Campaign Legal Ctr. v. Fed. Election Comm'n

• Decision Date: 04 June 2020
• Docket Number: Civil Action No. 19-2336 (JEB)
• Citation: 466 F.Supp.3d 141
• Parties: CAMPAIGN LEGAL CENTER, et al., Plaintiffs, v. FEDERAL ELECTION COMMISSION, Defendant, and Hillary for America, et al., Defendant-Intervenors.
• Court: U.S. District Court — District of Columbia

466 F.Supp.3d 141

CAMPAIGN LEGAL CENTER, et al., Plaintiffs,

v. FEDERAL ELECTION COMMISSION, Defendant,andHillary for America, et al., Defendant-Intervenors.

Civil Action No. 19-2336 (JEB)

United States District Court, District of Columbia.

Signed June 4, 2020

Megan P. McAllen, Paul March Smith, Tara Malloy, Campaign Legal Center, Washington, DC, for Plaintiffs.

Aria C. Branch, Marc Erik Elias, Perkins Coie LLP, Washington, DC, for Defendant-Intervenors.

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge

As the country turns its attention to the upcoming 2020 presidential election, embers from the 2016 campaign continue to smolder. Although most media attention remains focused on Russian interference and missing emails, Plaintiff Campaign Legal Center has a separate bone to pick. In October 2016, it filed an administrative complaint with Defendant Federal Election Commission, alleging that Hillary Clinton's campaign committee and a super PAC worked together to violate federal election law by failing to report almost $6 million in service-related (or "in-kind") contributions. While the FEC's Office of General Counsel found reason to believe the allegations, the Commission had only four of its six statutory members and ended up deadlocking 2-2, which resulted in the dismissal of the complaint.

CLC now challenges that dismissal in this Court, but the FEC, hobbled by its empty seats, could not even garner the votes needed to defend the suit. Into the breach stepped Defendant-Intervenors Hillary for America and Correct the Record, the subjects of the administrative complaint. HFA and CTR now move to dismiss the Amended Complaint, arguing that CLC lacks standing or, in the alternative, has not stated a claim upon which relief could be granted. Disagreeing on both points, the Court will deny the Motion.

I. Background

The Court begins by laying out the relevant statutory framework before recounting the factual and procedural history of this case.

A. Statutory Scheme

The Federal Election Campaign Act was passed in 1971 with the aim of "remedy[ing] any actual or perceived corruption of the political process." FEC v. Akins, 524 U.S. 11, 14, 118 S.Ct. 1777, 141 L.Ed.2d 10 (1998). In service of that goal, the Act sets forth two groups of rules: the first limits the amount and source of money that can be contributed to campaigns for federal office, and the second requires those campaigns to report their contributions and expenditures. See id.; see also 52 U.S.C. § 30101(8)(A) (defining "contribution" to include both "(i) any gift, subscription, loan, advance, or deposit of money or anything of value [given] by any person for the purpose of influencing any election for Federal office" and "(ii) the payment by any person of compensation for the personal services of another person which are rendered to a political committee without charge for any purpose"); id. § 30101(11) (defining "person" to "include[ ] an individual, partnership, committee, association, corporation, labor organization, or any other organization or group of persons" other than federal governmental ones).

The rules set forth by the statute apply not only to contributions made directly to a candidate but also to coordinated expenditures, which are those "made by any person in cooperation, consultation, or concert, with, or at the request or suggestion of, a candidate, his authorized political committees, or their agents." 52 U.S.C. § 30116(a)(7)(B)(i) ; see also 11 C.F.R. § 109.20(a) (defining "coordinated" similarly). "Expenditures coordinated with a candidate, that is, are contributions under the Act." FEC v. Colo. Republican Fed. Campaign Comm., 533 U.S. 431, 438, 121 S.Ct. 2351, 150 L.Ed.2d 461 (2001). Coordinated expenditures are necessarily in-kind contributions, as opposed to direct financial ones, since they are services rendered to the campaign. See In-kind Contributions, Fed. Election Comm'n, https://www.fec.gov/help-candidates-and-committees/filing-reports/in-kind-contributions/ (last visited June 4, 2020). Placing coordinated expenditures within FECA's reach "prevent[s] attempts to circumvent the Act through ... disguised contributions." Buckley v. Valeo, 424 U.S. 1, 47, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976).

Subsequent campaign-finance law also makes explicit that some communications amount to coordinated expenditures. Under the relevant regulations, "communications count as ‘coordinated’ (and thus as contributions) if: (1) someone other than the candidate, party, or official campaign pays for them, (2) the communication itself meets specified ‘content standards,’ and (3) the payer's interaction with the candidate/party satisfies specified ‘conduct standards.’ " Shays v. FEC, 414 F.3d 76, 98 (D.C. Cir. 2005) (quoting 11 C.F.R. § 109.21(a) ). The "content standards" referred to in subsection (2) of the regulation require the communication to be a "public" one. See 11 C.F.R. § 109.21(c). As relevant here, a communication is not public if it is "over the Internet, except for communications placed for a fee on another person's Web site." Id. § 100.26. In other words, the only Internet communications that could count as coordinated communications — and thus the only ones that could be regulated as contributions — are paid ones. The interpretation of this internet-communications rule is one of the main substantive disputes in this case.

As just stated, when an internet communication does count as a coordinated communication, it is subject to the contribution limits and reporting requirements of "coordinated expenditures" under the Act. Most relevant here are the requirements for reporting coordinated expenditures between authorized and unauthorized committees. An "authorized" committee is a candidate's "principal campaign committee" — here, Hillary for America. See 52 U.S.C. § 30101(6). There are several types of unauthorized committees; Correct the Record is a "hybrid" or "Carey" political action committee (PAC), which maintains two separate bank accounts, one for raising unlimited contributions for "independent" activities not subject to campaign-finance laws, and one for raising limited contributions for candidates, subject to FECA and its regulations. See FEC Statement on Carey v. FEC (2011) (Oct. 6, 2011), Fed. Election Comm'n, https://www.fec.gov/updates/fec-statement-on-carey-v-fec/; see also Carey v. FEC, No. 11-259 (D.D.C. Aug. 19, 2011) (Stipulated Order and Consent Judgment). For purposes of the present Motion, the Court concerns itself only with the arm of CTR that is subject to FECA.

When an unauthorized committee like CTR makes any kind of contribution — including, as explained above, coordinated expenditures — to an authorized committee like HFA, both sides must disclose these contributions, reporting the date and value of each. See 52 U.S.C. § 30104(b)(2)(D), (b)(3)(B) (authorized committee); id. § 30104(b)(6)(B)(i) (unauthorized committee). Because coordinated expenditures are not only "contributions" but also "expenditures," they must additionally be reported as such by both committees, again itemized and with detailed information for — including the purpose of — each transaction. See 11 C.F.R. §§ 104.13(a), 109.20(b), 109.21(b) (authorized committee); 52 U.S.C. § 30104(b)(5)(C) (unauthorized committee).

In addition to creating substantive campaign-finance law, the Act sets out the scheme for its enforcement: "Any person who believes a violation of [FECA] ... has occurred[ ] may file a complaint with the Commission." 52 U.S.C. § 30109(a)(1). The Federal Election Commission, statutorily made up of six politically diverse voting members, see id. § 30106(a)(1)–(2), must in turn notify the "person alleged in the complaint to have committed such a violation." Id. § 30109(a)(1).

After a period for that respondent to rebut the complaint, the Commission votes as to whether it "has reason to believe" that the respondent violated FECA. Id. § 30109(a)(2). It is aided in this determination by briefs submitted by both its Office of General Counsel and the respondent stating their respective positions "on the legal and factual issues of the case." Id. § 30109(a)(3). Four Commissioners must vote in the affirmative for the case to move on to an investigation. Id. § 30109(a)(2). If the Commission does not so find and thus dismisses the administrative complaint, the complainant may then "file a petition with the United States District Court for the District of Columbia" within 60 days of the dismissal. Id. § 30109(a)(8)(A)–(B). The Commission must again have four affirmative votes to defend such a civil action against the dismissal order. Id. §§ 30106(c), 30107(a)(6).

This Court's review of such a petition is limited: it "may declare that the dismissal of the complaint or the failure to act [was] contrary to law." Id. § 30109(a)(8)(C). The D.C. Circuit has interpreted this to mean that courts "may not disturb a Commission decision to dismiss a complaint unless the dismissal was based on an ‘impermissible interpretation of the Act ... or was arbitrary or capricious, or an abuse of discretion.’ " Common Cause v. FEC, 108 F.3d 413, 415 (D.C. Cir. 1997) (omission in original) (quoting Orloski v. FEC, 795 F.2d 156, 161 (D.C. Cir. 1986) ). If the Court does find that the dismissal was contrary to law, "[it] may direct the Commission to conform with such declaration within 30 days." 52 U.S.C. § 30109(a)(8)(C).

The FEC had all six voting Commissioners for several years leading up to 2017. All Commissioners, Fed. Election Comm'n. https://www.fec.gov/about/leadership-and-structure/commissioners/ (last visited June 4, 2020). But as of June 2019, when it voted on the complaint at issue in this case, it was two voting members short. Id. It lost another member in August 2019, id., meaning that the Commission has been unable to pursue any enforcement actions or defend its choices not to in district court.

B. Factual History

Correct the Record, as noted...