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WALTHER v. FEC

April 17, 1979

Henry L. WALTHER, Plaintiff,
v.
FEDERAL ELECTION COMMISSION, Defendant



The opinion of the court was delivered by: RICHEY

MEMORANDUM OPINION

 The FEC claims that, as a matter of law, section 441a(a)(5) could Never apply to the political committees of the AFL-CIO and its member unions. Thus, the Commission concludes, no violation could ever arise out of a candidate's acceptance of contributions from these two political committees. Relying primarily on this interpretation of the Federal Election Campaign Act of 1971, the FEC has filed this motion to dismiss. Because this Court is unable to accept the Commission's reading of the relevant statute, the FEC's motion must be denied.

 I. BACKGROUND.

 The Federal Election Campaign Act of 1971, as amended, 2 U.S.C. §§ 431-455 ("the Act"), is designed to curb the appearance of influence buying among federal candidates, without impinging upon the first amendment interests delineated in Buckley v. Valeo, 424 U.S. 1, 96 S. Ct. 612, 46 L. Ed. 2d 659 (1976). *fn2" To achieve this goal, the Act places limitations on the size of the contributions *fn3" which any individual or political committee *fn4" can give to a candidate during an election campaign. *fn5" Individuals can donate no more than $ 1,000 per campaign and political committees, which represent a bona fide pooling of the resources of individuals, are limited to $ 5,000. 2 U.S.C. §§ 441a(a)(1)(A) & (a)(2)(A) (1976).

 In addition, the Act contains provisions which place tight controls on the political activities of corporations and labor organizations. Although section 441b(a) prohibits contributions by corporations as well as labor unions, these organizations are permitted to establish "separate segregated funds," which are supported by voluntary contributions, and these funds may be distributed to federal candidates. *fn6" 2 U.S.C. § 441b(b)(2)(C) (1976). The committee which solicits for and distributes these funds is commonly called a "political action committee" (PAC). *fn7" The issue in this case concerns the relationship between the AFL-CIO's political committee, known as the Committee on Political Education ("COPE"), and the PAC's of unions belonging to the AFL-CIO ("union PAC's").

 In addition to controlling the political activities of corporations, labor organizations and their PAC's, the Act also permits private citizens to play a role in the enforcement of the election laws. Under 2 U.S.C. § 437g(a)(1), individuals are allowed to file complaints with the FEC and the Commission must investigate the matter "if it has reason to believe that any person has committed a violation" of the Act. 2 U.S.C. § 437g(a)(2) (1976).

 On October 30, 1978, and on November 7, 1978, the plaintiff alleges that he filed a total of forty-five sworn complaints with the FEC. Complaint No. 78-2097, P 6 (filed November 3, 1978); Complaint No. 78-2193, P 6 (filed November 21, 1978). The impropriety alleged in plaintiff's complaints rests primarily on two propositions: (1) a construction which the FEC has rejected of 2 U.S.C. § 441a(a)(5), the "anti-proliferation" statute; and (2) that candidates or their committees were Aware that a violation had occurred. *fn8" See 2 U.S.C. § 441j (1976).

 Section 441a(a)(5) is designed "to prevent corporations, labor organizations, or other persons or groups of persons from evading the contribution limits." H.R. Rep. No. 1057, 94th Cong., 2d Sess. 58, U.S. Code Cong. & Admin. News, pp. 929, 973 (1976) (hereinafter, "H. Conference Rep."). The statute provides in pertinent part:

 
For purposes of the limitations provided by (2 U.S.C. §§ 441a(a)(1) & (2)), all contributions made by political committees established or financed or maintained or controlled by any corporation, labor organization, or any other person, including any parent, subsidiary, branch, division, department, or local unit of such corporation, labor organization, or any other person, or by any group of such persons, shall be considered to have been made by a single political committee. . . . In any case in which a corporation and any of its subsidiaries, branches, divisions, departments, or local units, or a labor organization and any of its subsidiaries, branches, divisions, departments, or local units establish or finance or maintain or control more than one separate segregated fund, all such separate segregated funds shall be treated as a single separate segregated fund for purposes of the limitations provided by (2 U.S.C. §§ 441a(a)(1) & (2)).

 In its first clause, section 441a(a)(5) establishes a general rule for all political committees. In essence, it provides that contributions from separate PAC's which are "established or financed or maintained or controlled" *fn9" by the same person or the same group of persons, shall be considered to have been made by a single PAC. Thus, together, the two PAC's may not contribute in excess of $ 5,000. Without this antiproliferation device, the contribution ceiling would be meaningless: a single group could merely set up several PAC's and multiply its contributing power accordingly.

 In its last clause, section 441a(a)(5) specifically addresses the difficulties created by the relationship between a union and its locals. The statute establishes a Per se rule for the PAC's formed by these closely related organizations and under this rule, when a "labor organization" and one of its locals each finance or control a PAC, the two committees "Shall be treated as a Single separate segregated fund for purposes of the limitations" on campaign contributions. (emphasis added). A similar Per se rule governs the

 relationship between the PAC's of corporations and their subsidiaries. II. THE PROPER INTERPRETATION OF 2 U.S.C. § 441a(a)(5) REQUIRES THE DENIAL OF THE FEC'S MOTION TO DISMISS.

 The central question presented by the Commission's motion to dismiss is one of statutory construction. The Court must determine the correct application of section 441a(a)(5) to the alleged relationship between COPE and the PAC's of unions which are members of the AFL-CIO. The FEC contends that, as a matter of law, regardless of the extent of COPE's control over a member PAC or some group's control over both COPE and a union PAC the two committees can Never be treated as a single PAC under 2 U.S.C. § 441a(a)(5). Thus, the FEC concludes, plaintiff has not alleged a violation of the Act when he claims that COPE controls the PAC's ...


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