Federal Election Comm'n. v. Toledano

• Decision Date: 07 November 2002
• Docket Number: No. 01-56762.,01-56762.
• Citation: 317 F.3d 939
• Parties: FEDERAL ELECTION COMMISSION, Plaintiff-Appellee, v. James TOLEDANO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

317 F.3d 939

FEDERAL ELECTION COMMISSION, Plaintiff-Appellee, v. James TOLEDANO, Defendant-Appellant.

No. 01-56762.

United States Court of Appeals, Ninth Circuit.

Argued July 9, 2002.

Submitted September 2, 2002.

Filed November 7, 2002.

As Amended on Denial of Rehearing January 30, 2003.

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James Toledano, pro se, Santa Ana, CA, for the defendant-appellant.

Vivien Clair, Attorney, Federal Election Commission, Washington, DC, argued for the plaintiff-appellee. Lawrence H. Norton, General Counsel, and Richard B. Bader, Associate General Counsel, Federal Election Commission, Washington, DC, joined her on the brief.

Appeal from the United States District Court for the Central District of California; Gary A. Feess, District Judge, Presiding. D.C. No. CV-00-06526-GAF.

Before: KOZINSKI and FERNANDEZ, Circuit Judges, and KING,^* District Judge.

KOZINSKI, Circuit Judge.

Any person who receives a contribution in excess of $50 for a political committee must forward the contribution and the donor's information to the committee's treasurer "no later than 10 days after receiving the contribution." 2 U.S.C § 432(b)(2)(B). We plumb the deep mysteries of this language to figure out what it could possibly mean.

I

James Toledano, a lawyer admitted to practice in California, was chairman of the Orange County Democratic Party during the 1996 primary election. About three weeks before the primary, he received a $10,000 contribution check at his law office. The check was made out to the "Democratic Party of Orange County" by Debra and Paul LaPrade, sister and brother-in-law of James Prince, one of four candidates seeking the party's nomination for California's 46th Congressional District. Unbeknownst to the party's treasurer or anyone else, Toledano took the check to a bank, opened a new account in the name of "Democratic Party of Orange County II (Federal)" and deposited the money. At some point after the check was written, the roman numeral "II" was mysteriously added to the payee line to match the name of the account. Instead of providing the party's contact information for the new account, Toledano listed his law office's address and telephone number, and gave himself sole signatory authority.

That evening, Toledano attended the party's executive committee meeting, where the treasurer and other board members were present. Toledano said nothing about the contribution, even though he reported various other matters to the board, and even though the $10,000 check was hardly routine. It was, in fact, twenty-five times the next-largest donation to the party that year. Days and weeks passed — to say nothing of the ten-day statutory deadline — yet the treasurer remained in the dark. Toledano's failure to forward the check and the donors' information to the treasurer was no oversight. Toledano later admitted that he intentionally kept the contribution secret because he knew that, if he told anyone, his plan for the money would be thwarted.

And a plan he did have. Money in hand, he secretly arranged with James Prince's campaign staff — Prince for Congress — to print and mail pamphlets, complete with Prince's photograph, notifying voters of Prince's endorsement by the Democratic Party.¹ The pamphlets consumed all the funds in the undisclosed account, plus $277.87 from Toledano's own pocket.

Prince lost the primary, but with publicity comes scrutiny. When the other members of the party's executive committee found out about the mailings, they reported Toledano's manipulations to the press. The Federal Election Commission (FEC) began an investigation. It discovered that sister Debra and brother-in-law Paul LaPrade had already contributed the maximum allowable amount to Prince's election campaign before they made their latest donation. The LaPrades admitted to the FEC that the $10,000 check, although ostensibly made to the Orange County Democratic Party, was actually earmarked for Prince's election pamphlets and designed to evade campaign contribution limits, in violation of 2 U.S.C. § 441a(a)(1)(A) ("No person shall make contributions to any candidate and his authorized political committees with respect to any election for Federal office which, in the aggregate, exceed $1,000."). See 11 C.F.R. § 110.1(h)(2) (providing that a contributor may not evade limits on how much he can donate to a candidate's campaign by giving money to a political committee "with the knowledge that a substantial portion will be contributed to, or expended on behalf of, that candidate for the same election"). The LaPrades and Prince for Congress soon conceded wrongdoing and paid a hefty fine. But not Toledano.

The FEC brought this enforcement action in federal district court seeking civil penalties and other relief against Toledano for violating the Federal Election Campaign Act (FECA). Representing himself below and on appeal, Toledano admits that he spoke to Debra LaPrade about the contribution and told her to send the check to his law office rather than to that of the Democratic Party; that he didn't tell anyone from the party about the contribution; and that he spent all the money on Prince's campaign. He agrees that he neglected to send the contribution or the donors' information to the treasurer within ten days — or ever. See 2 U.S.C. § 432(b). Still, Toledano insists that he didn't violate the law and that the district court erred in granting summary judgment against him.

Toledano maintains that 2 U.S.C. § 432(b), despite its mandatory and straightforward language, cannot mean what it says. He contends that there are disputed issues of material fact that, if decided in his favor, would excuse his failure to comply with the statutory requirement. Toledano also marshals a pastiche of other arguments — judicial estoppel, statute of limitations, and the district court's abuse of its broad remedial discretion — to challenge the district court's decision.

II

Toledano stated under oath: "I received the [$10,000] check[.] I took it to Marine National Bank,.... and opened a new account with it.... I listed myself as the signatory .... I used my office address on the account ...." He did all these things "without consulting the Executive Committee or the Treasurer" and kept his actions under wraps past the statutory ten-day deadline because "I had formed the habit of doing everything ... without notifying the Executive Committee because I knew that whatever I wanted would be voted down for no other reason than spite and vindictiveness."²

It is undisputed, therefore, that Toledano (1) received a contribution, (2) whose amount exceeded $50, and (3) failed to present the contribution or the donors' names and addresses to the treasurer within ten days. The relevant statutory provision states as follows:

Every person who receives a contribution for a political committee which is not an authorized committee shall— ... if the amount of the contribution is in excess of $50, forward to the treasurer such contribution, the name and address of the person making the contribution, and the date of receipt of the contribution, no later than 10 days after receiving the contribution.

2 U.S.C. § 432(b)(2)(B) (emphasis added). On its face, Toledano's conduct appears to be a clear violation of the statutory requirement. But Toledano denies he did anything wrong because "Congress did not and could not have intended such a mechanistic view of the statute."

Toledano derisively calls the FEC's interpretation of the statute the "fingerprint rule." It simply cannot be, he asserts, that "literally hundreds of thousands of campaign contribution checks, representing literally millions of dollars," must pass through the treasurer's own hands and be impressed with the treasurer's fingerprints. The treasurer must be permitted to have agents who assist him, and he, Toledano, was one such agent. As chair of the party, he was entitled to accept and deposit contribution checks.

Toledano does not claim that the treasurer actually authorized him to act on the treasurer's behalf, or that the party's bylaws gave the chair such authority; Toledano readily admits that his actions violated the bylaws. See Supplemental Declaration of James Toledano at 9-10. Toledano nevertheless maintains he had de facto authority to act as treasurer because he was convinced that the real treasurer was incompetent and failed to discharge his duties responsibly.

According to Toledano's sworn declaration and deposition, "the painful reality [was that] the Treasurer of the Orange County Democratic Party ... was unreachable for days on end," "getting harder and harder to find," and becoming "less and less responsible." "As a result, the last thing that I would ever have done would be to give [the treasurer] a check the proceeds of which needed to be spent in a hurry." The executive committee, moreover, was paralyzed by continuing hostilities; the members were "virulent and vicious." Therefore, Toledano explains, "[i]t became totally obvious to me that I would get nothing done if I tried to work with the [committee]." "I could have proposed God, motherhood and apple pie, and it would have been voted down.... As a result of that, I never even thought about telling [the committee]."

We agree with Toledano that the statute does not impose a mechanistic "fingerprint rule." The treasurer is authorized to employ designated agents to assist him. See 2 U.S.C. § 432(a) (requiring the "authorization of the treasurer or his or her designated agent" (emphasis added)); 11 C.F.R. § 102.9 ("The treasurer of a political committee or an agent authorized by the treasurer to receive contributions and make expenditures shall fulfill [the listed] record keeping duties ...." (emphasis added)). But, as noted, Toledano did not have actual authority to act for the treasurer, and the party's bylaws gave him no authority to receive and spend money without the approval of the executive...