FEC v. Reform Party of USA

On March 5, 2007, the U.S. Court of Appeals for the 11th Circuit affirmed the district court decision requiring the Reform Party of the United States (the Reform Party) to repay $333,558 in public funds to the U.S. Treasury. The court also ruled that all challenges to FEC repayment determinations must occur in the U.S. Court of Appeals for the District of Columbia. The repayment stems from an FEC audit of the Reform Party’s 2000 Presidential nominating convention committee where the Commission found that the Reform Party impermissibly spent a portion of its public funding on non-convention related expenditures.

Background

The Reform Party received $2,522,690.00 in public funds for its 2000 Presidential nominating convention. Based on the results of a mandatory post-convention audit, the Commission determined that the Reform Party must repay $333,558 to the U.S. Treasury as a result of impermissible expenditures. See 26 U.S.C. § 9008(c) and 11 CFR 9008.7(a). The Reform Party repeatedly asked both the Commission and the courts to review its repayment obligation, but most of its requests were not filed within statutory and regulatory deadlines, and all were denied. The Commission filed suit in the Northern District of Florida to enforce the repayment obligation.

On November 22, 2005, the district court held that because the U.S. Court of Appeals for the District of Columbia is the only venue in which repayment determinations made by the Commission may be challenged, the Reform Party could not raise defenses that it failed to properly bring to the DC Circuit. The court granted the FEC’s motion for summary judgment and ordered the Reform Party to repay the total plus interest calculated in accordance with 11 CFR 9007.2(d)(3). The court also enjoined the Reform Party from diverting any of its assets to any other expenditures, other than payment of federal taxes, until it completes its repayment obligation.

Appeals court decision

The defendant appealed the district court decision, arguing that summary judgment was improperly granted because:

• The district court erroneously found it did not have jurisdiction to hear the Reform Party’s defenses and claims against the Commission;
• The Reform Party was denied discovery; and
• The injunction violates the Reform Party’s first amendment right to free speech.

On March 1, 2007, the U.S. Court of Appeals for the 11th Circuit affirmed the district court’s decision. The appeals court agreed that the district court lacked jurisdiction to review the repayment obligation because the Act clearly designates the DC Circuit as the forum for judicial review of any certification, determination or other action by the Commission. The appeals court also found no procedural irregularity in the grant of summary judgment because the Reform Party failed to demonstrate how discovery would have assisted it in rebutting the Commission’s showing that there were no genuine issues of fact concerning the final and conclusive repayment determination. Finally, the appeals court did not consider whether the injunction violates the first amendment because the argument was raised for the first time on appeal.

District Court docket No. 04- 00079-CV-MP-AK