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On March 6, 2008, the U.S. District
Court for the Central District of California denied defendant Stephen Adams’ motion to dismiss and granted
the Commission’s motion for partial judgment on the pleadings. Following that decision, the Commission’s
counsel and the defendant reached a proposed settlement agreement
and the court stayed the case.
Under the Federal Election Campaign Act (the Act), persons who make independent expenditures at any time during the calendar year, up to and including the 20th day before an election, must disclose this activity within 48 hours each time that the expenditures aggregate $10,000 or more. 2 U.S.C. §434(g)(2)(A). This report discloses the amount of the independent expenditure and certifies that the expenditure was not coordinated with a candidate or political party. Independent expenditures are also required to carry a disclaimer clearly stating the name and permanent street address, telephone number or web address of the person who paid for the communication and that the communication was not coordinated with any candidate or candidate’s committee. 2 U.S.C. §441d(a)(3).
In June 2004, Mr. Adams contracted for a $1 million ad campaign to place billboards in support of President Bush’s re-election in four battleground states: Michigan, Pennsylvania, Wisconsin and South Carolina. Mr. Adams’ billboard ads, which expressly advocated the election or defeat of a federal candidate, were independent expenditures under the Act and were required to be reported. The billboards first appeared on September 7, 2004, and ran through the date of the general election. Mr. Adams did not file the required independent expenditure reports until October 28, 2004—just five days before the general election. Moreover, the billboards’ disclaimers initially read “Personal message paid for and sponsored by Stephen Adams,” and did not contain all of the required disclaimer information.
The Commission received two administrative complaints regarding alleged violations of the Act and, on November 8, 2006, found probable cause to believe that violations had occurred. The Commission was not able to reach an acceptable conciliation agreement with Mr. Adams through informal methods and, thus, filed a complaint in federal court.
See 2 U.S.C. §437(g)(4)(A)(i).
On July 6, 2007, the FEC filed a complaint in the U.S. District Court for the Central District of California against Stephen Adams, charging that he failed to report and include proper disclaimers on $1 million worth of billboard ads during the 2004 Presidential race.
The Commission asked the court to:
Motion to Dismiss. The district court denied the defendant’s motion to dismiss, in which the defendant argued that the Commission failed to “meet its statutory obligation to make a good faith effort to conciliate prior to filing suit.” The court found that the Commission satisfied the Federal Election Campaign Act (the Act) by attempting to conciliate with the defendant. The court deferred to the Commission’s judgment as to the specifics of the proposed conciliation agreements offered by the Commission and the defendant.
Judgment as to Six Affirmative Defenses. The district court also granted the Commission’s motion for partial judgment on the pleadings.
The defendant asserted eight affirmative defenses, and the Commission
sought to strike six of the defenses. The court agreed with the Commission and found that the six challenged defenses had no basis as a matter of law. Two of the affirmative defenses dealt with the defendant’s claim that the Commission failed to properly conciliate. Since the court found that the Commission attempted to conciliate adequately, it struck these two defenses.
The other four challenged affirmative defenses involved claims that the Act’s independent expenditure reporting requirement violates the First Amendment and that the Commission’s enforcement of that provision violates the Due Process Clause of the Constitution. Regarding the First Amendment claim, the court followed U.S. Supreme Court and Ninth Circuit precedent, dismissing the affirmative defenses and holding that, while the Act “may infringe on some First Amendment freedoms, the infringement is minimal and reasonable to keep the electorate fully informed about the source of campaign funds and to deter or expose corruption.”
The court also rejected the defendant’s due process defenses, stating that the disclosure law was sufficiently straightforward. While the defendant claimed that “virtually no one was aware of [the disclosure] requirement at the time of the 2004 general election,” the court rejected this argument because the law was promulgated two years before the election in question and ten other individuals
filed the proper disclosures with the Commission. Additionally,
the defendant did not present any evidence that the Commission brought suit based on improper or discriminatory grounds.
The parties notified the court on April 7, 2008, that Commission counsel and Adams had reached a proposed settlement agreement. The defendant agreed to transfer within 30 days the full amount of the proposed
civil penalty to a trust account held by his attorney’s firm. If the Commission approves the agreement once it has a quorum, the parties will file a proposed consent agreement and request dismissal of the case. The defendant’s attorney will then transfer the civil penalty to the Commission.
On April 9, 2008, the court granted the parties’ request to stay the case until the Commission votes on the proposed settlement.
On November 13, 1980, the U.S. Supreme Court denied the Commission's petition for a writ of certiorari in the suit, FEC v. American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) (Supreme Court Docket No. 80-368). The Commission sought review of a judgment of the U.S. Court of Appeals for the District of Columbia Circuit, which had reversed an earlier decision by the U.S. District Court for the District of Columbia, imposing a $10,000 civil penalty against the AFL-CIO.
In filing the suit against the AFL-CIO on December 16, 1977, the Commission had sought to enjoin the organization from transferring funds from its COPE Education Fund (which contained general treasury funds) to COPE-PCC, its separate segregated fund (which contained only voluntary political contributions from individuals). The Commission had argued that the transfers violated provisions of the Act prohibiting labor organizations from using their general treasury funds to make contributions or expenditures in connection with federal elections. Between 1970 and 1977, COPE-PCC had transferred funds to the COPE Education Fund several times because COPE-PCC's funds were idle between elections. On demand of COPE-PCC, the funds were subsequently transferred from the COPE Education Fund back to COPE-PCC for its use. The COPE-PCC transfers were designated as loans to the COPE Education Fund but were interest free. Complete records were kept, and the transactions were reported to the Office of Federal Elections of the General Accounting Office (GAO) and later to the FEC.
In 1977, after the FEC had succeeded to the GAO's authority, it notified the AFL-CIO that section 441b of the Act permits transfers of funds from COPE-PCC to the COPE Education Fund but not transfers from the COPE Education Fund back to COPE-PCC. In an FEC enforcement action brought against the AFL-CIO, the AFL-CIO attempted to negotiate with the FEC a transfer of $321,000 from the Education Fund to COPE-PCC for the purpose of clearing the balance between the two funds. No agreement was reached and the FEC brought a civil action against the AFL-CIO in the district court. On June 16, 1978, the district court granted the Commission's motion for summary judgment in the case. It ruled that past transfers from the COPE Education Fund to COPE-PCC were illegal, enjoined the AFL-CIO from making any such transfers in the future (except for a single transfer of the $321,000 previously transferred) and assessed a $10,000 civil penalty against the AFL-CIO. The AFL-CIO appealed the assessment of the civil penalty.
The appeals court, on April 1, 1980, reversed the imposition of the $10,000 civil penalty. The appeals court found that the lower court had imposed the statutory penalty for a "knowing and willful" violation of the election law, although the facts in this case did not support a finding that the defendant's violation were "knowing and willful." (See 2 U.S.C. §437g(a)(5)(B).) The court held that the AFL-CIO's belief in the legitimacy of the transfers had been reasonable; during the GAO audit no comment had been made about the routinely reported transfers, and neither the Act nor any court decision had addressed the immediate issue. (The appeals court rejected the FEC's argument that Pipefitters Local No. 562 v. United States, 407 U.S. 385 (1972) provided specific notice that interfund transfers were prohibited by the Act.)
On November 10, 1980, the Supreme Court refused a request by the FEC for a writ of certiorari to review the appeals court ruling on the imposition of the civil penalty.
Source: FEC Record -- January 1981, p. 6.
FEC v. AFL-CIO, 628 F.2d 97 (D.C. Cir.), cert. denied, 449 U.S. 982 (1980).
On May 14, 1979, the U.S. District Court for the District of Columbia dismissed a suit which the FEC had filed against the American Federation of State, County and Municipal Employees (AFSCME). In that action, it was alleged that AFSCME had violated the disclosure requirements of 2 U.S.C. §431(f)(4)(C) by failing to report $983.73 it had spent to publish and circulate a political poster to its members immediately prior to the 1976 general election. The poster in question depicted, in caricature, President Gerald Ford, wearing a lapel button with the words "Pardon Me," and embracing former President Richard Nixon. The poster contained a quote taken from a speech given by Ford as Vice President: "I can say from the bottom of my heart the President of the United States is innocent and he is right."
The Act specifically excludes from the definition of the term "expenditure" any communication made by a membership organization or a corporation to its members or stockholders, but requires that the costs directly attributable to communications expressly advocating the election or defeat of a clearly identified candidate must be reported to the Commission if they exceed $2,000 per election (2 U.S.C. §431(9)(b)(iii)).1 AFSCME had reported "communications costs" of approximately $40,000 in connection with the 1976 general election, including approximately $23,000 directly attributable to expressly advocating the election of Jimmy Carter.
The court found that, although the Nixon-Ford poster did pertain to a clearly identified candidate and may have tended to influence voting, it did not contain an "express advocacy" of election or defeat within the narrow definition given to that term in Buckley v. Valeo. Additionally, the court held that, as a communication concerning a public issue widely debated during the 1976 campaign, the poster is typical of the political speech which is protected from regulation. Accordingly, the court dismissed the action for failure to allege a violation.
Source: FEC Record -- July 1979, p. 8.
FEC v. American Federation of State, County and Municipal Employees, 471 F. Supp. 315 (D.D.C. 1979).
On July 10, 1990, the U.S. District Court for the District of Columbia granted the FEC's motion for summary judgment, ruling that the American Federation of State, County and Municipal Employees-P.E.O.P.L.E., Qualified (AFSCME-PQ), the separate segregated fund of AFSCME, and its treasurer, William Lucy, violated the law when they delayed the disclosure of in-kind contributions to the 1982 and 1984 Indiana House campaigns of Representative Frank McCloskey. (Civil Action No. 88-3208.) On October 31, 1991, the court assessed a civil penalty of $2,000 against the defendants.
During September of 1982 and 1984, AFSCME-PQ established telephone banks that were used in part to advocate the election of Representative McCloskey. Instead of reporting these in-kind contributions at the time they were made (i.e., when the services were provided on behalf of the candidate), AFSCME-PQ reported them after it paid the bills for the services, some months after the services were provided.
Although AFSCME-PQ claimed that the in-kind contributions were reported on time (i.e., when the funds were disbursed), the court disagreed, citing the statutory requirement that a committee must disclose the name and address of "each political committee which has received a contribution from the reporting committee during the reporting period, together with the date and amount of any such contribution." 2 U.S.C. §434(b)(6)(B)(i). Because AFSCME-PQ reported on a monthly basis, the contributions should have been disclosed in the months immediately following the making of the contributions, i.e., the operation of the phone banks.
In its October 1991 ruling on the penalty, the court observed that, although there was no bad faith by the defendants, "there is always harm to the public when the FECA is violated." Considering the maximum penalty of $10,000 inappropriate here, the court said a $2,000 penalty would serve the public's interest "by punishing a violation of the plain language of the statute." The court declined, however, to permanently enjoin defendants from future violations of 2 U.S.C. §434(b). The court pointed out that defendants cured the violation and have since complied with the reporting provision. Because "there has been no showing of a reasonable likelihood that the defendants will commit future violations," the court decided the public interest would not be substantially advanced by an injunction.
Source: FEC Record -- October 1990, p. 7; and January 1992, p. 7.
On February 10, 1986, the U.S. District Court for the Eastern District of Virginia issued an order permanently enjoining American International Demographic Services, Inc. (A.I.D.S.) and its Vice President, Ernest Halter, from using FEC campaign finance information for commercial purposes. The court imposed a $3,500 civil penalty on the defendants for illegal use of the information. (Civil Action No. 85-0437-A.)
The Federal Election Campaign Act states that "...any information copied from reports or statements may not be sold or used by any person for the purpose of soliciting contributions or for commercial purposes, other than using the name and address of any political committee to solicit contributions from such committee." 2 U.S.C. §438(a)(4). While the Commission has allowed FEC information on political committees to be used for contribution solicitations, the agency has forbidden the use of individual contributor information for commercial purposes (e.g., product advertisements) or for solicitations.
The defendants' violation of this provision involved their illegal use of two FEC computer tapes containing individual contributor information that had been disclosed on FEC reports filed by political committees. The tapes had been purchased by Mr. Halter's wife on behalf on the Voter Information Council PAC (VICPAC), a nonconnected political committee she had established in April 1982. (Mrs. Halter claimed she had purchased the tapes to purge outdated information on lists owned by VICPAC and by her.) As part of an agreement A.I.D.S. had entered into with Working Names, Inc., a list management company, Mr. Halter subsequently transferred the two FEC tapes to the company. Working Names used the tapes, along with two other FEC tapes, to create four mailing lists which the company marketed to list brokers and mailers.
The defendants' illegal use of FEC contributor information was discovered by the National Republican Congressional Committee (NRCC) when a direct mail piece was addressed to "Kane Orsell," a fictitious contributor NRCC had listed on a report filed with the FEC. (FEC regulations allow a political committee to "salt" its FEC report with up to ten fictitious names and addresses for purposes of detecting such illegal use of its contributor names. 11 CFR 104.3(e).) The mailing was sent by the American Legislative Exchange Council, which had rented its list of addresses from a broker that Working Names had supplied with lists. (The Council had purchased the list for a one-time use.)
After tracing original ownership of the mailing list back to A.I.D.S., NRCC held a meeting with Mr. Halter in which he agreed, among other things, to take the names of NRCC contributors off the list broker market and to provide NRCC with a list of the direct mail companies that had rented the names. Mr. Halter failed to do any of these things. Consequently, on September 28, 1982, the NRCC filed a complaint against both Mr. Halter and A.I.D.S. with the FEC. After investigating the matter, the FEC found probable cause to believe that the defendants had violated the election law. Subsequently, when defendants failed to enter into a conciliation agreement with the agency, the FEC brought suit against them in the district court.
In its suit, the FEC asked the court to declare that Mr. Halter and A.I.D.S. had violated Section 438(a)(4) by using reports filed with the FEC for commercial purposes. Specifically, the FEC asked the court to find that defendants used FEC information to: a) prepare contributor listings they rented to various organizations through a broker and b) increase the commercial value of contributor listings they already had.
After examining the evidence presented for its consideration at trial, the court found that "the defendants willfully violated the Act by having Working Names manage the [two FEC computer] tapes for the purpose of renting them out to brokers and mailers." Mr. Halter filed an appeal with the U.S. Court of Appeals, 4th Circuit on March 31, 1986.
On February 2, 1987, the U.S. Court of Appeals for the Fourth Circuit dismissed FEC v. Ernest Halter (Appeal No. 86-1560). The court's action responded to Mr. Halter's request for a dismissal of his appeal.
Source: FEC Record -- April 1986, p. 8; and April 1987, p. 7.
FEC v. American International Demographic Services, Inc., 629 F. Supp. 317 (E.D. Va. 1986).
In a default judgment entered on January 14, 1993, the U.S. District Court of the Central District of California ordered America 's PAC (a state committee) and Neil Barry Rincover, as executive director and acting treasurer, to pay a $25,000 civil penalty for violating the Federal Election Campaign Act. (Civil Action No. CV-92-2747-LGB.)
The court found that defendants failed to forward a $2,000 earmarked contribution from the Physicians Interindemnity/PAC to Bill Press, a U.S. Senate candidate. The acceptance of the earmarked contribution caused America 's PAC to become a federal political committee with registration and reporting obligations. The court ruled that the defendants, by failing to fulfill those obligations, violated 2 U.S.C. §§433(a) and 434(a)(1). The court also found that they violated §432(b)(1) by failing to forward the earmarked contribution and the required information to the candidate. Finally, because the check contained corporate funds, the court found that defendants knowingly accepted a prohibited contribution, in violation of §441b(a). They were ordered to pay a $25,000 penalty, refund the $2,000 contribution to the PAC and file a Statement of Organization and required reports, all within 15 days.
Furthermore, given defendants' default in the litigation, the court found there was a likelihood that defendants would repeat the violations and therefore enjoined them from further violations of the provisions cited above.
On May 23, 1994, America 's PAC and Mr. Rincover, were held in civil contempt by the district court for failing to comply with the January 1993 default judgment.
Earlier, on April 18, 1994, responding to an FEC petition, the court had ordered the defendants to show cause why they should not be held in contempt. That same day, Mr. Rincover filed a motion to set aside the January 1993 default judgment. (America 's PAC never responded to the order to show cause.)
The court, however, rejected Mr. Rincover's motion, finding that his claims did not indicate the "extraordinary circumstances" necessary for the court to set aside a judgment. The court therefore ordered Mr. Rincover and America 's PAC to comply with the January 1993 order within 30 days or pay $50 for each day of delay. Exercising its discretion, the court reduced the penalty to $5,000 because all the violations stemmed from a single incident.
Source: FEC Record -- April 1993, p. 10; and August 1994, p. 8.
FEC v. America's PAC, No. 92-2747 LGB (Tx) (C.D. Cal. May 23, 1994).
On May 7, 1984, the FEC filed suit in the U.S. District Court for the Eastern District of Pennsylvania, seeking action against three defendants: the Tom Anderson for Senator Committee, the principal campaign committee of Mr. Anderson's 1980 Senate campaign; the Pennsylvania Service Station Dealers Association (the Association), an incorporated trade association; and Mary Anderson, the candidate's wife (Civil Action No. 84-2180).
Specifically, the FEC asked the court to declare that:
On December 11, 1984, the U.S. District Court for the Eastern District of Pennsylvania issued a consent order resolving claims the Commission had brought against Mary Anderson.
Within 30 days of signing the consent order, Mrs. Anderson agreed to pay a $350 civil penalty to the U.S. Treasury for having exceeded the election law's contributions limits. 2 U.S.C. §441a(a)(1)(A). By cosigning a $50,000 campaign loan with her husband, the candidate, Mrs. Anderson had made a $25,000 contributions to his Senate campaign. The law limits contributions from all individuals, including spouses, to $1,000 per candidate, per election.
During February 1985, the U.S. District Court for the Eastern District of Pennsylvania issued separate consent orders resolving claims the Commission had brought against the Association and the Anderson campaign. Within 30 days of signing their respective consent orders, defendants agreed to comply with the following terms:
Source: FEC Record -- July 1984, p. 8; February 1985, p. 6; and August 1985, p. 8.
On May 20, 1987, the United States District Court, Southern District of Ohio, Eastern Division, approved a consent order between the Commission and the defendants in FEC v. Bank One, Columbus, N.A. (Civil Action No. C2-86-1082.) Defendants were: the John Glenn Presidential Committee, Inc., William R. White, treasurer, and Senator John Glenn (Glenn Committee); and Bank One, Columbus, N.A., Ameritrust Company National Association, BancOhio National Bank and the Huntington National Bank (the Banks).
The FEC alleged that $2 million in loans made by the Banks to the Glenn Committee in 1984 were not made on a basis that assured repayment and, therefore, were in violation of 2 U.S.C. §441b(a). After failing to resolve the matter through the conciliation process, the FEC filed suit in federal court on September 9, 1986, and asked the court to find that:
The FEC also asked the court to assess a civil penalty against each defendant amounting to the greater of $5,000 or 100 percent of the amount involved in each defendant's violation.
The consent order contained the following:
Source: FEC Record -- November 1986, p. 6; and July 1987, p. 5.
FEC v. Bank One, Columbus, N.A., No. C-2-86-1082 (S.D. Ohio 1987).
On February 14, 1989, the U.S. District Court for the Southern District of New York granted the FEC's motion for summary judgment in FEC v. Committee to Elect Bennie O. Batts (Civil Action No. 87-5789(GLG)). The committee was Mr. Batts' principal campaign committee for his unsuccessful 1984 primary campaign in New York's 20th Congressional District.
The court found that the committee and its acting treasurer, Evelyn Batts (the candidate's wife), violated the election law by:
The court also found that Mrs. Batts personally violated the election law by making excessive contributions from her personal account.
Observing that the committee's violations had resulted from "at most...sloppy bookkeeping and unprofessional behavior," and that there was no implication that the defendants had been "motivated by personal gain," the court assessed civil penalties of $100 against the committee and its acting treasurer, Mrs. Batts. The court also assessed a $1 civil penalty against Mrs. Batts personally. In addition, the court permanently enjoined the defendants from similar future violations of the election law.
Source: FEC Record -- May 1989, p. 8.
On January 15, 1987, the U.S. District Court for the Southern District of New York granted the FEC's application for a default judgment in FEC v. Beatty for Congress Committee (Civil Action No. 86-Civ-3894- [RLC]). The court's default judgment decreed that the Beatty for Congress Committee, the principal campaign committee for Vander L. Beatty's 1982 House campaign, and the committee's treasurer, Edward Myers, Jr., violated the election law on several counts.
The court imposed a $5,000 civil penalty on the defendants for each violation and required the defendants to pay the FEC's court costs and attorney's fees. On March 31, 1987, the defendant entered a motion to vacate the default judgment.
On March 21, 1988, the U.S. Court of Appeals for the Second Circuit dismissed the appeal of Mr. Myers in FEC v. Beatty for Congress Committee and Edward Myers (Civil Action No. 88-6011). The FEC and Mr. Myers had filed a Stipulated Dismissal and Settlement Agreement with the court.
On May 16, 1986, the FEC filed suit with the U.S. District Court for the Southern District of New York against the Beatty for Congress Committee and against the committee's treasurer, Mr. Myers. The FEC asked the court to find the defendants in violation of federal campaign finance laws on the following counts:
The Commission also asked the court to find the defendants in violation of the FECA's recordkeeping and reporting laws on the following counts:
In granting the default judgment against Mr. Myers and the Beatty Committee in January 1987, the court imposed a $5,000 civil penalty for each of the violations. The court denied a motion by Mr. Myers to vacate the default judgment against him in October 1987. Mr. Myers appealed the default judgment to the U.S. Court of Appeals for the Second Circuit.
In March 1988, the appeals court dismissed the case after a stipulated agreement was reached between the FEC and Mr. Myers.
By the terms of the agreement, Mr. Myers would withdraw his appeal of the district court's October 1987 decision in the case. The court's decision denied Mr. Myers' motion to set aside the default judgment the court had entered against him in January 1987. That decision had imposed a $5,000 civil penalty on the defendants for each of 17 independent violations of the election law. In addition, the parties agreed that:
Source: FEC Record -- June 1986, p. 9; March 1987, p. 6; and June 1988, p. 9.
FEC v. Beatty for Congress, No. 86 Civ. 3894, (S.D.N.Y. Oct 23, 1987) (unpublished opinion).
On April 14, 1980, the U.S. District Court for the District of New Jersey issued a consent judgment agreed to by the Commission and defendant Jeffrey Bell. The Commission had filed suit on January 21, 1980, alleging that the defendant had violated 2 U.S.C. §441a(f) by accepting excessive contributions from his mother, Marjorie Bell, during his 1978 Senatorial campaign in New Jersey. Mr. Bell agreed to pay a civil penalty of $1,500 levied by the court.
Source: FEC Record -- June 1980, p. 8.
On April 10, 1980, the U.S. District Court for the District of Columbia issued a consent judgment agreed to by the Commission and defendants Marjorie Bell, the Bell for Senate Committee and its two treasurers, Andrew P. Napolitano and James S. Wagner. The Commission had filed suit on July 20, 1979, claiming that Marjorie Bell had violated the contribution limits of 2 U.S.C. §441a(a)(1)(A) and 441a(a)(3); and that the Bell Committee and its two treasurers had violated 2 U.S.C. §441a(a)(1)(A) and 441a(a)(3); and that the Bell Committee and its two treasurers had violated 2 U.S.C. §441a(f) by knowingly accepting excessive contributions, and 2 U.S.C. §434(b) by failing to report the actual source of the contributions. Marjorie Bell agreed to pay a civil penalty of $500 levied by the court. The Bell for Senate Committee agreed to pay a civil penalty of $4,500 levied against both the Committee and its officers. The Committee also agreed to amend reports filed with the Commission to indicate that Marjorie Bell was the actual source of $52,400 reported as loans from Jeffrey Bell to the Committee.
Source: FEC Record -- June 1980, p. 8.
On May 2, 1989, the U.S. District Court for the Northern District of Georgia, Atlanta Division, issued a final consent order and judgment in FEC v. Ron Bookman & Associates (Civil Action No. 1:88-CV-1807-JTC). The consent order declared that Bookman & Associates, a Georgia corporation, made a $150 contribution to a federal candidate. The Act prohibits corporations from making contributions or expenditures in connection with federal elections. 2 U.S.C. §441b.
The order also declared that Ron Bookman, as president of the company, had violated the law by consenting to the making of the contribution. Section 441b also prohibits corporate officers and executives from consenting to the making of contributions and expenditures.
The consent order included a $500 civil penalty and permanently enjoined the defendants from similar future violations of the Act.
Source: FEC Record -- June 1989, p. 8.
On September 1, 1989, the U.S. District Court for the Northern District of Texas issued a final consent order and judgment in FEC v. John Bryant Campaign Committee (Civil Action No. CA3-89-1694). The consent order decreed that the committee and its treasurer, Ken Molberg, had violated the election law by accepting a $2,000 excessive contribution from an individual. 2 U.S.C. §441a(f). The order also decreed that the defendants had unlawfully used information contained in another committee's reports for soliciting individuals. 2 U.S.C. §438(a)(4). The consent order included a $500 penalty and a permanent injunction against future similar violations of the law.
Source: FEC Record -- November 1989, p. 4.
On June 8, 1990, the U.S. District Court for the District of Maine imposed civil penalties on defendants Chipman C. Bull for Congress, the principal campaign committee for Mr. Bull's 1984 House campaign, and Denise M. Deshane, the committee treasurer, for violating several provisions of the Federal Election Campaign Act. (Civil Action No. 88-0037-B.) In earlier rulings of September 13, 1989, and January 9, 1990, the court found that defendants had violated the law by:
In its June 8 order, the court adopted the civil penalties recommended by a United States Magistrate and assessed a penalty of $18,437.50 against the committee and a $500 penalty against the treasurer.
Source: FEC Record -- August 1990, p. 11.
On October 14, 1999, the U.S. District Court for the Eastern District of California ruled that the California Democratic Party, the Democratic State Central Committee of California-federal, and the Democratic State Central Committee of California-nonfederal (collectively, the CDP) violated the Federal Election Campaign Act (the Act) when it paid for a voter registration drive that was "targeted" at potential Democratic registrants entirely with nonfederal funds. On November 2, 1999, the court issued a consent order and judgment in which the CDP agreed to pay a civil penalty to the FEC in the amount of $70,000 and to transfer $354,500 from its federal account to its nonfederal account.
The CDP is the state party committee responsible for the operations of the Democratic Party in California. In 1992 and early 1993, the CDP contributed $709,000 to Taxpayers Against Deception-No on 165 (No on 165), a California political committee that opposed a state ballot initiative, Proposition 165. The money, paid from the party's nonfederal account, was given with the knowledge that it would be used for voter registration drives for the 1992 general election.
The Commission had argued that the CDP had violated the Act when it failed to allocate the costs of its voter registration drive between its federal and nonfederal accounts. Under Commission regulations, political committees must allocate expenses for generic voter drives between their federal and nonfederal accounts, must pay for the expenses directly from their federal account or a special allocation account, and must disclose the allocation in their reports to the FEC. 11 CFR 102.5(a)(1)(i), 104.10(b)(4) and 106.5(d) and (g). In this case, the CDP failed to allocate any of the voter drive costs to its federal account, paid for all of the costs directly from a nonfederal account and failed to report any of the costs to the FEC.
The CDP asserted that the "FECA cannot be stretched beyond its literal terms to include any activity which could conceivably have an influence on a federal election." The court stated that the CDP's argument was unavailing because it disregarded the nature of the violations claimed by the FEC-that the CDP financed a partisan voter registration drive with nonfederal funds-and overlooked the allocation rules, which allow apportionment of the costs of fundraising activities not associated with a federal election, including generic voter drives, to a party's nonfederal account.
The CDP argued that No on 165's voter registration drive was, to its knowledge, nonpartisan and that its funding of the drive was therefore exempt from the Act under the Act's definition of "expenditure," which excludes "nonpartisan activity designed to encourage individuals to vote or to register to vote." 2 U.S.C. §431(9)(B)(ii). The court rejected the CDP's argument, and ruled that the definition of "expenditure" was not at issue in the case. The court also pointed out that there is no similar exception in the allocation rules. Further, the court determined that, in any event, the activities undertaken by No on 165 clearly were not nonpartisan and, therefore, could not fall under the exemption.
The CDP further claimed that there was a genuine issue of fact as to the partisan nature of the voter drives, pointing out that there was no evidence that Democratic literature was distributed at the drive sites, that any worker expressly advocated registering as a Democrat, or that a worker refused to accept a non-Democratic registration card for filing. The court disagreed, asserting that the undisputed evidence demonstrated that No on 165's voter registration drive was "a targeted effort to register Democrats to vote in a general election."
The court further concluded that the executive director undisputedly knew that No on 165 would target areas in which the majority of potential registrants would probably register as Democrats, and that whether she had "knowledge of all aspects" of the partisan conduct of the drive was not material.
Finally, the CDP had contended that, in light of the fact that No on 165 devised its voter drive strategy independently of the CDP, that it raised approximately $4 million in 1994, and that No on 165 and the CDP were "separate entities with separate interests," the voter registration drive could not be attributed to the CDP. The court, however, concluded that it was unnecessary to "attribute" the drive to the CDP in order to find that the CDP had contributed only nonfederal funds to No on 165's voter registration drive and that its failure to allocate an appropriate portion of the costs to its federal account violated the Act and the allocation rules.
Because the FEC showed that the CDP violated the Act and allocation regulations by funding a generic voter drive that targeted Democrats,1 the court granted the FEC's motion for summary judgment, ruling that the CDP violated the Commission's allocation and reporting rules at 2 U.S.C. §441b and 11 CFR 102.5(a)(1)(i), 104.10(b)(4) and 106.5.
Through a consent order and judgment, issued November 2, 1999, the CDP agreed to pay a civil penalty of $70,000 and to transfer $354,500 from its federal account to its nonfederal account.
1 The court, however, did not rule on one of the voter drives funded by the CDP. No on 165 had contributed $59,000 of the CDP's money to another California political committee called The Committee to Protect the Political Rights of Minorities (which in turn engaged the Black American Political Association of California (BAPAC)) for use in a separate voter registration drive. The court concluded that there was insufficient evidence that BAPAC's drive was conducted in a partisan manner and this matter, therefore, was to go to trial. In the consent order and judgment, however, the parties resolved all the issues. Consequently, a trial was not held.
Source: FEC Record -- December 1999 [PDF].
On June 4, 2004, the U.S. District Court for the Eastern District of California ordered the defendants to pay a $30,000 civil penalty and enjoined them from further similar violations of the Federal Election Campaign Act (the Act).
The plaintiff and defendants stipulated to the entry of the court's order, which followed the court's February 13, 2004 decision to grant the Commission's motion for summary judgment, finding that the defendants violated the Act by:
The court also denied the defendants' motion for summary judgment. See the Record April 2004 [PDF].
Under the Act, political party committees may only spend funds that are consistent with the limits and prohibitions of the Act to influence a federal election. Among other restrictions, the Act prohibits corporations and labor unions from making any contributions in connection with a federal election, and also prohibits a political committee from receiving such contributions. 2 U.S.C. § 441b. See also 2 U.S.C. §§ 441a, 441c, 441e, 441f and 441g; 11 CFR parts 100, 110, 114 and 115. A party committee that maintains both federal and nonfederal accounts may pay for some mixed federal/nonfederal activities with a combination of federal and nonfederal funds using the allocation rules set forth in Commission regulations.1 However, any expenditure made by a political party committee for activities that expressly advocate the election or defeat of a clearly identified federal candidate must be made with federally permissible funds.
In the 22nd Congressional District of California, a special general election was held on March 10, 1998, to fill a House seat left vacant after the death of Walter Capps. This federal office was the only office on the ballot for the special election, and Lois Capps was the only Democratic candidate on the ballot. The California Democratic Party (CDP) paid $99,097 for direct mailings and radio advertisements that contained statements such as "Continue the Walter Capps Tradition" and "Vote Democratic" in the "Special Election, Tuesday, March 10." In its FEC disclosure reports, the CDP reported the expenditures for these communications as mixed federal/nonfederal activity, and it paid for the costs of these communications with funds from both its federal and nonfederal accounts. Of the $99,097 spent on the communications, $77,281 came from the CDP's nonfederal funds. The ads included disclaimers stating that they were paid for by CDP, but did not state whether the ads were authorized by any candidate or candidate's committee. See the Record May 2003 [PDF].
The only contested issue before the court was whether Lois Capps was "clearly identified" in the defendants' ads. The court found that Ms. Capps was clearly identified in the ads under Buckley v. Valeo, 424 U.S. 1 (1976) and FEC v. Furgatch, 807 F.2d 875 (9th Cir. 1987).2 In FEC v. Furgatch, the appeals court held that a communication is "express advocacy" under the Act if, "when read as a whole, and with limited reference to external events," it is "susceptible of no other reasonable interpretation but as an exhortation to vote for or against a specific candidate." In this case, the court found that when the language of the ads was taken as a whole, "including the fact that the March 10th special election was a single-office, federal-only election with one Democratic candidate," the ads "clearly identify a candidate under Buckley and Furgatch. The court reasoned that because the ads' directive to "vote Democratic" in the "March 10th special election" left only one action for the public to take to follow the ads' instructions, "reasonable minds could not dispute that the subject Advertisements urged readers to vote for Lois Capps in the March 10 special election."
Because these ads expressly advocated the election of a clearly identified federal candidate and were not coordinated with any candidate, the court concluded that they were independent expenditures. Thus, CDP was required to pay for them with federal funds and include a disclaimer stating who paid for the communication and that it was not authorized by any candidate. CDP was also required to report the payments as independent expenditures on its FEC disclosure reports. The court granted the FEC's request for partial summary judgment, declaring that the defendants violated the Act by paying for the ads in part with funds from CDP's nonfederal account and failing to include a complete disclaimer and properly report the ads. The court denied the defendants' motion for summary judgment.
1 The defendants' activities described in this
case occurred before the Bipartisan
Campaign Reform Act of 2002 took effect. Thus, the court considered the
statutory and regulatory provisions in effect at that time.
2 The FEC moved for summary judgment only as to whether CDP violated the Act and not as to any civil penalty or other remedy the court may order as a result.
On March 17, 2003, the Commission filed a complaint in the U.S. District Court for the District of California, Sacramento Division, against the California Democratic Party (CDP), its federal account, the Democratic State Central Committee of California-Federal, its non-federal account, the Democratic State Central Committee of California-Non-federal, and Katherine Moret, the treasurer of the CDP's federal and nonfederal accounts The Commission alleges that in its get-out-the-vote (GOTV) activities for a 1998 special election, the CDP:
Under the Act, political party committees must only spend funds that are consistent with the limits and prohibitions of the Act to influence a federal election. Among other restrictions, the Act prohibits corporations and labor unions from makings any contribution in connection with a federal election, and also prohibits a political committee from receiving such a contribution. 2 U.S.C. §441b. See also 2 U.S.C. §§431(8), 441a, 441(b), 441(c), 441(e), 441(f) and 441(g); 11 CFR parts 100, 110, 114 and 115. A party committee that maintains both federal and nonfederal accounts may pay for some mixed federal/nonfederal activities with a combination of federal and nonfederal funds using the allocation rules set forth in Commission regulations. See 11 CFR 106.5. However, any expenditure made by a political party committee for activities that urge the public to vote for a clearly identified federal candidate must be made with federally-permissible funds.
In the 22nd Congressional District of California, a special general election was held on March 10, 1998, to fill a House seat left vacant after the death of Walter Capps. This federal office was the only office on the ballot for the special election, and Lois Capps was the only candidate on the ballot nominated by the Democratic Party. According to the complaint, the CDP paid $99,097 for direct mailings and radio advertisements that contained statements urging the public to vote on March 10th for Lois Capps. In its FEC disclosure reports, the CDP reported the expenditures for these communications as mixed federal/nonfederal activity, and it paid for the costs of these communications with funds from both its federal and nonfederal accounts. Of the $99,097 spent on the communications, $77,281 came from the CDP's nonfederal funds, which, the Commission contends, contained funds prohibited under the Act, including corporate and union funds.
The Commission asserts that these communications violated the Act in several respects. First, a GOTV drive conducted in connection with an election in which only federal candidates appear on the ballot is not a mixed federal/nonfederal activity. The expenditures for these communications were required to have been paid entirely from federal funds. 2 U.S.C. §441(b); 11 CFR 102.5. Second, the Commission contends that these communications, which included phrases such as "Continue the Walter Capps Tradition" and "Vote Democratic" in the "Special Election, Tuesday, March 10," expressly advocated the election or defeat of a clearly identified federal candidate and, thus, required a disclaimer stating both who paid for the communication and whether it was authorized by a candidate. 2 U.S.C. §441d(a) and 11 CFR 110.11(a)(1). These communications did not contain the required disclaimers. Third, the Commission argues that the communications were independent expenditures and that the committee violated the Act by failing to properly disclose them as such in its FEC reports.1
The Commission asks that the court:
1 The Act defines an "independent expenditure" as an expenditure that expressly advocates the election or defeat of a clearly identified federal candidate and is not made in cooperation or consultation with any candidate, candidate's committee or their agents and is not made in concert with or at the request or suggestion of any of these. 2 U.S.C. §431(17). See also 11 CFR 109.1(b)(4). Independent expenditures must be paid for with federally permissible funds and must be reported under 2 U.S.C. §§434(b)(4)(H)(iii) and (6)(B)(iii).
Source: FEC Record -- May 2003 [PDF].
On November 14, 1988, the U.S. District Court for the Central District of California granted the FEC's motion for a default judgment against the Californians for a Strong America (CSA), a nonconnected political committee, and CSA's treasurer Albert J. Cook. (Civil Action No. 88-1554-AWT.)
In the judgment, the court declared that the defendants had violated 2 U.S.C. §434 (a)(4)(A)(i) and (iv) by failing to file reports covering 1986 activity, that is, two quarterly reports and a year-end report. Accordingly, the court:
Source: FEC Record -- January 1989, p. 9.
On June 22, 1989, the U.S. District Court for the Central District of California issued a final order and default judgment in FEC v. Californians for a Strong America. (Civil Action No. CV-88-6449-AWT(Ex).) The court decreed that the committee and its treasurer, Albert J. Cook, had violated the election law by:
The court ordered the defendants to comply with the law's reporting requirements within 15 days of the judgment and to pay a civil penalty of $15,000 ($5,000 for each violation). The court also ordered the defendants to pay the FEC's court costs and to refrain from future similar violations of the election law.
On August 13, 1993, the district court held defendants in contempt of court for failing to pay the two $15,000 civil penalties stemming from this and a previous case (No. 88-1554, summarized in the preceding column). By then, the penalties had been outstanding for over three years. In both cases, defendants never responded to the FEC's suits, and the judgments were by default. Defendants also failed to file responses or appear before the court in the contempt proceedings.
The court ordered defendants to pay the penalties, plus accrued back interest, by August 31, 1993. Thereafter, they were to pay an additional $100 per day until they completed payment. Furthermore, if they failed to make full payment by September 30, the court said it would issue a warrant for the arrest of Mr. Cook.
Source: FEC Record -- September 1989, p. 8; and October 1993, p. 1.
On January 9, 1986, the U.S. District Court for the Central District of California ruled that Californians for Democratic Representation (CDR), a nonprofit organization registered with the California Fair Political Practices Commission, had violated various provisions of the Federal Election Campaign Act in the course of conducting a slate mail program during 1982. (Civil Action No. 85-2086.)
CDR's slate mail program consisted of political ads distributed through direct mail to the general public. In addition to endorsing ballot issues and state and local candidates, CDR's slate mail program endorsed federal candidates active in California's 1982 primary and general elections. Candidates could purchase advertising space from CDR at fair market value. (A candidate's ad might include, for example, his/her photograph and a write-up.) CDR also listed candidates who did not purchase advertising space, at no charge to them.
The court ruled that those federal candidates who had paid for advertising space in CDR's slate mailings had not contributed to CDR; nor did their advertising space constitute in-kind contributions from CDR to the candidates.
On the other hand, the court found that costs incurred by CDR for listing federal candidates free of charge in mailings constituted expenditures by CDR on behalf of the candidates, which were subject to the election law. (Nine federal candidates were listed free of charge in mailings for the primary elections, and three candidates were listed in general election mailings.) Accordingly, the court found the CDR had violated the election law by failing to register and report as a political committee when these expenditures exceeded $1,000 during 1982. See 2 U.S.C. §§431(4)(A), 433 and 434.
Finally, the court ruled that CDR's ads failed to state who paid for them and whether or not the candidates had authorized the mailings. See 2 U.S.C. §441d(a).
The court imposed a $15,00 civil penalty on the defendants. Subsequently the court denied defendants' motion to have the penalty reduced.
Source: FEC Record -- March 1986, p. 8.
FEC v. Californians for Democratic Representation, No. 85-2086-JMI, (C.D. Cal. Jan. 9, 1986) (unpublished opinion).
On August 3, 1987, the U.S. District Court for the District of Arizona, Tucson Division, approved a final consent order and judgment between the Commission and defendants Campaign Resource Technologies, Inc. (CRT) and John Kaur (Civil Action No. CTV 86-448 TUC ACM).
During the 1983-84 Presidential election cycle, the Bergland for President Committee (the Committee), the principal campaign committee for David Bergland's 1984 Presidential campaign, contracted with CRT for certain campaign services. CRT, in turn, subcontracted certain services to John Kaur, who was doing business as Digitgraph Computer Systems Company (Digitgraph).
In the consent order, defendants CRT and John Kaur agreed that they violated 2 U.S.C. §432(b) by failing to forward to the Committee's treasurer, within 10 days, approximately $6,000 in campaign contribution checks received by CRT and Digitgraph on behalf of the Committee.
The court imposed a $5,000 civil penalty which the defendants agreed to pay within 30 days of filing the consent order. The court also permanently enjoined the defendant from future similar violations of the Act.
Source: FEC Record -- September 1987, p. 8.
On July 21, 1986, the U.S. District Court for the Northern District of Georgia approved a consent order between the Commission and the Jimmy Carter Committee for a Greater America, a nonconnected political committee, and the Committee's treasurer, Chip Carter. The consent order provides that defendants violated sections 434(a)(4)(A)(i) and (iii) of the election law during the 1983-84 election cycle by failing to meet the filing deadline for 1984 post-general election and year-end reports.
Within 30 days of filing the consent order, the defendants agreed to pay a $250 civil penalty to the U.S. Treasurer.
The consent order concluded a suit filed by the FEC on April 7, 1986 (Civil Action No. C86-774A).
Source: FEC Record -- September 1986, p. 7.
On June 16, 1992, the U.S. District Court for the Eastern District of Pennsylvania ruled that Michael Caulder violated 2 U.S.C. §432(b)(3) by knowingly and willfully commingling his personal funds with $51,600 belonging to Alerted Democratic Majority, a political committee. (Defendant had embezzled the committee's funds and supplied false information on the committee's FEC reports in order to disguise the embezzlement.)
The court imposed a $103,200 civil penalty against Mr. Caulder but, in view of his depleted financial situation, suspended all but $3,000 of the penalty, to be paid in monthly installments. The court also permanently enjoined him from violating §432(b)(3) and from engaging in any activity that would result in his being responsible for political committee funds, accounts, financial records or FEC reports.
The FEC may request full payment of the suspended penalty if it discovers that defendant made inaccurate or misleading representations during the litigation or that he violated any terms of the court order. The FEC may also request full or partial payment of the penalty should Mr. Caulder's financial circumstances improve. The court's order and judgment were agreed to by both the FEC and Mr. Caulder. (Civil Action No. 91-CV-5906.)
Source: FEC Record -- August 1992, p. 13.
On February 2, 1980, the U.S. Court of Appeals for the Second Circuit remanded FEC v. Central Long Island Tax Reform Immediately et al. to the District Court for the Eastern District of New York with an order to dismiss the suit.
The FEC originally filed the suit on August 1, 1978, alleging that violations of the Act occurred when the Central Long Island Tax Reform Immediately Committee (CLITRIM) published a pamphlet for general circulation in October 1976 at a cost of more than $100. The FEC claimed that, in publishing and distributing the pamphlet, defendants violated the following provisions of the Act:
In its motion to dismiss the case, CLITRIM argued that, in its Buckley v. Valeo decision, the Supreme Court had specifically mandated that the Act be amended to regulate only expenditures or communications by persons "expressly advocating the election or defeat of a clearly identified candidate." Buckley v. Valeo, 424 U.S. 1, 43 (1976). Further, "express advocacy" must include at least one of the phrases suggested by the Court in Buckley: "'vote for', 'elect', 'support', 'cast your ballot for', 'Smith for Congress', 'Vote Against', 'defeat', 'reject.'" (424 U.S. 1 (1976) at 52). CLITRIM pointed out that the TRIM Bulletin did not contain any of the terms of "express advocacy" spelled out in Buckley.
Responding to this argument in one of its reply briefs filed with the court of appeals, the FEC maintained that the CLITRIM/National TRIM bulletin was not merely an informational or educational compilation of Congressional voting records. The bulletin discussed TRIM's position on the issue of high taxes and big government, identified federal candidates, critiqued their position on the issue of high taxes and big government and urged the voter to vote with TRIM. The Commission interpreted these communications as "express advocacy" communications within the meaning of 2 U.S.C. §434(e) and as construed by the Supreme Court in Buckley, 424 U.S. at 44, n. 52.
In reaching its decision to dismiss the case, the court of appeals concluded that the CLITRIM Bulletin did not "expressly advocate" the election or defeat of a candidate within the meaning of 2 U.S.C. §§434(e) and 441d. Since, as interpreted by the court, these provisions of the Act did not apply to defendants' conduct, the court concluded the constitutional issues raised by defendants in the case would not represent a case ripe for consideration by the court.
On February 25, 1980, National TRIM and John W. Robbins, intervenor in the case, petitioned the court of appeals for a rehearing. Defendants sought injunctive relief from FEC enforcement proceedings brought against local TRIM committees which were not affected by the court's February 2 order to dismiss the case. On March 5, 1980, the petition for rehearing was denied by the court of appeals.
Source: FEC Record -- April 1980, p. 7.
FEC v. Central Long Island Tax Reform Immediately Committee, 616 F.2d 45 (2d Cir. 1980) (en banc).
On June 28, 1995, the U.S. District Court for the Western District of Virginia, Lynchburg Division, dismissed this case. The FEC had brought suit against the Christian Action Network (CAN) for making independent expenditures1 with corporate funds, for failing to include the proper disclaimer on its political communications and for failing to file the required reports with the FEC.
On August 2, 1996, the U.S. Court of Appeals for the Fourth Circuit, in an unpublished opinion, upheld the district court's dismissal of this case. The court of appeals, finding "no error" in the district court opinion, affirmed that court's decision. Following, on April 7, 1997, the Fourth Circuit granted a request from the CAN that the FEC pay its attorney fees and other costs associated with this case. The court remanded the case to the district court to set the amount to be awarded.
The communications in question-a television advertisement and two newspaper advertisements that ran during the weeks leading up to the 1992 Presidential general election-assailed then-candidate Bill Clinton's alleged position on homosexual issues.
The court ruled that the communications were outside the Commission's jurisdiction because they did not expressly advocate the election or defeat of Mr. Clinton.
The court reached this conclusion on the basis of the Supreme Court's decision in Buckley v. Valeo. In that case, the Supreme Court said that, for a communication to be considered an independent expenditure and thus subject to FEC regulation, it must expressly advocate the election or defeat of a clearly identified candidate.2 In reviewing relevant court decisions since Buckley, the court found that "political expression, including discussion of public issues and debate on the qualifications of candidates, enjoys extensive First Amendment protection" and that the courts "have adopted a strict interpretation of the 'express advocacy' standard . . . . Thus, courts generally have been disinclined to entertain arguments made by the Commission that focus on anything other than the actual language used in an advertisement."
In arguing the case, the FEC had relied on the Court of Appeals for the Ninth Circuit's decision in FEC v. Furgatch. In that case, the appeals court considered the timing and context of a communication in determining the existence of express advocacy. The FEC stressed that those elements were important here as well: the CAN television advertisement aired in the weeks leading up to the 1992 general election, and, although the ad did not contain words that expressly advocated Mr. Clinton's defeat, its imagery, music, editing, coloring, etc. clearly conveyed that message.
The FEC also pointed out that the newspaper ads-both of which referred to the "voting public" and one of which referred to a Presidential debate scheduled for that day-conveyed a message identical to that of the television ad. Viewed collectively, the FEC contended, the three ads sent voters the message to vote against Mr. Clinton and his policies in the November elections.
The court recognized the validity of the Furgatch approach but noted that the Furgatch court stated that the context and timing of a communication were peripheral to the actual words themselves, and therefore should be given only limited weight when determining the presence of express advocacy.
Focusing on the words contained in the ads, the court said there was no call for electoral action. The newspaper ads' reference to the "voting public" "does not per se translate into an exhortation to vote."
Finding that express advocacy was absent from the ads, the court concluded that "the Defendants' advertisements represent the very type of issue advocacy the Buckley Court sought to exempt from government regulation."
1 An independent expenditure is an expenditure made
without any coordination with a candidate's campaign for a communication which
expressly advocates the election or defeat of a clearly identified candidate
for federal office.
2 The court listed the following examples of words that constitute express advocacy: "vote for," "elect," "support," "cast your ballot for," "Smith for Congress," "vote against," "defeat," "reject."
On May 13, 1997, the U.S. District Court for the District of Columbia denied the Christian Coalition's motion for partial dismissal of this case.
The decision meant that the FEC was able to seek declaratory and injunctive relief for all of the alleged violations of the Federal Election Campaign Act (the Act), but was not able to obtain civil penalties for any of the violations that occurred more than five years before the lawsuit was filed.
On August 2, 1999, the district court granted in part and denied in part motions for summary judgment by both the Federal Election Commission (the "FEC" or "Commission") and the Christian Coalition (the "Coalition").
The FEC and the Christian Coalition negotiated a final judgment and order, which the court issued on February 23, 2000.
The Coalition sought dismissal of those portions of the FEC's suit that concerned prohibited activities that had occurred more than five years before the suit was filed-essentially the activities that related to the 1990 election cycle.
At 28 U.S.C. §2462, the law provides for a five-year statute of limitations for certain law enforcement proceedings. The Coalition argued that that time limit started running at the time that the alleged offenses occurred-not when they were reported to the FEC by the Democratic Party of Virginia. The FEC argued that the time began running when it was notified through the administrative complaint process. Because its investigatory powers and resources are limited, the FEC said that it had no way of knowing about the Coalition's alleged conduct until a complaint was filed with the agency.
The court rejected the FEC's argument, citing the ruling of the U.S. Court of Appeals for the District of Columbia Circuit in 3M v. Browner.1 In that case, the appeals court ruled that an agency's failure to detect violations does not negate the inherent difficulties faced by bringing a case to court long after the alleged violation has occurred. The appeals court noted: "nothing in the language of §2462 even arguably makes the running of the limitation period turn on the degree of difficulty an agency experiences in detecting violations."
The court, however, agreed with the FEC that §2462 provides no shield for the Coalition from declaratory or injunctive relief. At 2 U.S.C. §437g(a)(6), the FEC has the authority to seek injunctive relief separate from its authority to seek legal remedies (e.g., civil fines, penalties and forfeitures).
The Commission had alleged that the Coalition had made three expenditures for communications that expressly advocated the election or defeat of clearly identified candidates. The court held that the following two communications did not contain express advocacy and, therefore, did not violate the Federal Election Campaign Act's (the "Act") ban on corporate contributions and expenditures made in connection with federal elections:
The court held that a third communication, a 1994 mailing by the Georgia Christian Coalition, did expressly advocate the election of then-Speaker Newt Gingrich in violation of the Act. The court also held that the Coalition violated the Act by making a prohibited corporate contribution to Oliver North's Senate campaign by giving it a mailing list.
The Commission also alleged that the Coalition coordinated its voter guides during the 1990, 1992 and 1994 elections with various federal candidates. In all but one instance, the court decided that there was no coordination. In one election campaign, Oliver North's 1994 U.S. Senate campaign in Virginia , the court determined that there were contested issues to be resolved after a future hearing.
The Christian Coalition is a nonprofit, nonstock corporation, originally incorporated in Virginia and doing business in the District of Columbia. In 1992 both the Democratic Party of Virginia and the Democratic National Committee filed complaints against the Coalition with the FEC. The two complaints were merged. The Commission found probable cause to believe the Coalition had violated the Act and attempted conciliation with the Coalition. After that attempt failed, the Commission filed this lawsuit in 1996.
The court determined that the two main issues in the litigation were:
With regard to the first issue, the court concluded that an express advocacy communication is one that a reasonable person would understand contains an explicit directive-using an active verb (or its functional equivalent)-that unmistakably exhorts the audience to take electoral action to support or defeat a clearly identified candidate. The verb (or its functional equivalent) must be considered in the context of the entire communication, including temporal proximity to the election.
With respect to the second issue, the district court limited its decision to "expressive coordinated expenditures" by corporations. The court explained that an "expressive coordinated expenditure" is an expenditure for a communication that (although not containing express advocacy) is "made for the purpose of influencing a federal election in which the spender is responsible for a substantial portion of the speech and for which the spender's choice of speech has been arrived at after coordination with the campaign." Such expenditures are coordinated if the candidate requests or suggests the expenditure, or if the spender engages in substantial discussion or negotiation with the campaign about the communication's content, timing, location, mode, intended audience or volume.
The FEC alleged that in three instances the Coalition used general treasury funds to finance independent communications that contained express advocacy (i.e., expressly advocated the election or defeat of a clearly identified candidate) and thereby violated §441b of the Act, which prohibits corporations and unions from making expenditures in connection with federal elections.
Based on decisions by the Supreme Court and lower courts in other jurisdictions, the district court held that, in order for an expenditure to contain express advocacy and, if made by a corporation, violate §441b of the Act, the following attributes are necessary:
The court said that it is a pure question of law as to whether a reasonable person would understand the communication to expressly advocate a candidate's election or defeat. Once the identity of the speaker (organization paying for the communication) and the content of the communication are proven, a court must determine whether the communication contains express advocacy "solely as a matter of law."
The FEC alleged that the Christian Coalition used general treasury funds to pay travel expenses and compensation to Ralph Reed, then-Executive Director of the Coalition, for a speech that expressly advocated the defeat of Pat Williams, the Democratic U.S. Representative from Montana's First District.
The court held that, while Reed's speech made references to the Democratic incumbent, it did not direct the audience to do anything. He predicted that "victory will be ours" and that "we're going to see Pat Williams sent bags packing . . . in November." The court said this was "prophecy rather than advocacy," because Reed's speech did not contain an explicit exhortation to the audience to take action to defeat Representative Williams. "[I]t can only be concluded that Reed exhibited precisely the 'ingenuity and resourcefulness' in his verb choice that the Buckley Court envisioned possible to circumvent the prohibition on express advocacy. As others have acknowledged, results such as this appear unsatisfyingly formalistic, allowing precisely the sort of communications Congress sought to prohibit to remain immune from liability. . . . But the Supreme Court felt that the First Amendment required a choice between a toothless provision and one with an overbite; results such as this flow directly from that choice."
The FEC alleged that portions of a mass mailing called "Reclaim America" included prohibited express advocacy. The Commission argued that, when read in conjunction with the enclosed Christian Coalition scorecard (rating incumbents on specific votes), the cover letter could only be understood to urge support of those incumbents rated favorably and defeat of those rated unfavorably.
Though acknowledging that the cover letter contained explicit directives (e.g., "stand together," "get organized"), the court concluded that a reasonable person could understand the cover letter as a directive to engage in lobbying or issue advocacy with all candidates. The scorecard did not identify which incumbents were candidates in 1994 and did not provide an electoral endorsement of any particular candidate. As a result, there was no express advocacy, and the expenditures did not violate §441b.
The FEC alleged that a mailing by the Georgia Christian Coalition state affiliate (for which the Coalition admitted it was responsible and liable) contained a cover letter from the Coalition's state chair expressly advocating the re-election of Congressman Newt Gingrich. The mailing also contained a copy of the Coalition's nationwide Congressional scorecard.
The court held that, unlike the other two communications discussed above, "the Georgia mailing was expressly directed at the reader-as-voter." The cover letter announced upcoming primary elections and enclosed two items "[to] help you prepare for your trip to the voting booth." The second item was the congressional scorecard. The letter stated that Newt Gingrich, a Christian Coalition "100 percenter," was the only incumbent facing a primary opponent. The letter also exhorted the voter to take the scorecard to the polls in the general election. "While marginally less direct tha[n] saying 'Vote for Newt Gingrich,' the letter in effect is explicit that the reader should take with him to the voting booth the knowledge that Speaker Gingrich was a 'Christian Coalition 100 percenter' and therefore the reader should vote for him. While the 'express advocacy' standard is susceptible of circumvention by all manner of linguistic artifice, merely changing the verb 'vote' into the noun, 'trip to the voting booth' is insufficient to escape the limited reach of 'express advocacy.'"
The court explained that §441b of the Act prohibits corporations from making any contributions or expenditures in connection with any federal election, and the Supreme Court, in Buckley v. Valeo, established that expenditures made in coordination with a campaign are contributions. The court further stated that, in FEC v. Massachusetts Citizens for Life, the Supreme Court "determined that Congress plainly intended the Act to reach corporate expenditures in connection with a federal election. . . . Under that construction, it is manifest that the Coalition's expenditures on voter guides fall within Congress's intended scope for §441b."
The district court went on to distinguish "expressive coordinated expenditures" from other coordinated expenditures. According to the court, an "expressive coordinated expenditure" is an expenditure "for a communication made for the purpose of influencing a federal election in which the spender is responsible for a substantial portion of the speech and for which the spender's choice of speech has been arrived at after coordination with the campaign." The court distinguished this type of coordinated expenditure from other types such as coordinated expenditures for noncommunicative materials (e.g., food or travel expenses for campaign staff).
The court held constitutional that portion of the FEC's regulations that would treat, as contributions, "expressive coordinated expenditures" made at the request or suggestion of the campaign. In the absence of a request or suggestion from the campaign, the court explained, an expressive expenditure is still coordinated where the candidate or his agent exercises control over the communication, or where there has been substantial discussion or negotiation between the campaign and the spender about such things as the contents, timing, location, mode, intended audience, or volume of the communication. A substantial discussion, the court explained, is one from which the spender and the campaign emerge as partners (not necessarily equal partners) or joint venturers in the expressive expenditure. "This standard limits §441b's contribution prohibition on expressive coordinated expenditures to those in which the candidate has taken a sufficient interest to demonstrate that the expenditure is perceived as valuable for meeting the campaign's needs or wants."
The court stated that, under this standard, a voter guide would be considered a coordinated expenditure if the conversation between the spender and the campaign went well beyond inquiry and included, for example, discussion or negotiation over the selection and phrasing of issues to be included in the candidate survey or voter guide. "Coordination requires some to-and-fro between corporation and campaign . . . ."
With respect to get-out-the-vote ("GOTV") telephone activity, the court held that the level of discussion must involve negotiation regarding such things as the contents of the scripts, when the calls are to be made, location or the audience-including which databases will be used to choose call recipients or the number of people to be called.
Using this standard, the court evaluated the facts surrounding the Coalition's expenditures for voter guides involving the following campaigns.
The court held that the Coalition's voter guides and GOTV expenditures, in connection with the 1992 Presidential election, did not qualify as coordinated expenditures-primarily because the court concluded that the Bush/Quayle '92 campaign staff, armed with foreknowledge of the Coalition's plans, chose not to respond to the Coalition's implicit offers to discuss those plans. Although Pat Robertson (Chairman of the Board and former President of the Coalition) and Reed had special access to the Bush/Quayle '92 campaign, and Reed had extensive discussions with campaign staff regarding the campaign's thinking on strategic issues, and the Coalition told the campaign it intended to issue voter guides, "the Coalition did most of the talking." Moreover, there was no request or suggestion by the candidate that the Coalition make expenditures for the voter guides. The corporation's possession of "insider" knowledge from the campaign did not, in itself, establish coordination. More overt acts are required, the court said.
With regard to three Congressional campaigns (Helms for Senate in 1990, Inglis for Congress in 1992 and Hayworth for Congress in 1994), the court found no coordination. In each case, someone was simultaneously involved in both the Coalition and the campaign, but the court said that such "insider trading" was not sufficient to establish coordination without more overt acts such as expenditures being made at the suggestion or request of the campaign.
In one case, North for Senate in 1994, the Coalition gave to Oliver North's campaign a list of previous delegates to the Virginia Republican convention who were also supporters of the Coalition. The court determined that such lists have commercial value, and therefore the contribution of the list to the North campaign was a prohibited corporation contribution.
The Coalition also distributed voter guides in Virginia in 1994. However, there is a material question of fact as to whether North's campaign manager discussed with Reed which issues should be included in the voter guide. That issue, along with the fair market value of the mailing list, will be determined in later court proceedings.
The FEC also had alleged that the Coalition had coordinated with the National Republican Senatorial Campaign Committee to create and distribute voter guides in several states the NRSC considered key in the 1990 elections. The NRSC had contributed $64,000 to the Coalition but had not become a partner in the voter guides by discussing their contents or points of distribution. The court concluded, therefore, that the Coalition had not violated the Act since there had been no discussion or negotiation with regard to the contents or distribution of the voter guides.
The FEC and the Christian Coalition negotiated a final judgment and order, which the court issued on February 23, 2000.
In the final judgment, the court ordered that:
On September 6, 2007, the U.S. District Court for the District of Columbia approved an agreement between the FEC and Citizens Club for Growth, Inc. (formerly known as Club for Growth, Inc.), ending a lawsuit pending before the court. Filed on September 5, 2007, the agreement asked the court to enter a consent judgment requiring Club for Growth (the Club) to pay a civil penalty of $350,000 for failing to register with the Commission as a political committee and to report its contributions and expenditures.
Under the Federal Election Campaign Act (the Act) and Commission regulations, organizations that make expenditures or receive contributions in excess of $1,000 must register with the Commission and file periodic financial disclosure reports. 2 U.S.C. §§431(4)(A), 433 and 434 and 11 CFR 100.5, 102.1 and 104.3. The Act also prohibits these organizations from receiving contributions from corporations or labor organizations and limits contributions from individuals to no more than $5,000 per year. 2 U.S.C. §441b(a) and 11 CFR 114.1(a)(1), and 2 U.S.C. §441a(f) and 11 CFR 110.1(d). In its landmark Buckley v. Valeo decision, the Supreme Court further defined the term “political committee” to include groups whose major purpose is to influence the election of candidates to office. 424 U.S. 1, 79 (1976).
This matter was initiated by an administrative complaint filed with the Commission by the Democratic Senatorial Campaign Committee (DSCC) alleging, among other things, that the Club, a Virginia Corporation registered with the Internal Revenue Service (IRS) as a political organization under Section 527 of the Internal Revenue Code, had improperly failed to register with the FEC as a political committee.
Registering and Reporting as a Political Committee. Following the investigation of a complaint filed with the FEC in 2003, the Commission determined that Club for between 2000 and 2004 expressly advocating the election or defeat of clearly identified federal candidates. In addition, the Club mailed at least five fundraising solicitations during that period that clearly indicated that funds received would be targeted to the election or defeat of specific federal candidates. The Club received well in excess of $1,000 in contributions in response to these solicitations. Because the Club both made more than $1,000 in expenditures and received over $1,000 in contributions, it met the statutory definition of a political committee and was required to register and report with the Commission, provided that its major purpose was to influence federal elections.
Major Purpose. The FEC found that the Club’s major purpose was influencing federal elections. According to numerous fundraising solicitations from 2000 to 2004, its goals at the time were to “elect more pro-growth leaders to Congress,” "help Republicans keep control of the House and take back the Senate,” “elect pro-growth congressmen who will fight to cut taxes and limit government,” “help Republicans retain control of the House and Senate in the upcoming elections,” "help Republicans keep control of Congress” and “defeat status quo incumbents.”
Disbursements. Further, supporting the FEC’s findings as to the Club’s major purpose, the FEC found the vast majority of its disbursements, which totaled about $15.1 million between August of 2000 and the end of 2004, were made in connection with federal elections. The Club’s spending focused on candidate research, polling and ads and other public communications referencing clearly identified federal candidates. In 2004, it spent approximately 88 percent of its disbursements on advertising supporting or criticizing clearly identified federal candidates.
Receipts from Individual in Excess of $5,000 and Prohibited Corporate Contributions. From 2000 through the end of 2006, Club for Growth accepted approximately $10.78 million in contributions from individuals that exceeded the $5,000 contribution limit. Between 2000 and 2004, it also accepted more than $93,000 in corporate contributions.
On October 19, 2004, after finding reason to believe that the Club accepted contributions and made expenditures in excess of the $1,000 registration threshold, the Commission authorized an administrative investigation. Based on the results of that investigation, the Commission’s General Counsel notified the Club on April 25, 2005, that he was prepared to recommend that the Commission find probable cause to believe the Club violated the Act by failing to register as a political committee. The Club filed a response on May 31, 2005.
On July 19, 2005, the Commission voted to find probable cause to believe that the Club violated the Act and approved a proposed conciliation agreement. The Commission was unable to secure an acceptable conciliation agreement with the Club, prompting this suit.
On September 19, 2005, the FEC asked the U.S. District Court for the District of Columbia to find that the Club violated the Act by failing to register with the Commission after meeting both the statutory definition of “political committee” and the “major purpose” test established by the Supreme Court.
According to the Commission’s complaint, the Club was formed primarily to help elect candidates to Congress who would vote for and implement its policy views. In fact, in its registration statement with the IRS, the Club describes itself as primarily dedicated to helping elect pro-growth, pro-freedom candidates through political contributions and issue advocacy campaigns.
Based on its investigation, the Commission determined that the Club met the threshold for registration as a political committee by spending millions of dollars on federal campaign activity during the 2000, 2002, and 2004 election cycles, and by soliciting funds from donors indicating their funds would be spent to help elect or defeat specific federal candidates. The Club encouraged large donations from federally-prohibited sources, and accepted many contributions from individuals that exceed the Act’s $5,000 per year contribution limit on contributions to political committees. Some of the Club’s solicitations clearly indicated that the funds received would be used to support or oppose specific federal candidates. As a result, those contributions apply towards the political committee registration threshold. See FEC v. Survival Education Fund, Inc., 65 F.3d 285, 295 (2d Cir. 1995).
The Commission found that the largest component of the Club’s expenditures during the last three election cycles was political advertising, and that many of its ads contained messages that expressly advocated the election or defeat of clearly identified federal candidates. Based on those ads alone, the Commission alleges that the Club triggered political committee status in August 2000, at the latest.
The Commission asks that the District Court find that the Club:
Additionally, the Commission asks the Court to permanently enjoin the Club from violating the Act; order the Club to register and file disclosure reports with the FEC until it terminates its status as a political committee; order the Club to disgorge all excessive and prohibited contributions it has received since it became a political committee; and assess an appropriate civil penalty.
On October 10, 2006, the U.S. District Court for the District of Columbia denied the Club’s motion for the court to certify its June 5, 2006, decision for interlocutory appeal. An interlocutory appeal allows an appellate court to review a lower court’s decision prior to the final judgment in the case. Interlocutory appeals are rare, in part because the moving party, in this case the Club, has the burden to show exceptional circumstances that justify the expedited process. The court held that the Club failed to do so.
One requirement for granting certification for an interlocutory appeal is that there must be a substantial basis for a difference of opinion about the ruling. While the Club disagreed with the court’s application of a previous case, FEC v.
Legi-Tech., Inc., 75 F.3d 704 (D.C. Cir. 1996), to the circumstances, the Club did not cite any case law to contradict the court’s decision. The court stated that the June 5, 2006, decision was not based on“novel and untested legal theories.”
Instead, the decision was based on the legal doctrine of harmless error, deference to the FEC, the plain language of the Act and settled principles of law regarding agency ratification actions. Since the Club did not show a substantial ground
for difference of opinion, the court denied the Club’s motion to certify the decision for an interlocutory appeal
On June 5, 2006, the U.S. District Court for the District of Columbia issued a memorandum opinion and order denying the Club’s motion to dismiss. In its motion to dismiss, the Club claimed that because the Federal Election Commission (FEC) failed to follow proper procedures before bringing this lawsuit, the court lacked subject-matter jurisdiction. In the opinion denying the Club’s motion, the court found that the FEC was in compliance with the enforcement provisions of the Act. Specifically, the court found that the FEC’s failure to provide timely notice of the administrative complaint constituted harmless error; the agency was entitled to deference in its conciliation procedures; and the Commission properly ratified its decision to file suit.
The Club made three distinct arguments in support of its motion to dismiss, each rejected by the court for the reasons set out below. First, the Club argued the FEC failed to provide timely notice of the allegations made against it.
Under the Act, the Commission shall notify any person alleged to have committed a violation within five days after the FEC’s receipt of the complaint. 2 U.S.C. 437g(a)(1). In this case, the FEC sent notice of the administrative complaint to Stephen Moore, who served as the Club’s President, as well as Treasurer of the Club for Growth, Inc. PAC (the PAC). The
notification was addressed to Mr. Moore as Treasurer of the PAC. After realizing the error, the FEC sent notice to Mr. Moore again, this time addressing the document to him as President of the Club. In its opinion, the court did not agree
with the Club’s claim that this error resulted in untimely notification. Though the original (and timely) notice was sent to him in his capacity as PAC Treasurer rather than as President of the Club, the court noted that through Mr. Moore, the Club had notice.
In the motion to dismiss, the Club also argued that the FEC’s conciliation proposals were not made in good faith. The Act requires the Commission to attempt, for a period of at least 30 days, to correct or prevent violations by informal means, and to enter into a conciliation agreement with any person involved. 2 U.S.C. 437g(a)(4)(A)(i). In assessing whether the FEC complied with this statutory provision, the court afforded high deference to the agency’s action. The court’s opinion also noted that the Club provided no evidence or argument to support this claim, except that they did not like the FEC’s conciliatory offers. The opinion also reasoned that the Act requires the Commission to come to the conciliation table, but does not instruct it on the nature of its offerings. The court agreed with the FEC’s argument that, in showing deference, the court should not scrutinize the FEC’s conciliation offers.
Lastly, the Club argued that the Commission violated the Act by authorizing the lawsuit prior to the completion of the conciliation process. During the course of the conciliation process, the FEC General Counsel sent an undated letter to the Club indicating that the Commission had authorized suit be filed in District Court if the parties were unable to reach an agreement. Although the court held that the initial contingent suit authorization, prior to completion of the conciliation process, was contrary to law under 2 U.S.C. 437g(a)(6)(A), it found that the FEC cured the defective vote by later ratifying its first action. On December 5, 2005, the Commission reaffirmed authorization for the General Counsel to pursue litigation. In its opinion, the court noted that the FEC’s reaffirmation constituted a subsequent review of evidence, and since the December 5 action came after 30 days of conciliation efforts, it was consistent with the requirements of the Act.
The Court entered the consent judgment proposed by the parties, which includes a permanent injunction against future violations by the defendant and its successors, officers and employees and requires that the Club file disclosure reports with the FEC and pay to the U.S. Treasury any funds over $5,000 remaining in its bank account after payment of legal expenses, up to the amount of excessive and prohibited contributions the Club originally accepted.
Between December 1980 and January 1981, the FEC filed four separate suits in U.S. district courts seeking enforcement of subpoenas it had issued to three "draft Kennedy" political committees registered with the Commission, which had been engaged in promoting the Presidential candidacy of Senator Edward Kennedy during 1979, and to the Machinist Non-Partisan Political League (MNPL), the separate segregated fund of the International Association of Machinists, which had supported the formation of "draft Kennedy" groups in several states during 1979. The Commission filed suit against MNPL and Citizens for Democratic Alternatives in 1980 in the U.S. District Court for the District of Columbia (FEC v. Citizens for Democratic Alternatives in 1980, Civil Action No. 800-0009 and FEC v. Machinists Non-Partisan Political League, Civil Action No. 79-0291), against Wisconsin Democrats for Change in 1980 in the U.S. District Court for the Western District in Wisconsin (FEC v. Wisconsin Democrats for Change in 1980, Civil Action No. 80-C-124) and against the Florida for Kennedy Committee in the U.S. District Court for the Southern District of Florida (FEC v. Florida for Kennedy Committee, Civil Action No. 79-5964-CIV-JLK).
The suits resulted from defendants' failure to comply with subpoenas to produce information, which the FEC had issued as part of an investigation of alleged violations of the election law. 2 U.S.C. §437d. The FEC had received a complaint from the Carter/Mondale Presidential Committee, Inc. on October 4, 1979, alleging that nine named political committees were affiliated within the meaning of 2 U.S.C. §433, 441a(a)(5) and 11 CFR 110.3(a)(1)(ii)(D). The complaint claimed that, as affiliated political committees, the nine committees were subject to a single $5,000 limit on contributions they accepted from a multicandidate committee. 2 U.S.C. §441a(a)(1)(C)(2)(C). The complaint further alleged that the draft committees had received, and MNPL had given to them, contributions in excess of the $5,000 limit. 2 U.S.C. §441a(a).
After finding reason to believe that the draft committees and MNPL had violated the Act, the Commission issued 13 subpoenas to various draft committees and to MNPL in an effort to investigate the draft committees' alleged affiliation.
Continued refusal by the four defendants to comply with their subpoenas prompted the FEC to seek enforcement of the subpoenas in the U.S. district courts. The FEC argued that the subpoenas clearly conformed to the guidelines for the enforcement of an administrative agency's subpoenas established by the Supreme Court in United States v. Morton Salt Co. Specifically, the FEC's inquiries were authorized by 2 U.S.C. §437d(a)(1), they were not too indefinite and the information they sought was reasonably relevant to the FEC's investigation. Further, in seeking court-mandated enforcement of the subpoenas, the Commission had followed the procedures prescribed by 2 U.S.C. §437d(b).
Defendant committees raised collateral issues that challenged the Commission's jurisdiction over political committees organized to draft candidates for federal office and that raised First Amendment questions. Defendants argued that, for purposes of the Act, the Supreme Court had restricted the definition of a "political committee" in Buckley v. Valeo to a group whose major purpose is to influence the nomination or election of a candidate. (Buckley v. Valeo, 424 U.S. at 79.)
The district courts ordered enforcement of the Commission's subpoenas. The courts maintained that the subpoenas met the guidelines for enforceability and were within the authority of the agency.
The Wisconsin Democrats for Change in 1980 complied with the Wisconsin district court's subpoena enforcement order. However, Citizens for Democratic Alternatives in 1980 and MNPL filed notices appealing the D.C. district court's decisions to the U.S. Court of Appeals for the District of Columbia Circuit, and the Florida for Kennedy Committee filed a notice appealing the Florida district court's decision to the U.S. Court of Appeals for the Fifth Circuit.
The Florida for Kennedy Committee was granted its application for a stay of the district court's order pending its appeal. The D.C. district and appeals courts denied the stay applications requested by Citizens for Democratic Alternatives in 1980 and MNPL; the Supreme Court also denied a further application made by MNPL. The appellants then produced all documents requested by the Commission.
On May 19, 1981, the appeals court for the D.C. circuit issued its opinions in FEC v. MNPL and FEC v. Citizens for Democratic Alternatives in 1980. The appeals court found that the Commission "lacked subject matter jurisdiction over the draft activities it sought to investigate." (FEC v. MNPL, slip op. at 7; FEC v. Citizens for Democratic Alternatives in 1980, slip op. at 2). The appeals court vacated the D.C. district court's orders enforcing the subpoenas and remanded the cases to the district court for further proceedings consistent with its ruling. The appeals court limited its decision to the provisions of the Federal Election Campaign Act prior to the 1979 Amendments: "Whatever the post-1979 situation, it is clear to us that in this case the contribution limitations did not apply to the nine groups whose activities did not support an existing 'candidate.'" (FEC v. MNPL, slip op. at 31.) The court did note that the 1979 Amendments to the Act appeared to require that "draft" committees comply only with the Act's reporting requirements.
The appeals court departed from the standard for judicial review of agency subpoenas and established a new "extra careful scrutiny" standard for judicial enforcement of FEC subpoenas. The appeals court reasoned that such a standard was warranted since "the activities which the FEC normally investigates differ in terms of their constitutional significance" from those of concern to other federal agencies. On June 9, 1981, the Commission decided to seek review of the D.C. appeals court's decisions by petitioning the Supreme Court for a writ of certiorari. On October 13, 1981, the Supreme Court denied the petition.
On August 2, 1982, the U.S. Court of Appeals for the Eleventh Circuit issued an opinion overturning a ruling of the U.S. District Court for the Southern District of Florida in FEC v. Florida for Kennedy Committee (FKC) (Civil Action No. 80-6013). 681 F.2d 1281 (11th Cir. 1982). The appeals court, with Judge Clark dissenting, found that the Commission lacked subject matter jurisdiction over the FKC's activities. The appeals court therefore reversed the district court's order enforcing subpoenas that the Commission had issued to FKC.
Relying on the Supreme Court's decision in NAACP v. Alabama (357 U.S. 499 ), the appeals court maintained that the usual standard for judicial review of agency subpoenas did not apply in the FEC's case. The appeals court reasoned that "the FEC [must] prove to the satisfaction of the courts that it has statutory investigative authority" before the courts may order enforcement of FEC subpoenas. The appeals court then found that "committees organized to 'draft' a person for federal office" are not "political committees" within the purview of the Act and are not, therefore, subject to the Commission's investigative authority.
Judge Clark, in his dissent to the majority opinion, concluded that the statutory language and legislative history both demonstrated that "draft" committees fall within the jurisdiction of the Act. Judge Clark argued that to exempt draft committees from the Act "would leave a significant portion of political activity outside the coverage of the Act, a construction rejected by the Supreme Court." Judge Clark also found the court's reliance on NAACP v. Alabama to be inappropriate.
On September 22, 1982, the Commission filed a petition with the appeals court for a rehearing of the suit and a suggestion for a rehearing en banc, which was denied October 8, 1982.
Source: FEC Record -- July 1981, p. 5; December 1981, p. 6; and November 1982, p. 6.
FEC v. Citizens for Democratic Alternatives in 1980, 655 F.2d 397 (D.C. Cir.), cert. denied, 454 U.S. 897 (1981). FEC v. Florida for Kennedy Committee, 492 F. Supp. 587 (S.D. Fl. 1979), rev'd, 681 F.2d 1281 (11th Cir. 1982). FEC v. Machinists Non-Partisan Political Action Committee, 655 F.2d 380 (D.C. Cir. 1981), cert. denied, 454 U.S. 897 (1981).
On March 1, 1979, the U.S. District Court for the District of Columbia granted summary judgment to Citizens for the Republic (CFR), defendants in a suit filed by the FEC. In granting judgment to the defendant, the court found that there was no genuine issue as to any material fact.
On August 11, 1977, the Commission found reasonable cause to believe that Citizens for the Republic (formerly Citizens for Reagan, principal campaign committee for former Presidential candidate Ronald Reagan) had violated the Act by failing to report or make best efforts to report the occupations and principal places of business of 35% of those persons who had contributed an aggregate of $100 or more to the candidate, as required by 2 U.S.C. §434(b)(2). On June 23, 1978, the Commission filed suit after unsuccessfully trying, for almost a year, to resolve the matter through conciliation, as required by 2 U.S.C. §437g(a)(5)(A).
The defendant maintained that:
The Commission argued that:
In finding for the defendant, the court concluded that the Commission "had a duty to give more...detailed guidance by regulation." In the absence of such guidance, the efforts made by the Reagan Committee were best efforts.
Source: FEC Record -- May 1979, p. 2.
On July 31, 1987, the U.S. District Court for the District of Columbia entered a default judgment against the Citizens Party, a political party committee, and the party's acting treasurer, Kirby Edmonds, for the respondents' failure to timely pay in full a previously agreed upon civil penalty, in violation of the terms of a conciliation agreement they had entered into with the FEC on March 20, 1986. (FEC v. Citizens Party; Civil Action No. 86-3113 (OG).)
The court also: (1) ordered the defendants to pay interest on the $1,250 unpaid balance of the civil penalty for the period from June 18, 1986, to December 8, 1986, and (2) permanently enjoined the defendants from further violations of the agreement.
Source: FEC Record -- March 1987, p. 6.
On May 1, 1989, the U.S. District Court for the Northern District of New York entered a consent order and judgment in FEC v. Citizens Party (Civil Action No. 87-CV-1577). The judgment declared that the Citizens Party, a political committee, and its treasurer, Kirby Edmonds, knowingly and willfully violated the election law by failing to file four reports in a timely manner: a 1985 year-end report and three 1986 quarterly reports (April, July and October). The consent order and judgment also assessed a civil penalty of $10,000 against the committee. Mr. Edmonds was personally assessed a $500 penalty.
Source: FEC Record -- July 1989, p. 7.
On April 23, 1987, the U.S. District Court for the Middle District of Florida issued a consent order in FEC v. John R. Clark, Jr. (Civil Action No. 86-1841-CIV-T-17B). In the order, the FEC and Mr. Clark agreed that:
Finally, Mr. Clark assured the court that, in the future, he would fully comply with the election law.
Source: FEC Record -- June 1987, p. 6.
In April 1986-four months before the Democratic primary and seven months before the November general election-the Colorado Republican Federal Campaign Committee (the Committee) ran a $15,000 radio ad in response to a series of television ads sponsored by the Senatorial campaign committee of then-Congressman Tim Wirth, a Democrat. The ad contrasted Mr. Wirth's statements in his TV ads with his Congressional voting record, and concluded with the words: "Tim Wirth has a right to run for the Senate, but he doesn't have a right to change the facts."
Under the Federal Election Campaign Act (the Act), the Committee was authorized to spend up to a certain limit on coordinated party expenditures made "in connection with the general election campaign" of the Republican Party candidate running in the U.S. Senate race in Colorado. 2 U.S.C. §441a(d)(3). The Committee, however, had assigned its entire 1986 spending authority to the National Republican Senatorial Committee.
In its campaign finance reports, the Committee characterized the ad as a generic voter education expense that was not subject to the §441a(d) limits. The FEC, however, viewed it as a coordinated party expenditure and filed suit against the Committee for violating the Act's expenditure limits and reporting requirements for this type of expenditure. The Committee counterclaimed with a First Amendment challenge to the constitutionality of the §441a(d) limits.
On August 31, 1993, the U.S. District Court for the District of Colorado granted summary judgment to the Committee. The court held that the Committee's $15,000 expenditure for a radio ad, because it did not contain "express advocacy," was not subject to the coordinated party expenditure limit.
The court first rejected the Committee's argument that the ad was an "independent expenditure" (rather than a coordinated expenditure)-and thus not subject to spending limits-because it was aired before the Republican candidate had been nominated. The court noted that the FEC and the courts have said that party committees are incapable of making independent expenditures. The court concluded that the Committee's expenditure "was made on behalf of the Republican candidate, whomever that might be; and it is irrelevant that no particular person had been designated."
In considering whether the ad was subject to the coordinated party expenditure limits at 2 U.S.C. §441a(d), the district court concluded that only communications that expressly advocate the election or defeat of a candidate qualify as coordinated party expenditures. The court decided that the radio ad did not contain express advocacy, and therefore was not a coordinated party expenditure.
The district court reasoned that in FEC v. Massachusetts Citizens for Life (MCFL), the Supreme Court established that the presence of express advocacy determined whether or not an independent expenditure was made "in connection with" a federal election. Although the MCFL decision dealt with independent expenditures rather than coordinated party expenditures, the district court noted that §441a(d) also includes the phrase "expenditure in connection with" a federal election. The court therefore followed a common law rule: a phrase recurring in a statute is to be interpreted consistently.
The district court then referred to the list of words and phrases, contained in the Supreme Court's Buckley v. Valeo decision as examples of express advocacy. Finding that the Committee's ad did not contain any of these words or phrases, the district court ruled that the expenditure for the ad did not constitute a coordinated party expenditure and therefore did not count toward the Committee's §441a(d) limit.
On June 23, 1995, the U.S. Court of Appeals for the Tenth Circuit reversed the district court's ruling that express advocacy is a defining feature of coordinated party expenditures. Further, it concluded that the Act's limitation of these expenditures does not violate the Committee's First Amendment rights. The court remanded the case to the district court with instructions to enter judgment in favor of the FEC and to impose on the defendant a proper civil penalty under 2 U.S.C. §437g(a)(6).
The court of appeals observed that both Buckley and MCFL distinguish between these two types of expenditures:
"The Supreme Court cases have distinguished between the potential for corruption that attaches to contributions and coordinated party expenditures, and those that might develop from independent expenditures, finding less inherent risk in the latter."
The court of appeals also noted that Buckley struck down the Act's limits on independent expenditures as an unwarranted infringement on the First Amendment rights of individuals but upheld the Act's limits on party expenditures because they served the substantial government interest of preserving the integrity of the electoral process. The validity of this interest has been reinforced in subsequent court case decisions.
In the appeals court's view, the distinctions made in these precedents indicate that the phrase "expenditures in connection with" should not be construed the same way with respect to independent expenditures and coordinated party expenditures.
Rather, the court held that judicial deference was due to the Commission's interpretation of its statute. Advisory Opinions 1984-15 and 1985-14 establish the Commission's criteria for determining whether or not a party expenditure counts against the §441a(d) limit: an expenditure counts against the limit if it is made for a communication that (1) clearly identifies a candidate and (2) contains an electioneering message. The presence of express advocacy is not a factor in this determination.
The court then found that the ad identified a candidate (Mr. Wirth) and "unquestionably contained an electioneering message," since it sought to diminish public support for Mr. Wirth and garner support for the then-yet-to-be-named Republican nominee. Consequently, the court reasoned that the radio ad resulted in an "expenditure made in connection with" an election and thus counted against the Committee's §441a(d) limit.
Citing the reasoning of the Supreme Court in Buckley and subsequent cases, the court of appeals ruled that, as with contribution limits, the coordinated party expenditure limits are a justifiable infringement on the First Amendment rights of party committees.
"The opportunity for abuse is greater when the contributions (or in the instant case, coordinated party expenditures) derive from sources inherently aligned with the candidate, rather than with independent expenditures."
The coordinated party expenditure limits were adopted because of Congressional concern that unchecked party spending would give citizens who make large contributions to party committees undue influence on elected officials. The court concluded that the §441a(d) limits diminish this potential with a minimal impact on the important role of political parties. This follows the precedent set in Buckley that found that these and other contribution and expenditure limits served the overriding government interest of preserving the integrity of the electoral process.
The Commission appealed the Tenth Circuit's decision to the Supreme Court. Oral arguments were presented on April 15, 1996.
On June 26, 1996, the U.S. Supreme Court ruled that the coordinated party expenditure limits at 2 U.S.C. §441a(d) could not be constitutionally applied to the radio ad aired by the Committee. The Court found that the ad was not coordinated with any candidate; rather it was an independent expenditure that could not constitutionally be subject to the coordinated party expenditure limit.
The FEC had concluded that political parties, because of their special function, are incapable of making electoral expenditures that are "independent" of their own candidates, since the sole reason for a political party's existence is to elect its candidates to public office.
The Court disagreed, stating that, with reference to the radio ad, there was no evidence of coordination between the Committee and the three candidates who were then seeking the Republican Senate nomination. Rather, the ad "was developed by the Colorado Party independently and not pursuant to any general or particular understanding with a candidate." The Court also found that the potential for, or appearance of, corruption, which the Buckley Court found sufficient to justify limiting contributions, was not present to the extent that would justify limiting such independent spending by political parties on behalf of their candidates. Accordingly, the Court concluded that the First Amendment precludes application of the §441a(d) limits to independent campaign expenditures by political parties.
This decision pertained to party spending in connection with congressional races. The Court warned that this opinion does not "address issues that might grow out of the public funding of Presidential campaigns."
The Court decided not to address a constitutional challenge to the §441a(d) coordinated limits brought by the Committee. Instead, the Court chose to "defer consideration of the broader issues until the lower courts have reconsidered the question in light of our current opinion."
This decision vacated the 10th Circuit Court of Appeals' judgment. The case was remanded to the lower courts for further proceedings consistent with this decision.
Justice Breyer wrote the plurality opinion announcing the judgment of the Court. Although seven Justices concurred in the judgment, only Justices O'Connor and Souter joined Justice Breyer's plurality decision. There were also two separate concurring opinions and one dissent which the remaining Justices signed on to, as follows:
On February 23, 1999, the district court granted the Committee's motion for summary judgment on its counterclaim, ruling that the coordinated party expenditure limits are unconstitutional and cannot be enforced against the Committee. The court denied the FEC's cross motion for summary judgment and dismissal of the amended counterclaim.
In the district court's view, the FEC needed to demonstrate that:
The court said that the FEC had to show that coordinated party expenditure limits prevent corruption or the appearance of corruption. The FEC had to do more than show "the opportunity" for corruption.
The FEC argued that generous contributors could demand special favors of candidates via their party committee contributions; and that party committees could withhold or grant unlimited coordinated expenditures in order to exact a quid pro quo from candidates who needed financial assistance. The court rejected the first argument, saying that the FEC had shown that large contributors to parties had obtained access to elected officials, but such access did not constitute corruption. The court rejected the analogy to unlimited soft money donations because they may not be used to make coordinated party expenditures. Moreover, because of the limits on individual contributions, the court found the contributor-to-party-to-candidate scenario "an unlikely avenue of corruption."
As to the second argument, the court stated that party committees, by their nature, exert some influence over candidates. "[A] political party's decision to support a candidate who adheres to the parties' beliefs is not corruption. Conversely, a party's refusal to provide a candidate with electoral funds because the candidate's views are at odds with party positions is not an attempt to exert improper influence."
Furthermore, the court stated that in Buckley v. Valeo the Supreme Court's concern with corruption was related to large individual financial contributions-not contributions from party committees.
Finally, the court stated: "The FEC cannot rely on general public dissatisfaction with parties and politicians and the amount of money in the political process.to support its claim that the party coordinated expenditure limit serves a compelling purpose and is narrowly tailored to accomplish that purpose."
The court concluded that the FEC had failed to offer relevant, admissible evidence that suggested coordinated party expenditures had to be limited to prevent corruption or its appearance. The court also stated that coordinated party expenditures were "indistinguishable in substance" from the candidate's campaign expenditures. Since, under Buckley, candidate expenditures cannot be limited, coordinated party expenditures also cannot be regulated.
On May 5, 2000, the U.S. Court of Appeals for the 10th Circuit affirmed a district court decision that the coordinated party expenditure limits at 2 U.S.C. 441a(d)(3) are unconstitutional.
To support the constitutionality of the 441a(d) limits, the Commission offered three principal arguments that the limits prevent corruption or the appearance of corruption:
The court, in a 2-1 decision, rejected the first of these arguments by noting, in part, that-based on the Supreme Court's earlier ruling in this case-party committees can already make unlimited independent expenditures. The court refused to consider the potential corrupting influence of unregulated "soft money" contributions, since those funds cannot legally be spent to influence federal elections.
With respect to the FEC's second argument, the court concluded that "there is nothing pernicious" about a party "shaping the views of its candidates." The court added that, "Parties are simply too large and too diverse to be corrupted by any one faction."
The court dismissed the Commission's final argument by noting that 2 U.S.C. 441a(a)(8) requires that contributions earmarked for a particular candidate (i.e., that pass through an intermediary) be treated as contributions from the original source to the candidate.
Having found no persuasive evidence that coordinated party expenditures corrupt, or appear to corrupt, the electoral process, the appeals court upheld the district court's decision. The court concluded that "441a(d)(3)'s limit on party spending . . . constitutes an 'unnecessary abridgment' of First Amendment freedoms." The court stated explicitly that its analysis and holding apply only to party spending in connection with Congressional races.
In dissent, Chief Judge Seymour found the "majority opinion fundamentally flawed in several respects." In her view, the panel majority "substitute[d] its judgment for that of Congress on quintessentially political matters the Supreme Court has cautioned courts to leave to the legislative process. In so doing, the majority creates a special category for political parties based on its view of their place in American politics, a view at odds with history and with legislation drafted by politicians."
On June 25, 2001, the U.S. Supreme Court, overruling the Court of Appeals for the 10th Circuit, held that the coordinated party expenditure limits at 2 U.S.C. §441a(d)(3) are constitutional. The Court ruled that party coordinated expenditures, unlike party expenditures made independently of any candidate or campaign, may be restricted to "minimize circumvention of [individual] contribution limits."
In arguments before the Supreme Court, the Committee maintained that financial support of candidates was an inherent function of political parties. Therefore, any limitation of Committee expenditures coordinated with its candidates would be a serious infringement of its speech and associational rights. The Committee argued that such a limitation would impose a unique First Amendment burden on the Committee, and such a burden could not be justified by any benefits gained in preventing corruption or the appearance of corruption.
The Commission argued that coordinated expenditures should be limited not only because they are equivalent to contributions, but also because unlimited coordinated party expenditures would allow individuals to evade the contribution limits applicable to their direct contributions to candidates. Because individuals can give much larger contributions to parties than to candidates, if parties' coordinated spending were unlimited, individuals would have an incentive to make large contributions to parties, who would then be able to spend more of those contributors' dollars on a particular candidate than the individual contribution limits would allow. This circumstance would allow individuals and other contributors to circumvent the contribution limits upheld in Buckley v. Valeo.
In upholding the constitutionality of coordinated party expenditure limits, the Court:
Citing testimony provided by political scientists in friend-of-the-court briefs, the Court agreed with the Commission that there was a serious threat of abuse from unlimited coordinated party expenditures. The Court concluded: "Despite years of enforcement of the challenged limits, substantial evidence demonstrates how candidates, donors, and parties test the limits of the current law, and it shows beyond serious doubt how contribution limits would be eroded if inducement to circumvent them were enhanced by declaring parties' coordinated spending wide open."
Source: FEC Record -- November 1993, p. 1; August 1995, p. 1; August 1996 [PDF]; April 1999 [PDF]; July 2000 [PDF]; October 2000 [PDF]; and August 2001 [PDF].
FEC v. Colorado Republican Federal Campaign Committee, 839 F. Supp. 1448 (D. Colo. 1993); 59 F.3d 1015 (10th Cir. 1995), rev'd, 116 S. Ct. 2309 (1996), on remand, 41 F. Supp.2d 1197 (D. Colo. 1999); Supreme Court decision, 533 U.S. 431, 121 S.Ct. 2351.
On September 30, 1993, the District Court for the District of Columbia granted the Commission's motion for summary judgment against the Committee of 100 Democrats, the Committee to Elect Fusco to Congress (formerly Throw the Rascals Out) and Dominick A. Fusco, the treasurer of both committees.
The court ruled that Mr. Fusco and the committees had violated the terms of two conciliation agreements related to an FEC enforcement action (Matter Under Review (MUR) 3148). The court ordered the defendants to comply with the agreements, assessed $1,000 penalties against each committee and enjoined the defendants from future violations of the agreements.
Noting that Mr. Fusco was named as a party to the conciliation agreements and had signed them both, the court concluded that his "status as a party to each of the agreements subjects him to personal liability for their violation." As a result, the court held Mr. Fusco and the committees "jointly liable" for compliance with the conciliation agreements and payment of the additional penalties.
To comply with the conciliation agreements, the Committee of 100 Democrats-and Mr. Fusco, as its treasurer-had to register with the Commission and file the appropriate reports of receipts and disbursements. Mr. Fusco and his Committee to Elect Fusco to Congress were to pay the FEC a $3,500 civil penalty. The court directed the defendants to comply with its order within 10 days.
In a court document filed September 13, 1994, the parties in this suit agreed to a schedule for paying the $5,500 in total penalties owed by the three defendants.
The stipulation agreement required the defendants to pay the penalties in monthly installments. If payments were late, interest would accrue on the entire unpaid balance until it was fully paid. Moreover, if defendants failed to carry out their obligations, they would be required to reimburse the FEC for costs and attorneys' fees expended on the case since the September 1993 judgment.
Source: FEC Record -- December 1993, p. 3; and November 1994, p. 9.
FEC v. Committee of 100 Democrats, 844 F. Supp. 1 (D.D.C. 1993).