Federal Election Com'n v. Furgatch

Decision Date08 March 1989
Docket NumberNo. 88-6047,88-6047
Citation869 F.2d 1256
PartiesFEDERAL ELECTION COMMISSION, Plaintiff-Appellee, v. Harvey FURGATCH, Defendant-Appellant.
CourtU.S. Court of Appeals — Ninth Circuit

H. Richard Mayberry, Jr., Washington, D.C., for defendant/appellant.

Jacqueline Jones-Smith, Washington, D.C., for plaintiff/appellee.

Appeal from the United States District Court for the Southern District of California.

Before FLETCHER, PREGERSON and LEAVY, Circuit Judges.

FLETCHER, Circuit Judge:

After this court rejected Furgatch's statutory and constitutional defenses to the Federal Election Commission's civil action against him, FEC v. Furgatch, 807 F.2d 857 (9th Cir.1987), the district court on remand granted summary judgment in favor of the Federal Election Commission (FEC). Furgatch appeals from the portion of the district court's order assessing a civil penalty of $25,000 and permanently enjoining him from future similar violations of the Federal Election Campaign Act (FECA or the Act). We affirm in part, reverse in part, and remand.

I

Shortly before the 1980 presidential election, Furgatch placed full page advertisements in the New York Times (October 28, 1980) and the Boston Globe (November 1 1980). The ads criticized President Carter and urged, "Don't let him do it." The two ads together cost Furgatch $25,008. The Times ad stated that it was not authorized or paid for by a candidate, but the Globe ad contained no such disclaimer. Furgatch did not report his expenditure on the ads to the FEC.

On March 25, 1983, the FEC filed a complaint against Furgatch, alleging that he had violated Secs. 434(c) and 441d of the FECA. Sec. 434(c)(2) states that "[a]ny independent expenditure ... aggregating $1,000 or more made after the 20th day, but more than 24 hours, before any election shall be reported [to the FEC] within 24 hours after such independent expenditure is made." Sec. 441d states that an advertisement that is an independent expenditure must state whether or not the candidate authorized or paid for the advertisement.

The district court dismissed the FEC's complaint because it found that Furgatch's newspaper ads were not independent expenditures and thus were not covered by these two provisions. We reversed. Furgatch urged the district court on remand to find that the ads were not independent expenditures "notwithstanding the decision of the Court of Appeals." Supp. ER 1-2. Furgatch filed an expenditure report with the FEC on June 3, 1988, 38 days after the district court ordered him to do so.

Furgatch now argues that (1) the district court abused its discretion in assessing a $25,000 civil penalty; (2) the relevant statutory provision, Sec. 437g(a)(6)(B), authorizes an injunction only when the defendant is about to violate the FECA; (3) the FEC made no such showing; (4) the injunction violates Rule 65(d)'s specificity requirement; (5) the injunction violates Rule 65(d)'s requirement of a statement of reasons for the injunction. We have jurisdiction pursuant to 2 U.S.C. Sec. 437g(a)(9).

II

Section 437g(a)6)(B) permits a court to assess a civil penalty "which does not exceed the greater of $5,000 or an amount equal to any contribution or expenditure involved in such violation." The total amount of expenditures involved in Furgatch's violation was $25,008, and the penalty assessed was $25,000. Furgatch argues that the district court abused its discretion by imposing what is essentially the statutory maximum penalty. The district court's assessment of a civil penalty is reviewed for an abuse of discretion. FEC v. Ted Haley Congressional Committee, 852 F.2d 1111, 1116 (9th Cir.1988).

Because there are very few cases discussing the factors which should guide a court's discretion in imposing a civil penalty under Sec. 437g(a)6)(B), we seek guidance from cases that deal with the imposition of discretionary civil penalties under other federal statutes. According to these cases, in determining the amount of the penalty, a district court should consider (1) the good or bad faith of the defendants; (2) the injury to the public; (3) the defendant's ability to pay; and (4) the necessity of vindicating the authority of the responsible federal agency. United States v. Danube Carpet Mills, Inc., 737 F.2d 988, 993 (11th Cir.1984). 1

Analysis of these factors in this case support the district court's decision to assess a $25,000 penalty. Furgatch refused to comply with the FEC's request for a report on the 1980 expenditures until the district court on remand ordered him to do so. As the FEC notes, Furgatch's filing of this report occurred over a year after this court definitively rejected his defenses to the FEC's action against him. The district court was free to conclude that the absence of good faith efforts by Furgatch to undo or cure his violations is indicative of the need for a large penalty to deter future wrongdoing. 2 See, e.g., FEC v. Ted Haley Cong. Commission, 852 F.2d at 1116 (upholding the district court's decision not to assess a civil penalty, which was based in part on the " 'rapid repayment of the [allegedly improper] loan by the former candidate from personal funds' ") (quoting district court opinion); Danube Carpet Mills, Inc., 737 F.2d at 994 (considering the defendant's failure to take "prompt remedial action upon discovery of the violations" in upholding civil penalty). Moreover, Furgatch's failure to comply with the FEC's demand for an expenditure report is relevant to an assessment of the need to vindicate the agency's authority.

The "public harm" factor also supports imposition of the $25,000 penalty. The importance of the FECA's reporting and disclosure provisions, 3 and the difficulty of proving that violations of them actually deprived the public of information, justify a rule allowing a district court to presume harm to the public from the magnitude or seriousness of the violation of these provisions. See United States v. Reader's Digest Association, Inc., 662 F.2d 955, 969 (3d Cir.1981) (court presumed actual deception of the public from the fact that Reader's Digest distributed materials in violation of a consent order); Danube Carpet Mills, Inc., 737 F.2d at 994 (court presumed harm to the public from the fact that the defendant distributed carpet which failed to conform with the flammability standard). In this case, the violations were clearly serious, and serious public harm should therefore be presumed. A full-page pre-election ad in the Boston Globe attracts many readers; these readers deserve to know whether a candidate authorized the ad. Further, according to the FEC, Furgatch's $25,008 was the largest independent expenditure in opposition to a presidential candidate by any individual in the country in the 1980 election.

Finally, Furgatch concedes that his ability to pay was a factor which "did not weigh in favor of mitigation of the penalty." Appellants Brief at 29, n. 8.

III

Furgatch argues that the district court erred in granting an injunction pursuant to 2 U.S.C. Sec. 437g(a)(6)(B) because that section permits a court to issue an injunction only when the defendant "is about to commit" a violation of the Federal Election Campaign Act. Section 437g(a)(6)(B) provides that "[i]n any civil action instituted by the Commission under subparagraph (A), the court may grant a permanent or temporary injunction, restraining order, or other order, including a civil penalty which does not exceed the greater of $5,000 or an amount equal to any contribution or expenditure involved in such violation, upon a proper showing that the person involved has committed, or is about to commit (if the relief sought is a permanent or temporary injunction or a restraining order), a violation of this Act...." 2 U.S.C. Sec. 437g(a)(6)(B) (West 1985 & Supp.1988). Furgatch notes that the phrases "has committed" and "or is about to commit" are set apart by a comma. He then reasons that the juxtaposition of the phrase "is about to commit" and the parenthetical phrase "if the relief sought is a permanent or temporary injunction or a restraining order" demonstrates Congress's intent to limit injunctive relief under Sec. 437g(a)(6)(B) to cases where the "person involved" is "about to" violate the Act.

The Federal Election Commission argues that Sec. 437g(a)(6)(B) gives a court the discretion to issue an injunction on the basis of either a past or threatened future violation. The FEC notes that the parenthetical phrase was inserted by Congress as part of the 1980 amendments to the Act. This phrase, the FEC contends, was intended merely to clarify that a civil penalty is not available where the court finds that the "person involved" has not yet committed a violation of the Act. As the FEC notes, Sec. 437g(a)(6)(B)'s predecessor provision could have been read literally to authorize a civil penalty when a person is about to commit a violation of the Act. See Sec. 313(a)(5)(C) of Pub.Law 94-283, 90 Stat. 483 ("the court may grant permanent or temporary injunction, restraining order, or other order, including a civil penalty ... upon a proper showing that the person involved has engaged or is about to engage in a violation of this Act ...").

The plain language of the statute does not indicate whether Congress intended to limit injunctive relief to cases involving persons who are about to violate the Act. The language of the statute does not clearly indicate whether the parenthetical phrase modifies only the "about to commit" phrase or whether it modifies both the "has committed" and "about to commit" phrases. Moreover, the "is about to" phrase and the parenthetical phrase read together simply state that a district court may grant an injunction if the defendant is about to violate the Act. These two phrases read together do not show that the converse is also true--that a district court may not grant an injunction if the "person involved" is...

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