that the FEC had improperly leaked information about the matter to the press.
On March 27, 1998, the U.S. Court of Appeals for the Fifth Circuit sustained the district court's ruling in this case for the FEC, but it based the dismissal on lack of jurisdiction rather than on the merits.
Background
Former Congressman Stephen E. Stockman was a respondent in an administrative complaint the FEC received concerning a newspaper that was published at Mr. Stockman's residence and campaign headquarters during the 1994 primary election season. In February 1996, Mr. Stockman asked the U.S. District Court for the Eastern District of Texas, Beaumont Division, to direct the FEC to dismiss the administrative complaint because, among other reasons, the FEC allegedly had unreasonably delayed its investigation and FEC personnel allegedly had leaked information about the investigation to the press, in violation of statutory and regulatory confidentiality requirements.
District Court Decisions
In decisions rendered in June and August 1996, the district court rejected Mr. Stockman's arguments. While the district court found that it had jurisdiction over the delay claim, it ruled that the delay in the investigation was not unreasonable in light of the FEC's work load and lack of resources. The district court dismissed Mr. Stockman's breach-of-confidentiality claim for lack of jurisdiction because Mr. Stockman had failed to follow FEC procedures for resolving such a claim. In the alternative, the court found that there was no factual basis for Mr. Stockman's allegations of press leaks by the FEC. Mr. Stockman then appealed the case.
Appeals Court Decision
The appellate court, citing 2 U.S.C. §437g(a)(8), concluded that the Federal Election Campaign Act (the Act) does not create a cause of action for a delay claim by an administrative respondent (as opposed to the person who files the complaint). Section 437g(a)(8), the court pointed out, states that only an administrative complainant who is aggrieved by the FEC's failure to act may petition for judicial relief, and then only in the U.S. District Court for the District of Columbia. The court further held that Mr. Stockman's delay claim could not be based on the Administrative Procedure Act, which does not apply where the underlying statute precludes judicial review. The court found that the Act precludes judicial review of delay claims by plaintiffs, like Mr. Stockman, who were not administrative complainants and did not file suit in the District of Columbia. The district court therefore lacked jurisdiction, the court of appeals held, over Mr. Stockman's delay claim.
Source: FEC Record, October 1996, p. 2; May 1998, p. 3.
Stockman v. FEC, 944 F. Supp. 518 (E.D. Tex. Aug. 27, 1996), aff'd as modified, 138 F.3d 144 (5th Cir. Mar. 27, 1998).
TRINSEY v. FEC
On October 27, 1992, the U.S. District Court for the Eastern District of Pennsylvania dismissed a suit filed by John H. Trinsey, Jr., a 1992 Presidential candidate. (Civil Action No. 91-8041.) He had brought suit against 49 of the 50 states (all except New Hampshire) as well as the District of Columbia and Guam, seeking a declaration that the ballot access laws in South Dakota (where allegedly he was denied access to the primary ballot) and the other jurisdictions were unconstitutional. He also asked the court to bar the payment of matching funds to 1992 candidates until he was permitted to gain ballot access.
The court granted defendants' motions to dismiss the suit, noting that the U.S. District Court in South Dakota dismissed, with prejudice, a virtually identical suit filed by Mr. Trinsey. The court further noted that the Eighth Circuit Court of Appeals upheld the South Dakota court's dismissal after carefully considering Mr. Trinsey's claim (Trinsey v. Hazeltine, Civil Action No. 92-1394, September 2, 1992). On this basis, the Pennsylvania district court dismissed the suit even though some of the defendants had not yet filed their motions.
Source: FEC Record, December 1992, p. 7.
U.S. v. IUOE
On October 1, 1979, the U.S. Court of Appeals for the Ninth Circuit issued a decision in United States v. International Union of Operating Engineers. Reversing the lower court, the appeals court concluded that "nothing in these provisions [the Federal Election Campaign Act, as amended] suggests...that action by the Department of Justice to prosecute a violation of the Act is conditioned upon prior consideration of the alleged violation by the FEC."
District Court Decision
On August 13, 1976, the U.S. District Court for the District of Oregon dismissed an indictment brought by the Department of Justice against the union. The district court decided that the Attorney General was required to refer the case to the FEC for an administrative remedy before seeking criminal penalties against the defendant for violations of 2 U.S.C. §§431-455.
The administrative remedy to which the district court was referring was provided for in §437g of the FECA, which said that "any person who believes" a violation of the election law has occurred "may file a complaint with the Commission," and which prescribed a detailed process for the FEC to take action. If the Commission found reason to believe that a violation had occurred, there was a period during which the agency had to attempt to reach a conciliation agreement with the respondent; the agreement could include a civil penalty.1 If the parties were unable to work out a conciliation agreement, the law allowed the FEC to seek relief through the federal courts. The law also provided that the FEC could refer cases of "knowing and willful violation" of the FECA to the Justice Department for criminal prosecution. Furthermore, a completed conciliation agreement with the FEC could be introduced by the respondent as mitigating evidence in any criminal action brought by the Attorney General.
The district court concluded that "the procedural scheme devised by Congress to protect candidates from the adverse effects of groundless or insubstantial charges will be frustrated if the Attorney General has the power to step in and obtain an indictment in a case which was never referred to the FEC."
The Attorney General appealed the district court's decision.
Appeals Court Decision
On October 1, 1976, the court of appeals issued an opinion reversing the decision of the district court.
The appeals court observed that the lower court had based its conclusion not on legislative history but on inferences from the language of the Act. Acknowledging that the statute does contain many restrictions designed to minimize the risk that the administrative process might be used unfairly, the appeals court concluded that the restrictions were aimed at complainants and the FEC, but not the Attorney General.
The court cited the legislative history of the FECA to corroborate this conclusion. The Senate's version of the 1974 amendments to the FECA, the judges noted, had included a provision which allowed the Justice Department to take action on civil and criminal violations of the Act "only after the Commission [was] consulted and consent[ed] to such a prosecution." The provision was dropped from the bill by the conferees. The conference report made explicit that Congress intended, in its final version of the 1974 amendments, to grant the FEC primary powers of civil enforcement. The court further pointed out that the 1976 amendments to the Act gave the FEC "exclusive responsibility" for civil enforcement while it preserved the Justice Department's customary jurisdiction over criminal violations.
Finally, the court stated, the Act specifies that if the FEC finds probable cause that a "knowing and willful violation" has occurred, the agency may refer the case to the Justice Department without first attempting a conciliation agreement.
By the time the appeals court issued this decision, the Justice Department and the FEC had entered into a memorandum of understanding which adopted similar principles. The Commission retained exclusive primary authority for the prosecution of civil violations of the Act, while the Justice Department retained independent authority for the prosecution of criminal violations of the Act.
International Union of Operating Engineers, Local 701: United States v., 638 F.2d 1161 (9th Cir. 1979), cert. denied, 444 U.S. 1077 (1980).
1 The phrase in 2 U.S.C. §437g(a)(2) to which the court was referring, "if it [the Commission] has reason to believe that any person has committed a violation," was deleted in the 1979 amendments to the Act. The current enforcement procedures outlined in §437g would not have altered the outcome of this decision.
UNITED STATES DEFENSE COMMITTEE v. FEC
On April 12, 1988, the U.S. District Court for the Northern District of New York entered an order granting summary judgment to the FEC in United States Defense Committee (USDC) v. FEC (Civil Action No. 84-CV-450).
In a decision of November 7, 1988, the U.S. Court of Appeals for the Second Circuit held that the USDC's complaint against the FEC was not ripe for the court's review. The appeals court therefore remanded the case to the U.S. District Court for the Northern District of New York with instructions for the district court to dismiss the case.
Background
In its suit, the United States Defense Committee (USDC) asked the U.S. District Court to take action with respect to the Commission's Advisory Opinions (AOs) 1983-43, 1984-14, and 1987-7.
In those opinions, the Commission expressed the view that corporate treasury expenditures for certain voter guides which USDC proposed to compile and distribute to the general public were not exempted under Part 114 of FEC regulations. Consequently, the voter guides were prohibited by 2 U.S.C. §441b because, as drafted, the language of the guides suggested an election-influencing purpose. (Taken together, these legal provisions prohibit corporations, labor organizations and incorporated membership organizations from distributing to the general public voter guides that favor one candidate or political party over another.)
In response to the opinions, USDC asked the court to declare that USDC's proposed expenditures were not proscribed by FEC regulations. USDC also raised three constitutional questions concerning its distribution of the voter guides. For example, USDC asked the court to consider whether 441b abridged its First and Fifth Amendment rights by discriminating between incorporated organizations like USDC and the institutional press. (Costs incurred by news media corporations for bona fide coverage of political events are exempt from the election law's broad prohibition on corporate expenditures, provided the news corporation is not owned or controlled by any political party, political committee or candidate.)
District Court Ruling
In a statement read into the public record, the district court judge presiding in this case held that the court had jurisdiction to review USDC's complaint. While the court acknowledged that the election law did not specifically provide for judicial review of FEC advisory opinions, the court found that its authority to review the complaint had not been "explicitly restricted by statute or by Congress...."
In ruling on the merits of the case, the court rejected USDC's claim that the election law discriminates against USDC by permitting the institutional press to disseminate information on political candidates to the general public while prohibiting USDC from disseminating information in the form of voter guides. The court held that the press exemption had a "valid basis" in that it recognizes the need for informing the public on federal election-related issues. Further, the press is not covered by this exemption when it exceeds its legitimate press function. The court also rejected USDC's argument that the guides were not covered by the 441b prohibition because they did not include an explicit request for the recipients to vote one way or another.
Finally, the court held that the Supreme Court's decision in FEC v. Massachusetts Citizens for Life, Inc. (MCFL), (Civil Action No. 85-701) did not exempt USDC from 441b's prohibition against corporate expenditures in connection with federal elections. To be eligible for the MCFL exception, among other things, a nonprofit corporation must have a policy of not accepting contributions from business corporations or labor organizations. Since USDC had accepted money from its corporate members, the court found that the organization was not eligible for the MCFL exception.
USDC subsequently filed an appeal of the district court's decision with the U.S. Court of Appeals for the Second Circuit.
Appeals Court Ruling
In deciding that USDC's case was not ripe for judicial review, the appeals court said that nothing in the legislative history indicated that Congress thought advisory opinions were reviewable. Further, the appeals court explained that an FEC advisory opinion was not "final or binding.... " In this regard, the court noted that "if a person proceeded to act contrary to an FEC advisory opinion, [that person] would be entitled to all of the enforcement protections, including conciliation, conference, persuasion and the like, provided under 2 U.S.C. §437g."
The appeals court further noted that AO 1987-7 was "particularly inappropriate for judicial resolution at this time. As a consequence of the Supreme Court's decision in FEC v. Massachusetts Citizens for Life the Commission is engaged in a rulemaking proceeding which could alter the very regulations applied in the opinion."
On remand, the district court dismissed the case.
Source: FEC Record, July 1988, p. 6.
United States Defense Committee, Inc. v. FEC, No. 84-CV-450 (N.D.N.Y. April 27, 1988) (unpublished order), vacated and remanded, 861 F.2d 765 (2d Cir. 1988).
USA v. HSIA
On May 18, 1999, the U.S. Court of Appeals for the District of Columbia Circuit reversed a district court decision to dismiss five counts of a six-count criminal indictment charging Maria Hsia, a Democratic fundraiser, with collecting and disguising impermissible contributions in the 1995-96 election cycle.
The five counts of the indictment that were reinstated accuse Ms. Hsia of causing the Clinton/Gore '96 Primary Committee, the Democratic National Committee and The Friends of Patrick J. Kennedy '96 to make false statements in their reports filed with the FEC. The appellate court also denied Ms. Hsia's cross-appeal of the remaining count in the indictment, which accuses her of conspiracy to defraud the FEC and the Immigration and Naturalization Service.
The court remanded the case to the U.S. District Court for the District of Columbia for further proceedings.
The Department of Justice (DOJ), which filed this suit, alleged that Ms. Hsia and the International Buddhist Progress Society (IBPS), an incorporated, tax-exempt religious organization in California, funneled money through straw donors to various campaigns. The indictment alleged that Ms. Hsia and IBPS asked nuns, monks and others with ties to IBPS to make contributions to Democratic campaigns, and later reimbursed them with IBPS funds. Ms. Hsia was also accused of using straw donors to funnel money from two clients of her Los Angeles immigration consultant business to Democratic campaigns.
The Federal Election Campaign Act (the Act) prohibits corporations from making contributions in connection with any federal election. 2 U.S.C. §441b(a). The Act also prohibits any person from making a contribution in the name of another. 2 U.S.C. §441f. Additionally, the U.S. tax code bars certain organizations, such as IBPS, from participating in any political campaigns. 26 U.S.C. §501(c)(3). Finally, under 18 U.S.C. §§2 and 1001, it is unlawful to willfully cause an offense by another person against the United States.
Appeals Court Decision
The appeals court first addressed the willful nature of Ms. Hsia's alleged conduct. The district court had concluded that Ms. Hsia's actions were not willful because the DOJ failed to show that she knew her conduct was unlawful. The appellate court, however, stated that the government need not prove that Ms. Hsia knew that her conduct was unlawful; only that she knew that the information provided to the political committees regarding the sources of contributions was false and that she intentionally caused false statements to be made by another.
The appeals court also rejected the district court's finding that the causal link between Ms. Hsia's conduct and the false statements in the political committees' reports was too "attenuated." In fact, the appeals court concluded the conduit scheme together with the names on the checks caused false statements to be made by the political committees. The appellate court pointed to several cases where the courts previously upheld applying the "false statement prohibition" to conduit contribution schemes. In those cases, defendants used straw donors to conceal their own contributions. Here, Ms. Hsia did not funnel her own money to straw donors: instead, the money belonged to immigration clients or to IBPS. Hsia, however, arranged for the conduits to do their part. The distinction of whose money was used is irrelevant to this situation, the appeals court found. FEC regulations state that a contribution made by check should be reported as a contribution by the last person signing it. 11 CFR 104.8(c). "The simple interposition of conduits to sign the checks is certainly enough to 'cause' a committee to make false statements in its report," the appeals court wrote in its decision.
The appeals court also rejected the lower court's finding that the contributor information filed with the Commission by the three committees was "literally true." The district court had reasoned that, because the indictment did not allege that the committees' treasurers had any wrongful knowledge about the true contributors, the statements in their reports had to be considered in compliance with the Act, and therefore not false.
This reasoning assumes that the safe harbor provision protecting treasurers of political committees who use "best efforts" to report all required information, 11 CFR 104.7, modifies the substantive reporting requirements of the Act. However, the court added, "it would make no sense for Congress to allow treasurers to rely on the provision of information by others while at the same time giving others a virtual carte blanche to provide inaccurate information."
Source: FEC Record, July 1999, p. 9.
USA v. Hsia, 176 F.3d 517 (D.C. Cir. 1999).
WALTHER v. FEC
On April 17, 1979, the U.S. District Court for the District of Columbia denied the FEC's motion to dismiss the claim of Henry L. Walther in a suit filed against the FEC on November 21, 1978, in accordance with 2 U.S.C. §437g(a)(9).
The plaintiff contended that the Commission had acted contrary to law in dismissing 45 complaints filed with the Commission by Mr. Walther and the National Right to Work Committee pursuant to 2 U.S.C. §437g(a)(1). Each complaint asserted that both a candidate for federal office and the candidate's committee had accepted illegal contributions in excess of the $5,000 contribution limitation established by 2 U.S.C. §441a(a)(2)(A). The complainants claimed that the alleged violations had occurred when contributions were accepted from both the AFL-CIO political committee (COPE) and from political committees set up by member unions of the AFL-CIO (union committees).
The plaintiff contended that COPE and some union committees were subject to the same control and, therefore, shared one contribution limitation under 441a(a)(5). (The 441a(a)(5) antiproliferation provision provides that contributions from separate PACs which are "established or financed or maintained or controlled" by the same person or group of persons shall be considered to have been made by a single political committee.)
The FEC contended, on the other hand, that as a matter of law, 441a(a)(5) was not intended by Congress to apply to the relationship between the AFL-CIO Federation and its membership (union locals). The FEC also maintained that since the agency had publicly construed the antiproliferation provision to exclude cooperation between COPE and union PACs, no candidate could knowingly violate the statute by accepting contributions from both. (In 1977, the FEC had dismissed a complaint filed by the National Right to Work Committee against the AFL-CIO, which had alleged that the AFL-CIO and member unions were affiliated. The National Right to Work Committee never appealed that determination to the court.) Therefore, the FEC filed a motion to dismiss the case.
The court identified the central question presented by the Commission's motion to dismiss as one of statutory construction: What is the correct application of 441a(a)(5) to the relationship between COPE and union committees?
After examining the language of the statute and the policy underlying the Act, the court refused to accept the FEC's interpretation of the statute for the following reasons:
Accordingly, the court concluded that 441a(a)(5) applies to all political committees controlled by the same person or group of persons except for certain exemptions not relevant to this case. Therefore, the relationship alleged by the plaintiff may constitute a violation. Furthermore, the court rejected the FEC's contention that the agency's interpretation of the statute precluded commission of civil or criminal violations of the Act by candidates. The court concluded that, although an incorrect administrative interpretation may have some bearing on determining whether or not a party acted knowingly, it does not provide immunity to the party.
Finally, in denying the FEC motion to dismiss, the court held that the plaintiff had alleged facts sufficient to withstand a motion to dismiss. However, the court pointed out that this opinion could not be construed as concluding that a violation had occurred or that the FEC had actually failed to perform its statutory duty.
Cross-motions for summary judgment were filed. On June 15, 1979, the U.S. District Court for the District of Columbia granted summary judgment to the FEC.
Based on the standard of judicial review that only arbitrary and capricious administrative actions of an agency may be reversed, the court determined that the Commission's decision not to investigate Walther's complaints was "eminently reasonable." The court characterized the Walther complaints as a "shambles" containing serious shortcomings.
Source: FEC Record, June 1979, p. 7; and September 1979, p. 5.
Walther v. FEC, 468 F. Supp. 1235 (D.D.C. 1979).
WEBER v. HEANEY
The U.S. Court of Appeals for the Eighth Circuit recently held that the Federal Election Campaign Act (FECA) preempted the Minnesota Congressional Campaign Reform Act in its entirety. The court's June 17, 1993, decision in John Vincent Weber v. William M. Heaney affirmed a district court holding. The Commission was an amicus curiae in the litigation.
Background
Under the Minnesota Congressional Campaign Reform Act, U.S. House and Senate candidates on the general election ballot may choose to limit their campaign expenditures to specified amounts. A contributor to these candidates can then receive up to a $50 refund from the state. If one candidate agrees to the limit but the major party opponent does not, neither candidate is subject to the spending limit, but the first candidate is entitled to a public funding grant from the state. Violations of the voluntary expenditure limit are subject to civil penalties of up to four times the amount of the excess spending.
The FECA "supersede[s] and preempt[s] any provision of state law with respect to election to Federal office." 2 U.S.C. §453. The FEC addressed the Minnesota preemption question in AO 1991-22, requested by three members of the Minnesota delegation to the U.S. Congress. The Commission concluded that the Campaign Reform Act sought to regulate an area under the sole authority of federal law and was therefore preempted. The requesters, seeking the same ruling from the courts, filed suit against the state officials responsible for enforcing the Campaign Reform Act.
District Court Decision
In deciding whether the FECA preempted the Minnesota Act, the U.S. District Court for the District of Minnesota found that §453 and its legislative history were too ambiguous to provide much guidance and therefore looked to the FEC's interpretation of §453 in its regulations. (11 CFR 108.7 provides, in part, that federal law supersedes state law in the area of expenditure limitations.) The court found that "this regulation is probably the most persuasive evidence that section 453 was intended to preempt all state laws purporting to regulate congressional campaign expenditures." The court noted that the regulation passed Congressional review in 1977. "Thus, the Court infers that this regulation, because it was tacitly approved by Congress, represents a valid interpretation of Congressional intent." The court also accorded deference to the Commission's conclusion in AO 1991-22.
On June 11, 1992, the court held that the Minnesota Campaign Reform Act was preempted in its entirety based on the FEC's interpretation of §453. The court permanently enjoined Minnesota from implementing or enforcing the Act. (No. 4-91-1009.)
Court of Appeals Decision
Concluding that §453 was susceptible to more than one reading, the court of appeals nevertheless held that "under every plausible reading of §453, the Campaign Reform Act falls squarely within the boundaries of the preempted domain." (No. 92-2458.)
Like the district court, the court of appeals was persuaded by the FEC preemption regulation: "We find this duly authorized regulation is a further express preemption of the Campaign Reform Act."
The court rejected appellants' argument that the regulation was not applicable to voluntary expenditure limits. The court even questioned whether the limits were "truly voluntary" in light of the benefits bestowed on those who complied with them and the penalties imposed on those who did not.
Source: FEC Record, August 1993, p. 1.
WHITE v. FEC
On April 24, 1992, the U.S. District Court for the Western District of Pennsylvania granted the FEC's motion to dismiss this case based on the report and recommendation of the magistrate judge, which the court adopted as its opinion. (Civil Action No. 91-1201.)
William D. White challenged the constitutionality of 11CFR 110.11(a), which permits candidates (except those receiving public funding1) to make unlimited contributions of personal funds to their own campaigns. Mr. White claimed that the rule violated the equal protection provision of the Fifth Amendment by conferring a privilege on candidates that is denied to other citizens. He sought an order compelling candidates to pay a penalty in the amount of their excessive contributions. He also sought a preliminary injunction barring candidates from making contributions to their own campaigns in excess of $1,000. The court denied that motion on August 26, 1991.
In ruling on the issues, the court pointed out that the Supreme Court upheld the challenged provision in Buckley v. Valeo. In that case, the High Court recognized that "the use of personal funds reduces the candidate's dependence on outside contributions and thereby counteracts the coercive pressures and attendant risks of abuse to which the [Federal Election Campaign] Act's contribution limitations are directed." The district court also cited California Medical Association v. FEC, in which the Supreme Court held that the disparities in the Act's contribution provisions do not violate equal protection rights.
Because the Supreme Court has already ruled on the issue raised by Mr. White, the district court found that there was no need to certify his constitutional challenge pursuant to 2 U.S.C. §437h.2 The court therefore granted the FEC's motion to dismiss based on plaintiff's failure to state a claim for which relief may be granted.
Source: FEC Record, July 1992, p. 9.
1 Presidential candidates who receive public funds are subject to a $50,000 limit on contributions to their own campaigns.
2 This provision provides for review of constitutional issues: the U.S. district court immediately certifies to the U.S. court of appeals all questions of the constitutionality of the Federal Election Campaign Act.
WHITE v. FEC
On July 31, 1997, the U.S. District Court for the District of Columbia granted the FEC's request for summary judgment and dismissed this case.
William D. White, the plaintiff, had charged in this suit that the FEC had acted contrary to law when it dismissed and closed an administrative complaintlater designated MUR 3920he had filed in November 1994.
Source: FEC Record, October 1997, p. 2.
White v. FEC, 1997 WL 459849 (D.D.C. July 31, 1997).
WHITMORE v. FEC
On December 9, 1994, the U.S. District Court for the District of Alaska dismissed Whitmore and Quinlan v. FEC, in which the plaintiffs challenged the constitutionality of permitting federal candidates for the Alaska at-large seat in the U.S. House of Representatives to accept contributions from individuals and PACs residing outside of Alaska.
The U.S. Court of Appeals for the Ninth Circuit, on October 26, 1995, affirmed the district court's dismissal.
District Court Decision
Joni Whitmore was the Green Party's 1994 candidate for U.S. House Representative from Alaska. She refused out-of-state contributions throughout her campaign. James Quinlan is a resident of Alaska. Plaintiffs argued that the Federal Election Campaign Act (the Act) permitted out-of-state contributions, which violated their constitutional rights, hurt Ms. Whitmore's candidacy and diluted Mr. Quinlan's vote.
The court found that the plaintiffs lacked standing to bring this case because they did not demonstrate injury-in-fact or causation, or that the relief they sought would redress the alleged injury.
An injury-in-fact must affect a plaintiff in a personal and individual way. The court deemed Ms. Whitmore's alleged injury to be hypothetical and speculative. The court found no evidence to suggest that Ms. Whitmore would have fared better in the election if out-of-state contributions had been prohibited. As to the allegation that the Act injures Mr. Quinlan by depriving him of his right to equal protection and to be governed by a republican form of government, the court said there was no injury-in-fact because all candidates were free to solicit and receive contributions.
To show causation, a plaintiff's injury must be traceable to the challenged action of the defendant. The court stated that Ms. Whitmore failed to present any facts indicating that the government had caused non-Alaskans to contribute to her opponents, prevented her from soliciting such contributions or prevented non-Alaskans from contributing to her. The Act, the court found, does not treat the plaintiffs any differently than other American citizens.
Lastly, the court stated that there was no evidence to show that prohibiting her opponents from accepting out-of-state contributions would redress Ms. Whitmore's injury; the effect of out-of-state contributions on her campaign was wholly speculative.
The court said " . . . to accomplish the result plaintiffs seek, the court would have to add to [the Act] a prohibition [on] nonresident contributions, which it is not permitted to do. . . . [R]egulation of federal elections is more appropriately committed to the legislature, not to the judiciary."
Appeals Court Decision
The court of appeals affirmed the district court's dismissal of this case on grounds that plaintiffs lacked standing under Article III of the constitution to file this suit and that, even if they had standing, their claims were frivolous.
Source: FEC Record, February 1995, p. 7; and March 1996, p. 6.
Whitmore v. FEC, No. A94-289 CIV (JWS) (D.C. Alaska Sept. 16, 1994) (denying preliminary injunction); (D.C. Alaska Dec. 8, 1994) (opinion); No. 94-36236 (9th Cir. Oct. 26, 1995).
WILSON v. U.S.A.
On March 2, 1995, the U.S. District Court for the Northern District of California upheld the constitutionality of the National Voter Registration Act (NVRA). Additionally, the court ordered the State of California to present a proposed plan for implementing the NVRA within 10 days of this decision.
The U.S. Court of Appeals for the 8th Circuit upheld the district court's decision on July 25, 1995.
The NVRA, a federal law that went into effect on January 1, 1995, mandated that states requiring advance registration to vote in federal elections must permit voter registration by: mail-in application; simultaneous application with driver's license application, renewal, or change of address; and simultaneous application at disability and public assistance agencies as well as other agencies designated by the state.1
California Governor Pete Wilson filed suit in the district court against the federal government (including the FEC) on December 20, 1994. In his suit, Governor Wilson argued that the NVRA, as an unfunded federal mandate, was unconstitutional under the Tenth Amendment, which reserves to the states those powers not delegated to the federal government by the Constitution.
The district court, however, deemed that Article I, Section 4, of the Constitution does indeed delegate to the federal government the authority to enforce the NVRA:
"The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof, but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing [sic] Senators."
Source: FEC Record, May 1995, p. 1.
Wilson v. U.S.A., Nos. C 95-20042 JW and C 94-20860 JW (N.D. Cal. Mar. 2, 1995).
1 The FEC is the federal agency entrusted with the development of a National Voter Registration Form. This form has been available since January 1. The FEC is also required to submit a report to Congress every 2 years assessing the impact of the National Voter Registration Act and suggesting improvements in voter registration forms and procedures.
XEROX CORP. v. AMERICANS WITH HART
KROLL v. AMERICANS WITH HART
On March 10, 1988, the U.S. District Court for the District of Columbia granted the FEC's motion to vacate two writs of attachment filed by creditors of Americans with Hart, Inc., Gary Hart's 1984 publicly funded Presidential campaign. The court also dismissed the FEC as a party to the cases and remanded the cases to the Superior Court for the District of Columbia. (Xerox Corp. v. Americans with Hart, Inc. and Harry Kroll v. Americans with Hart, Inc.; Civil Action Nos. 88-0086 and 88-0211, respectively.) The court has not yet acted on the FEC's motion to dismiss a third writ of attachment filed by Semper-Moses Associates, Inc., another creditor of the 1984 Hart campaign.
Background
The Commission declared Gary Hart eligible to receive matching funds on December 28, 1987, 13 days after his decision to reenter the 1988 campaign for the Presidency.
On December 28, 1987, and again on January 12, 1988, the Commission was served with writs of attachment for assets belonging to the 1984 Hart campaign. The General Counsel filed motions with the district court which sought to have the writs vacated. Because the creditors who served the writs were in litigation with the 1984 Hart campaign, the Commission also authorized the General Counsel to send letters advising the creditors that no federal statute authorized diversion of matching funds by the government to any other party. Moreover, the letters said that any attempt to execute a creditor's judgment against funds of the United States government would be barred by sovereign immunity.
In addition, the letters noted that the Commission did not possess any assets which belonged to the 1984 Hart campaign. The Commission had certified that Hart was eligible to receive matching funds for his 1988 Presidential nomination campaign. The 1988 campaign was called Friends of Gary Hart-1988, Inc., a separate corporate entity from Americans with Hart.
In conclusion, the letters explained that the Commission did not hold any matching payments that the candidate might be entitled to; nor did it make the actual payment of primary matching funds. Under the Presidential Account Primary Matching Payment Account Act, the Commission determines the eligibility of candidates to receive matching funds and certifies the amount the candidate is to receive to the Secretary of the Treasury. The Secretary, not the Commission, is responsible for making the payment.
Source: FEC Record, May 1988, p. 6.