Public Office Corp. v. Clinton for President Comm.

• Decision Date: 29 October 1999
• Docket Number: No. 99-7002,99-7002
• Citation: 194 F.3d 139
• Parties: (D.C. Cir. 1999) Public Office Corporation, et al.,Appellants v. Clinton for President Committee, et al.,Appellees
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 139

194 F.3d 139 (D.C. Cir. 1999)

Public Office Corporation, et al.,Appellants v. Clinton for President Committee, et al.,Appellees

No. 99-7002

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 5, 1999

Decided October 29, 1999

Appeal from the United States District Court for the District of Columbia(No. 95cv01264)

Michael E. Geltner argued the cause and filed the briefs for appellants.

John C. Keeney, Jr., argued the cause for appellees. With him on the brief was Kelleen McGinnis Scott.

Before: Edwards, Chief Judge, Wald and Williams, Circuit Judges.

Opinion for the Court filed by Circuit Judge Wald.

Wald, Circuit Judge:

Appellants, the Public Office Corporation ("POC") and its directors, provided computer systems services to appellees, the Clinton for President Committee and its auxiliaries ("Committee"). As part of a routine audit mandated by federal election campaign law, auditors for the Federal Election Commission ("FEC" or "the Commission") issued an interim report in which they identified possible discrepancies in the Committee's accounts. In response to this audit report, the Committee attributed these disparities in part to the actions of an unnamed computer vendor. Alleging that the Committee had made libelous statements about them in its response to the report, appellants filed suit. Appellees moved to dismiss the libel suit under 2 U.S.C. § 437d(c), which provides statutory immunity against civil liability for disclosing information "at the request of the Commission." 2 U.S.C. § 437d(c). This is an appeal from the district court's order dismissing the suit. Appellants argue that the allegedly libelous statements made by the Committee were not immune because they were not made "at the request of the Commission." Id. We hold in conformity with the district court that the Commission's audit report did constitute a request for information. Thus, the Committee's statements in response to that report were immunized under § 437d(c).

I. Background

Appellants, POC and its directors, William and Patricia Anderson, provided data processing services and assistance in complying with federal election laws to political campaigns. Appellees, the Clinton for President Committee and the Clinton/Gore '92 General Election Compliance Fund, retained POC to provide computer systems support during the primary and general election campaigns. As is customary under federal election campaign law, the FEC conducted an audit of the Committee's accounts; in their report the auditors found discrepancies. In response to an interim report issued by the FEC's auditors, the Committee attributed some of these disparities to errors made by one of its vendors. Alleging that their professional reputation had been damaged by three statements, POC and its directors sued to recover damages for libel against the Committee and its attorney.¹ This appeal arises from an order issued by the district court granting the appellees' motion to dismiss appellants' libel suit under 2 U.S.C. § 437d(c), which provides statutory immunity against civil liability for disclosing information "at the request of the Commission." 2 U.S.C. § 437d(c).

The Committee received federal election campaign funds under the Presidential Primary Matching Payment Account Act ("PPMPAA"), 26 U.S.C. § 9031 et seq. As a condition of receiving such funds, a campaign committee is required to "agree to an audit and examination by the Commission." 26 U.S.C. § 9033(a)(3). The PPMPAA and implementing regulations set out a mandatory procedural framework for conducting an audit. See 2 U.S.C. § 9038(a); 11 C.F.R. § 9038.1.The auditing process involves four steps.² First, the Committee must submit documentation to the FEC's auditors to be utilized in conducting the audit. Second, the audit staff releases an interim audit report detailing its preliminary findings and recommendations. See 11 C.F.R. § 9038.1(c)(1).These recommendations may include tentative repayment amounts, if the Committee is found to have received federal funds in excess of actual eligibility. Third, the Committee "will have an opportunity to submit, in writing ... legal and factual materials disputing or commenting on the contents of the interim report." 11 C.F.R. § 9038.1(c)(2). Fourth, after consideration of the Committee's responses, the Commission publicly releases its final audit report which may differ from its interim audit report. The Commission may publish a committee's responses in its own final report.

In this case, the interim audit report discussed several alleged discrepancies in the Committee's accounts, including excessive redesignations. Contributions made to a primary campaign may, in certain limited circumstances, be transferred to the general election campaign by written redesignation. See 11 C.F.R. §§ 103.3, 110.1, 110.2, and 9003.3. The audit staff found that in many instances, the "redesignations pursued by the Committee were not permissible." Joint Appendix ("J.A.") at 250.

Moreover, according to the report, the excessive redesignation effort caused the Committee to receive matching funds in excess of entitlement. By redesignating funds from the primary election campaign to the general election campaign, it appeared that the Committee did not have sufficient private funds in its primary campaign to meet its financial obligations. J.A. at 248-50. Therefore, the primary campaign remained eligible for matching funds. However, the Commission staff contended that most of the funds were improperly redesignated and should have been considered available to the primary campaign to discharge its financial obligations.Thus, it concluded that "the Candidate had received matching funds in excess of his entitlement." J.A. at 249. Given this finding, the report recommended that "the Committee provide evidence to demonstrate that it did not receive matching funds in excess of entitlement." J.A. at 251.

The issue in this case is whether three statements about POC that the Committee made in its response to the interim audit report fall within the statutory grant of immunity for information given "at the request of the Commission." 2 U.S.C. § 437d(c). The first alleged defamatory statement involves the Committee's response to the report's finding that the Committee had received excessive public funds, primarily due to the volume of improper redesignations. Since the propriety of this finding depended on whether the Committee had improperly conducted redesignations, the Committee sought to explain its redesignation efforts. Agreeing that many redesignations were "superfluous," J.A. at 101, the Committee referred to an unnamed vendor whose "contract ... included an incentive for the vendor to treat contributions as though additional documentation or affidavit was necessary." J.A. at 100. This statement was later published by the FEC in its final audit report. Contending that this statement was libelous, POC asserted that the clear implication was that it had conducted improper redesignations to augment its profits. POC further argued that although the vendor was not named, it could easily be identified since a vendor list was published with the final report.

In the second and third "defamatory" statements, appellants also alleged that the Committee essentially tried to shift blame for its accounting discrepancies to POC. The second statement concerned the Committee's assertion that discrepancies in its account balances were "essentially due to errors by one of the Committee's computer vendors who failed to reconcile her records." J.A. at 63. POC asserted that while she was not named, the "her" was an obvious reference to its director, Patricia Anderson, who performed these functions and was widely known to have done so. In the third statement, the Committee explained record keeping errors by stating that "[d]uring this period, the Committee experienced significant difficulties with the vendor preparing the Primary Committee's reports." Id.

In response to the lawsuit, appellees filed a motion arguing that 2 U.S.C. § 437d(c), the provision that provides statutory immunity for information disclosed at the FEC's request, mandated dismissal. The district court granted the defendant's motion to dismiss, finding that the statements made by the Committee to the FEC were in fact "privileged against civil liability under § 437d(c)." Memorandum Opinion at 13 (reprinted in J.A. at 18). The court determined that § 437d(c) set forth a "two-fold test" for immunity: "the statements must be (1) at the request (2) of the Commission."Memorandum Opinion at 7 (reprinted in J.A. at 12). The court determined that the report "contain[ed] unequivocal requests for information." Memorandum Opinion at 9 (reprinted in J.A. at 14). The court also held that the second prong of § 437d(c) was satisfied, rejecting the argument that the audit staff was a separate entity from the Commission. However, the court declined to accept appellees' ambitious contention that all audit submissions necessarily constitute responses to Commission requests that fall within § 437d(c)'s scope.

On appeal, appellants assert that the statements do not meet § 437d(c)'s bifurcated test. Noting that § 437d(c)'s grant of immunity is contingent on the issuance of a "request," appellants first contend that the statements in the Commission's interim report were not "requests." Appellants also assert that because the report was not issued by the Commission, but by its audit staff, which is an entity distinct from the Commission, the statements fail to meet the second prong of § 437d(c)'s test.

II. Discussion

The viability of appellants' libel suit turns on whether the allegedly defamatory statements fall within the immunity provision's scope. See 2 U.S.C. § 437d(c). Recalling the Supreme Court's holding that "in any case of statutory construction, our analysis begins with the language of the statute," we turn to...