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

[Smith, Brad]

The decision seems a bit bizarre. There is no limit on "coordination" between citizens' groups. Groups X, Y, and Z are perfectly free to coordinate strategy to their hearts' content. Coordination has never been deemed to apply in such a situation, and it would certainly be unconstitutional to deem such coordination illegal. Is this equation changed because Group X (but not Groups Y or Z) made a legal contribution to a candidate?

That's a pretty tough road to hoe. Surely - I think - the mere fact that X PAC gave to Candidate Smith does not mean that Group Y cannot operate an IE PAC - even if Group Y has the same objectives as Group X, and even if Group Y talks with Group X about their shared goals and even election plans. The state would have to prove that Candidate Smith was using Group X to coordinate with Group Y- a factual determination. But the idea that you could simply prohibit Group Y from operating an IE PAC because it *might* coordinate with Candidate Smith through Group X seems off the rails.

Does this change because Group X and Y are organizationally related in some way? I think not. See Colorado Republican II.

Now, the Court does note that VRTL chose not to contest the state's evidentiary record showing the extent to which its IE PAC and its traditional PAC were intermeshed. But none of that record (at least not described in the Court of Appeals opinion) would actually show that any expenditures were coordinated with the campaign. Again, see Colorado Republican II. More importantly, so long as coordination is illegal, certainly organizations may be investigated for illegal coordination. But I don't think that the law can presumptively hold that two organizations are coordinating. It's got to be proven. Once again, that's Colorado Republican II. Citizens United? We don't need no stinkin' Citizens United.

The Court seems to be relying not really on "coordination," but on what the FEC calls "affiliation." But affiliation rules never prohibited two affiliated PACs from each each making unlimited IEs - they served only to assure that the two affiliated PACs  did not exceed the contribution limit. (In other words, Berkshire-Hathaway can't get around the $5000 PAC contribution limit by simply creating Berkshire Hathaway PAC I, B-H PAC II, B-H PAC III etc.). But here there is no question of exceeding the contribution limit, and so long as the funds are kept separate, there is no danger of a donor using the IE PAC to exceed the contribution limit or of the IE PAC being used to get corporate or union contributions to the campaign.

Many people will applaud this decision because they disagree with the extensive precedent out there. They believe that much more regulation should be allowed than the Supreme Court has held is allowed by the Constitution. But as a matter of accurately understanding the law and precedent, the Second Circuit is in danger of becoming the 9th Circuit of campaign finance law - a jurisdiction whose opinions are readily out of tune with other circuits and overruled by the Supreme Court.




Bradley A. Smith

Josiah H. Blackmore II/Shirley M. Nault

   Professor of Law

Capital University Law School

303 E. Broad St.

Columbus, OH 43215

614.236.6317

http://law.capital.edu/faculty/bios/bsmith.aspx

________________________________
From: law-election-bounces at department-lists.uci.edu [law-election-bounces at department-lists.uci.edu] on behalf of Byron Tau [btau at politico.com]
Sent: Wednesday, July 02, 2014 3:08 PM
To: Kelner, Robert; Rick Hasen; law-election at UCI.edu
Subject: Re: [EL] big 2d Circuit campaign finance case; more news

Anyone think it has any broader implications beyond perhaps leading to a review about the permissibility of hybrid PACs, though?

Aren't some trade associations set up in similar ways? 501c + federal PAC + IE arm?

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Byron Tau
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From: law-election-bounces at department-lists.uci.edu [law-election-bounces at department-lists.uci.edu] on behalf of Kelner, Robert [rkelner at cov.com]
Sent: Wednesday, July 02, 2014 2:56 PM
To: Rick Hasen; law-election at UCI.edu
Subject: Re: [EL] big 2d Circuit campaign finance case; more news

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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Washington, DC 20004
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rkelner at cov.com
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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 ¨C 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.


[Share]<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.
[Share]<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.
[Share]<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.
[Share]<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

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UC Irvine School of Law

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Irvine, CA 92697-8000

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