On January 21, 2010, the Supreme Court issued a ruling in Citizens United v. Federal Election Commission overruling an earlier decision, Austin v. Michigan State Chamber of Commerce (Austin), that allowed prohibitions on independent expenditures by corporations. The Court also overruled the part of McConnell v. Federal Election Commission that held that corporations could be banned from making electioneering communications. The Court upheld the reporting and disclaimer requirements for independent expenditures and electioneering communications. The Court’s ruling did not affect the ban on corporate contributions.
The Federal Election Campaign Act (the Act) prohibits corporations and labor unions from using their general treasury funds to make electioneering communications or for speech that expressly advocates the election or defeat of a federal candidate. 2 U.S.C. § 441b. An electioneering communication is generally defined as “any broadcast, cable or satellite communication” that is “publicly distributed” and refers to a clearly identified federal candidate and is made within 30 days of a primary or 60 days of a general election. 2 U.S.C. § 434(f)(3)(A) and 11 CFR 100.29(a)(2).
In January 2008, Citizens United, a non-profit corporation, released a film about then-Senator Hillary Clinton, who was a candidate in the Democratic Party’s 2008 presidential primary elections. Citizens United wanted to pay cable companies to make the film available for free through video-on-demand, which allows digital cable subscribers to select programming from various menus, including movies. Citizens United planned to make the film available within 30 days of the 2008 primary elections, but feared that the film would be covered by the Act’s ban on corporate-funded electioneering communications that are the functional equivalent of express advocacy, thus subjecting the corporation to civil and criminal penalties. Citizens United sought declaratory and injunctive relief against the Commission in the U.S. District Court for the District of Columbia, arguing that the ban on corporate electioneering communications at 2 U.S.C. § 441b was unconstitutional as applied to the film and that disclosure and disclaimer requirements were unconstitutional as applied to the film and the three ads for the movie. The District Court denied Citizens United a preliminary injunction and granted the Commission’s motion for summary judgment. The Supreme Court noted probable jurisdiction in the case.
Supreme Court decision
The Supreme Court found that resolving the question of whether the ban in § 441b specifically applied to the film based on the narrow grounds put forth by Citizens United would have the overall effect of chilling political speech central to the First Amendment. Instead, the Court found that, in exercise of its judicial responsibility, it was required to consider the facial validity of the Act’s ban on corporate expenditures and reconsider the continuing effect of the type of speech prohibition which the Court previously upheld in Austin.
The Court noted that § 441b’s prohibition on corporate independent expenditures and electioneering communications is a ban on speech and “political speech must prevail against laws that would suppress it, whether by design or inadvertence.” Accordingly, laws that burden political speech are subject to strict scrutiny,” which requires the government to prove that the restriction furthers a compelling interest and is narrowly tailored to achieve that interest. According to the Court, prior to Austin there was a line of precedent forbidding speech restrictions based on a speaker’s corporate identity, and after Austin there was a line permitting them. In reconsidering Austin, the Court found that the justifications that supported the restrictions on corporate expenditures are not compelling. The Court in Austin identified a compelling governmental interest in limiting political speech by corporations by preventing “the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideas.” However, in the current case the Court found that Austin’s “antidistortion” rationale “interferes with the ‘open marketplace of ideas’ protected by the First Amendment.” According to the Court, “[a]ll speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech, and the First Amendment protects the resulting speech.” The Court held that the First Amendment “prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.” The Court further held that “the rule that political speech cannot be limited based on a speaker’s wealth is a necessary consequence of the premise that the First Amendment generally prohibits the suppression of political speech based on the speaker’s identity.”
The Court also rejected an anticorruption rationale as a means of banning independent corporate political speech. In Buckley v. Valeo, the Court found the anti-corruption interest to be sufficiently important to allow limits on contributions, but did not extend that reasoning to overall expenditure limits because there was less of a danger that expenditures would be given as a quid pro quo for commitments from that candidate. The Court ultimately held in this case that the anti-corruption interest is not sufficient to displace the speech in question from Citizens United and that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.”
The Court furthermore disagreed that corporate independent expenditures can be limited because of an interest in protecting dissenting shareholders from being compelled to fund corporate political speech. The Court held that such disagreements may be corrected by shareholders through the procedures of corporate democracy.
Finally, Citizens United also challenged the Act’s disclaimer and disclosure provisions as applied to the film and three ads for the movie. Under the Act, televised electioneering communications must include a disclaimer stating responsibility for the content of the ad. 2 U.S.C. § 441d(d)(2). Also, any person who spends more than $10,000 on electioneering communications within a calendar year must file a disclosure statement with the Commission identifying the person making the expenditure, the amount of the expenditure, the election to which the communication was directed and the names of certain contributors. 2 U.S.C. § 434(f)(2). The Court held that, although disclaimer and disclosure requirements may burden the ability to speak, they impose no ceiling on campaign activities and do not prevent anyone from speaking. As a result, the disclaimer and disclosure requirements are constitutional as applied to both the broadcast of the film and the ads promoting the film itself, since the ads qualify as electioneering communications.
The text of the Supreme Court’s opinion is available on the Commission’s website at http://www.fec.gov/law/litigation/cu_sc08_opinion.pdf.
U.S. Supreme Court No. 08-205.