Is the U.S. Supreme Court ready to take up another major challenge to campaign finance restrictions in the wake of its much-criticized ruling in Citizens United v. FEC?
William Danielczyk Jr. and Eugene Biagi hope so. In a case closely followed by advocates and opponents of limits on money in elections, the two men, represented by Jeffrey Lamken of D.C.’s MoloLamken, are asking the justices to strike down the federal ban on direct contributions by corporations to candidates.
“This case involves Congress’s criminalization of activity that lies at the core of the First Amendment’s protections,” writes Lamken in Danielczyk v. U.S. “The First Amendment protects corporations’ political activity no less than that of individuals.”
Danielczyk and Biagi were officers of Galen Capital Group LLC and Galen Capital Corporation. They hosted two fundraisers for Hillary Clinton in 2006 and 2007. The government in 2011 brought a seven-count indictment against the men, alleging that they caused their two companies to reimburse employees for contributions made to allow them to attend those fundraisers. The reimbursements for the 2006 fundraiser were allegedly made using money from Galen LLC, while the 2007 reimbursements were allegedly paid from Galen Corporation’s funds. They reimbursed donors for $156,400 in contributions made to Clinton’s 2008 campaign, which the campaign reported to the FEC.
Because the alleged reimbursements for the 2007 fundraiser were made using Galen Corporation’s funds, the indictment included an additional charge that the two men “knowingly and willfully” contributed corporate money to a candidate for federal office, in violation of the ban in §441b of the Federal Election Campaign Act (FECA).
A federal district court, relying on the rationale in the 2010 Citizens United decision, dismissed the additional charge after holding that the direct contribution ban was unconstitutional. “If human beings can make direct campaign contributions within FECA’s limits without risking quid pro quo corruption or its appearance,” wrote the court, then under Citizens United “corporations must also be able to contribute within FECA’s limits.”
The U.S. Court of Appeals for the Fourth Circuit reversed. The appellate court said the question was controlled by Beaumont v. FEC, in which the Supreme Court in 2003 upheld the ban in a case involving nonprofit advocacy corporations. “Beaumont makes clear that §441b(a)’s ban on direct corporate contributions is constitutional as applied to all corporations,” the court said. And even if Beaumont were not controlling, the court said, it would still uphold the ban because contribution restrictions are subject not to strict scrutiny but to “the ‘lesser demand of being closely drawn to match a sufficiently important interest.’”
However, Lamken argues, “Beaumont invoked the same rationales for singling out corporations that Citizens United rejected: alleged ‘distortion’ from aggregated wealth; the putative need to protect potentially dissenting shareholders; and an expansive view of ‘corruption’ encompassing not only quid pro quo but also mere influence and access. Citizens United thus swept away Beaumont’s logical underpinnings and scrapped most of the government interests that case described.”
He also urges the Court to examine whether restrictions or bans on the right to make campaign contributions should be reviewed under strict scrutiny instead of under a less protective standard.
Adam Skaggs of the Brennan Center for Justice, an advocate of campaign finance limits, was skeptical whether the Supreme Court would be eager to revisit this area.
“The Beaumont case is pretty clear and obviously remains the law as the court of appeals found,” said Skaggs. “If the Supreme Court were to take this up, it would be a troubling sign that they want to go far beyond what they did in Citizens United. It would be a sign they want to aggressively continue deregulating campaign finance.”
He noted that the justices’ jurisprudence “for decades” has recognized a fundamental distinction between independent spending and direct contributions. “The fact the petition is pending immediately in the aftermath of an election that saw an unprecedented amount of money and substantial corporate spending, brings into clear focus the stakes of this issue,” he added.
Marcia Coyle is the chief Washington correspondent for The National Law Journal, a Legal affiliate based in New York.