Teamsters used the CCTS to monitor contributions by its membership and, when it perceived "the possibility of getting more contributions" from certain of its members, it would solicit contributions from those members.
Legi-Tech was also aware that other CCTS customers used the CCTS for soliciting contributions. At the time that it sold CCTS access to the Freedom Policy Foundation (under the name "National Endowment for the Preservation of Liberty"), it knew that this organization had used CCTS information in the past for soliciting contributions.
And, despite knowing that the Democratic Congressional Campaign Committee ("DCCC") planned to use CCTS information to monitor contributions and solicit the same from contributors who had not exhausted their contribution limits, Legi-Tech twice renewed its contract with the DCCC.
Legi-Tech renewed its agreement with the National Association of Independent Schools under similar circumstances.
One of Legi-Tech's CCTS customers, the International Funding Institute, Inc. ("IFI"), used the CCTS information to create and market a solicitation list. IFI, a political and managerial consulting firm that engaged in fundraising, advertising, public relations, marketing and other commercial activities, subscribed to the CCTS in May of 1986. One mailing list, entitled "Active Republican Donors," was compiled exclusively from information provided to IFI through its subscription to the CCTS database.
During September of 1986, IFI marketed the "Active Republican Donors" list to at least five different organizations, at least four of which used the information to solicit contributions. One such organization was the American Citizens for Political Action, Inc. ("ACPA").
On October 24, 1985, the NRCC filed an administrative complaint against Legi-Tech pursuant to 2 U.S.C. § 437g(a)(1), alleging that Legi-Tech had violated the Act.
The NRCC is a political committee whose "primary activity is fundraising" and whose "principal business asset is its list of donors, created through an expensive and laborious process of targeting and soliciting likely contributors." National Republican Congressional Committee v. Legi-Tech Corp., 254 U.S. App. D.C. 145, 795 F.2d 190, 191 (D.C. Cir. 1986).
Following the procedural requirements of the Act, the FEC found reason to believe that Legi-Tech had violated 2 U.S.C. § 438(a)(4) and 11 C.F.R. § 104.15, and it commenced an investigation. The Commission later found probable cause to believe that Legi-Tech had violated the Act, and it engaged in efforts to correct the violations through conciliation negotiations with Legi-Tech. When those efforts failed, the FEC filed the instant civil enforcement suit in this Court pursuant to 2 U.S.C. 437g(a)(6).
In its Complaint, the FEC seeks declaratory and injunctive relief as well as a civil penalty of five thousand dollars for each violation of 2 U.S.C. § 438(a)(4) by Defendant Legi-Tech. See Compl. at 5 (citing 2 U.S.C. § 437g(a)(6)(B)). The FEC alleges that through the CCTS, Legi-Tech "sold or used information copied from reports filed with the Commission for commercial purposes, in violation of the Act, 2 U.S.C. § 438(a)(4)." Id. P18. Discovery is closed, and the parties' cross-motions for summary judgment are ripe.
The principal questions raised by the parties' cross-motions and the facts presented here are simply whether Legi-Tech's sale of subscriptions to the CCTS data base were for a commercial purpose within the meaning of the Act, as implemented through the agency's implementing regulations at 11 C.F.R. § 105.15(c); and, if so, whether that interpretation squares with the First Amendment.
A. The standard of review.
Summary judgment is appropriate when there is "no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). "The inquiry performed is the threshold inquiry of determining whether there is a need for trial--whether, in other words, there are any genuine issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In considering a motion for summary judgment, the "evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [its] favor." Id. at 255. At the same time, however, Rule 56 places a burden on the nonmoving party to "go beyond the pleadings and by [its] own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.' " Celotex Corp. v. Catrett, 477 U.S. 317, 324, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).
B. The statutory challenge.
Under the Act, the FEC is required to make reports and statements filed with it available for public inspection "except that any information copied from such reports or statements may not be sold or used by any person for the purpose of soliciting contributions or for commercial purposes." 2 U.S.C. § 438(a)(4). The FEC has implemented this statutory provision through 11 C.F.R. § 104.15, which, in relevant part, states:
The use of information, which is copied or otherwise obtained from reports filed under 11 C.F.R. part 104, in newspapers, magazines, books or other similar communications is permissible as long as the principal purpose of such communications is not to communicate any contributor information listed on such reports for the purpose of soliciting contributions or for other commercial purposes.
11 C.F.R. § 104.15(c).
In moving for summary judgment in its favor, Legi-Tech argues that Section 438(a)(4) of the Act is inapplicable to it as an organ of the press. Relying upon a floor colloquy, Legi-Tech states that "while debating Section 438(a)(4), the Senators expressed significant concern about protecting the rights of the press and made it clear that Section 438(a)(4) does not apply here." Defendant Legi-Tech's Notice of Motion and Motion for Summary Judgment: Supporting Memorandum of Points and Authorities ("Legi-Tech's MSJ") at 11. "This congressional intent to exempt the media from this restriction was codified into the federal regulations, specifically 11 C.F.R. Section 104.15(c)." Id. According to Legi-Tech, this regulatory provision exempts it from the Act because the CCTS is a communication similar to a newspaper, book or magazine, id. at 13-18, and the principal purpose of the CCTS was not a commercial purpose in violation of the Act. Id. at 19-20.
The FEC views things differently. Through a series of advisory opinions and in the underlying administrative proceedings, it "has concluded that [Legi-Tech's] sale of lists of contributor information for profit . . . reflects a 'commercial purpose' within the meaning of the Act." Plaintiff FEC's Memorandum of Points and Authorities in Support of its Motion for Summary Judgment and in Opposition to Defendant Legi-Tech's Summary Judgment Motion (FEC's MSJ") at 16. "The Commission has also construed its regulation to permit a publisher to use names and addresses from reports filed with the Commission when it is incidental to the sale of a larger publication, such as to provide leads for news articles included in a newspaper sold commercially, but not to permit the use of individual contributor names when the 'intended use of contributor information is not merely incident to the sales but is the primary focus of [the] activity." Id. (citing Advisory Op. 1981-38, reprinted in 1 Fed.Elec.Camp.Fin.Guide (CCH) P5624, at 10,791 (Oct. 13, 1981), and quoting Advisory Op. 1986-25, reprinted in 2 Fed.Elec.Camp.Fin.Guide (CCH) P5865, at 11,298 (Aug. 15, 1986)).
According to the FEC, "when the information sold is 'composed primarily, if not exclusively, of individual contributor information and incorporate[s] nearly all of the identification of individual contributors reported to the Commission,' the Commission has concluded that the commercial sale of this contributor information by itself is the primary purpose of the sales." Id. (quoting Advisory Op. 1986-25, supra P5865, at 11,299, and citing Advisory Op. 1991-16, reprinted in 2 Fed.Elec.Camp.Fin.Guide (CCH) P6022, at 11,720 (June 18, 1991)). "The 'logical and foreseeable consequence of the promotion and sale of such lists of contributor information is that the customers involved in politics 'would purchase the product to obtain names of likely contributors. Such use of names from reports filed with the Commission is directly contrary to the intent of section 438(a)(4).' " Id. (quoting Advisory Op. 1991-16, supra P6022, at 11,720). Based on these interpretations, the FEC argues that Legi-Tech's activity of selling subscriptions to the CCTS is more akin to that "of a listbroker" than that "of a newspaper." Id. at 18.
Because "FECA is ambiguous with respect to whether commercial activity like Legi-Tech's [Campaign Contribution] Tracking System is protected," Legi-Tech, 795 F.2d at 192, the FEC's construction of 2 U.S.C. § 438(a)(4), if reasonable, is entitled to deference. Id. at 193 (citing Chevron, U.S.A., Inc. v. Natural Resources Defense Counsel, Inc., 467 U.S. 837, 843, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984), and FEC v. Democratic Senatorial Campaign Comm., 454 U.S. 27, 37, 70 L. Ed. 2d 23, 102 S. Ct. 38 (1981)).
Through 11 C.F.R. § 104.15(c), and its advisory opinions, the agency has reasonably filled the gap left by Congress while accommodating the competing policy objectives identified by Congress. Id.; see K N Energy, Inc. v. FERC, 297 U.S. App. D.C. 13, 968 F.2d 1295, 1300 (D.C. Cir. 1992) (agency is entitled to "even more deference in its interpretation of its own regulations than in the reading of its statutory mandate").
The state and the FEC's implementing regulation provide for the full disclosure of political contributions, and that regulation generally permits the use and publication of the information. The exception is where the principal purpose of the use of this information is the solicitation of contributions or the commercial sale of the information itself. Accommodating the competing interests of promoting disclosure of campaign contribution information with the protection of private citizens' privacy and the property interests of the political committees, see International Funding Inst., 297 U.S. App. D.C. 110, 969 F.2d 1110, 1116; Legi-Tech, 795 F.2d at 191, the FEC has reasonably drawn the line between "newspapers, magazines, books or other similar communications" that reproduce contributor information for the principal purpose of soliciting contributions or selling that information and communications in which the publication of contributor information is incidental and not the primary focus. See Advisory Op. 1981-38, supra P5624; Advisory Op. 1986-25, supra P5865; Advisory Op. 1991-16, supra P6022. The FEC's interpretation of the statute and its regulation is reasonable, that regulation is fully consistent with plain text of the statute, see 2 U.S.C. § 438(a)(4), and it is completely in accord with other evidence of the underlying congressional intent. See, e.g., 117 Cong.Rec. 30,058 (Aug. 5, 1971), reprinted in Legislative History of the Federal Election Campaign Act of 1971, at 582 (GPO 1981) ("only purpose [of the amendment] is to prohibit the lists from being used for commercial purposes") (remarks of Sen. Nelson); id. ("the list brokers, under this amendment, would be prohibited from selling the list or using it for commercial solicitation") (remarks of Sen. Bellmon).
In light of the material facts of this case, the FEC's determination that Legi-Tech's CCTS falls on the wrong side of the line drawn by the agency's regulation is not an unreasonable one. First, CCTS cannot fairly be characterized as a communication that is similar to a "newspaper, magazine or book"--communications which are exempt from the prohibition of 2 U.S.C. § 438(a)(4) through the FEC's regulation at 11 C.F.R. § 104.15(c) (the media exemption). While a multi-media corporation can (and many do) provide computerized information that is similar to a newspaper, magazine or book, merely reproducing the campaign contribution information provided to the FEC is, as the FEC recognizes, more akin to that of a listbroker. Legi-Tech's CCTS is nothing more than a computerized list of campaign contribution information copied from FEC files. The CCTS cannot fairly be characterized as an electronic newspaper, magazine, book or similar communication. The Court agrees that "the mere fact that the CCTS provided users with [a] list of contributors on a computer screen rather than on paper is of no significance." FEC's Superseding Reply at 11.
Second, Legi-Tech's CCTS fails the "principal purpose" test. Through the CCTS, Legi-Tech provided its subscribers with information that was copied directly from reports filed with the FEC, except to the extent it supplemented that information with the individual contributors' telephone numbers (making the solicitation of contributions even easier, as demonstrated by the actions of IFI and its customers). Unlike the incidental reporting of contributor information in "news stories, commentaries, or editorials," Advisory Op. 1986-25, supra P5865, at 11,298, Legi-Tech's sale of contributor information through the CCTS was not only the primary focus of its activity, but, as the FEC points out, it was the CCTS's only purpose. Legi-Tech's sale of information through the CCTS posed the precise threat that troubled Congress: while Congress wanted to promote disclosure of campaign contribution information, it also wanted to protect political committees' intellectual property and "political discourse from the adverse effect that the disclosure requirement of the Act would otherwise have." International Funding Inst., 969 F.2d at 1117.
The authority upon which Legi-Tech relies to the contrary is neither binding nor persuasive. The primary case cited by Legi-Tech in support, FEC v. Political Contributions Data, Inc., 943 F.2d 190 (2nd Cir. 1991), narrowly construed Section 438(a)(4) to proscribe only the use of the FEC information for soliciting contributions. That case involved a defendant who, like Legi-Tech here, provided access to a computerized data base of FEC campaign contribution information. However, on substantially different facts than those presented here, the court stated: "Since none of PCD's publications is of the type that could infringe on the contributor's privacy interests, the publications at issue may be sold without violating § 438(a)(4) of the FECA." 943 F.2d at 198.
Even had Political Contributions Data involved facts similar to those presented here,
the reasoning employed by that court is not persuasive. For example, the opinion appears to have adopted an overbroad interpretation of the scope of the regulation implementing 2 U.S.C. § 438(a)(4):
Under the FEC's interpretation of the 'principal purpose' requirement, no newspaper could print, for example, a list of contributions made by the top executives of a military contractor who had just received a large government contract (information that would surely be protected by the statute, if not by the first amendment). Nor could that newspaper print a list of larger donors in the congressional districts that its circulations serves. In short, such a reading would plainly be contrary to the broader purposes of the FECA, and would very likely run afoul of the first amendment.
943 F.2d at 197.
As this Court reads the FEC's regulation and its advisory opinions, the agency's interpretation of the statute does nothing of the sort. In fact, the agency expressly provides for the sort of publication described in Political Contributions Data, since such publication would be incidental to the primary purpose of a newspaper. See Legi-Tech, 795 F.2d at 193. What the agency proscribes is list-making: the copying and selling of campaign contributor and contribution information where the principal purpose is the sale of that information, a transaction akin to list-making and brokering. Id.
In attempting to avoid the constitutional issue, the Political Contributions Data court read the phrase "or for commercial purposes" out of the statute. While courts are to construe statutes to avoid constitutional conflicts where possible, such a mandate cannot include ignoring plain text that might pose a conflict. See Edmond v. United States, U.S. , 117 S. Ct. 1573, 137 L. Ed. 2d 917 (U.S. 1997) (Scalia, J., Op. for the Court) ("a constitutional question confronted in order to preserve, if possible, a congressional enactment is not a constitutional question confronted unnecessarily").
Moreover, not only does the Political Contributions Data opinion appear to conflict with the law of this Circuit regarding the appropriate deference to which the FEC is entitled, see Legi-Tech, 795 F.2d at 193-94, but that opinion does not appear to address "the value of a political committee's intellectual property" as one of the governmental interests underlying 2 U.S.C. § 438(a)(4). Compare Political Contributions Data, 943 F.2d at 198 with IFI, 297 U.S. App. D.C. 110, 969 F.2d 1110 at 1116-17. For all of these reasons, Political Contributions Data does not rescue Legi-Tech from the result reached here.
Also unpersuasive is Legi-Tech's argument that the CCTS is exempt from the Act because Legi-Tech's parent corporation is a diversified media company. What matters is not who owns Legi-Tech or the nature of that owner's businesses, but the principal purpose and type of communication in which the campaign contribution information is used. Even a corporation that is "an organ of the press," Legi-Tech, Inc. v. Keiper, 766 F.2d 728, 730 (2nd Cir. 1985), or otherwise in the newspaper or multi-media business, is not entitled to compile FEC campaign contribution lists for the primary purpose of a commercial sale of that information. See Legi-Tech, 795 F.2d at 193.
C. The constitutional challenge.
Legi-Tech next challenges the FEC's construction of 2 U.S.C. § 438(a)(4), contending that it runs afoul of the First Amendment because it prevents "the dissemination of the truth about political campaigns" and constitutes "a content based restriction on core political speech." Legi-Tech's MSJ at 21.
The FEC, pointing out that the D.C. Circuit has already upheld the constitutionality of 2 U.S.C. § 438(a)(4) on its face and as applied to one of Legi-Tech's CCTS customers, see FEC's MSJ at 28 (citing IFI, 969 F.2d at 1110), argues that the statute strikes an appropriate constitutional balance, leaving "undisturbed a pre-existing barrier to defendant['s] use of" campaign contribution list information. Id. at 29 (quoting IFI, 969 F.2d at 1113). Like its statutory challenge, Legi-Tech's constitutional attack falls short.
In IFI, the Court of Appeals applied intermediate scrutiny to the First Amendment challenge of 2 U.S.C. § 438(a)(4). See 969 F.2d at 1116. Under this standard, the statute survives constitutional challenge if "the restriction further[s] 'an important or substantial government interest unrelated to the suppression of expression' and [is] 'no greater than is necessary or essential to the protection of the particular governmental interest involved.'" 969 F.2d at 1114 (quoting Seattle Times Co. v. Rhinehart, 467 U.S. 20, 32, 81 L. Ed. 2d 17, 104 S. Ct. 2199 (1984)). This standard applies because "both in Seattle Times and here, the Government compelled disclosure of information for a particular purpose and prohibited use of that information for other purposes; like the newspaper in Seattle Times, the defendants here have no claim of right to the benefit of the compelled disclosure apart from the measure in which the concomitant use restrict is found." Id. That reasoning applies equally to this case.
Applying the intermediate scrutiny standard blunts the defendant's constitutional argument.
As the Court of Appeals found in IFI, § 438(a)(4) serves important governmental interests by minimizing the adverse effects of the Act's disclosure requirements. In addition to protecting political committees' intellectual property, see 969 F.2d at 1116, the Act preserves the level of political discourse:
Without the use restriction of § 438(a)(4), innumerable entrepreneurs would, like the defendants here, be able freely to appropriate to themselves part of the value of the contributor lists compiled by reporting political committees. As a result, such committees would have less incentive to compile the lists in the first place. In other words, if the return on their investment in solicitation would be reduced by others using the resulting lists, political committees would not find it worthwhile to solicit as much as they now do; they would raise less money, spend less money, and correspondingly underwrite less political discourse.