Federal Election Commission v. Lance

• Decision Date: 15 January 1981
• Docket Number: No. 78-1859,78-1859
• Citation: 635 F.2d 1132
• Parties: FEDERAL ELECTION COMMISSION, Plaintiff-Appellee, v. T. Bertram LANCE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1132

635 F.2d 1132

FEDERAL ELECTION COMMISSION, Plaintiff-Appellee, v. T. Bertram LANCE, Defendant-Appellant.

No. 78-1859.

United States Court of Appeals, Fifth Circuit.

Jan. 15, 1981.

Trotter, Bondurant, Griffin, Miller & Hishon, Emmet J. Bondurant, Atlanta, Ga., Robert A. Altman, Washington, D. C., for defendant-appellant.

Charles N. Steele, Kathleen Imig Perkins, Carolyn U. Oliphant, Gen. Counsel, Federal Election Commission, Washington, D. C., for plaintiff-appellee.

James A. McPherson, New Orleans, La., Kenneth J. Guido, Jr., Ellen G. Block, Washington, D. C., for amicus curiae Common Cause.

Appeal from the United States District Court for the Northern District of Georgia.

Before COLEMAN, Chief Judge, BROWN, AINSWORTH, GODBOLD, CHARLES CLARK, RONEY, GEE, TJOFLAT, HILL, FAY, RUBIN, VANCE, KRAVITCH, FRANK M. JOHNSON, Jr., GARZA, HENDERSON, REAVLEY, POLITZ, HATCHETT, ANDERSON, RANDALL, TATE, SAM D. JOHNSON and THOMAS A. CLARK, Circuit Judges. ^*

TJOFLAT, Circuit Judge:

The Federal Election Commission (FEC or Commission) brought this action to enforce an administrative subpoena requiring T. Bertram Lance to appear for a deposition and to produce certain documents. The subpoena is incident to an enforcement investigation of possibly illegal loans, some in the form of overdrafts, made by two national banks to the Bert Lance for Governor Campaign of 1974. The Commission began the investigation after determining, pursuant to 2 U.S.C. § 437g(a)(2) (1976), that there was "reason to believe" the banks and the Bert Lance Campaign Committee had violated the Federal Corrupt Practices Act, 2 U.S.C. § 441b (1976) (FCPA or Act). ¹ Upon Lance's failure to appear for the deposition, the Commission petitioned the district court to enforce the subpoena. After a hearing, the district court ordered Lance to comply with the subpoena, and Lance appealed from that order.

A panel of this court held that the district court correctly had rejected the arguments that Lance had raised in the enforcement proceedings, but declined to order enforcement of the subpoena because it concluded that "there exists a serious question whether the Federal Corrupt Practices Act is constitutional." Federal Election Commission v. Lance, 617 F.2d 365, 367 (5th Cir. 1980). "If the FCPA is unconstitutional," the panel reasoned, "then the subpoena, issued in aid of an investigation intended to enforce the Act, must be invalid as well." Id. at 367. Nevertheless, the panel declined to resolve the constitutional issue, ruling that section 437h of the Federal Election Campaign Act of 1971, as amended (FECA), 2 U.S.C. §§ 431-455 (1976), requires that the question be decided by the en banc court. Id. at 374.

We conclude that the provisions of the Act that Lance has standing to challenge are not facially unconstitutional and that none of Lance's other objections to the subpoena have merit. Therefore, we affirm the district court's order enforcing the subpoena.

I

Lance ran for Governor of Georgia in 1974. The Bert Lance for Governor Campaign Committee had checking accounts with two banks, the Calhoun First National Bank (Calhoun Bank) and the National City Bank of Rome, Georgia (National City Bank). The campaign ended on August 12, 1974, when Lance lost in the Democratic primary election. In April, 1975, the Enforcement and Compliance Section of the Comptroller of the Currency of the United States began an investigation of the financial dealings between the campaign committee and the Calhoun Bank. In a report dated September 22, 1975, the Comptroller set out its findings that the Calhoun Bank had repeatedly permitted the campaign committee to overdraw its accounts to pay campaign expenses. The overdrafts were still being repaid, the report stated, as late as January 31, 1975, and the bank "was paid no interest for the use of its money ...." Record at 37. The report concluded that these transactions indicated possible violations of the Federal Corrupt Practices Act as well as of 18 U.S.C. § 656 (1976) (a statute concerning misapplication of bank funds) and 18 U.S.C. § 1005 (1976) (a statute prohibiting false bank record entries).

The Comptroller again scrutinized the financing of the 1974 Bert Lance for Governor Campaign in 1977 as a part of a comprehensive investigation of Lance's financial affairs. This second investigation concluded with a report, dated August 18, 1977, that further detailed the irregular extensions of credit by the Calhoun Bank to the campaign committee before, during, and after Lance's campaign. ²

In September and November, 1977, the Federal Election Commission, acting on the basis of the reports issued by the Comptroller of the Currency, record at 4, found reason to believe that the Bert Lance for Governor Campaign Committee, the Calhoun Bank, and the National City Bank had violated section 441b. The Commission asserts that the suspected violations relate to the two banks' extensions of credit to the Campaign Committee, including "overdrafts in 1974, repaid in 1975, loans made during the 1974 campaign, other extensions of credit made during 1974, and repaid in 1975, and loans made between 1975 and 1977 for the purpose of repaying outstanding campaign debts." Brief for the Commission, at 3.

After making the requisite finding of "reason to believe" that the Act had been violated, see § 437g(a)(2), the Commission began an enforcement investigation. On November 10, 1977, the Commission subpoenaed Lance, requiring him to produce documents and to appear for a deposition on December 2, 1977. Lance moved the Commission on November 22, 1977, to quash the subpoena; the Commission denied the motion on November 29, 1977. When Lance failed to appear for the scheduled deposition, the Commission petitioned the district court to enforce the subpoena.

The district court held a hearing on January 16, 1978, at which it considered briefs and affidavits filed by the parties. Lance raised the following arguments in the district court: (1) since section 441b is a criminal statute, the FEC's attempt to apply the statute to justify an investigation of events that occurred prior to its enactment violates the ex post facto and due process clauses of the Constitution; (2) the statute of limitations bars the investigation; (3) the FEC has no jurisdiction to investigate violations of section 610 (the predecessor of section 441b, see note 1 supra ) that occurred prior to 1975; and (4) since the FEC already has all the information that it might acquire by the subpoena, enforcement should be denied on grounds of burden and harassment. On February 9, 1978, the district court granted enforcement of the subpoena, reasoning that the subpoena was well within the Commission's "broad and inclusive" statutory authority to investigate violations of the FECA. Record at 82. Lance moved the court to reconsider its order, and that motion was denied on March 24, 1978.

On appeal, Lance raised again the four arguments that he had advanced in the district court. In addition, he argued that the subpoena should be quashed on the ground that section 441b was facially violative of the first amendment. After rejecting Lance's first four arguments, the panel determined that he could challenge the facial constitutionality of the Act on appeal even though he had not raised the issue in the district court proceedings:

The general rule is that, "in the absence of a miscarriage of justice, issues not raised or presented in the lower court will not be considered for the first time on appeal." Excavators and Erectors, Inc. v. Bullard Engineers, Inc., 489 F.2d 318, 320 (5th Cir. 1973). In Higginbotham v. Ford Motor Co., 540 F.2d 762, 768 n.10 (5th Cir. 1976), we explained, "the rationale for the rule requires its application if additional facts would have been developed in the trial court had the new theory been presented there; in that case judicial economy is served and prejudice is avoided by binding the parties to the facts presented and the theories argued below." Here, however, as in Higginbotham, the "new theory raises a purely legal question. No facts could have been developed to aid our resolution of the issue." Id. Also as in Higginbotham, the parties have filed post-oral argument briefs discussing the issue at the request of the court. See id. In the circumstances of the case, we agree with the Higginbotham court that "it would be unjust ... to refuse to consider the new argument." Id. See also Milhouse v. Levi, 548 F.2d 357, 363 (D.C.Cir.1976); United States v. Jones, 527 F.2d 817, 819 (D.C.Cir.1975).

Federal Election Commission v. Lance, 617 F.2d 365, 374 (5th Cir. 1980).

The panel went on to hold, however, that it lacked jurisdiction to resolve the constitutional question:

Nevertheless, there is an additional bar to this panel's considering Lance's first amendment argument. Section 437h(a) of the FECA provides: "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." Congress's obvious intent in enacting this section was to deprive district courts and panels of the circuit courts of appeals of jurisdiction to consider the constitutionality of the FECA. In our view, the outcome of the present appeal depends on the resolution of the question of the constitutionality of section 441b, which is, of course, part of the FECA. Therefore, we must submit this case to the en banc court for resolution of the first amendment issue.

Id. at 374.

II

Section 437h(a), the statutory provision under which the panel presented this case to the en banc court, is an extraordinary piece of legislation. Subsection (a) provides:

The Commission, the national committee of any political party, or any individual eligible to vote in any election for the office of President of the United States may institute such actions in the appropriate ...