DEP'T OF STATE COMPLIANCE AND RULES DIV. v. MEA-NEA

• Decision Date: 08 August 2002
• Docket Number: Docket No. 225155.
• Citation: 650 N.W.2d 120,251 Mich. App. 110
• Parties: DEPARTMENT OF STATE COMPLIANCE AND RULES DIVISION and Secretary of State, Petitioners-Appellants, v. MICHIGAN EDUCATION ASSOCIATION-NEA, Respondents-Appellee.
• Court: Court of Appeal of Michigan — District of US

650 N.W.2d 120

251 Mich. App. 110

DEPARTMENT OF STATE COMPLIANCE AND RULES DIVISION and Secretary of State, Petitioners-Appellants, v. MICHIGAN EDUCATION ASSOCIATION-NEA, Respondents-Appellee.

Docket No. 225155.

Court of Appeals of Michigan.

Submitted January 15, 2002, at Lansing.

Decided April 30, :10 a.m.

Released for Publication August 8, 2002.

Jennifer M. Granholm, Attorney General, Thomas L. Casey, Solicitor General, and Katherine C. Galvin, Assistant Attorney General, for the petitioners.

Miller, Canfield, Paddock & Stone, P.L.C. (by Michael J. Hodge and Clifford T. Flood), Lansing, for the respondent.

Before: GAGE, P.J., and HOEKSTRA and METER, JJ.

HOEKSTRA, J.

Petitioners appeal by leave granted from a circuit court order vacating a hearing officer's order that found respondent in violation of the Michigan Campaign Finance Act (MCFA), M.C.L. § 169.201 et seq. We affirm in part, reverse in part, and remand for further proceedings.

Respondent is a corporation that in 1994 sold political polling services to an independent political committee¹ (the committee) for $61,651.50. At some point, respondent sent the committee a bill for these services dated December 31, 1994. The committee acknowledged the debt for the first time in its July 1995 triannual campaign statement. Subsequently, the committee's campaign statements filed for October 1995 and for April 1996 continued to show the debt. These statements also showed that the committee paid thousands of dollars on other debts, had other remaining outstanding debts in addition to the debt owed to respondent, and had a net operating balance. The July 1996 statement reported that the committee paid $256,588.40 on other debts, leaving a debt balance of $61,650.50, and had an end balance of $39,121.84. The October 1996 statement indicates no payments on debt, a debt balance of $61,651.50, and an end balance of $80,977.52. Since the original bill dated December 31, 1994, respondent had neither sent any other written demand to the committee for payment of the debt nor filed a lawsuit for collection of the debt; however, respondent had not "forgiven" the debt. Further, Allan Short, respondent's director of government affairs, testified that he had been in contact with the committee on a monthly basis concerning payment of the debt, that respondent offered the committee the possibility of installment payments, and that respondent expected to be paid.

In May 1996, petitioners received a complaint alleging that respondent may have violated the MCFA by making a corporate campaign contribution. Petitioners notified respondent of the complaint and thereafter initiated administrative proceedings. Those proceedings culminated in a hearing officer's issuing a final decision and order on October 13, 1997, finding that respondent had violated M.C.L. § 169.254(1) (subsection 54[1]) by making a contribution to the committee in the form of a forbearance. The hearing officer acknowledged that petitioner Secretary of State had no rules or standards to define "forbearance" under M.C.L. § 169.204(1) (subsection 4[1]). The hearing officer further stated that petitioners had not applied a consistent standard regarding the meaning of forbearance, having never commenced an enforcement action on the basis that a committee has failed to pay a corporate debt for a period in excess of twenty-two months. Nevertheless, the hearing officer found respondent to be in violation of the MCFA according to the "plain and ordinary meaning" of "forbearance." Specifically, the hearing officer quoted Black's Law Dictionary and Webster's New World Dictionary for the following definitions of "forbearance":

"Refraining from doing something that one has a legal right to do. Giving of further time for repayment of obligation or agreement not to enforce claim at its due date. A delay in enforcing a legal right. Act by which creditor waits for payment of debt due him by debtor after it becomes due.

"Refraining from action. The term is used in this sense in general jurisprudence, in contradistinction to `act.'

"Within usury law, term signifies contractual obligation of lender or creditor to refrain, during a given period of time, from requiring borrower or debtor to repay loan or debt then due and payable."²

* * *

"The act of forbearing, to refrain from; avoid or cease (doing, saying, etc.) Law the act by which a creditor extends time for payment of a debt or forgoes for a time his right to enforce legal action on the debt."³

Having found that respondent violated subsection 54(1), the hearing officer imposed a statutory penalty pursuant to M.C.L. § 169.215(6)⁴ of a civil fine equal to the amount of the improper contribution plus an additional $1,000, totaling $62,651.50.

Respondent appealed the hearing officer's order to the circuit court.⁵ The circuit court heard oral argument in October 1998, and in September 1999 issued its opinion vacating the hearing officer's order.⁶ In its decision, the circuit court determined that the hearing officer's order must be vacated because "it is not authorized by law, is arbitrary and capricious, and is not supported by competent, material and substantial evidence on the whole record."

Specifically, the circuit court concluded that the term "forbearance" as used in the MCFA is unconstitutionally vague, "not because it does not have definite and well-recognized meanings but, rather, that there is no way to discern which particular meaning or meanings the Legislature intended to employ in the MCFA." The circuit court found five distinct definitions in Black's Law Dictionary (rev 6th ed.) and two distinct definitions in Webster's New World Dictionary, Second College Edition (1980). According to the circuit court, the Secretary of State "failed to give corporations proper notice of its expectations of lawful corporate conduct in avoiding even the appearance of forbearance on debts owed by political committees."⁷ The circuit court concluded that the failure to adopt a rule further defining forbearance precluded enforcement based on illegal forbearance and that, in the absence of administrative guidance, the hearing officer's interpretation of forbearance was arbitrary and capricious. The circuit court also found that the hearing officer's decision was based on insufficient evidence of respondent's specific purpose to influence the electoral process, as subsection 4(1) requires, that the hearing officer never even posed the question whether respondent had the requisite intent, and that the testimony of Allan Short indicated that respondent had other reasons for not insisting on immediate payment of the debt. Because the hearing officer made no finding whether the "forbearance" was for "an illicit purpose," the circuit court found that the MCFA was not enforced as written. Petitioners now appeal by leave granted the circuit court's order vacating the hearing officer's order.

We first address petitioners' argument that the circuit court erred in holding that the MCFA's prohibition against corporate political contributions in the form of forbearance is unconstitutionally vague. The constitutionality of a statute is a question of law that this Court reviews de novo. Tolksdorf v. Griffith, 464 Mich. 1, 5, 626 N.W.2d 163 (2001); Proctor v. White Lake Twp. Police Dep't, 248 Mich.App. 457, 461, 639 N.W.2d 332 (2001).

"The `void for vagueness' doctrine is derived from the constitutional guarantee that the state may not deprive a person of life, liberty, or property, without due process of law." State Treasurer v. Wilson (On Remand), 150 Mich.App. 78, 80, 388 N.W.2d 312 (1986), citing U.S. Const., Am. XIV; Const. 1963, art. 1, § 17. With regard to a challenge to the constitutionality of a statute based on vagueness, this Court has explained:

A statute may qualify as void for vagueness if (1) it is overbroad and impinges on First Amendment freedoms, (2) it does not provide fair notice of the conduct it regulates, or (3) it gives the trier of fact unstructured and unlimited discretion in determining whether the statute has been violated. [Proctor, supra at 467, 639 N.W.2d 332, citing Ray Twp. v. B & BS Gun Club, 226 Mich. App. 724, 732, 575 N.W.2d 63 (1997).]

See also Hill v. Colorado, 530 U.S. 703, 722, 120 S.Ct. 2480, 147 L.Ed.2d 597 (2000); People v. Lino, 447 Mich. 567, 575-576, 527 N.W.2d 434 (1994).

To determine whether a statute is void for vagueness, a court should examine the entire text of the statute and give the words of the statute their ordinary meanings. People v. Piper, 223 Mich.App. 642, 645, 567 N.W.2d 483 (1997); In re Forfeiture of 719 N. Main, 175 Mich.App. 107, 111, 437 N.W.2d 332 (1989). Substantive due process requires standards in a statute to be "reasonably precise" in order to ensure that individuals are not held responsible by the state for conduct that they could not reasonably understand to be proscribed. Sillery v. Bd. of Medicine, 145 Mich.App. 681, 686, 378 N.W.2d 570 (1985); K Mart Corp. v. Dep't of State, 127 Mich.App. 390, 395, 339 N.W.2d 32 (1983). Stated another way, "[t]o give fair notice, a statute must give a person of ordinary intelligence a reasonable opportunity to know what is prohibited or required." People v. Noble, 238 Mich.App. 647, 652, 608 N.W.2d 123 (1999) (internal citation omitted); In re Gosnell, 234 Mich.App. 326, 334, 594 N.W.2d 90 (1999).

In addition to this general framework for analyzing whether a statute is unconstitutionally vague, a heightened level of scrutiny is required because the MCFA implicates free speech.⁸ Our Supreme Court has stated, in the context of the similar overbreadth doctrine,⁹ that when a statute restricts political expression, which occupies the core of First Amendment protection, it will be subjected to exacting scrutiny and will be upheld only if it is narrowly tailored to serve a compelling state interest. In re Chmura, 461 Mich. 517, 532-534, 608 N.W.2d 31 (2000); see Buckley v. Valeo...