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Unnamed Plaintiff #1, et al. v. FEC
(Pillar of Law Institute, et al. v. FEC)
On July 22, 2016, the U.S. District Court for the District of Wyoming entered a Consent Order and Judgment whereby the Commission agreed not to enforce the ban on corporate contributions against the Pillar of Law Institute ("Pillar") and two unnamed plaintiffs (collectively, "Plaintiffs") with respect to contributions to convention delegates.
The Federal Election Campaign Act (the Act), generally prohibits corporations from making contributions or expenditures in connection with "any primary election or political convention or caucus held to select candidates for presidential and vice presidential electors or a Senator or Representative in, or a Delegate or Resident Commissioner to, Congress." 52 U.S.C. § 30118. The ban applies to any direct or indirect payment, distribution, loan, advance, deposit or gift of money or any services or anything of value to any candidate, campaign committee or political party or organization in connection with any election. See 52 U.S.C. §§ 30101(8)(A), 30118(b)(2); 11 CFR 114.1(a). "Anything of value" includes all in-kind contributions, such as the provision of goods or services without charge. See 52 U.S.C. § 30101(8)(A)(i); 11 CFR 100.52(a), (d).
Commission regulations define "election" to include a national nominating convention, as well as any primary election to select delegates to a convention. See 11 CFR 100.2(c)(3); Therefore, the Commission considers funds received and spent for delegate selection activities to be contributions and expenditures to influence a federal election that must come from permissible sources. 11 CFR 110.14(c)(1), (c)(2). However, since delegates do not qualify as candidates under the Act contributions to delegates are not subject to the amount limitations applicable to candidates. See 52 U.S.C. §§ 30101(2), (3), 30116(a)(1); 11 CFR 110.14(d)(1).
Pillar is a program of the Wyoming Liberty Group, a 501(c)(3) nonprofit corporation. The two unnamed plaintiffs were delegates to the 2016 Republican National Convention. Through its "delegate autonomy project" Pillar intended to provide convention delegates with free educational materials about the political parties, conventions and delegates. The educational materials would not contain express advocacy for or against a federal candidate. Pillar also planned to provide travel stipends to convention delegates and free legal representation for delegates facing threats of lawsuits or other forms of legal intimidation.
None of the Plaintiffs requested an advisory opinion (AO) from the Commission on their proposed activities.
On May 25, 2016, Plaintiffs filed suit in the U.S. District Court for the District of Wyoming. Plaintiffs sought a declaratory judgment that the bar on corporate contributions and expenditures in 52 U.S.C. § 30118 is an unconstitutional restriction of their First Amendment rights to speech and association. They also filed a Motion for Preliminary Injunctive Relief to enjoin the Commission from enforcing 52 U.S.C. § 30118 against them.
On June 17, 2016, the Commission filed its opposition to the Plaintiffs' motion and argued that the Plaintiffs were not entitled to a preliminary injunction because their proposed conduct would not violate the Act as it has been construed by the courts.
The Commission reasoned that the Act does not prohibit Pillar's proposal to provide educational materials and free legal services to delegates because they are neither contributions nor expenditures to influence a federal election. "[While the Act] effectively presumes that services provided to political committees without charge are election related. ...[i]n the context of discounted or free goods and services to delegates, however, no such rule applies. " [Emphasis in original.] In fact, the Commission contended that it has repeatedly approved of corporate produced, non-advocacy educational materials (see AOs 1988-22, 2004-07) and has allowed corporations to provide pro bono legal services under circumstances similar to this case (see AOs 1981-13, 1980-04).
The Commission further argued that Plaintiffs' proposed activity, including the proposed travel stipend, is permissible under FEC v. Massachusetts Citizens for Life, Inc., 479 U.S. 238 (1986) ("MCFL"). In MCFL, the Supreme Court held that certain nonprofit advocacy corporations cannot constitutionally be barred from making independent expenditures. The MCFL exemption is available to corporations—like the Wyoming Liberty Group—that were formed for the express purpose of promoting political ideas and that do not engage in business activities; have "no shareholders or other persons affiliated so as to have a claim on its assets or earnings"; and are not established by a corporation or labor organization and do not accept contributions from such entities.
The Commission noted that neither the courts nor the Commission has ever enforced § 30118 to bar an MCFL corporation from making contributions or expenditures to a delegate to a national convention. "Although MCFL addressed only the independent expenditures of non-profit advocacy corporations... the Commission has never enforced the corporate contribution and expenditure bar against such an entity for providing funds or discounted goods or services to delegates. Nor would it in this case, because the conduct at issue is far closer to an independent expenditure directed at voters than a contribution to a candidate." The Commission reasoned that each of Pillar's proposals would not directly or indirectly provide anything of value to any particular candidate. The activities are also not designed to influence the outcome of any election in that they do not directly provide means for a candidate to fund his own campaign.
Relying on the FEC's argument that Commission and Court precedent would permit their proposed activity, Plaintiffs postponed their Motion for Preliminary Injunctive Relief on June 21, 2016.
Consent Order and Judgment
On July 22, 2016, the U.S. District Court for the District of Wyoming entered a Consent Order and Judgment whereby the Commission agreed that it would not enforce 52 U.S.C. § 30118 and any implementing regulations against the Plaintiffs with regard to the monetary contributions made by MCFL-type corporations to delegates to a national nominating convention.
Source: FEC Record -- August 2016.
Court Decisions and Related Documents
Court Decisions :
- Consent Order and Judgment (7/22/16) [PDF; 2 pages]
- Notice of Settlement and Stipulated Consent Order (7/22/16) [PDF; 5 pages]
- Plaintiffs' Reply Brief to Memorandum in Opposition to Plaintiff's Motion for Preliminary Injunction (6/21/16) [PDF; 7 pages]
- Defendant FEC's Opposition to Plaintiff's Motion for Preliminary Injunction (6/17/16) [PDF; 34 pages]
- Memorandum in Support of Motion for Preliminary Injunction (6/3/16) [PDF; 20 pages]
- Plaintiff's Motion for Preliminary Injunctive Relief (6/3/16) [PDF; 4 pages]
- Verified Complaint for Declaratory and Injunctive Relief (5/25/16) [PDF; 19 pages]