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

• Decision Date: 30 September 2014
• Docket Number: Civil Action No. 12–0958 ABJ
• Citation: 70 F.Supp.3d 82
• Parties: Federal Election Commission, Plaintiff, v. Craig for U.S. Senate, et al., Defendants.
• Court: U.S. District Court — District of Columbia

70 F.Supp.3d 82

Federal Election Commission, Plaintiff

v.Craig for U.S. Senate, et al., Defendants.

Civil Action No. 12–0958 ABJ

United States District Court, District of Columbia.

Signed September 30, 2014

Harry Jacobs Summers, Kevin Deeley, Kevin Paul Hancock, Robert William Bonham, III, David Brett Kolker, Federal Election Commission, Anthony Herman, Covington & Burling LLP, Washington, DC, for Plaintiff.

Andrew Dewald Herman, Miller & Chevalier, Chartered, Stanley McKennett Brand, Brand Law Group, PC, Washington, DC, for Defendants.

MEMORANDUM OPINION

AMY BERMAN JACKSON, United States District Judge

This opinion arises out of former Senator Larry Craig's efforts to withdraw the guilty plea he entered in Minnesota state court in 2007, after he was arrested for disorderly conduct in the Minneapolis–St. Paul International Airport. On June 11, 2012, the Federal Election Commission (“FEC” or “the Commission”) brought suit against defendants Craig, the Craig for U.S. Senate campaign committee (“Craig Committee”), and Kaye L. O'Riordan, the former treasurer of the Craig Committee,¹ contending that defendants converted campaign funds to personal use in violation of the Federal Election Campaign Act (“FECA” or “the Act”) when they expended those funds to pay legal fees incurred in connection with Senator Craig's efforts to withdraw his plea. Defendants moved to dismiss the complaint for failure to state a claim on August 2, 2012, and the Court denied that motion on March 28, 2013. The FEC then moved for summary judgment on September 30, 2013, seeking an order disgorging from Senator Craig the $216,984 sum that the FEC contends was unlawfully converted, a $70,000 civil penalty against defendant Craig, a $70,000 civil penalty against the Craig Committee, and declaratory and injunctive relief.

The Court will grant the FEC's motion, although it will not award all of the relief the FEC seeks. The Court finds that defendants violated the FECA when they converted campaign funds to pay for legal expenses related to Senator Craig's efforts to withdraw his guilty plea, which was a personal matter that was not connected to the Senator's duties as an officeholder. Furthermore, the Court finds that the circumstances of this case merit the imposition of both a penalty and an order of disgorgement, as well as the declaratory relief the FEC seeks. But the Court finds that the amount that was unlawfully converted totals $197,535, not $216,984, and that a penalty of $45,000 against Senator Craig is appropriate in this case. The Court will therefore order Senator Craig to pay a total of $242,535 to the U.S. Department of the Treasury, which is comprised of the amount he was unjustly enriched plus the additional penalty. The Court will not order any relief against the now defunct Craig Committee, nor will it issue an injunction in this case.

BACKGROUND

The following facts are not in dispute.² Defendant Larry Craig was a United States Senator from Idaho from January, 1991 to January, 2009. Compl. [Dkt. # 1] ¶ 6; Answer [Dkt. # 12] ¶ 6. Senator Craig is named in this case both in his personal capacity and in his official capacity as treasurer of defendant Craig for U.S. Senate. See May 1, 2013 Minute Order. Defendant Craig for U.S. Senate is a political committee authorized to receive contributions and make expenditures on behalf of defendant Craig. Compl. ¶ 7; Answer ¶ 7. Plaintiff, the Federal Election Commission, is an agency of the United States government that is authorized to enforce the Federal Election Campaign Act. Compl. ¶ 5; Answer ¶ 5.

On June 11, 2007, Senator Craig was arrested in the Minneapolis–St. Paul International Airport and charged with two violations of Minnesota criminal law: “disturbing the peace-disorderly conduct,” and interference with privacy. Compl. ¶ 12; Answer ¶ 12. On August 8, 2007, Senator Craig pled guilty to disorderly conduct, a misdemeanor. Compl. ¶ 12; Answer ¶ 12; see also FEC's Resp. to Defs.' Statement of Alleged Material Facts in Dispute [Dkt. # 21] ¶ 1 (“FEC Facts Resp.”). But on September 10, 2007, Senator Craig filed a motion in Minnesota state district court to withdraw his guilty plea. Compl. ¶ 14; Answer ¶ 14. Senator Craig's efforts to withdraw his plea were unsuccessful, and his final appeal was denied on December 9, 2008. Compl. ¶ 14; Answer ¶ 14.

On September 1, 2007, after the arrest and conviction became the subject of national media attention, Senator Craig announced his intention to resign from the Senate effective September 30, 2007. Compl. ¶ 15; Answer ¶ 15. Meanwhile, the U.S. Senate Select Committee on Ethics (“Senate Ethics Committee”) launched an inquiry into the Senator's arrest, guilty plea, and subsequent conduct. Compl. ¶ 16; Answer ¶ 16. Senator Craig then decided not to resign so that he could “continue [his] effort to clear [his] name in the Senate Ethics Committee,” and he retired at the end of his term in January 2009 instead. Compl. ¶ 17; Answer ¶ 17.

On July 25, 2008, the Senate Ethics Committee authorized Senator Craig to establish a legal expense trust fund “to pay for expenses incurred in connection with” the Minnesota litigation, although it warned Senator Craig that its “approval of the Fund and of the trust agreement [did] not indicate approval of [his] continuation of the proceedings in” Minnesota. Ex. 9 to Defs.' Opp. to Pl.'s Mot. for Summ. J. (“Defs.' Opp.”) [Dkt. # 19–11] at 1. The Committee also warned that it would “consider any further use of [Senator Craig's] campaign funds for legal expenses without the Committee's approval to be conduct demonstrating [his] continuing disregard of ethics requirements.” Id. at 2.

Between July 9, 2007 and October 5, 2008, the Craig Committee disbursed more than $480,000 of campaign funds for legal fees and other expenses. Compl. ¶ 18; Answer ¶ 18. The Craig Committee paid at least $139,952 to the law firm of Sutherland, Asbill & Brennan LLP for its legal services to Senator Craig in connection with his efforts to withdraw his guilty plea, and approximately $77,032 to the law firm of Kelly & Jacobson for similar services, for a total of $216,984. Compl. ¶¶ 19–20; Answer ¶¶ 19–20.

On February 13, 2008, the Senate Ethics Committee issued a “Public Letter of Admonition” to Senator Craig, which stated that some portion of the Craig Committee's expenditures “may not be deemed to have been incurred in connection with [Senator Craig's] official duties, either by the Committee or by the Federal Election Commission.” Ex. 7 to Defs.' Opp. [Dkt. # 19–9] at 2. Then, on November 10, 2008, the FEC received an administrative complaint alleging that Senator Craig had violated the FECA by spending more than $213,000 in campaign funds to pay legal fees and expenses incurred in connection with his attempts to withdraw his guilty plea. Compl. ¶ 24; Answer ¶ 24. The FEC investigated the complaint and attempts to resolve the matter short of litigation were unsuccessful. Compl. ¶¶ 25–30; Answer ¶¶ 25–30.

The FEC filed this lawsuit on June 11, 2012, claiming that defendants violated 52 U.S.C. § 30114(b)³ when they disbursed campaign funds to pay legal expenses related to the Senator's efforts to withdraw his guilty plea in Minnesota. Compl. ¶¶ 33–34. The FEC alleged that defendants unlawfully “converted the Craig Committee's funds to personal use” because these expenditures were not “made in connection with Mr. Craig's campaign for federal office and were not ordinary and necessary expenses incurred in connection with his duties as a Senator.” Id. ¶ 33. Defendants moved to dismiss the complaint on August 2, 2012 for failure to state a claim. Defs.' Mot. to Dismiss [Dkt. # 3]. On March 28, 2013, the Court denied defendants' motion. See FEC v. Craig for U.S. Senate, 933 F.Supp.2d 111, 113 (D.D.C.2013). Accepting the allegations in the complaint as true, the Court found that the FEC had stated a claim that defendants violated the Act by converting campaign funds to personal use. Id. at 116–119. The Court further found that defendants had failed to demonstrate that they were immune from prosecution based on their alleged reliance on prior FEC Advisory Opinions because all of those opinions were distinguishable. Id. at 120–25.

Following the Court's ruling on the motion to dismiss, on April 11, 2013, defendants filed an answer that admitted nearly all of the factual allegations in the complaint. See Answer ¶¶ 12–31. Then, on September 30, 2013, the FEC moved for summary judgment. FEC's Mot. for Summ. J. [Dkt. # 16] (“FEC Mot.”). The FEC sought the following relief in addition to the entry of judgment in its favor: an order disgorging from Senator Craig the $216,984 disbursed to Sutherland, Asbill & Brennan LLP and Kelly & Jacobson; a $70,000 civil penalty against Senator Craig; a $70,000 civil penalty against the Craig Committee; a declaration that defendants violated the Act; and a permanent injunction against all defendants prohibiting them from violating the Act in the future. Id. at 14. Defendants opposed the FEC's motion on November 13, 2013, arguing in part that a portion of the legal fees were lawful campaign expenditures. Defs.' Opp. [Dkt. # 19]. Plaintiff filed its reply on January 10, 2014. FEC's Reply Mem. [Dkt. # 21] (“FEC Reply”). The Court heard oral argument on plaintiff's motion on July 17, 2014. After the hearing, the Court ordered defendants to submit a supplemental pleading “itemizing and quantifying all of the legal expenses included in any of the bills submitted ... by Kelly & Jacobson and Sutherland, Asbill, and Brennan” that defendants maintained were permissible. July 17, 2014 Minute Order. Defendants submitted their pleading on August 15, 2014, and the FEC responded on August 29, 2014. Defs.' Pleading Itemizing & Quantifying Legal Expenses [Dkt. # 24] (“Defs.' Supp. Mem.”); FEC's Resp. to Defs.' Pleading [Dkt. # 25] (“FEC Resp.”).

STANDARD OF REVIEW

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as...