and other appropriate relief pursuant to sections 307(a)(6), 309(a)(6)(A) of the Campaign Act against the defendants for their failure to comply with the conciliation agreements described above.
The primary legal defense raised in this litigation has been that Mr. Fusco signed the agreements in a "representative capacity," Answer P 7, and that therefore, he is not personally liable for carrying out the committees' obligations to file reports or for paying TRO's $ 3,500.00 civil penalty. Mr. Fusco claims, as a factual matter, that he is not responsible for the unlawful campaign contribution underlying the TRO Agreement. Moreover, he claims that the Commission "arbitrarily" designated him treasurer of TRO without his consent after Mr. Wedra's resignation. Opposition to Motion for Summary Judgment ("Opposition") at 2-3. As a consequence, he argues that he should have no personal liability for TRO's failure to pay the civil penalty.
Defendants also claim that 100 Democrats failed to file the agreed upon scheduled reports due to an error in its Statement of Organization which it purports either to have resolved or be in the process of resolving. See Opposition at 4; Supplement at 1. Consequently, defendants argue that their late filing is not a willful attempt to ignore the law. Finally, they argue that in any event, the 100 Democrats financial reports are on file with the New York State Board of Elections for public perusal, and that "the Committee spent no money for federal [campaigns], and the F.E.C. is using a sledgehammer to squash a speck." Opposition at 5.
The Commission's response to these arguments is basically twofold. First, it points out that assertions regarding the merits of the underlying violations resolved by the conciliation agreements are irrelevant to this proceeding. The only purpose of this litigation is to enforce the agreements. Under the Campaign Act, for the Commission to obtain relief in this case, it need only establish that those who entered into the agreement violated it. 2 U.S.C. § 437g(a)(5)(D). Consequently, the Commission argues, the Court cannot now review the merits of defendants' arguments that they are not responsible for the underlying violations of the Act. FEC Mem. at 13; Reply at 2.
Second, because there is no dispute over the validity of the agreements, or that the defendants have not complied with them, the only cognizable legal defense that has been put forth is that Mr. Fusco is not personally liable for complying with them. FEC Mem. at 9. The Commission argues that this defense must fail as a matter of law. As a party and signatory to the agreements, Mr. Fusco is personally responsible for the defendant committees' compliance with them. Id. at 9-10. The Commission further argues that under the regulatory scheme established by the Campaign Act, Mr. Fusco, as treasurer of the defendant committees, is in the unique position of being the only individual in either organization who can fulfill their obligations to file their required reports and is in the unique position of being able to seek funds and expend them in order to pay the agreed upon penalties. Id. at 10-13. See 2 U.S.C. §§ 432, 434. Consequently, the Commission argues, Mr. Fusco is a fortiori liable for the defendant committees' failure to comply with the conciliation agreements.
E. Relief Sought
The Commission seeks an Order requiring the following relief:
(1) that defendants 100 Democrats and Mr. Fusco, as treasurer, comply fully with the terms of their conciliation agreement by filing scheduled reports disclosing all contributions received and disbursements made pursuant to 2 U.S.C. § 433(a);
(2) that defendants Committee to Elect Fusco to Congress (the successor to TRO) and Mr. Fusco comply with the terms of the TRO Agreement by paying the $ 3,500.00 penalty to the Commission;
(3) that defendants 100 Democrats and Mr. Fusco pay the Commission $ 5,000.00 in civil penalties pursuant to 2 U.S.C. § 437g(a)(6)(A) for violating the 100 Democrats Agreement;
(4) that defendants Committee to Elect Fusco to Congress and Mr. Fusco pay the Commission $ 5,000.00 in civil penalties pursuant to 2 U.S.C. § 437g(a)(6)(A) for violating the TRO Agreement; and
(5) that all defendants be permanently enjoined from future violations of their respective conciliation agreements.
Summary judgment must be awarded where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); White v. Fraternal Order of Police, 285 U.S. App. D.C. 273, 909 F.2d 512, 516 (D.C. Cir. 1990). The Court must view the facts and the inferences to be drawn therefrom in the light most favorable to the nonmoving party. Id. In this case, there are no genuine issues concerning any material facts in this litigation. Furthermore, the Court holds that the Commission is entitled to a judgment as a matter of law.
A. Merits of the Underlying Violations
As a threshold matter, the Court holds that the merits of the underlying violations resolved by the conciliation agreements are irrelevant to this proceeding as a matter of law. The Act provides that
In any case in which a person has entered into a conciliation agreement with the Commission under [ 2 U.S.C. § 437g(a)(4)(A)], the Commission may institute a civil action for relief under [ 2 U.S.C. § 437g(a)(6)(A)] if it believes that the person has violated any provision of such conciliation agreement. For the Commission to obtain relief in any civil action, the Commission need only establish that the person has violated, in whole or in part, any requirement of such conciliation agreement.
2 U.S.C. § 437g(a)(5)(D). As the undisputed material facts of this case make clear, the defendants have not complied with the two conciliation agreements. Thus, the only legal issues before the Court are (i) whether Mr. Fusco is personally liable for violating those agreements, and (ii) the amount of civil penalties that should be awarded against the defendants.
B. No Genuine Disputes Concerning the Material Facts
There is a superficial dispute between Mr. Fusco and 100 Democrats and the Commission as to whether 100 Democrats failed to file scheduled reports disclosing contributions received and disbursements made pursuant to 2 U.S.C. § 433(b). While the question of whether the required reports have or have not been filed is material because it might affect the outcome of the case, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986), the dispute is not "genuine." There is no evidence that any such reports exist or have been filed.
The Commission has met its burden of production by submitting Mr. Cooper's July 22, 1993 declaration stating that he has searched for and discovered no reports of receipts and disbursements by Committee of 100 Democrats. FEC Exh. 24. Mr. Fusco and 100 Democrats, on the other hand, fail to avail themselves of even the simple expedient of attaching a file-stamped copy of this alleged report to the papers they have filed with this court. As such, the evidence before the Court is not such that a reasonable jury could return a verdict for the defendants. Id. At most, Mr. Fusco and 100 Democrats have made a bare claim that a factual controversy still persists in this case. This is insufficient to withstand a motion for summary judgment. Alyeska Pipeline Svc. Co. v. United States Environmental Protection Agency, 272 U.S. App. D.C. 355, 856 F.2d 309, 314 (D.C. Cir. 1988) (adequately supported motion for summary judgment not defeated simply by bare opinion or unaided claim that factual controversy persists); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986) (purpose of summary judgment rule to isolate and dispose of factually unsupported claims and defenses). Consequently, there can be no genuine issue with respect to the fact that as of July 22, 1993, Mr. Fusco and 100 Democrats had not filed the required reports.
C. Mr. Fusco's Liability
The Campaign Act permits the Commission to enter into conciliation agreements with persons alleged to have violated the Act either when it finds "probable cause" to believe that a violation has occurred, 2 U.S.C. § 437g(a)(4)(A)(i), 11 C.F.R. § 111.18(a). It may also enter into a conciliation agreement prior to a finding of probable cause if the respondent requests it. 11 C.F.R. § 111.18(d). Conciliation agreements entered into prior to a finding of probable cause "have the same force and effect as a conciliation agreement reached after a Commission finding of probable cause to believe." Id. These agreements may specify measures that will rectify the violations. See 2 U.S.C. § 437g(a)(4)(A)(i). The Act also clearly states that such agreements may provide "that the person involved in such conciliation agreement shall pay a civil penalty. . . ." 2 U.S.C. § 437g(a)(5)(A).
The TRO Agreement unequivocally provides that Mr. Fusco may be held personally liable for the underlying civil penalty. FEC Exh. 13 at P IV. The 100 Democrats Agreement likewise provides that Mr. Fusco may be held personally liable for that committee's failure to file the scheduled reports under section 433(b) of the Act. FEC Exh. 12 at P VI(2). As the Commission correctly states:
The agreements set forth without equivocation the obligations of the parties to comply with those agreements. By executing the agreements, Mr. Fusco, treasurer of the defendant committees, bound himself and the committees to carry out the obligations contained in the agreements. Indeed, the agreements are unambiguous in their application to Mr. Fusco, who is named as a party to each of the agreements. Mr. Fusco's signature to the two conciliation agreements is an unequivocal agreement in exchange for the Commission's closing of its administrative proceedings against the defendant committees. The failure to comply subjects the parties, including Mr. Fusco, to an order enforcing the conciliation agreements pursuant to 2 U.S.C. § 437g(a)(5)(D).
FEC Mem. at 9-10. Because the Court holds that Mr. Fusco's status as a party to each of the agreements subjects him to personal liability for their violation, the Court does not need to reach the question of whether Mr. Fusco' status as treasurer of the defendant political committees subjects him to personal liability for correcting their violations of the Act.
Mr. Fusco's status as treasurer of the defendant committees is of limited relevance. It is relevant insofar as the substitution of the word "treasurer" for his name in the TRO Agreement results in his being named as a "respondent" who must comply with that agreement, and insofar as it enabled him to take measures to bring the defendant committees into compliance with their respective conciliation agreements. See 2 U.S.C. § 432(a) (committee must have treasurer in order to raise and expend funds); Id. § 434(a)(1) (reports of receipts and disbursements must be filed and signed by committee's treasurer).
To conclude, the Court finds that both agreements have been breached in those respects discussed above, and holds that defendant Dominick A. Fusco is jointly liable
with 100 Democrats and TRO for the breaches of their respective agreements.
D. Civil Penalties
The Campaign Act permits the Court to impose civil penalties for violations of conciliation agreements. 2 U.S.C. §§ 437g(a)(5)(D) and (6)(A). The Commission correctly notes that because it may not file suit based on violations of the Act after it has entered into an agreement with a respondent to conciliate those violations, id. § 437g(a)(4)(A)(i), such penalties provide an essential incentive for a respondent to comply with the terms of an agreement without the need to resort to judicial action. FEC Mem. at 17. Substantial civil penalties thereby conserve limited Commission and judicial resources.
There are relatively few cases discussing the factors which should guide a court's discretion in imposing civil penalties under section 437g(a)(6). The Ninth Circuit has looked to guidance from cases that deal with the imposition of discretionary civil penalties under other federal statutes. In determining the amount of a penalty under section 436g(a)(6)(B) the Ninth Circuit has stated that a district court should consider (1) the good or bad faith of the defendants, (2) the injury to the public, (3) the defendant's ability to pay, and (4) the necessity of vindicating the authority of the responsible agency. Federal Election Comm'n v. Furgatch, 869 F.2d 1256, 1258 (9th Cir. 1989). The Court believes this to be a sound approach to imposing penalties under section 437g(a)(6)(A) as well.
The Court awards the Commission a penalty of $ 1,000.00 for the violation of the TRO Agreement by TRO and Mr. Fusco in addition to ordering them to pay the $ 3,500.00 due under the TRO Agreement.
Their refusal to comply with their conciliation agreement is admittedly willful, and a substantial penalty is appropriate. Individuals must be deterred from using the conciliation process as a ruse and from using the courts as a mechanism for delay. Thus, Mr. Fusco's bad faith, the harm to the public arising from the expenses associated with enforcing this agreement, and the need to vindicate the Commission's authority in this are, all counsel in favor of substantial penalties. See Furgatch, supra, 869 F.2d at 1258-60.
The Court also awards the Commission a penalty of $ 1,000.00 for the violation of the 100 Democrats Agreement by 100 Democrats and Mr. Fusco. Defendants are well aware of their obligation to file disclosure reports under both the law and pursuant to the conciliation agreement, yet they continue to fail to do so. Deposition of Dominick A. Fusco, FEC Exh. 18 at 50.
The disclosure provisions of the Act serve many important purposes. They provide the electorate with information about where political campaign money comes from and how it is spent, deter corruption, and better enable voters to detect special post-election favors to a candidate's most generous supporters. Buckley v. Valeo, 424 U.S. 1, 66-67, 46 L. Ed. 2d 659, 96 S. Ct. 612 (1976). As the Ninth Circuit stated in Furgatch, supra, "the importance of the [Act's] reporting and disclosure provisions, and the difficulty of proving that violations of them actually deprived the public of information, justify a rule allowing a district court to presume harm to the public from the magnitude or seriousness of the violations of these provisions." 869 F.2d at 1259 (footnote omitted).
E. Injunctive Relief
The Commission also seeks injunctions against all defendants prohibiting them from committing future violations of their respective conciliation agreements. The propriety of injunctive relief in this case is governed by whether (1) the defendants acted in good faith and with diligence to cure their violations, (2) the task faced by the defendants in complying with their obligations was complex and whether those obligations were difficult to interpret, and (3) an order would have any effect in ensuring better compliance in the future. Federal Election Comm'n v. California Medical Ass'n, 502 F. Supp. 196, 204 (N.D. Cal. 1980), citing Federal Election Comm'n v. Committee for a Constitutional Presidency -- McCarthy '76, Fed. Elec. Campaign Financing Guide (CCH) P 9074 at 50,632 (D.D.C. 1979).
Given that the defendants have failed to act diligently in the past, do not face a complex obligation, and present the possibility that they may commit further violations, injunctions against such future violations are warranted. See Federal Election Comm'n v. NRA Political Victory Fund, 778 F. Supp. 62, 66 (D.D.C. 1991).
For the foregoing reasons and consistent with the attached order, the Commission's Motion for Summary Judgment is granted.
Date 30 Sep. 1993
Thomas F. Hogan
United States District Judge
Upon full consideration of the motion for summary judgment filed by the plaintiff Federal Election Commission, and the defendants' opposition thereto,
This Court FINDS that:
Defendants Committee of 100 Democrats and Dominick A. Fusco violated the terms of a conciliation agreement they voluntarily entered into with the Federal Election Commission; and
Defendants Committee to Elect Fusco to Congress, formerly named Throw the Rascals Out, and Dominick A. Fusco violated the terms of a conciliation agreement they voluntarily entered into with the Federal Election Commission.
Accordingly, it is hereby ORDERED that:
1. Plaintiff's summary judgment motion is GRANTED;
2. Defendants Committee of 100 Democrats and Dominick A. Fusco, as treasurer, shall fully comply with the terms of said conciliation agreement within ten (10) days from the date of entry of this ORDER by filing scheduled reports disclosing all contributions received and disbursements made pursuant to 2 U.S.C. § 433 (a);
3. Defendants Committee to Elect Fusco To Congress and Dominick A. Fusco shall fully comply with the terms of said conciliation agreement within ten (10) days from the date of entry of this ORDER by paying $ 3,500 to the Federal Election Commission;
4. Defendants Committee of 100 Democrats and Dominick A. Fusco shall pay to the Federal Election Commission within ten (10) days from the date of entry of this ORDER, a civil penalty of $ 1,000.00 for violating the terms of the conciliation agreement they entered into with the Federal Election Commission;
5. Defendants Committee to Elect Fusco to Congress and Dominick A. Fusco shall pay to the Federal Election Commission within ten (10) days from the date of entry of this ORDER, a civil penalty of $ 1,000.00 for violating the terms of the conciliation agreement they entered into with the Federal Election Commission;
6. Defendants Committee of 100 Democrats and Dominick A. Fusco are permanently enjoined from future violations of the terms of the conciliation agreement they entered into with the Federal Election Commission;
7. Defendants Committee to Elect Fusco to Congress and Dominick A. Fusco are permanently enjoined from future violations of the terms of the conciliation agreement they entered into with the Federal Election Commission; and
8. The payments described above shall be delivered to the Office of the General Counsel of the Federal Election Commission, located at 999 E Street, N.W., Washington D.C. 20463.
Date 30 Sep. 1993
Thomas F. Hogan
UNITED STATES DISTRICT JUDGE