A legal defense fund may be established to pay the costs incurred by a Congressional campaign committee in defending against a copyright infringement and misappropriation lawsuit. The monies received and spent by the fund would not be “contributions” or “expenditures” as defined in the Federal Election Campaign Act (the Act) and Commission regulations.
Robin Carnahan for Senate (the Committee) is the principal campaign committee for Ms. Carnahan, who was a candidate in the 2010 Senate election in Missouri. On September 15, 2010, Fox News Network, LLC, and Chris Wallace filed a complaint against the Committee alleging that an ad aired by the Committee that contained footage of a Fox News interview infringed Fox News’ copyright, invaded Mr. Wallace’s rights of privacy and publicity and misappropriated his likeness and persona (the Fox News lawsuit). The litigation was recently settled by the parties. The Committee’s costs to defend the lawsuit total more than $85,000, and may continue to accrue until the settlement is finalized.
The Committee proposes that a separate legal defense fund (the Fund) be established to defray the Committee’s legal costs. The Fund would be independent from the Committee and would not be administered or controlled by the Committee. The Committee would not be involved in soliciting donations to the Fund. None of the individuals involved in establishing, administering or operating the Fund would be federal candidates or federal officeholders. Solicitations for the Fund, either in person or in writing, would be accompanied by a letter stating the purpose of the Fund and noting that no amounts given to the Fund would be used for the purpose of influencing any federal election. Solicitations for the Fund would be conducted separately from any solicitations for the Committee or any other federal political committee. The Fund plans to accept unlimited amounts from individuals, political committees, corporations and labor organizations. The Fund would terminate once all legal costs were paid, and any excess funds would be refunded or donated to charity.
The Act and Commission regulations define the term “contribution” as any gift, subscription, loan, advance or deposit of money or anything of value made by any person for the purpose of influencing any election for federal office. 2 U.S.C. § 431(8)(A); 11 CFR 100.52(a). Similarly, the term expenditure is defined as any purchase, payment, distribution, loan, advance, deposit or gift of money or anything of value made by any person for the purpose of influencing any election for federal office. 2 U.S.C. § 431(9)(A); 11 CFR 100.111(a).
The Commission has previously concluded that funds received or disbursed for the purpose of defending against certain types of lawsuits are not for the purpose of influencing a federal election, and are therefore not contributions or expenditures. See AOs 1981-16, 1981-13 and 1980-04.
The money received and disbursed by the Fund would be strictly for the purpose of paying the Committee’s legal costs in connection with the Fox News lawsuit. Specifically, this money would compensate the Committee’s counsel for legal services that enabled the Committee to present a defense to a civil complaint in a lawsuit alleging copyright infringement, invasion of privacy and right of publicity, and misappropriation of likeness and identity, and to settle the case. The proposed Fund would be established and administered separately and independently from the Committee. Solicitations for the Fund would be conducted separately from any solicitation for the Committee, and all amounts received by the Fund will be held separately from the Committee’s funds. No amounts given to the Fund could be used for the purpose of influencing any federal election. Therefore such receipts and disbursements would not be “contributions” to, or “expenditures” by, the Fund, as defined in the Act and Commission regulations, nor would they be in-kind “contributions” from the Fund to the Committee.
Since the funds received and disbursed by the Fund are not contributions or expenditures, they are not subject to the source prohibitions, amount limitations or reporting requirements of the Act and Commission regulations.
Accordingly, nothing in the Act or Commission regulations would limit or prohibit the Fund from receiving unlimited donations from individuals, political committees, corporations and labor organizations. Also, the Fund would not be required to register or file disclosure reports under the Act or Commission regulations.
AO 2011-01: Date issued: February 17, 2011; Length: 4 pages.