Cozen O’Connor will again go before the state Supreme Court—this time on the merits—to argue it should be able to forgive the $450,000 in legal bills U.S. Rep. Bob Brady, D-Pa., racked up during a failed bid for Philadelphia mayor in 2007.
The law firm already went before the high court once as to whether it had standing to argue Brady, a Philadelphia Democrat, would not run afoul of state campaign finance laws that limit contributions to certain annual sums if he raised funds to pay off the debt in toto or if the firm forgave it in toto.
Since then, lower courts have ruled in Cozen O’Connor v. City of Philadelphia Board of Ethics that post-election contributions are subject to the Philadelphia Campaign Finance Law annual contribution limits as long as the debt being paid down was incurred to influence the outcome of the election. The courts found that Brady’s fight against a challenge to his being listed on the ballot for the mayoral race was akin to influencing the election because staying on the ballot is part and parcel of winning an election.
In its order Monday, the Supreme Court granted Cozen O’Connor’s petition for allowance of appeal, taking up four issues that deal with whether post-election fundraising, debt forgiveness or the paying down of legal defense costs are classified either as contributions or expenditures that would be regulated under the 2007 version of the city’s campaign finance laws.
Cozen O’Connor had additionally attempted to get a declaratory judgment ruling on whether Brady’s campaign committee could raise funds outside of the campaign finance limits in order to pay off the debt. The trial court and Commonwealth Court ruled, however, that the firm only had standing to inquire about its own ability to forgive the debt, not another entity’s ability to fundraise outside the limits. The Supreme Court has now granted allocatur on that issue as well.
Justice Seamus P. McCaffery did not participate in the consideration or decision to grant allocatur. While the order did not give a reason, media reports have said that Cozen O’Connor partner William J. Winning is providing legal representation to McCaffery.
McCaffery is reported to be under an FBI investigation stemming from referral fees paid to Lise Rapaport, his wife and chief legal aide. Winning has told The Philadelphia Inquirer that “Justice McCaffery has done nothing wrong and has not violated any law.”
McCaffery and Justice Debra Todd played no role in the consideration or decision in the Supreme Court’s initial review of the Cozen case in 2011 even though they participated at oral arguments. Stephen A. Cozen of Cozen O’Connor, who argued the case on his firm’s behalf, said at the time that he didn’t know why the justices didn’t participate and said none of the parties asked for their recusal. There was no indication that Todd did not participate in the court’s decision Monday to take up the case again.
Cozen O’Connor has argued the 2010 amendments to the Campaign Finance Law expressly stating fundraising limits apply to post-election activities was evidence the law in place at the time of the 2007 election did not intend for the limits to apply to post-election fundraising.
The Commonwealth Court, in a June 2013 opinion by Judge P. Kevin Brobson, rejected that argument, finding the amendments simply served to clarify and codify existing interpretations of the law. Brobson adopted the Philadelphia trial court’s finding that the law as it stood in 2007 is what applies to this case. The Commonwealth Court’s ruling upholds the trial court’s denial of Cozen O’Connor’s motion for judgment on the pleadings.
“The definition [of 'contribution'] neither expressly limits its reach to pre-election activities nor prohibits its extension to post-election activities,” Brobson said. “Accordingly, it matters not whether the forgiveness of debt occurred before or after the election, so long as the purpose for which the committee incurred the debt was to influence the outcome of the election of the candidate.”
Cozen O’Connor has argued the debt was not incurred to influence the outcome of the election but rather to secure Brady’s petition on the ballot after campaign opponent Tom Knox challenged Brady’s ability to run in the race. Brobson said the finance law does not define the term “influence.” In looking at the dictionary definition of the word, Brobson said keeping a candidate on the ballot influences the outcome of an election.
“We applaud all of those who have the desire to serve in elected office and who are willing to step into the political arena,” Brobson said. “To argue that ballot challenge litigation is not part of that arena, however, invites the willful suspension of disbelief.”
If Cozen O’Connor were to forgive the debt in total, the forgiveness would be a contribution because forgiveness of debt is included in the definition of “contribution,” the definition is not limited to only pre-election fundraising and the debt was incurred for purposes of influencing the election, Brobson said.
Cozen O’Connor has argued it will take it more than 40 years to forgive the debt in accordance with the law’s annual limits of around $10,000 per organization.
Brobson noted in a footnote to his opinion that the law firm could forgive the debt in accordance with the annual contribution limits or, upon application to the City of Philadelphia Board of Ethics, forgive the debt at one time in full as long as the firm meets the criteria outlined in the board’s Regulation No. 1. The criteria requires, among a number of other factors, that the campaign committee not have received any contributions or made any expenditures over $1,000 for the past two years.
Stephen A. Cozen of Cozen O’Connor and Adam C. Bonin of the Law Office of Adam C. Bonin represented Cozen O’Connor. Cozen didn’t respond to a request for comment. Elisa T. Wiygul of Dechert represented the ethics board and declined to comment on Monday’s allocatur order.