NC Right to Life Inc v. Bartlett , 168 F.3d 705 ( 1999 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
NORTH CAROLINA RIGHT TO LIFE,
INCORPORATED; NORTH CAROLINA
RIGHT TO LIFE POLITICAL ACTION
COMMITTEE; BARBARA HOLT,
President of North Carolina Right to
Life, Incorporated,
Plaintiffs-Appellees,
v.
GARY O. BARTLETT, in his official
capacity as Executive Secretary-
Director of the State Board of
Elections of the State of North
Carolina; STEVE A. BALOG, in his
official capacity as District Attorney
for North Carolina Prosecutorial
No. 98-1636
District 15A, and as a representative
of the class of District Attorneys in
the State of North Carolina; MIKE
EASLEY, in his official capacity as
Attorney General for the State of
North Carolina; JUNE K.
YOUNGBLOOD, in her official capacity
as a Member of the State Board of
Elections; DOROTHY PRESSER, in her
official capacity as a Member of the
State Board of Elections; LARRY
LEAKE, in his official capacity as
Chairman of the State Board of
Elections; S. KATHERINE BURNETTE,
in her official capacity as Secretary
of the State Board of Elections;
FAIGER M. BLACKWELL, in his
official capacity as a Member of the
State Board of Elections,
Defendants-Appellants.
NORTH CAROLINA ALLIANCE FOR
DEMOCRACY; AMERICAN CIVIL
LIBERTIES UNION OF NORTH CAROLINA
LEGAL FOUNDATION, INCORPORATED,
Amici Curiae.
Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
Terrence W. Boyle, Chief District Judge.
(CA-96-835-5-BO-1)
Argued: October 27, 1998
Decided: February 17, 1999
Before WILKINSON, Chief Judge, and ERVIN and
WILKINS, Circuit Judges.
_________________________________________________________________
Affirmed in part and reversed in part by published opinion. Chief
Judge Wilkinson wrote the opinion, in which Judge Ervin and Judge
Wilkins joined.
_________________________________________________________________
COUNSEL
ARGUED: Susan Kelly Nichols, Special Deputy Attorney General,
NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North
Carolina, for Appellants. James Bopp, Jr., BOPP, COLESON &
BOSTROM, Terre Haute, Indiana, for Appellees. ON BRIEF:
Michael F. Easley, North Carolina Attorney General, James Peeler
2
Smith, Special Deputy Attorney General, Alexander McC. Peters,
Special Deputy Attorney General, NORTH CAROLINA DEPART-
MENT OF JUSTICE, Raleigh, North Carolina, for Appellants. John
K. Abegg, BOPP, COLESON & BOSTROM, Terre Haute, Indiana;
Paul Stam, Jr., STAM, FORDHAM & DANCHI, Apex, North Caro-
lina, for Appellees. James G. Exum, Jr., John J. Korzen, SMITH,
HELMS, MULLISS & MOORE, Greensboro, North Carolina; Marta
Nelson, Glenn Moramarco, Nancy Northup, Brennan Center for Jus-
tice, NEW YORK UNIVERSITY SCHOOL OF LAW, New York,
New York, for Amicus Curiae Alliance. Hugh Stevens, EVERETT,
GASKINS, HANCOCK & STEVENS, L.L.P., Raleigh, North Caro-
lina; Deborah K. Ross, AMERICAN CIVIL LIBERTIES UNION OF
NORTH CAROLINA, Raleigh, North Carolina, for Amicus Curiae
ACLU.
_________________________________________________________________
OPINION
WILKINSON, Chief Judge:
Appellees North Carolina Right to Life (NCRL), its political action
committee, and its president brought suit in federal district court chal-
lenging the constitutionality of several provisions of North Carolina
election and campaign finance law. The district court found for
NCRL on each of its claims. North Carolina Right to Life, Inc. v.
Bartlett, 3 F. Supp. 2d 675 (E.D.N.C. 1998). The State of North Caro-
lina appeals. For the reasons that follow, we affirm in part and reverse
in part.
I.
NCRL is a nonprofit corporation operating in the State of North
Carolina. NCRL has as a purpose the protection of human life. In fur-
therance of that purpose, it provides information to the public about
abortion and euthanasia. NCRL is not associated with any political
candidate, political party, or campaign committee. Nor is one of
NCRL's major purposes to nominate, elect, or defeat specific candi-
dates for public office or to pass or defeat ballot measures. In other
words, NCRL does not engage in "express advocacy" -- advocacy
3
"that in express terms [calls for] the election or defeat of a clearly
identified candidate for . . . office." Buckley v. Valeo, 424 U.S. 1, 44
(1976) (per curiam). Rather, NCRL engages in "issue advocacy" --
the discussion of issues of public concern, including candidates' posi-
tions on those issues -- by, among other means, distributing voter
guides to the general public. Thus, issue advocacy may influence an
election even though it does not expressly advocate the election or
defeat of a particular candidate or party. See Virginia Society for
Human Life, Inc. v. Caldwell, 152 F.3d 268, 270 (4th Cir. 1998).
NCRL created North Carolina Right to Life Political Action Com-
mittee (NCRLPAC) to engage in express advocacy consistent with
NCRL's views. NCRLPAC, therefore, does have as a primary pur-
pose supporting or opposing specific candidates and political parties.
Toward that end, NCRLPAC contributes money to the campaigns of
candidates with whom it agrees and makes "independent expendi-
tures" -- expenditures made independently of candidates that finance
an express call for their election or defeat -- to support them.
NCRL's president, Barbara Holt, oversees the operations of both
NCRL and NCRLPAC. Holt is also a registered lobbyist in the State
of North Carolina.
While preparing for North Carolina's 1996 general election, NCRL
became concerned that some of the activities in which it wished to
engage might violate North Carolina's election law. Specifically,
NCRL worried that it might be considered a "political committee"
under North Carolina law if it were to distribute its voter guide. N.C.
Gen. Stat. § 163-278.6(14). If NCRL were a political committee, it
would need to register as such, keep detailed accounts of its expendi-
tures and contributions, and regularly file organizational and financial
reports with the State. Id. §§ 163-278.7(b), .8, .9, .11. If NCRL failed
to satisfy these requirements, its officers would be subject to criminal
penalties. Id. §§ 163-278.27, .34.
In addition, NCRL was concerned that, by publishing its voter
guide, it might violate the provision prohibiting corporations from
making any contributions or expenditures for a "political purpose," id.
§§ 163-269, -278.19, which the statute defines as any attempt to "in-
fluence an election," id. § 163-278.6(16). Were the State to determine
that NCRL's voter guide was for a political purpose, NCRL's officers
4
would be similarly subject to criminal penalties. Id. §§ 163-269,
-278.19(c).
To determine whether it would violate these provisions by distrib-
uting a voter guide, NCRL twice wrote to Yvonne Southerland, Chief
Deputy Director of the State Board of Elections, to request her opin-
ion. Along with each letter, NCRL sent a sample voter guide. The
first sample guide inadvertently contained a one-page candidate
endorsement list -- i.e., express advocacy -- prepared by NCRL-
PAC. Southerland informed NCRL that the distribution of this voter
guide would violate the State's prohibition against corporate expendi-
tures for a political purpose. Southerland also stated more generally
that any expenditure for a political purpose would make NCRL a
political committee. Realizing that its first sample voter guide acci-
dentally contained NCRLPAC's express advocacy, NCRL sent a sec-
ond letter to Southerland and attached a voter guide without any
candidate endorsements. In this second letter, NCRL asked only
whether the distribution of this second guide would violate North Car-
olina's prohibition against corporate expenditures for a political pur-
pose. Southerland again answered affirmatively.
NCRL, NCRLPAC, and Holt then brought suit in federal district
court challenging several provisions of North Carolina's election law.
They named as defendants the members of the State Board of Elec-
tions, the State Attorney General, and the district attorney for the pro-
secutorial district in which Holt lives. First, NCRL challenged North
Carolina's definition of political committee on the ground that it
includes entities that engage in issue advocacy only. Id. § 163-
278.6(14). Second, it challenged the State's total ban on corporate
expenditures for a political purpose because it prohibits NCRL from
engaging in both issue advocacy and express advocacy. Id. §§ 163-
269, -278.6(16), -278.19. Third, NCRLPAC and Holt challenged the
provision prohibiting lobbyists, and the political committees that
employ them, from contributing to members and candidates for the
General Assembly and Council of State while the General Assembly
is in session. Id. § 163-278.13B(c). They also challenged the provi-
sion prohibiting members and candidates for the General Assembly
and Council of State from soliciting contributions from lobbyists and
the political committees that employ them. Id. § 163-278.13B(b).
Finally, NCRLPAC objected to North Carolina's requirement that all
5
political committees provide prospective donors with the name of the
candidate for whom the money will be used. Id. § 163-278.20(a). On
each of their claims, NCRL, NCRLPAC, and Holt sought declaratory
and injunctive relief.
With respect to North Carolina's definition of political committee,
the district court declared section 163-278.6(14) to be unconstitu-
tional because it defines as political committees those entities that
engage in issue advocacy as well as express advocacy. NCRL, 3 F.
Supp. 2d at 679-80. With regard to North Carolina's ban on corporate
contributions and expenditures, the district court declared it to be
unconstitutional because it prohibits all corporations, including non-
profits, from making expenditures for a political purpose. Id. at 681.
As to North Carolina's prohibition on lobbyists and the political com-
mittees that employ them contributing to candidates and incumbents
during the General Assembly session, the district court declared sec-
tion 163-278.13B unconstitutional as an undue burden on Holt's and
NCRLPAC's First Amendment rights. Id. at 682. Finally, with respect
to North Carolina's requirement that political committees alert donors
of the use to which their donation will be put, the district court
granted NCRLPAC a declaratory judgment that it need only alert pro-
spective donors of its name and need not tell them for whom the
money will be used. Id. at 677. North Carolina now appeals.
II.
The State argues initially that no case or controversy exists with
respect to several of the provisions NCRL and NCRLPAC challenge.
Initially, the State claims that, irrespective of the statute's plain lan-
guage, it interprets the definition of political committee in section
163-278.6(14) to allow NCRL to distribute a voter guide free of can-
didate endorsements, or to engage in other forms of issue advocacy,
without registering or filing the required reports. Indeed, the State
points out that in the twenty-five years since the statute's enactment,
it has never interpreted it to apply to groups engaging only in issue
advocacy. Consequently, NCRL proffers nothing more than a hypo-
thetical risk of prosecution under section 163-278.6(14).
We disagree. When a plaintiff faces a credible threat of prosecution
under a criminal statute he has standing to mount a pre-enforcement
6
challenge to that statute. See Doe v. Bolton, 410 U.S. 179, 188 (1973).
A non-moribund statute that "facially restrict[s] expressive activity by
the class to which the plaintiff belongs" presents such a credible
threat, and a case or controversy thus exists in the absence of compel-
ling evidence to the contrary. New Hampshire Right to Life PAC v.
Gardner, 99 F.3d 8, 15 (1st Cir. 1996). This presumption is particu-
larly appropriate when the presence of a statute tends to chill the exer-
cise of First Amendment rights. See Wilson v. Stocker, 819 F.2d 943,
946 (10th Cir. 1987).
Section 163-278.6(14) appears by its terms to apply to NCRL.
North Carolina law provides that any entity "the primary or incidental
purpose of which is to . . . influence or attempt to influence the result
of an election," N.C. Gen. Stat. § 163-278.6(14), must register and
file certain reports with the State, or its officers risk criminal prosecu-
tion. Since the record in this case demonstrates that NCRL has distrib-
uted voter guides -- which attempt to influence elections -- the
statute facially restricts "expressive activity by the class to which the
plaintiff belongs." Gardner, 99 F.3d at 15.
More importantly, NCRL has stated that it wants to distribute these
guides in the future, and would do so but for its fear that it would fall
within North Carolina's definition of political committee. To deter-
mine whether that fear was well-founded, NCRL wrote the State
Board of Elections. The State did not indicate that it would interpret
the statute to mean anything other than what its plain language would
suggest. As a result, NCRL refrained from disseminating its guide,
and its speech was chilled.
The State's litigation position -- that it does not interpret section
163-278.6(14) to encompass issue advocacy -- fails to alter our anal-
ysis in this case. The record does not indicate that the Board has pro-
mulgated a rule exempting from its definition of political committee
those entities that engage in issue advocacy only. See, e.g., Wisconsin
Right to Life, Inc. v. Paradise, 138 F.3d 1183, 1185 (7th Cir.), cert.
denied, 119 S. Ct. 172 (1998). Nor does the record indicate that the
local district attorneys have any intention of refraining from prosecut-
ing those who appear to violate the plain language of the statute. See
id.
7
NCRL is left, therefore, with nothing more than the State's promise
that NCRL's officers will face no criminal penalties if NCRL distrib-
utes its voter guide without registering as a political committee.
NCRL's First Amendment rights would exist only at the sufferance
of the State Board of Elections. It has no guarantee that the Board
might not tomorrow bring its interpretation more in line with the pro-
vision's plain language. Without such a guarantee, NCRL will suffer
from the reasonable fear that it can and will be prosecuted for failing
to register and file the necessary disclosures, and its constitutionally
protected speech will be chilled as a result.
This same analysis applies to the State's argument that no case or
controversy exists with respect to its prohibition on corporate contri-
butions and expenditures for a political purpose. See N.C. Gen. Stat.
§§ 163-269, -278.6(16), -278.19. As noted, section 163-278.6(16)
defines political purpose to include seeking to influence an election
-- language which certainly appears to cover NCRL's endorsement-
free voter guide. More importantly, in its response to NCRL's second
letter, the State indicated that it would consider NCRL's
endorsement-free guide to be for a political purpose and therefore
prohibited by sections 163-269 and 163-278.19. Again, the only thing
standing in the way of a criminal prosecution is the State's litigation
position that it will voluntarily refrain from enforcing the statute
according to its plain language.
Finally, the State claims that no case or controversy exists with
regard to section 163-278.20(a). Section 163-278.20(a), in relevant
part, requires "any group" or "committee" soliciting contributions to
advise those solicited of either the name of the candidate for whom
the funds will be used, id. § 163-278.20(a)(1), the name of the politi-
cal committee or party for which they will be used, id. § 163-
278.20(a)(2), or that a decision will be reached as to the candidate,
committee, or party to be supported at some later date no later than
twenty days prior to the upcoming primary or general election, id.
§ 163-278.20(a)(3). Section 163-278.20(b) provides that a violation of
this provision is a criminal offense.
The State argues that only section 163-278.20(a)(2) applies to
NCRLPAC, and that it interprets that section to require political com-
mittees such as NCRLPAC to do nothing more than identify them-
8
selves when they solicit funding. In a prior interpretive letter,
however, the State informed another political committee that it must
comply with each subsection of 163-278.20(a) -- not just (a)(2). Con-
sequently, as was true with respect to NCRL above, NCRLPAC is
protected from possible prosecution by nothing more than the State's
post-suit position that the section does not apply as its plain language
would suggest.
In sum, this case presents a statute aimed directly at plaintiffs who
"will have to take significant . . . compliance measures or risk crimi-
nal prosecution." Virginia v. American Booksellers Ass'n, Inc., 484
U.S. 383, 392 (1988). In such a circumstance, courts have long recog-
nized that the statute's mere existence risks chilling First Amendment
rights. Indeed, in this case, NCRL has discontinued distributing its
voter guide and NCRLPAC has stopped soliciting without providing
a disclaimer because of a credible threat of prosecution. Conse-
quently, a case or controversy inheres in each provision.1
_________________________________________________________________
1 The State also argues that we should abstain from ruling on appellees'
claims concerning sections 163-269, 163-278.6(14), and 163-278.19
because no state court has construed these provisions and such a con-
struction may either render unnecessary this court's constitutional deter-
mination or substantially alter the questions before us. Railroad Comm'n
v. Pullman Co., 312 U.S. 496 (1941). Recognizing that North Carolina
has no procedure by which we may certify these questions to its Supreme
Court, the State suggests that we solicit the State Board of Elections for
its interpretation of these provisions under section 163-278.23. N.C. Gen.
Stat. § 163-278.23. Quite apart from the problem of applying Pullman
abstention to the unauthoritative declarations of a state administrative
body, section 163-278.23 provides no mechanism for a federal court to
certify a question to the Board. And in all events, courts "have been par-
ticularly reluctant to abstain in cases involving facial challenges based on
the First Amendment," City of Houston v. Hill , 482 U.S. 451, 467 (1987),
because the delay involved "might itself effect the impermissible chilling
of the very constitutional right [the litigant] seeks to protect," Zwickler
v. Koota, 389 U.S. 241, 252 (1967). Consequently, abstention in this case
is inappropriate.
9
III.
We next proceed to the merits of NCRL, NCRLPAC, and Holt's
constitutional challenges. Section 163-278.6(14) defines political
committee as "a combination of two or more individuals, or any per-
son, committee, association, or organization, the primary or incidental
purpose of which is to support or oppose any candidate or political
party or to influence or attempt to influence the result of an election."
N.C. Gen. Stat. § 163-278.6(14). The consequences of finding NCRL
a political committee are substantial -- NCRL would be required to
register as such, keep detailed records of its expenditures and contri-
butions, and file organizational and financial reports with the State.
Id. §§ 163-278.7(b), .8, .9, .11.
The district court found section 163-278.6(14)'s definition of polit-
ical committee to be impermissibly broad because it includes groups
such as NCRL that engage in issue advocacy only. NCRL, 3 F. Supp.
2d at 679-80. The State appeals, claiming that the district court should
have narrowly construed North Carolina's definition of political com-
mittee so as not to include groups that only engage in issue advocacy.
Specifically, the State requests that we follow the path of the
Supreme Court which in Buckley v. Valeo narrowly construed a simi-
lar provision. In Buckley, the Supreme Court addressed a provision
that required any entity falling within the Federal Election Campaign
Act's (FECA) definition of "political committee" to make certain dis-
closures to the federal government. FECA defined a political commit-
tee as any entity making contributions or expenditures above a certain
amount "for the purpose of . . . influencing" the nomination or elec-
tion of individuals to federal office. Buckley , 424 U.S. at 63. The
Court held that, without a narrowing construction, the general require-
ment that political committees "disclose their expenditures could raise
. . . vagueness problems, for `political committee' is defined [in such
a way that it] could be interpreted to reach groups engaged purely in
issue discussion." Id. at 79.
To save the provision from being unconstitutionally vague, the
Court defined political committee as including only those entities that
have as a major purpose engaging in express advocacy in support of
a candidate, id., by using words such as"vote for," "elect," "support,"
10
"vote against," "defeat," or "reject," id. at 44 n.52. Otherwise, "absent
the bright-line limitation, the distinction between issue discussion (in
the context of electoral politics) and candidate advocacy would be
sufficiently indistinct that the right of citizens to engage in the vigor-
ous discussion of issues of public interest without fear of official
reprisal would be intolerably chilled." FEC v. Christian Action
Network, 110 F.3d 1049, 1051 (4th Cir. 1997) (emphasis omitted).
The question then is whether we may similarly construe North Car-
olina's definition of political committee to save it from being void for
vagueness. We cannot. Two crucial differences exist between section
163-278.6(14) and the provisions of FECA at issue in Buckley. First,
unlike the provisions of FECA, North Carolina's definition expressly
sweeps within its ambit those groups that only incidentally engage in
express advocacy. This is a much broader definition of political com-
mittee than that at issue in Buckley, and to save it would require quite
a stretch -- in fact, we would have to excise the word "incidental"
from the statute.
Second, the North Carolina definition of political committee covers
groups engaging in issue advocacy by explicitly juxtaposing express
and issue advocacy, and thereby indicating that it encompasses both.
Specifically, the definition covers any group "the primary or inciden-
tal purpose of which is to support or oppose any candidate . . . or to
influence or attempt to influence the result of an election." N.C. Gen.
Stat. § 163-278.6(14) (emphasis added). The only reasonable reading
of this definition is that political committee encompasses both entities
that have as a primary or incidental purpose supporting a candidate
-- i.e., engaging in express advocacy -- and those that merely wish
to influence an election -- i.e., engage in issue advocacy. To accept
the State's proffered interpretation would read the references to influ-
encing elections (a classic form of issue advocacy) right out of the
statute.
Without the benefit of a narrowing construction, section 163-
278.6(14) is unconstitutionally vague and overbroad. See Buckley,
424 U.S. at 79-80. The statute subjects groups engaged in only issue
advocacy to an intrusive set of reporting requirements. In so doing,
it "blankets with uncertainty" the entire field of campaign politics
"compel[ling] the speaker to hedge and trim." Thomas v. Collins, 323
11
U.S. 516, 535 (1945). Burdening speech of this sort is unacceptable
in an area of such crucial import to our representative democracy. The
district court was correct in finding section 163-278.6(14) facially
unconstitutional, and we affirm its judgment.
IV.
North Carolina prohibits corporate expenditures or contributions
for a political purpose. N.C. Gen. Stat. §§ 163-269, -278.6(16),
-278.19. Sections 163-269 and 163-278.19 prohibit corporations from
making "any contribution or expenditure . . . for any political purpose
whatsoever." Section 163-278.6(16) defines "political purpose" in rel-
evant part as "any purpose in aid of seeking to influence an election."
Because North Carolina's ban on corporate expenditures makes no
exception for nonprofit corporations, the district court declared sec-
tions 163-269, 163-278.6(16), and 163-278.19 to be unconstitution-
ally overbroad. NCRL, 3 F. Supp. 2d at 681. The State appeals.
The Supreme Court has recognized that, in the realm of campaign
politics, "the special characteristics of the corporate structure require
particularly careful regulation." FEC v. National Right to Work
Comm., 459 U.S. 197, 209-10 (1982). The economic advantages of
the corporate form such as "limited liability, perpetual life, and favor-
able treatment of the accumulation and distribution of assets" all
enhance a corporation's ability "to attract capital and to deploy . . .
resources." Austin v. Michigan Chamber of Commerce, 494 U.S. 652,
658-59 (1990). These advantages enable corporations to create enor-
mous "war chests" and "to incur political debts from legislators who
are aided by [their] contributions" and expenditures. National Right
to Work Comm., 459 U.S. at 207. The danger, of course, is that there
is no guarantee that any relationship exists between the amount of
corporate expenditures in favor of a position and the popularity of that
position with the public at large. FEC v. Massachusetts Citizens for
Life, 479 U.S. 238, 258 (1986) [hereinafter MCFL]. Recognizing this,
the Supreme Court has, in some circumstances, upheld complete pro-
hibitions on both corporate political contributions, National Right to
Work Comm., 459 U.S. 197, and independent expenditures, Austin,
494 U.S. 652.
Nevertheless, the Court has been careful to note that "[r]egulation
of corporate political activity . . . has reflected concern not about use
12
of the corporate form per se, but about the potential for unfair deploy-
ment of wealth for political purposes." MCFL , 479 U.S. at 259. More-
over, such a concern is not omnipresent. For instance, in MCFL, the
Court considered a prohibition on corporate expenditures in connec-
tion with federal elections. MCFL, like NCRL, was a nonprofit corpo-
ration founded for the purpose of fostering respect for human life by
opposing abortion. MCFL did not accept contributions from for-profit
corporations. MCFL, 479 U.S. at 242.
After reiterating its general concern with the distorting effect of the
corporate form in politics, the Court held that its analysis with respect
to corporate expenditures must be more nuanced. Specifically, it held
that MCFL was sufficiently distinct from the traditional for-profit cor-
poration. First, MCFL could not engage in for-profit activity, and it
was created simply to disseminate political ideas. Second, it had no
shareholders or other persons who held a claim on its assets or earn-
ings. Finally, it was not established by a business or a labor union,
and it had a policy of refusing to accept contributions from either type
of entity. Such organizations, the Court held, do not pose the same
dangers to the political system since they are organized to promote a
political message and their revenues typically reflect the public's sup-
port of that message. Id. at 264.
Like the federal election law in MCFL, North Carolina's law
makes no exception for nonprofits that present a minimal risk of dis-
torting the political process. Rather, it bars all corporations from mak-
ing any expenditures and contributions for a political purpose. As
such, it is substantially overbroad and thus unconstitutional.
The State, in an apparent last-ditch effort to save its statute, argues
that NCRL is ineligible for the MCFL exception because, unlike
MCFL, NCRL has no policy against accepting contributions from for-
profit corporations. Indeed, from 1993 to 1995, NCRL's contributions
from such entities fluctuated from zero to eight percent of its overall
revenues.
We do not think this modest percentage of revenue disqualifies
NCRL for the nonprofit exemption to North Carolina's ban on corpo-
rate expenditures. We agree with those circuits that have addressed
the question, each of which has held that the list of nonprofit corpo-
13
rate characteristics in MCFL was not "a constitutional test for when
a nonprofit corporation must be exempt," but"an application, in three
parts, of First Amendment jurisprudence to the facts in MCFL." Day
v. Holahan, 34 F.3d 1356, 1363 (8th Cir. 1994); see also FEC v. Sur-
vival Educ. Fund, Inc., 65 F.3d 285, 292 (2d Cir. 1995). The crucial
question is not whether NCRL has a policy against accepting corpo-
rate contributions, but whether its acceptance of those contributions
means that it is serving as a conduit "for the type of direct spending
[by for-profit corporations] that creates a threat to the political mar-
ketplace." MCFL, 479 U.S. at 264.
Such is clearly not the case with respect to NCRL. Those corporate
contributions it has received are but a fraction of its overall revenues.
In addition, the contributions are not of the traditional form. They are
instead part of a program by which phone company customers may
direct their phone bill refunds to a nonprofit of their choice. Conse-
quently, while these contributions technically come from the phone
company, they in fact result from the decisions of individual phone
company customers. Moreover, NCRL displays all the typical charac-
teristics of the nonprofit form -- it does not engage in profit-making
activity, it has no shareholders or other persons who might have a
claim on its assets and earnings, and it is exempt from federal income
taxation. As a result, NCRL falls squarely within the MCFL excep-
tion. And because North Carolina law fails "to distinguish between
corporations which pose a threat to the integrity of the political pro-
cess and those which do not," we agree with the district court that sec-
tions 163-269, 163-278.6(16), and 163-278.19 are unconstitutionally
overbroad. NCRL, 3 F. Supp. 2d at 680.
V.
Section 163-278.13B prohibits a lobbyist, a lobbyist's agent, or a
political committee that employs a lobbyist from contributing to a
member of or candidate for the North Carolina General Assembly or
Council of State while the General Assembly is in session. N.C. Gen.
Stat. § 163-278.13B(c). It also prohibits candidates or incumbents
from soliciting lobbyists or political committees that employ them
during the session. Id. § 163-278.13B(b). Violation of these restric-
tions carries a criminal penalty. Id. § 163-278.13B(e). The record
indicates that the General Assembly was in session for one to two
14
months for most of the years from 1975 to 1997 in which an election
was held. In 1998 it apparently extended its session, and in nonelec-
tion years it routinely meets for a longer period of time. When the
General Assembly is not in session, lobbyists and political commit-
tees may contribute up to $4,000 per election to any candidate. Id.
§ 163-278.13(a).
Holt and NCRLPAC challenged North Carolina's prohibition on
lobbyist and PAC contributions to members and candidates for the
General Assembly while it is in session. They also challenged North
Carolina's solicitation restriction.2 The district court struck section
163-278.13B as violating the First Amendment. NCRL, 3 F. Supp. 2d
at 682. We hold, however, that North Carolina can constitutionally
enact the limited restrictions on lobbyist and political committee con-
tributions embodied in sections 163-278.13B(b) and (c).
A.
Initially, appellees argue that section 163-278.13B impermissibly
burdens their First Amendment rights of speech and association.
Appellees are correct that political contribution limits do implicate
one's speech and association rights. See Buckley , 424 U.S. at 14-15,
24-25. As such, courts have applied strict scrutiny to such limits. See,
e.g., Carver v. Nixon, 72 F.3d 633, 637 (8th Cir. 1995). Nevertheless,
it is settled that "[n]either the right to associate nor the right to partici-
pate in political activities is absolute." CSC v. National Ass'n of Letter
Carriers, 413 U.S. 548, 567 (1973). In fact, the activities of lobbyists
are extensively regulated. See, e.g., Lobbying Disclosure Act of 1995,
2 U.S.C. §§ 1601-1612 (requiring lobbyists to make detailed disclo-
sures related to their lobbying efforts).
Moreover, the Supreme Court has long noted that restrictions on
political contributions are constitutionally less problematic than are,
_________________________________________________________________
2 We cannot accept the State's argument that appellees have no stand-
ing to challenge North Carolina's solicitation restriction because they are
not members of or candidates for the General Assembly or Council of
State. North Carolina's solicitation restriction is inextricably intertwined
with its contribution limitation. Indeed, the two are the mirror reflection
of one another.
15
for instance, restrictions on independent expenditures. See Buckley,
424 U.S. at 20-21. This lesser concern springs from the fact that con-
tribution limits typically "entail[ ] only a marginal restriction upon the
contributor's ability to engage in free communication." Id. Such is the
case here. North Carolina's restrictions do nothing more than place a
temporary hold on appellees' ability to contribute during the General
Assembly session, leaving them free to contribute during the rest of
the calendar year and to engage in political speech for the entire year.
North Carolina's contribution and solicitation restrictions also sur-
vive strict scrutiny because they advance a compelling state interest.
Prohibiting lobbyist contributions and solicitations while the General
Assembly is in session serves to prevent corruption and the appear-
ance of corruption -- "the only legitimate and compelling govern-
ment interests thus far identified for restricting campaign finances."
FEC v. National Conservative PAC, 470 U.S. 480, 496-97 (1985); see
also Buckley v. American Constitutional Law Found., Inc., 119 S. Ct.
636, 648 (1999)(noting the risk of quid pro quo corruption "when
money is paid to, or for, candidates"). Legislative action which is pro-
cured directly through gifts, or even campaign contributions, too often
fails to reflect what is in the public interest, what enjoys public sup-
port, or what represents a legislator's own conscientious assessment
of the merits of a proposal.
Appellees respond that the compelling interest the Court identified
in Buckley was not the prevention of corruption or its appearance gen-
erally, but the prevention of only that corruption or appearance of cor-
ruption that results from large contributions by individuals. Holt and
NCRLPAC, however, define the interest too narrowly. Corruption,
either petty or massive, is a compelling state interest because it dis-
torts both the concept of popular sovereignty and the theory of repre-
sentative government.
In evaluating the state interest in this case, we find a genuine risk
of both actual corruption and the appearance of corruption. With
respect to actual corruption, lobbyists are paid to effectuate particular
political outcomes. The pressure on them to perform mounts as legis-
lation winds its way through the system. If lobbyists are free to con-
tribute to legislators while pet projects sit before them, the temptation
16
to exchange "dollars for political favors" can be powerful. National
Conservative PAC, 470 U.S. at 497.
Illicit bargaining of this type is not limited to the old days when
trusts shopped state legislatures like children in a candy store. More
recent cases of improper activity, unfortunately, also exist. Indeed,
courts have recognized instances of influence peddling, Maryland
Right to Life State PAC v. Weathersbee, 975 F. Supp. 791, 797 (D.
Md. 1997), political quid pro quos, United States v. Nelson, 486 F.
Supp. 464, 468 (W.D. Mich. 1980), and other improper behavior on
the part of legislators, United States v. Bailey , 990 F.2d 119, 121 (4th
Cir. 1993) (detailing personal cash payments for support of pari-
mutuel betting legislation); Kentucky Right to Life, Inc. v. Terry, 108
F.3d 637, 639 (6th Cir.) ("Numerous Kentucky public officials have
been convicted of abusing their political offices for personal gain over
the past twenty-five years."), cert. denied , 118 S. Ct. 162 (1997).
While lobbyists do much to inform the legislative process, and their
participation is in the main both constructive and honest, there remain
powerful hydraulic pressures at play which can cause both legislators
and lobbyists to cross the line. State governments need not await the
onset of scandal before taking action.
The appearance of corruption resulting from PAC and lobbyist
contributions during the legislative session can also be corrosive.
Even if lobbyists have no intention of directly"purchasing" favorable
treatment, appearances may be otherwise. The First Amendment does
not prevent states such as North Carolina from recognizing these dan-
gers and taking reasonable steps to ensure that the appearance of cor-
ruption does not undermine public confidence in the integrity of
representative democracy. See Buckley, 424 U.S. 26-27.
Toward these ends, North Carolina enacted narrowly tailored
restrictions. First, the restrictions in section 163-278.13B are limited
to lobbyists and the political committees that employ them -- the two
most ubiquitous and powerful players in the political arena. Second,
the restrictions are temporally limited: they last only during the legis-
lative session, which typically, though not invariably, has covered just
a few months in an election year. In short, the restrictions cover only
that period during which the risk of an actual quid pro quo or the
appearance of one runs highest.
17
Holt and NCRLPAC counter that the limitations are not narrowly
tailored for two reasons. First, they maintain that the restrictions cover
any contribution, not just those large enough to support a potential
quid pro quo. But a "court has no scalpel to probe" such fine distinc-
tions. Buckley, 424 U.S. at 30 (internal quotation marks omitted). And
even were we able to distinguish those dollar amounts that are suffi-
cient to support actual purchases of political favors from those that
are not, the appearance of corruption may persist whenever a favor-
able legislative outcome follows closely on the heels of a financial
contribution. Courts simply are not in the position to "second-guess
a legislative determination as to the need for prophylactic measures
where corruption is the evil feared." National Right to Work Comm.,
459 U.S. at 210.
Second, Holt and NCRLPAC claim the restrictions are not nar-
rowly tailored because they prevent candidates for office from receiv-
ing contributions even though candidates are in no position to sell
legislative outcomes. Appellees' argument might be persuasive were
contributions to incumbents the only way to gain favorable treatment.
But sticks can work as well as carrots, and the threat of contributing
to a legislator's challenger can supply as powerful an incentive as
contributing to that legislator himself.
Finally, appellees argue that North Carolina's restrictions are con-
stitutionally infirm because they allegedly make fundraising a more
difficult proposition for challengers than it is for incumbents. The
restrictions work a particular disadvantage upon challengers, so the
argument runs, because they effectively deprive them of a major
funding source in the critical months leading up to an election or pri-
mary. Incumbents, by contrast, would allegedly benefit from a huge
infusion of contributions shortly after the General Assembly session
ends.
This precise argument was squarely rejected by the Supreme Court
in Buckley. In Buckley, the Court faced a provision of FECA that lim-
ited to $1000 the contribution any one person could make to any can-
didate with respect to a federal election. 424 U.S. at 23-24. The
plaintiffs in Buckley argued that the FECA limitation was unconstitu-
tional because it allegedly made fundraising more difficult for chal-
lengers vis a vis incumbents. Id. at 30-31. In rejecting plaintiffs'
18
claim, the Court found important the fact that FECA, like North Caro-
lina's restriction, "applies the same limitations on contributions to all
candidates" -- incumbents and challengers alike. Id. at 31. Indeed,
the Court emphasized that "[s]ince the danger of corruption and the
appearance of corruption apply with equal force to challengers and to
incumbents, Congress had ample justification for imposing the same
fundraising constraints upon both." Id. at 33 (emphasis added). In
addition, the Court took issue with the plaintiffs' claim that fundrais-
ing is necessarily more difficult for challengers. It noted that "major-
party challengers as well as incumbents are capable of raising large
sums for campaigning" and that "a small but nonetheless significant
number of challengers have in recent elections outspent their incum-
bent rivals." Id. at 32. Finally, as a practical matter, the Court's view
was informed by the realization that if challengers and incumbents
were required to play by different sets of campaign finance rules, few
reforms would be likely to win legislative enactment.
B.
Appellees also claim that section 163-278.13B violates the Four-
teenth Amendment because it treats lobbyists and political commit-
tees differently than it does the general population with respect to
their fundamental right to associate. As the preceding section notes,
however, the State has advanced strong reasons for doing so -- rea-
sons that the Supreme Court has in fact expressly validated. National
Conservative PAC, 470 U.S. at 496-97.
C.
Appellees' last challenge to section 163-278.13B is equally
unavailing. Holt and NCRLPAC argue that the provision impermiss-
ibly forces lobbyists to forego their constitutional right to petition the
government for a redress of grievances if, during the General Assem-
bly session, they wish to exercise their First Amendment right to asso-
ciate by contributing to candidates and incumbents. They argue that
such a system creates an "intolerable [situation in which] one consti-
tutional right [must] be surrendered in order to assert another."
Simmons v. United States, 390 U.S. 377, 394 (1968).
As an initial matter, it is instructive to note that Holt's position is
in many respects similar to that of federal employees. Under the
19
Hatch Act, one must forego certain rights to participate in the political
process if one wishes to take federal employment. Despite the obvi-
ous trade-off such a scheme forces prospective federal employees to
make, the Supreme Court has upheld the Hatch Act's restrictions as
constitutional. Letter Carriers, 413 U.S. 548.
More generally, "[n]either the right to associate nor the right to par-
ticipate in political activities is absolute." Letter Carriers, 413 U.S.
at 567. When the interests sought to be advanced by the statutory
scheme are sufficiently important, minimal burdens on one's right to
associate are constitutional. Id. at 564-65. Not only are the interests
served by North Carolina's statutory scheme important, they are com-
pelling. Moreover, the burden on appellees' right to associate is mini-
mal. Appellees are not prevented from contributing to the candidates
and incumbents of their choice, they are only restrained from doing
so while the Assembly is in session.
In conclusion, this effort on the part of a state legislature to protect
itself from the damaging effects of corruption should not lightly be
thwarted by the courts. Here, the proper judicial posture should be
one of restraint. The Constitution does not prevent this attempt on the
part of North Carolina to preserve the integrity of and maintain public
confidence in its legislative process. In the end, North Carolina law
does nothing more than recognize that lobbyists are paid to persuade
legislators, not to purchase them.
VI.
The following represents a summation of our holdings. We hold
North Carolina's definition of political committee in section 163-
278.6(14) to be unconstitutionally vague and overbroad, and we
affirm the judgment of the district court. North Carolina's prohibition
on corporate expenditures and contributions in sections 163-269, 163-
278.6(16), and 163-278.19 is substantially overbroad, and we again
affirm the district court. Finally, the State's contribution and solicita-
tion limitations set forth in section 163-278.13B are constitutional,
and we thus reverse the district court.3
_________________________________________________________________
3 Before the trial court, NCRLPAC also challenged North Carolina's
requirement that political committees provide donors with the name of
20
Each of the provisions we strike works in its own way to impede
the free and open discussion of issues and candidates that sustains our
ability as citizens to control our own destiny. The one provision we
do uphold is a reasonable measure to ensure that this free and open
debate does not go for naught.
The judgment of the district court is hereby
AFFIRMED IN PART AND REVERSED IN PART.
_________________________________________________________________
the candidate for whom their contribution would be used. N.C. Gen. Stat.
§ 163-278.20(a). The district court granted NCRLPAC a declaratory
judgment that section 163-278.20(a) requires it merely to provide pro-
spective donors with its own name. NCRL, 3 F. Supp. 2d at 677. On
appeal, the State challenges only the presence of a case or controversy
-- it offers no objection to the merits of the district court's decision. As
noted, a case or controversy does exist with regard to this section. We
agree with the district court that NCRLPAC cannot be required to iden-
tify to potential contributors the names of specific candidates or parties
for whom the contributions will be used.
21