[EL] big 2d Circuit campaign finance case; more news

Wed Jul 2 11:56:04 PDT 2014

Today’s Second Circuit decision should not affect stand alone Super PACs because it turns on ties between a Super PAC and a connected traditional PAC.  These so-called “hybrid” PACs are not particularly useful and have not to date played a major role in the campaign finance system.

That said, it seems to me that the Second Circuit opinion equates the existence of a traditional PAC that can make direct candidate contributions with “coordination.”   It is not necessarily the case that a traditional PAC coordinates with candidates merely because it makes contributions to candidates.  The Court is on firmer ground when it cites evidence of a “fluidity” of funds flowing between the Super PAC and its connected traditional PAC.  But this highlights the narrowness of the holding.  Many Super PACs are estabished as stand alone entities without connected traditional PACs, and the Second Circuit’s decision provides one more reason not to form a hybrid PAC.

It will be interesting to see whether the Second Circuit rehears this case in banc, assuming the prevailing party moves for rehearing.
Robert K. Kelner
COVINGTON & BURLING LLP
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From: law-election-bounces at department-lists.uci.edu [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of Rick Hasen
Sent: Wednesday, July 02, 2014 12:28 PM
To: law-election at UCI.edu
Subject: [EL] big 2d Circuit campaign finance case; more news

Big Campaign Finance News: Second Circuit Accepts Limits on Contributions to Independent Campaign Committees in Some Circumstances, Creating Circuit Split<http://electionlawblog.org/?p=62960>
Posted on July 2, 2014 9:26 am<http://electionlawblog.org/?p=62960> by Rick Hasen<http://electionlawblog.org/?author=3>

Today a unanimous Second Circuit panel issued an 84-page opinion in Vermont Right to Life, Inc. v. Sorrell<http://electionlawblog.org/wp-content/uploads/12-2904_opn.pdf>. Most of the opinion is devoted tor rejecting a number of arguments raised against Vermont disclosure rules applied to independent groups. This is quite consistent with the rulings of other courts since Citizens United: most disclosure challenges have failed.

But the most interesting part of the decision comes in the last 22 pages or so. As I understand it, Vermont Right to Life had two committees, one which made only independent expenditures (what we would now generally call a Super PAC) and another which made contributions to candidates. The Second Circuit agreed that if there were just the Super PAC, it would be unconstitutional to limit contributions to the group (following the Citizens United-SpeechNow line of cases).  But VRTL did not dispute that the two different groups were “enmeshed” with one another, and the Second Circuit held that the overlap between the two groups provided a basis for limiting contributions to both of them. A separate bank account is not enough according to the Second Circuit, although it seems to be enough in other circuits (see, e.g., the Carey v. FEC case from the D.C. Circuit).  This sets up a Circuit split and the potential for either en banc review in the Second Circuit or Supreme Court review.

Here is the relevant language about enmeshment beginning on page 68:

Although some courts have held that the creation of separate bank accounts is by itself sufficient to treat the entity as an independent‐expenditure‐only group, see, e.g.,Emily’s List v. Fed. Election Comm’n, 581 F.3d 1, 12 (D.C. Cir. 2009),21 we do not believe that is 1 enough to ensure there is a lack of ““prearrangement and coordination.” A separate bank account may be relevant, but it does not prevent coordinated expenditures - whereby funds are spent in coordination with the candidate. See Stop This Insanity, Inc. Emp. Leadership Fund v. Fed. Election Comm’n, 902 F. Supp. 2d 23, 43 (D.D.C. 2012). Nor is it enough to merely state in organizational documents that a group is an independent‐expenditure‐only group. Some actual organizational separation between the groups must exist to assure that the expenditures are in fact uncoordinated. We therefore decline to adopt the reasoning of the Fourth Circuit in NCRL III. There, the Fourth Circuit rejected North Carolina’s argument that NCRL‐FIPE (a similar organization to VRLC‐FIPE) was “not actually an independent expenditure committee because it [was] ‘closely intertwined’” with NCRL and NCRL‐PAC, two organizations (similar to VRLC and VRLC‐PC) that did not limit their activities to independent expenditures. NCRL III, 525 F.3d at 294 n.8. The Fourth Circuit concluded based only on NCRL‐FIPE’s organizational documents that the group was “independent as a matter of law.”22 Id. We do not agree that organizational documents alone satisfy the anti‐corruption concern with coordinated expenditures that may justify contribution limits.

There is little guidance from other courts on examining coordination of expenditures, but we conclude that, at a minimum, there must be some organizational separation to lessen the risks of coordinated expenditures. Separate bank accounts and organizational documents do not ensure that “information [] will only be used for independent expenditures.” Catholic Leadership Coal. of Tex. v. Reisman, No. A‐12‐CA‐566‐SS, 2013 WL 2404066, at *177 (W.D. Tex. May 30, 2013) (emphasis added) (“The informational wall [that plaintiff] asserts it can raise to keep its independent expenditure activities entirely separate from its direct campaign contribution activities is thin at best. This triggers the precise dangers of corruption, and the appearance of corruption, which motivated the Court in Buckley to uphold the challenged contribution limits.”). As discussed below, whether a group is functionally distinct from a non‐independent‐expenditure‐only entity may depend on factors such as the overlap of staff and resources, the lack of financial independence, the coordination of activities, and the flow of information between the entities.

[cid:image001.png at 01CF9605.3E1AA450]<http://www.addtoany.com/share_save#url=http%3A%2F%2Felectionlawblog.org%2F%3Fp%3D62960&title=Big%20Campaign%20Finance%20News%3A%20Second%20Circuit%20Accepts%20Limits%20on%20Contributions%20to%20Independent%20Campaign%20Committees%20in%20Some%20Circumstances%2C%20Creating%20Circuit%20Split&>
Posted in campaign finance<http://electionlawblog.org/?cat=10>
“Why the Civil Rights Act Couldn’t Pass Today”<http://electionlawblog.org/?p=62957>
Posted on July 2, 2014 8:38 am<http://electionlawblog.org/?p=62957> by Rick Hasen<http://electionlawblog.org/?author=3>

Todd Purdum, author of the new book, An Idea Whose Time Has Come: Two Presidents, Two Parties and the Battle for the Civil Rights Act of 1964<http://us.macmillan.com/anideawhosetimehascome/ToddPurdum>, has written this article in<http://dyn.politico.com/printstory.cfm?uuid=4C8AD4D6-4E72-4C84-B19E-67B19252CE4C> Politico, which also discusses the Voting Rights Act renewal.
[cid:image001.png at 01CF9605.3E1AA450]<http://www.addtoany.com/share_save#url=http%3A%2F%2Felectionlawblog.org%2F%3Fp%3D62957&title=%E2%80%9CWhy%20the%20Civil%20Rights%20Act%20Couldn%E2%80%99t%20Pass%20Today%E2%80%9D&description=>
Posted in Voting Rights Act<http://electionlawblog.org/?cat=15>
“The Defiant Mississippi Loser”<http://electionlawblog.org/?p=62955>
Posted on July 2, 2014 8:34 am<http://electionlawblog.org/?p=62955> by Rick Hasen<http://electionlawblog.org/?author=3>

The Hill reports <http://thehill.com/blogs/ballot-box/senate-races/211127-the-defiant-mississippi-loser> on McDaniel’s efforts to challenge the #MSSEN results.
[cid:image001.png at 01CF9605.3E1AA450]<http://www.addtoany.com/share_save#url=http%3A%2F%2Felectionlawblog.org%2F%3Fp%3D62955&title=%E2%80%9CThe%20Defiant%20Mississippi%20Loser%E2%80%9D&description=>
Posted in campaigns<http://electionlawblog.org/?cat=59>, recounts<http://electionlawblog.org/?cat=50>
“Marijuana, Voters Bill of Rights to miss Nov. ballot”<http://electionlawblog.org/?p=62953>
Posted on July 2, 2014 8:33 am<http://electionlawblog.org/?p=62953> by Rick Hasen<http://electionlawblog.org/?author=3>

The latest<http://www.cincinnati.com/story/news/politics/elections/2014/07/01/marijuana-voters-bill-of-rights-to-miss-november-ballot/11901311/> from Ohio.
[cid:image001.png at 01CF9605.3E1AA450]<http://www.addtoany.com/share_save#url=http%3A%2F%2Felectionlawblog.org%2F%3Fp%3D62953&title=%E2%80%9CMarijuana%2C%20Voters%20Bill%20of%20Rights%20to%20miss%20Nov.%20ballot%E2%80%9D&description=>
Posted in The Voting Wars<http://electionlawblog.org/?cat=60>

--

Rick Hasen

Chancellor's Professor of Law and Political Science

UC Irvine School of Law

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Irvine, CA 92697-8000

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rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>

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http://electionlawblog.org
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