Fed. Election Comm'n v. O'Donnell
| Citation | 209 F.Supp.3d 727 |
| Decision Date | 21 September 2016 |
| Docket Number | C.A. No. 15–17–LPS |
| Parties | FEDERAL ELECTION COMMISSION, Plaintiff, v. Christine O'DONNELL, et al., Defendants. |
| Court | United States District Courts. 3th Circuit. United States District Court (Delaware) |
Seth Nesin, Daniel A. Petalas, Lisa J. Stevenson, Kevin Deeley, Harry J. Summers, Robert W. Bonham III, FEDERAL ELECTION COMMISSION, Washington, DC, Attorneys for Plaintiff
Stephen M. Hoersting, Chris Gober, THE GOBER GROUP PLLC, Austin, TX, Attorneys for Defendants
This case is an enforcement action by the Federal Elections Commission ("FEC" "Commission" or "Plaintiff") against Christine O'Donnell ("O'Donnell"), a candidate for the United States Senate; the Friends of Christine O'Donnell ("Committee"), a campaign committee supporting O'Donnell's candidacy; and Matthew Moran, in his official capacity as the Committee's treasurer (together with O'Donnell and the Committee hereinafter referred to as "Defendants").1 Plaintiff alleges that Defendants violated federal law prohibiting the use of campaign contributions to pay rent on a candidate's residence. As part of their defense, Defendants contend that if Plaintiff's interpretation of the applicable regulation is correct, then the regulation is unconstitutional. Defendants have filed counterclaims based on this contention.
Discovery is complete. Pending before the Court are Plaintiff's motion to dismiss Defendants' counterclaims (D.I. 13) as well as cross-motions for summary judgment (D.I. 53, 58). The Court received full briefing and heard extensive oral argument. (See Transcript of May 3, 2016 Hearing ("Tr."))
Having considered the evidence, arguments, and pertinent authorities, the Court agrees with the FEC's interpretation of the statute and regulations. The Court also agrees with the FEC that the statute and regulations are not unconstitutional. Therefore, Defendants are liable for the unlawful use of campaign contributions to pay the rent for O'Donnell's residence. Thus, the Court will grant-in-part and deny-in-part Plaintiff's motion for summary judgment, deny Defendant's motion for summary judgment, and grant Plaintiff's motion to dismiss the counterclaims.
While the issue of liability is now resolved, the Court is not able at present to determine the amount Defendants will have to pay and whether other, non-monetary relief is appropriate. The parties will be given an opportunity to provide the Court with their positions on whether resolution of issues relating to appropriate remedies requires further litigation, possibly to include trial.
This case is about the misuse of campaign funds by a campaign committee and a candidate. In 2010, Christine O'Donnell was a candidate for the United States Senate from the State of Delaware. (D.I. 1 ¶ 6; D.I. 9 ¶ 6) In late 2009, O'Donnell's campaign committee, Friends of Christine O'Donnell ("Committee"), obtained a lease for a townhouse in Greenville, Delaware ("Townhouse"). (D.I. 55 Ex. 1 ("Rental Agreement")) The lease required the Committee to provide a $99 down payment and to pay $1,410 per month for rent. (D.I. 55 Ex. 12 () ¶¶ 6–7)2 The lease agreement included a deferred rent payment of $235 per month that would be due only if the Committee defaulted on the lease. (Id. ) The lease further provided that a late charge of 5% would be assessed for any payment received after the fifth of each month. (Rental Agreement ¶ 6(c))
The Committee used the Townhouse as a campaign headquarters. (See D.I. 1 ¶ 14; D.I. 9 ¶ 14) Shortly after the Committee obtained the lease, O'Donnell decided that she would live in the Townhouse. (See D.I. 59 Ex. A (O'Donnell Deposition ("O'Donnell Depo.")) at 28–29) One of the reasons why O'Donnell decided to live in the Townhouse was to prevent harassment and ensure campaign security. (Seeid. at 28–31) An alternate living arrangement O'Donnell considered was to live with an aunt, but O'Donnell believed that would have endangered her aunt, given the threats O'Donnell perceived to her own safety. (Seeid. at 31–32)
O'Donnell lived in the Townhouse from early 2010 through March 2011. (Seeid. at 27-38; see also D.I. 60 at 2 (); D.I. 61 at 8 ())3 For the first part of 2010, O'Donnell had exclusive control over the Townhouse's master bedroom. (See O'Donnell Depo. at 121) Later, starting in July 2010, female campaign staffers also starting using the master bedroom. (Seeid. at 122) Throughout the period she resided at the Townhouse, O'Donnell used the bedroom to sleep and work as well as to store clothes, makeup, and other items. (Seeid. at 123–24, 158) She also had access to the Townhouse kitchen and to shared living areas. (Seeid. at 128)
At the time O'Donnell began using the Townhouse as her residence, she did not have a written lease or sublease agreement with the Committee; nor did she provide a down payment or security deposit. (RFA ¶¶ 25–26) In fact, O'Donnell did not discuss with the Committee the prospect of paying rent until after she had already taken possession of the property. (See O'Donnell Depo. at 103) O'Donnell eventually agreed to pay rent on a quarterly basis. (RFA ¶¶ 23–24) Her quarterly rent obligation was $770, which is equivalent to a monthly rate of about $256.67. (Id. ¶ 23) O'Donnell's agreement regarding payments on the Townhouse was never put in writing.
In September 2010, the FEC received a complaint alleging that O'Donnell and the Committee had violated the Federal Election Campaign Act ("FECA") by using campaign funds to pay for O'Donnell's rent and utilities at the Townhouse. (D.I. 55 Ex. 3) In May 2012, the FEC voted 6-0 to open an investigation and, in November 2014, voted 6-0 to find probable cause that a violation of FECA had been committed. (See D.I. 55 Exhs. 7, 8) Shortly thereafter, the FEC authorized this suit, again by a 6–0 vote. (See D.I. 55 Ex. 11)
Thereafter, on January 5, 2015, the FEC filed its Complaint against O'Donnell and the Committee alleging FECA violations and requesting declaratory relief, disgorgement, a civil penalty, and an injunction. (D.I. 1) On April 17, 2015, Defendants filed an answer and several counterclaims. (D.I. 9) The counterclaims allege that the FEC regulations upon which Plaintiff relies are unconstitutional and requests declaratory relief. (See id. ) On June 16, 2015, the FEC filed a motion to dismiss Defendants' counterclaims as redundant or, alternatively, for failure to state a claim. (D.I. 13) On March 8, 2016, the FEC filed a motion for summary judgment and, on March 30, 2016, Defendants filed a cross-motion for summary judgment. (D.I. 53, 58) The Court heard oral argument on all pending motions on May 3, 2016. (See Tr.)
Evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires the Court to accept as true all material allegations of the complaint. See Spruill v. Gillis , 372 F.3d 218, 223 (3d Cir. 2004). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." In re Burlington Coat Factory Sec. Litig. , 114 F.3d 1410, 1420 (3d Cir. 1997) (internal quotation marks omitted). Thus, the Court may grant such a motion to dismiss only if, after "accepting all well-pleaded allegations in the complaint as true, and viewing them in the light most favorable to plaintiff, plaintiff is not entitled to relief." Maio v. Aetna, Inc. , 221 F.3d 472, 481–82 (3d Cir. 2000) (internal quotation marks omitted).
However, "[t]o survive a motion to dismiss, a civil plaintiff must allege facts that "raise a right to relief above the speculative level on the assumption that the allegations in the complaint are true (even if doubtful in fact)." Victaulic Co. v. Tieman , 499 F.3d 227, 234 (3d Cir. 2007) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). At bottom, "[t]he complaint must state enough facts to raise a reasonable expectation that discovery will reveal evidence of [each] necessary element" of a plaintiffs claim. Wilkerson v. New Media Tech. Charter Sch. Inc. , 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).
The Court is not obligated to accept as true "bald assertions," Morse v. Lower Merion Sch. Dist. , 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), "unsupported conclusions and unwarranted inferences," Schuylkill Energy Res., Inc. v. Pennsylvania Power & Light Co. , 113 F.3d 405, 417 (3d Cir. 1997), or allegations that are "self-evidently false," Nami v. Fauver , 82 F.3d 63, 69 (3d Cir. 1996).
"The court shall grant summary judgment if the movant shows that 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). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Adickes v. S.H. Kress & Co. , 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). An assertion that a fact cannot be—or, alternatively, is—genuinely disputed must be supported either by citing to "particular parts of materials in the record, including depositions, documents, electronically stored information; affidavits or declarations, stipulations (including those made for the purposes of the motion only), admissions, interrogatory answers, or other materials," or...
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