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Rear Adm. (Ret) James J. Carey et al v. Federal Election Commission

June 14, 2011

REAR ADM. (RET) JAMES J. CAREY ET AL., PLAINTIFFS,
v.
FEDERAL ELECTION COMMISSION, DEFENDANT.



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

MEMORANDUM OPINION ON MOTION FOR PRELIMINARY INJUNCTION

Plaintiffs Rear Adm. (Ret.) James J. Carey and the National Defense Political Action Committee ("NDPAC") seek to solicit and expend contributions for: (1) independent expenditures in federal election campaigns; and (2) direct funding of federal candidates, a candidate's political committee, or political party committees. They seek to solicit unlimited funds for use in independent expenditure campaigns, while maintaining statutory limits on solicitation of funds for direct funding of federal candidates. Plaintiffs propose to keep these two distinct pools of funds segregated by maintaining separate banking accounts. Plaintiff Kelly S. Eustis is a private citizen who would like to contribute toward NDPAC's independent expenditure campaigns in an amount currently exceeding the statutory maximum of $5,000.

Plaintiffs seek a preliminary injunction to enjoin the Federal Election Commission ("FEC" or "Commission") from enforcing 2 U.S.C. § § 441a(a)(1)(C) & 441a(a)(3) against NDPAC for its planned solicitation and acceptance of unlimited contributions (including Plaintiff Eustis') for use in making independent expenditures in federal election campaigning; Plaintiffs do not challenge the Commission's power to enforce the amount and source limits with respect to solicitation and use of contributions directly for federal candidates and party committees. The Commission opposes the motion, failing to appreciate the applicability of Citizens United v. FEC, 130 S. Ct. 876 (2010), EMILY's List v. FEC, 581 F.3d 1 (D.C. Cir. 2009), and SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010), which govern the result in this case. A limited preliminary injunction will be granted.

I. FEDERAL ELECTION CAMPAIGN LAW

The Federal Election Campaign Act ("FECA"), 2 U.S.C. § § 431 et seq., inter alia, imposes limits on the sources and amounts of contributions that may be made by individuals and groups to federal candidates, party committees, and political action committees. Key to assessing these limits is the identity of the receiver of those contributions and the purpose for which those contributions are expended.

Under FECA, a contribution is "any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office; or the payment by any person of compensation for the personal services of another person which are rendered to a political committee without charge for any purpose." 2 U.S.C. § 431(8). A contribution, however, can be used in several ways, and depending on that purpose it can legally be limited to certain amounts.

If contributions are directed toward a federal candidate's personal coffers or his or her own political action committee, such contributions are subject to statutory limits because of the "strong governmental interest in combating corruption and the appearance thereof." EMILY's List, 581 F.3d at 8. The same can be said of contributions to political party committees because of the "close relationship between candidates and parties." Id. at 9. Section 441a(a)(1)(C) provides that no person shall make contributions "to any other political committee . . . in any calendar year which, in the aggregate, exceed $5,000." 2 U.S.C. § 441a(a)(1)(C). Section 441a(a)(3) provides:

During the period which begins on January 1 of an odd-numbered year and ends on December 31 of the next even-numbered year, no individual may make contributions aggregating more than --

(A) $37,500, in the case of contributions to candidates and the authorized committees of candidates;

(B) $57.500, in the case of any other contributions, of which not more than $37,500 may be attributable to political committees which are not political committees of national political parties. 2 U.S.C. § 441a(a)(3). All contributions and expenditures made subject to these source and amount limitations are referred to as "hard money." See EMILY's List, 581 F.3d at 27.

Under § § 441a(a)(1)(C) & 441a(a)(3) there is no distinction made between political committees directly associated with parties/federal candidates and non-connected political action committees.*fn1 And no distinction need be made if the non-connected political action committee is merely funneling its contributions, as a "conduit," to federal candidates, their personal political action committees or political party committees. See EMILY's List, 581 F.3d at 24--26. Generally speaking, "[u]nder FECA, a political committee is 'any committee, club, association, or other group of persons' that receives contributions of more than $1000 in a year or makes expenditures of more than $1000 in a year." SpeechNow.org v. FEC, 599 F.3d at 691 (citing 2 U.S.C. § 431(4)). "Once a group is so designated, contributions to the committee are restricted by 2 U.S.C. § 441a(a)(1)(C) and 441a(a)(3)." Id.

If, however, a non-connected political action committee is making independent expenditures,*fn2 wholly separate from federal candidates or parties, the analysis is different because there is not that same governmental interest in protecting quid pro quo corruption. See EMILY's List, 581 F.3d at 9--11. Recent Supreme Court and D.C. Circuit cases have partially invalidated statutory provisions within FECA with respect to the limits placed on contributions for independent expenditures in federal election campaigns. See Citizens United v. FEC, 130 S.Ct. 876 (2010); SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010); EMILY's List v. FEC, 581 F.3d 1 (D.C. Cir. 2009).

These cases have clarified the constitutional scope of monetary limits on contributions for the purpose of independent expenditures. Contributions and expenditures are not limited for this purpose and may be made from a "general treasury account that is not subject to source and amount limits," otherwise known as "soft money." See EMILY's List, 581 F.3d at 27. These cases have found that limits on soft money contributions used for independent expenditures are unconstitutional because such a limitation violates a contributor's First Amendment rights, while also finding that hard money limits on expenditures that directly support federal candidates, their authorized committees, or any political committee established and maintained by a national political party are constitutional. See generally Citizens United v. FEC, 130 S.Ct. 876 (2010); SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010); EMILY's List v. FEC, 581 F.3d 1 (D.C. Cir. 2009).

II. FACTS

Admiral Carey is the founder and treasurer of NDPAC, a political action committee registered with the Commission. Verified Compl. ¶ ¶ 8 & 10. NDPAC "advocates in favor of limited government, upholding a national commitment to this nation's veterans, and publicly defends the rights of American soldiers," by "rais[ing] and expend[ing] funds in support of candidates for federal office who are military veterans and agree with its values." Id. ¶ 12. NDPAC raises funds pursuant to the amount and source limitations detailed within 2 U.S.C. § 441a and "makes contributions to candidates for federal office up to the applicable limit and makes independent expenditures in support or opposition of candidates." Id. ¶ 12. Plaintiff Kelly S. Eustis is a potential contributor to NDPAC who would like to contribute more than the amount currently allowed toward NDPAC's independent expenditures in federal campaigns. Id. ¶ 13.

Plaintiffs complain that § § 441a(a)(1)(C) & 441a(a)(3) impose unconstitutional limits on amounts an individual may contribute to a non-connected political committee such as NDPAC with respect to independent expenditures. Citing Citizens United, EMILY's List, and SpeechNow.org, Plaintiffs dispute the constitutionality of any limit when those contributions are used for independent federal expenditures. V. Compl. ¶ 13. Plaintiffs do not contest the Commission's authority to regulate "hard money" under § 441a(a)(1)(A) and (B), which limits contributions to candidates, a candidate's authorized committee, and any political committee established and maintained by a national political party. See V. Compl. ¶ 49.

NDPAC requested an advisory opinion from the Commission on August 11, 2010, pursuant to 2 U.S.C. § 437f, asking whether it would be lawful for NDPAC to accept unlimited contributions for the purpose of making independent expenditures. V. Compl. ¶ 15. NDPAC committed to the limits on contributions made directly to federal candidates; it proposed to separate those "campaign contribution" funds from "independent expenditure" funds by maintaining two separate bank accounts. Id. The Commission's general counsel prepared two alternative draft advisory opinions for the Commission's consideration, one of which held NDPAC to the disputed statutory limits under § § 441a(a)(1)(C) & 441a(a)(3) ("Draft A"), and the other of which held that separate independent expenditures, when wholly separated from hard money contributions, are not subject to contribution limits ("Draft B"). Id. ¶ ¶ 17--18. On September 23, 2010, the six-member Commission failed to issue a binding four-vote advisory opinion, missing approval of Draft A by a vote of 2-3 and missing approval of Draft B by a vote of 3-2. Id. ¶ ¶ 19--20. Commissioner Walther did not vote on either draft. Id., Attach. 1 at 33. As a result, the Commission left NDPAC and Admiral Carey liable for possible enforcement actions against them should NDPAC solicit more than applicable limits currently allowed under § § 441a(a)(1)(C) & 441a(a)(3) for independent expenditures. Likewise, Mr. Eustis could be liable for a possible enforcement action should he contribute to NDPAC more than the amount currently allowed.

On January 31, 2011, Plaintiffs filed a complaint and motion for preliminary injunction, seeking to enjoin the Commission from enforcing § § 441a(a)(1)(C) & 441a(a)(3) against Plaintiffs should NDPAC and Admiral Carey solicit and receive contributions in excess of those statutory limits and/or should Mr. Eustis contribute more than currently allowed.

III. LEGAL STANDARDS

A district court may grant a preliminary injunction "to preserve the relative positions of the parties until a trial on the merits can be held." Univ. Of Tex. v. Camenisch, 451 U.S. 390, 395 (1981). An injunction is an equitable remedy so its issuance is one which falls within the sound discretion of the district court. See Hecht Co. v. Bowles, ...


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