Federal Election Com'n v. Friends of Jane Harman

• Decision Date: 18 August 1999
• Docket Number: No. CV 98-7691 CAS (JGX).,CV 98-7691 CAS (JGX).
• Citation: 59 F.Supp.2d 1046
• Court: U.S. District Court — Central District of California
• Parties: FEDERAL ELECTION COMMISSION, Plaintiff, v. FRIENDS OF JANE HARMAN, et al., Defendants.

59 F.Supp.2d 1046

FEDERAL ELECTION COMMISSION, Plaintiff, v. FRIENDS OF JANE HARMAN, et al., Defendants.

No. CV 98-7691 CAS (JGX).

United States District Court, C.D. California, Western Division.

August 18, 1999.

COPYRIGHT MATERIAL OMITTED

Lawrence M. Noble, Stephen E. Hershkowitz, Richard B. Bader, Erin K. Monaghan, Laura M. Friedman, Federal Election Com'n, Washington, DC, for plaintiff.

Charles F. Palmer, Perkins Coie, Los Angeles, CA, Marc E. Elias, Brian G. Svoboda, Robert F. Bauer, Perkins Coie, Washington, DC, for defendants

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

SNYDER, District Judge.

I. INTRODUCTION

This case is an enforcement action brought by the Federal Election Commission ("FEC") against defendants Friends of Jane Harman ("Harman Campaign") and Jacki Bacharach ("Bacharach"). The allegations in this lawsuit arise out of a fundraising event held for former United States Representative Jane Harman ("Harman") at the headquarters of Hughes Aircraft Company ("Hughes") on October 29, 1993 ("the October 1993 fundraiser").

The FEC filed the complaint in the present action in this Court on September 22, 1998. In its complaint, the FEC alleged that defendants violated 2 U.S.C. § 441b(a) by accepting corporate contributions, and sought an order requiring defendants to disgorge the allegedly prohibited contributions, as well as civil penalties pursuant to 2 U.S.C. § 437g(a)(6)(B). On March 29, 1999, this Court denied defendants' motion to dismiss the complaint. The parties' cross-motions for summary judgment are presently before the Court.

II. FACTUAL BACKGROUND

The FEC is a federal agency with jurisdiction over the administration, interpretation, and civil enforcement of the Federal Election Campaign Act of 1971 ("FECA" or "the Act"), 2 U.S.C. §§ 431 et seq. The Harman Campaign served as an authorized political committee, as defined in 2 U.S.C. § 431(4), for Representative Harman from 1992 to 1994. Bacharach served as treasurer for the Harman Campaign during this time period. See 2 U.S.C. § 432(a).

The principal facts in this litigation are not in dispute. In Spring 1993, Representative Harman met with C. Michael Armstrong ("Armstrong"), then the Chief Executive Officer and Chairman of Hughes. Complaint, ¶ 21; Answer, ¶ 21; Deposition of Jane Harman ("Harman Depo.") at 26:14-27:9, Exhibit 5 to Plaintiff's Statement of Uncontroverted Facts and Conclusions of Law ("Plaintiff's Statement"). Harman asked Armstrong to host a fundraiser for her campaign, and also asked him to support her request for contributions from the Hughes Active Citizenship Committee ("Hughes PAC"). Id. Armstrong agreed to her requests, and told William Merritt ("Merritt"), Vice President of Hughes' Washington D.C. office and the administrator of the Hughes PAC, about the proposed fundraiser. Complaint, ¶ 21; Answer, ¶ 21. On April 22, 1993, Merritt called Jo-Ann Costa ("Costa"), Hughes Director of Public Affairs, and asked her to make arrangements for the fundraiser. Deposition of Jo-Ann Costa ("Costa Depo.") at 38:12-40:17, Exhibit 1 to Plaintiff's Statement. Merritt told Costa she should contact Judy Sitzer ("Sitzer"), a member of Harman's campaign staff, to coordinate the arrangements for the event. Id. at 38:12-39:21.

After receiving Merritt's instructions about the proposed fundraiser, Costa telephoned Hughes' District of Columbia office for further information regarding campaign contribution limits. Id. at 46:14-47:2. She also telephoned Hughes' outside legal counsel at the law firm of Nielsen, Merksamer, Parrinello, Mueller & Naylor (hereafter, "the Nielsen firm") to find out the legal requirements for holding the fundraiser. Id. at 47:3-6. She asked counsel what the best method for holding the fundraiser would be. Id. at 47:3-18. Counsel suggested that the fundraiser be held in the home of a Hughes executive. Id. at 47:14-18. Costa informed Merritt about the legal advice she had received, and Merritt told her that the fundraiser should nonetheless be held at Hughes' corporate offices. Id. at 48:4-9. Costa then spoke to the Nielsen firm again, and sought advice regarding the legal requirements for holding the fundraiser at Hughes. Id. at 48:10-15.

In May 1993, Costa and Sitzer met at Hughes' offices to coordinate arrangements for the fundraiser, and discussed tentative dates in June and July 1993. Id. at 54:3-8. At that time, Costa explained to Sitzer that according to Hughes' legal counsel, the Harman Campaign would have to reimburse Hughes for the cost of the room, the cost of the food, Costa's time, and any materials used. Deposition of Judy Sitzer ("Sitzer Depo.") at 54:5-55:10, 58:9-59-8, Exhibit 3 to Plaintiff's Statement. Sitzer understood that Costa would take care of all arrangements for the fundraiser, including the room and catering. Complaint, ¶ 23; Answer, ¶ 23. Sitzer told Representative Harman about her meeting with Costa, and explained the arrangements made by Costa. Sitzer Depo. at 62:11-22. Sitzer did not discuss the legal implications of the fundraiser with Costa or anyone else at Hughes after the initial lunch meeting. Id. at 76:20-77:7.

Costa wrote a letter to Sitzer dated May 18, 1993, thanking her for her help. The letter stated: "I appreciate your interest in Hughes' invitation to Ms. Harman to join us in a reception in her honor." Exhibit 2 to Costa Depo. During the next few months, the date of the fundraiser was changed several times based on scheduling problems. In early October 1993, Merritt spoke with the Chief of Staff of Harman's congressional office to schedule a date for the Hughes event. The fundraiser was set for October 29, 1993. Costa Depo. at 92:18-93-13. Costa contacted Sitzer to ensure that Sitzer knew the October 29th date had been agreed upon. Complaint, ¶ 24; Answer, ¶ 24. Sitzer suggested to Costa that the contributions be sent to the Harman Campaign's post office box, which was the normal practice for receiving contributions to the Campaign. Sitzer Depo. at 102:10-103-4. Sitzer testified that with respect to this fundraiser, the contributions were instead collected by Costa because "[t]hat is the way Hughes wanted it to be done." Id. at 102:10-13.

In early October 1993, Hughes distributed two invitations to the fundraiser. The first invitation was on Hughes corporate stationery and dated October 12, 1993 ("the October 12 letter"). This letter was drafted by Costa and signed by Armstrong. Costa Depo. at 105:3-10, 109-16-110:3. The letter states "I would personally like to invite you to a reception for U.S. Congresswoman Jane Harman on October 29, 1993." Exhibit 7 to Costa Depo. The letter requested that the addressee respond to Costa. Id. Costa distributed a draft of the October 12 letter to T.G. Westerman ("Westerman"), Senior Vice President for Human Resources and Administration and Chief Administrative Officer for Hughes, Larry Wheeler, Hughes' Director of Congressional Affairs, Merritt, and possibly Sitzer for review.¹ Costa Depo. at 111:3-13. Westerman, who was Costa's supervisor, made a few minor word changes to the draft. Id. at 111:8-15. Armstrong also saw a draft of the letter. Deposition of C. Michael Armstrong ("Armstrong Depo.") at 26:15-18, Exhibit 2 to Plaintiff's Statement. Costa also read the letter to Hughes' outside counsel over the phone. Costa Depo. at 114:7-12. This letter was sent to approximately 233 Hughes executives.

Costa also drafted a second invitation letter for the fundraiser dated October 13, 1993 ("the October 13 letter"). This letter states in part:

You've probably received Mike's invitation to the reception for U.S. Congresswoman Jane Harman on October 29th by now. This letter is to ask you and your senior people to participate in the fundraising portion of the event as Ms. Harman is certain to face well-financed opposition in the next election.

Exhibit 8 to Costa Depo. The letter then specifies contribution amounts according to corporate position, and continues as follows:

Please extend the invitation to contribute to the senior people (Staff Vice Presidents and E9's) reporting to you. Contributions are voluntary.

Personal checks should be made payable to "Friends of Jane Harman" .... Corporate funds cannot be accepted pursuant to Federal Election Commission law. Please forward checks, along with your RSVP, to Jo-Ann Costa, CO/C01/C129, in advance of the event.

Thank you. Your contribution and attendance is appreciated.

Id. The letter was drafted for signature by Westerman and Merritt under the name of the Hughes PAC. Costa drafted the letter with input from Merritt and Westerman. Costa Depo. at 119:1-3. She read a draft of the letter to legal counsel at the Nielsen firm. Id. at 120:2-4. After she drafted the letter, some changes were made to the letter, including the addition of the phrase "please forward checks, along with your RSVP, to Jo-Ann Costa, at the address, in advance of the event." Id. at 121:7-15. The name of the Hughes PAC was also added to the draft letter above the signatures of Merritt and Westerman. Id. at 121:16-17. These changes were in Westerman's handwriting. Id. at 121:7-20.

Costa called the Nielsen firm with questions about the changes "because this draft was significantly different from the information that I had been given in April and the Hughes Active Citizenship Committee was something brand new." Id. at 122:5-18. Costa stated "I read this letter to [legal counsel]. I told them about the letter foot, who signed it, the forwarding of checks, everything, the suggested contributions, the whole bit, and cleared it with outside legal counsel on the phone." Id. at 123:12-17. This letter was distributed to approximately thirty-eight of the most senior executives of Hughes. Id. at 120:12-121:6. It is not clear from the record whether Costa provided a copy of this letter to Sitzer.²

On October 25, 1993, Costa received a memorandum from ...