Sterling Consulting Corp.. v. Lynn Land

Citation725 F.Supp.2d 665
Decision Date23 July 2010
Docket NumberCase No. 1:10-cv-664.
PartiesMICHIGAN CHAMBER OF COMMERCE, Michigan Chamber Political Action Committee III, and Sterling Consulting Corporation, Plaintiffs, v. Terri Lynn LAND, in her official capacity as Michigan Secretary of State, Defendant.
CourtU.S. District Court — Western District of Michigan

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Eric E. Doster, Foster Swift Collins & Smith PC, Gary P. Gordon, Dykema Gossett PLLC, Lansing, MI, for Plaintiffs.

OPINION and ORDER

Michigan Chamber 2

PAUL L. MALONEY, Chief Judge.

Rejecting Defendant's Ripeness, Administrative Exhaustion, Abstention, and Laches Arguments; Granting in Part and Denying in Part the Application for Preliminary Injunctive Relief:

Preliminarily Enjoining the Defendant from Enforcing Mich. Comp. Laws § 169.254 against Corporations/Unions' Paying Money to a PAC or Other Conduit for the Purpose of the PAC Making Expenditures Which Are Not in Any Degree Coordinated with a Candidate or Candidate-Related Entity and against the PAC's Solicitation, Receipt and Expenditure of Such Monies

Permitting the Defendant to Enforce Mich. Comp. Laws § 169.254 against The Plaintiff Corporations Paying Money to a PAC or other Conduit for the Purpose of the PAC Making Expenditures Which Are in Any Degree Coordinated with a Candidate or Candidate-Related Entity, and against the PAC's Solicitation, Receipt and Expenditure of Such Monies
Declining to Stay the Preliminary Injunction Pending Appeal

This is a civil-rights action under 42 U.S.C. § 1983 1 to enjoin the Michigan Secretary of State (“Secretary”)'s alleged ongoing violation of the plaintiffs' First Amendment rights to freedom of political speech and association. 2 Specifically, the plaintiffs lodge an as-applied challenge to the Secretary's interpretation and application of a provision of the Michigan Campaign Finance Act (“MCFA”), Mich. Comp. Laws § 169.254(1). See generally New Mexico Youth Organized v. Herrera, No. 09-2212, 611 F.3d 669, 677 n. 5 (10th Cir.2010) (“The ‘as-applied’ challenge acknowledges may have some potentially constitutionally permissible applications, but argues that the law is not constitutional as applied to these organizations.”); US v. Stephens, 594 F.3d 1033, 1039 (8th Cir.2010) (the distinction between facial challenge and as-applied challenge is ‘both instructive and necessary’ insofar as it ‘goes to the breadth of the remedy employed by the Court) (quoting Citizens United v. FEC, 558 U.S. at ----, 130 S.Ct. 876, 893 (2010)). The court has uncontested federal-question jurisdiction pursuant to 28 U.S.C. § 1343(a)(3), which confers original jurisdiction on the federal district courts over § 1983 actions.

The Secretary contends that the court should deny preliminary injunctive relief and dismiss the complaint on four independent grounds: ripeness, laches, failure to exhaust state administrative/judicial remedies, and abstention. In the alternative, the Secretary urges the court to deny preliminary injunctive relief by rejecting plaintiffs' claims under a standard less demanding than strict scrutiny. For the reasons that follow, the court will reject these arguments, consider the merits of the complaint under the strict-scrutiny standard, and issue preliminary injunctive relief (though not of the scope requested by the plaintiffs). The court will also decline to stay the injunction pending appeal.

The plaintiffs are the Michigan Chamber of Commerce (“the Chamber”), Chamber member Sterling Consulting Corporation (Sterling), and the Michigan Chamber Political Action Committee (PAC). The Chamber is a non-profit organization, organized under Internal Revenue Code § 501(c)(6), whose membership is open to persons, corporations or other entities who subscribe to its mission statement, pay dues, and are accepted for membership, Complaint filed July 12, 2010 (“Comp”) ¶ 21 and Ex D-Affidavit of Michigan Chamber of Commerce CEO and President Richard Studley executed July 12, 2010 (“Studley Aff.”) ¶¶ 1 and 3. Sterling is a for-profit corporation and Chamber member which “lacks the resources to finance a meaningful amount of independent expenditures on its own behalf” and thus “intends to associate with other similarly situated corporations ... to pool resources” with other corporations “in order to amplify their own voices with respect to independent expenditures on behalf of or in opposition to candidates for political office.” Comp. ¶ 23 and Ex F-Affidavit of Sterling Consulting Corporation President Stephen Linder executed July 9, 2010 (“Linder Aff.”). Critical to the resolution of the instant case, the PAC's sole purpose is to make independent expenditures under MCFA, and it would receive contributions for this purpose from corporations and other entities, including the Chamber and Sterling. See Comp. ¶ 22 & Ex. E-Affidavit of Michigan Chamber PAC III Treasurer Robert LaBrant executed July 12, 2010 (“Labrant Aff.”).

The Chamber, the PAC, and Sterling intend to engage in corporate independent expenditures supporting and opposing candidates for political office, including advertisements in newspapers and on billboards, television, radio and the Internet; endorsing candidates and informing businesses of those endorsements; placing endorsements on websites; using blogs to post messages of support or endorsement; encouraging Chamber members to endorse or support certain candidates; coordinating rallies; and organizing and staffing telephone banks, see Comp. ¶ 24. The three plaintiffs have refrained from engaging in these independent corporate expenditures when they would seem to be prohibited by the defendant Michigan Secretary of State Terri Lynn Land (Secretary)'s interpretation of the MCFA, see Comp. ¶ 29. 3

Plaintiffs instituted this action on July 12, 2010 by filing a complaint and ex parte

applications for temporary restraining order, preliminary and permanent injunctive relief, and declaratory relief. Defendant Land is named only in her official capacity as Secretary of State and therefore chief elections officer for the State of Michigan. See Comp. ¶¶ 9-12. The Chamber complains that Secretary Land's interpretation of the Michigan Campaign Finance Act, Mich. Comp. Laws § 169.201 et seq.

, 4

violates their First Amendment rights to freedom of speech and freedom of association by restricting their right to make certain “independent” political expenditures during and in connection with campaigns for state elective office. The Chamber persuasively contends that the need to remove the putatively unconstitutional restrictions is urgent given the approach of Michigan's upcoming party primary elections on August 3, 2010 and the general election on November 2, 2010. Specifically, the Chamber attacks the Secretary's interpretation and application of section 54, subsection 1 of the MCFA, which provides as follows:

Except with respect to the exceptions and conditions in subsections (2) and (3) and section 55 [Mich. Comp. Laws § 169.255], and to loans made in the ordinary course of business, a corporation, joint stock company, domestic dependent sovereign, or labor organization shall not make a contribution or expenditure or provide volunteer personal services that are excluded from the definition of a contribution by section 4(3)(a) [Mich. Comp. Laws § 169.204(3)(a), i.e., certain volunteer services or travel cost reimbursement less than $500 in a calendar year].

Mich. Comp. Laws § 169.254(1) (emphasis added). 5 In turn, MCFA section 4(1) defines a contribution to mean

a payment, gift, subscription, assessment, expenditure, contract, payment for services, dues, advance, forbearance, loan, or donation of money or anything of ascertainable monetary value, or a transfer of anything of ascertainable monetary value to a person, made for the purpose of influencing the nomination or election of a candidate, or for the qualification, passage or defeat of a ballot question.

Mich. Comp. Laws § 169.204(1) (emphasis added). 6 [W]hen a statute specifically defines a given term, that definition alone controls.” Tryc v. Michigan Veterans' Facility, 451 Mich. 129, 136, 545 N.W.2d 642 (Mich.1996) (“Applying these principles, the definition of ‘hospital’ supplied in the statute, being clear and unambiguous, controls. Judicial construction is not permitted.”) (citing, inter alia, Butterfield Theatres, Inc. v. Revenue Dep't, 353 Mich. 345, 91 N.W.2d 269 (Mich.1958)) (footnote omitted).

An individual who knowingly violates MCFA section 54(1) by making such a contribution is guilty of a felony punishable by a fine up to $5,000 and/or a prison sentence up to three years; a corporation or labor union which knowingly does so is guilty of a felony punishable by a fine up to $10,000. See Mich. Comp. Laws § 169.254(4). The Chamber, the PAC, and Sterling Consulting all propose and intend to engage in campaign activities and expenditures which are prohibited by Mich. Comp. Laws § 169.254 as interpreted by the Secretary, and they fear that the Secretary will initiate criminal prosecution against them and their officers, employees and agents if they do so. See Comp. ¶ 16.

After the United States Supreme Court issued its opinion in Citizens United v. Federal Election Commission, --- U.S. ----, 130 S.Ct. 876, --- L.Ed.2d ---- (2010), the Chamber on February 19, 2010 wrote a letter to Secretary Land requesting a declarative ruling or interpretive statement of portions of the MCFA. The Chamber's request stated the following facts:

1. The Chamber is a Michigan nonprofit corporation and a trade association, and is an interested person whose course of action would be affected by a declaratory ruling.

2. The Chamber's members consist of more than 7,000 entities, many of them corporations.

3. MCPAC III will not be a separate segregated fund of the Chamber under section 55 of the MCFA (MCL 169.255).

4. MCPAC III will be a distinct and separate...

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