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On March 8, 2010, the U.S.
District Court for the District of
Columbia denied the Commission’s
motion to dismiss and denied Utility Workers Union of America, Local 369’s (Plaintiff’s) oral motion for summary judgment regarding the Plaintiff’s suit against the FEC for dismissing an administrative complaint alleging that Covanta Energy Corporation (“Covanta”) unlawfully
solicited contributions to its separate segregated fund (SSF) in its employee handbook. The district court remanded the case to the Commission for further explanation and proceedings consistent with the court’s opinion.
The Plaintiff filed an administrative
complaint with the Commission
in October 2008 alleging
that Covanta violated the Federal
Election Campaign Act (the Act) by
including language in its employee
handbook that solicited contributions
from employees to Covanta’s SSF.
Under the Act, SSFs may only solicit
contributions from a corporation’s
"restricted class," which consists of
stockholders, executive and administrative personnel and the families of both groups. 2 U.S.C. §441b(b). The Plaintiff alleged that the handbook violated the Act by impermissibly soliciting all employees and by not following other requirements.
The FEC dismissed the Plaintiff’s complaint. Applying the standard set forth in Commission advisory opinions for determining whether a communication amounts to a solicitation, the Commission concluded that the language in Covanta’s employee handbook was not a solicitation because it did not encourage support for the [SSF] or facilitate the making of contributions to the [SSF], but "merely convey[ed] information that might engender inquiry."
The Plaintiff brought suit challenging the Commission’s dismissal of its administrative complaint under 2 U.S.C. §437g(a)(8)(A), which states that any party aggrieved by an order of the Commission dismissing a complaint may file a petition with the U.S. District Court for the District of Columbia.
The Plaintiff argued that the
Commission’s dismissal of the
administrative complaint was flawed
and that the Commission’s Explanation and Justification (E&J) on SSF solicitations calls into question the Commission’s order. That E&J explains that an SSF "may accept unsolicited contributions from persons otherwise permitted by the Act to make contributions. Informing
persons of the right to accept such contributions is, however, a solicitation." H.R. Doc. No. 95-44, 109 (January 12, 1977). 1
District Court Decision
The district court held that it
could not sustain the Commission’s
administrative decision because
neither the Factual and Legal Analysis explaining the decision nor the precedent it cites enables the court to discern the Commission’s rationale in determining that the Covanta handbook did not inform persons of the SSF’s right to accept contributions, and thus that is was not a solicitation as interpreted by the E&J.
The court held that a remand to
the Commission for further explanation
is the appropriate remedy in this
situation because, on remand, the
Commission may be able to supply a
reasoned analysis for its dismissal of
the Plaintiff’s complaint in a manner
consistent with the E&J. The court
also held that the Commission did
not improperly rely on its own past
advisory opinions when it cited them
in its order.
1 The Commission’s Explanation and Justification is available on the FEC’s website.
Source: FEC Record -- April 2010 [PDF].
Court Decisions and Related Documents
District Court (DC) (09-1022)
- Defendant Federal Election Commission's Supplemental Memorandum of Law (1/26/10) [PDF; 7 pages]
- Supplemental Brief of Plaintiff Utility Workers Union of America, Local 369, AFL-CIO (1/26/10) [PDF; 8 pages]
- Reply in Support of Defendant Federal Election Commission's Motion to Dismiss the Complaint (8/21/09) [PDF; 10 pages]
- Memorandum of Points and Authorities in Opposition to Federal Election Commission's Motion to Dismiss and Conditional Motion for Leave to Amend Complaint (8/11/09) [PDF; 8 pages]
- Defendant Federal Election Commission's Motion to Dismiss the Complaint (7/31/09) [PDF; 17 pages]
- Complaint and Petition for Review of Federal Election Commission Order Dismissing Complaint (6/1/09) [PDF; 108 pages]