Kuhn for Cong. v. Fed. Election Comm'n, Civ. No. 2:13-cv-3337-PMD-WWD

CourtUnited States District Courts. 4th Circuit. United States District Court of South Carolina
Docket NumberCiv. No. 2:13-cv-3337-PMD-WWD
Decision Date08 October 2014


Civ. No. 2:13-cv-3337-PMD-WWD


October 8, 2014


In the instant action, Plaintiff challenges the November 5, 2013, decision of Defendant to fine Plaintiff $8,800 for the late filing of its April 2013 Quarterly Report. (See Dkt. No. 1 at 3 of 4.) This matter is before the Court upon Defendant's Motion to Dismiss, and the motion has been referred to the undersigned for the issuance of a Report and Recommendation on the motion. (See Dkt. No. 27.) For the reasons set forth herein, Defendant's motion should be granted.


1. The Federal Election Campaign Act, 52 U.S.C. §§ 30101-30146 (formerly 2 U.S.C. §§ 431-457) ("FECA"), requires every "political committee" — which includes candidate campaigns, political parties, and other political organizations, see 52 U.S.C. § 30101(4)-(6) (2 U.S.C. § 431(4)-(6)) — to designate a treasurer to maintain the committee's financial records. See 52 U.S.C. § 30102(a)-(d) (formerly 2 U.S.C. § 432(a)-(d)).1

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2. The treasurer must sign and file reports that detail, among other things, the committee's receipts and disbursements. 52 U.S.C. § 30104(a)-(b) (2 U.S.C. § 434(a)-(b)).

3. FECA establishes a periodic schedule for such reports. Under that schedule, a candidate committee must file (i) a pre-election report 12 days before the relevant election; (ii) a post-election report 30 days after the relevant election; and (iii) quarterly reports 15 days after each calendar quarter ends, "except that the report for the quarter ending December 31 shall be filed no later than January 31 of the following calendar year." 52 U.S.C. § 30104(a)(2)(A)(i)- (iii)) (2 U.S.C. § 434(a)(2)(A)(i)-(iii)).

4. Authorized committees for candidates seeking election to the United States House of Representatives file their reports directly with the Federal Election Commission ("FEC" or "Commission"). 52 U.S.C. § 30102(g)(3) (2 U.S.C. § 432(g)(3)).

5. The FEC is the independent agency of the United States government with exclusive jurisdiction over the administration, interpretation, and civil enforcement of FECA. See generally 52 U.S.C. §§ 30106(b)(1), 30107(a), 30108 (2 U.S.C. §§ 437c(b)(1), 437d(a), 437g).

6. FECA establishes a detailed administrative process for the Commission to review alleged violations of the Act. See 52 U.S.C. § 30109(a) (2 U.S.C. § 437g(a)); see also 11 C.F.R. §§ 111.3-111.24 (regulations governing Commission's enforcement process).

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7. In 1999 Congress amended FECA to create a streamlined enforcement system for violations of the periodic filing requirements. See Treasury and General Government Appropriations Act, 2000, Pub. L. No. 106-58, § 640, 113 Stat. 430, 476-77 (1999) (codified at 52 U.S.C. § 30109(a)(4)(C) (2 U.S.C. § 437g(a)(4)(C))). Specifically, Congress authorized the Commission to directly assess civil money penalties for violations of 52 U.S.C. § 30104(a), (2 U.S.C. § 434(a)), which establishes, inter alia, the deadlines for political committees' disclosure reports. Congress recently amended FECA to extend the Commission's Administrative Fines program through December 31, 2018. Extension of Admin. Penalty Auth. of Federal Election Commission, Pub. L. 113-72 § 1, 127 Stat. 1210, 1210 (Dec. 26, 2013).

8. In 2000, the Commission promulgated regulations implementing FECA's administrative-fines mechanism. See Administrative Fines, 65 Fed. Reg. 31,787 (May 19, 2000) (codified as amended at 11 C.F.R. §§ 111.30-111.46). These regulations establish the procedures that the Commission follows in cases that the Commission determines are appropriate for treatment under the administrative-fines process. 11 C.F.R. § 111.31.

9. The Commission's regulations define overdue reports as "late" up until a certain number of days after the due date; after that date, the report is defined as "not filed." 11 C.F.R. § 111.43(e)(2).

10. Reports that are not election sensitive — including the quarterly reports due in April of each year, 11 C.F.R. § 104.5(a)(1) — are "late" if filed within thirty days of their due date, and they are considered "not filed" after that point. 11 C.F.R. § 111.43(e)(1).

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11. The Commission's regulations also establish the schedules of civil penalties authorized by 52 U.S.C. § 30109(a)(4)(C)(i)(II) (2 U.S.C. § 437g(a)(4)(C)(i)(II)). See 11 C.F.R. § 111.43(a)-(c). These penalty schedules take into account whether the untimely (or not filed) report was election sensitive, how late it was filed, the dollar amount of the receipts and disbursements it detailed, and the number of prior violations by the respondent. See id.

12. John R. Kuhn was a candidate in the Republican Party's 2013 special election primary for the South Carolina First District House of Representative seat. (Pl.'s Pet. for Review ¶¶ 1, 2.)

13. Plaintiff Kuhn for Congress was Mr. Kuhn's principal campaign committee. (AR001-002.2) Kuhn for Congress registered with the FEC in January 2013 as the principal campaign committee for Mr. Kuhn's special election campaign by filing its FEC Form 1. (Id.)

14. Under 52 U.S.C. § 30104(a)(4)(A) (2 U.S.C. § 434(a)(4)(A)), the Kuhn Committee's April 2013 quarterly report was due on April 15, 2013, after the special election primary held on March 19, 2013, (Pet. at 2), which the candidate lost.

15. The Kuhn Committee failed to timely file its April 2013 Quarterly report. (Pet. at 8, 10).

16. On May 3, 2013, the FEC's Assistant Staff Director emailed the Kuhn Committee a letter notifying the Committee and its treasurer that the April 2013 Quarterly Report had not been filed by the statutory deadline. (AR014-015, AR016.)

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That letter advised the Committee to file the report immediately and warned that civil money penalties might result from the Committee's failure to timely file the report. (AR014.)

17. The Kuhn Committee filed its April 2013 Quarterly Report on August 20, 2013 (Pet. at 10), more than 120 days after the statutory deadline for filing the report. 52 U.S.C. § 30104(a)(2)(A)(iii) (2 U.S.C. § 434(a)(2)(A)(iii)).

18. Because the Kuhn Committee's April 2013 Quarterly Report was filed more than 30 days after it was due, the Commission deemed the report "not filed" under the applicable FEC regulation, 11 C.F.R. § 111.43(e)(1).

19. The Commission initiated an administrative-fines proceeding against the Kuhn Committee for its unfiled April 2013 Quarterly Report, and the matter was designated as AF No. 2751. (AR032-035.)

20. On July 23, 2013, the Commission decided by a vote of 5 - 0 to find "reason to believe" that the Kuhn Committee had violated 52 U.S.C. § 30104(a) ( 2 U.S.C. § 434(a)) by failing to file the required April 2013 Quarterly Report. (AR036-037.)

21. In the absence of reported campaign activity, i.e. the committee's total receipts and disbursements for the period covered by the unfiled report, the Commission estimated $343,963 of campaign activity pursuant to the formula specified in the Commission's regulations. AR035-038; see 11 C.F.R. § 111.43(d)(2)(i) (explaining formula for estimating unreported campaign activity of political committees).

22. Based on the Commission's schedule of civil money penalties at 11 C.F.R. § 111.43, the Commission calculated the appropriate penalty for the Kuhn Committee's reporting violation to be $8,800. (AR038.)

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23. The Commission notified the Kuhn Committee and its treasurer, Amanda Michelle Perry, of its reason-to-believe determination in a letter dated July 24, 2013, that was successfully delivered the following day. (AR038-050, AR051-052.)

24. In addition to informing the Kuhn Committee and its treasurer of the Commission's reason-to-believe determination and civil penalty calculation, the letter explained that any challenge to the Commission's reason-to-believe finding and/or civil penalty calculation must be submitted to the Commission in writing and received within 40 days of that finding, i.e. by September 1, 2013. (AR038-039.)

25. The letter further explained the three permissible grounds for challenges to an administrative fine: "(1) a factual error in the RTB finding; (2) miscalculation of the calculated civil money penalty by the FEC; or (3) your demonstrated use of best efforts to file in a timely manner when prevented from doing so by reasonably unforeseen circumstances that were beyond your control." (AR039.) The letter provided specific examples of circumstances that would be considered reasonably unforeseen and beyond the Committee's control as well as circumstances that do not meet that...

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