MAE A. D'AGOSTINO, District Judge:
On August 28, 2012, Plaintiffs filed this action asking the Court to find several provisions of the New York State Election Law unconstitutional facially and as applied. See Dkt. No. 1. On the same day, Plaintiffs filed an emergency motion for a preliminary and permanent injunction. See Dkt. No. 4. On October 23, 2012, the Court denied Plaintiffs' motion for a preliminary injunction. See Dkt. No. 32. On September 26, 2013, 2013 WL 5423855, the Court denied Defendants' motions to dismiss and for expedited discovery. See Dkt. No. 78. On October 18, 2013, Plaintiffs' moved for summary judgment, which Defendants have opposed. See Dkt. No. 89.
In light of the upcoming November elections, in a July 2, 2014 Order, the Court summarily granted Plaintiffs' motion for summary judgment, enjoined Defendants from enforcing the relevant provisions of the New York State Election Law, and indicated that an opinion articulating the rationale for its decision would follow. In accordance with the July 2, 2014 Order, the Court now issues the following Memorandum and Decision explaining its reasons for granting Plaintiffs' motion.
To protect against corruption and the appearance of corruption, New York Election Law limits contributions that an individual or corporation may make to candidates and political parties. Schwartz v. Romnes, 495 F.2d 844, 849 (2d Cir.1974). Moreover, to ensure that voters have sufficient information to intelligently participate in elections, to deter corruption, and to enable the New York State Board of Elections ("Board of Elections") to enforce contribution limits, New York law requires certain organizations that seek to promote the election or defeat of a candidate or ballot issue to register and disclose certain information about themselves and those who contribute to them.
New York sets limits on the amount that corporations and individuals may contribute to candidates, parties, and political committees. A corporation doing business in New York may make contributions of up to $5,000 in any year for purposes related to elections for New York State office, local office, or party positions. See N.Y. Elec. Law § 14-116(2). An individual may make contributions, loans, or guarantees of funds of up to $150,000 per year "in connection with the nomination or election of persons to state and local public offices and party positions within the State of New York in any one calendar year." Id. at § 14-114. In an opinion issued by the New York State Board of Elections, this $150,000 limit applies to "contributions to independent committees[.]" See Dkt. No. 4-7 at 3.
The Election Law defeines a "contribution" as follows:
N.Y. Elec. Law § 14-100(9). Therefore, a payment of money to promote the success or defeat of a candidate is not a "contribution" if the payment is "made, taken or performed ... by a person or a political committee independent of the candidate or his agents or authorized political committees." Id.
Political Action Committees ("PACs") are designated by the Board of Elections as "committee type 2, and cannot make expenditures to aid or take part in the nomination, election or defeat of a candidate,
An "authorized committee" is the term derived from the Election Law relating to those political committees which are specifically authorized by a candidate to "aid or take part in his election." N.Y. Elec. Law §§ 14-112, 14-100(9)(3) & 14-104(1)-(2). An unauthorized committee is the term derived from the Election Law relating to, as the name implies, committees not authorized by a candidate to "aid or take part in his election." Id. This committee is designated as a "Type 9" by the Board of Elections.
Pursuant to the Election Law, "[a]ny political committee aiding or taking part in the election or nomination of any candidate, other than by making contributions, shall file, in the office in which the statements of such committee are to be filed pursuant to this article, either a sworn verified statement by the treasurer of such committee that the candidate has authorized the political committee to aid or take part in his election or that the candidate has not authorized the committee to aid or take part in his election." N.Y. Elec. Law § 14-112. This authorization statement, which is a single page, is referred to as a CF-03 "Committee Authorization Status" form. This provision and the CF-03 form are intended to allow the Board of Elections and the public, including other candidates, to ascertain whether or not a contribution limit applies to that particular committee.
On or about August 17, 2012, Plaintiff FNY filed its CF-03 with the Board of Elections. See Dkt. No. 18-30. When asked to list the candidate(s) "for whom your committee is aiding or taking part in their election or nomination (other than by making contributions) but who have not authorized your committee to do so," Plaintiff FNY answered "to be determined." Id. (emphasis in original).
Plaintiff Hispanic Leadership Fund, Inc. ("HLF") is a tax-exempt organization primarily focused on issue advocacy. It is a non-partisan 501(c)(4) social welfare organization incorporated in Virginia. See Dkt. No. 44 at ¶ 6. Plaintiff HLF accomplishes its advocacy mission through the use of television, radio, and print advertisements. See id. at ¶ 13. HLF also makes contributions to "like-minded organizations[,]" and will occasionally engage in political speech "expressly advocating for the election or defeat of a candidate, but HLF's major purpose is issue advocacy." See id. at ¶¶ 14-15.
Mario Lopez is the President of Hispanic Leadership Fund. See Dkt. No. 89-7 at ¶ 1. Mr. Lopez claims that he is "`[t]he only person who has a right to determine the content, timing, or recipient of HLF's
Plaintiff HLF claims that it wants to make a contribution to Plaintiff FNY in excess of $5,000 "for the purpose of making independent expenditures `[r]elated to the election of candidates for New York State public office.'" Id. at ¶ 8 (citing Dkt. No. 60-6 at 19; Dkt. No. 4-9 at 2). Although it has already contributed $5,000, Plaintiff HLF contends that it has refrained from making contributions in excess of $5,000 to Plaintiff FNY because of New York's contribution limits. See id.
Although he was not affiliated with Plaintiff FNY when this lawsuit was first commenced, since approximately September 26, 2013, Dan Backer has served as the Treasurer and sole officer of Plaintiff FNY. See id. at ¶ 9; Dkt. No. 110 at ¶ 9. Plaintiff FNY has no members, directors, or employees. See id.
Plaintiff FNY is registered with the New York State Board of Elections as a Type 9, independent expenditure only committee. See id. at ¶ 10; Dkt. No. 110 at ¶ 10. Plaintiff FNY does not have a separate bank account for purposes of making contributions to candidates or political committees. See id. Plaintiff FNY contends that it does not make contributions to candidates and Defendants admit that Plaintiff FNY has not reported making any contributions to candidates. See id.
According to Plaintiffs, Mr. Backer serves as treasurer to only one other political committee that is registered with the Board of Elections. See id. at ¶ 11. Further, Plaintiffs contend that Mr. Backer is the only person who determines whether Plaintiff FNY makes an independent expenditure and is the only person who has the right to determine the content, timing, and medium of FNY's independent expenditures. See id. at ¶ 12. Additionally, Plaintiffs assert that Mr. Backer has sole
Plaintiffs contend that Plaintiff FNY only accepts general contributions and does not accept any contributions from foreign nationals. See id. at ¶ 15. Finally, Plaintiffs assert that Shaun McCutcheon wishes to contribute more than $150,000 in a calendar year to Plaintiff FNY but that it cannot solicit this money because to do so would violate New York's contribution limits. See id. at ¶ 16.
In their amended complaint, Plaintiffs claim that they wish to meaningfully participate in upcoming elections in New York. Plaintiff HLF wishes to spend more than $5,000 on independent expenditures in New York this year and to make contributions to like-minded organizations. See Dkt. No. 44 at ¶¶ 14, 16. Plaintiff HLF alleges that it "has never and does not plan on making any contribution to any candidate for any office. It does, however, wish to make contributions in excess of $5,000 to New York political committees, such as FNY, for the purpose of supporting FNY's independent expenditures." See id. at ¶ 17. Moreover, in order to avoid civil and criminal penalties, Plaintiff HLF alleges that it has refrained from making contributions to New York political committees in excess of $5,000. See id. at ¶¶ 18-19.
Plaintiff FNY claims that it wishes to solicit and accept corporate contributions in excess of $5,000, and more than $150,000 from individual contributors (as well as donations from contributors who would exceed the $150,000 aggregate annual limit), for the purpose of expressing its views through independent expenditures. See id. at ¶¶ 20-21. Plaintiff FNY claims that, "[d]ue to the restrictions imposed by the Election Law, [it] has refrained from soliciting and accepting contributions for the purpose of expressing its views through independent expenditures in excess of New York statutory limits so as to avoid criminal and civil penalties imposed for violations of Election Law." See id. at ¶ 24.
As discussed, New York law prohibits corporations from contributing more than $5,000 in a calendar year to political committees. See N.Y. Elec. Law § 14-116(2). Similarly, New York law prohibits individuals from contributing more than $150,000 in a calendar year to political committees. See N.Y. Elec. Law § 14-114(8). The New York State Board of Elections has interpreted these statutes to impose these contribution limits against entities that only make independent expenditures. See N.Y. Bd. of Elec. 1994 Opinion No. 3 (Apr. 25, 1994). Those individuals and entities who violate these limits are subject to criminal sanctions. See N.Y. Elec. Law § 14-126.
In their motion for summary judgment, Plaintiffs contend that New York does not have a sufficiently important governmental interest to restrict contributions to independent expenditure committees because, as courts including the Second Circuit have held, the government's interest in preventing quid pro quo corruption is not triggered when individuals or organizations make contributions to groups that engage only in independent spending on political speech. See Dkt. No. 106 at 15. "The conclusion that these restrictions are unconstitutional follows inexorably from the decision of the Supreme Court [in] Citizens United and the Second Circuit in New York Progress and Protection PAC[.]" Id.
Plaintiffs seek the following declaratory judgments: (1) "That [HLF] is entitled to make unlimited contributions to political
After Plaintiffs filed their motion for summary judgment, several decisions were issued that impact this case, including McCutcheon v. FEC, ___ U.S. ___, 134 S.Ct. 1434, 188 L.Ed.2d 468 (2014) and New York Progress & Protection PAC v. Walsh, 17 F.Supp.3d 319, 2014 WL 1641781 (S.D.N.Y. Apr. 24, 2014) ("NYPPP"). In McCutcheon, as discussed in more detail below, the Supreme Court held that aggregate limits—restrictions on the amount of money a donor may contribute in total to all candidates or committees—"do little, if anything," to further the permissible purpose of combatting quid pro quo corruption, "while seriously restricting participation in the democratic process." McCutcheon, 134 S.Ct. at 1442. In NYPPP, Judge Crotty granted the plaintiff's motion for summary judgment and held that the individual contribution limit contained in N.Y. Elec. Law § 14-114(8) as applied to committees that make only independent expenditures violates the First Amendment of the United States Constitution. See NYPPP, 17 F.Supp.3d at 322-23, 2014 WL 1641781, at *3. Judge Crotty specifically enjoined the commissioners of the Board of Elections—who are the Defendants in this action—from enforcing N.Y. Elec. Law § 14-114(8) against the plaintiff and its individual donors. See id.
In response to these decisions and Plaintiffs' inquiries, Defendants informed the Court that they have decided to not appeal the district court's decision in NYPPP and that the Board of Elections voted unanimously on May 22, 2014 to not enforce N.Y. Elec. Law § 14-114(8). See Dkt. No. 134 at 1. As such, Defendants contend that Plaintiffs' challenge to section 14-114(8) is moot and must be dismissed. See id. Defendants, however, indicated that they still intend to enforce section 14-116, and simply argue that McCutcheon and NYPPP "are not `equally applicable' to the corporate contribution limit challenged in this case[.]" Id. at 2.
In light of Defendants' position regarding Plaintiffs' challenge to section 14-114(8), the Court will first address whether Plaintiffs' challenge is now moot.
"Article III of the Constitution limits federal courts' jurisdiction to certain `Cases' and `Controversies.'" Clapper v. Amnesty Int'l USA, ___ U.S. ___, 133 S.Ct. 1138, 1146, 185 L.Ed.2d 264 (2013). Accordingly, "`[t]o invoke the jurisdiction of a federal court, a litigant must have suffered, or be threatened with, an actual injury traceable to the defendant and likely to be redressed by a favorable judicial decision.'" Chafin v. Chafin, ___ U.S. ___, 133 S.Ct. 1017, 1023, 185 L.Ed.2d 1 (2013) (quotation omitted). "Federal courts may not `decide questions that cannot affect the rights of litigants in the case before them' or give `opinion[s] advising what the law would be upon a hypothetical state of facts.'" Id. (quotation omitted). "`[I]t is not enough that a dispute was very much alive when suit was filed'; the parties must `continue to have a "personal stake"' in the ultimate disposition of the lawsuit." Id. (quotations omitted).
"There is thus no case or controversy, and a suit becomes moot, `when the
In Occupy Columbia v. Haley, 866 F.Supp.2d 545 (D.S.C.2011), the plaintiffs brought suit to enjoin the defendants from interfering with the plaintiffs' twenty-four hour occupation of the State House grounds. See Occupy Columbia, 866 F.Supp.2d at 549. Pursuant to a policy document entitled "Conditions for Use of South Carolina State House and Grounds," no activities were permitted on the grounds beyond 6:00 p.m., "unless special provisions in writing have been made to extend the time." Id. at 550. The defendants indicated that they did not plan to enforce the 6:00 p.m. policy against the plaintiffs and then argued that the plaintiffs' challenge was now moot. See id. at 562. Finding that the case was not moot and that the plaintiffs established an irreparable injury, the court held that the plaintiffs should not have to rely on representations of officials that they will not enforce a policy against them. See id. (citations omitted). Specifically, the court found that the "fear of inconsistent application of policies creates a risk that Plaintiffs will be silenced in violation of the First Amendment." Id.
Similarly, in Occupy Fort Myers v. City of Fort Myers, 882 F.Supp.2d 1320 (M.D.Fla.2011), the plaintiffs challenged several city ordinances on First Amendment grounds. See id. at 1330-34. As to one of the ordinances requiring a permit, the City and its Chief of Police asserted that, despite its presence on the books, it was not enforced as to the plaintiffs in this case and presented two letters in which they informed the plaintiffs that a permit was not required for their planned activities. See id. at 1333. Under the facts presented, the district court found that "it would be virtually impossible to find the issues moot." Id. Specifically, the district court held that the plaintiffs "are not required to rely upon the City's representations that it will not enforce the ordinance as to them. `The whim, self restraint, or even the well reasoned judgment of a government official cannot serve as the lone safeguard for First Amendment rights.'" Id. (quoting Florida Cannabis Action Network, Inc. v. City of Jacksonville, 130 F.Supp.2d 1358, 1362 (M.D.Fla.2001)).
Finally, in City of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 102 S.Ct. 1070, 71 L.Ed.2d 152 (1982), the Supreme Court held that "[i]t is well settled that a defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice." Id. at 289, 102 S.Ct. 1070. The Court went on to explain that such abandonment is "an important factor bearing on the question whether a court should exercise its power to enjoin the defendant from renewing the practice, but that is a matter relating to the exercise rather than the existence of judicial power." Id. In City of Mesquite, the Supreme Court found that, even though the city repealed the objectionable language in the ordinance in question, nothing precluded the city from reenacting precisely the same provision if the district court's judgment was vacated. See id. ("There is no certainty that a similar course would not be pursued if its most recent amendment were effective to defeat federal jurisdiction"); see also id. at 289 n. 10, 102 S.Ct. 1070
In the present matter, in a letter dated May 23, 2014, Defendants informed the Court that they were not going to appeal the final judgment in NYPPP and that the Board of Elections unanimously voted on May 22, 2014, to not enforce New York Election Law § 14-114(8). See Dkt. No. 134 at 1. As such, Defendants argue that Plaintiffs' challenge to section 14-114(8) is now moot.
Contrary to Defendants' position, Plaintiffs' as-applied constitutional challenge of New York Election Law § 14-114(8) is not moot. The New York State legislature has not taken any action to remove the statute or amend it to comply with recent changes in the law. Rather, the Defendant members of the Board of Elections have simply voted to not enforce the provision. Although the Court does not doubt the sincerity of the Board of Elections, finding that Plaintiffs' challenge is now moot would allow Defendants to change their mind and enforce this provision as soon as this action is terminated or when the composition of the Board of Elections changes. See City of Mesquite, 455 U.S. at 289 n. 10, 102 S.Ct. 1070; Wisconsin Right to Life, Inc. v. Barland, 751 F.3d 804, 832 (7th Cir.2014) (finding that the board of elections decision to not enforce the statute at issue against the plaintiff did not render the plaintiff's challenge moot) (citation omitted); Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 190, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) ("[A] defendant claiming that its voluntary compliance moots a case bears the formidable burden of showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur").
Similarly, the decision in NYPPP does not render this challenge moot. In that decision, Judge Crotty held that New York Election Laws §§ 14-114(8) and 14-126 were unconstitutional as applied to the plaintiff in that action, and its donors. See NYPPP, 17 F.Supp.3d at 322-23, 2014 WL 1641781, at *3. As such, the court enjoined "Defendants from applying and enforcing New York Election Laws §§ 14-114(8) and 14-126 against NYPPP and its individual donors only for independent expenditures." Id. Since NYPPP only enjoined the defendants from enforcing section 14-114(8) against the plaintiff in that case and its donors, Defendants are still free to enforce the provision against Plaintiffs in the present matter.
Based on the foregoing, the Court finds that Plaintiffs' challenge to section 14-114(8) is not moot.
A court may grant a motion for summary judgment only if it determines that
In assessing the record to determine whether any such issues of material fact exist, the court is required to resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party. See Chambers, 43 F.3d at 36 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513-14, 91 L.Ed.2d 202 (1986)) (other citations omitted). Where the non-movant either does not respond to the motion or fails to dispute the movant's statement of material facts, the court may not rely solely on the moving party's Rule 56.1 statement; rather, the court must be satisfied that the citations to evidence in the record support the movant's assertions. See Giannullo v. City of N.Y., 322 F.3d 139, 143 n. 5 (2d Cir.2003) (holding that not verifying in the record the assertions in the motion for summary judgment "would derogate the truth-finding functions of the judicial process by substituting convenience for facts").
The United States Supreme Court has held that campaign contribution and expenditure limitations "operate in an area of the most fundamental First Amendment activities." Buckley, 424 U.S. at 15, 96 S.Ct. 612. "A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached." Id. at 19, 96 S.Ct. 612 (footnote omitted). "This is because virtually every means of communicating ideas in today's mass society requires the expenditure of money." Id.
The Supreme Court has drawn a distinct line between limits on contributions and limits on independent expenditures. Contribution limits are "only a marginal restriction upon the contributor's ability to engage in free communication." Id. at 20, 96 S.Ct. 612. "A contribution serves as a general expression of support for the candidate and his views, but does not communicate the underlying basis for the support." Id. at 21, 96 S.Ct. 612. "The quantity of communication by the contributor does not increase perceptibly with the size of his contribution, since the expression rests solely on the undifferentiated, symbolic act of contributing." Id. By contrast, expenditure limits impose "significantly more severe restrictions on protected freedoms of political expression and association." Id. at 23, 96 S.Ct. 612. Unlike large campaign contributions, expenditures do "not presently appear to pose dangers of real or apparent corruption." Id. at 46, 96 S.Ct. 612; see also Citizens United, 558 U.S. at 357, 130 S.Ct. 876 (concluding that "independent expenditures. . . do not give rise to corruption or the appearance of corruption"). "The absence of prearrangement and coordination of an expenditure with the candidate or his agent not only undermines the value of the
As such, expenditure limitations are subject to strict scrutiny—they must "satisfy the exacting scrutiny applicable to limitations on core First Amendment rights of political expression." Id. at 44-45, 96 S.Ct. 612. The Supreme Court has repeatedly adhered to Buckley's constraints on expenditure limits. See Randall v. Sorrell, 548 U.S. 230, 236, 126 S.Ct. 2479, 165 L.Ed.2d 482 (2006) (citing cases). Contribution limitations, on the other hand, are subject to a less rigorous standard of review—they must be "closely drawn" to match a "sufficiently important interest." Buckley, 424 U.S. at 25, 96 S.Ct. 612.
So far, the only constitutionally sufficient justification for campaign finance laws that the Court has recognized is limiting "the actuality and appearance of corruption resulting from large individual financial contributions." Buckley, 424 U.S. at 25-26, 96 S.Ct. 612; see also Davis v. Fed. Election Comm'n, 554 U.S. 724, 128 S.Ct. 2759, 171 L.Ed.2d 737 (2008). The Court in Buckley was concerned with the danger of "large contributions . . . given to secure a political quid pro quo from current and potential office holders." Buckley, 424 U.S. at 26-27, 96 S.Ct. 612. The Court acknowledged that "restrictions on direct contributions are preventative, because few if any contributions to candidates will involve quid pro quo arrangements." Citizens United, 558 U.S. at 357, 130 S.Ct. 876 (citing Fed. Election Comm'n v. Mass. Citizens for Life, Inc., 479 U.S. 238, 260, 107 S.Ct. 616, 93 L.Ed.2d 539 (1986)) (other citations omitted). The Court has also recognized that the government has a valid anticorruption interest in preventing circumvention of contribution limits. See Fed. Election Comm'n v. Colorado Republican Fed. Campaign Comm., 533 U.S. 431, 456, 121 S.Ct. 2351, 150 L.Ed.2d 461 (2001) (Colorado II) ("[A]ll Members of the Court agree that circumvention is a valid theory of corruption").
The standard to apply in these cases was recently made clear by the Supreme Court in McCutcheon. Any campaign finance regulation, and any criminal prosecution resulting from the violation thereof, must target activity that results in or has the potential to result in quid pro quo corruption. As the Court has explained:
McCutcheon, 134 S.Ct. at 1441-42 (emphases in original) (internal citations omitted). In short, combating quid pro quo corruption, or the appearance thereof, is the only interest sufficient to justify campaign-finance restrictions. "Over time, various other justifications for restricting political speech have been offered—equalization of viewpoints, combating distortion, leveling electoral opportunity, encouraging the use of public financing, and reducing the appearance of favoritism and undue political access or influence—but the Court has repudiated them all." Wisconsin Right to Life v. Barland, 664 F.3d 139, 153-54 (7th Cir.2014) (collecting cases). The First Amendment "prohibits such legislative attempts to `fine-tune' the electoral process, no matter how well intentioned." McCutcheon, 134 S.Ct. at 1450.
In Buckley, the Supreme Court upheld contribution limits to candidates but struck down limits on expenditures. One of the contribution limits the Court upheld was the $25,000 aggregate limit on contributions to candidates and political committees. See Buckley, 424 U.S. at 38, 96 S.Ct. 612. But the Court was not addressing contributions to political committees for independent expenditures, only contributions to "political committees likely to contribute to [a particular] candidate." Id. The concern was that the absence of an aggregate cap would facilitate "evasion of the $1,000 contribution limitation." Id. In other words, a donor could make numerous contributions to different PACs likely to make contributions to the favored candidate and thereby evade the individual limits on contributions to candidates. The aggregate limitation served a justifiable limit on a donor's ability to contribute dollars directly to a candidate, either personally or through a PAC.
Similarly, in Cal-Med, the Supreme Court reaffirmed contribution limits to multi-candidate political committees, i.e., PACs that made campaign contributions to multiple candidates. See Cal-Med, 453 U.S. at 197-99, 101 S.Ct. 2712. The Court reasoned, as in Buckley, that Congress could restrict contributions to such committees or else individuals could circumvent the $1,000 limit on individual contributions and the $25,000 aggregate limit. See id. In the opinion, however, there was no discussion, let alone approval, of contribution restrictions for independent expenditures. In fact, Justice Blackmun, in his concurring (and controlling) opinion, underscored that "a different result would follow if [the restrictions] were applied to contributions to a political committee established for the purpose of making independent
Before launching into a claim-by-claim analysis, it is worthwhile to set forth the holdings and central reasoning in Citizens United v. Federal Election Comm'n. In Citizens United, the Supreme Court produced a two-fold ruling: "Government may regulate corporate political speech through identification and disclosure requirements, but it may not suppress that speech altogether." Citizens United v. Federal Election Comm'n, 558 U.S. 310, 319, 130 S.Ct. 876, 175 L.Ed.2d 753 (2010).
In Citizens United, the Supreme Court made clear that there is no state interest sufficient to justify a law that entirely prohibits corporate and union independent political expenditures. It reasoned that the only valid governmental interest in regulating campaign expenditures is preventing the reality or appearance of quid-pro-quo corruption, and independent expenditures, precisely because they are uncoordinated with candidates, pose no such threat. See id. at 357-58, 130 S.Ct. 876. This view on campaign spending is at least as old as Buckley v. Valeo, in which the Supreme Court remarked that "[u]nlike contributions, such independent expenditures may well provide little assistance to the candidate's campaign and indeed may prove counterproductive." Buckley v. Valeo, 424 U.S. 1, 47, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976).
Citizens United also held that the "First Amendment does not permit Congress to make these categorical distinctions based on the corporate identity of the speaker and the content of the political speech." Citizens United, 558 U.S. at 365, 130 S.Ct. 876. The Court accordingly struck down 2 U.S.C. § 441b's total ban on corporate and union spending from general treasury funds for express advocacy or electioneering communications—forms of regulated independent expenditures. See id. at 365-66, 130 S.Ct. 876.
In reaching that result, Citizens United dispatched the counter-argument that the law's provision allowing a corporation that wished to engage in such speech to form a PAC was a suitable alternative to direct corporate or union speech. See Citizens United, 558 U.S. at 337-38, 130 S.Ct. 876. Previously, a corporation like the plaintiff in Citizens United could only engage in express advocacy or electioneering speech indirectly by creating a PAC, to which only its stockholders or employees could contribute. See id. at 320-21, 130 S.Ct. 876. The Court found that the PAC approach did not alleviate the electioneering ban's speech-repressive effects, because such
At the same time, eight justices joined the portion of the Citizens United opinion upholding the identification and disclosure requirements that also applied to the plaintiff. See Citizens United, 558 U.S. at 318, 365-71, 130 S.Ct. 876. This part of the opinion affirmed another longstanding view: in spite of the burdens they pose to political speech, "disclosure requirements certainly in most applications appear to be the least restrictive means of curbing the evils of campaign ignorance and corruption that Congress found to exist." Buckley, 424 U.S. at 68, 96 S.Ct. 612. Since Buckley, the Supreme Court has recognized that different legitimate government interests support disclosure requirements, as opposed to those interests which support limits on spending in campaigns. These interests include (1) informing voters as to the "sources of a candidate's financial support," enabling voters to better "evaluat[e] those who seek office"; (2) limiting corruption and its appearance by making large contributions and expenditures transparent; and (3) gathering data to discover any violations of the campaign finance laws. Id. at 66-68, 96 S.Ct. 612.
The Supreme Court relied on the first rationale to justify the provisions applied to the plaintiff in Citizens United. See Citizens United, 558 U.S. at 367-71, 130 S.Ct. 876. To gauge their constitutionality, it applied Buckley's "`exacting scrutiny'" test, which requires a "`substantial relation' between the disclosure requirement and a `sufficiently important' governmental interest." Id. at 366-67, 130 S.Ct. 876 (citing Buckley, 424 U.S. at 64, 66, 96 S.Ct. 612); see also John Doe No. 1 v. Reed, 561 U.S. 186, 196, 130 S.Ct. 2811, 177 L.Ed.2d 493 (2010) (confirming that the exacting scrutiny standard applies to disclosure requirements) (citations omitted). The provisions at issue survived this scrutiny. See id. at 369-70, 130 S.Ct. 876.
In reaching its conclusion, the Supreme Court in Citizens United explicitly rejected the argument that disclosure could only cover express advocacy or its functional equivalent. See id. at 368-69, 130 S.Ct. 876. This statement assured the vitality of the part of McConnell in which the Court "rejected the notion that the First Amendment requires Congress to treat so-called issue advocacy differently from express advocacy." McConnell, 540 U.S. at 194, 124 S.Ct. 619; see also Citizens United, 558 U.S. at 368-69, 130 S.Ct. 876. The Citizens United Court made clear that the power to require disclosure extends beyond the power to limit speech, analogizing that although Congress "has no power to ban lobbying itself," it may require registration and disclosure of lobbyists. See Citizens United, 558 U.S. at 369, 130 S.Ct. 876 (citing United States v. Harriss, 347 U.S. 612, 625, 74 S.Ct. 808, 98 L.Ed. 989 (1954)). Indeed, Citizens United went further toward solidifying this principle, explicitly endorsing a system of relatively unrestricted political speech paired with "effective disclosure," noting that many of Congress' findings of influence-peddling in promulgating campaign finance legislation
"[T]he First Amendment safeguards an individual's right to participate in the public debate through political expression and political association," and "[w]hen an individual contributes money to a candidate, he exercises both of those rights." McCutcheon, 134 S.Ct. at 1448. According to the Supreme Court, in order to be valid, any regulation of campaign contributions must target "`quid pro quo' corruption or its appearance," that is, the "direct exchange of an official act for money," or "dollars for political favors." Id. at 1441; see also id. at 1450 ("In addition to `actual quid pro quo arrangements,' Congress may permissibly limit `the appearance of corruption stemming from public awareness of the opportunities for abuse inherent in a regime of large individual financial contributions' to particular candidates'"). The Government may not impose campaign finance restrictions that pursue other objectives. See id. at 1441 ("Campaign finance restrictions that pursue other objectives . . . impermissibly inject the Government `into the debate over who should govern'"); see also Citizens United, 558 U.S. at 359, 130 S.Ct. 876 ("When Buckley [v. Valeo, 424 U.S. 1, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976)] identified a sufficiently important governmental interest in preventing corruption or the appearance of corruption, that interest was limited to quid pro quo corruption").
In McCutcheon, the Supreme Court held that aggregate limits—restrictions on the amount of money a donor may contribute in total to all candidates or committees— "do little, if anything," to further the permissible purpose of combatting quid pro quo corruption, "while seriously restricting participation in the democratic process." McCutcheon, 134 S.Ct. at 1442. Specifically, the Supreme Court stated:
Id. at 1450-51 (quotation and other citation omitted); see also id. at 1441 ("[G]overnment regulation may not target the general gratitude a candidate may feel toward those who support him or his allies, or the political access such support may afford. `Ingratiation and access are not corruption'") (quoting Citizens United, 558 U.S. at 360, 130 S.Ct. 876). The Supreme Court therefore concluded that the aggregate limits of 2 U.S.C. § 441a(a)(3) were invalid under the First Amendment. See McCutcheon, 134 S.Ct. at 1442.
In the first decision analyzing contribution limitations following Citizens United, the D.C. Circuit found unconstitutional the Bipartisan Campaign Reform Act's contribution limits as applied to an independent expenditure-only group. See SpeechNow.org v. Federal Election Comm'n, 599 F.3d 686 (D.C.Cir.2010) (en banc). Recognizing the government's anti-corruption interest as the only legitimate basis for limiting contributions, the D.C. Circuit reasoned that "because Citizens United holds that independent expenditures do not corrupt or give the appearance of corruption as a matter of law, then the government can have no
As discussed, an individual may make contributions, loans, or guarantees of funds of up to $150,000 in any year "in connection with the nomination or election of persons to state and local public offices and party positions within the state of New York in any one calendar year." N.Y. Elec. Law § 14-114. In an opinion issued by the New York State Board of Elections, this $150,000 limit applies to "contributions to independent committees[.]" See Dkt. No. 4-7 at 3. Plaintiffs contend that, in light of Citizens United and its progeny, New York is without a sufficiently important government interest to restrict contributions to independent expenditure committees because, as the courts have uniformly held, the government's interest in preventing quid pro quo corruption is not triggered when individuals or organizations make contributions to groups that engage only in independent spending on political speech. See Dkt. No. 106 at 15.
Although Defendants have now indicated that the Board of Elections will no longer enforce this provision in light of the decision in NYPPP, they initially argued in support of section 14-114(8)'s constitutionality. See Dkt. No. 109 at 19-35. Specifically, Defendants first argued that "contribution limits impose only marginal restriction on speech and are reviewed deferentially." Id. at 19-20. Thereafter, Defendants discussed at length the fact that "Super PACs" pose a substantial risk of corruption and create the appearance of corruption. See id. at 21-29. Next, Defendants contend that the Supreme Court has upheld limits on contributions to committees. See id. at 33-34 (citing McConnell, 540 U.S. at 133-154, 124 S.Ct. 619 (upholding limits on contributions to party committees); Cal. Med. Ass'n v. FEC, 453 U.S. 182, 201, 101 S.Ct. 2712, 69 L.Ed.2d 567 (1981) (upholding limit on contributions to multi-candidate committees); Buckley, 424 U.S. at 38, 96 S.Ct. 612 (upholding aggregate limit on contributions to "political committees")) (other citations omitted). Finally, Defendants argue that the decisions of other circuits are either wrongly decided or inapposite to the present matter. See id. at 34-36.
As previously discussed, in New York Progress & Protection PAC v. Walsh, 17 F.Supp.3d 319, 2014 WL 1641781 (S.D.N.Y. Apr.24, 2014) ("NYPPP"), Judge Crotty granted the plaintiff's motion for summary judgment and held that the individual contribution limit contained in N.Y. Elec. Law § 14-114(8) as applied to committees that make only independent expenditures violates the First Amendment of the United States Constitution. See id. at 322-23, 2014 WL 1641781 at *3. The defendants had claimed that unlimited contributions to independent expenditure-only
As in NYPPP, the Court finds that the tenuous connections Plaintiffs may have to individuals associated with politicians hardly rise to the level of coordination or quid pro quo corruption articulated in Citizens United and McCutcheon. Remanding NYPPP back to the district court, the Second Circuit clearly held that "preventing quid pro quo corruption is the only government interest strong enough to justify restrictions on political speech, and the threat of quid pro quo corruption does not arise when individuals make contributions to groups that engage in independent spending on political speech." New York Progress and Protection PAC v. Walsh, 733 F.3d 483, 487 n. 1 (2d Cir.2013). Furthermore, in McCutcheon, the Supreme Court noted that the "base and aggregate limits govern contribution to traditional PACs, but not to independent expenditure PACs." McCutcheon, 134 S.Ct. at 1442 n. 2. In making this distinction, the Court cited favorably to SpeechNow.org, where an en banc panel of the D.C. Circuit unanimously held that the government has no anticorruption interest in limiting contributions to an independent expenditure group. See SpeechNow.org, 599 F.3d at 695-96.
Regardless of whether the Court agrees with the Supreme Court's interpretation of the First Amendment in the context of this case, having thoroughly reviewed the parties' submissions regarding the pending motions, as well as the relevant law, the Court must conclude that the contribution limit set forth in New York Election Law § 14-114(8), as applied to independent expenditure-only organizations, cannot prevent quid pro quo corruption or its appearance. As such, the Court finds that N.Y. Elec. Law § 14-114(8) is unconstitutional as applied to Plaintiffs; and, therefore, the Court enjoins Defendants from enforcing N.Y. Elec. Law § 14-114(8) against Plaintiffs and their individual donors.
As discussed, a corporation doing business in New York may make contributions up to $5,000 in any year for purposes related to elections for New York state, local office, or party positions. See N.Y. Elec. Law § 14-116(2). As with the aggregate limits placed on individual donors, Defendants have taken the position that this provision applies to corporations who wish to make contributions to independent expenditure-only organizations in excess of the $5,000 limit.
Defendants argue that "corporate contributions are treated differently from individual contributions. NYPPP and McCutcheon dealt solely with individual
Defendants argue that the State has two important interests that outweigh Plaintiff HLF's limited First Amendment speech interest in making corporate contributions. See id. at 3. "First, the State has a compelling interest in deterring corruption and the appearance of corruption." Id. "Second, the State has an important interest in preventing circumvention of its disclosure laws. New York law requires a political committee to report the names of its contributors. . . If corporations could make unlimited contributions, then individual donors could very easily use corporations bearing `dubious and misleading names' as vehicles for enormous anonymous spending to influence the outcome of democratic elections." Id. (quoting McConnell v. FEC, 540 U.S. 93, 197, 124 S.Ct. 619, 157 L.Ed.2d 491 (2003)).
Plaintiffs, however, contend that Defendants want "this Court to take the constitutionally untenable position that once individuals have joined together in an incorporated form, they lose the right to do what they could otherwise do in their individual capacities—namely make contributions to entities that engage solely in independent expenditures." Dkt. No. 135 at 2. Plaintiffs contend that this position is directly contrary to the Supreme Court's holding in Citizens United. See id. Further, Plaintiffs claim that, contrary to Defendants assertions, other courts have clearly recognized that corporate contributions to independent expenditure only committees cannot constitutionally be limited." Id. (citations omitted). Finally, Plaintiffs contend that Defendants "continue[ ] to seek refuge in a distinction that the courts have not recognized. The Attorney General conflates contribution limits as applied to contributions to candidates, with what HLF and FNY are challenging here, namely, contribution limits as applied to contributions to entities who only make independent expenditures." Id.
In the present matter, having reviewed the parties positions and the applicable law, the Court finds that N.Y. Elec. Law § 14-116(2) is unconstitutional as applied to Plaintiffs. Defendants reliance on Beaumont and other similar cases discussing corporate contributions is misplaced.
As Plaintiffs correctly contend, Beaumont dealt with a ban on corporate contributions to candidates rather than contributions to independent expenditure-only committees. As such, it was the type of speech at issue in Beaumont, i.e., political contributions by the corporation to a candidate, rather than the corporate identity of the corporate plaintiff that led to the result reached by the Supreme Court. Defendants argue that Plaintiff HLF's corporate identity renders the limit on corporate contributions to independent expenditure-only committees constitutional. This position, however, is clearly untenable with the applicable Supreme Court caselaw. In Citizens United, the Court held that "[t]he First Amendment does not permit Congress to make these categorical distinctions based on the corporate identity of the speaker and the content of the political speech . . . We return to the principle established in Buckley and [First Natl. Bank of Boston v.] Bellotti [435 U.S. 765, 98 S.Ct. 1407, 55 L.Ed.2d 707 (1978)], that the Government may not suppress political speech on the basis of the speaker's corporate identity. No sufficient governmental interest justifies limits on political speech of nonprofit or for-profit corporations." Citizens United, 558 U.S. at 364-65, 130 S.Ct. 876.
In Citizens United, the Supreme Court declared that "`[t]he absence of prearrangement and coordination of an expenditure with the candidate or his agent not only undermines the value of the expenditure to the candidate, but also alleviates the danger that expenditures will be given as a quid pro quo for improper commitments from the candidate.'" Citizens United, 558 U.S. at 345, 130 S.Ct. 876 (quoting Buckley, 424 U.S. at 47, 96 S.Ct. 612). As such, several Courts of Appeals, including the Second Circuit, have concluded that an anti-corruption rationale cannot apply to contributions to groups that engage only in independent expenditures. See Vermont Right to Life Comm. v. Sorrell, 758 F.3d 118, 140-41 (2d Cir.2014) (citing cases).
In Wisconsin Right to Life, Inc. v. Barland, 751 F.3d 804 (7th Cir.2014), the plaintiff challenged Wisconsin's statute capping the amount at $20,000 that a corporation may spend to solicit contributions to its affiliated PAC. See id. at 831. The defendants conceded that the ban was unconstitutional and the Seventh Circuit agreed, holding that the "statute is plainly unconstitutional under the rationale of Citizens United and our decision in Barland I[.]" Id. at 831-32.
In Texans for Free Enterprise v. Texas Ethics Comm'n, 732 F.3d 535 (5th Cir. 2013), the plaintiff was a "`direct campaign expenditure only committee,' meaning that it does not make any contributions to candidates or their official committees. Rather, it spends funds only to support its own speech in favor of or against candidates."
Id. at 537-38 (internal footnotes omitted).
In General Majority PAC v. Aichele, No. 1:14-cv-332, 2014 WL 3955079 (M.D.Pa. Aug. 13, 2014), the plaintiff challenged a provision of Pennsylvania's Election Code which prohibited corporations and unincorporated associations from contributing to independent expenditure-only groups. See id. at *4 (citation omitted). These groups were similarly prohibited from accepting such contributions. See id. Finding that the law at issue was unconstitutional, the court noted that it was joining "host of federal courts, including the Courts of Appeal[] for the Second, Fifth, Seventh, Ninth, Tenth, and D.C. Circuits," in finding "statutory limitations on independent expenditures unconstitutional following Citizens United." Id. at *4-*5 (citing N.Y. Progress & Prot. PAC, 733 F.3d at 487; Texans for Free Enter., 732 F.3d at 538; Wis. Right to Life State PAC, 664 F.3d at 143; Long Beach Area Chamber of Commerce v. City of Long Beach, 603 F.3d 684, 698-99 (2010); Republican Party, 741 F.3d at 1095-96; SpeechNow.org, 599 F.3d at 696).
A review of this authority makes clear that N.Y. Elec. Law § 14-116(2) is unconstitutional as applied to Plaintiff HLF. As the Second Circuit noted, "[f]ew contested legal questions are answered so consistently by so many courts and judges." NYPPP, 733 F.3d at 488. This result obtains regardless of the standard of review. See id. at 487 n. 1. After Buckley, political contribution limits are subject to heightened scrutiny, which requires that they be "closely drawn" to match a "sufficiently important interest." Buckley, 424 U.S. at 25, 96 S.Ct. 612. Expenditure limits, however, are subject to even higher scrutiny, requiring that they be narrowly tailored to meet a compelling government interest. See Citizens United, 558 U.S. at 340, 130 S.Ct. 876. In this case, the effect of the restrictions is to limit contributions that can be made to a committee that seeks to make independent expenditures. Only one such interest has ever been recognized to justify such limits: preventing corruption or the appearance of corruption. See SpeechNow.org, 599 F.3d at 695-96. Since Citizens United held "as a matter of law that independent expenditures do not corrupt or create the appearance of quid pro quo corruption," it followed inexorably that "contributions to groups that make only independent expenditures also cannot corrupt or create the appearance of corruption." Id. at 694. And since "[t]he First Amendment does not permit . . . categorical distinctions based on the corporate identity of the speaker and the content of the political speech[,]" it inevitably
Based on the foregoing, the Court finds that N.Y. Elec. Law § 14-116(2) is unconstitutional as applied to Plaintiff HLF. As such, the Court enjoins Defendants from enforcing N.Y. Elec. Law § 14-116(2) against Plaintiffs.
Defendants argue that they need additional discovery because they cannot determine whether Plaintiff FNY is in fact an independent-expenditure only committee, as it claims to be. The Court disagrees. First, the Supreme Court has repeatedly admonished against extensive discovery in election law cases. See Fed. Elec. Comm'n v. Wis. Right to Life, Inc., 551 U.S. 449, 469, 127 S.Ct. 2652, 168 L.Ed.2d 329 (2007). Further, most of the information that Defendants seek is entirely irrelevant to the present matter. As Plaintiffs' correctly contend, much of the information Defendants seek is more appropriately sought in an enforcement action if a complaint is ever lodged against Plaintiffs alleging that they violated some aspect of the Election Law.
In SpeechNow.org v. Fed. Election Comm'n, 599 F.3d 686 (D.C.Cir.2010), the plaintiff was an unincorporated nonprofit association registered as a "political organization" under the Internal Revenue Code. See id. at 689. Its stated purpose was to "promote the First Amendment rights of free speech and freedom to assemble by expressly advocating for federal candidates whom it views as supporting those rights and against those whom it sees as insufficiently committed to those rights." Id. Although it had not yet begun operations, it planned to acquire funds solely through donations by individuals and intended to operate "exclusively through `independent expenditures.'" Id. Despite the fact that the plaintiff had not yet begun its operations, the court held that "[t]he contribution limits of 2 U.S.C. § 441a(a)(1)(C) and 441a(a)(3) violate the First Amendment by preventing plaintiffs from donating to SpeechNow in excess of the limits and by prohibiting SpeechNow from accepting donations in excess of the limits." Id. at 696. The court made clear, however, their decision only "applied to contributions to SpeechNow, an independent expenditure-only group." Id.
As discussed, Defendants argument regarding the need for additional discovery misses the point. Addressing an argument raised that the court should not find the statute at issue unconstitutional as applied because their was evidence of coordination between the two plaintiffs, the Tenth Circuit held that "the logic of Citizens United would insist on the enforcement of bans on coordination, rather than targeting an entire class of contributions to independent groups." Republican Party of New Mexico v. King, 741 F.3d 1089, 1096 n. 4 (10th Cir.2013). The court continued as follows:
Id.
Both Plaintiffs are relatively new entities in New York, who have refrained from engaging in the protected activities at issue because of the threat of prosecution. Additional discovery would only serve to prolong the Court in reaching this inevitable result. See id.; see also Personal PAC v. McGuffage, 858 F.Supp.2d 963, 968 (N.D.Ill.2012) (citation omitted).
Based on the foregoing, the Court denies Defendants' request that the Court deny Plaintiffs' motion for summary judgment as premature.
After carefully reviewing the entire record in this matter, the parties' submissions and the applicable law, and for the above-stated reasons, the Court hereby
Throughout this litigation, Defendants have argued that they require additional discovery so that they can determine whether Plaintiffs are actually the types of organizations they claim to be or whether they are actually acting in coordination with candidates or other groups. Defendants arguments on this topic are irrelevant to determining the constitutionality of these provisions. Mr. Lopez has sworn under penalty of perjury that "[n]one of HLF's officers or directors have served, belong as members, or have any relationship with any political committee registered with the New York State Board of Elections[,]" and that "HLF does not accept earmarked contributions and only accepts general contributions." Dkt. No. 89-7 at ¶¶ 3-4. While the information that Defendants seek may be relevant to an enforcement action brought by the Board of Elections for alleged violations of the Election Law, it is entirely unnecessary for the disposition of the present case. The only relevance to the information Defendants seek is to determine whether Plaintiffs have standing to challenge the provisions at issue. As discussed at length in its September 26, 2013 Memorandum-Decision and Order denying Defendants' motion to dismiss for lack of standing and to expedite discovery, the evidence already before the Court clearly establishes Plaintiffs' standing to challenge the statutory provisions at issue. See Dkt. No. 78.
