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February 28, 1996

GOPAC, INC., Defendant.

The opinion of the court was delivered by: OBERDORFER


 On April 14, 1994, the Federal Election Commission filed this civil action against GOPAC, Inc., alleging that in 1989 and 1990 GOPAC was a "political committee" which had failed to register and report as required by the Federal Election Campaign Act, 2 U.S.C. ยงยง 433(a) and 434(a). The allegation had its origins in an administrative complaint filed by the Democratic Congressional Campaign Committee with the Commission in September 1990 that GOPAC's receipts and expenditures for its "Campaign for Fair Elections" project made it a "political committee" as defined in the Act. Over three years later, after the Commission concluded its investigation, on December 9, 1993, it notified GOPAC that there was probable cause to believe that it was a "political committee," obligated by the Act to register and report. The Commission attempted to enter into a conciliation agreement with GOPAC. When conciliation failed, the Commission filed the complaint in this case, centered on the "Campaign for Fair Elections" project.

 On June 20, 1994, GOPAC moved to dismiss the complaint for failure to state a claim, contending that in 1989 and 1990 it confined itself to supporting state and local candidates and affirmatively refrained from supporting the election or defeat of any federal candidate. A December 23, 1994 Memorandum and Order denied defendant's motion to dismiss in order to allow the Commission to establish, if it could, that in 1989 and 1990 GOPAC's major purpose was to elect a particular federal candidate or candidates. Although the complaint did not clearly allege that GOPAC supported any particular federal candidate or candidates, it was sufficiently broad to encompass proof to that effect. The Memorandum and Order made no ruling on the Commission's claim that the "Campaign for Fair Elections" mailings stated a cause of action. FEC v. GOPAC, Inc., 871 F. Supp. 1466, 1470 (D.D.C. 1994). Thereafter, the parties proposed, and the Court adopted, a schedule for extended discovery, briefing, and argument. They have now filed cross-motions for summary judgment, supported by copious statements with respect to material facts, more than 6,000 pages of exhibits, and six audiotapes. During the briefing period, Common Cause filed a memorandum as amicus curiae. After oral argument, the matter is ready for decision on cross-motions for summary judgment.


 The parties have clearly framed the legal issue in the exchange of briefs. The Commission argues essentially that in 1989 and 1990, GOPAC was a "political committee" required by the Act to register because (1) its "major purpose [was] electoral activity," and (2) it made expenditures and received contributions of $ 1,000 or more for the purpose of influencing federal elections. See Pl.'s Mot. at 10; Pl.'s Opp'n at 3. GOPAC counters that this statement of the law -- which classifies organizations on the basis of degree of "election orientation" -- requires an impermissible, subjective determination by the Commission and by the courts. See Def's Reply at 4-5. According to GOPAC, the Act and controlling legal precedents establish more objective criteria for determining whether an organization receiving contributions of $ 1,000 or more is a "political committee," namely: whether its expenditures in cash or in kind evidence the organization's major purpose to be the supporting of a particular candidate or candidates for federal office. Emphasizing that, as the Commission concedes, GOPAC made no direct contributions to federal candidates in 1989 and 1990, GOPAC contends that it was not a "political committee" in those years.


 Undisputed material facts distilled from the exchange between the parties establish the following: GOPAC was founded in 1979 by then-Governor Pierre S. DuPont IV to fund Republican candidates for state legislatures. Since 1983, GOPAC has been incorporated as a non-profit corporation under the laws of the District of Columbia. Pl.'s Statement P 1. During the relevant time period, its Articles of Incorporation stated its purpose to be "to influence or attempt to influence the nomination for election of candidates for state legislative office; but in no event shall contributions be made to, or for the benefit of, candidates for federal office." Def's Ex. 1. By 1989, GOPAC had spent more than $ 4 million in direct contributions and political programs on behalf of state and local Republican candidates. Pl.'s Statement P 39; Pl.'s Ex. 66 at 5926; Def.'s Response P 39. Its state and local candidate contributions declined thereafter. On May 1, 1991, GOPAC registered with the Commission as a "political committee" and, on July 31, 1991, filed its first report of receipts and expenditures. Since February 1992, GOPAC "has filed monthly reports of its receipts and disbursements with the Commission" and has "reported its shared federal/non-federal activity as ten per cent federal and ninety per cent non-federal." Pl.'s Ex. 7 (Decl. of Kent C. Cooper, Commission Custodian of Records).

 Beginning in 1984, GOPAC undertook to help the Republican Party "to become competitive in more congressional districts" and "to win a majority in the U.S. House of Representatives." Pl.'s Ex. 66 at 2991. Toward this end, GOPAC targeted its support for Republican candidates for state legislatures "with an eye to 1991," when reapportionment of congressional districts to reflect the results of the 1990 census would begin. In addition, GOPAC began to recruit and support candidates for state legislatures who could become a "farm team" of "promising future congressional candidates in congressional districts where there may not be a possibility of winning a seat right away, but where voting demographics show there is Republican voting strength and that with the right candidate and sufficient Party support, a win can be ours." Id.

 In 1986, Congressman Newt Gingrich succeeded Governor DuPont as GOPAC General Chairman. Congressman Gingrich was also an individual candidate for reelection in 1986, 1988, and 1990. As GOPAC's General Chairman, the Congressman proposed its reorientation to reflect his belief that "the primary problem with the Republican Party was ideas, not money." Pl.'s Ex. 23 at 15 (Newt Gingrich Dep., Sept. 26, 1995). He saw GOPAC's "niche as a very unique research and development and training kind of institution [for candidates]." Id. at 23. Other Republican leaders "were pretty amenable to [the] idea of making [GOPAC] an idea-oriented institution." Id. at 15. As GOPAC's General Chairman, the Congressman tried to "think through the general direction for where we were going and to try to do the teaching and then to engage in those specific fundraising activities." Id. at 11. After he became General Chairman, GOPAC shifted away from making large contributions to Republican state candidates and parties, and by 1987, began providing candidate training, communications, and focus group research results to Republican candidates, party organizations, and activists. See Pl.'s Ex. 19 at 42 (GOPAC Political Director Tom Morgan Dep., June 21, 1995).

 During 1989, GOPAC adopted a formal "mission statement" which reiterated its ultimate objective "to create and disseminate the doctrine which defines a caring, humanitarian, reform Republican Party in such a way as to elect candidates, capture the U.S. House of Representatives and become a governing majority at every level of government." Pl.'s Ex. 66 at 281; Def's Ex. 73. Congressman Gingrich stated that "there was no question that the ultimate goal of GOPAC was to create a state and local farm team of sufficient depth that, as a result of that level of recruitment and energy, the party would be large enough to win control of the House." Def.'s Ex. 75. This focus on state and local elections reflected GOPAC's view that "capturing the U.S. House of Representatives, as envisioned by GOPAC, could only be accomplished by building a farm team and changing the balance of grass roots political power." Def's Statement P 50; Pl.'s Response P 12.

 In 1989, as part of its "farm team" program, GOPAC mailed a questionnaire to every Republican state legislator inquiring whether he or she would "consider a campaign for Congress in your future." Id. 178; Pl.'s Ex. 66 at 5688; Def.'s Response P 178. From this mailing, GOPAC compiled a list of more than 500 prospective candidates. Seventeen of the GOPAC farm team members who expressed an interest in running for Congress in response to the questionnaire actually ran for Congress in 1990. Pl.'s Statement P 181; Def.'s Response P 181. When farm team members running for Congress in 1990 asked for contributions from GOPAC, their requests were conspicuously turned down. See Tr. at 19.

 GOPAC's direct mail fundraising efforts reinforced and reiterated GOPAC's statement of its "mission." In 1989 and 1990, GOPAC conducted a "Campaign for Fair Elections," a "project that directly attacked two of the most blatant ways [the franking privilege and gerrymandering] the Democrats [in Congress] keep themselves in power." Pl.'s Ex. 1 at 2. Then-Speaker Jim Wright was a prominent target in the "Campaign." In a May 30, 1989 letter, Congressman Gingrich described Speaker Wright as a "corrupt Democrat"; Speaker Wright and his fellow Democratic Congressmen have "entrenched themselves into a permanent majority in Congress. It's now practically impossible to defeat a sitting member of the House." Pl.'s Ex. 30 at 2709. Congressman Gingrich further stated that "I truly believe GOPAC's Campaign for Fair Elections will defeat or seriously weaken a large number of Democrats in 1990. That gives us the momentum we need to sweep in a majority of Republicans in 1992 -- the first election after the districts are re-drawn. Our plan is ambitious. We're aiming to overturn a Democrat reign that's lasted 35 years." Pl.'s Ex. 30 at 2711. A June 27, 1989 letter requested contributions to the "Campaign for Fair Elections" and concluded that "with your help, we can break the liberal Democrats' iron-grip on the House of Representatives and build a new Republican majority." Pl.'s Ex. 1 at 4. That letter and others proposed, as a remedy, eliminating the franking privilege, which gave incumbents an advantage over challengers, and defeating the Democrats at the gerrymandering "game." The letters also asked for contributions to state and local Republican candidates. GOPAC distributed approximately 25,277 copies of the June 27, 1989 "Campaign for Fair Elections" letter to the persons on its mailing list at a cost of $ 15,521. GOPAC received $ 35,657 in contributions from that mailing. Pl.'s Statement P 238. From June 1989 through August 1990, GOPAC's direct mail firm distributed another 773,515 copies of the "Campaign for Fair Elections" letters to the general public at a cost of $ 265,291. GOPAC received $ 240,053 in contributions from these mailings. Id. P 239.

 A GOPAC mailing dated August 12, 1938 and unrelated to the "Campaign for Fair Elections" or the 1989-1990 election cycle, referred to then-Vice President Bush's 1988 campaign for election and requested the recipient to "sign the personal message of support to Vice President Bush that I've enclosed with my letter." Pl.'s Ex. 29 at 2686. The proposed personal message stated to President Bush that "You can count on my vote Election Day and my commitment to help you carry forward the Reagan agenda into the 1990's." Id. at 2689.

 In addition to its direct mail efforts, GOPAC raised fluids by recruiting and soliciting contributions from its Charter Members. Def.'s Statement P 20; Pl.'s Statement P 249. Charter Members are individuals who contribute $ 10,000 or more annually to GOPAC. Def.'s Statement P 22. GOPAC held semi-annual meetings for Charter Members at which they met with "cabinet members, members of Congress and other Republican officials." Id. P 25; Pl.'s Statement P 256. At the May 1989 meeting, "Democracy in China," "Ethics and Congress," and "The New House Whip System" figured prominently on the agenda. Def's Ex. 44. At the November 1989 meeting, Charter Members attended, among other things, "Briefings with Cabinet Members and other White House Officials" at the Old Executive Office Building. Id.

 Summaries of campaign finance reports already on file with the Commission reveal that in 1989 and 1990, Charter Members contributed a total of $ 539,328 to Republican candidates for the House of Representatives, 23% of which ($ 124,503) went to Congressman Gingrich's campaign committee and 3.5% of which ($ 19,050) went to Congressman Joe Barton's campaign committee, the next largest beneficiary of GOPAC Charter Members' contributions. See Pl.'s Ex. 10 (Decl. of Robert W. Biersack, Commission Supervisory Statistician).

 In 1990, in response to an apparent inquiry from a Charter Member, GOPAC Political Director Tom Morgan identified the "four Congressional campaigns . . . I believe to be the most important in the nation." Pl.'s Ex. 66 at 5519. He described a campaign for a congressional seat in Idaho as a "hotly contested race, high on our national list" and the Republican candidate as a "great candidate." Id. The Charter Member subsequently contributed a total of$ 1,500 to Republican candidates in three of those campaigns and reported the contributions to the Commission. Pl.'s Statement PP 204-05; Pl.'s Ex. 42; Def.'s Response PP 204-05. Another contributor wrote to GOPAC Chairman Bo Callaway on September 5, 1990, telling him "you'll be glad to know that we have 'maxed out' to both Newt's and [congressional candidate] John Linder's campaigns." Pl.'s Statement P 207; Pl.'s Ex. 66 at 4283; Def.'s Response P 207. On one occasion, a GOPAC Charter Member from Kansas City, Missouri enclosed his $ 10,000 membership check with a letter addressed to the "Honorable Newt Gingrich" at his GOPAC office summarizing the Member's financial support to GOPAC over five years and requesting an appointment with Congressman Gingrich "in connection with the asbestos regulations," which were costing his company "millions and millions of dollars." Pl.'s Ex. 66 at 4854-55 (Jan. 19, 1990 letter to Congressman Gingrich from Miller Nichols). Congressman Gingrich answered on GOPAC stationery over his signature as General Chairman: "I want you to know how very much I appreciate your generous contribution! . . . Regarding the problematic asbestos regulations -- please send me a copy of your research when you are finished and I will look into it." Pl.'s Ex. 66 at 4858 (Jan. 25, 1990 letter to Miller Nichols from Congressman Gingrich). On another occasion, a Charter Member wrote to Congressman Barton enclosing a $ 10,000 check to GOPAC and thanking him for his assistance in "our dumping case against Mexican cement producers." Pl.'s Ex. 66 at 4807 (Sept. 27, 1989 letter to Congressman Barton from Edgar J. Marston III). There is no showing that either Congressman Gingrich or Congressman Barton had announced for reelection at the time of these exchanges.

 GOPAC also "undertook research to develop and articulate an effective Republican message." Def's Opp'n at 15-16. In particular, GOPAC convened "shirtsleeve sessions," which provided "themes and message development for state and local Republican candidates," and "focus groups," which identified and defined political issues that would motivate voters in various regions of the country. Def's Statement PP 27-34; Pl.'s Statement PP 88-104. GOPAC "shirtsleeve sessions" dwelt on national issues facing Congress, including "Congressional reform," "campaign reform," "taxes and fiscal growth," and "regulatory reform." Pl.'s Statement P 64. GOPAC advocated a "thematic approach which allows all of the campaigns to be able to subsume themselves into a larger pattern so that . . . you create an echo effect, a resonance, which fits about 88 percent of the country." Pl.'s Ex. 23 at 38 (Gingrich Dep.). GOPAC publicized and distributed these results around the country in the form of audiotapes and videotapes. Def's Statement P 34; Pl.'s Statement PP 138-47. During 1989, GOPAC mailed more than 45,000 copies of new audiotapes. During 1990, GOPAC mailed 36,000 copies of six other new audiotapes. Pl.'s Statement P 141; Def's Response P 141. According to Director Morgan, it was "certain that members of Congress wound up with copies of the tapes," and likely that there were federal candidates on GOPAC's mailing list. Pl.'s Statement P 147 (citing Pl.'s Ex. 19 at 162-63, 111 (Morgan Dep.)). Indeed, a GOPAC letter to Charter Members and other potential contributors in July 1989 reported its plan to conduct training and other programs, including "'immersion' programs for GOP candidates at all levels within specific states." Id. at P 270.

 In 1990, GOPAC initiated "Project 170," which focused on "recruiting, training and funding strong local and state candidates in specific congressional districts, with the expectation that successful candidates at the state and local level would run for higher office in the future." Def's Statement P 47; Pl.'s Statement PP 195-96. GOPAC selected 170 congressional districts because this was "the number of congressional seats GOPAC believed necessary to win control of Congress." Pl.'s Statement P 195; Def's Response P 195. A "Project 170" district was a district "chosen by our demographer, Tom Morgan, based on an analysis of the district," where "the possibility existed that it could be a Republican congressional district." Pl.'s Ex. 21 at 124 (Dep. of Kay Riddle, GOPAC Executive Director, Aug. 24, 1995). Ms. Riddle further testified in response to questions:

Q: And that is where GOPAC focused its state contributions?
A: No, not -- not early on.
Q: But--
A: We hadn't even identified the ...

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