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FEC v. Massachusetts Citizens for Life

Summary

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

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

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

District court ruling

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

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

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

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

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

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

Appeals court ruling

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

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

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

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

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

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

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

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

Supreme Court decision

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

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

  • The organization must be formed "for the express purpose of promoting political ideas, and cannot engage in business activities. If political fundraising events are expressly denominated as requests for contributions that will be used for political purposes, including direct expenditures, these events cannot be considered business activities."
  • The organization must have "no shareholders or other persons affiliated so as to have a claim on its assets or earnings."
  • The organization must not have been established by a business corporation or a labor union, and must adopt a policy "not to accept contributions from such entities."

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

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

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

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

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

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

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

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

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

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

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

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

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

Dissents

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

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

FOOTNOTES:

1. The election law and FEC regulations define an independent expenditure as an expenditure for a communication expressly advocating the election or defeat of a clearly identified candidate that is not made with the cooperation or prior consent of, or in consultation with, or at the request or suggestion of, any candidate or his/her authorized committee or agents.

2. U.S.C. §431 (17); 11 CFR 110.16 and 109.1(a). 2 Under the election law and FEC regulations, a news story, commentary, or editorial by any broadcasting station, newspaper, magazine, or other periodical publication is not considered an expenditure, provided the station or publication is not owned or controlled by a political party, committee or candidate. 2 U.S.C. §431(9)(B)(i); 11 CFR 100.8(b)(2).

Source:   FEC RecordFebruary 1987; October 1985; August 1984

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

Documents

Supreme Court (85-701)

Court decisions:

Related documents:

Appeals Court (1st Circuit) (84-1719)

Court decisions:

Related documents: