FEC v. Phillips Publishing
On July 16, 1981, the U.S. District Court for the District of Columbia denied an FEC petition for court enforcement of two subpoenas the Commission had issued to Phillips Publishing, Inc. (FEC v. Phillips Publishing, Inc., Civil Action No. 81-0079). The court granted the respondent's motion to enjoin any further FEC investigation of either Phillips Publishing, Inc. or its biweekly newsletter, The Pink Sheet on the Left (The Pink Sheet).
The FEC had issued the subpoenas to the staff of Phillips Publishing, Inc. as part of an investigation into a complaint filed by the Kennedy for President Committee on March 18, 1980. The Kennedy Committee claimed that the publishing company had distributed a promotional mailing for The Pink Sheet that expressly advocated the defeat of Senator Edward Kennedy (D-Mass.) in his bid for the 1980 Presidential nomination. The Kennedy Committee alleged that, in making expenditures for the mailing, the respondent had violated the following provisions of the Act:
- §433, by failing to register as a political committee;
- §434(c)(1), by failing to report independent expenditures for the mailing in excess of $250;
- §435(b), by failing to include a notice on the mailing indicating that committee reports were available at the FEC and could be purchased;
- §441(b), by making a prohibited corporate expenditure advocating the defeat of a candidate in a federal election; and
- §441(d), by failing to identify who had paid for and authorized the mailing.
In responding to these allegations, Phillips Publishing, Inc. contended that, since The Pink Sheet was a periodical and was not controlled by any political party, candidate or committee, the promotional mailing constituted a news activity exempted from the Act's definition of contribution or expenditure. 2 U.S.C. §431(9)(B)(i). In finding reason to believe the alleged violations had occurred, the FEC concluded that this issue, as well as others, had to be investigated further to make a factual determination with regard to the respondent's claim that the promotional mailing constituted an exempted news activity. Based on a facial comparison, the Commission noted, for example, that the title of the solicitation letter was not printed in the same format as that of the regular Pink Sheet newsletter, that the mailing did not contain legends normally carried on The Pink Sheet and that the respective contents of the mailing and The Pink Sheet were dissimilar. Moreover, the promotional mailing was not distributed through the facilities of a periodical publication.
On April 8, 1981, after company officials to whom the subpoenas had been directed failed to respond, the Commission filed its petition with the district court. On May 29, 1981, Phillips Publishing, Inc. filed a motion to dismiss the FEC's petition and a motion to bar any further investigation of The Pink Sheet and the promotional mailing.
District court ruling
In denying the FEC's petition for enforcement of the subpoenas, the court found that the FEC had sufficient information to determine that the mailing met the criteria for the news story exemption. "As early as April 1980, the FEC received responses from Phillips Publishing, through its counsel, stating that The Pink Sheet and its publisher 'are not political committees, do not solicit or receive any political contributions, or make any contributions to any candidate.... '" Moreover, the court said, "...the solicitation letter was to publicize The Pink Sheet and to obtain new subscribers, both of which are normal, legitimate press functions.... " The court concluded, therefore, that the FEC's petition for further information should be denied.
Motion to appeal withdrawn
On October 30, 1981, the U.S. Court of Appeals for the District of Columbia Circuit granted the FEC's motion to withdraw its appeal of FEC v. Phillips Publishing, Inc. (Civil Action No. 81-2015). In a motion filed on October 21, 1981, the Commission stated that it was withdrawing the appeal "in the interest of judicial economy," but that it continued to believe "the district court's decision was erroneous."
 This section was stricken from the Federal Election Campaign Act (the Act) by the 1979 Amendments to the Act (Pub. L. No. 96-187, January 8, 1980).