Lovely v. F.E.C., CIV.A.02-12496-PBS.

• Citation: 307 F.Supp.2d 294
• Decision Date: 09 March 2004
• Docket Number: No. CIV.A.02-12496-PBS.,CIV.A.02-12496-PBS.
• Parties: William A. LOVELY, III, Treasurer, and Committee to Elect Bill Sinnott, Plaintiffs, v. FEDERAL ELECTION COMMISSION, Defendant.
• Court: U.S. District Court — District of Massachusetts

307 F.Supp.2d 294

William A. LOVELY, III, Treasurer, and Committee to Elect Bill Sinnott, Plaintiffs, v. FEDERAL ELECTION COMMISSION, Defendant.

No. CIV.A.02-12496-PBS.

United States District Court, D. Massachusetts.

March 9, 2004.

Richard B. Bader, David B. Kolker, Lawrence H. Norton, Federal Election Commission, Office of the General Counsel, Washington, DC, for Federal Election Commission, Defendant.

William F. Sinnott, Sinnott Law Office, Boston, MA, for Committee to Elect Bill Sinnott, William A. Lovely, III, Plaintiffs.

MEMORANDUM AND ORDER

SARIS, District Judge.

I. INTRODUCTION

Plaintiffs William A. Lovely, III and Committee to Elect Bill Sinnott appeal from a decision of the Federal Election Commission ("FEC") imposing a fine of $1,800 due to a tardy electronic filing of a report required by the Federal Election Campaign Act, 2 U.S.C.A. §§ 431-437 (West 1999 & Supp.2003) ("FECA"). Plaintiffs argue that the report was timely filed on paper and by diskette, albeit in an incorrect electronic format, and that the FEC imposed the fine in violation of the best efforts provision, 2 U.S.C. § 432(i). Both parties have moved for summary judgment.

After review of the briefs and hearing, the Plaintiffs' motion for summary judgment is DENIED and the Defendant's motion for summary judgment is DENIED. The case is vacated and remanded to the FEC for further proceedings in accordance with this Order.

II. BACKGROUND

A. Factual Background

The administrative record contained evidence of the following facts.

In 2001, Bill Sinnott unsuccessfully campaigned for Congress. William A. Lovely, III was the treasurer of the Committee to Elect Bill Sinnott, a political committee within the meaning of 2 U.S.C. § 431(4). It is a self-described grassroots, all-volunteer organization with scant personnel or monetary resources.

Mandatory electronic filing of reports began in January, 2001. On December 28, 2001, the FEC sent a notice reminding campaign committees that the 2001 Year End Report would be due on January 31, 2002, as required by 2 U.S.C. § 434(a)(2)(B)(ii), and cautioning committees that fines would be assessed for late or inaccurate reports. The notice included a four-page handout titled "Electronic Filing" that described the mandatory procedures for filing reports electronically. It specified that reports could be filed either via the internet or by mailing a diskette accompanied by a certification, and also noted that reports had to follow the FEC's Electronic Filing Specification Requirements, which were available online or on paper. The notice stated that "[a]n electronic report is considered `filed' when it is received and validated by the Commission's computer system on or before 11:59 p.m. on the prescribed filing date. Incomplete or inaccurate reports that do not pass the FEC's validation program will not be considered filed." (AR0004.)

Lovely called the FEC several times during January to inquire about the filing requirements and the consequences of not filing electronically. On January 29, 2002, the Electronic Filing Office received and processed a request from Lovely for a password so that he would be able to file the Year End Report electronically.

On January 31, 2002, the Year End Report filing deadline, Lovely experienced difficulty when trying to file his report via the Internet, receiving a message stating that there was a "winsock" error. He called the FEC's Technical Support Center but kept being referred to voicemail, and then tried calling several other persons at the FEC. He called Adam Regan and Patricia Sheppard of the FEC's Reports Analysis Division. Regan gave him instructions on uploading the report to diskette, and advised him to send a paper copy as well. Sheppard told him that the Technical Support Center was backed up with calls but was trying to return all messages that day, and that the paper copy would not be acceptable to the FEC. She suggested that he save the report to diskette and 3end it in. Lovely, using the steps suggested by Regan for uploading the report to diskette, attempted to upload the information to the disk but the computer cited errors that prevented this. (AR0051.) Instead, he sent a paper copy and a diskette via registered mail later that day, with a signed summary page. The report was accurate and complete.

After a delay due to security precautions at the FEC mail room, the diskette arrived on February 13. The FEC rejected the diskette, as it was incorrectly formatted, but posted the paper copy on the FEC's website. Eliza Green of the Technical Support Center left a message for Lovely telling him of the problems. On February 14, Lovely spoke with the Technical Support Center, which told him that the diskette was incorrectly formatted and the report would have to be uploaded or a new diskette sent. Lovely told them he would call back five days later, on February 19, to obtain assistance. On February 15, the FEC sent Lovely a notice that the Committee "may have failed to file" its Year End Report.

Lovely contacted the FEC on February 25, and Green walked Lovely through the steps necessary to save the report to disk — according to Lovely, "the very same steps that Mr. Regan [had] provided on January 31." (AR0051.) Lovely sent the report again on February 26, and then phoned the FEC to reiterate that he had attempted to file the report electronically but had been unable to do so. Lovely explained that he had been busy the past week, and so had not called earlier. On February 27, twenty-seven days after the filing deadline, the FEC received the properly-formatted diskette, which passed the FEC's validation program.

B. Procedural History

On June 14, 2002, a six-person panel at the FEC voted unanimously to find reason to believe ("RTB") that the Committee and Lovely violated 2 U.S.C. § 434(a), and to make a preliminary determination that a civil money penalty of $3100 would be assessed. This fine was based on the number of days the report was late (27) and the number of prior violations (0). On July 23, 2002, Lovely submitted an affidavit challenging the RTB finding.

On November 2, 2002, the FEC's Office of Administrative Review submitted its reviewing officer's recommendation to the FEC, a copy of which was sent to the Committee on November 6. The recommendation summarized the facts at issue, Lovely's submission, and the regulations, and then stated that since Lovely had not raised any of the three defenses permitted by 11 C.F.R. § 111.35(b), the Officer recommended that a fine of $3100 be imposed for the 27 days the filing was late. On November 18, Lovely submitted a letter objecting to the recommendation.

The FEC voted unanimously on November 25, 2002, to make a final determination that the Committee and Lovely had violated 2 U.S.C. § 434(a). The FEC also voted to decrease the civil penalty from $3100 to $1800, "based on the filing, which was postmarked on the filing date, being fourteen days late, after accounting for the irradiation process which resulted in mail delays." (AR0092.) A certification of this vote appears in the administrative record, but the administrative record does not contain an opinion or other statements of reasons by the Commission. There was no oral hearing.

III. JUDICIAL REVIEW STANDARD FOR AGENCY ACTIONS

Section 437g(a)(4)(C)(iii) of the Federal Election Campaigns Act states: "Any person against whom an adverse determination is made under this subparagraph may obtain a review of such determination in the district court of the United States for the district in which the person resides by filing in such court ... a written petition requesting that the determination be modified or set aside."

The parties agree that the correct judicial review standard is governed by the Administrative Procedure Act ("APA"), 5 U.S.C.A. § 706 (West 1999 & Supp.2003).¹ Under section 706(2)(A), the Court must set aside agency action if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Greenwood for Congress, Inc. v. Fed. Election Comm'n, 2003 WL 22096125, *5 (E.D.Pa. Aug.15, 2003) (holding that FEC's decision rejecting the disk used for filing an electronic report was arbitrary and capricious); cf. Becker v. FEC, 230 F.3d 381, 384 (1st Cir.2000) (applying section 706 of the APA in reviewing facial challenge to FEC regulation). Agency hearing determinations are upheld when supported by "substantial evidence." § 706(2)(E). See Sistema Universitario Ana G. Mendez v. Riley, 234 F.3d 772, 777 (1st Cir.2000).

Under the APA, "all decisions" shall include a statement of "findings and conclusions, and the reasons or basis therefore on all the material issues of fact, law, or discretion presented on the record," as well as the appropriate sanction. 5 U.S.C. § 557(c)(A). The Court must assure itself that the agency "examine[d] the relevant data and articulate[d] a satisfactory explanation for its action, including a `rational connection between the facts found and the choice made.'" Bagdonas v. Dep't. of Treasury, 93 F.3d 422, 426 (7th Cir.1996). An agency may not simply state, by an ipse dixit, that the agency does not believe that the statutory criteria have been met. This is because a court "cannot fulfill its statutory duty to review the agency's determination if the agency does not state, in even the most truncated fashion, the basis for its decision." Id. at 426.

[The] basis [for an administrative action] must be set forth with such clarity as to be understandable. It will not do for a court to be compelled to guess at the theory underlying the agency's action; nor can a court be expected to chisel that which must be precise from what the agency has left vague and indecisive. In other words, we must know what a decision means before the duty becomes ours to say whether it is right or wrong.

Harrington v. Chao, 280 F.3d 50, 60 (1st Cir.2002).

"[A]lthough the court is to `uphold a decision of less than...