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AO 2013-11 – Senate Candidate May Use Campaign Funds for Lawsuit Expenses

A lawsuit involving former Senate candidate Joseph Miller would not have existed irrespective of his candidacy. As a result, his campaign committee, Citizens for Joe Miller, may use campaign funds as a deposit with a state court while appealing a judgment that awarded attorneys’ fees to the plaintiff. The prevailing party will have the right to apply the funds deposited in satisfaction of the judgment should the appeal be unsuccessful.

Background
Joseph Miller was a candidate for U.S. Senate from Alaska in 2010. During the campaign, four media outlets sought access to Miller’s employment records from his years as an attorney for the Fairbanks North Star Borough. The Borough refused to provide some of the documents without Mr. Miller’s consent, which he did not provide.  Mr. Miller intervened as a defendant in the case to protect his privacy rights and filed cross-claims against the Borough and a third party claim against its mayor.

The media outlets successfully challenged the Borough in court, and the records were released prior to the election. Subsequently, all of the media outlets but one waived their rights to attorney fees and were dismissed from the case. The Alaska Dispatch remained and was an active participant in the proceedings on Mr. Miller’s cross-claims and third party claim. Notwithstanding the later success of Mr. Miller’s cross claim and third party claim against the Borough and its mayor, the judge ordered him to pay $85,435 in attorney fees to the Dispatch as the prevailing party in the entirety of the litigation. Mr. Miller filed a timely appeal of the award against him and asked the Commission if he could use campaign contributions to pay for the required cash deposit or supersedeas bond pending the appeal. Those funds could be applied toward the potential judgment if the appeal is unsuccessful.

Analysis
The Federal Election Campaign Act (the Act) prohibits the “personal use” of campaign contributions by any person. 2 U.S.C. §439a(b)(1) and 11 CFR 113.2(e).

The Act identifies six categories of permissible uses of contributions accepted by a federal candidate. 2 U.S.C. §439a(a); see also 11 CFR Part 113. These permissible uses include: (1) “otherwise authorized expenditures in connection with the [candidate’s] campaign for Federal office,”; (2) “ordinary and necessary expenses incurred in connection with the duties of the individual as a holder of Federal office”; and (3) “any other lawful purpose” that does not constitute conversion to “personal use.” 2 U.S.C. §439a(a)(1), (2), (6), (b); see also 11 CFR 113.2. Conversion to personal use occurs when campaign funds are used “to fulfill any commitment, obligation or expense ... that would exist irrespective of the candidate’s election campaign or ... duties as a holder of Federal office.” 2 U.S.C. §439a(b)(2); see also 11 CFR 113.1(g). Commission regulations provide that the Commission determines on a case-by-case basis whether the use of campaign funds to pay “legal expenses” falls within the definition of “personal use.” 11 CFR 113.1(g)(1)(ii)(A).

The media inquiries that led to the initial lawsuit arose solely from Mr. Miller’s candidacy.  Since the post-election phase of the litigation was inextricably linked to that initial lawsuit, his campaign committee may use its funds to post a cash deposit with the court pending the appeal of the court’s decision and the prevailing party may apply those funds toward the judgment should the appeal be unsuccessful.

Date Issued: October 31, 2013; 9 pages.

(Posted 11/14/2013; By: Alex Knott)

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The FEC Record is produced by the Information Division, Office of Communications. Toll free 800-424-9530; Local 202-694-1100; Email info@fec.gov. Greg Scott, Director; Alex Knott, Senior Writer/Editor; Dorothy Yeager, Production Manager