FEC v. Reform Party of the USA

On February 28, 2008, the U.S. District Court for the Northern District of Florida dismissed the amended counterclaim filed by the Reform Party of the United States of America (the Reform Party) for lack of jurisdiction and failure to state a claim upon which relief could be granted. In addition to granting the FEC's motion to dismiss, the court modified an injunction against the Reform Party to permit the party to make expenditures to raise funds to repay the amount owed to the U.S. Treasury.

Background

The Reform Party received $2,522,690 in public funds for its 2000 Presidential nominating convention. Based on the results of a mandatory post-convention audit, the Commission determined that the Reform Party must repay $333,558 to the U.S. Treasury as a result of impermissible expenditures and inadequate documentation. See 26 U.S.C. §9008(c) and 11 CFR 9008.7(a). The Reform Party repeatedly asked both the Commission and the courts to review its repayment obligation, but its requests were not filed within statutory and regulatory deadlines, and all were denied. The Commission filed suit in the Northern District of Florida to obtain a judgment that the government is entitled to the repayment by the Reform Party.

In November 2005, the U.S. District Court for the Northern District of Florida granted the FEC's motion for summary judgment and held that the government is entitled to the repayment. The court also enjoined the Reform Party from diverting any of its assets to any other expenditures, other than payment of federal taxes, until it completes its repayment obligation.

The Reform Party appealed the district court's decision arguing, in part, that the injunction violated the party's First Amendment right to free speech. In March 2007, the U.S. Court of Appeals for the 11th Circuit affirmed the district court's decision. See July 2007 Record. The appellate court declined to address the Reform Party's First Amendment claims, suggesting that the district court was the proper venue, as the Reform Party did not raise the claims until the appeal.

Counterclaim by the Reform Party

The Reform Party renewed its First Amendment argument in a counterclaim filed in the district court. The Reform Party argued that the injunction was an invalid spending restraint on political speech by a political party.

District court decision

The district court granted the Commission's motion to dismiss the Reform Party's counterclaim. The court held that since the relief requested by the Reform Party— modification of the injunction—can only be provided by the court, not the FEC, the Reform Party failed to state a claim. Additionally, the court lacked subject matter jurisdiction over the Reform Party's suit, as the plaintiffs did not ask the court to interpret any portion of the Presidential Election Campaign Fund Act and the United States has not waived its sovereign immunity.

The court analyzed whether the injunction should be modified. The court found that while the injunction involved First Amendment activity by prohibiting the Reform Party from spending its funds to promote political views or candidates, the injunction is narrowly tailored to address a specific harm and thus permissible.

To alleviate the Reform Party's concern that it could not spend money to raise money to pay the debt owed to the U.S. Treasury, the court agreed with the Commission's suggestion to modify the injunction slightly to permit the Reform Party to make expenditures for the purpose of raising funds to meet the repayment obligation.

U.S. District Court for the Northern District of Florida, 14-cv-00079-MP-AK.