[EL] Danielczyk

[Joe La Rue]

Rick questioned yesterday whether Jim Bopp's response, regarding applying
the FEC's affiliation and earmarking rules to corporate contributions to
candidates, was consistent with a position that I took at oral argument in
the San Diego case at the district court. To the best of my knowledge, Jim's
firm's position has always been that there are at least three possible ways,
each of which might be constitutional, to address the anticircumvention
interest if corporations are allowed to exercise their First Amendment right
to make contributions. Before we get to that, I think it's important that we
recognize that the anticircumvention interest may not be valid
anymore. *Citizens
United *severely undermined it when it said that  political speakers "find
ways to circumvent campaign finance laws." *Citizens United v. FEC*, 130 S.
Ct. 876, 912 (2010). This seems to indicate that the anticircumvention
interest cannot undergird restrictions on speech because laws cannot be
tailored to it--the law will always be underinclusive to the
anticircumvention interest. But even if anticircumvention is still a valid
interest in *limiting* political speech, "an outright ban on corporate
political speech is not a permissible remedy." *Id*. at 911. And
contributions are both association *and speech*, as every Supreme Court case
to consider contributions has acknowledged. So bans on contributions must be
unconstitutional.

There are several ways the Government might address Rick's concerns about
whether he can set up sham corporations and circumvent individual
contribution limits (if, as I said, the anticircumvention interest is still
valid, and we're not sure it is). First, the FEC could count any
*earmarked*contributions by a donor to a corporation for a candidate
to be a
contribution by the donor. Jim mentioned this in his post yesterday. Another
option might be for the FEC to impose the affiliation rules to corporate
contributions. Then, if a corporation is controlled by a principal or a
group, then principal or group and the corporation are subject to the same
aggregate contribution limit. This is what the FEC does with contributions
from LLCs. Jim also suggested this option in his post yesterday. We have
also suggested that properly tailored disclosure regulations might be used
to combat setting up sham corporations designed to circumvent contribution
limits. This was the suggestion I made at oral argument in San Diego.

I'm not saying that any of these options would be constitutional, but they
might be. It's not our job to tell the Government how to get around the
clear rule of the First Amendment: "Congress shall make *no *law ..." Nor is
it the job of the *Danielczyk *court. It's for the legislature to make the
law. It's for the courts, though, to declare that laws that violate the
First Amendment are unconstitutional. And because Section 441b(a)'s ban on
corporate contributions is an "outright ban," it is "not permissible." And
because it discriminates against corporate speakers on the sole basis of
their corporate identity, the First Amendment cannot tolerate it. The *
Danielczyk* court was right, even if some don't like it.

Joe
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On Wed, Jun 8, 2011 at 4:11 PM, Rick Hasen <rhasen at law.uci.edu> wrote:

>  I am glad to hear you think it is constitutional for the government to
> treat a contribution by X to Y for Z as a contribution from Z to X.  But
> this is not the position I thought you were taking in the past, at least in
> the in the San Diego litigation. San Diego's law bars contributions from any
> non-human entities (not just corporate contributions).   In that case, I
> believe you and your legal team have taken the position that an individual
> should have the right to create as many artificial entities as she pleases,
> and then fund these entities, and then have these entities make additional
> contributions to candidates not earmarked to the individual who funded it.
> In other words, your position is that these entities, be they corporations,
> unincorporated associations, or anything else, have their own constitutional
> rights to make independent contributions.  Wouldn't an earmark rule deprive
> them of this supposed constitutional right?
>
> Here's what your associate Joe LaRue said at oral argument in the trial
> court in the San Diego case on this point:
>
> “Professor Hasen brought up the possibility of sham organizations, the idea
> that, you know, someone might create a bunch of LLCs and, you know,
> whatever, I grant that’s a possibility, certainly, but the answer is
> disclosure.”
>
> Rick
>
>
>
>
>
>
> On 6/8/2011 11:34 AM, JBoppjr at aol.com wrote:
>
>      The Supreme Court in *CU* rejected the notion that there should be a
> distinction between non-profits and for-profits re political speech.  I
> think that is the right result. It is true that before the Court would
> accept that position, we sought an as applied exception for non-profits from
> both bans an IE's, see *MCFL*, and contributions, see *Beaumont, so that
> at least some groups would have political rights.* In both instances, the
> "reformers" opposed.  Now they wish for the good old days they fought
> against!  LOL
>
>     On Rick's "conduit" point, there are two legitimate ways to deal with
> this.  First, is to count any earmarked contributions by X to Y for Z to be
> a contribution to Z from X, not Y.  That is how the FEC earmarking rules
> work.  Second, is the affiliation rules.  If an entity is controlled by the
> same group, then they are subject to the same aggregate contribution limit.
> FEC rules on this also operate this way.
>
>     His real point is that X may make multiple contribution to different
> entities that the person does not control, which are not controlled by the
> same group of people and which are not earmarked to contribute to a certain
> candidate, but then that all these contributions should be treated as a
> contribution from X. The reason I understand is that these entities may all
> be of one mind, ie conservative, and expected to contribute to Y.
>
>     This would be like UCI, who pays salaries to employees UCI does not
> control, the employees don't control each other and the salary is not
> earmarked as a contribution to a candidate, being treated as the contributor
> of contributions from its employees. While it is true that they are all of
> like mind -- all liberal Democrats, no doubt -- this is wrong.  Each
> employee still has his or her own mind and free will.  And they are
> contributing their own money -- even though it "came" from UCI (hey every
> one gets there money from someone else, except the feds.). Each employee is
> still responsible for his or her own contribution.  Jim Bopp
>
>  In a message dated 6/8/2011 1:17:12 P.M. Eastern Daylight Time,
> rhasen at law.uci.edu writes:
>
> This looks exceedingly close to an admission that non-profit corporations
> could be used as conduits to evade individual contribution limits.  And I'm
> less optimistic than Brad that for-profit corporations could not be used for
> the same purpose.   I also question the constitutionality of the PAC and
> affiliation rules under the logic of Judge Cacheris's order.
>
> Finally, I emphatically disagree with the notion that "American Democarcy
> did pretty well right up through 1974."  Watergate is a prime (but not only)
> example of the abuses of a poorly-regulated campaign finance system.
>
>
>
> On 6/8/2011 10:04 AM, Smith, Brad wrote:
>
>  In his first post, Rick writes:
>
> "Why couldn’t I set up 50 ideological corporations now in Virginia along
> the following lines? Contribute to these 50 ideological corporations
> supporting progressive (or tea party) candidates. If you’ve maxed out on
> your contributions to your favorite candidates, give the money to us, and
> we’ll contribute it to the candidates directly on our list.  This is our
> corporation’s mission."
>
> Now he writes:
>
> "those groups which should be entitled to the *most *First Amendment
> protections (even under *Austin* and before *Citizens United, *such groups
> could spend their treasury funds independently on candidate campaigns) get
> the *least* protection."
>
> The first post provides a reason why the second post is not necessarily
> true. For profit corporations are highly unlikely to be used to end run
> individual contribution limits - but non-profit corporations would be better
> vehicles for such a manuever.
>
> Of course, all of this could be regulated, as are PACs now, through
> affiliation rules. Or, we could recognize that American democracy did pretty
> well right up through 1974, and simply do away with individual limits on
> contributions, which would do away with Rick's feared scenario. But assuming
> individual contribution limits stay in place, Rick himself, in his first
> post, explained why it could make sense to limit Beaumont to non-profit
> corporations.
>
>  *Bradley A. Smith*
> *Josiah H. Blackmore II/Shirley M. Nault Designated Professor of Law*
> *Capital University Law School*
> *303 E. Broad St.*
> *Columbus, OH 43215*
> *(614) 236-6317*
> http://www.law.capital.edu/Faculty/Bios/bsmith.asp
>
> ------------------------------
> *From:* law-election-bounces at department-lists.uci.edu on behalf of Rick
> Hasen
> *Sent:* Wed 6/8/2011 10:44 AM
> *To:* law-election at uci.edu
> *Subject:* Re: [EL] Danielczyk
>
>  The Perverse Holding of Danielczyk <http://electionlawblog.org/?p=18888>
> Posted on June 8, 2011 <http://electionlawblog.org/?p=18888> by Rick Hasen<http://electionlawblog.org/?author=3>
>
> In response to my query in this post <http://electionlawblog.org/?p=18851>,
> a few readers have said that the opinion means it is unconstitutional to
> limit the direct contributions of *for-profit* corporations to candidates,
> but it remains constitutional under the controlling authority of *Beaumont
> * to limit the direct contributions of *ideological, non-profit*corporations.
>
> Of course, as my readers point out, if this is what it means, it is a
> perverse holding: those groups which should be entitled to the *most *First
> Amendment protections (even under *Austin* and before *Citizens United, *such
> groups could spend their treasury funds independently on candidate
> campaigns) get the *least* protection.
>
> That’s another reason why the district court’s ruling should be appealed
> immediately <http://electionlawblog.org/?p=18859>.
>
>
>  [image:
> http://www.addtoany.com/share_save#url=http://electionlawblog.org/?p=18888&title=The
> Perverse Holding of Danielczyk&description=]<http://www.addtoany.com/share_save#url=http%3A%2F%2Felectionlawblog.org%2F%3Fp%3D18888&title=The%20Perverse%20Holding%20of%20Danielczyk&description=>
>  Posted in Uncategorized <http://electionlawblog.org/?cat=1> | Comments
> Off
>
>
> On 6/7/2011 1:03 PM, Rick Hasen wrote:
>
> Breaking News: Judge in Va. Contributions Case Reaffirms Opinion Striking
> Down Federal Campaign Contribution Limits Law (Danielczyk)<http://electionlawblog.org/?p=18848>
> Posted on June 7, 2011 <http://electionlawblog.org/?p=18848> by Rick Hasen<http://electionlawblog.org/?author=3>
>
> Via Ken Vogel <https://twitter.com/#%21/kenvogel/status/78182731254743040>comes
> word of this order
> <http://www.politico.com/static/PPM170_cacherisupholds.html>from Judge
> Cacheris.  This is not what I was expecting<http://electionlawblog.org/?p=18521>.
> The Court has held unconstitutional a 100-year-old ban on direct corporate
> campaign contributions to candidates. He has done so in direct contradiction
> to the Supreme Court’s holding in *FEC v. Beaumont*, and in contradiction
> to rulings in the Second Circuit<http://lawprofessors.typepad.com/files/green-party-2.pdf>,
> the Eighth Circuit, <http://www.ca8.uscourts.gov/opndir/11/05/103126P.pdf>and a federal
> district court<http://electionlawblog.org/archives/thalheimer-pi.pdfhttp://electionlawblog.org/archives/thalheimer-pi.pdf>in San Diego [that case is on appeal, and I am defending San Diego's similar
> law in the Ninth Circuit.]
>
> Judge Cacheris makes two arguments as to why he is not bound by *FEC v.
> Beaumont*, in which the Supreme Court upheld the very same law.
>
> 1. He accepted the argument put forward in an amicus brief by the James
> Madison Center that the holding in *Beaumont *applied only to non-profit
> advocacy corporations, and not to for-profit companies.  This argument is
> very weak. In *Beaumont*, a nonprofit ideological corporation argued that
> even if the statute could constitutionally be applied to for-profit
> corporations, it could not constitutionally be applied to non-profit
> corporations.  The Court had already held in the case of *Mass. Citizens
> for Life v. FEC* that such corporations could not be barred from making
> independent expenditures.  In *Beaumont, *the Court held that *even* such
> ideological *MCFL* corporations could constitutionally be barred from
> making direct contributions to candidates.  Among other reasons, the law
> prevented such corporations from being used as conduits to evade individual
> contribution limits.  If such non-profit corporations could constitutionally
> be barred from making contributions to candidates, *a fortiori* for-profit
> corporations should be barred as well.
>
> 2. The judge accepted the second argument that *Citizens United* silently
> overruled *Beaumont. *This too is a weak argument.  I think that argument
> is dead wrong, for reasons explained in great detail in Part I of this
> brief <http://electionlawblog.org/archives/city-9th-reply.pdf> filed in
> the San Diego case.
>
> What should happen next?  I’m not an expert on the ability of the
> government to take an interlocutory appeal at this point in the criminal
> case,  but I would urge them if they could to take this directly to the 4th
> Circuit.  Otherwise, there will be great uncertainty going into the 2012
> election season about an important constitutional question.
>  [image:
> http://www.addtoany.com/share_save#url=http://electionlawblog.org/?p=18848&title=Breaking
> News: Judge in Va. Contributions Case Reaffirms Opinion Striking Down
> Federal Campaign Contribution Limits Law (Danielczyk)&description=]<http://www.addtoany.com/share_save#url=http%3A%2F%2Felectionlawblog.org%2F%3Fp%3D18848&title=Breaking%20News%3A%20Judge%20in%20Va.%20Contributions%20Case%20Reaffirms%20Opinion%20Striking%20Down%20Federal%20Campaign%20Contribution%20Limits%20Law%20%28Danielczyk%29&description=>
>  Posted in Uncategorized <http://electionlawblog.org/?cat=1> | Comments
> Off
> --
> Rick Hasen
> Visiting Professor
> UC Irvine School of Law
> 401 E. Peltason Dr., Suite 1000
> Irvine, CA 92697-8000
> 949.824.3072 - office
> 949.824.0495 - fax
> rhasen at law.uci.edu
> http://law.uci.edu/faculty/page1_r_hasen.html
>
> William H. Hannon Distinguished Professor of Law
> Loyola Law School
> http://electionlawblog.org
>
>
> --
> Rick Hasen
> Visiting Professor
> UC Irvine School of Law
> 401 E. Peltason Dr., Suite 1000
> Irvine, CA 92697-8000
> 949.824.3072 - office
> 949.824.0495 - fax
> rhasen at law.uci.edu
> http://law.uci.edu/faculty/page1_r_hasen.html
>
> William H. Hannon Distinguished Professor of Law
> Loyola Law School
> http://electionlawblog.org
>
>
> --
> Rick Hasen
> Visiting Professor
> UC Irvine School of Law
> 401 E. Peltason Dr., Suite 1000
> Irvine, CA 92697-8000
> 949.824.3072 - office
> 949.824.0495 - fax
> rhasen at law.uci.edu
> http://law.uci.edu/faculty/page1_r_hasen.html
>
> William H. Hannon Distinguished Professor of Law
> Loyola Law School
> http://electionlawblog.org
>
>
> _______________________________________________
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>
>
> --
> Rick Hasen
> Visiting Professor
> UC Irvine School of Law
> 401 E. Peltason Dr., Suite 1000
> Irvine, CA 92697-8000
> 949.824.3072 - office
> 949.824.0495 - fax
> rhasen at law.uci.edu
> http://law.uci.edu/faculty/page1_r_hasen.html
>
> William H. Hannon Distinguished Professor of Law
> Loyola Law School
> http://electionlawblog.org
>
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