Federal Election Com'n v. Reform Party of U.S.

Decision Date01 March 2007
Docket NumberNo. 05-17083.,05-17083.
Citation479 F.3d 1302
PartiesFEDERAL ELECTION COMMISSION, Plaintiff-Appellee, v. REFORM PARTY OF THE UNITED STATES of America, Defendant-Appellant.
CourtU.S. Court of Appeals — Eleventh Circuit

Appeal from the United States District Court for the Northern District of Florida, No. 04-00079-CV-MP-AK, Maurice M. Paul, J D. Andrew Byrne, Cooper, Byrne, Blue & Schwartz, PLLC, Tallahassee, FL, for Defendant-Appellant.

Lawrence H. Norton, Colleen T. Sealander and Richard B. Bader, Fed. Elec. Com'n, Washington, DC, for Fed. Elec. Com'n.

Appeal from the United States District Court for the Northern District of Florida.

Before ANDERSON and MARCUS, Circuit Judges, and ALTONAGA,* District Judge.


The Reform Party of the United States ("the RPUSA") appeals the district court's grant of summary judgment in favor of the Federal Election Commission ("the Commission"), and its entry of an injunction limiting the manner in which the RPUSA may spend its money pending satisfaction of its repayment obligation. The Commission filed suit against the RPUSA, and its treasurers William D. Chapman, Sr. ("Chapman") and Lee Dilworth ("Dilworth"), and the Reform Party 2000 Convention Committee ("Convention Committee") and its treasurer, Gerald M. Moan ("Moan"), pursuant to 26 U.S.C. § 9010(b). In its suit, the Commission sought the recovery of $333,558.00 in public funds previously determined by the Secretary of the Treasury to be owed by the RPUSA pursuant to 26 U.S.C. § 9007, as well as injunctive and declaratory relief. The RPUSA and the other named Defendants presented several defenses, filed a counterclaim against the Commission, and filed cross-claims against Defendant Chapman and the Convention Committee.

The RPUSA argues that summary judgment was improperly granted because (1) the district court erroneously found it did not have jurisdiction to hear the RPUSA's defenses and claims against the Commission; (2) the RPUSA was denied discovery; and (3) the injunction violates the RPUSA's first amendment right to free speech. We conclude that the court correctly determined it lacked jurisdiction to entertain the defenses and counterclaim, and that the RPUSA was not improperly denied discovery. We do not reach the merits of the first amendment challenge to the injunctive portion of the order. Accordingly, we AFFIRM.1


The Commission is an independent agency with exclusive jurisdiction to administer, interpret, and civilly enforce the Federal Election Campaign Act of 1971, as amended ("FECA"), 2 U.S.C. §§ 431-455, and the Presidential Election Campaign Fund Act ("Fund Act"), 26 U.S.C. §§ 9001-9013. The Commission administers federal funding for presidential nominating conventions. See Freedom Republicans v. FEC, 13 F.3d 412, 414 (D.C.Cir. 1994).

In November 1997, the RPUSA registered with the Commission as the national committee of the Reform Party, and in the 2000 election cycle was a minor party within the meaning of 26 U.S.C. § 9002(7). Dilworth was the treasurer of the RPUSA at the time of the amended complaint, and Chapman was the RPUSA's treasurer at the time the litigation began. The treasurers are responsible for accepting all receipts and authorizing disbursements on behalf of the RPUSA as well as keeping records of the RPUSA's receipts and disbursements and filing required reports with the Commission for public disclosure. See 2 U.S.C. §§ 432, 433 and 434.

The Convention Committee is a subordinate committee of the RPUSA, established by the RPUSA for the purpose of acting on its behalf in receiving public funds to finance the RPUSA's 2000 presidential nominating convention and using those funds to conduct the convention. See 11 C.F.R. § 9008.3(a)(2). Moan is the treasurer of the Convention Committee.

The Fund Act authorizes national party committees of eligible major and minor parties2 to receive public funds from the Presidential Election Campaign Fund in order to defray certain expenses incurred in a presidential nominating convention. See 26 U.S.C. § 9008. Pursuant to 11 C.F.R. § 9008.3(a), to qualify for entitlement to payments from the Presidential Election Campaign Fund, the national committee of a party must establish a convention committee and file an application statement, and both the national committee and the convention committee must file an agreement agreeing to certain enumerated conditions. See 11 C.F.R. § 9008.3(a)(4)(i)-(iv).

On September 10, 1999, the National Committee of the RPUSA submitted an application for public presidential nominating convention funding, agreeing to the required conditions, and establishing the Convention Committee as the committee responsible for conducting the day to day arrangements and operations for its 2000 presidential nominating convention. The chair of the Convention Committee was selected and identified. The RPUSA, via its National and Convention Committees, agreed to "an audit and examination pursuant to 26 U.S.C. 9008(g) and 11 C.F.R. 9008.11 of all convention expenses," to assume the "burden of proving that disbursements by the convention committee were for purposes of defraying convention expenses," and, after the audit, to "pay any amount required to be paid under 26 U.S.C. 9008(h) and 11 C.F.R. 9008.12." (R1-61 at Ex. 5). In reliance on the promises made by the RPUSA and the RPUSA's compliance with statutory requirements for the receipt of such funds, the Commission certified to the Secretary of the Treasury that the RPUSA was entitled to payments. The Convention Committee of the RPUSA eventually received $2,522,690.00.

After the 2000 Reform Party USA presidential nominating convention, which ended on August 13, 2000, and pursuant to the Fund Act, 26 U.S.C. § 9008(g), the Commission conducted an audit of the Convention Committee. The audit revealed certain expenditures that either were not permissible uses of public funds under section 9008(c), or were inadequately documented, including a $300,000 payment to a company called The Performance Group. The Commission determined that the RPUSA was obligated to repay $333,558, which consisted of the payment to The Performance Group plus additional non-convention related expenses.

On September 30, 2002, the Commission notified the Convention Committee of the Commission's repayment determination, and provided it with a copy of the Final Audit Report.3 On November 26, 2002, the RPUSA submitted a timely request for administrative review of the repayment determination, and on October 8, 2003, the Commission issued its decision on the request for administrative review, finding that the RPUSA was required to repay the $333,558 to the United States Treasury, and issuing with the decision a detailed Statement of Reasons. By correspondence dated October 14, 2003, the Commission notified the RPUSA and the Convention Committee of its Post-Administrative Review Repayment Determination, and gave each a copy of the Statement of Reasons. A subsequent petition for rehearing was denied by the Commission as untimely, and on March 29, 2004, Shawn O'Hara, national chairman of the RPUSA, filed a petition for review in the United States Court of Appeals for the District of Columbia Circuit.

The D.C. Circuit dismissed that petition as untimely on March 31, 2004. Thereafter, the Commission filed this suit, seeking repayment of the $333,558. The RPUSA asserted several defenses, among them that it was the Convention Committee that had received payments from the Commission, not the National Committee, and that under 26 U.S.C. § 9008(h), the Commission can only require repayments from the National Committee. The RPUSA brought a counterclaim pursuant to 26 U.S.C. § 9011(b) and the mentioned cross-claims, seeking declaratory relief and damages on the basis that the Convention Committee is liable to the RPUSA, and that the Commission had acted upon false and fraudulent reports and engaged in misconduct against the RPUSA.

The Commission's motion for summary judgment was filed on April 25, 2005. Several months later, the RPUSA sought discovery and the Commission responded with a motion to stay discovery pending a ruling on the summary judgment motion. The motion to stay discovery was denied as moot given the resolution of the summary judgment motion.

The district court granted summary judgment, finding that once the D.C. Circuit rejected the petition for review as untimely, the RPUSA was foreclosed from raising claims or defenses that had not been properly presented before the D.C. Circuit. Persuaded that the D.C. Circuit is the only venue in which repayment determinations made by the Commission may be challenged, see 26 U.S.C. § 9011(a), and because no such challenge was properly presented, the district court declared that the Commission was entitled to recovery of the $333,558. In ordering repayment, the district court also included language that enjoined the RPUSA "from diverting any of its assets to any other expenditures other than payment of federal taxes until it completes its repayment obligation."

The district court ordered that the Clerk enter judgment for the Commission. This was done on November 23, 2005, and the case was closed.


The district court's opinion is not a final decision within the meaning of 28 U.S.C. § 1291, because it did not adjudicate or address the cross-claims.4 However, because the order under consideration enjoins the RPUSA from diverting any of its assets to any expenditures other than payment of federal taxes until it completes its repayment obligation, the opinion is justiciable pursuant to 28 U.S.C. § 1292(a)(1), and the parties acknowledge the Court's jurisdiction.

We review the district court's grant of summary judgment de novo, considering the facts and inferences to be drawn therefrom in the light most favorable to the nonmoving party, in this case the RPUSA. Fed.R.Civ.P. 56(c); Lofton v. Sec'y of the Dep't of Children & Family...

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