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NADER v. FEC
Click here for case summary, as well as court decisions and related documents.
This suit challenged the constitutionality of Section 441b of the Act, which limits solicitations by corporations (and their separate segregated funds (PACs)) of voluntary contributions to the PACs.
On July 20, 1978, the National Chamber Alliance for Politics filed suit against the Federal Election Commission challenging the constitutionality of the PAC solicitation provisions and asking for injunctive relief. The plaintiffs included the Chamber of Commerce (a nonprofit corporation), its separate segregated fund, three executives of the two organizations and one board member of the Chamber of Commerce. Plaintiffs argued that, by enumerating those whom the corporation or PAC may solicit, 441b of the Act:
- Limits the plaintiffs' First Amendment right to communicate to a more broadly based audience for the purpose of "soliciting" their financial assistance;
- Limits the plaintiffs' ability to associate with those not enumerated in the Act as potential solicitees;
- Violates the First Amendment right of the potential solicitees (not enumerated in the Act) to associate with the plaintiffs;
- Discriminates against plaintiffs, in violation of their Fifth Amendment rights, by permitting candidates and their committees to solicit funds from any PAC but denying this same right to corporations and their PACs.
The plaintiffs argued that the harm brought about by Section 441b was actual, not hypothetical, because the plaintiffs have limited their solicitation activities, fearing the imposition of the civil and criminal sanctions contained in the Act.
The Federal Election Commission petitioned the court to dismiss the suit, arguing, first, that the court lacked jurisdiction because:
- Special statutory judicial review mechanisms, such as Section 437h of the Act, are the exclusive avenues for judicial review.
- Under §437h of the Act, the Commission, the national committee of any political party, or any individual eligible to vote may bring appropriate actions to challenge the constitutionality of the Act. The Commission argued that none of the plaintiffs were eligible to bring such an action under §437h.
- Challenges brought by any other person or entity must be raised during the ordinary course of enforcement procedures provided in Section 437g of the Act.
The Commission also argued that the complaint did not present a "case or controversy" because the plaintiffs can make no showing of present, direct injury resulting from Section 441b. The FEC further argued that the plaintiffs failed to state a claim upon which relief could be granted because §441b did not violate the plaintiffs' First or Fifth Amendment rights. The Commission's arguments are summarized below:
- The plaintiffs failed to see that §441b grew out of (and was, in fact, an exception to) a long series of Congressional efforts, dating back to 1907, to prevent actual corruption or the appearance of corruption arising from the influence of corporate general treasury funds on federal elections. The Commission explained that subsequently Congress also recognized that the individuals who comprise a corporation may have an interest in combining their funds for direct use in candidates' campaigns. Thus, with the passage of the Federal Election Campaign Act of 1971, Congress wrote a special exception to the general ban on corporate election spending. It permitted the use of corporate funds to establish, administer and solicit contributions to a separate segregated fund.
- The challenged subsection puts restrictions only on the solicitation of contributions. The plaintiffs are free to engage in discussion of general political issues; the Act does not restrict such activity.
- Section 441b does not restrict the plaintiffs' ability to associate with potential solicitees not enumerated in the Act. Such persons, including other PACs, can freely contribute to a corporate PAC and associate with it.
- Section 441b does not invidiously discriminate against corporations. The Commission said, "the notion of equal protection does not prevent Congress from classifying for different treatment those persons in distinguishable circumstances." Since corporations, through their PACs, are in a unique position to exert influence on many candidates throughout the entire nation, they are treated differently. In this case, the Commission added, the Chamber of Commerce had chosen to establish its PAC under §441b to take advantage of the provision permitting corporations to use their treasury funds to administer a PAC and solicit contributions to it. The Commission added that individual plaintiffs could establish their own PAC; under those circumstances, the law would permit the plaintiffs to solicit anyone, including other corporate PACs.
District Court Ruling
On November 22, the court dismissed the suit. The court said that the special provision of 2 U.S.C. §437h(a), expediting judicial review of constitutional issues, is inapplicable to the plaintiffs. The individual plaintiffs sue "not in their individual capacities but rather to vindicate the rights of the corporate entities. That derivative right was not the constitutional right of an 'individual eligible to vote' which Congress considered 'appropriate' for vindication in a declaratory judgment action under this section (437h)." Moreover, the court held that the plaintiffs presented no case or controversy sufficiently ripe for decision by a federal court.
Appeals Court Ruling
The plaintiffs filed an appeal. On June 10, 1980, the U.S. Court of Appeals for the District of Columbia Circuit denied the appeal, holding that the plaintiffs' claims were not ripe for judicial review.
Supreme Court Action
On November 13, 1980, the Supreme Court denied a petition for a writ of certiorari filed by the National Chamber Litigation Center (a legal arm of the Chamber of Commerce of the U.S.) in the suit, National Chamber Alliance for Politics v. FEC (Civil Action No. 78-1333).
Source: FEC Record -- February 1979, p. 3; and January 1981, p. 5.
National Chamber Alliance for Politics v. FEC, 627 F.2d 375 (D.C. Cir.), cert. denied, 449 U.S. 954 (1980).
On February 27, 1998, the U.S. District Court for the Northern District of California dismissed this case after agreeing with the FEC that the plaintiffs had failed to state a claim upon which relief could be granted.
On February 9, 1999, the U.S. Court of Appeals for the Ninth Circuit affirmed the district court's decision. The district court had declined to certify claims brought by the National Committee of the Reform Party (the Committee) to an en banc panel of the appeals court. The district court had determined that the Committee lacked standing in regard to some of its claims and failed to state a claim on which relief could be granted with respect to its remaining claims.
In this case, the Committee, the Reform Party of California, campaign committees of former Reform Party Presidential candidate Ross Perot and an individual voter who supported Mr. Perot in the 1996 Presidential election alleged that:
- The issue ads paid for by the 1996 Democratic and Republican presidential campaigns caused the Reform Party monetary damages by reducing the number of votes its Presidential candidate received and thereby reducing the amount of federal funding the party nominee would be entitled to in the 2000 election.
- The statutory composition of the FEC at 2 U.S.C. §437c(a)(1), which states that no more than three members of the six-member Commission may be affiliated with the same political party, is unconstitutional.
- The Presidential Election Campaign Fund Act (Fund Act) is unconstitutional because it denies equal protection by providing greater funding to major party candidates than it does to minor party candidates.
In addition to these claims, the Committee contended the Republican and Democratic defendants owed it damages under California and federal laws.
Appeals Court Decision
The appellate court found that neither California nor federal law authorized the Committee's suit for damages related to issue advertisements produced by the Republican and Democratic committees. The FEC's power to sue alleged violators of the Federal Election Campaign Act (the Act) is the "exclusive civil remedy" for enforcement of the Act. 2 U.S.C. §437d(e). (Entities may, however, seek judicial review of the agency's dismissal of an administrative complaint alleging violations of the Act.) The Committee argued unsuccessfully that the FEC's "exclusive civil remedy" did not preclude the Reform Party Committee from acting as a private party and suing for damages.
Legislative history is instructive here, the court found. Before the 1976 amendments to the Act, there was confusion over just which agency should enforce the statute. In those amendments, Congress added the word "exclusive" to prohibit enforcement suits by other agencies. There is no indication that Congress was, at the same time, approving private suits. The U.S. Supreme Court has also noted that there is no authority supporting the contention that Congress intended to have anyone other than the government enforce the Act (FEC v. National Conservative Political Action Committee, 470 U.S. 480 (1985)).
In addition, the Commission has a process in place by which entities can pursue their charges that the Act or FEC regulations have been violated.
The Act states that no more than three members of the Commission may be affiliated with the same political party. 2 U.S.C. §437c(a)(1). Commission seats historically have been equally divided between Democrats and Republicans only. Appellants claimed that this provision violates the Appointments Clause and their rights to free speech and equal protection. The court said that they lacked standing to raise this claim because they did not explain how the relief they requested-the invalidation of the party affiliation provision-would make minority party representation on the Commission more likely.
The Committee's facial challenge to the Fund Act, based on First Amendment and equal protection arguments, is foreclosed by Buckley v. Valeo, the court found. The Supreme Court held that the Fund Act "is a congressional effort, not to abridge, restrict, or censor speech, but rather to use public money to facilitate and enlarge public discussion and participation in the electoral process." Buckley went on to say that the public funding system does not discriminate against minor parties. "[T]he inability, if any, of minor-party candidates to wage effective campaigns will derive not from lack of public funding but from their inability to raise private contributions."
The Committee also argued that, as applied, the Fund Act "invidiously" discriminates against the Reform Party. The appellate court rejected this claim, concluding that the types of complaints expressed by the Reform Party were understood and taken into account by the Supreme Court when it rejected the claims of invidious discrimination in Buckley.
On February 14, 1985, the National Congressional Club (NCC), a multicandidate political committee, and Jefferson Marketing, Inc. (JMI), a North Carolina corporation that provides media services to political committees, voluntarily dismissed a suit they had filed against the FEC. Plaintiffs had filed their suit with the U.S. District Court for the District of Columbia on January 29, 1985. (Civil Action No. 85-0299.)
In their suit, NCC and JMI sought action against the FEC with regard to the agency's processing of two compliance actions (i.e., matters under review or MURs). The compliance actions were filed against NCC and JMI by Congressman Charles E. Rose (MUR 1503) and the Democratic Party of North Carolina (MUR 1792). In his complaint, filed in October 1982, Congressman Rose alleged that, among other things, JMI had provided media services to his 1982 primary election opponents at less than fair market value, resulting in a prohibited corporate contribution from JMI to the candidates.1 In the ensuing investigation, the General Counsel's office also found that a special relationship may have existed between NCC and JMI. In MUR 1792, the Democratic Party of North Carolina included, among its claims, an allegation concerning the NCC/JMI relationship.
NCC and JMI asked the court to find that the FEC's actions with regard to MURs 1503 and 1792 violated the election law, as well as the First and Fifth Amendments, and were contrary to law. Plaintiffs based these claims on the following allegations:
- The FEC refused to consolidate MURs 1503 and 1792, as requested by plaintiffs NCC and JMI.
- The FEC failed to give NCC and JMI adequate notice of the factual and legal bases for the agency's "reason to believe" determinations in MUR 1503.
- Before finding "reason to believe" that NCC and JMI were related, the FEC found "probable cause to believe" that, based on their relationship, the two organizations had violated the election law's ban on corporate contributions.
- The FEC refused to give NCC and JMI an opportunity to respond to the General Counsel's position on the FEC's authority to find "probable cause to believe" NCC and JMI were related before finding "reason to believe" they were related.
- The FEC took final action on MUR 1503 despite NCC's and JMI's allegations that the agency had violated the election law in processing the complaint.
NCC and JMI also sought an injunction requiring the Commission to comply with provisions of the election law and the Constitution.
1 See also Rose v. FEC.
Source: FEC Record -- March 1985, p. 3.
On November 18, 1996, the U.S. District Court for the District of Columbia issued an order instructing the FEC to supply the National Republican Congressional Committee (NRCC) with regular updates of its progress on the committee's administrative complaint against the actions of labor organizations during the 1996 election cycle. The order, which had been submitted by the parties involved in the suit, also dismissed this case without prejudice.
The NRCC had asked the court to force the FEC to take action, before the election, on three administrative complaints that it had filed with the FEC concerning the AFL-CIO and allied labor organizations. The NRCC had alleged that the labor groups were making massive expenditures coordinated with Democratic candidates, in violation of 2 U.S.C. §441b(a).
The NRCC had filed its administrative complaints with the FEC in February, March and April 1996 and had alleged that the FEC had not acted on those complaints by October 3, 1996, when the Republican committee filed its lawsuit. The NRCC said the FEC's delay could cause it irreparable injury and asked the court to order the FEC to take action before the election.
The settlement agreement requires the FEC to provide NRCC lawyers with confidential updates on the complaint until it is resolved or there is further action by the court.
Source: FEC Record -- January 1997 [PDF].
On March 14, 1995, the U.S. Court of Appeals for the District of Columbia vacated the district court's decision of May 11, 1994, and ordered the court to dismiss the complaint against the FEC as moot. The district court had dismissed the case on the grounds that it was not ripe for adjudication.
District Court Decision
On May 11, 1994, the U.S. District Court for the District of Columbia dismissed this suit in which the National Republican Senatorial Committee (NRSC) had asked the court to stop the FEC from proceeding in an internal enforcement matter opened in 1991, Matter Under Review (MUR) 3204. The NRSC claimed that the FEC's vote to find "reason to believe" that the committee had violated the law and the ensuing investigation were invalid because they took place when the composition of the FEC was unconstitutional. The court ruled that the case was not ripe for adjudication since the FEC had not yet taken "'concrete' action" in MUR 3204. But the court was doubtful whether NRSC would have succeeded on the merits even if its case had been ripe for review.
NRSC had relied on the October 1993 appellate court ruling in FEC v. NRA Political Victory Fund (NRA). In that case, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the FEC lacked authority to bring action against the NRA because the composition of the agency was unconstitutional.1
The court said that NRSC's reliance on NRA was "misplaced" because, in that case, the court of appeals was confronted with an otherwise final district court judgment obtained by an unlawfully constituted Commission against a respondent. By contrast, the court pointed out, in this case, NRSC had filed suit before the FEC had taken final action. The agency had not even voted on whether to find "probable cause to believe" that NRSC had violated the law, the next step in the enforcement process. The court said that the impending vote "will either confirm and ratify what was thought sufficient to warrant an investigation" in 1991, or the FEC will terminate the matter.
Concluding that the NRSC had filed its case prematurely, the court observed that, even had the case been ripe for judicial review, NRSC would have failed to satisfy the standards for a preliminary injunction to stop the FEC from proceeding in the MUR.
Appeals Court Decision
The NRSC's suit became moot because, after the district court's decision, the FEC closed MUR 3204 without finding probable cause to believe the NRSC had violated federal election law. The court of appeals therefore ordered the district court to dismiss the case as moot.
1 6 F.3d 821 (D.C. Cir. 1993). The court found that the presence of the Clerk of the House and the Secretary of the Senate as nonvoting, ex officio Commission members violated the Constitution's separation of powers doctrine. After the October 1993 NRA ruling was handed down, the FEC immediately reconstituted itself by excluding the ex officio members.
Source: FEC Record -- July 1994, p. 2; and May 1995, p. 4.
National Republican Senatorial Committee v. FEC, No. 94-0332 (TJP) (D.D.C. May 11, 1994); No. 94-5148 (D.C. Cir. Mar. 14, 1995).
On September 21, 1984, the National Right to Work Committee (NRWC) and Mr. Ralph M. Hettinga filed suit in the U.S. District Court for the District of Columbia asking the court to declare that the FEC had acted contrary to law in failing to act on an administrative complaint within 120 days (Civil Action No. 84-2955).
In their administrative complaint filed with the FEC on May 18, 1984, plaintiffs had alleged that the Mondale for President Committee (the Mondale Committee) and numerous Mondale delegate committees were affiliated committees, subject to a single, shared contribution limit, and that they had violated 2 U.S.C. §441a by accepting excessive contributions. The complaint had further alleged that several union political action committees were also affiliated with each other and had also violated Section 441a by making excessive contributions to the Mondale Committee through the delegate committees.
On October 31, 1984, the district court ruled that the Commission had not acted contrary to law in its handling of the complaint. The court rejected plaintiffs' argument that 2 U.S.C. §437g(a)(8) requires the agency to resolve a complaint within 120 days. Rather, the court held that the time period "is jurisdictional in nature, marking the time at which judicial intervention is permissible if appropriate." The court further remarked that, after the 120-day period, "a court may declare agency inaction to be contrary to law...but has discretion to conclude otherwise."
Although plaintiffs wanted the court to order the FEC to resolve the complaint before the November 6 election day, the court denied the request, finding that the law "does not provide for pre-election resolution of every complaint...implicating the campaign of a candidate for office. Especially in an election year, the FEC workload exceeds its resources, and a decision to expedite the consideration of plaintiffs' complaint would necessarily delay resolution of other pending matters. The Commission's judgment as to the priority each case deserves...should not be ignored."
Source: FEC Annual Report 1984, p. 22.
National Right to Work Committee and Hettinga v. FEC, 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9225 (D.D.C. 1984).
On July 21, 1977, the U.S. District Court for the District of Columbia consolidated the two above-mentioned cases. The order stated that the cases "involve common questions of law and that consolidation will reduce cost and delay." Both suits alleged that the FEC had failed to act on complaints filed with the Commission against the National Education Association.
After oral hearings in the consolidated cases, on August 31, 1977, the court denied the Commission's motion to dismiss the complaints and granted the plaintiffs summary judgment. The court also ordered the Commission to proceed to a formal resolution of the complaints within 30 days.
After considering the context of this case, the court agreed with the plaintiffs' argument that the 90-day time period established by law must serve as a time limit for the formal resolution of complaints. The Federal Election Campaign Act (2 U.S.C. §437g(a)(9)(A))1 allows an "aggrieved party" to file suit against the FEC in district court if the Commission "fails to act" on a complaint within 90 days of its filing. The court stated that otherwise "the complaint process would be subverted through indefinite delays," and plaintiffs will be left "without any way of knowing whether any action at all has been taken on their complaints."
The court also stated that the delay by the Commission was unnecessary since the Commission's regulations specifically prohibit the acts cited in the complaints.
The Commission had thirty days in which to bring about a formal resolution of the complaints: dismissal, entry into a conciliation agreement or institution of a formal enforcement action.
Source: FEC Record -- June 1977, p. 3; and October 1977, p. 3.
National Right to Work Committee v. Vernon W. Thomson; Paul E. Chamberlain v. Vernon W. Thomson, 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9042 (D.D.C. 1977).
On September 21, 2000, the U.S. District Court for the District of Columbia granted the FEC's motion for summary judgment in this case, ruling against the Natural Law Party of the United States of America, Dr. John Hagelin and John Moore (the plaintiffs). The court held that, although the plaintiffs had standing to challenge the FEC's dismissal of their administrative complaint against the Commission on Presidential Debates (CPD), they failed to show that the FEC's interpretation of the debate regulations at 11 CFR 110.13 was arbitrary and capricious.
The plaintiffs appealed. After expedited briefing on the issue of whether the 15 percent electoral support requirement in CPD's selection criteria is illegal, the Court of Appeals affirmed the district court's order on this issue on September 29, 2000.
Dismissal of Case
On November 30, 2000, the U.S. Court of Appeals for the District of Columbia Circuit granted the appellant's unopposed motion to dismiss the appeal.
On February 15, 1978, the National Conservative Political Action Committee (NCPAC) filed suit against the Federal Election Commission challenging the legality of the Commission's regulation (11 CFR 110.1(g)(1)) and the Commission's Advisory Opinion 1978-1 which provide that the contribution limitations (2 U.S.C. §441a) do not apply to pre-1975 campaign debts. In the case of AO 1978-1, the Commission allowed the Democratic National Committee to retire pre-1975 debts without regard to the contribution limitations.
On April 28, 1978, the court granted the Commission's motion to dismiss with respect to AO 1978-1 and granted summary judgment with respect to 11 CFR 110.1(g)(1). The court cited the following reasons:
- The court lacks jurisdiction with respect to the activities of the DNC because NCPAC did not use the statutorily established compliance procedures (2 U.S.C. §437g) prior to filing suit in district court.
- AO 1978-1 and its effect on NCPAC does not present an issue "ripe for review" by the court.
- Nothing in the Act or legislative history of the Act provides for the extension of the contribution limits to pre-1975 election debts.
- The regulation does not "deny equal protection of the laws to persons and entities subject to the contribution limitations.. .. "
- The regulations were promulgated in accordance with the Administrative Procedures Act.
Source: FEC Record -- June 1978, p. 7.
National Conservative Political Action Committee v. FEC, 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9057 (D.D.C. 1978), aff'd, 626 F.2d 953 (D.C. Cir. 1980).
On January 24, 2000, the Supreme Court issued a ruling reaffirming the distinction set out in Buckley v. Valeo between expenditures and contributions, and upholding the constitutionality of contribution limits. Furthermore, the Court rejected the argument that the Missouri government was required to provide concrete evidence substantiating a need for limits to curtail corruption or the appearance of corruption. The Court concluded that the threat of corruption, and public concern about that threat, were sufficient.
Shrink Missouri Government PAC (Shrink PAC) and Zev David Fredman, a candidate for Missouri 's Republican nomination for state auditor in 1998, filed suit alleging that Missouri contribution limits (ranging from $275 to $1075 to candidates for state office) violated their First and Fourteenth Amendment rights. The district court, relying on Buckley v. Valeo, sustained the statute in a summary judgment, finding that limits on political contributions were based on the belief that large contributions raise suspicions of influence peddling, which tend to undermine citizens' confidence in government integrity.
The district court rejected the respondents' claim that inflation since the Buckley decision had rendered the state limit unconstitutional today.
In reversing the district court's decision, the Eighth Circuit Court of Appeals held that Missouri had to demonstrate that it had a compelling interest and that the contribution limits at issue served that interest. Missouri claimed a compelling interest in avoiding corruption or the perception of corruption caused by large campaign contributions. The appeals court, however, found this insufficient and required Missouri to provide demonstrable evidence that genuine problems resulted from contributions that exceeded the statutory limits. It ruled that the state's evidence was inadequate for this purpose.
The Supreme Court, in its opinion delivered by Justice Souter, reversed the Eight Circuit's decision and held that Buckley v. Valeo, a 1976 Supreme Court decision, was the authority for comparable state limits on contributions to state political candidates.
The Buckley court struck down the Act's $1,000 limit on independent expenditures made by individuals on behalf of candidates for federal office, maintaining that the limits infringed upon the free speech and association guarantee of the First Amendment and the Equal Protection Clause of the Fourteenth. By contrast, the Buckley Court upheld provisions limiting individual contributions to a candidate to $1,000 per election. The Court drew a line between independent expenditures and contributions, treating expenditure restrictions as direct restraints on speech but saying, in effect, that limiting contributions to candidates did not violate an individual's right to free speech. The Buckley Court found the prevention of corruption and the appearance of corruption to be constitutionally sufficient justification for the contribution limits at issue.
In this case, the Supreme Court rejected the appeals court's requirement that the government demonstrate that corruption among public officials is real, and not merely conjectural. Acknowledging that conflicting academic studies both assert and deny that large contributions to candidates change candidates' positions, the Court concluded that there is little reason to doubt that sometimes large contributions will corrupt our political system and no reason to doubt a corresponding suspicion among voters.
Further, the Court found no support for the respondents' arguments that Missouri 's contribution limits were so different from those sustained in Buckley as to raise a new issue about the adequacy of the Missouri limits. In fact, the Court found no indication that contribution limits had a dramatic adverse effect on the funding of campaigns and political associations and, thus, no evidence that the limitations had prevented candidates from raising the resources necessary for effective advocacy.
Justice Stevens filed a concurring opinion. Justice Breyer filed a concurring opinion, in which Justice Ginsburg joined. Justice Kennedy filed a dissenting opinion. Justice Thomas also filed a dissenting opinion, in which Justice Scalia joined.
Source: FEC Record -- March 2000 [PDF].
120 S. Ct. 897 (2000).
On April 14, 2010, the United States District Court for the Northern District of Texas granted the Commission’s Motion for Summary Judgment against the Defendants, Jody L. Novacek, Republican Victory Committee, Inc. (“RVC”), BPO, Inc., and BPO Advantage, LP (Defendants). The court found that Ms. Novacek and the RVC knowingly and willfully violated 2 U.S.C §441h(b)(1) by fraudulently misrepresenting themselves as acting for, or on behalf of, a political party for the purpose of soliciting contributions. The court also found that BPO, Inc., and BPO Advantage, LP, knowingly and willfully violated 2 U.S.C §441h(b)(2) by participating in Novacek and RVC’s plan, scheme or design to fraudulently misrepresent themselves as acting for, or on behalf of, a political party for the purpose of soliciting contributions. Finally, the court found that Ms. Novacek and RVC violated 2 U.S.C § 441d(a) and (c) by failing to include on their communications the required disclaimer information in the manner specified by the statute. The court ordered the Defendants to pay a civil penalty of $47,414.15.
On June 29, 2004, the Republican National Committee filed an administrative complaint with the Commission that alleged certain solicitations made by RVC violated the Federal Election Campaign Act (the Act) because these solicitations contained misrepresentations that RVC was acting on behalf of the Republican Party.
The Commission began its own investigation in 2005 and found probable cause that the Defendants had knowingly and willfully violated the Act. In October 2008, the Commission sent letters to the Defendants which proposed a conciliation agreement. The Commission was unable through informal methods to secure an acceptable conciliation agreement with the defendants.
On March 6, 2009, the Commission filed a Complaint in the U.S. District Court for Northern Texas against the Defendants for violations of the Act. On November 30, 2009, the Commission filed a Motion for Summary Judgment. The Commission argued that the Defendants made fundraising solicitations by phone and in mailers that fraudulently misrepresented the source of the solicitation as the Republican National Committee and the Republican Party in what constitutes a knowing and willful violation of the Act. Ms. Novacek created and operated the RVC, as well as BPO, Inc., and BPO Advantage, LP. Through these entities, Ms. Novacek made misrepresentations to vendors and the general public stating or implying that RVC was raising money for the Republican Party and the Republican National Committee. In addition, Ms. Novacek and RVC violated the Act by failing to include on their communications some of the required disclaimer information in the manner specified by the Act.
District Court Decision
The court granted the Commission’s Motion for Summary Judgment against the Defendants. The court found that the Defendants had violated 2 U.S.C. §441h(b)(1) and (2). The court noted that Ms. Novacek and RVC had knowingly and willfully misrepresented themselves as acting for, or on behalf of, the Republican Party and the Republican National Committee for the purpose of soliciting contributions. The court also found that the defendants BPO, Inc., and BPO Advantage, LP, had willfully and knowingly participated in Ms. Novacek and RVC’s scheme, design or plan to fraudulently misrepresent themselves for the purpose of soliciting contributions. The court found that the Defendants failed to argue any of the material facts of the allegations and that the Defendants admitted to authoring scripts and follow-up letters to potential contributors for solicitation purposes.
The court rejected the Defendants’ claim that the call transcripts obtained by the Commission may not be an accurate sample of the calls made by call centers on behalf of the Defendants. The court also denied the Defendants’ request for additional discovery regarding further evidence from the call centers.
The court rejected the Defendants’ claim that Ms. Novacek did not commit any “knowing and intentional” fraud and misrepresentation because the “RNC does not own the term ‘Republican Party.’” FEC v. Novacek, No. 09-00444 (N.D. Tex. April 14, 2010). The court found the Defendants’ position unsupportable in light of the script’s clear implication that donations were solicited for the Republican Party and/or the Republican National Committee.
Finally, the court found that Defendants violated 2 U.S.C. § 441d(a) and (c) by failing to include a disclaimer in their communications. The Defendants failed to include RVC’s permanent address, phone number or website address, or state that the solicitation was not authorized by a candidate or candidate committee. In RVC’s mailings, the written material failed to properly format that information in clearly readable type size in a printed box set apart from the content of that communication. The court dismissed the Defendants’ arguments that the violations were unintentional since intent is not an element of the offense and the Commission did not request higher civil penalties that would become available if Ms. Novacek had acted with “knowing and willful” intent for those violations.
The court ordered the Defendants to pay a civil penalty in the amount of $47,414.15. The court also ordered that any funds raised by these solicitations and held by a non-party, the call center Apex CoVantage, L.L.C., shall be turned over to the Commission for return to the contributors.
Source: FEC Record -- May 2010 [PDF].
Appeals Court (5th Circuit) (10-10516)
- Appellee Federal Election Commission's Response to Appellant 's Motion to Represent Corporate Entities (9/3/10) [PDF; 5 pages]
- Appellant's Response to Appellee 's Motion for Summary Affirmance (8/23/10) [PDF; 21 pages]
- Appellee Federal Election Commission's Motion for Summary Affirmance (7/12/10) [PDF; 12 pages]
District Court (Northern District of TX)
- Notice of Appeal (5/15/10) [PDF; 2 pages]
- Plaintiff Federal Election Commission's Reply in Support of its Motion for Summary Judgment Submitted in Response to Defendant's Amended Response (2/12/10) [PDF; 19 pages]
- Unopposed Motion to Dismiss Counterclaim Without Prejudice Pursuant to Federal Rule of Civil Procedure 41(a)(2) (1/28/10) [PDF; 4 pages]
- Plaintiff Federal Election Commission's Reply in Support of its Motion for Summary Judgment (1/7/10) [PDF; 17 pages]
- Plaintiff Federal Election Commission's Motion to Dismiss Defendant's Counterclaims (11/30/09) [PDF; 19 pages]
- Plaintiff Federal Election Commission's Motion for Summary Judgment (11/30/09) [PDF; 29 pages]
- Response to Complaint for Declaratory, Injunctive and Other Appropriate Relief (7/2/09) [PDF; 3 pages]
- Complaint for Declaratory, Injunctive and Other Appropriate Relief (3/9/09) [PDF; 15 pages]
- The following were filed by the Federal Election Commission on 3/6/09 -- [PDF; 65 pages]:
- Complaint for Declaratory, Injunctive and Other Appropriate Relief;
- Plaintiff Federal Election Commission's Ex Parte Motion for Waiver of the Local Counsel Requirement and Waiver of the Pro Hac Vice Admission Fee and Memorandum in Support Thereof (with Appendix);
- Application and Order for Admission Pro Hac Vice (application for each Commission Attorney, Thomasenia P. Duncan, David Kolker, Kevin Deeley and Greg J. Mueller;
- Proposed Order Regarding Motion for Waiver of the Local Counsel Requirement and Waiver of the Pro Hac Vice Admission Fee; and
- Certificate of Interested Persons.
On July 31, 1984, the U.S. District Court for the District of Columbia granted the FEC's motion to dismiss as moot a suit filed by the National Rifle Association (NRA) on June 19, 1984 (Civil Action No. 84-1878). In the suit, NRA had asked the court to declare that the FEC's failure to act within 120 days on an administrative complaint NRA had filed on December 1, 1983, was arbitrary, capricious, an abuse of power and contrary to law. (See 2 U.S.C. §437g(a)(8)(A).) The FEC had petitioned the court to dismiss the suit as moot because, on July 31, 1984, the Commission had entered into a conciliation agreement with the respondent, Handgun Control, Inc. (HCI), thereby resolving the claims in NRA's administrative complaint.
On October 19, 1987, the district court dismissed a second suit in which NRA challenged the FEC's dismissal of a subsequent administrative complaint alleging further violations of the election law by HCI (Civil Action No. 86-2285).
At the time of the district court's decision in the second suit, NRA had filed a total of three administrative complaints with the FEC against HCI, an incorporated membership organization that supports restrictions on gun ownership. All three of NRA's complaints challenged HCI's status as a membership organization under the election law.
The first administrative complaint resulted in a conciliation agreement between the FEC and HCI in which the latter was required to reconstitute itself as a membership organization and to pay a $15,000 civil penalty. NRA had alleged that HCI at that time a nonprofit corporation without members and its separate segregated fund, HCI-PAC, had unlawfully solicited contributions from individuals beyond their solicitable class (i.e., the executive and administrative employees and their families). NRA's first lawsuit, charging that the FEC had violated the law by failing to act within 120 days of NRA's filing of the administrative complaint, was dismissed as moot after the conciliation agreement was achieved.
In its second and third administrative complaints, NRA alleged that HCI had not complied with the conciliation agreement and had violated §441b(b)(4)(A)(i) of the election law by soliciting contributions to its separate segregated fund from individuals who were not HCI members.
In dismissing NRA's second administrative complaint, the FEC found that HCI qualified as a membership organization, even though it had improperly applied the membership requirements retroactively to past contributors. With respect to NRA's third administrative complaint, the FEC found that the allegations were virtually identical to those raised in NRA's second complaint. Consequently, the agency dismissed the third complaint.
In its second suit NRA asked the court to declare that the FEC's dismissal of its third administrative complaint was contrary to law and to issue an order directing the FEC to initiate enforcement proceedings against HCI within 30 days of the court's order.
The FEC argued that, under §437g(a)(8)(B) of the election law, a party challenging the agency's dismissal of an administrative complaint must file suit within 60 days after the date of the dismissal. NRA did not petition for review of the FEC's dismissal of its second administrative complaint within the statutory time period. Instead, NRA reasserted its previously dismissed claim in a third administrative complaint, which the FEC contended amounted to nothing more than an attempt to obtain review beyond the 60-day period.
In dismissing NRA's suit, the court concurred with the FEC: "Regardless of how one would characterize the record herein, it is apparent that the issues and facts in all three complaints are substantially similar. More importantly, however, it is clear that the plaintiff failed to appeal the defendant's decision in the second complaint within the time period allowed by law."
On October 26, 1987, NRA filed an appeal of the district court decision with the U.S. Court of Appeals for the District of Columbia Circuit.
Source: FEC Record -- September 1984, p. 11; and December 1987, p. 6.
National Rifle Assn. v. FEC, No. 86-2285 (D.D.C. Oct 19, 1987 ) (unpublished opinion), aff'd, 854 F.2d 1330.
On August 5, 1988, the U.S. Court of Appeals for the District of Columbia Circuit issued a decision in National Rifle Association of America (NRA) v. FEC (Civil Action No. 87-5373), which affirmed an October 1987 decision by the U.S. District Court for the District of Columbia. In its decision, the district court found that a petition for review of the Commission's dismissal of an administrative complaint that NRA had filed against Handgun Control, Inc. (HCI) constituted an untimely appeal of an earlier FEC dismissal of another administrative complaint also filed by NRA against HCI. See 2 U.S.C. §437g(a)(8)(B).
NRA's suit challenged the FEC's dismissal of NRA's third administrative complaint against HCI. NRA's third administrative complaint had alleged violations of the election law by HCI, an incorporated membership organization that supports restrictions on gun ownership. All three of NRA's administrative complaints challenged HCI's status as a membership organization under the election law.
The first administrative complaint resulted in a conciliation agreement between the FEC and HCI. In dismissing NRA's second administrative complaint, the FEC found that HCI had qualified as a membership organization by taking the steps specified in the conciliation agreement resulting from the first complaint, even though it had improperly applied the membership requirements retroactively to past contributors. With respect to NRA's third administrative complaint, the FEC found that the allegations were virtually identical to those raised in NRA's second complaint. Consequently, the agency dismissed the third complaint.
District Court Ruling
In a brief filed with the district court, the FEC argued that, under section 437g(a)(8)(B) of the election law, a party challenging the agency's dismissal of an administrative complaint must file suit within 60 days after the date of dismissal. NRA did not petition for review of the FEC's dismissal of its second administrative complaint within the statutory time period. Instead, NRA reasserted its previously dismissed claim in a third administrative complaint which, the FEC contended, amounted to nothing more than an attempt to obtain review beyond the 60-day period.
In dismissing NRA's suit, the court concurred with the FEC's argument. On October 26, 1987, NRA filed an appeal of the district court's decision with the U.S. Court of Appeals for the D.C. Circuit.
Appeals Court Ruling
In affirming the district court's dismissal of NRA's suit, the appeals court found that "the second and third NRA complaints [were] substantially similar by virtue of the fact that the legal question posed by both was the same: whether an organization that does not provide for an annual meeting at which members may participate in the conduct of corporate business may qualify as a membership organization under section 441b(b)(4)(C).... Having raised that issue in the second complaint and [having] failed to appeal the Commission's order, the NRA cannot obtain judicial review of the issue by the expedient of bringing it (albeit in a more concrete context) before the FEC once again."
The appeals court concurred with NRA's argument that, because it had dismissed the merits of NRA's argument in rejecting its third administrative complaint, the FEC had effectively reopened the issue and had rendered a decision that was, in principle, subject to court review. Nevertheless, the appeals court noted that NRA had failed to make this argument with the district court when the FEC moved to dismiss NRA's suit on grounds that the court lacked subject matter jurisdiction over it. The appeals court concluded that, "having failed to raise the reopening argument as the basis for jurisdiction in the District Court, the NRA is not at liberty to raise it for the first time on appeal."
Source: FEC Record -- October 1988, p. 9.
National Rifle Association v. FEC, No. 86-2285 (D.D.C. Oct. 19, 1987 ) (unpublished opinion), aff'd, 854 F.2d 1330 (D.C. Cir. 1988).
On February 27, 1992, the U.S. District Court for the District of Columbia rejected NRA's challenge to the FEC's dismissal of an administrative complaint. The court ruled that the statutory time bar removed its jurisdiction to review the FEC's decision, since the same issues were considered and dismissed in a previous complaint and NRA failed to challenge that decision within the 60 days allowed by law.
On February 25, 1993, the U.S. Court of Appeals for the District of Columbia Circuit, in a per curiam judgment, affirmed the district court's ruling (No. 92-5078).
NRA had filed several administrative complaints against Handgun Control, Inc. (HCI), an incorporated membership organization. The first complaint challenged HCI's status as a membership organization, alleging that it illegally solicited nonmembers for contributions to its separate segregated fund. This first complaint resulted in a conciliation agreement in which HCI paid a civil penalty and amended its bylaws to qualify as a membership organization with solicitable members.
NRA's second complaint, Matter Under Revivew (MUR) 1891, alleged that HCI's membership still did not have sufficient rights to qualify as members. The Commission dismissed the complaint, concluding that HCI's amended bylaws satisfactorily established the rights of members by allowing them to participate in annual meetings and to elect a board director. NRA did not seek judicial review of the Commission's dismissal of MUR 1891.
The Commission also dismissed NRA's third complaint against HCI, MUR 2115, because the allegations were "virtually identical" to those raised in the second complaint. This time, NRA sought judicial review of the dismissal. Ruling on this suit, the district court held that NRA's petition constituted an untimely challenge to the FEC's dismissal of MUR 1891, since the issues in both MURs were substantially similar. A court of appeals affirmed that decision. National Rifle Association of America v. FEC, 854 F.2d 1330 (D.C. Cir. 1988).
NRA's most recent administrative complaint, the subject of the present suit, again challenged the status of HCI members. The FEC dismissed this fourth complaint, MUR 2836, because the issues had already been resolved in MUR 1891.
In this court case, NRA argued that the two MURs raised different issues, MUR 1891 dealing with member participation, and MUR 2836 focusing on member control. The court, however, found that "[d]espite the change in language, there remains no material variance between NRA's allegations in MUR 1891 and MUR 2836." The court therefore ruled that, because NRA did not appeal the FEC's decision in MUR 1891 within the 60 days allowed by law, it was barred from doing so in the present case.
The court also rejected NRA's argument that the FEC's dismissal of MUR 2836 qualified for judicial review because the FEC had considered the substantive merits of the complaint. The court found that the FEC did not consider the merits but simply stated that the issues had been resolved in MUR 1891.
The court ruled that it lacked jurisdiction by virtue of the 60-day time bar and accordingly granted the FEC's motion to dismiss the suit.
In affirming the lower court's decision, the appeals court found that the district court had "correctly concluded that appellant's fourth administrative complaint raised issues 'substantially similar' to those resolved in a previous complaint, and that appellant's petition for judicial review was therefore untimely."
Source: FEC Record -- April 1992, p. 8; and April 1993, p. 10.
On August 23, 2001, the Court of Appeals for the District of Columbia Circuit denied the Commission's petitions to have this case reheard by a panel of the court and heard en banc. The Commission had asked the court to revisit a portion of its June 29, 2001 ruling. Although the court denied the FEC's petitions, it did--at the Commission's request--clarify that the NRA's 1980 exemption applied only to corporate independent expenditures and not to corporate contributions to candidates. The court did not address whether the standard it used to determine that the NRA qualified for this limited exemption should be applied on a calendar-year or election-cycle basis.
On June 29, 2001, the U.S. Court of Appeals for the District of Columbia Circuit affirmed a district court ruling that the National Rifle Association (the NRA) and its lobbying organization, the NRA American Institute for Legal Action (ILA), violated the FECA's ban on corporate contributions and expenditures during the 1978, 1980 and 1982 election cycles. However, the appellate court determined that during 1980 the NRA qualified for a constitutionally-mandated exemption from the ban. As a result, the appeals court remanded the case to the lower court in order to have civil penalties calculated based on the 1978 and 1982 violations alone.