Citizens for Responsibility & Ethics in Wash. v. Fed. Election Comm'n, Civil Action No.: 15–2038 (RC)

Citation236 F.Supp.3d 378
Decision Date22 February 2017
Docket NumberCivil Action No.: 15–2038 (RC)
Parties CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON, et al., Plaintiffs, v. FEDERAL ELECTION COMMISSION, Defendant.
CourtUnited States District Courts. United States District Court (Columbia)

Adam J. Rappaport, Stuart C. McPhail, Citizens for Responsibility and Ethics in Washington, Washington, DC, for Plaintiffs.

Gregory John Mueller, Harry Jacobs Summers, Kevin Deeley, Jacob Stephen Siler, Federal Election Commission, Office of General Counsel, Litigation Division, Washington, DC, for Defendant.

Re Document Nos.: 19, 20

MEMORANDUM OPINION

GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT; DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

RUDOLPH CONTRERAS, United States District Judge

I. INTRODUCTION

The parties agree that the Federal Election Commission had strong grounds to prosecute the Commission on Hope, Growth and Opportunity under the Federal Election Campaign Act, but declined to do so. The parties' main source of disagreement is the extent to which the FEC can decline to prosecute after receiving a citizen complaint. Citizens for Responsibility and Ethics in Washington contends that the FEC relied on improper legal grounds when it dismissed its complaint against the Commission on Hope, Growth and Opportunity. The FEC responds by noting that its dismissal was not primarily based on legal interpretations, but rather the agency's discretion in deciding which cases it wishes to pursue. Specifically, the commissioners who voted to dismiss Plaintiffs' complaint note that, by the time the FEC could have moved forward with prosecuting the case, the statute of limitations on the "obvious" violations had run, the other violations were not clear-cut from a legal perspective, and the group had dissolved and had no identifiable agents or assets. Because any further prosecution would have cost the FEC more than any benefit it calculated that it could derive, the FEC argues that its dismissal was within the scope of its prosecutorial discretion. Concluding that the FEC rationally dismissed Plaintiffs' complaint as an exercise of its prosecutorial discretion, the Court will grant summary judgment for Defendant.

II. STATUTORY AND REGULATORY BACKGROUND
A. The Federal Election Commission

The Federal Election Commission ("FEC") is a six-member, independent agency charged with administering the Federal Election Campaign Act ("FECA"). 52 U.S.C. § 30106(a) - (b). The FEC has the power to "administer, seek to obtain compliance with, and formulate policy with respect to" FECA, and has exclusive jurisdiction to civilly enforce FECA. Id. § 30106(b)(1). The votes of four commissioners are required for the FEC to pursue enforcement proceedings, civil actions, or even voluntary compliance with FECA. See id. §§ 30106(c), 30107(a)(6)(9). Third parties who believe that a violation of FECA has occurred may file a "citizen complaint" with the FEC. Id. § 30109(a)(1). After the FEC receives a citizen complaint and any response from the alleged violator, if it determines by a vote that it has "reason to believe" that a violation has occurred, FECA states that the FEC "shall ... notify the person of the alleged violation ... [and] shall make an investigation of such alleged violation." See id. § 30109(a)(2). At that point, the FEC's Office of General Counsel ("OGC") is charged with preparing a brief outlining OGC's position on the law and facts of the case. Id. § 30109(a)(3). OGC's brief, along with a reply brief from the respondent, are then considered by the FEC in a vote on whether probable cause exists to believe that a violation has occurred. Id. If the FEC determines that probable cause exists, it must attempt to informally and privately resolve the dispute. See id. §§ 30109(a)(4)(A)(i)(B)(i). If those attempts fail, the FEC may, by vote, determine whether to institute a civil action. Id. § 30109(a)(6)(A). A third party who is "aggrieved" by an FEC decision to dismiss a complaint may seek judicial review of the FEC decision. Id. § 30109(a)(8)(A). The statute of limitations for FECA actions is five years. See 28 U.S.C. § 2462.

B. The Federal Election Campaign Act

FECA was enacted to limit spending in federal campaigns and eliminate the perceived or actual influence that wealthy individuals can have over elections based on their capacity to bankroll campaigns. See Orloski v. FEC , 795 F.2d 156, 163 (D.C. Cir. 1986). Accordingly, FECA imposes several limitations on campaign contributions and expenditures, often based on the source of the contributions and expenditures. See generally 52 U.S.C. §§ 30101 – 30126. Several of those limitations are relevant here.

1. Political Committees

FECA requires noncandidate "political committees" to register with the FEC, keep records of the names and addresses of contributors, and periodically file reports identifying their contributors, among other requirements. See 52 U.S.C. §§ 30102 – 30105. Thus, whether a group is legally classified as a political committee has significant practical consequences. Under FECA, a political committee is "any committee, club, association, or other group of persons which receives contributions aggregating in excess of $1,000 during a calendar year or which makes expenditures aggregating in excess of $1,000 during a calendar year." Id. § 30101(4)(a). Although this definition appears broad at first glance, it is limited by FECA's definitions of "contributions" and "expenditures," which require an intent to "influenc[e] any election for Federal office." See id. §§ 30101(8)(A), 30101(9)(A). Out of concern for overbreadth of this definition, which could be construed to reach "groups engaged purely in issue discussion," the Supreme Court has limited this definition further, effectively restricting FECA's rules governing political committees to "organizations that are under the control of a candidate or the major purpose of which is the nomination or election of a candidate." Buckley v. Valeo , 424 U.S. 1, 79, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976). The FEC determines a group's "major purpose" on a case-by-case basis, taking into account the group's allocation of spending, public and private statements, and overall conduct. See 72 Fed. Reg. 5595, 5601 (Feb. 7, 2007) ; Shays v. FEC , 511 F.Supp.2d 19, 23, 30 (D.D.C. 2007).

2. Expenditure–Related Reporting Requirements

In addition to regulating political committees, FECA requires anyone who makes "independent expenditures" of more than $250 over the course of a calendar year to publicly disclose certain information by filing with the FEC. See 52 U.S.C. § 30104(c)(1). Among the information provided, the person making the independent expenditure must disclose the identity "of each person who made a contribution in excess of $200 to the person filing such report [if the] contribution was made for the purpose of furthering the reported independent expenditure."See 11 C.F.R. § 109.10(e)(vi). Like the definition of "political committee," whether an expenditure is an "independent expenditure" has significant implications. An "independent expenditure" is an expenditure made by a person "expressly advocating the election or defeat of a clearly identified candidate" that is not made in coordination with a candidate, party, or political committee. See 52 U.S.C. § 30101(17). "Clearly identified" means that the name or photograph of the candidate appears, or "the identity of the candidate is apparent by unambiguous reference." Id. § 30101(18). "Express advocacy" includes phrases like "vote for the President," "re-elect your Congressman," "support the Democratic nominee," and "Smith for Congress." See 11 C.F.R. § 100.22(a).

FECA also requires those engaged in certain "electioneering communications" to disclose the identities of major contributors. See 52 U.S.C. § 30104(f). An electioneering communication is a mass broadcast targeting a relevant electorate that refers to a clearly identified candidate for federal office and is made within 60 days of a general election or 30 days of a primary election. See 11 C.F.R. § 100.29(a). Such communications must include disclaimers with information like the person who paid for the communication and whether it is authorized by the candidate. See id. § 110.11.

III. FACTUAL BACKGROUND

Citizens for Responsibility and Ethics in Washington and its former executive director Melanie Sloan (collectively "CREW") take issue with the FEC's handling of a case involving the Commission for Hope, Growth and Opportunity ("CHGO"). Thus, this case involves both the substantive matter that was before the FEC and the FEC's handing of it. There are few factual disputes. The Court first outlines the formation and operation of CHGO, then moves to the FEC's investigation before detailing the FEC's ultimate decision to dismiss the case against CHGO.

A. CHGO

According to Michael Mihalke, the president of Meridian Strategies, LLC, Scott Reed, a political consultant, approached him about forming CHGO in early 2010. See Joint Appendix ("J.A.") 327, 332, ECF No. 25. Mr. Mihalke apparently recruited James Powell to be CEO and William Canfield to be CHGO's legal counsel. See J.A. 363–64. Although Mr. Powell was CEO in form, is his view he was only the "creative" person, responsible for the content of the advertisements that CHGO developed. See J.A. 365.

Mr. Canfield, in comparison, was quite active in the formation of CHGO. After helping to form CHGO, Mr. Canfield applied for its § 501(c)(4) tax exempt status from the IRS, and in doing so certified, under penalty of perjury, that CHGO was a "public welfare organization created to advance the principle that sustained and expanding economic growth is central to America's economic future." See J.A. 1548–49. Mr. Canfield further stated that the group would "engage economists and other business experts to inform its understanding of the necessity for sustained economic growth and [would] bring the fruits of this expertise and research directly to the attention...

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