FEC v. Haley Congressional Committee
On February 24, 1987, the U.S. District Court for the Western District of Washington at Tacoma granted the defendants' motion for summary judgment in FEC v. Ted Haley Congressional Committee (Civil Action No. 85-1185). The district court dismissed the suit with prejudice, finding no violation of federal election law regarding contribution limitations (2 U.S.C. §441a(a)(1)(A) and 441a(f)). The court concluded, alternatively, that if there was a violation, no civil penalty would be assessed.
On July 22, 1988, the U.S. Court of Appeals for the Ninth Circuit issued a decision which reversed the district court ruling. Though finding that the defendants had, in fact, violated the contribution limitations, the appeals court upheld the lower court's refusal to assess a civil penalty.
On November 22, 1988, the court issued an amended judgment responding to the remand order.
The Ted Haley Congressional Committee was the principal campaign committee for Mr. Haley's bid for a House seat in Washington 's 1982 Congressional primaries. After the election, Mr. Haley obtained a $50,000 personal loan from a local bank to retire debts outstanding from his campaign. To secure the loan, Mr. Haley obtained guarantees from several friends, that is, the six other defendants in the suit. (Four of the defendants provided guarantees of $10,000 each; two provided guarantees of $5,000 each.) The loan and the guarantees were reported by Mr. Haley's campaign in its 1983 mid-year report. By the end of 1983, Mr. Haley had fully repaid the loan.
Under the election law and FEC regulations, an endorsement or guarantee of a loan, like a regular loan, counts as a contribution from the endorser or guarantor to the extent of his/her portion of the outstanding balance of the loan. 11 CFR 100.7(a)(1)(i)(C). Consequently, each guarantor for Mr. Haley's campaign loan exceeded his/her $1,000 limit for Mr. Haley's primary campaign. On October 30, 1984, the Commission therefore found reason to believe that:
- The loan guarantors had made excessive contributions to the Haley Campaign in the form of loan guarantees (2 U.S.C. §441a(a)(9)(A)); and
- The Haley campaign and its treasurer had, in turn, violated the election law by accepting the excessive contributions (2 U.S.C. §441a(f)).
On July 30, 1985, after attempting to resolve this enforcement matter through informal methods of conciliation, the Commission filed a suit against defendants in the U.S. District Court for the Western District of Washington.
District court ruling
The court found that "post-election loan guarantees, such as those made here, are presumptively for the purpose of influencing an election under the statute and regulations. This presumption, however, is not conclusive, but rebuttable. It simply allows the FEC to shift the burden of proof to defendants after a minimal showing."
The court held that the defendants had successfully rebutted this presumption by showing that the "facts [of the case] are not in issue, and that those facts lead to the legal conclusion that the guarantees in issue were not for the purpose of influencing any election." Thus the guarantees should not have been viewed as contributions (i.e., funds received to influence a federal election). As evidence that the loan guarantees were not made to influence a federal election, the court cited "the timing of the solicitation [of loan guarantees after the election], the nature of the relationships between Haley and the guarantors, their intent in making and accepting the guarantees and the facts and circumstances of Haley's [re]payment.... " of the loan.
The court also found "no justifiable ground" for assessing a civil penalty against defendants, even if it were to conclude the defendant had violated the election law. On April 23, 1987, the FEC filed an appeal with the U.S. Court of Appeals, 9th Circuit (Civil Action No. 87-3867).
Appeals court ruling
In reviewing the case on appeal, the appeals court held that, since Congress had not precisely addressed the issue of whether donations made to a campaign committee after the election constituted contributions for the purpose of influencing a federal election, the court could "not simply impose its own construction on the statute...." Rather, the court had to decide whether the FEC had based its interpretation of the statute on a "permissible construction.... "
The court found that the FEC's interpretation of the relevant statutory provisions through its regulations and advisory opinions was a "permissible" interpretation of the election law. For example, when the FEC promulgated a regulation in 1976 stating that post-election contributions were subject to limits, Congress did not disapprove it. In the court's view, "Congress' acquiescence [was] made more concrete in view of several advisory opinions the FEC has issued on the subject."
The appeals court therefore held that "the district court erred when it substituted its interpretation of the statute and regulations rather than giving deference to the FEC's interpretation of its enabling statute and its own promulgated regulations and advisory opinions...The appellees [the Haley Congressional Committee] cannot choose to ignore that interpretation of the regulatory scheme and urge this court to substitute its own construction for that of the FEC."
The appeals court found that the district court had not abused its discretion in finding that a civil penalty for the defendants' violations of the election law was "unwarranted." Consequently, the appeals court decided not to "disturb that finding and conclusion."
Finally, the appeals court vacated the district court's award of attorneys' fees to the defendants. Since the defendants were no longer the "prevailing party" in the case, the appeals court held that all parties to the suit had to bear their own litigation costs.
District court ruling on remand
In its amended judgment, the district court:
- Reversed its February 1987 decision in the suit in favor of the FEC;
- Ordered that no civil penalties be assessed against defendants; and
- Vacated its order awarding attorneys' fees to defendants.