FEC v. California Democratic Party, et al. (02CV00875)

On March 17, 2003, the Commission filed a complaint in the U.S. District Court for the District of California, Sacramento Division, against the California Democratic Party (CDP), its federal account, the Democratic State Central Committee of California-Federal, its non-federal account, the Democratic State Central Committee of California-Non-federal, and Katherine Moret, the treasurer of the CDP's federal and nonfederal accounts The Commission alleges that in its get-out-the-vote (GOTV) activities for a 1998 special election, the CDP:

• Violated the Federal Election Campaign Act's (the Act) ban on corporate and labor union contributions;
• Failed to report its activities as independent expenditures; and
• Failed to include the required disclaimer on GOTV communications.

Background

Under the Act, political party committees must only spend funds that are consistent with the limits and prohibitions of the Act to influence a federal election. Among other restrictions, the Act prohibits corporations and labor unions from makings any contribution in connection with a federal election, and also prohibits a political committee from receiving such a contribution. 2 U.S.C. §441b. See also 2 U.S.C. §§431(8), 441a, 441(b), 441(c), 441(e), 441(f) and 441(g); 11 CFR parts 100, 110, 114 and 115. A party committee that maintains both federal and nonfederal accounts may pay for some mixed federal/nonfederal activities with a combination of federal and nonfederal funds using the allocation rules set forth in Commission regulations. See 11 CFR 106.5. However, any expenditure made by a political party committee for activities that urge the public to vote for a clearly identified federal candidate must be made with federally-permissible funds.

In the 22nd Congressional District of California, a special general election was held on March 10, 1998, to fill a House seat left vacant after the death of Walter Capps. This federal office was the only office on the ballot for the special election, and Lois Capps was the only candidate on the ballot nominated by the Democratic Party. According to the complaint, the CDP paid $99,097 for direct mailings and radio advertisements that contained statements urging the public to vote on March 10th for Lois Capps. In its FEC disclosure reports, the CDP reported the expenditures for these communications as mixed federal/nonfederal activity, and it paid for the costs of these communications with funds from both its federal and nonfederal accounts. Of the $99,097 spent on the communications, $77,281 came from the CDP's nonfederal funds, which, the Commission contends, contained funds prohibited under the Act, including corporate and union funds.

The Commission asserts that these communications violated the Act in several respects. First, a GOTV drive conducted in connection with an election in which only federal candidates appear on the ballot is not a mixed federal/nonfederal activity. The expenditures for these communications were required to have been paid entirely from federal funds. 2 U.S.C. §441(b); 11 CFR 102.5. Second, the Commission contends that these communications, which included phrases such as "Continue the Walter Capps Tradition" and "Vote Democratic" in the "Special Election, Tuesday, March 10," expressly advocated the election or defeat of a clearly identified federal candidate and, thus, required a disclaimer stating both who paid for the communication and whether it was authorized by a candidate. 2 U.S.C. §441d(a) and 11 CFR 110.11(a)(1). These communications did not contain the required disclaimers. Third, the Commission argues that the communications were independent expenditures and that the committee violated the Act by failing to properly disclose them as such in its FEC reports.[1]

Relief

The Commission asks that the court:

• Declare that the defendants violated these provisions of the Act and Commission regulations;
• Permanently enjoin the defendants from further such violations of the Act;
• Order the defendants to transfer $77,281 from the Democratic State Central Committee of California-Federal to the CDP's nonfederal account;
• Order the defendants to correct reports for the 1998 special general election in order to accurately describe these activities as independent expenditures; and
• Assess an appropriate civil penalty against the defendants jointly and severally for each violation found, not in an amount to exceed the greater of $5,500 or the amount of the expenditures involved for each violation. See 2 U.S.C. §437g(a)(6)(B) and 11 CFR 111.24.

FOOTNOTE:

[1] The Act defines an "independent expenditure" as an expenditure that expressly advocates the election or defeat of a clearly identified federal candidate and is not made in cooperation or consultation with any candidate, candidate's committee or their agents and is not made in concert with or at the request or suggestion of any of these. 2 U.S.C. §431(17). See also 11 CFR 109.1(b)(4). Independent expenditures must be paid for with federally permissible funds and must be reported under 2 U.S.C. §§434(b)(4)(H)(iii) and (6)(B)(iii).

Source:   FEC Record — May 2003