F.E.C. v. California Democratic Party
| Decision Date | 11 June 1998 |
| Docket Number | No. CIV-S-97-891 DFL PAN.,CIV-S-97-891 DFL PAN. |
| Court | U.S. District Court — Eastern District of California |
| Parties | FEDERAL ELECTION COMMISSION, Plaintiff, v. CALIFORNIA DEMOCRATIC PARTY, et al., Defendants. |
Lawrence M. Noble, Richard B. Bader, Stephen E. Hershkowitz, Colleen T. Sealander, Federal Election Commission, Washington, DC, for Plaintiff.
Lance H. Olson, Mary-Beth, Moylan, Olson, Hagel, Leidigh, Waters & Fishburn, L.L.P., Sacramento, CA, for Defendants.
JOINT STATUS REPORT
NOW COME PLAINTIFF AND DEFENDANTS, by and through their respective counsel of record, and submit a Joint Status Report in compliance with Federal Rule of Civil Procedure 16 and the Court's Orders filed May 9, 1997, and September 2, 1997.
Defendants California Democratic Party ("CDP")1 and Gary Paul move to dismiss Plaintiff's complaint for failure to state a claim upon which relief can be granted. Fed. R.Civ.P. 12(b)(6). Plaintiff Federal Election Commission ("FEC" or "Commission") opposes the motion. For the reasons stated, Defendant CDP's motion is denied and Defendant Paul's motion is granted.
On a motion to dismiss brought under Rule 12(b)(6), all material allegations in the complaint must be accepted as true and the complaint must be construed in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.1986); North Star International v. Arizona Corporation Commission, 720 F.2d 578, 580 (9th Cir.1983). The court is bound to give the plaintiff the benefit of every reasonable inference to be drawn from well-pleaded allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n. 6, 83 S.Ct. 1461, 10 L.Ed.2d 678 (1963). A complaint "should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984).
This dispute concerns financial contributions from Defendant CDP to a ballot measure committee called "Taxpayers Against Deception — No on 165" ("No on 165") made in the months preceding the 1992 general election. Construing the allegations in the light most favorable to the FEC, the pertinent facts are as follows.
No on 165 was a registered political committee organized for the purpose of raising and spending funds to defeat Proposition 165, which was a measure intended to reduce state spending on welfare and other social programs. See Pl.'s Compl. at ¶¶ 12, 21. As part of its strategy to defeat the proposition No on 165 engaged in a large-scale effort to register and turn out voters who would oppose the proposition, under a plan that was also designed to increase the number of voters "who would vote for the Democratic candidates, including Democratic candidates for federal office." Id. at 20, 26.
In June 1992 the chairman of the voter registration effort for No on 165, Mr. Dean Tipps, approached the CDP's executive director to discuss the possibility of obtaining funding. Id. at ¶¶ 14, 32. To entice the CDP into contributing, Tipps emphasized that the CDP would benefit from No on 165's efforts because the potential registrants were predisposed to vote for Democrats based on historical voting patterns. Id. at ¶ 33. The CDP then agreed to commit between $400,000 and $750,000 to No on 165, depending on the success of CDP's own fundraising efforts. Id. at ¶ 34.
The voter registration drive was conducted in accordance with policies developed by No on 165, which included targeting Democrats and counting only Democratic registrants in their totals. Id. at ¶¶ 28-30. To carry out those policies, No on 165's field workers "were told they had to meet a quota of [Democratic] voters registered per day in order to remain employed." Id. at ¶ 36. Field supervisors were instructed to help self-identified Democratic registrants in completing their voter registration cards, but no such help was to be given to self-identified Republican registrants. Id. at ¶ 37. Several of those supervisors conducted their voter registration activities under a sign that read "Stop Pete Wilson — Register Democrat." Id. at ¶ 38. In addition, names and addresses of newly registered Democrats were kept by No on 165 to facilitate get-out-the-vote activities. Id. at ¶¶ 41, 42.
Tipps provided weekly reports about the progress of the voter registration efforts to the executive director of the CDP, who was responsible for approving No on 165's periodic requests for funds. Id. at ¶¶ 43-45. Both Tipps and the CDP executive director kept the Democratic National Committee and representatives from the campaigns of various federal candidates apprised of No on 165's voter registration efforts. Id. at ¶¶ 47-48.
Ultimately, the CDP contributed $719,000 to No on 165, nearly all of which was used to register Democratic voters. Id. at ¶¶ 50-51, 54. The CDP's contributions to No on 165 were made entirely from its "non-federal committee account," which contained union and corporate funds. Id. at ¶¶ 18, 20, 55. These contributions were not reported to the FEC. Id. at ¶ 55.
After attempting to conciliate with the CDP, the FEC filed its complaint alleging violations of the Federal Election Campaign Act of 1971 ("FECA" or "Act"), 2 U.S.C. § 431, et seq., and the regulations promulgated thereunder. Specifically, the FEC asserts in its complaint that the CDP violated 2 U.S.C. § 441b and 11 C.F.R. §§ 102.5(a)(1)(i), 104.10(b)(4) and 106.5(d) by (1) using an account containing corporate and union funds to make expenditures in connection with a federal election, (2) failing to allocate the expenditures for the generic voter drive between its federal and non-federal committee accounts, and (3) failing to report to the FEC any amounts that were or should have been allocated. Id. at ¶ 59.
Under the FECA, it is unlawful for a union or a corporation to use its general treasury "to make a contribution or expenditure in connection with any election" in which the electorate will vote for certain enumerated federal offices. 2 U.S.C. § 441b(a). A "contribution or expenditure" is defined to include "any direct or indirect payment ... to any candidate, campaign committee, or political party or organization, in connection with" an election for any of the enumerated federal offices. 2 U.S.C. § 441b(b)(2).
The FECA vests the Commission with "primary and substantial responsibility for administering and enforcing the Act." Buckley v. Valeo, 424 U.S. 1, 109, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976). The Act empowers the Commission "to make such rules `as are necessary to carry out the provisions of [the] Act.'" Id. at 110, 96 S.Ct. 612 (quoting 2 U.S.C. § 437d(a)(8)). The Commission's enforcement power under the Act "is both direct and wide ranging." Id. at 111, 96 S.Ct. 612.
The Commission's regulations at issue here permit a political party committee to create separate "federal" and "non-federal" accounts into which it may accept contributions. 11 C.F.R. § 102.5(a)(1)(i). The former account can only contain funds raised in accordance with the limitations and restrictions of the FECA. The latter can contain what is popularly known as "soft money," comprised of contributions "from sources who would be barred from making such contributions in connection with a federal election, e.g. from corporations and labor unions." Common Cause v. Federal Election Comm'n, 692 F.Supp. 1391, 1392 (D.D.C. 1987); 11 C.F.R. § 102.5(a)(1)(i). Party committees may use the funds from their non-federal account for activities that affect only state and local elections. However, when they make disbursements for activities connected with both federal and non-federal elections, they must make those disbursements either entirely from the federal account or allocate the expenses between their federal and non-federal accounts according to a prescribed method. 11 C.F.R. § 106.5(a)(1). Under the Commission's regulations, state and local party committees are required to allocate the costs of "generic voter drives," 11 C.F.R. § 106.5(d)(1),
including voter identification, voter registration, and get-out-the-vote drives, or any other activities that urge the general public to register, vote or support candidates of a particular party or associated with a particular issue, without mentioning a specific candidate.
11 C.F.R. § 106.5(a)(2)(iv). Such allocations must be reported to the FEC. 11 C.F.R. § 104.10(b).
The CDP's motion to dismiss the complaint is based on essentially three grounds. First, it asserts that the facts in the complaint do not demonstrate that the CDP itself violated the FEC's allocation or reporting regulations. Second, it argues that the regulations cannot be construed to apply to the factual scenario pled in the complaint without exceeding the promulgating authority conferred on the FEC by Congress. Third, it contends that application of the regulations to these facts is unconstitutional.
The CDP first argues that since it did not itself conduct the voter registration drive, the money it gave to No on 165 was not subject to the allocation regulations. The CDP asserts that the complaint shows only that the CDP made a contribution for the purpose of opposing a state ballot measure,2 that the CDP did not require the funds to be used in a particular manner, and that at most, the CDP had knowledge that funds would be used to conduct a voter registration drive. See Defs.' Mot. Dismiss at 8. Thus, the CDP contends that the FEC failed to allege that the CDP engaged in any activities subject to FEC...
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