Mariani v. United States ( 2000 )

Opinions of the United
2000 Decisions States Court of Appeals
for the Third Circuit
5-18-2000
Mariani v. United States
Precedential or Non-Precedential:
Docket 99-3875
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Filed May 18, 2000
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 99-3875
RENATO P. MARIANI, Plaintiff
v.
UNITED STATES OF AMERICA, Defendant
FEDERAL ELECTION COMMISSION (Intervenor in D.C.)
On Appeal From the United States District Court
For the Middle District of Pennsylvania
(D.C. Civ. No. 98-cv-01701)
District Judge: Honorable Thomas I. Vanaskie,
Chief Judge
Argued En Banc: February 16, 2000
Before: BECKER, Chief Judge, SLOVITER, MAN SMANN,
GREENBERG, SCIRICA, NYGAARD, ALITO, ROTH,
McKEE, and BARRY, Circuit Judges.
(Filed May 18, 2000)
FLOYD ABRAMS, ESQUIRE
(ARGUED)
SUSAN BUCKLEY, ESQUIRE
Cahill, Gordon & Reindel
80 Pine Street
New York, NY 10005
THOMAS COLAS CARROLL,
ESQUIRE
MARK E. CEDRONE, ESQUIRE
Carroll & Cedrone
Suite 940 - Public Ledger Building
150 So. Independence Mall West
Philadelphia, PA 19106
Counsel for Plaintiff
Renato P. Mariani
LAWRENCE M. NOBLE, ESQUIRE
General Counsel
RICHARD B. BADER, ESQUIRE
Associate General Counsel
DAVID KOLKER, ESQUIRE
(ARGUED)
Federal Election Commission
999 E Street, NW
Washington, DC 20463
Counsel for Intervenor
Federal Election Commission
DAVID W. OGDEN, ESQUIRE
Acting Assistant Attorney General
DAVID M. BARASCH, ESQUIRE
United States Attorney
BRUCE BRANDLER, ESQUIRE
Assistant United States Attorney
Federal Building
228 Walnut Street
P.O. Box 11754
Harrisburg, PA 17108
DOUGLAS N. LETTER, ESQUIRE
MICHAEL S. RABB, ESQUIRE
(ARGUED)
Attorneys, Appellate Staff
Civil Division
United States Department of Justice
601 D Street, NW - Room 9530
Washington, DC 20530
Counsel for United States of America
2
GLEN J. MORAMARCO, ESQUIRE
Brennan Center for Justice at
NYU School of Law
161 Avenue of the Americas,
5th Floor
New York, NY 10013
FRED WERTHEIMER, ESQUIRE
Democracy 21
Suite 400 1825 I Street, NW
Washington, DC 20006
DONALD J. SIMON, ESQUIRE
Sonosky, Chambers, Sachse
& Endreson
Suite 1000
1250 I Street, NW
Washington, DC 20005
Counsel for Amici Curiae
Brennan Center for Justice at NYU
School of Law, Common Cause, and
Democracy 21
OPINION OF THE COURT
BECKER, Chief Judge.
This proceeding is before us pursuant to 2 U.S.C.S 437h,
which channels constitutional challenges to the Federal
Election Campaign Act, 2 U.S.C. S 431 et seq. ("FECA"), as
amended, directly to the en banc Court of Appeals. The
present challenge was filed in the District Court for the
Middle District of Pennsylvania by Renato P. Mariani. A
criminal indictment pending in that court charges Mariani
and other officers of Empire Sanitary Landfill, Inc., and
Danella Environmental Technologies, Inc., with violating
the FECA, 2 U.S.C. SS 441b(a) and 441f, by making
campaign contributions to a number of candidates for
federal office through enlisting company employees and
others to forward contributions to the candidates that were
thereafter reimbursed by one of the companies. Mariani
3
argues that SS 441b(a) and 441f violate the First
Amendment to the United States Constitution.
Mariani's principal argument regards "soft money," or
funds lawfully raised by national and congressional political
party organizations for party-building activities from
corporations, labor unions, and individuals who have
reached their federal direct contribution limits. Soft money
is sometimes used to fund so-called "issue advocacy,"
advertisements that advocate a candidate's positions or
criticize his opponents without specifically urging viewers to
vote for or defeat the candidate. Issue ads are often only
marginally distinguishable from ads directly supporting a
candidate, which corporations cannot lawfully fund under
the FECA.
Mariani contends that S 441b(a), which proscribes
corporate contributions made directly to candidates for
federal office, has been completely undermined by the
staggering increase in recent years of the amount of
corporate soft money donations. In Mariani's submission,
this avalanche of soft money has made S 441b(a) so
underinclusive, and so incapable of materially advancing
the intended purpose of the federal election statute, that it
must be struck down. Alternatively, because the bellwether
cases in this area, including Buckley v. Valeo , 424 U.S. 1
(1976) (per curiam), validate statutes limiting campaign
contributions, but not banning them outright, and
recognize that corporate speech is protected under the First
Amendment, see First National Bank of Boston v. Bellotti,
435 U.S. 765 (1978), Mariani challenges the total ban on
direct corporate contributions as inconsistent with the First
Amendment. Mariani also challenges the constitutionality of
S 441f, which prohibits making campaign contributions in
the name of another to a candidate for federal elective
office.
The Supreme Court has construed S 437h so that, if a
district court concludes that a challenge to the FECA is
frivolous, the court may dismiss the case without certifying
it. See California Med. Ass'n v. Federal Election Comm'n,
453 U.S. 182, 193-94 n.14 (1981). The District Court
concluded that the challenge to S 441b(a) was not frivolous,
made comprehensive findings, and certified Mariani's
4
challenge to this Court. Section 437h, as construed by the
Supreme Court, required the District Court to make fact
findings. Many of the District Court's findings were
stipulated to by the parties and are uncontested. The
government and the Federal Election Commission ("FEC"),
however, assail other findings and the Court's 21 ultimate
findings of fact as being excessive or beyond its powers.
They also argue that a number of them, including the
ultimate findings, are unsupported by the record. Our
review of the District Court's findings, made in a setting
outside the traditional adversary crucible, is not deferential.
As we note in section II, we agree that some of the District
Court's findings are unsupported by proper evidence and
that some stray from appropriate fact finding into legal
conclusions. But even assuming that the role of soft money
is that asserted by Mariani and found by the District Court,
we conclude that the record could not support a holding
that S 441b(a) violates the First Amendment.
The government and the FEC not only defend the
constitutionality of SS 441b(a) and 441f, but contend that
Mariani's challenges are legally frivolous and thus never
should have been certified to the en banc court. They also
submit that the District Court employed an insufficiently
stringent standard for measuring frivolousness. We are
satisfied that the District Court did not apply an incorrect
standard of legal frivolousness and that it acted correctly in
not dismissing the case without certifying it, at least with
respect to the challenges to S 441b(a), for which it made an
independent assessment of frivolousness. Though the
District Court did not make an independent assessment of
the frivolousness of the challenge to S 441f as it should
have, the government does not challenge the lack of an
independent assessment here, and because the pending
criminal case awaits a determination of this action, we will
reach the challenges to S 441f without remanding for such
a determination.
Although not legally frivolous, Mariani's challenge to
S 441b(a) fails. As we explain in detail, both the
underinclusiveness and outright ban challenges are
interred by the Supreme Court's jurisprudence in the area.
See especially Austin v. Mich. Chamber of Commerce, 494
5
U.S. 652 (1990), and Federal Election Comm'n v. Nat'l Right
to Work Comm., 459 U.S. 197 (1982). Although Mariani's
factual portrayal of the impact of soft money on
contemporary elections is impressive, it falls short. Section
441b(a) is not fatally underinclusive under our precedents,
because we cannot say that there is no meaningful
distinction between hard and soft money. We cannot
exchange our robes for togas; any reform in this area must
be sought from Congress.
Finally, we conclude that the challenge to S 441f is
patently without merit. Accordingly we shall enter judgment
in favor of the government.
I. Procedural History
In October 1997, the United States filed an indictment
charging Mariani and several other individuals with, inter
alia, violating the FECA. That action, United States v.
Mariani, No. 3:CR-97-225, is pending before the District
Court. The indictment charges that between August 1994
and December 1996, Mariani and other officers and
employees of Empire Sanitary Landfill, Inc. ("Empire") and
Danella Environmental Technologies, Inc. ("Danella")
solicited numerous employees of the corporations, as well
as business associates, friends, and family members, to
make contributions to the campaigns of designated
candidates for federal election. According to the indictment,
these contributions were reimbursed either directly or
indirectly by Empire. The indictment also alleges that
Mariani and other officers and employees at Empire and
Danella made individual contributions to these federal
candidates, which were also reimbursed by Empire.
More particularly, the indictment alleges that in April
1995, Mariani and other officers and employees of Empire
and Danella contacted employees, associates, friends and
family members in an effort to raise funds for the New
Jersey Steering Committee, a state fundraising arm of the
Robert Dole campaign for President. Contributors allegedly
were asked to write personal checks in amounts of $1,000
(or, in the case of couples, $2,000) and were reimbursed
with Empire corporate funds. It is also alleged that on April
6
29, 1995, Mariani and another defendant in the criminal
case, Michael Serafini, attended a Steering Committee
luncheon at which they handed an envelope containing the
contributions to Dole campaign officials. When the Dole
campaign reported the contributions to the Federal Election
Commission ("FEC"), its filing allegedly attributed these
$80,000 worth of contributions to the individual
contributors, rather than to Empire. The Dole contributions
came approximately ten days prior to a vote in the Senate
on the Interstate Transportation of Municipal Waste bill, in
which Empire and Danella were interested. Dole was the
Senate majority leader at the time.
The indictment charges Mariani (and others) with
violations of 2 U.S.C. SS 441b(a) and 441f. Section 441b(a)
of the FECA prohibits any corporation from making any
contribution in connection with any campaign for federal
office and renders it unlawful for any officer of a
corporation to consent to any prohibited corporate
contribution. Section 441f of the FECA, the conduit
contribution ban or "anti-conduit" provision, prohibits one
from making a contribution "in the name of another
person" or "knowingly permit[ting] his name to be used to
effect such a contribution." 2 U.S.C. S 441f. Mariani moved
to dismiss the FECA charges in the indictment and
simultaneously filed this action against the United States
seeking declaratory relief pursuant to 2 U.S.C.S 437h. The
FEC was granted leave to intervene as a defendant.
Section 437h provides that
any individual eligible to vote in any election for the
office of President may institute such actions in the
appropriate district court of the United States,
including actions for declaratory judgment, as may be
appropriate to construe the constitutionality of any
provision of [FECA]. The district court immediately
shall certify all questions of constitutionality of this Act
to the United States court of appeals for the circuit
involved, which shall hear the matter sitting en banc.
2 U.S.C. S 437h.1 The Supreme Court has construed S 437h
_________________________________________________________________
1. It is uncontested that Mariani meets the voter eligibility requirement.
7
so that, if a plaintiff brings a claim that is frivolous, a
district court may dismiss the case without certifying it. See
California Med. Ass'n v. Federal Election Comm'n, 453 U.S.
182, 193-94 n.14 (1981). The Supreme Court also has
interpreted S 437h to require the district court to develop a
record and make findings of fact sufficient to allow the en
banc court of appeals to decide the constitutional issues.
See Bread Political Action Comm. v. Fed. Election Comm'n,
455 U.S. 577, 580 (1982) ("[T]he District Court, as required
by S 437h, first made findings of fact and then certified the
case . . . ."). The District Court concluded that the
challenge to S 441b(a) was not frivolous, and that the
interests of judicial economy "militated against" a separate
determination that the challenge to S 441f was not
frivolous. See Mariani v. United States, 80 F. Supp. 2d 352,
355 (M.D. Pa. 1999). The District Court then made
comprehensive findings and certified the challenge to this
Court.
II. The District Court's Findings of Fact
Some of the District Court's findings are disputed, are
unsupported by proper evidence, or go beyond appropriate
fact finding into legal conclusion. For example, an opinion
expressed by the New York Times Editorial page that one
individual's experiences with the Democratic National
Committee "deepen the cynicism of Americans" is not a
proper evidentiary source for a finding that Americans have
become more cynical about government as a result of the
role of soft money in the political system.2 See Mariani v.
United States, 80 F. Supp.2d. 352, 412 (M.D. Pa. 1999).
Similarly, the very title of the segment of thefindings called
"Due to the Effects of Soft Money on the Political System,
FECA is not Serving the Goals it was Intended to Serve," id.
at 418, as well as the finding that "[m]ost issue ads are
financed in large part with soft money . . . from sources
_________________________________________________________________
2. Johnny Chung, the individual referred to in the editorial, stated in an
interview with NBC News anchor Tom Brokaw that he was solicited to
make contributions to the Democratic National Committee in exchange
for invitations to meetings at which he could meet government officials
and discuss business concerns.
8
and in amounts that the FECA was meant to prohibit," id.
at 377, demonstrate that the fact-finding effort sometimes
metamorphosed into conclusions regarding the legal issues
in this case. Id. at 418-19. Given the unique procedural
posture of the case, we need not (and do not) defer to such
findings in our analysis. Although some of the District
Court's findings went beyond what was proper both as a
matter of evidence and by crossing the line into forming
legal conclusions, the court compiled an impressive factual
showing that soft money plays an increasingly large role in
federal elections.
Contributions made to or expenditures made on behalf of
candidates for federal elective office are referred to as "hard
money." Under S 441b(a), corporations are not permitted to
make contributions of hard money to campaigns for federal
office. Corporations can, however, make contributions to
political parties in unlimited amounts. These contributions,
which are referred to as "soft money," can be used to fund
"issue advocacy." "Issue advocacy" includes advertisements
or other campaign materials that advocate positions
supported by a candidate, often comparing those positions
with those of an opponent, without directly advocating the
election of the candidate. Donors of soft money are able to
avoid the FECA contribution limits and disclosure
requirements applicable to hard money and direct
advocacy. The amount of soft money contributed in each
election cycle has grown tremendously in the last two
decades, from about $19 million in 1980 to more than $260
million in 1996.3 Soft money donations by the 544 largest
public and private companies more than tripled between
1992 and 1996.
_________________________________________________________________
3. During the 1995-96 election year cycle, the Republican national party
committees (the Republican National Committee, the National
Republican Senatorial Committee, and the National Republican
Congressional Committee) raised approximately $138.2 million in soft
money and the Democratic national party committees (the Democratic
National Committee, the Democratic Senatorial Campaign Committee,
and the Democratic Congressional Campaign Committee) raised
approximately $123.9 million in soft money. (The term "election cycle"
refers to the period from January 1 of the year preceding the election
through December 31 of the year during which the election occurs).
Corporations were major contributors of these funds.
9
With respect to Mariani's challenge, the parties agree on
the following facts. Candidates for federal elective office
help their parties raise soft money. Candidates who raise
large amounts of soft money often receive more support
from their party than candidates who are less effective at
raising soft money. Committee officials often act as
intermediaries between donors and candidates.
Soft money is used to fund (or partially fund) issue
advocacy that, on occasion, is hard to distinguish from
direct advocacy for a particular candidate for federal office.
Campaigns sometimes coordinate with outside entities
regarding these ads. These ads promote or criticize federal
candidates in order to influence the outcome of elections,
although avoiding words of direct advocacy such as"vote
for," "elect," or "defeat."4
Corporations play an important role in campaignfinance.
Candidates for federal elective office often know which
_________________________________________________________________
4. The following ads aired in the 1995-95 election cycle illustrate this
proposition. The Republican National Committee financed the following
ad:
ANNOUNCER: Three years ago Bill Clinton gave us the largest tax
increase in history, including a 4 cent a gallon increase on
gasoline.
Bill Clinton said he felt bad about it.
CLINTON: People in this room are still mad at me over the budget
because you think I raised your taxes too much. It might surprise
you to know I think I raised them too much, too.
ANNOUNCER: OK, Mr. President, We are surprised. So now,
surprise us again. Support Senator Dole's plan to repeal your gas
tax. And learn that actions . . . do speak louder than words.
The Democratic National Committee financed the following issue ad:
ANNOUNCER: American Values. Do our duty to our parents.
President Clinton protects Medicare. The Dole/Gingrich budget tried
to cut Medicare $270 Billion.
Protect families. President Clinton cut taxes for millions of
working
families. The Dole/Gingrich budget tried to raise taxes on 8
million
of them. Opportunity. President Clinton proposes tax breaks for
tuition. The Dole/Gingrich budget tried to slash college
scholarships. Only President Clinton's plan meets our challenges,
protects our values.
10
corporations are large contributors of soft money. Because
there are no limits on soft money contributions, soft money
is easier to raise than hard money. Soft money
contributions of corporate treasury funds can result in
access (and thus a forum to express their interests) for
corporate officials to high government officials, including
elected officials, as well as to candidates for federal elective
office. Large and repeat donors sometime get more access
than other donors, and donating soft money can be a more
effective means for getting access than hard money.
Corporate soft money contributions enable corporations to
some extent to circumvent the corporate hard money
contribution ban and support (indirectly) candidates for
federal elective office.
Corporations are solicited for and give large sums of soft
money in federal elections; according to reportsfiled with
the FEC, during the 1994 and 1998 election cycles,
corporations donated more than 50 percent of all itemized
soft money contributions. Additionally, in the 1995-95
election cycle, corporations in industries in which
legislation was contemplated gave large sums of soft money.
III. The Test for Frivolousness
In California Med. Ass'n v. Fed. Election Comm'n , 453
U.S. 182, 193-94 n.14 (1981), the Supreme Court stated
that "we do not construe S 437h to require certification of
constitutional claims that are frivolous." The Court cited
with approval a district court decision from an in forma
pauperis action that employed the standard from the in
forma pauperis statute, 28 U.S.C. S 1915(e)(2)(B), to
determine whether a challenge to FECA was frivolous. See
id. at 193-94 n. 14 (citing Gifford v. Congress, 452 F. Supp.
802 (E.D. Cal. 1978)). The in forma pauperis statute
authorizes a district court to dismiss sua sponte any action
that it determines to be legally frivolous. An action is not
frivolous under the statute where the complaint raises an
arguable question of law that ultimately will be resolved
against the plaintiff. Neitzke v. Williams, 490 U.S. 319, 328
(1989). The District Court applied the standard for
frivolousness set forth in Neitzke and certified Mariani's
challenge to the en banc Court of Appeals after concluding
11
that "it cannot be said that the constitutional challenges
are plainly foreclosed by existing precedent." Mariani v.
United States, No.3 CV-98-1701 (March 25, 1999).
The government and the FEC argue that the District
Court should have used a more exacting standard for
frivolousness and rejected Mariani's challenge. They submit
that the correct standard is that set forth by the Ninth
Circuit in Goland v. United States, 903 F.2d 1247, 1257
(9th Cir. 1990), which viewed the role of the District Court
as akin to that of a single judge deciding a motion to
convene a three-judge court to hear a constitutional
challenge and noted that this standard is closer to the
standard used to review a claim under FED. R. CIV. P.
12(b)(6) than it is to the in forma pauperis standard.
We need not decide which standard applies, because
under either standard Mariani's claim is not frivolous. As
the Ninth Circuit noted, a genuinely new variation on an
issue raised under a particular section of the FECA that
already has been challenged and upheld may give rise to a
nonfrivolous challenge to that section: "[o]nce a core
provision of FECA has been reviewed and approved by the
courts, unanticipated variations also may deserve the full
attention of the appellate court. At the same time, not every
sophistic twist that arguably presents a `new' question
should be certified." Goland v. United States, 903 F.2d at
1257; see also Khachaturian v. FEC, 980 F.2d 330, 331
(5th Cir. 1992). Mariani's challenge to S 441b(a) is not
simply a sophistic twist, but can fairly be characterized as
a new challenge based on the rise in importance in
campaign finance of soft money and issue advocacy.
Moreover, the facial validity of the statute never has been
squarely determined by the Supreme Court.
The District Court did not make an independent
assessment of the frivolousness of the challenge toS 441f.
Hereafter, district courts considering challenges to separate
provisions of the FECA should make the required
determination regarding frivolousness for each of the
challenges.5 However, because the government does not
challenge the lack of an independent assessment here, and
_________________________________________________________________
5. That determination is best made initially by District Courts.
12
because the pending criminal case awaits a determination
of this action, we will reach the challenges toS 441f without
remanding for a determination regarding frivolousness.
IV. The Challenge to S 441b(a)
Section 441b(a) bans corporations and unions from using
funds from their corporate treasuries to contribute to or
make expenditures in connection with any campaign for
federal office. See 2 U.S.C. S 441b(a). In Fed. Elec. Comm'n
v. Nat'l Right to Work Comm., 459 U.S. 197, 208-09 (1982),
the Supreme Court chronicled the history of S 441b(a):
Seventy-five years ago Congress first made financial
contributions to federal candidates by corporations
illegal by enacting the Tillman Act, 34 Stat. 864 (1907).
Within the next few years Congress went further and
required financial disclosure by federal candidates
following election, Act of July 25, 1910, 36 Stat. 822,
and the following year required pre-election disclosure
as well. Act of August 19, 1911, 37 Stat. 25. The
Federal Corrupt Practices Act, passed in 1925,
extended the prohibition against corporate
contributions to include "anything of value," and made
acceptance of a corporate contribution as well as the
giving of such a contribution a crime. 43 Stat. 1070.
The first restrictions on union contributions were
contained in the second Hatch Act, 54 Stat. 767
(1940), and later, in the War Labor Disputes Act of
1943, 57 Stat. 167, union contributions in connection
with federal elections were prohibited altogether. These
prohibitions on union political activity were extended
and strengthened in the Taft-Hartley Act, 61 Stat. 136
(1947), which broadened the earlier prohibition against
contributions to "expenditures" as well. Congress
codified most of these provisions in the Federal
Election Campaign Act of 1971, 86 Stat. 3, and
enacted later amendments in 1974, 88 Stat. 1263, and
in 1976, 90 Stat. 475.
Under Buckley v. Valeo, 424 U.S. 1, 19, 22 (1976) (per
curiam), it is clear that spending for political campaigns is
protected speech that implicates both the right to free
13
expression and the right of free association. Moreover,
because there is "no support in the First or Fourteenth
Amendment, or in the decisions of this Court, for the
proposition that speech that otherwise would be within the
protection of the First Amendment loses that protection
simply because its source is a corporation," First Nat'l Bank
of Boston v. Bellotti, 435 U.S. 765, 784 (1977), the ban on
corporate contributions under S 441b(a) is subject to the
same level of scrutiny as other regulations limiting
spending for political campaigns. In Buckley, 424 U.S. at
16, the Court held that limitations on spending for
campaigns should be subjected to "exacting scrutiny": "this
Court has never suggested that the dependence of a
communication on the expenditure of money operates itself
to introduce a nonspeech element or to reduce the exacting
scrutiny required by the First Amendment." The Court
added that the First Amendment guarantee "has its fullest
and most urgent application precisely to the conduct of
campaigns for political office." Id. at 15 (citing Monitor
Patriot v. Roy, 401 U.S. 265, 272 (1971)).
Buckley, of course, distinguished campaign contributions
from direct expenditures, striking down a limit on
expenditures while upholding a limit on campaign
contributions. As the Court's recent decision in Nixon v.
Shrink Missouri Gov't PAC, 120 S. Ct. 897, 904 (2000) (citing
Buckley, 424 U.S. at 20-21), explains, in the area of
contributions, even under the exacting scrutiny standard,
"limiting contributions [leaves] communication significantly
unimpaired." "[U]nder Buckley's standard of scrutiny, a
contribution limit involving `significant interference' with
associational rights could survive if the government
demonstrated that contribution regulation was `closely
drawn' to match a `sufficiently important interest.' " Shrink
Missouri, 120 S. Ct. at 904 (citation omitted). Accordingly, in
considering Mariani's challenge to S 441b(a), while we treat
campaign contributions from the corporate treasury as
speech and subject the ban on them in S 441b(a) to
exacting scrutiny, we do so against a background principle
that limits on contributions--though not necessarily bans
on contributions--can withstand this scrutiny if they are
" `closely drawn' to match a `sufficiently important
interest.' "
14
The District Court certified two issues regardingS 441b(a)
to this Court. The first is whether the prohibition in
S 441b(a) on contributions by corporations from corporate
treasuries to candidates for federal elective office is
unconstitutional on its face. The second is whether the
prohibition in S 441b(a) on contributions by corporations
from corporate treasuries to candidates for federal office, in
the context of the presently existing law that otherwise
permits corporations to expend unlimited amounts of
corporate funds to influence the outcome of federal
elections (via soft money contributions), violates the First
Amendment.
A. The Constitutionality of S 441b(a) on its Face
In considering the $1,000 contribution limit at issue in
Buckley, the Supreme Court stressed the importance of the
right to association through support of the candidate of
one's choice:
[T]he primary first amendment problem raised by the
Act's contribution limitations is their restriction of one
aspect of the contributor's freedom of political
association . . . [T]he right of association is a `basic
constitutional freedom,' Kusper v. Pontikes, 414 U.S.
57, that is "closely allied to freedom of speech and a
right which, like free speech, lies at the foundation of
a free society." Shelton v. Tucker, 364 U.S. 479, 486
(1960). In view of the fundamental nature of the right
to associate, governmental "action which may have the
effect of curtailing the freedom to associate is subject
to the closest scrutiny." NAACP v. Alabama , [357 U.S.]
at 460-461.
Buckley, 424 U.S. at 24-25 (internal citations partially
omitted).
Nevertheless, the Court concluded that the $1,000 limit
was constitutional. The Court identified two principal
reasons for upholding the limit. First, the Court recognized
a strong governmental interest in deterring corruption and
the appearance of corruption in campaign finance,
particularly from large contributions. Id. at 28; see also id.
at 30 ("Congress was justified in concluding that the
15
interest in safeguarding against the appearance of
impropriety requires that the opportunity for abuse
inherent in the process of raising large monetary
contributions be eliminated."). Second, the Court concluded
that the $1,000 limit was narrowly tailored insofar as it still
permitted individual donors to register their political
preferences in a substantial way, reasoning that the
expressive value of the contribution lies in the act of
contributing rather than the amount given. See id. at 21.
Accordingly, Buckley seems to leave open the question
whether an outright ban on campaign contributions--such
as that found in S 441b(a)--would pass constitutional
muster.
The government and the FEC argue that, even if Buckley
left the door open for a constitutional challenge to an
outright ban, Federal Election Comm'n v. National Right to
Work Comm, 459 U.S. 197 (1982) (hereinafter NRWC),
slammed the door shut. In NRWC, the Supreme Court
addressed indirectly the issue of limiting direct corporate
contributions to candidates. There, the Court upheld
federal restrictions upon corporate solicitation of campaign
funds from individuals found in a subsection ofS 441b-
441b(b)(4)(c)--that prohibits nonstock corporations from
soliciting funds to be used for political purposes (through a
separate segregated fund) from people who are not
members of the corporation. See id. at 198 n.1, 205-11.
Subsection 441b(b)(4)(c) permits corporations to make
limited campaign contributions from separate segregated
funds solicited explicitly for that purpose. See id. at 201-02.
In upholding the statute, the Court suggested that
Congress could prohibit direct contributions by
corporations to candidates for public office, stating that
The first purpose of S 441b, the government states, is
to ensure that substantial aggregations of wealth
amassed by the special advantages which go with the
corporate form of organization should not be converted
into political "war chests" which could be used to incur
political debts from legislators who are aided by the
contributions. See United States v. United Automobile
Workers, 352 U.S. 567, 579, 77 S. Ct. 529, 535, 1
L. Ed. 2d 563 (1957). The second purpose of the
16
provisions, the government argues, is to protect the
individuals who have paid money into a corporation or
union for purposes other than the support of
candidates from having that money used to support
political candidates to whom they may be opposed. See
United States v. CIO, 335 U.S. 106, 113, 68 S. Ct. 1349,
1353, 92 L. Ed. 1849 (1948). We agree with the
government that these purposes are sufficient to justify
the regulation at issue.
Id. at 207-08. See also Fed. Election Comm'n v. Nat'l
Conservative PAC, 470 U.S. 480, 495 (1985) (stating that
NRWC upheld "the prohibition of corporate campaign
contributions to political candidates").
Although S 441b(a) was not directly at issue in NRWC,
the Eleventh and Sixth Circuits have read NRWC to uphold
the constitutionality of its ban on contributions from
corporate treasuries. See Kentucky Right to Life, Inc. v.
Terry, 108 F.3d 637, 645-46 (6th Cir. 1997); Athens Lumber
Co., Inc. v. FEC, 718 F.2d 363, 363 (11th Cir. 1983) (en
banc). There is some room for doubt as to whether the
Court can be said to have held squarely that the ban in
S 441b(a) is constitutional. NRWC stated that "We are also
convinced that the statutory prohibitions and exceptions
we have considered are sufficiently tailored to these
purposes to avoid undue restriction on the associational
interests asserted by respondent." Id. at 208 (emphasis
added). Moreover, the first purpose identified by the Court
--limiting the effect of the advantage flowing from the
corporate form--could be met by a limit on contributions
from corporate treasuries instead of a ban; and the second
purpose could perhaps be addressed in corporate charters
and state laws regulating corporations. Nevertheless, we
feel constrained to read NRWC, and the Court's statements
on NRWC in Nat'l Conservative PAC, as at least strong
suggestions that S 441b(a) is constitutional.
Austin v. Michigan Chamber of Commerce, 494 U.S. 652
(1990), which upheld a Michigan statute that prohibited
corporations from using corporate funds for independent
expenditures in support of or in opposition to candidates
for state office, also implies that the flat ban in S 441b(a) is
constitutional. The analysis proceeds from Buckley, which
17
distinguished independent expenditures from contributions:
"[A]lthough the Act's contribution and expenditure
limitations both implicate fundamental First Amendment
interests, its expenditure ceilings impose significantly more
severe restrictions on protected freedoms of political
expression and association than do its limitations on
financial contributions." Buckley, 424 U.S. at 23. Austin
upheld a ban on independent expenditures from the
corporate treasury because it found the ban sufficiently
narrowly tailored to the purpose of limiting the influence of
the unique state-conferred benefit of the corporate
structure, which allows corporations to amass large
treasuries. See Austin, 494 U.S. at 660-61. Because
Buckley treats limits on independent expenditures as more
severe than limits on contributions, Austin suggests that a
ban on contributions from the corporate treasury also
would be constitutional if sufficiently narrowly tailored to
achieve the goal.
Austin also counsels that the ban on contributions from
the corporate treasury here is sufficiently narrowly tailored
to the interest of limiting the influence of corporate
treasuries amassed under the state-conferred corporate
structure. Austin reasoned that the Michigan statute
prohibiting independent expenditures by corporations was
sufficiently narrowly tailored to its purpose because, by
permitting corporations to make independent political
expenditures from separate segregated funds, it avoided an
absolute ban on all forms of corporate political spending.
See 494 U.S. at 660-61. The FECA also permits such
indirect corporate political expenditures (via soft money),
and under the teachings of Austin would thus seem to be
sufficiently narrowly tailored to pass constitutional muster.
We are mindful that the flat ban on corporate
contributions has never been directly addressed by a
holding of the Supreme Court, and that this issue involves
important First Amendment values. Because of the strong
implication we draw from NRCW, Nat'l Conservative PAC,
and Austin, however, we feel compelled to reject Mariani's
facial challenge to S 441b(a). It will be for the Supreme
Court itself to decide otherwise.
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B. Section 441b(a) and Soft Money
The second challenge Mariani raises with respect to
S 441b(a) is that the development of issue advocacy and the
prevalence of soft money in campaigns for federal office has
so eroded the theoretical distinction between hard and soft
money that any justification for the ban on contributions
from corporate treasuries has been vitiated. Mariani argues
that under present conditions the ban cannot advance a
compelling state interest and therefore must be invalidated.
Significantly, Mariani does not complain thatS 441b(a)
itself fails to ban contributions from corporate treasuries.
Rather, he argues that under the FECA--as interpreted by
the Supreme Court and FEC regulations--it is possible for
corporations to accomplish through other means that
which they cannot accomplish through direct contributions
from corporate treasuries. Mariani contends that, by
funding soft money issue advocacy, contributors come so
close to accomplishing what they would accomplish by hard
money campaign contributions that the two are basically
indistinguishable in terms of the danger they pose of
corrupting the political process.
This contention amounts to an argument that S 441b(a)
does too little by way of banning corporate political
spending and is thereby fatally underinclusive. The
Supreme Court has made clear, however, that Congress
can act incrementally in this and other areas. See Buckley,
424 U.S. at 105 ("[A] statute is not invalid under the
constitution because it might have gone farther than it
did.") (citations omitted). As we have explained in a case
regarding solicitation of campaign funds by a candidate for
judicial office, the government may "take steps, albeit tiny
ones, that only partially solve a problem without totally
eradicating it." Stretton v. Disciplinary Bd. of the Supreme
Court of Penn., 944 F.2d 137, 146 (3d Cir. 1991).
The underinclusiveness analysis employed for First
Amendment questions does not change this principle. The
First Amendment requires that the rule chosen must"fit"
the asserted goals, City of Cincinnati v. Discovery Network,
Inc., 507 U.S. 410, 428 (1993), and it must also strike an
appropriate balance between achieving those goals and
protecting constitutional rights. Underinclusiveness
19
analysis serves to "ensure that the proffered state interest
actually underlies the law," Austin, 494 U.S. at 677
(Brennan, J., concurring). But a rule fails the test only if it
cannot "fairly be said to advance any genuinely substantial
governmental interest," Federal Communication Comm'n v.
League of Women Voters, 468 U.S. 364, 396 (1984),
because it provides only "ineffective or remote" support for
the asserted goals, id. (citing Central Hudson Gas & Elec.
Corp. v. Public Serv. Comm'n, 447 U.S. 557, 564 (1980)), or
"the most limited incremental" support, Bolger v. Youngs
Drug Prods. Corp., 463 U.S. 60, 73 (1983).
Thus, First Amendment underinclusiveness analysis
requires neither a perfect nor even the best available fit
between means and ends. See City of Renton v. Playtime
Theaters, Inc., 475 U.S. 41, 52-53 (1986) (zoning ordinance
regulating adult theaters was not constitutionally
underinclusive "in that it fail[ed] to regulate other kinds of
adult businesses . . . We simply have no basis on this
record for assuming that Renton will not, in the future,
amend its ordinance to include other kinds of adult
businesses."). See also Blount v. SEC, 61 F.3d 938, 946
(D.C. Cir. 1995) ("[A] regulation is not fatally underinclusive
simply because an alternative regulation, which would
restrict more or the speech of more people could be more
effective. The First Amendment does not require the
government to curtail as much speech as may conceivably
serve its goals.").
Applying this standard, section 441b(a) is not fatally
underinclusive. The regulation in Fed. Communications
Comm'n v. League of Women Voters, 468 U.S. at 397, which
banned editorial speech by station management, but not
editorial control over the content of programs and guests on
news programs, was struck down because it did "virtually
nothing" to prevent noncommercial stations from serving as
outlets for expression of narrow partisan views. In contrast,
S 441b(a) prevents corporations from donating hard money
entirely. The important theoretical differences between hard
and soft money, which include that a candidate cannot
directly control how to spend soft money, are intended to
avoid the corrupting influence of large contributors
supporting a particular candidate. The practical
20
distinctions between hard and soft money may have
diminished in the past decade with the rise of issue
advocacy, but not to such an extent that we can say that
there is no benefit from distinguishing between the two. If
hard and soft money were equivalent, it would be hard to
imagine why Mariani would have gone to the lengths he
allegedly went to in order to give hard money instead of
soft.
Mariani attempts to counter this analysis by citing to
United States v. Nat'l Treasury Employees Union, 513 U.S.
454 (1995):
[w]hen the Government defends a regulation on speech
as a means to . . . prevent anticipated harms, it must
do more than simply `posit the existence of the disease
sought to be cured.' . . . It must demonstrate that the
recited harms are real, not merely conjectural, and that
the regulation will in fact alleviate these harms in a
direct and material way.
Id. at 475 (quoting Turner Broadcasting System v. Fed.
Communications Comm'n, 512 U.S. 622, 664 (1994)). The
underinclusiveness analysis explicated above is not
inconsistent with National Treasury Employees Union.
Congress may regulate speech so long as it demonstrates
that the recited harms are real, and it may, consistent with
that principle, choose to regulate just some part of that
speech. The requirement that the regulation alleviate the
harm in a direct and material way is not a requirement that
it redress the harm completely. And in light of the broad
language in NRWC regarding the legitimacy of Congress's
purpose in enacting S 441b(a), it is simply too late in the
day to argue that Congress has failed to demonstrate that
the recited harms are real.
Congress might well have concluded that direct
contributions from corporate treasuries were more
important to regulate than expenditures or contributions
made through committees, because hard money can be
used by a candidate in more and different ways than soft
money. We note that no party to this case has argued that
there is no compelling government interest in banning
contributions from corporations. Indeed, Mariani's
21
argument that the rise of soft money fatally undermines the
purpose of S 441b(a) seems to depend on the assumption
that limiting corporate contributions--if done effectively--
would be constitutionally valid.
V. The Challenge to S 441f
Section 441f provides that "[n]o person shall make a
contribution in the name of another person or knowingly
permit his name to be used to effect such a contribution,
and no person shall knowingly accept a contribution made
by one person in the name of another person." 2 U.S.C.
S 441f. Mariani argues that the prohibition inS 441f on
contributions in the name of another to candidates for
federal elective office violates the First Amendment because
it fails to advance any compelling state interest and
because it is underinclusive since it only applies to
contributions of hard money (and can be circumvented by
donating soft money).
The Buckley Court accorded broad acceptance to the
FECA's reporting and disclosure requirements, explaining
that they impose "only a marginal restriction upon the
contributor's ability to engage in free communication."
Buckley v. Valeo, 424 U.S. 1, 21-22 (1976). Although
acknowledging the dangers of compelled disclosure of
political activity, the Court found that the governmental
interests in disclosure were of such magnitude that the
requirements passed the strict test established by NAACP v.
Alabama, 357 U.S. 449 (1958). The Court accepted as
compelling three purposes behind the disclosure
requirement: to provide the electorate with information as
to where political campaign money comes from and how it
is spent by the candidate in order to aid the voters in
evaluating those who seek federal office; to deter actual or
apparent corruption; and to gather the data necessary to
detect violations of the contribution limits. Buckley, 424
U.S. at 66-68.
Buckley carefully considered the danger posed by
compelled disclosure. It held that the state interests
promoted by the FECA's reporting and disclosure
requirements justified the indirect burden imposed on First
22
Amendment interests, and that the compelled disclosure
requirements were constitutional in the absence of a
"reasonable probability" that disclosures would subject
their contributors to "threats, harassment, or reprisals." Id.
at 74. Proscription of conduit contributions (with the
concomitant requirement that the true source of
contributions be disclosed) would seem to be at the very
core of the Court's analysis. In light of Buckley, we reject
Mariani's argument that S 441f fails to advance a
compelling state interest.
We also conclude that Congress's decision to limit the
disclosure requirement to contributions of hard money does
not make the requirement fatally underinclusive. Mariani's
argument that the disclosure requirement is fatally
underinclusive is similar to his argument that S 441b(a) has
been undermined by the rise of soft money. As with that
challenge, however, we conclude that Congress was free to
determine that disclosure of hard money donations was the
most important form of disclosure, and to limit the
regulation to that area.
VI. Conclusion
For the foregoing reasons, we reject Mariani's challenges
to SS 441b(a) and 441f. Judgment will be entered in favor of
the government.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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