No. 08—205 

IN THE

Supreme Court of the United States _____________ 

CITIZENS UNITED, 

 Appellant, 

v. 

FEDERAL ELECTION COMMISSION, 

 Appellee. 

_____________ 

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

_____________ 

SUPPLEMENTAL BRIEF OF THE CENTER FOR POLITICAL 

ACCOUNTABILITY AND THE CAROL AND LAWRENCE 

ZICKLIN CENTER FOR BUSINESS ETHICS RESEARCH AT 

THE WHARTON SCHOOL AS AMICI CURIAE IN SUPPORT 

OF APPELLEE

_____________ 

Michael T. Liburdi Karl J. Sandstrom 

James A. Ahlers Counsel of Record

PERKINS COIE Andrew H. Werbrock 

 BROWN & BAIN P.A. PERKINS COIE LLP

2901 N. Central Avenue 607 14th Street N.W. 

Phoenix, Arizona 85012 Washington, D.C. 20005 

(602) 351-8000 (202) 628-6600 

mliburdi@perkinscoie.com ksandstrom@perkinscoie.com 

jahlers@perkinscoie.com awerbrock@perkinscoie.com 

Counsel for Amici Curiae 
ii 

TABLE OF CONTENTS

TABLE OF AUTHORITIES ...............................................iv 

STATEMENT OF INTEREST .............................................1 

SUMMARY OF ARGUMENT..............................................1 

ARGUMENT....................................................................4 

I. OVERTURNING AUSTIN AND 

MCCONNELL WILL DRAMATICALLY 

ALTER THE CAMPAIGN FINANCE 

LANDSCAPE ..............................................4 

A. Corporations’ Ability to Amass 

Capital Will Distort the Political 

Process.................................................5 

B. Profit Maximization Promotes 

Unrestrained, Indiscriminate 

Political Spending ...............................8 

C. Corporate Centralized 

Management Facilitates RentSeeking Behavior by Managers........12 

II. CORPORATE POLITICAL SPENDING 

PROHIBITIONS ARE THE ONLY 

MEANINGFUL SAFEGUARDS 

AGAINST CORRUPTION ........................14 

A. Coordination Rules Cannot 

Isolate Independent Expenditure 

Committees........................................14 
iii 

B. Objecting Shareholders and 

Directors Cannot Check 

Corporate Political Activity ..............16 

III. THE COURT SHOULD NOT 

REVERSE ITS DEFERENCE TO 

CONGRESS...............................................19 

CONCLUSION...............................................................21
iv 

TABLE OF AUTHORITIES

Cases Page(s)

Austin v. Mich. Chamber of Commerce, 

494 U.S. 652 (1990) ........................................passim 

Buckley v. Valeo, 424 U.S. 1 (1976) ..........................14 

Colo. Republican Fed. Campaign Comm. v. 

Fed. Election Comm’n, 518 U.S. 604 (1996)..........16 

Fed. Election Comm’n v. Beaumont, 

539 U.S. 146 (2003) ..........................................17, 19 

Fed. Election Comm’n v. Nat’l Right to Work 

Comm., 459 U.S. 197 (1982) ............................19, 20 

McConnell v. Fed. Election Comm’n, 

540 U.S. 93 (2003)..........................................passim 

NLRB v. Jones & Laughlin Steel Corp., 

301 U.S. 1 (1937)....................................................19

Shays v. Fed. Election Comm’n, 

414 F.3d 76 (D.C. Cir. 2005) ..................................15 

United States v. United Auto. Workers, 

352 U.S. 567 (1957)..................................................5

U.S. Civil Serv. Comm’n v. Nat’l Ass’n of Letter 

Carriers, 413 U.S. 548 (1973) ..........................19, 20 
v 

Statutes and Regulations Page(s)

2 U.S.C. § 431(17)(B).................................................14 

2 U.S.C. § 441a(a)(7)(B)(i).........................................14 

2 U.S.C. § 441b ..................................................passim 

2 U.S.C. § 441c(a) ........................................................6 

2 U.S.C. § 441e(a)........................................................6 

2 U.S.C. § 441i(a).........................................................6 

34 Stat. 864..................................................................6 

11 C.F.R. § 109.20 .....................................................14 

11 C.F.R. § 109.21 .....................................................14 

11 C.F.R. § 109.21(c) .................................................15 

11 C.F.R. § 109.22 .....................................................14 

11 C.F.R. § 109.23 .....................................................14 

Other Authorities and Sources Page(s)

40 Cong. Rec. 91 ....................................................5, 20 

40 Cong. Rec. 96 ..........................................................5 

Rajesh K. Aggarwal et al., Corporate Political 

Contributions: Investment or Agency?, 

Jan. 30, 2007 ....................................................13, 18 
vi 

Other Authorities and Sources Page(s)

(cont.)

Richard L. Berke, Enron Pursued Plan to Forge 

Close Ties to Gore Campaign, N.Y. TIMES, 

Feb. 18, 2002 ....................................................13, 14 

Aaron Bernstein, When Political Giving Doesn’t 

Pay: Investor Groups Want Greater Board 

Oversight and Disclosure of the Political 

Contribution Process, DIRECTORSHIP, 

June 1, 2008 .....................................................13, 17 

Robert Bryce, Exxon, Big Oil Profits Evil Only 

Until You Weigh Their Tax Bills, U.S. NEWS 

& WORLD REP., Feb. 11, 2009...................................8 

Campaign Finance Institute, Party 

Independent Spending Soars, Nov. 11, 2004 ........16 

Ronnie J. Clayton et al., Enron: Market 

Exploitation and Correction, FINANCIAL 

DECISIONS, Spring 2002 ...............................9, 13, 14 

Michael J. Cooper et al., Corporate Political 

Contributions and Stock Returns, Oct. 24, 

2006 ..........................................................................9 

Jeanne Cummings, Investors Seek Clarity on 

Campaign Giving: Pressure Grows on 

Corporations to Improve How They Disclose 

and Track Political Donations, WALL ST. J., 

Apr. 5, 2006 ............................................................18 
vii 

Other Authorities and Sources Page(s)

(cont.)

Colin Diamond et al., New Media and Retail 

Shareholder Participation, BLOOMBERG LAW 

REPORTS, Apr. 6, 2009...........................................17 

Fred Emery, WATERGATE: THE CORRUPTION OF 

AMERICAN POLITICS AND THE FALL OF RICHARD 

NIXON (1995) ..........................................................11 

Fed. Election Comm’n, Summary Report for 

ExxonMobil Corporation Political Action 

Comm. (C00121368), 2007-08 Cycle........................7 

Sanjay Gupta and Charles W. Swenson, RentSeeking by Agents of the Firm, 46 J. L. &

ECON. 253 (April 2001)...........................................13 

Carrie Johnson, Enron’s Fastow Gets 6 Years: 

Finance Chief’s Sentence Reflects His Help 

Convicting Lay, Skilling, WASH. POST, 

Sept. 27, 2006.........................................................14 

Marianne Lavelle, Exxon’s Profits: Measuring a 

Record Windfall, U.S. NEWS & WORLD REP., 

Feb. 1, 2008 ..............................................................8 

Neil A. Lewis, A Conservative Organization is 

Accused of Offering Help in a Labor Dispute 

for a Price, N.Y. TIMES, July 17, 2009 ...................10 

Jeffrey A. Miron, Campaign Finance 

Regulation, LIBRARY OF ECONOMICS AND 

LIBERTY, Jan. 2, 2001............................................15 
viii 

Other Authorities and Sources Page(s)

(cont.)

Robert E. Mutch, CAMPAIGNS, CONGRESS, AND 

COURTS (1998) ..........................................................6 

The Nation: The High Price of Higher Milk 

Prices, TIME, June 10, 1974 ...................................10 

Louise Overacker, MONEY IN ELECTIONS (1932) ........6 

Scandals: A Record of Corporate Corruption, 

TIME, Feb. 23, 1976 ................................................10 

Susan Schmidt and James V. Grimaldi, 

Nonprofit Groups Funneled Money For 

Abramoff, WASH. POST, June 25, 2006 ..................11 

R. Jeffrey Smith, The DeLay-Abramoff Money 

Trail, WASH. POST, Dec. 31, 2005 ..........................11 
1 

STATEMENT OF INTEREST

The Center for Political Accountability (“CPA”) 

and the Carol and Lawrence Zicklin Center for 

Business Ethics Research at the Wharton School of 

the University of Pennsylvania (“The Zicklin 

Center”) submit this supplemental brief as amici 

curiae in support of the Appellee.1 Amici refer the 

Court to, and incorporate by reference, the statement 

of interest set forth in their prior amici brief 

submitted on the merits in this case. 

SUMMARY OF ARGUMENT

The ability of corporations to amass capital, focus 

on maximizing shareholder value, and centralize 

management has contributed immensely to the 

nation’s economic well-being. For more than a 

century, Congress and state legislatures have 

recognized that those same attributes, which are the 

engines of economic growth, may have a corrosive 

impact on the functioning of our democratic 

institutions. The ability to accumulate capital 

enables corporations to deploy immense, taxadvantaged resources in pursuit of their political 

objectives. Focusing on maximizing shareholder 

value allows corporations to disregard the larger 

societal and economic consequences of their political 

engagement. Centralized management vests in 

managers near complete power to engage in rentseeking behavior through political channels. 

 1 CPA and The Zicklin Center submit this brief pursuant to 

the written consent of the parties. No party or counsel for a 

party has authored this brief in whole or in part, and no person 

or entity other than CPA and The Zicklin Center has made a 

financial contribution to its preparation or submission. 
2 

Over the last century, a series of political 

scandals involving corporations has led Congress to 

recognize that the economic advantages of the 

corporate structure pose a danger in the political 

realm. Congress, along with numerous state 

legislatures, has chosen to limit corporate influence 

in elections. The law does not ban all corporate 

political activity, but requires corporations to play 

under the same rules as other actors in the process. 

The question before the Court is whether those 

legislative efforts should be thwarted. In asking 

whether Austin v. Michigan Chamber of Commerce, 

494 U.S. 652 (1990), or McConnell v. Federal Election 

Commission, 540 U.S. 93 (2003),2 should be 

overruled, the Court asks whether the historic and 

widely shared judgment of our elected officials, who 

have first-hand knowledge of the dangers posed by 

unlimited corporate political spending, should be set 

aside. It will be those elected officials who will be 

asked to resist, using the legally limited campaign 

resources at their disposal, the political pressure 

that will accompany unlimited corporate political 

spending. 

Austin and McConnell recognize that 

corporations, created by the state, are capable of 

amassing billions of dollars, some of which can 

readily be made available for political purposes. One 

example illustrates how overturning Austin and 

McConnell would fundamentally rework our 

campaign finance system. In the last election cycle, 

ExxonMobil, the nation’s largest corporation, raised 

 2 To the extent that it addresses Section 203 of the 

Bipartisan Campaign Reform Act of 2002, 2 U.S.C. § 441b. 
3 

$950,434 in voluntary political contributions from its 

employees and shareholders. During that same 

election cycle, ExxonMobil’s profits were $85 billion, 

or more than 560 times the amount raised by all 

corporate political action committees (“PACs”) 

combined. ExxonMobil need only use a very small 

percentage of those corporate funds to secure a 

politically favorable legislative landscape. 

Restrictions on coordination provide one check 

against unlawful independent expenditures by 

corporations. But these restrictions alone are 

inadequate, in part because corporations can achieve 

their political ends without legally coordinating their 

activities. Officeholders are well aware that a 

massive influx of independent expenditures by a 

single corporation could determine their fate at the 

ballot box and will feel compelled to weigh that 

corporation’s interests heavily when they conflict 

with less organized and less funded interests that 

must operate under the limitations of existing 

campaign finance law. 

Incumbent federal officeholders currently enjoy a 

nearly twenty-to-one advantage over challengers in 

the receipt of corporate PAC contributions. This 

advantage will only be magnified if corporations are 

able to reward their legislative allies with unlimited 

spending from corporate coffers. It stands to further 

close the political marketplace to competition. 

Experience shows us the impact unrestrained 

corporate political spending will have on corporate 

behavior. Slashing restraints on corporate spending 

will generate internal and external pressures on 

corporations to engage in unrestrained political 

spending that may bear little or no relation to 
4 

shareholder value. Corporations will feel compelled 

to keep up with their competitors, particularly in the 

face of a shakedown by elected officials who write the 

laws and regulations that corporations must follow 

on a daily basis. Managers will engage in rentseeking behavior, spending corporate funds for 

personal gain or to advance management’s personal 

political preferences. Most important, political 

spending will be used to secure and maintain 

unwarranted competitive advantage in regulation 

with severe consequences on the openness, 

dynamism, and operation of markets. 

The Court should not lightly set aside the wellreasoned, long-standing, and broadly shared 

judgment of legislators that unchecked corporate 

political spending corrupts our politics and distorts 

our economy. 

ARGUMENT

I. OVERTURNING AUSTIN AND 

MCCONNELL WILL DRAMATICALLY 

ALTER THE CAMPAIGN FINANCE 

LANDSCAPE 

The corporate structure allows economic activity 

to be organized efficiently to pursue private profit. 

The ability to amass capital, centralize management, 

and focus on maximizing shareholder value enables 

corporations to contribute immensely to our nation’s 

economic success. Congress and numerous state 

legislatures have recognized that these same 

attributes can compromise our democratic 

institutions and distort our market economy. The 

ability of corporations to accumulate capital puts at 
5 

their disposal quantities of money and influence that 

dwarf all other available sources of political 

contributions. The focus on maximizing profit leads 

corporations to seek to reduce economic competition 

and to privatize public goods through political action. 

Finally, centralized management enables corporate 

managers to engage in rent-seeking political 

behavior. 

A. Corporations’ Ability to Amass Capital 

Will Distort the Political Process 

President Theodore Roosevelt’s message to 

Congress in 1905 recognized the central role that 

corporations assumed in American life: “The 

corporation has come to stay, just as the trade union 

has come to stay. Each can and do and has done 

great good. . . . But each should be sharply checked 

where it acts against law and justice.” 40 Cong. Rec. 

91. Against this backdrop, and given his own 

experience with corporate political spending, 

President Roosevelt urged Congress to take action: 

All contributions by corporations to any 

political committee for any political 

purpose should be forbidden by law; 

directors should not be permitted to use 

stockholders’ money for such 

purposes . . . . [T]he national and the 

several State legislatures [should] forbid 

any officer of a corporation from using 

the money of the corporation in or about 

any election . . . . 

40 Cong. Rec. 96 (partially quoted in United States v. 

United Auto. Workers, 352 U.S. 567, 572 (1957)). 
6 

The oversized role that corporations played in the 

financing of the presidential elections of 1896, 1900, 

and 1904 compelled President Roosevelt to action. 

Every major trust had contributed at the urging of 

political “bosses” such as Mark “Boss” Hanna. 

Standard Oil alone gave $250,000 to the presidential 

campaigns in 1896 and 1900. Louise Overacker, 

MONEY IN ELECTIONS 107 (1932). President 

Roosevelt’s 1904 campaign accepted $150,000 from 

companies controlled by J. P. Morgan and $100,000 

from Standard Oil, along with corporate money from 

International Harvester, Bethlehem Steel, and 

General Electric, among others. Robert E. Mutch, 

CAMPAIGNS, CONGRESS, AND COURTS 3 (1998). A 

former Republican national party treasurer 

explained “that corporations had furnished 73.5 

percent of the 1904 presidential campaign fund.” Id. 

Congress responded by enacting legislation 

prohibiting corporate spending in federal elections. 

See, e.g., Act of Jan. 26, 1907, ch. 420, 34 Stat. 864 

(the Tillman Act); see also 2 U.S.C. § 441b(a). Today, 

as a result of an unbroken series of amendments 

strengthening the limits on corporate funds in 

campaigns, candidates, political parties, and political 

committees may not raise money from corporations, 

nor may corporations make independent 

expenditures.3 Corporations must participate in the 

political process under essentially the same rules as 

other actors in the process by forming separate 

 3 Candidates, political parties, and PACs can only raise 

money through limited contributions from individuals, 

permanent residents of the United States, and nongovernmental contractors. See 2 U.S.C. §§ 441c(a), 441e(a), 

441i(a). 
7 

segregated funds, commonly referred to as PACs, 

which may solicit and accept voluntary contributions 

from corporate employees and individual 

shareholders. 2 U.S.C. § 441b(b)(2)(C). PACs are an 

important, but not dominant, source of political 

funds. 

Overturning Austin and McConnell would 

radically change campaign financing. Throwing 

open the process to corporate treasury funds – a mix 

of domestic and foreign monies, earnings from 

government contracts, and general profits – would 

undermine the system of limited, voluntary 

contributions. All political committees, including 

candidate committees, derive their funds from 

individuals.4 Without restrictions on corporate 

political spending, it stands to reason that 

lawmakers would seek to level the playing field by 

repealing the restrictions on candidate, party, and 

other political committees, opening the system to the 

very corruption that current law seeks to contain. 

The financial resources controlled by a single 

large corporation dwarf the funds available to all 

other electoral participants combined. As noted 

earlier, in the last election cycle, ExxonMobil’s PAC 

raised $950,434 in voluntary political contributions 

from its employees and shareholders.5 All corporate 

PACs combined raised a total of approximately $150 

 4 A controlling shareholder could use corporate funds to 

make a political expenditure, a dissenting minority would first 

need to receive a taxable dividend. 

5 Fed. Election Comm’n, Summary Report for ExxonMobil 

Corporation Political Action Comm. (C00121368), 2007-08 

Cycle. 
8 

million for contested congressional races. By stark 

contrast, ExxonMobil’s profits during the same 

period were $85 billion,6 or over 560 times the 

amount collected by all corporate PACs. A fraction of 

ExxonMobil’s profits from a single year would be 

sufficient to fundamentally alter the terms of 

legislative debate over serious national issues. 

There is no reason to believe that the imbalance 

in resources will not impact campaign financing, 

candidate and party platforms, legislation, and 

market efficiency. 

B. Profit Maximization Promotes 

Unrestrained, Indiscriminate Political 

Spending 

The drive to maximize shareholder profit leads 

corporations to seek to prevent or reduce 

competition, to privatize public goods, and to 

minimize taxation. Corporations often pursue these 

goals without regard for the larger societal or 

economic costs of their success. 

A 2006 study of PAC contributions found that, for 

some firms, political spending pays handsomely: 

 6 Robert Bryce, Exxon, Big Oil Profits Evil Only Until You 

Weigh Their Tax Bills, U.S. NEWS & WORLD REP., Feb. 11, 2009, 

available at http://www.usnews.com/articles/opinion/2009/02/11/

exxon-big-oil-profits-evil-only-until-you-weigh-their-taxbills.html (last accessed July 28, 2009); Marianne Lavelle, 

Exxon’s Profits: Measuring a Record Windfall, U.S. NEWS &

WORLD REP., Feb. 1, 2008, available at

http://www.usnews.com/articles/business/economy/2008/02/01/e

xxons-profits-measuring-a-record-windfall.html (last accessed 

July 28, 2009). 
9 

[O]ur results imply that firms 

participate in the political system not 

from the standpoint of consuming a 

patriotic consumption good . . . but 

rather from the standpoint of creating 

positive net present value investments. 

Michael J. Cooper et al., Corporate Political 

Contributions and Stock Returns, Oct. 24, 2006, at 

24, available at http://ssrn.com/abstract=940790 (last 

accessed July 28, 2009). The specific benefits derived 

from political spending may include favorable tax 

treatment, winning government contracts, the 

imposition of tariffs or penalties on competitors, and 

favorable regulatory changes. Id. at 5. Even when 

the benefits are unclear, a corporation may feel 

obligated to make political expenditures to keep up 

with competitors who are doing the same. 

It is advantageous for ABC Corporation 

to invest in lobbying for regulations that 

secure its market position while 

harming that of its rival, XYZ 

Corporation. Given the size and scope 

of the regulatory structure in 

Washington, failure to engage in such 

activity can be detrimental to a firm’s 

long term survival. 

Ronnie J. Clayton et al., Enron: Market Exploitation 

and Correction, FINANCIAL DECISIONS, Spring 2002, 

at 13. 

Recently, news surfaced that the non-profit 

American Conservative Union (“ACU”) allegedly 

offered political support to FedEx in a clash with 

UPS over labor legislation, in exchange for a $3.4 
10 

million contribution to ACU. Neil A. Lewis, A 

Conservative Organization is Accused of Offering 

Help in a Labor Dispute for a Price, N.Y. TIMES, 

July 17, 2009, at A10. When FedEx declined ACU’s 

offer, the organization’s chairman allegedly threw 

his support behind UPS. Id. If Austin and 

McConnell are overturned, ACU could use corporate 

money secured in this manner to support its own 

preferred candidates. 

In the years following Watergate, investigators 

uncovered illegal corporate campaign contributions 

to President Richard Nixon’s re-election committee, 

including payoffs involving corporations subject to 

heavy regulation. The Watergate Special Counsel’s 

report documents how major corporations discovered 

that political spending was in their financial 

interest. Examples of illegal corporate contributions 

include $150,000 from defense contractor Northrop 

Corporation, $100,000 each from Gulf, Phillips, and 

Ashland oil companies, and $55,000 and $40,000 

from American Airlines and Braniff Airways, 

respectively. Scandals: A Record of Corporate 

Corruption, TIME, Feb. 23, 1976, available at

http://www.time.com/time/magazine/article/0,9171,91

8067-1,00.html (last accessed July 28, 2009). 

Another political payoff at that time involved the 

largest dairy farmer’s association, Associated Milk 

Producers, Inc., which “pledge[d] more than $2 

million . . . in return for higher milk prices and other 

favors.” The Nation: The High Price of Higher Milk 

Prices, TIME, June 10, 1974, available at

http://www.time.com/time/magazine/article/0,9171,91

1381,00.html (last accessed July 28, 2009). 
11 

One of the most serious examples of political 

payoffs involved International Telephone & 

Telegraph (“ITT”). At the time, ITT was under 

investigation by the Justice Department for antitrust 

violations. In exchange for a $400,000 contribution 

to help finance the 1972 Republican presidential 

convention, President Nixon saw to it that the 

Department of Justice dropped its investigation. See

Fred Emery, WATERGATE: THE CORRUPTION OF 

AMERICAN POLITICS AND THE FALL OF RICHARD NIXON

101 (1995). 

The money trail does not always run in a straight 

line. As this Court noted in Austin, even non-profit 

organizations can exploit their status to amass 

corporate funds, thus enabling them to circumvent 

the restrictions on corporate political expenditures. 

See Austin, 494 U.S. at 664. The sordid tale of 

convicted lobbyist Jack Abramoff and his many 

powerful political allies illustrates the “laundering” 

of corporate money at its most egregious. Extensive 

investigations into Abramoff’s dealings revealed how 

he secretly routed clients’ funds to politicians 

through willing tax-exempt organizations. See, e.g., 

Susan Schmidt and James V. Grimaldi, Nonprofit 

Groups Funneled Money For Abramoff, WASH. POST, 

June 25, 2006, at A1; R. Jeffrey Smith, The DeLayAbramoff Money Trail, WASH. POST, Dec. 31, 2005, at 

A1. 

Striking down Austin would remove restraints 

against conduit spending, effectively eliminating any 

restriction on corporate political uses of treasury 

funds. Indeed, the United States Chamber of 

Commerce (“Chamber”), writing as amicus curiae on 

the merits for Citizens United, has declared its 
12 

intention to spend millions on electioneering 

communications (“ECs”) if allowed to mask corporate 

donor identities. (Chamber Br. at 6, 12).7 

What is more consequential, individual firms will 

spend politically, as they have done historically, to 

maximize each firm’s own profits, at times to the 

detriment of the overall economy and the health and 

well-being of the nation. 

C. Corporate Centralized Management 

Facilitates Rent-Seeking Behavior by 

Managers 

Political giving is not always motivated by profits; 

it may also be a matter of private rent-seeking. 

Empirical research reveals that corporate managers 

frequently engage in political spending for personal 

gain, under the guise of benefiting the corporation. 

An alternative reason why companies 

may donate is that, while companies do 

not have political preferences per se, 

their managers do. In this view, political 

donations need not be associated with 

firm performance and, in fact, subtract 

from firm value as they represent a cash 

outflow with no corresponding benefit to 

the firm’s shareholders. The political 

donations are a form of perquisites 

 7 The Chamber reports spending $15.7 million on ECs in 

2008. Biannual EC reports filed with the FEC show total 

corporate EC expenditures of $119.5 million in 2008. The 

Chamber was the largest spender with $24.3 million total, 

including $8.6 million for a Chamber sub-entity called 

“Americans for Job Security.” These figures were compiled by 

the FEC at the request of CPA and The Zicklin Center. 
13 

consumption for the firm’s managers, 

one that is often not transparent or 

visible to shareholders.

Rajesh K. Aggarwal et al., Corporate Political 

Contributions: Investment or Agency?, Jan. 30, 2007, 

available at http://ssrn.com/abstract=972670 (last 

accessed July 28, 2009) (emphasis added).8 

A 2006 survey of public company shareholders 

commissioned by amicus CPA found that 73 percent 

of respondents believe that corporate political giving 

is undertaken to advance corporate managers’ 

private political agendas. Aaron Bernstein, When 

Political Giving Doesn’t Pay: Investor Groups Want 

Greater Board Oversight and Disclosure of the 

Political Contribution Process, DIRECTORSHIP, 

June 1, 2008, available at

http://www.politicalaccountability.net/index.php?ht=

display/ArticleDetails/i/1416/pid/188 (last accessed 

July 28, 2009). 

Enron was renowned in the corporate world for 

its adept political “investments.” See Ronnie J. 

Clayton et al., supra, at 13. In 1999 and 2000, Enron 

hedged its risks by giving $426,500 to the Republican 

party and $362,000 to the Democratic party. 

Richard L. Berke, Enron Pursued Plan to Forge Close 

Ties to Gore Campaign, N.Y. TIMES, Feb. 18, 2002, at 

A1. Enron also gave $250,000 to the Republican 

National Convention’s host committee and hired a 

 8 A common example of rent-seeking involves corporate 

managers spending corporate funds to influence personally 

beneficial tax changes. See generally Sanjay Gupta and Charles 

W. Swenson, Rent-Seeking by Agents of the Firm, 46 J. L. &

ECON. 253 (April 2001). 
14 

Democratic strategist to help with “Democratic 

political outreach in the 2000 presidential election.” 

Id. 

The company itself gained from these donations 

initially (see Clayton, supra, at 13-15), but as the 

company’s profits declined precipitously, executives 

such as Ken Lay, Jeffrey Skilling, and Andrew 

Fastow continued to reap the personal financial 

benefits obtained with shareholders’ funds. See, e.g., 

Carrie Johnson, Enron’s Fastow Gets 6 Years: 

Finance Chief’s Sentence Reflects His Help 

Convicting Lay, Skilling, WASH. POST, Sept. 27, 2006, 

at D1. 

Private rent seeking sacrifices shareholder value 

to the financial and political agendas of corporate 

managers. The practice will only increase if this 

Court removes existing restraints on corporate 

political spending. 

II. CORPORATE POLITICAL SPENDING 

PROHIBITIONS ARE THE ONLY 

MEANINGFUL SAFEGUARDS AGAINST 

CORRUPTION 

A. Coordination Rules Cannot Isolate 

Independent Expenditure Committees 

Coordination defines the line separating 

independent expenditures and contributions to 

candidate committees. See 2 U.S.C. §§ 431(17)(B), 

441a(a)(7)(B)(i); Buckley v. Valeo, 424 U.S. 1, 47 

(1976), 11 C.F.R. §§ 109.20-109.23. Any coordination 

between independent expenditure and campaign 

committees could render the expenditure a 
15 

contribution. See Shays v. Fed. Election Comm’n, 

414 F.3d 76, 97 (D.C. Cir. 2005). 

Should corporations be able to conduct 

independent expenditure campaigns, the Federal 

Election Commission’s coordination rules will not be 

enough to prevent corruption. Even with tight 

regulation, “tacit coordination” between independent 

expenditure campaigns, run by seasoned political 

consultants who know how to execute a successful 

independent expenditure campaign, and candidate 

committees is easier than one might suspect: 

[T]acit coordination is easy. Those 

making independent expenditures can 

hire the pollsters and political 

consultants who work for a candidate’s 

campaign, or mutual friends can guide 

“independent” expenditures in the 

direction desired by a candidate. 

Jeffrey A. Miron, Campaign Finance Regulation,

LIBRARY OF ECONOMICS AND LIBERTY, Jan. 2, 2001, 

available at http://www.econlib.org/library/Columns/ 

Mironcampaign.html (last accessed July 28, 2009). 

Sensitive to the associational interests that arise, 

the Federal Election Commission’s coordination rules 

only prohibit coordination with respect to specific 

expenditures. 11 C.F.R. § 109.21(c). More general 

offers of support do not transgress the rules. 

Corporate representatives will have no difficulty 

under the rules conveying the objects of a corporate 

political spending program. 

Even with more tightly drawn coordination rules, 

independent expenditure committees could 

effectively assist a candidate without any direct, 
16 

overt lines of communication between the two. 

Instead, tacit coordination arises when the 

independent expenditure committee hires former 

candidate staffers, including both political and 

congressional staffers, pollsters or public relations 

firms shared with the candidates, or by simply 

repeating the candidate’s message. 

Even if the coordination rules were up to the task, 

they would be insufficient to guard against the most 

pernicious form of corruption. Both bribes and 

extortion can corrupt the legislative process. 

Extortion is the greater danger, however, because it 

often leaves no trail. Nothing is given; the threat is 

sufficient. The threat of massive independent 

spending will often be sufficient to secure the 

regulatory forbearance or action sought.9

B. Objecting Shareholders and Directors 

Cannot Check Corporate Political 

Activity 

Corporations are not proxies for their 

shareholders. While corporate managers may spend 

freely with expectations of reaping shareholder 

returns, or of simply avoiding political backlash, 

shareholders and directors themselves are much 

 9 Similar is the expansion of political parties’ role in 

elections following Colorado Republican Federal Campaign 

Committee v. Federal Election Commission, 518 U.S. 604 (1996), 

which demonstrates the broad ramifications to the campaign 

finance landscape that follow from a change in independent 

expenditure rules. See Campaign Finance Institute, Party 

Independent Spending Soars, Nov. 11, 2004, available at

http://www.cfinst.org/pr/prRelease.aspx?ReleaseID=55 (last 

accessed July 28, 2009). 
17 

more skeptical of the value of corporate political 

involvement. See Aaron Bernstein, supra. Yet 

shareholders and directors often cannot effectively 

voice their dissent. 

The views of a large public corporation and its 

individual officers or managers do not mirror those of 

shareholders and employees, who often represent a 

diverse cross-section of the public. Though many 

individual shareholders and directors vocally oppose 

questionable uses of corporate funds, they lack the 

means to significantly influence corporate political 

spending decisions. The vast majority of stock in the 

United States – approximately 66 percent – is owned 

by institutional investors. See, Colin Diamond et al., 

New Media and Retail Shareholder Participation, 

BLOOMBERG LAW REPORTS, Apr. 6, 2009, at 1.10 

Consequently, it is highly unlikely that aggregate 

corporate political spending represents the collective 

will of the individual or beneficial shareholders. 

The voluntary contributions that a corporate PAC 

receives from its shareholders and employees are a 

more accurate measure of support of the 

corporation’s political program. They operate under 

the same legal constraints as other players in the 

process, thus avoiding the distorting effects of the 

“state-conferred corporate structure that facilitates 

the amassing of large treasuries,” which preoccupied 

the Court in Austin. Austin, 494 U.S. at 660.11

 10 Keeping with their fiduciary responsibility, institutional 

investors hesitate to express their political preferences. 

11 See also Fed. Election Comm’n v. Beaumont, 539 U.S. 146, 

163 (2003) (“The [PAC] option allows corporate political 

participation without the temptation to use corporate funds for 

political influence, quite possibly at odds with the sentiments of 
18 

When corporations make political expenditures 

without knowing how or why those expenditures 

yield benefits, political spending is at best a costly 

gamble.12 Many corporations and active 

shareholders recognize that better corporate 

governance is associated with lower levels of political 

donations. See Aggarwal et al., supra, at 2. It may 

be this concern that has shareholders wanting more 

internal controls over corporate political giving. 

CPA’s 2006 poll of shareholders shows that “[m]ore 

than 90% of respondents backed more disclosure and 

84% wanted board oversight and approval of such 

giving.” Jeanne Cummings, Investors Seek Clarity 

on Campaign Giving: Pressure Grows on 

Corporations to Improve How They Disclose and 

Track Political Donations, WALL ST. J., Apr. 5, 2006, 

at A4 (reporting on CPA’s shareholder poll). 

The Court’s other concern in Austin, conduit 

spending by corporations, also impairs the ability of 

shareholders and directors to effectively monitor 

corporate political activity. The use of conduits 

obscures the amount of corporate political 

contributions and their true nature and purpose. 

Shareholders and directors cannot act as a check on 

such potentially criminal behavior by their 

 

some shareholders or members, and it lets the Government 

regulate campaign activity through registration and 

disclosure.”). 

12 Indeed, corporations frequently make political donations 

without even knowing exactly where the money is going. See

Jeanne Cummings, Investors Seek Clarity on Campaign Giving: 

Pressure Grows on Corporations to Improve How They Disclose 

and Track Political Donations, WALL ST. J., Apr. 5, 2006, at A4. 
19 

corporations if the campaign finance system allows 

corporate donors to operate in the dark. 

III. THE COURT SHOULD NOT REVERSE 

ITS DEFERENCE TO CONGRESS 

Congress and state legislatures, acting at the 

behest of voters, have identified corporate political 

spending in candidate elections as a threat to our 

electoral processes. In Federal Election Commission 

v. National Right to Work Committee, this Court held 

that the “careful legislative adjustment of the federal 

election laws, in a ‘cautious advance, step by step,’ to 

account for the particular legal and economic 

attributes of corporations and labor organizations 

warrants considerable deference.” 459 U.S. 197, 209 

(1982) (quoting NLRB v. Jones & Laughlin Steel 

Corp., 301 U.S. 1, 46 (1937)) (second citation omitted) 

(emphasis added). The Court acknowledged the 

“actual and apparent corrupti[ve]” effects of 

corporate money on elections and the political 

system, and “accept[ed] Congress’s judgment” and 

upheld the challenged limitation on corporate PAC 

solicitations. Id. at 209-10; accord Beaumont, 539 

U.S. at 155. 

This Court has recognized efforts to instill public 

confidence in government, even when doing so 

involves First Amendment interests. One example is 

United States Civil Service Commission v. National 

Association of Letter Carriers, 413 U.S. 548 (1973), 

which upheld political prohibitions on certain 

executive agency employees. Id. at 564-65. The 

Court balanced the employees’ First Amendment 

interests against the government’s interests in 

promoting merits-based public employment. Id. at 
20 

557; see also id. at 567 (“Neither the right to 

associate nor the right to participate in political 

activities is absolute. . . . Nor are the management, 

financing, and conduct of political campaigns wholly 

free from governmental regulation.”) (footnote and 

citations omitted); see also Nat’l Right to Work 

Comm., 459 U.S. at 207-08 (“[W]e conclude that the 

associational rights asserted by respondent may be 

and are overborne by the interests Congress has 

sought to protect in enacting § 441b.”). 

* * * 

As President Roosevelt reminded Congress: 

The fortunes amassed through 

corporate organization are now so large, 

and vest such power in those that wield 

them, as to make it a matter of 

necessity to give to the sovereign—that 

is, to the Government, which represents 

the people as a whole—some effective 

power of supervision over their 

corporate use. 

40 Cong. Rec. 91. This holds true in both the 

economic and political marketplaces. 

Competition in the political marketplace is 

inextricably linked to competition in the economic 

marketplace. A competitive marketplace is an open, 

dynamic, and efficient one. When corporations are 

able to secure through politics what they cannot 

achieve through economic competition, oligopolies 

and monopolies result, which may pose as great a 

detriment to our economy as corruption is to our 

body politic. 
21 

These time-honored principles are no different 

today than they were at the turn of the 20th century. 

Our nation’s leaders have always understood the 

dangers that unchecked corporate political spending 

pose to our democracy and market economy. 

Answering this Court’s question, Austin and 

McConnell should be affirmed. 

CONCLUSION

Respectfully submitted, 

Michael T. Liburdi Karl J. Sandstrom 

James A. Ahlers Counsel of Record

PERKINS COIE Andrew H. Werbrock 

 BROWN & BAIN P.A. PERKINS COIE LLP

2901 N. Central Avenue 607 14th Street N.W. 

Phoenix, Arizona 85012 Washington, D.C. 20005 

Counsel for Amici Curiae the Center for Political 

Accountability and the Carol and Lawrence 

Zicklin Center for Business Ethics Research at 

the Wharton School 

July 30, 2009