Stern v. Federal Election Com'n, 89-5377

• Decision Date: 11 December 1990
• Docket Number: No. 89-5377,89-5377
• Citation: 921 F.2d 296
• Parties: Philip M. STERN v. FEDERAL ELECTION COMMISSION.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 296

921 F.2d 296

287 U.S.App.D.C. 256

Philip M. STERN v. FEDERAL ELECTION COMMISSION.

No. 89-5377.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 10, 1990.

Decided Dec. 11, 1990.

Appeal from the United States District Court for the District of Columbia (Civil Action No. 89-0089).

Whitney North Seymour, Jr., New York City, for appellant.

Vivien Clair, Attorney, Federal Election Com'n, with whom Lawrence M. Noble, General Counsel, and Richard B. Bader, Associate General Counsel, Federal Election Com'n, Washington, D.C., were on the brief, for appellee.

Before: MIKVA, SILBERMAN, and HENDERSON ^*, Circuit Judges.

Opinion for the Court filed by Circuit Judge MIKVA.

MIKVA, Circuit Judge:

Appellant Philip Stern alleges that the General Electric Company ("GE" or "the Company") violated the Federal Election Campaign Act of 1971 ("FECA" or "the Act"), 2 U.S.C. Secs. 431-455 (1988), in making unlawful corporate expenditures for the establishment, administration, and solicitation of contributions to its segregated political fund. The appellee Federal Election Commission ("FEC" or "the Commission") dismissed Stern's administrative complaint, and, on review, the district court entered judgment on the pleadings for the Commission. We affirm the district court's decision.

I.

Section 441b of the Act prohibits corporations from making contributions or expenditures "in connection with any election." 2 U.S.C. Sec. 441b(a). Section 441b(b)(2)(C), however, specifically excludes "the establishment, administration, and solicitation of contributions to a separate segregated fund to be utilized for political purposes by a corporation" from the definition of "contribution or expenditure." 2 U.S.C. Sec. 441b(b)(2)(C). In 1975, GE established such a separate segregated fund, known as the "Non-Partisan Political Support Committee for General Electric Employees," or "GE/PAC."

Stern, a GE shareholder, claims that GE/PAC made improper expenditures for lobbying purposes instead of the sanctioned "political purposes" of section 441b(b)(2)(C) during the 1985-86 election cycle. According to Stern, these improper expenditures by GE/PAC rendered the Company's administrative support of the fund unlawful under section 441b(a). Specifically Stern objects to the following GE/PAC practices: (1) contributions to candidates facing weak opposition or none at all; (2) contributions made without regard to candidates' attitudes towards business; (3) contributions to two or more candidates in the same race; (4) post-election contributions to winners; and (5) support of incumbents.

Stern first filed suit against GE in 1986 in federal district court in New York; the district court dismissed the complaint, concluding that it fell within the exclusive jurisdiction of the Commission. In 1988, Stern filed an administrative complaint with the Commission; the Commission dismissed the complaint on the General Counsel's recommendation, finding "no reason to believe" that violations of sections 441b(a) or 441b(b)(2)(C) had occurred.

Stern sought judicial review of the Commission's decision in the United States District Court for the District of Columbia. The court deemed it unnecessary to reach the statutory question of whether lobbying was a permitted activity for segregated funds such as GE/PAC, although it noted an inclination to uphold the FEC's interpretation, under which segregated funds could be used "for any lawful purpose." Stern v. Federal Election Comm'n, Civ. No. 89-0089, Memorandum Opinion at 6-7 (D.D.C. August 31, 1989) (hereinafter "Mem. Op."). The court granted the Commission's motion for judgment on the pleadings, holding that "[t]he GE/PAC funds at issue were expended as direct contributions to the campaign committees of legitimate federal candidates," Mem. Op. at 7-8, and were therefore permissible under any construction of "political purposes" in section 441b(b)(2)(C).

II.

We note at the outset that our analytical task would have been greatly simplified if counsel for the Commission had been prepared at oral argument to address the relevant statutory schemes, most notably the interrelationship of FECA and the Federal Regulation of Lobbying Act (FRLA). See 2 U.S.C. Secs. 261-270 (1988). Nevertheless, like the district court, we find no reason to reach the question of how broadly the phrase "political purposes" in section 441b(b)(2)(C) of FECA should be construed. Even under the narrowest possible definition urged by Stern--namely, that segregated funds may be used only "in connection with an election"--the GE/PAC practices he challenges do not violate the Act.

1. Contributions to candidates facing weak opposition or none at all. Stern challenges GE/PAC's support of unopposed candidates, arguing that the contributions served "no political purpose whatsoever in bringing about the[ir] re-election." Similarly, Stern challenges GE/PAC's support of candidates who had won their last four elections by at least three-to-one margins, and could thus be "predicted to coast to easy victories." One need only review recent election results to realize how whimsical predictions of "easy victory" may prove. Furthermore, nothing in the Act suggests that the legitimacy of campaign contributions varies with the closeness of the race. In fact, FEC regulations specifically contemplate contributions to unopposed candidates. See 11 C.F.R. Sec. 110.2(i)(2), (3) (1990) ("An election in which a candidate is unopposed is a separate election for the purposes of the limitations on contributions of this section.").

2. Candidates' attitudes towards business. Stern next challenges contributions that he claims were made without regard to candidates' attitudes towards business, as measured by U.S. Chamber of Commerce approval ratings. Specifically, Stern seems to argue that when GE/PAC supports a candidate who is less "pro-business" than his opponent, the contribution is presumptively unlawful because that candidate's election could not advance GE's interests. This claim borders on the frivolous. As the district court noted, "a low approval rating from the Chamber of Commerce, or any other interest group, may be totally irrelevant to a particular candidate's political attractiveness to GE/PAC." Mem. Op. at 8 n. 5. Nothing in the Act requires segregated funds to advance particular ideological interests through their expenditures.

3. Contributions to opposing candidates. Stern challenges GE/PAC's contributions to opposing candidates in the same election. However, GE/PAC is a "multi-candidate committee," which by definition must contribute to five or more federal candidates. See 11 C.F.R. Sec. 100.5(e)(3). Nothing in the statute or regulations prohibits a multi-candidate committee such as GE/PAC from making contributions to a variety of candidates, including candidates who oppose one another. Insofar as Stern worries that opposing contributions will facilitate "influence-purchasing," we note that the stringent...