Three Years After Citizens United, More Campaign Finance Cases Loom
The National Law Journal
The third anniversary of the unpopular Citizens United decision was lost in the shadows of a presidential inauguration and the birthday of a landmark abortion decision. But fallout from that controversial campaign finance ruling lives on at the U.S. Supreme Court.
The justices on February 15 will consider three petitions, one of which is brought by the irrepressible foe of campaign finance restrictions, James Bopp Jr., and all of which urge the justices to do more to unravel those federal restrictions.
The most high-profile of the three traces its primary legal arguments to the decision in Citizens United v. Federal Election Commission, the 2010 ruling by a 5-4 high court.
In Danielczyk v. U.S., Jeffrey Lamken of MoloLamken takes direct aim at the long-time ban on corporate contributions to candidates in the Federal Election Campaign Act (FECA). In the high court, Lamken represents two businessmen who have been indicted for, among other violations, using their companies to reimburse employees for contributions to fundraisers for Hillary Clinton's 2006 Senate campaign and 2008 presidential campaign.
A federal district judge in their case drew national headlines when, shortly after the Citizens United decision, he ruled that the ban on corporate campaign contributions was unconstitutional based on the rationale in Citizens United. He said, "If human beings can make direct campaign contributions within FECA's limits without risking quid pro quo corruption or its appearance," then under Citizens United, "corporations must also be able to contribute within FECA's limits."
The judge subsequently refused to reconsider his decision when the government argued that the high court's 2003 ruling in FEC v. Beaumont, upholding the ban in a case involving nonprofit advocacy organizations, controlled. The judge said that decision was limited to nonprofit advocacy corporations and did not directly control whether the ban was constitutional as applied to the two businessmen's for-profit corporations.
The U.S. Court of Appeals for the Fourth Circuit reversed, holding that "Beaumont makes clear that § 441b(a)'s ban on direct corporate contributions is constitutional as applied to all corporations." The appellate court conceded that Citizens United had rejected two of the four government interests that supported the ban in Beaumont. However, the remaining twoanti-corruption and anti-circumvention of the banwere "all that were required" to pass closely drawn scrutiny under the First Amendment.
In his petition, Lamken tells the justices, "The Federal Election Campaign Act allows any personincluding individuals, partnerships, and many limited liability companiesto contribute up to $2,500 per candidate per election. But 2 U.S.C. § 441b bars corporations from contributing even a cent. That defies logic. As the district court observed, it cannot be that allowing the wealthiest American to donate $2,500 creates no intolerable risk of corruption, but allowing the most impecunious corporation to donate a penny would. Nor can Congress single out corporations for unfavorable treatment just because they are corporations: The First Amendment protects corporations' political activity no less than that of individuals."
The government counters that the high court, while striking down limits on corporate independent expenditures in Citizens United, "has long 'sustained limits on direct contributions in order to ensure against the reality or appearance of corruption.' Those differencesin the First Amendment interests at stake, the levels of scrutiny, and the risks of corruption or its appearancejustify a different rule in the corporate-contribution context."
There is no conflict among the circuits on the constitutionality of the ban on corporate campaign contributions. However, Lamken and supporting briefs urge the justices to take the case to resolve what other courts have called the tension between Beaumont and Citizens United.
"If they do take it, they take it to reverse, unless they buy the argument that the danger of circumvention of individual contribution limits is very high because the number of corporations that could be created is unlimited," said election law scholar Richard Hasen of the University of California, Irvine School of Law.
"It depends on whether they want to bite the bullet," he added. "They got a big negative reaction to Citizens United. I don't think that deterred them. They certainly didn't change their minds in the Montana case (which unsuccessfully challenged the application of Citizens United to Montana's century-old ban on corporate independent expenditures)."
Hasen said the Court may be more inclined to take one of the two other campaign finance cases on their February 15 conference list.
Those two cases involve challenges to biennial limits on contributions in the Federal Election Campaign Act and under Federal Election Commission rules. The act limits the aggregate amount that an individual may contribute to federal candidates, parties and political action committees (PACs) in a two-year period. In 2011-12, for example, an individual could contribute no more than $46,200 to candidates and no more than $70,800 to party committees and PACs.
In James v. FEC, Virginia James, a New Jersey resident, wanted to contribute to federal candidates in increments of $2,500 or less that collectively would exceed the $46,200 biennial limit. She said she had no interest in contributing to political parties and PACs. She filed her constitutional challenge to the $46,200-limit before a three-judge panel which, around the same time, was considering the third case on the Supreme Court's February 15 conference list McCutcheon v. FEC.
Shaun McCutcheon and the Republican National Committee challenged both the $46,200-candidate limit and the $70,800 limit for political committees and PACs on First Amendment grounds.
In Buckley v. Valeo, the Supreme Court upheld an earlier version of those aggregate limits, finding that the limits were necessary to prevent donors from circumventing the limits on contributions to candidates "through the use of unearmarked contributions to political committees likely to contribute to that candidate, or huge contributions to the candidate's political party."
The three-judge panel first disposed of the McCutcheon challenge, saying the government could justify the aggregate contribution limits as a means of preventing corruption or the appearance of corruption, or as a means of preventing circumvention of contribution limits imposed to further the government's anti-corruption interest.
The panel subsequently dismissed James' narrower challenge, saying its McCutcheon decision applied. The panel said:
"If the $46,200 aggregate limit on candidate contributions were erased, James or anyone else could give at least $2.34 million (435 House candidates plus 33 Senate candidates multiplied by $5,000that is, $2,500 for primary and $2,500 for general election) to candidate committees (or possibly to a joint fundraising committee), which could then transfer those sums to certain preferred candidates or even to non-candidate national committees.
"While James believes this could not happen because '[s]he is not challenging the biennial aggregate limit of $117,000,' and 'she does not intend to give more than the $117,000 Congress already allows,' such belief rests on a fundamental miscomprehension of BCRA [the Bipartisan Campaign Reform Act]. There is no $117,000 total aggregate limit in the statute; instead, there are merely sublimits of $46,200 and $70,800, which add up to $117,000. Remove one of the sublimits, and there is no higher constraint."
The James and McCutcheon petitions "really are quite different," said Bradley Smith of Capital University Law School and founder of the Center for Competitive Politics, which is representing James. McCutcheon's counsel is Bopp.
"McCutcheon directly challenges Buckley," said Smith. "James does not. She accepts the aggregate cap but asks, `Why do I have to give some to this group or that group?'"
The center's Allen Dickerson writes in the James' petition that the risk of circumvention of the $2,500 individual candidate limit is "patently greater when large sums are given to party committees rather than divided among a number of candidates. Nonetheless, once an individual has contributed $46,200 to various federal candidates, that individual may not contribute a cent more, but may contribute an additional $70,800 to committees that may, in turn, contribute to candidatesincluding the candidates to whom our hypothetical individual had originally contributed."
Smith said the James and McCutcheon cases may be more significant than Danielczyk which seeks to change a fairly well-settled area of the law. He also senses the justices are not eager to take on more campaign finance cases.
"One thing that has been a bit of problem is that people on both sides of the debate have looked at Citizens United and said everything is gone," he said, referring to campaign finance restrictions. "Citizens United is a very important case but it is Citizens United. The court is not necessarily prepared to say everything goes. Citizens United is not a green light for you to do everything you want to do."
This article originally appeared in The National Law Journal.