Fed. Election Comm'n v. Craig for U.S. Senate

• Decision Date: 04 March 2016
• Docket Number: No. 14–5297.,14–5297.
• Parties: FEDERAL ELECTION COMMISSION, Appellee v. CRAIG FOR U.S. SENATE and Larry E. Craig, Individually, and In His Official Capacity as Treasurer of Craig for U.S. Senate, Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

816 F.3d 829

FEDERAL ELECTION COMMISSION, Appellee

v.CRAIG FOR U.S. SENATE and Larry E. Craig, Individually, and In His Official Capacity as Treasurer of Craig for U.S. Senate, Appellants.

No. 14–5297.

United States Court of Appeals, District of Columbia Circuit.

Argued Oct. 7, 2015.

Decided March 4, 2016.

Andrew D. Herman argued the cause for appellants. With him on the briefs were Aiysha S. Hussain and Stanley M. Brand.

Kevin P. Hancock, Attorney, Federal Election Commission, argued the cause for appellee. With him on the brief were Kevin Deeley, Acting Associate General Counsel, Harry J. Summers, Assistant General Counsel, and Robert W. Bonham III, Senior Attorney.

Before: GARLAND, Chief Judge, GRIFFITH, Circuit Judge, and SENTELLE, Senior Circuit Judge.

Opinion for the Court filed by Chief Judge GARLAND.

GARLAND, Chief Judge:

The Federal Election Commission alleges that former Senator Larry E. Craig, his campaign committee, and the committee's Treasurer converted campaign funds to the Senator's personal use in violation of the Federal Election Campaign Act. That conversion occurred, the Commission contends, when the appellants spent campaign funds to pay legal fees the Senator incurred in connection with efforts to withdraw his guilty plea to a criminal charge of disorderly conduct. The district court granted summary judgment on the Commission's complaint and ordered Senator Craig to disgorge $197,535 to the U.S. Treasury and pay a civil penalty of $45,000. We affirm the court's grant of summary judgment and its remedial orders.

I

Larry E. Craig represented Idaho in the United States Senate from 1991 to 2009. On June 11, 2007, he was flying from Idaho to Washington, D.C., with a stop for a connecting flight at the Minneapolis–St. Paul International Airport. During that stop, a police officer arrested the Senator in the airport bathroom on charges of disorderly conduct and interference with privacy. On August 1, Craig signed and mailed the Minnesota state authorities a plea agreement, pursuant to which he pled guilty to a criminal misdemeanor charge of disorderly conduct and paid a fine and costs totaling $575.

The details of Senator Craig's arrest and plea soon became public. On Monday, August 27, Roll Call, a newspaper that covers the United States Congress, obtained the June 11 arrest report and published an article headlined, "Craig Arrested, Pleads Guilty Following Incident in Airport Restroom." J.A. 225–26. Within a day, Senators and a congressional watchdog group were urging the Senate Select Committee on Ethics (the Senate Ethics Committee) to investigate. At the request of the Senate Republican leadership, Senator Craig stepped down from his committee leadership positions. On August 30, in response to questions about the arrest, the airport police released an audiotape of Craig's interview with the arresting officer.

Two days later, on September 1, the Senator announced that he would resign from the Senate effective September 30. On September 5, his attorneys submitted a letter to the Senate Ethics Committee arguing that the arrest fell outside the Committee's jurisdiction because the arrest was for "purely personal conduct unrelated to the performance of official Senate duties." Letter from Brand Law Group to Hon. Barbara Boxer, Chairwoman, Senate Ethics Comm. (Sept. 5, 2007) (J.A. 179).

The following Monday, September 10, Senator Craig filed a motion with the Minnesota state trial court to withdraw his guilty plea. The court denied the motion on October 4. That same day, the Senator announced that he had reconsidered his plan to resign. He said he would serve the remaining fifteen months of his Senate term, which he did, retiring from the Senate in January 2009.

Also on October 4, the Senator's attorneys advised him that "it is clear that [Federal Election Commission] advisory opinions authorize full payment with campaign funds for legal representation in all matters before the Senate Ethics Committee." Letter from Brand Law Group to Hon. Larry E. Craig (Oct. 4, 2007) (J.A. 155). They further "conclude[d] that all expenses incurred for ... legal representation in Minnesota state court are ... fully payable with campaign funds," but warned that there were "no directly applicable [Commission] opinions" addressing that issue. Id.

A few weeks later, on October 29, Senator Craig's campaign committee, Craig for U.S. Senate (the Craig Committee), made the first in a series of payments to attorneys for legal costs arising from the Senator's efforts to withdraw his guilty plea. Those payments would continue while the Senator appealed the decision of the Minnesota trial court. The Minnesota appellate court would ultimately reject that appeal in December 2008.

In February 2008, the Senate Ethics Committee issued a "Public Letter of Admonition" to Senator Craig. Among other things, the letter warned that the costs associated with the Senator's efforts to withdraw his plea "may not be deemed to have been incurred in connection with your official duties, either by the Committee or by the Federal Election Commission." Letter from Senate Ethics Comm. to Hon. Larry E. Craig (Feb. 13, 2008) (J.A. 236).

In November 2008, the Federal Election Commission (FEC) received an administrative complaint alleging that Senator Craig had unlawfully spent campaign funds on legal fees related to his arrest and conviction. On the basis of the Senator's response and the then-available information, the Commission identified three categories of campaign disbursements at issue: for legal fees incurred in connection with the Senate Ethics Committee's inquiry, for public relations fees incurred in responding to press inquiries, and for legal fees incurred in connection with the Senator's attempt to withdraw his guilty plea. The FEC determined that disbursements in the first two categories were permissible, but it found "reason to believe" that Craig's use of campaign funds to pay legal expenses in connection with the attempt to withdraw the guilty plea "constitute[d] impermissible use ... in violation of" the Federal Election Campaign Act (FECA). Reason to Believe Finding, Factual and Legal Analysis, In re Larry E. Craig, Matter Under Review 6128, at 11 (J.A. 73); see id. at 8–13 (J.A. 70–75); see also 52 U.S.C. § 30109(a)(2) (regarding "reason to believe" findings).

After conducting an investigation, the Commission voted 5–0 (with one Commissioner recused) to find "probable cause to believe" that Senator Craig, the Craig Committee, and Kaye L. O'Riordan as Treasurer had violated FECA. See 52 U.S.C. § 30109(a)(4) (regarding "probable cause to believe" findings). Thereafter, the FEC attempted to correct the violation through the informal conciliation process prescribed by the statute. Id. § 30109(a)(4)(A)(i). Unable to secure an acceptable conciliation agreement, the Commission voted 5–0 (again, with one Commissioner recused) to authorize the current litigation. See FEC Compl. ¶¶ 28–30 (J.A. 59–60).

FECA provides that, "[i]f the Commission is unable to correct or prevent any violation of this Act" by informal conciliation, "the Commission may, upon an affirmative vote of 4 of its members, institute a civil action for relief" in United States district court. 52 U.S.C. § 30109(a)(6)(A). On June 11, 2012, the Commission filed this lawsuit against defendants Craig, the Craig Committee, and then-Treasurer O'Riordan. After O'Riordan resigned as Treasurer, Senator Craig assumed the position. He has since been substituted for O'Riordan as a defendant in that official capacity as well.

The FEC's complaint charged that the defendants violated FECA, 52 U.S.C. § 30114(b), by disbursing more than $200,000 in campaign contributions to the Sutherland, Asbill & Brennan and Kelly & Jacobson law firms to pay for legal expenses incurred in connection with efforts to withdraw Senator Craig's guilty plea. The FEC sought declaratory and injunctive relief, disgorgement by Senator Craig of all improper disbursements, and the assessment of civil penalties.

The defendants filed a motion to dismiss, which the district court denied. FEC v. Craig for U.S. Senate, 933 F.Supp.2d 111 (D.D.C.2013). The following year, the court granted the FEC's motion for summary judgment, holding that the defendants had violated FECA's ban on converting campaign funds to personal use. FEC v. Craig for U.S. Senate, 70 F.Supp.3d 82 (D.D.C.2014). The defendants'—now appellants'—first challenge is to this holding, which we review in Parts II and III.

The district court also ordered Senator Craig to disgorge the value of the improperly spent funds to the U.S. Treasury. The court fixed the amount of such funds at $197,535. In addition, it imposed a civil penalty of $45,000. The appellants challenge both the disgorgement and the civil penalty orders. We address those challenges in Part IV.

II

The district court held that, by using campaign contributions to fund the legal battle to withdraw the Senator's guilty plea, Senator Craig and the Craig Committee violated 52 U.S.C. § 30114(b). We review the district court's grant of summary judgment de novo. Gentiva Healthcare Corp. v. Sebelius, 723 F.3d 292, 295 (D.C.Cir.2013). Summary judgment is appropriate if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(a).

A

FECA contains a list of "[p]ermitted uses" for campaign contributions. 52 U.S.C. § 30114(a). As relevant here, such uses include payments for "ordinary and necessary expenses incurred in connection with duties of the individual as a holder of Federal office," id. § 30114(a)(2), and expenditures "for any other lawful purpose unless prohibited by subsection (b) of this section," id. § 30114(a)(6).

The district court first held that the appellants' expenditures were not permitted under § 30114(a)(2) because "legal expenses incurred in withdrawing a plea to personal criminal conduct ... could not be characterized as ordinary and...