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

[Smith, Brad]

This raises a good question Ben - may a corporation that maintains a PAC be prohibited, under this decision, from making independent expenditures in accordance with Citizens United? I don't think so, but that would seem to be the Second Circuit's logic.


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 Benjamin Barr [benjamin.barr at gmail.com]
Sent: Wednesday, July 02, 2014 4:21 PM
To: Edward Still
Cc: law-election at UCI.edu
Subject: Re: [EL] big 2d Circuit campaign finance case; more news

I'm curious about the findings of fact by the lower court.

The Second Circuit views the related Vermont Right to Life entities as mere bank accounts--shells without formal organizational separation.  But the case law underlying decisions like EMILY's List and Carey inform that a PAC is a separate organization from the main organization, or from other PACs.  And there is both a special fluidity and rigidity about roles held by individuals in these groups--they may serve in various related organizations so long as they wear their proverbial separate hats and follow rules preventing the sharing of certain information or resources.  These sort of arrangements are common across a wide array of non-profit entities, as Ed and Byron note.  To impose stricter requirements would be to impose onerous staffing and personnel requirements on already-strained non-profits in the quixotic pursuit of ending "corruption."

That sort of overly rigid formality is what came to the fore in Carey, a case I brought with Steve Hoersting, Dan Backer, and Allen Dickerson a few years back.   If the FEC had its way, we would have needed to clone the group in question, a meagerly funded veterans organization, to engage in meaningful advocacy.  But the court understood that separate, segregated accounts and following the applicable rules means that related entities can, indeed, be related and be so bold as to speak and engage the public about elections.

The Second Circuit seems confused about groups being "enmeshed financially" without understanding how formal rules of separation for related entities work.  I do hope en banc reconsideration cures this confusion.

Forward,

Benjamin Barr



On Wed, Jul 2, 2014 at 3:50 PM, Edward Still <still at votelaw.com<mailto:still at votelaw.com>> wrote:
Byron has a good point. Here is a list of national groups I used as examples recently:

a.  EMILY¡¯S List (hard money and soft money accounts)

b.  U.S. Chamber of Commerce (& its PAC)

c.  Sierra Club (& its Political Committee)

d.  League of Conservation Voters (& Education Fund)

e.  AFL-CIO (and COPE)

f.  NAACP (& its National Voter Fund)

g.  Human Rights Campaign (& its Federal PAC)

In each of these cases, one organization engages in one type of political activity and its sister engages in another.

Ed

Edward Still
Edward Still Law Firm LLC
130 Wildwood Parkway STE 108-304
Birmingham AL 35209
205-320-2882<tel:205-320-2882>
still at votelaw.com<mailto:still at votelaw.com>
www.votelaw.com/blog<http://www.votelaw.com/blog>
www.edwardstill.com<http://www.edwardstill.com>
www.linkedin.com/in/edwardstill<http://www.linkedin.com/edwardstill>




On Wed, Jul 2, 2014 at 2:08 PM, Byron Tau <btau at politico.com<mailto:btau at politico.com>> wrote:
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?

--
Byron Tau
Lobbying and campaign finance reporter || POLITICO
c: 202-441-1171<tel:202-441-1171>
d: 703-341-4610<tel:703-341-4610>
Follow: @byrontau<http://twitter.com/byrontau>
Subscribe to: http://www.politico.com/politicoinfluence/

________________________________
From: law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu> [law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu>] on behalf of Kelner, Robert [rkelner at cov.com<mailto: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
1201 Pennsylvania Avenue, NW
Washington, DC 20004
phone: (202) 662-5503<tel:%28202%29%20662-5503>
fax: (202) 778-5503<tel:%28202%29%20778-5503>
rkelner at cov.com<mailto:rkelner at cov.com>
This message is from a law firm and may contain information that is confidential or legally privileged. If you are not the intended recipient, please immediately advise the sender by reply e-mail that this message has been inadvertently transmitted to you and delete this e-mail from your system. Thank you for your cooperation.
From: law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu> [mailto: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

Chancellor's Professor of Law and Political Science

UC Irvine School of Law

401 E. Peltason Dr., Suite 1000

Irvine, CA 92697-8000

949.824.3072<tel:949.824.3072> - office

949.824.0495<tel:949.824.0495> - fax

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

http://www.law.uci.edu/faculty/full-time/hasen/

http://electionlawblog.org

_______________________________________________
Law-election mailing list
Law-election at department-lists.uci.edu<mailto:Law-election at department-lists.uci.edu>
http://department-lists.uci.edu/mailman/listinfo/law-election


_______________________________________________
Law-election mailing list
Law-election at department-lists.uci.edu<mailto:Law-election at department-lists.uci.edu>
http://department-lists.uci.edu/mailman/listinfo/law-election

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://webshare.law.ucla.edu/Listservs/law-election/attachments/20140702/bf3239cc/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 1504 bytes
Desc: image001.png
URL: <http://webshare.law.ucla.edu/Listservs/law-election/attachments/20140702/bf3239cc/attachment.png>