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FEC v. NOW

May 11, 1989

FEDERAL ELECTION COMMISSION, Plaintiff,
v.
NATIONAL ORGANIZATION FOR WOMEN, Defendant


Aubrey E. Robinson, Jr., Chief United States District Judge.


The opinion of the court was delivered by: ROBINSON, JR.

AUBREY E. ROBINSON, JR., CHIEF UNITED STATES DISTRICT JUDGE:

 At issue in this case is political speech, which lies at the core of the First Amendment. Discussion of public issues and the qualifications of candidates for public office is integral to a system of government in which the people elect their leaders. In order to make informed choices about its leaders, the citizenry needs to hear the free exchange of ideas. The First Amendment affords the broadest protection to such political expression.

 When a group spends money advocating its political opinions, the First Amendment is implicated. As Justice Potter Stewart once stated, "Money is speech and speech is money." Buckley v. Valeo, oral argument transcript at 24 (November 10, 1975). Laws restricting the amount of money individuals or organizations can contribute to an election "necessarily reduce[] the quantity of expression by restricting the number of issues discussed, the depth of their exploration and the size of the audience reached." Buckley v. Valeo, 424 U.S. 1, 19, 46 L. Ed. 2d 659, 96 S. Ct. 612 (1976). Even so, Congress has legislated a complex body of laws monitoring campaign spending so that those with aggregated wealth do not have unfair advantages in the political marketplace. The Supreme Court has upheld the constitutional validity of these restrictions on political speech only where the burden is justified by a compelling state interest.

 The plaintiff in this case, the Federal Election Commission ("FEC" or "Commission"), administers the Federal Election Campaign Act ("FECA" or "Act") and seeks to prevent the violation of federal election laws. In bringing this action, the FEC charged that the National Organization for Women ("NOW") illegally used its corporate funds in connection with the 1984 elections. NOW does not contest that it spent corporate funds, but maintains that the sole purpose of the mailing was to make NOW's views known and gain additional members.

 NOW's use of corporate funds to finance letters criticizing certain politicians who do not share NOW's political opinions does not fall within the prohibitions of the federal election campaign laws. The Court holds that NOW did not violate FECA when it used its corporate treasury to engage in issue advocacy rather than the express advocacy of the election of specific candidates. NOW was exercising its constitutional right of advocating and defending points of view. It was not spending its money to influence any election or to call for the election or defeat of particular persons seeking political office.

 I. BACKGROUND

 On August 14, 1987, the Federal Election Commission filed this action *fn1" against the National Organization for Women under the Federal Election Campaign Act, 2 U.S.C. § 437 g(a)(6)(A). *fn2" The FEC sought a civil penalty and an injunction against further violations of the Act. It alleged that NOW violated 2 U.S.C. § 441b(a) by using corporate treasury funds to make an expenditure "in connection with" a federal election. Under § 441b, any expenditure for such purpose must be financed by voluntary contributions to a separate segregated fund. In its complaint, the FEC alleges that during the 1984 election cycle, NOW used corporate money to pay for three letters sent to the general public which contained "electioneering messages." According to NOW, these letters were aimed solely at soliciting new members by setting forth the group's political goals.

 After engaging in substantial discovery for more than a year, counsel for the parties filed cross-motions for summary judgment which became ripe in January 1989. Oral argument on these motions was heard by the Court at a hearing held on April 19, 1989. The legal memoranda, supporting exhibits, answers to interrogatories, documents, admissions, and the final arguments of counsel have all been fully considered. For the reasons set forth below, the Court grants defendant's motion for summary judgment and denies plaintiff's cross motion.

 II. FINDINGS OF FACT

 A. THE NATIONAL ORGANIZATION OF WOMEN

 NOW was established in 1966 as a nonprofit membership organization. It has affiliated organizations in the 50 states and the District of Columbia, as well as nearly 800 local chapters, all organized for the same purpose:

 
NOW's purpose is to take action to bring women into full participation in the mainstream of American society now, exercising all the privileges and responsibilities thereof in truly equal partnership with men.

 NOW's Bylaws, Article II, Pltf.'s Ex. # 10; Deft.'s Ex. # 5.

 Hoping to have a greater effect on political, social, and economic reform in America, NOW entered the political arena as an independent, non-aligned group. Because it recognized the political aspects of its goal of achieving equality for women through participation in the selection of candidates and political decision-making, NOW established two separate segregated funds. These funds, more commonly known as political action committees or "PACs," make expenditures and contributions to influence the outcome of state elections (NOW's Equality PAC) and federal elections (NOW PAC). In compliance with FECA, the two PACs operate entirely separate from NOW and are recognized as legally separate entities.

 NOW's membership is restricted to natural persons, or individuals. In 1983 and 1984, respectively, NOW had 216,500 and 165,920 dues-paying members. Deft.'s Response to Interrogatory # 1 (Nov. 16, 1987). During those years, it received 59% of its income from membership dues. Affidavit of Eleanor Smeal at para. 6 (Nov. 17, 1988) ("Affid."). The remainder of NOW's income came from membership contributions or from other individuals' contributions. It is estimated that less than 1% of NOW's overall budget comes from contributions from corporations or labor unions. Id. at paras. 5.

 B. NOW'S DIRECT MAIL CAMPAIGNS

 Like numerous other membership organizations, NOW regularly sends letters to the general public, asking people to join their group and support their cause. The established way to attract members is to use a "direct mail campaign." Direct mail became extremely popular in the 1980s as a way for groups of all political persuasions to increase their membership rolls. Groups contract with direct mail firms to send out broad appeals in hopes of attracting enough contributions to pay for the mailing and expand their mailing and membership lists. Direct mail campaigns have less to do with getting action than with getting members.

 For the past ten years, NOW has retained the services of a leading direct mail consultant, Roger Craver. Affid. of Craver at paras. 1-2 (Nov. 10, 1988). His firm, Craver, Mathews, Smith & Company ("CMS") obtains lists of names from a broker which are used for NOW's membership solicitation mailings. These names are called "cold prospects." The names and addresses are kept confidential, and NOW has no idea whose names appear on the list or where the recipients reside. Id. at para. 6. In fact, NOW never sees the mailing list. The entire mailing is planned and orchestrated by CMS and the actual task of mailing the letters is done by an outside mailing house. Id. at para. 8.

 C. THE THREE CONTESTED MAILINGS

 In 1983 and 1984, NOW's president Judy Goldsmith, and her assistant, Lillian Ciarrochi, met with consultant Roger Craver, regarding the organization's direct mail activities. Deposition of Judy Goldsmith at 50, 63 (June 1, 1988). After these meetings, Craver drafted the text of three membership solicitation letters which are the subject of this action. Affid. of Craver at para. 5. Two of the letters were quite successful in gaining new members for NOW. There is no dispute that all costs for the preparation, printing, and distribution of these mailings were paid from the organization's general corporate treasury funds.

 1. The "59 cent Letter "

 The first disputed mailing, also referred to as the "59 cent letter" addresses the subject of economic discrimination against women. The letter urges the recipient to join NOW and to wear a 59 cent button as a symbol of the fact that women earn 59 cents for every dollar earned by men. While the letter focuses on issues (wage discrimination, Social Security, divorce law, education), it ...


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