FEC v. Furgatch; FEC v. Dominelli

On November 20, 1984, the U.S. District Court for the Southern District of California dismissed FEC v. Furgatch (Civil Action No. 83-0596-GT[M]) on the ground that the case failed to state a justiciable claim. Based on its ruling in the Furgatch suit, on November 30, 1984, the court also dismissed a "virtually identical case," FEC v. Dominelli (Civil Action No. 83-0595-GT[M]).

More than two years later, however, the district court was reversed by the court of appeals, which ruled that the defendants had violated the election law and which remanded the cases to the district court.

On remand, the district court assessed a $25,000 civil penalty against Mr. Furgatch and permanently enjoined him from future similar violations of the election law (Civil Action No. 86-6047). Mr. Furgatch appealed the penalty and the injunction.

On March 8, 1989, the appeals court upheld the lower court's imposition of the civil penalty. However, the court vacated the permanent injunction against Mr. Furgatch and remanded it to the district court with instructions to limit its duration.

Background

In filing suit against Mr. Furgatch on March 25, 1983, the FEC claimed that he had violated the election law by failing to report independent expenditures of approximately $25,008. 2 U.S.C. §434(c). Mr. Furgatch incurred the expenditures for two political ads he placed in The New York Times and The Boston Globe, respectively, which the Commission alleged expressly advocated the defeat of President Carter in his 1980 reelection bid. The FEC also claimed Mr. Furgatch had violated section 441d of the law by failing to include an adequate disclaimer notice on the ad he placed in The Boston Globe.

In filing suit against Mr. Dominelli on the same day, the FEC had asked the court to find that he had failed to report independent expenditures amounting to $8,471. The FEC alleged that Mr. Dominelli had incurred the expenditures for an ad in a November 1980 issue of The Chicago Tribune, which expressly advocated President Carter's defeat.

District court ruling on the Furgatch suit

In ruling on whether the political ads sponsored by Mr. Furgatch expressly advocated President Carter's defeat, and therefore constituted independent expenditures, the district court applied the standard contained in the Supreme Court's Buckley v. Valeo opinion.[1] In Buckley v. Valeo, the Court had defined express advocacy as "communications containing express words of advocacy of election or defeat, such as 'vote for,' 'elect,' 'cast your ballot for,' 'Smith for Congress,' 'vote against,' 'defeat,' 'reject.'" Buckley v. Valeo, 424 U.S. 1, 44 (1976). The district court cited earlier district and appeals court decisions which emphasized that "neither the purpose nor the effect of a political advertisement is determinative of the issue of whether the ad expressly advocates the election or defeat of a clearly identified candidate." See FEC v. CLITRIM, 616 F.2d 45, 53 (2d Cir. 1980); FEC v. AFSCME, 471 F. Supp. 315, 316 (D.D.C. 1979). Applying this express advocacy standard to Mr. Furgatch's ads, the court found that the pivotal question was "whether the phrase 'Don't let him do it' [was] the equivalent of the expression 'vote against Carter.'" (The remainder of the language in the ad was beyond the election law's scope, the court concluded, because it contained only an implied message not to vote for President Carter.) Interpreting the word "it" in the phrase, the court concluded that the ad exhorted the reader not to let President Carter "hide his own record" or "degrade the electoral process and lessen the prestige of the office." The court then concluded that the phrase "Don't let him do it" did not constitute express advocacy. The court found that "the range of actions expressly recommended by the ad obviously did not include voting the President out of office." Consequently, the ad did not ask the reader to vote against the President.

Finally, the court noted that, since it had decided the case on grounds of statutory construction, it was not "necessary or desirable to [address] the defendants' constitutional challenges to sections 434(c) and 441d" of the election law.

On January 24, 1985, the FEC filed an appeal of the district court's decision with the U.S. Court of Appeals for the Ninth Circuit.

Appeals court ruling

On January 9, 1987, the U.S. Court of Appeals for the Ninth Circuit reversed the district court's decision in the case and confirmed the FEC's claim that Mr. Furgatch should be held liable for violations of the election law resulting from: his failure to report spending for the ads as independent expenditures and his failure to state in one of the ads that the communication was not authorized by a candidate or a candidate's committee.

Since FEC v. Dominelli presented "facts virtually identical" to those addressed in the Furgatch suit, the appeals court also reversed the district court's ruling in that case. (FEC v. Dominelli; Civil Action No. 85-5525)

In reversing the district court's ruling in the case, the appeals court rejected the "strictly limited" definition of express advocacy relied upon by the district court. (See discussion above.) Instead, the appeals court found that "context is relevant to a determination of express advocacy." The court therefore concluded that "[political] speech need not include any of the words listed in Buckley to be express advocacy under the Act, but must, when read as a whole, and with limited reference to external events, be susceptible of no other reasonable interpretation but as an exhortation to vote for or against a specific candidate." The appeals court stated that this standard for determining when political speech constitutes express advocacy would "preserve the efficacy of the Act without treading upon the freedom of political expression."

Elaborating on this standard, the appeals court held that a political communication constituted express advocacy if:

• The communication "is unmistakable and unambiguous, suggestive of only one plausible meaning," even if "not presented in the clearest, most explicit language";
• The communication "presents a clear plea for action"; and
• There can be no reasonable doubt about "what action is advocated."

Conversely, the appeals court held that "speech cannot be express advocacy of the election or defeat of a clearly identified candidate when reasonable minds could differ as to whether it encourages a vote for or against a candidate or encourages the reader to take some other kind of action." In applying its express advocacy standard to Mr. Furgatch's ads, the appeals court held that it had "no doubt that the ads ask the public to vote against Carter." In reversing the district court's conclusion, the appeals court held that the "pivotal question is not what the reader should prevent Jimmy Carter from doing, but what the reader should do to prevent it [i.e., his reelection]." The appeals court noted that, although "we are presented with an express call to action" in the ad, we are not told "what action is appropriate." However, the court concluded, in the context of the message, "reasonable minds could not dispute that Furgatch's advertisement is urging readers to vote against Jimmy Carter." Moreover, the court held that its conclusion was "reinforced by consideration of the timing of the ad... timing the appearance of the advertisement less than a week before the election left no doubt of the action proposed."

Finally, the court held that Mr. Furgatch's ads were not the kind of "issue-oriented speech" excepted from the election law: "The ads directly attack a candidate, not because of any stand on the issues of the election, but for his personal qualities and alleged improprieties in the handling of his campaign. It is the type of advertising that the Act was enacted to cover."

The court did not explicitly discuss Mr. Furgatch's constitutional challenge to sections 434(c) and 441d of the election law, but noted that in deciding the case on grounds of statutory construction, it had "implicitly" dealt with the free speech issues raised in his suit.

On October 5, 1987, the U.S. Supreme Court denied a petition by Mr. Furgatch for a writ of certiorari in the suit.

District court judgment on remand

On April 26, 1988, the district court entered a judgment requiring Mr. Furgatch to pay a $25,000 civil penalty and to comply with the FECA's reporting requirements within 30 days. The court also permanently enjoined the defendant from future similar violations of the election law. Mr. Furgatch appealed the judgment in the Ninth Circuit.

Mr. Furgatch petitioned the appeals court to find that the district court had abused its discretion in assessing a $25,000 penalty. He also asked the appeals court to find that the lower court's permanent injunction was not authorized by the election law, was impermissibly vague and was not imposed in compliance with Rule 65(d) of the Federal Rules of Civil Procedure.

Appeals court decision

In finding that the district court had not abused its discretion in imposing the civil penalty, the appeals court observed that the Federal Election Campaign Act (the Act) permits a court to assess a civil penalty "which does not exceed the greater of $5,000 or an amount equal to any contribution or expenditure involved" in the violation. 2 U.S.C. §437g(a)(6)(B). Since the total expenditures Mr. Furgatch had made for the ads amounted to $25,008, the district court had assessed a $25,000 penalty.

With regard to the permanent injunction, Mr. Furgatch had claimed that the Act permitted a court to issue an injunction only when a person "is about to commit" a violation of the law. The FEC claimed that the relevant statute, 2 U.S.C. §437g(a)(6)(B), gave a court the authority to issue an injunction on the basis of either a past or a threatened future violation. Admitting that the language of the statute did not clearly indicate whether Congress intended to limit injunctive relief to cases of imminent violations of the Act, the court cited legislative history to conclude that the FEC was correct in its interpretation of section 437g.

Nevertheless, the court said, the district court could not issue an injunction pursuant to section 437g(a)(6)(B) unless there was a likelihood of future violations. The court found that although the record supported a finding that Mr. Furgatch was likely to violate the election law again, it did not justify a permanent injunction-that is, an injunction lasting the duration of his life.

In remanding the injunction to the lower court, the appeals court instructed it to limit the injunction to a "reasonable duration." The appeals court also required the district court to state, in compliance with Rule 65(d), the reasons for the injunction and the specific actions restrained by it.

On remand, the district court cited Mr. Furgatch's past violations of the election law as demonstrating that he was likely to violate the law again. As an additional reason for the injunction, the court pointed out that his conduct since the enforcement action was opened (in 1980) had shown "an absence of good faith efforts by Furgatch to cure his violations."

In accordance with the appeals court's ruling, the district court specified that the injunction prohibited Mr. Furgatch from committing further violations of sections 434(c) and 441d of the Act. Finally, the court limited the duration of the injunction to eight years.

Default judgment against Dominelli

Since Mr. Dominelli never responded to the FEC's complaint on remand, the agency asked the district court to issue a default judgment against him.

In response to the FEC's request, on March 14, 1988, the district court issued a judgment in which it decreed that:

• Mr. Dominelli violated section 434(c) of the election law by failing to report $8,471 in independent expenditures he incurred for an ad placed in a November 1980 issue of The Chicago Tribune. The ad had expressly advocated the defeat of President Jimmy Carter in his 1980 reelection bid.
• Mr. Dominelli had to report these expenditures within 30 days of the entry of the court's order and default judgment.
• Mr. Dominelli had to pay an $8,471 civil penalty for the violation.

FOOTNOTE:

[1] An independent expenditure is an expenditure for a communication expressly advocating the election or defeat of a clearly identified candidate that is not made with the cooperation or prior consent of, or in consultation with, or at the request or suggestion of, any candidate or his/her authorized committees or agents. 11 CFR 100.16 and 109.1(a).

Source:   FEC Record — February 1990; June 1989; May 1989; May 1988; December 1987; June 1987; March 1987; and January 1985. FEC v. Dominelli, No. 83-0595-GT(M) (S.D. Cal. 1984) (unpublished opinion), rev'd, 810 F.2d 205 (9th Cir. 1987). FEC v. Furgatch, No. 83-0956-GT(M) (S.D. Cal. 1984), (unpublished opinion), rev'd, 807 F.2d 857 (9th Cir.), cert. denied, 484 U.S. 850 (1987), on remand (S.D. Cal. April 26, 1988) (unpublished order), aff'd in part, vacated and remanded in part, 869 F.2d 1256 (9th Cir. 1989).

Supreme Court documents

• Petitioner FEC's Petition for Writ of Certiorari (08/15/1989)

Appeals Court documents (9th Circuit) (88-6047)

• Appellee FEC's Petition for Rehearing and Suggestion for Rehearing en banc (03/21/1989)
• Appellee FEC's Brief (09/16/1988)

Appeals Court documents (9th Circuit) (85-5524)

• Appellant Furgatch's Motion to Consolidate and Memo in Support (09/25/1987)
• Appellant FEC's Opposition to Petition for Rehearing and Suggestions for Rehearing en banc (03/19/1987)
• Reply Brief for Appellant FEC (09/06/1985)
• Brief for Appellant FEC (07/01/1985)