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Alliance for Democracy v. Federal Election Commission

March 4, 2005

ALLIANCE FOR DEMOCRACY, ET AL., PLAINTIFFS,
v.
FEDERAL ELECTION COMMISSION, DEFENDANT.



The opinion of the court was delivered by: Reggie B. Walton United States District Judge

MEMORANDUM OPINION

This is an action that has been brought pursuant to the Federal Election Campaigns Act ("FECA"), 2 U.S.C. § 431 et seq., and the Declaratory Judgment Act, 28 U.S.C. § 2201. The plaintiffs seek redress for the Federal Election Commission's ("FEC") dismissal of the central allegations of their administrative complaint claiming that the dismissal was arbitrary and capricious, contrary to law, and a clear abuse of the agency's discretion. Plaintiffs' Complaint (Compl.) ¶ 2. Currently before the Court is Defendant Federal Election Commission's Motion to Dismiss, or in the Alternative, for Summary Judgment ("Def.'s Mot.") [D.E. # 13], the plaintiffs' opposition thereto and the defendants reply. For the reasons discussed below, this Court will grant the defendant's motion.*fn1

I. Background

On the day of John Ashcroft's Senate confirmation hearing for the position of Attorney General, the Washington Post reported that during his 2000 Missouri Senate campaign, Spirit of America PAC (hereafter "SOA") gave a fundraising list of 100,000*fn2 donors to Ashcroft 2000, and that neither Ashcroft's campaign nor his political action committee ("PAC") reported the contribution to the Federal Election Commission ("FEC"). Plaintiffs Alliance For Democracy, Hedy Epstein, and Ben Kjelshus' Opposition to Defendant's Motion to Dismiss, or in the Alternative, For Summary Judgment ("Pl.'s Opp'n") at 2 & Exhibit ("Ex.") D (Walter Pincus, "Possible Ashcroft Campaign Violation," Washington Post, February 1, 2001) at A4. The article did not report the market value of the list or any quote from the Ashcroft campaign or his PAC regarding the value of the list. Id. About one month later, on March 8, 2001, the plaintiffs filed an administrative complaint with the FEC against Ashcroft 2000 and SOA. Compl. ¶ 9. The administrative complaint, designated MUR 5181, alleged that SOA "contributed a fund-raising list of approximately 100,000 donors to Ashcroft 2000 and that, in turn, Ashcroft 2000 made a significant amount of money by renting the list to other entities." Id. ¶ 10. The administrative complaint further alleged that "the*fn3 donation of the fund-raising list by SOA to Ashcroft 2000 constituted a 'contribution' as defined by federal law," and that the contribution was illegal because it exceeded the applicable limit on PAC contributions to candidate committees. Id. ¶ 11 (citing 2 U.S. C. § 431(8) and 11 C.F.R. 100.7). Additionally, the administrative complaint alleged that "neither Ashcroft 2000 nor the SOA []reported the contribution of the fund-raising list to the FEC, as required by [the FECA]." Id. (citing 2 U.S.C. § 441a(a)(2)(a); 2 U.S.C. § 441a(f); and 2 U.S.C. § 434(b)).*fn4

The FEC's investigation of the administrative complaint by the FEC's Office of the General Counsel ("OGC") revealed that SOA spent approximately $1.7 million to develop the fund-raising list. Id. ¶ 13. According to the plaintiffs, a work product*fn5 agreement was reached whereby the list was transferred to Ashcroft 2000 in exchange for permission to use his name and likeness in SOA's mailings. Id. The plaintiffs note that both organizations, SOA and Ashcroft 2000, "were controlled by the same individuals," and that "SOA already had the use of Mr. Ashcroft's name and likeness for at least six months prior to the work product agreement." Id. The OGC concluded that the exchange was neither bargained-for at arms's length, nor was it commercially reasonable, and the transfer of the mailing list therefore constituted an in-kind contribution to Ashcroft 2000 as defined by the FECA. Id. Documents describing the results of the OGC's investigation, including the OGC's reports and other FEC documents referenced in the complaint filed with the Court in this case are publicly available through the Enforcement Query System on the Commission's website. Id.

The OGC's investigation further revealed that by transferring the mailing list, SOA and its treasurer, Garrett Lott, violated the $5,000 limit on contributions from a political committee to a candidate in an election covered by 2 U.S.C. § 441a(a)(2)(A). Id. ¶ 14. Furthermore, the investigation disclosed that Ashcroft 2000 and its treasurer violated the prohibition on candidates accepting contributions prohibited by 2 U.S.C. § 441a(f). Id. Moreover, the OGC found that both SOA and Ashcroft 2000 had violated*fn6 the disclosure requirements contained in 2 U.S.C. § 434(b) by failing to report the value of the mailing list as an in-kind contribution. Id. The OGC specifically found that "excessive, unreported contributions were created by... the transfer of list rental income ("LRI") from [SOA] to Ashcroft 2000" totaling $66,662. Id. ¶ 15. Additionally, it determined that excessive unreported contributions in the amount of $46,300 was derived from "Ashcroft 2000's sale of accounts receivable from persons who had rented the list from SOA" and $80,000 from "Ashcroft 2000's own rental income [derived] from the list." Id. Finally, the OGC concluded that "Ashcroft 2000's use of the list in its own mailings" resulted in excessive unreported contributions totaling $61,955. Id. According to the plaintiffs, "the OGC's findings concerning these contributions necessarily assume that the mailing list did not become the property of Ashcroft by virtue of the [Work Product Agreement], further establishing that the transfer of the list constituted an inkind donation to Ashcroft 2000 that should have been reported under 2 U.S.C. § 434(b)." Id. The plaintiffs complain, however, that the Commission "failed to find probable cause to believe that the transfer of the mailing list constituted an in-kind donation, the value of which had to be reported by both SOA and Ashcroft 2000." Id. ¶ 16. Moreover, the plaintiffs challenge the Commission's failure to find probable cause as to Ashcroft 2000's use of the list and receipt of LRI from its own rental of the list. Id. Instead, "[t]he only activities as to which the Commission found probable cause were transfers of funds generated by... SOA's rental of the list [as itemized above] totaling $112,962. Id.

As a result of the OGC's investigation and findings, and the FEC's partial adoption of the OGC's findings,*fn7 on December 11, 2003, the Commission approved a Conciliation Agreement with SOA, Ashcroft 2000, and Garrett Lott, as Treasurer of both SOA and Ashcroft 2000, wherein they agreed to pay a $37,000 fine. Id. ¶ 17. According to the plaintiffs, "[t]he Conciliation Agreement acknowledges only that the transfer of LRI and accounts receivable earned by SOA to Ashcroft 2000 violated the law, and does not acknowledge violations comprised by the donation of the list to Ashcroft 2000, the failure to report the donation, or Ashcroft 2000's own use and rental of the list." Id. After approval of the Conciliation Agreement, "the Commission closed its file on MUR 5181." Id. ¶ 18. Because the Commission did not find the transfer of the fund-raising list to be an illegal contribution, it did not determine the actual monetary value of the list, which the plaintiffs believe is far in excess of the $112,962 in excessive contributions found by the Commission. Id. Moreover, the plaintiffs complain that the Conciliation Agreement does not require SOA or Ashcroft 2000 to disclose and report the monetary value of the mailing list. Id. The plaintiffs claim that "[t]he lack of report and disclosure by the [SOA] and Ashcroft 2000, and the [FEC's] wrongful actions as detailed above have caused the plaintiffs actionable harm." Id. ¶ 21. Accordingly, the plaintiffs contend that the FEC's dismissal of their administrative complaint violated § 437(g)(a)(8)(A) of the Federal Election Campaigns Act. Id. ¶¶ 35-36.

II. Standard of Review

A. Motion to Dismiss

Under Rule 12(b)(1) of the Federal Rules of Civil Procedure, which governs motions to dismiss for lack of subject matter jurisdiction, "[t]he plaintiff bears the burden of persuasion to establish subject matter jurisdiction by a preponderance of the evidence." Pitney Bowes, Inc. v. United States Postal Serv., 27 F. Supp. 2d 15, 19 (D.D.C. 1998). In reviewing such a motion, this Court must accept as true all the factual allegations contained in the complaint. Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993). Additionally, in deciding a Rule 12(b)(1) motion, it is well established in this Circuit that a court is not limited to the allegations in the complaint, but may also consider material outside of the pleadings in its effort to determine whether the court has jurisdiction in the case. See EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624-25 n.3 (D.C. Cir. 1997); Herbert v. Nat'l Acad. of Sci., 974 F.2d 192, 197 (D.C. Cir. 1992); Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987); Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 14 (D.D.C. 2001).

B. Summary Judgment

In reviewing a motion for summary judgment, the Court must determine whether 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 Court must review the facts in the light most favorable to the non-moving party in making this determination. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In making its determination, the Court evaluates the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any...," that are submitted to the Court. Fed. R. Civ. P. 56(c). Once a motion for summary judgment has been properly made and supported by evidence, the non-moving party must then demonstrate the existence of a genuine issue of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing Fed. R. Civ. P. 56(e)). The existence of "some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). A fact is material if it "might affect the outcome of the suit under the governing law." Id. at 248. Summary judgment is mandated if a party fails to establish an element essential to that party's case on which that party will have the burden of proof at trial. Celotex Corp., 477 U.S. at 322.

"For purposes of ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Warth v. Seldin, 422 U.S. 490, 501 (1975); Haase, 835 F.2d 902, 906 (D.C. Cir. 1987). A motion to dismiss or for summary judgment for lack of subject matter jurisdiction should not prevail "unless plaintiffs can prove no set of facts in support of their claim which would entitle them to relief." Kowal v. MCI Communications Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994); Beverly Enters., Inc. v. Herman, 50 F. Supp. 2d 7, 11 (D.D. C. 1999). At this juncture, the plaintiffs enjoy all favorable inferences that can be drawn from the alleged facts. St. Francis Xavier Parochial Sch., 117 F.3d at 624. However, the Court "has an affirmative obligation to ensure that it is acting within the scope of its ...


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