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

_____________

BRIEF OF THE CENTER FOR POLITICAL

ACCOUNTABILITY AND THE CAROL AND LAWRENCE

ZICKLIN CENTER FOR BUSINESS ETHICS RESEARCH 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
i

TABLE OF CONTENTS

TABLE OF AUTHORITIES .............................................. iii

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

SUMMARY OF ARGUMENT..............................................2

ARGUMENT.................................................................... 5

I. PUBLIC DISCLOSURE IS ESSENTIAL TO AN

EFFECTIVE CORPORATE COMPLIANCE

PROGRAM .............................................................. 5

A. Federal Law Prohibits Direct Corporate

Spending in Connection with a Federal

Election........................................................ 6

B. Distinguishing Prohibited Corporate

Election Activity from Protected Speech

Requires Care..............................................8

C. To Assure Compliance, a Corporation

Must be Aware of Electioneering

Communications Paid in Whole or in

Part with Corporate Funds.......................11

II. IN ADDITION TO COMPLIANCE WITH

FEDERAL LAW, PUBLIC DISCLOSURE SERVES

OTHER IMPORTANT GOVERNMENTAL

INTERESTS ..........................................................14

A. Disclosure Provides the Public with

Valuable Information to Assess

Corporate Political Involvement ..............16
ii

B. Disclosure Discourages Use of

Corporate Funds for Political Causes

Not Approved by Shareholders.................21

C. Disclosure Enables Shareholders and

Directors to Oversee a Company’s

Political Involvement................................22

CONCLUSION ...............................................................25
iii

TABLE OF AUTHORITIES

Cases Page(s)

Alaska Right to Life Comm. v. Miles,

441 F.3d 773 (9th Cir. 2006)..................................15

Austin v. Michigan State Chamber of

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

Buckley v. Am. Constitutional Law Found.,

Inc., 525 U.S. 182 (1999)..................................15, 19

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

Citizens Against Rent Control/Coalition for

Fair Housing v. City of Berkeley,

454 U.S. 290 (1981)..........................................15, 20

Citizens United v. Federal Election Comm’n,

530 F. Supp. 2d 274 (D.D.C. 2008)........................19

Federal Election Comm’n v. Beaumont,

539 U.S. 146 (2003)..................................3, 6, 14, 22

Federal Election Comm’n v. Citizens Club for

Growth, Inc., No. CV 05-1851 (RMU) (D.D.C.

filed Sept. 19, 2005)..................................................4

Federal Election Comm’n v. Mass. Citizens

for Life, Inc., 479 U.S. 238 (1986).................passim

Federal Election Comm’n v. Survival Educ.

Fund, Inc., 65 F.3d 285 (2d Cir. 1995) ................4, 9
iv

Cases (cont’d) Page(s)

Federal Election Comm’n v. Wisconsin Right

To Life, Inc., 127 S. Ct. 2652 (2007) ..............passim

First Nat’l Bank of Boston v. Bellotti,

435 U.S. 765 (1978)................................................16

McConnell v. Federal Election Comm’n,

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

McConnell v. Federal Election Comm’n, 251 F.

Supp. 2d 176 (D.D.C. 2003) .............................18, 20

N.C. Right to Life Comm. Fund for Indep.

Political Expenditures v. Leake, 524 F.3d 427

(4th Cir. 2008) ........................................................15

NAACP v. Alabama, 357 U.S. 449 (1958) ................18

R.I. Affiliate, Am. Civil Liberties Union, Inc. v.

Begin, 431 F. Supp. 2d 227 (D.R.I. 2006) ..............16

Voters Educ. Comm. v. Wash. State Pub.

Disclosure Comm’n, 166 P.3d 1174 (Wa. 2007).....20

Statutes and Regulations Page(s)

Bipartisan Campaign Reform Act

§ 201......................................................................2, 3

§ 201(a) .....................................................................3

§ 203..........................................................................2

11 C.F.R. § 100.57 .......................................................4
v

Statutes and Regulations (cont’d) Page(s)

11 C.F.R. § 100.57(a) ...................................................9

11 C.F.R. § 109.21 ...................................................4, 8

11 C.F.R. § 109.21(a)-(c)..............................................8

11 C.F.R. § 114.1(a)(1).............................................7, 9

11 C.F.R. § 114.2(b)(3).................................................7

11 C.F.R. § 114.15 .................................................8, 10

72 Fed. Reg. 72,899 .................................................8, 9

2 U.S.C. § 431(8)(A)(i)-(ii)........................................7, 9

2 U.S.C. § 431(9)(A)(i)-(ii)............................................7

2 U.S.C. § 434(f)(3)(A)(i)..............................................7

2 U.S.C. § 437(d)..........................................................6

2 U.S.C. § 437g(a)(6)..................................................10

2 U.S.C. § 437g(d)......................................................10

2 U.S.C. § 441b(a)....................................................3, 7

2 U.S.C. § 441b(b)(2) ...............................................7, 9
vi

Other Authorities and Sources Page(s)

Aaron Bernstein, When Political Giving Doesn’t

Pay: Investor Groups Want Greater Board

Oversight & Disclosure of the Political

Contribution Process, DIRECTORSHIP, June 1,

2008 ..................................................................13, 23

Center for Political Accountability, Open

Windows: How Codes of Conduct Regulate

Corporate Political Spending and a Model

Code to Protect Company Interests and

Shareholder Value, 2007....................................5, 24

Center for Political Accountability, Political

Disclosure Tops 50 Companies, May 28, 2008 ......13

Jeanne Cummings, Investors Seek Clarity on

Campaign Giving: Pressure Grows on

Corporations to Improve How They Disclose

and Track Political Donations, WALL STREET

JOURNAL, April 5, 2006 ..............................11, 12, 23

Bruce F. Freed & Karl J. Sandstrom, Political

Money: The Need for Director Oversight, THE

CONFERENCE BOARD, EXECUTIVE ACTION

SERIES NO. 263, April 2008..............................12, 24

General Counsel’s Report # 2, Federal Election

Commission MUR # 5365 (Club for Growth,

Inc.) (July 5, 2005) ...................................................4

Sanjay Gupta and Charles W. Swenson, RentSeeking by Agents of the Firm, 46 JOURNAL OF

LAW AND ECONOMICS 253 (April 2001)...................23
vii

Other Authorities and Sources (cont’d) Page(s)

U.S. SENTENCING GUIDELINES MANUAL § 8B2.1

(2008)......................................................................24

William S. Laufer, Corporate Bodies and Guilty

Minds: The Failure of Corporate Criminal Liability

(2008) ...........................................................................4
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 brief as amici curiae in support

of the Appellee.1

CPA is a non-profit, non-partisan organization

dedicated to ensuring transparency and accountability of corporate political spending for the benefit

of shareholders, the public, and the political process.

CPA seeks to create a business environment that

promotes ethical behavior. Critical to its success are

laws and regulations that foster rather than impede

ethical decision-making. Since CPA was founded in

2003, it has worked with shareholders and

companies to enable companies to pursue their

political interests openly and responsibly. Drawing

from the published practices of leading companies,

CPA developed a model code for corporate political

activity. Major corporations, including Intel, Merck,

and Dell, subsequently modeled their codes on

CPA’s.

CPA also promotes corporate disclosure and

oversight of company political spending. As a result

of its efforts, more than fifty leading public

companies, including forty S&P 100 companies, have

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

made political disclosure and oversight an essential

element of their political programs.

The Zicklin Center, established in 1997, sponsors

and disseminates leading research on business ethics

and corporate social responsibility. It provides

students, educators, business leaders, and

policymakers with tools to meet the ethical

challenges that arise in complex business

transactions. The Zicklin Center supports research

that examines organizational incentives and

disincentives to ethical business practices.

CPA and The Zicklin Center strongly support the

electioneering communication (“EC”) disclosure

requirements embodied in § 201 of the Bipartisan

Campaign Reform Act (“BCRA”). These

requirements promote corporate best practices with

respect to funding political activity and enable voters

and shareholders to make informed political and

investment decisions.

SUMMARY OF ARGUMENT

This Court held in Federal Election Commission

v. Wisconsin Right To Life, Inc. (“WRTL”) that § 203

of BCRA unconstitutionally restricted a nonprofit

corporation’s right to broadcast issue-oriented ECs

before federal elections. 127 S. Ct. 2652, 2673

(2007). Appellant Citizens United seizes upon WRTL

in an attempt to dismantle various BCRA provisions,

including its disclosure requirements. These

requirements are necessary to enforce the

substantive provisions of campaign finance law. By

eliminating them, Citizens United would achieve

indirectly what it cannot achieve directly: cutting all

restraints on corporate influence of elections.
3

Nothing in WRTL suggests that this Court

intended to undo more than a century of legislative

efforts to check the danger of corruption from

corporate campaign spending. See Federal Election

Comm’n v. Beaumont, 539 U.S. 146, 152-53 (2003)

(discussing the 1907 Tillman Act and other campaign

finance laws). Citizens United overreaches in its use

of WRTL and this Court should uphold the

challenged BCRA provisions.

CPA and The Zicklin Center agree with the

Federal Election Commission (“FEC”) that Hillary:

The Movie is “the functional equivalent of express

advocacy” and should not receive financial support

from corporations. Appellee Br. at 10. Regardless of

whether the movie is determined to be express or

issue advocacy, the fact that it mentioned a clearly

identified candidate for public office within the

specified time periods renders it an EC under BCRA

§ 201(a). As such, corporate spending on broadcasts

promoting the movie is still subject to the disclosure

requirements. These requirements serve important

governmental interests and are constitutional as

applied to Citizens United.

BCRA § 201 is indispensable to corporate

compliance with campaign finance law and sound

corporate governance practices. The Federal

Election Campaign Act (“FECA”) generally prohibits

corporate political contributions and expenditures, 2

U.S.C. § 441b(a), a fact unchanged by WRTL. Thus,

a corporation can easily cross the line into prohibited

election activity even by funding an ostensibly issuedriven EC. For example:

 a corporation or the recipient of corporate

funding may coordinate its spending with a
4

candidate, making the EC illegal, see

Buckley v. Valeo, 424 U.S. 1, 46-47 (1976);

11 C.F.R. § 109.21;

 the solicitation of corporate funding may

violate federal law, see Federal Election

Comm’n v. Survival Educ. Fund, Inc., 65

F.3d 285, 295 (2d Cir. 1995); 11 C.F.R. §

100.57; and

 a corporation may finance an EC that the

courts or the FEC later determine to

expressly advocate the election or defeat of

a candidate. See, e.g., Federal Election

Comm’n v. Citizens Club for Growth, Inc.,

No. CV 05-1851 (RMU) (D.D.C. filed

Sept. 19, 2005); General Counsel’s Report

# 2, FEC MUR # 5365 (Club for Growth,

Inc.) (July 5, 2005).

Consequently, corporations must carefully adhere

to the line separating protected speech from

prohibited election activity. Many corporations have

implemented internal compliance programs, but

their success depends on support from a system of

public disclosure and reporting. See William S.

Laufer, Corporate Bodies and Guilty Minds: The

Failure of Corporate Criminal Liability (2008).

Compliance with federal law requires that a

corporation’s officers, directors, and shareholders be

able to track the flow of company funds to ECs. To

foster compliance, organizations that solicit or accept

corporate support for ECs must be obligated to

disclose their contributors, just as corporations must

disclose their direct payments for ECs.
5

Equally important is the role of disclosure in

educating the public and promoting good corporate

governance. This Court has long recognized the

importance of disclosure in deterring corruption,

informing the public, and facilitating enforcement of

campaign finance laws. Corporations also derive

value from disclosure because it strengthens a

corporation’s ability to monitor the use of its funds

and supervise employees and agents for compliance

with its internal policies. This enables

accountability to shareholders and directors for

political spending that may diverge from a company’s

values, damage its reputation, or expose it to civil

and criminal penalties. In short, disclosure brings

transparency to corporate political activity that

would otherwise remain shielded from view, to the

detriment of the voting public, shareholders, and

corporations themselves.

ARGUMENT

I. Public Disclosure is Essential to an

Effective Corporate Compliance

Program

Corporations confront an ever-changing

landscape of campaign finance law that requires

diligent, sustained compliance efforts.2 For example,

this Court recently clarified that corporations may

fund issue advertisements within a certain time

period before a federal election, where such

2 See generally Center for Political Accountability, Open

Windows: How Codes of Conduct Regulate Corporate Political

Spending and a Model Code to Protect Company Interests and

Shareholder Value, 2007.
6

advertisements were previously thought to be strictly

prohibited. WRTL, 127 S. Ct. at 2667.

Appellant paints a deceptively simple post-WRTL

world in which a corporation’s rights displace all of

its prior obligations under the federal campaign

finance laws. In Appellant’s view, the fact that some

corporate-funded issue advertisements cannot

constitutionally be proscribed means they cannot be

regulated at all. See Appellant Br. at 12.

In reality, corporations continue to encounter

legal pitfalls in the form of complex, interrelated

rules on contributions and expenditures,

coordination and solicitation of funds, and the

content of ECs. Violations result in economic and

reputational harms that most companies can ill

afford and may even trigger criminal prosecution of

officers or directors. See generally 2 U.S.C. § 437(d).

Disclosure requirements remind corporations of their

legal obligations when they engage with the public

on political issues, and enable them to develop and

sustain the compliance programs necessary to safely

navigate the terrain of campaign finance law.

A. Federal Law Prohibits Direct

Corporate Spending in Connection

with a Federal Election

Congress’ ban on corporate treasury contributions

to campaigns has been in place for over a century

and, as this Court has long recognized, is justified by

the public’s interest in preventing corruption or the

appearance of corruption. See Beaumont, 539 U.S. at

154; accord McConnell v. Federal Election Comm’n,

540 U.S. 93, 203 (2003); Buckley, 424 U.S. at 66-68.

To that end, FECA prohibits corporations from using
7

their general treasury funds to make “a contribution

or expenditure in connection with any election to any

political office, or in connection with any primary

election . . . or any officer or any director of any

corporation . . . to consent to any contribution or

expenditure by the corporation . . . prohibited by this

section.” 2 U.S.C. § 441b(a).3

The concept of ECs was introduced to the

campaign finance world with BCRA’s enactment. In

the context of a presidential election, BCRA defines

an EC as a “broadcast, cable, or satellite

communication” that refers to a clearly identified

candidate and is made within sixty days before a

general election or thirty days before a primary

election or party nominating convention. 2 U.S.C.

§ 434(f)(3)(A)(i). BCRA prohibits corporations from

using their treasuries to fund ECs. 2 U.S.C.

§ 441b(b)(2); 11 C.F.R. § 114.2(b)(3).

WRTL invalidated the corporate funding

restriction as applied to certain issue ads and

clarified that companies may fund ECs with general

treasury funds unless the communication is the

functional equivalent of express advocacy. 127 S. Ct.

at 2667. Thus, an EC can be either a permissible

issue-oriented ad or an impermissible campaign ad.

After WRTL, an EC that “is susceptible of [any]

reasonable interpretation other than as an appeal to

vote for or against a specific candidate” is treated as

issue advocacy. 127 S. Ct. at 2667.

3 A contribution or expenditure, broadly speaking, is

“anything of value made by any person for the purpose of

influencing any election for Federal office.” See 2 U.S.C.

§§ 431(8)(A)(i)-(ii) (defining “contribution”), 431(9)(A)(i)-(ii)

(defining “expenditure”); 11 C.F.R. § 114.1(a)(1).
8

B. Distinguishing Prohibited Corporate

Election Activity from Protected

Speech Requires Care

Corporations walk a fine line between protected

speech and prohibited political activity. To fully

comply with federal law, corporations must insure

that all of their officers, directors, and agents know

the difference and conduct themselves accordingly.

This is no simple matter for a major corporation

with tens of thousands of employees and a complex

organizational structure including multiple

subsidiaries, operating units, and affiliates. The safe

harbor provisions of 11 C.F.R. § 114.15, which

codified WRTL, do not otherwise alter the

restrictions on corporate funding of ECs. See

generally, Electioneering Communications, 72 Fed.

Reg. 72,899 (Dec. 26, 2007). The company must still

consider multiple variables, namely: whether it has

coordinated its ECs, directly or indirectly, with a

party or candidate; how the funds are solicited for

ECs; and whether the content of its ECs amounts to

express advocacy or its functional equivalent.

First, although corporations may fund issueoriented ECs, in doing so they may not coordinate

this activity with a candidate or a political party.

See 11 C.F.R. § 109.21(a)-(c); see also Buckley, 424

U.S. at 42, 46-47 (“[C]ontrolled or coordinated

expenditures are treated as contributions . . . under

the Act.”). Coordination terminates the EC’s status

as a permissible use of corporate funds and converts

it to an illegal contribution. See 11 C.F.R. § 109.21.

Thus, an EC that may be paid for with

corporation or labor organization funds
9

under the new exemption in section

114.15 may nevertheless be a prohibited

corporate or labor organization in-kind

contribution to a candidate or political

party if that EC is coordinated with a

candidate or party under the

coordinated communications rules.

Electioneering Communications, 72 Fed. Reg. 72,899,

at *72,901 (Dec. 26, 2007).

Second, if a person or entity gives funds in

response to a solicitation that “indicates that any

portion of the funds received will be used to support

or oppose the election of a clearly identified Federal

candidate,” that person or entity has made a

“contribution.” 11 C.F.R. § 100.57(a) (emphasis

added); see also 2 U.S.C. § 431(8)(A)(i)-(ii); Survival

Educ. Fund, 65 F.3d at 295; 11 C.F.R. § 114.1(a)(1).

For example, a 501(c)(6) trade association or a

501(c)(4) social welfare organization requests

donations for an issue advertisement and explains

that the ad’s purpose is to generate opposition to a

specific candidate. A corporation that funds an EC

in response to such a solicitation violates FECA’s

prohibition against corporate contributions to

influence elections. See 2 U.S.C. § 441b(b)(2). This

is an independent restriction on corporate

contributions that does not depend on the ultimate

content of the EC in question. The violation occurs

at the time of the contribution, even if the EC

ultimately produced what might reasonably be

interpreted as something other than a call to vote for
10

or against a particular candidate.4 See WRTL, 127 S.

Ct. at 2667.

Third, the content of an EC may trigger a

violation. Corporations can no longer rely on

Buckley’s “magic words”5 to determine when a

political message veers toward express advocacy.

See WRTL, 127 S. Ct. at 2667; McConnell, 540 U.S.

at 193; 11 C.F.R. § 114.15. The line separating

permissible issue advocacy and impermissible

express advocacy is thus imprecise, and a message

skirting that line risks significant legal and economic

repercussions for the funding corporation.6

In most cases, a corporation will not know the

EC’s ultimate content at the time of its contribution.

The organization producing the EC may promise not

to use the funds in a manner that violates the EC

content rules, but this is precious little assurance

given the potential costs of a violation.

A corporation exposes itself to each of these risks

each time it authorizes spending for political activity.

Minimizing that exposure requires that the

corporation exercise control over the issuance of

political funds and the ultimate use of those funds.

4 It should be noted that corporations are barred from

contributing to partisan voter registration, absentee ballot, and

get-out-the-vote campaigns even if there is no express advocacy

in the speech that accompanies the campaign.

5 Buckley, 424 U.S. at 44 n.52 (restricting definition of

express advocacy to use of words such as “‘vote

for,’ ‘elect,’ ‘support,’ ‘cast your ballot for,’ ‘Smith for

Congress,’ ‘vote against,’ ‘defeat,’ ‘reject’”).

6 See 2 U.S.C. § 437g(a)(6) & (d) (providing for civil and

criminal penalties for violating federal campaign finance laws).
11

Absent disclosure requirements, however, a large

corporation cannot establish the necessary control to

carry out an effective compliance program.

C. To Assure Compliance, a Corporation

Must be Aware of Electioneering

Communications Paid in Whole or in

Part with Corporate Funds

Large corporations often struggle to comply with

campaign finance laws because of a basic problem:

they do not know where their donations end up. A

recent example well illustrates this point.

In the money-laundering investigation

of former House Majority Leader Tom

DeLay, for instance, eight corporations

were indicted for making donations to a

Texas political group associated with

Mr. DeLay. In Texas, donations by

companies to political candidates are

illegal; the firms say they weren’t aware

that their contributions might be

directed to candidates.

Jeanne Cummings, Investors Seek Clarity on

Campaign Giving: Pressure Grows on Corporations to

Improve How They Disclose and Track Political Donations, WALL STREET JOURNAL, April 5, 2006, at A4.

Corporations regularly pass through funding to

other entities – sometimes unwittingly, sometimes

intentionally – that make the actual ECs for which

the corporation is ultimately responsible. In some

cases, corporations donate funds to trade

associations or other organizations that spend on

candidates or causes that directly conflict with
12

company policies. Cummings, supra. Absent

disclosure, corporations have inadequate means to

monitor how these funds are spent. Recently, Merck

and other companies faced backlash for donating to a

state judicial candidate who made racially charged

remarks to an all-white audience, contradicting the

ethos the company espouses in its employee diversity

training. Bruce F. Freed & Karl J. Sandstrom,

Political Money: The Need for Director Oversight,

THE CONFERENCE BOARD, EXECUTIVE ACTION SERIES

NO. 263, April 2008. Public disclosure reinforces

compliance by alerting the company to the spending

and forces the company to accept responsibility for

how the money is used.

“Corporations have long been able to make their

voices heard – and their identities concealed – on

Capitol Hill by having their trade associations take

the lead, and these groups often closely guard donor

lists and finances.” Cummings, supra. This Court

addressed this issue in Austin v. Michigan State

Chamber of Commerce, 494 U.S. 652 (1990), which

upheld Michigan’s restriction on corporations

funding independent expenditures with general

treasury funds. The Michigan Chamber of

Commerce (“Michigan Chamber”) argued that the

prohibition should not apply because of its non-profit

status, citing Federal Election Commission v.

Massachusetts Citizens for Life, Inc., 479 U.S. 238

(1986) (“MCFL”). Austin, 494 U.S. at 661. This

Court rejected the Michigan Chamber’s argument,

holding that corporations otherwise prohibited from

making direct general treasury contributions could

contribute to campaigns indirectly through the

Michigan Chamber. Id. at 664. Without the

restriction, the Michigan Chamber could “serve as a
13

conduit for corporate political spending.” Id. This

Court concluded that restricting the Michigan

Chamber itself from making contributions out of its

general treasury funds served the compelling state

interest of preventing corruption or the appearance

of corruption, and did not offend the First

Amendment. Id. at 658-59, 664-65.

Appellant argues that political spending by

corporations is no different than such spending by

individuals, commenting that, “[t]he for-profit

corporations, at least, must respond to their

shareholders through their boards of directors.”

Appellant Br. at 31. This is misleading on two

accounts. First, for the reasons addressed above,

there is greater risk of illegality with political

spending by a corporation. Second, shareholders can

exercise their important oversight function only if

they are aware of the corporation’s political

activities. Eliminating disclosure requirements is

tantamount to asking shareholders to conduct

oversight while blindfolded.

Shareholders play a critical role in the success of

compliance programs by providing an independent

check on officers and directors. More than fifty

leading public companies have voluntarily made

political disclosure and oversight a key element of

their political programs. See Center for Political

Accountability, Political Disclosure Tops 50

Companies, May 28, 2008. Many of these

corporations adopted these rules in response to

shareholder resolutions. Aaron Bernstein, When

Political Giving Doesn’t Pay: Investor Groups Want

Greater Board Oversight & Disclosure of the Political

Contribution Process, DIRECTORSHIP, June 1, 2008.
14

Mandatory disclosure empowers corporate officers,

directors and shareholders to make these programs

viable and exerts market pressure for other

corporations to follow suit.

II. In Addition to Compliance with Federal

Law, Public Disclosure Serves Other

Important Governmental Interests

Disclosure is not only the law, it is necessary for

the law to be effective. More than three decades of

this Court’s jurisprudence firmly establish the

importance of mandatory disclosure:

[T]he important state interests that

prompted the Buckley Court to uphold

FECA’s disclosure requirements –

providing the electorate with

information, deterring actual corruption

and avoiding any appearance thereof,

and gathering the data necessary to

enforce more substantive electioneering

restrictions – apply in full to BCRA.

Accordingly, Buckley amply supports

application of FECA § 304’s disclosure

requirements to the entire range of

“electioneering communications.”

McConnell, 540 U.S. at 196 (footnote omitted). In

addition, this Court has recognized that disclosure

helps secure the rights of shareholders and promote

corporate governance standards that respect those

rights. See Beaumont, 539 U.S. at 153; Austin, 494

U.S. at 673 (Brennan, J., concurring).

Appellant strains the meaning of WRTL in an

attempt to erase what this Court has already said
15

about disclosure in McConnell. If WRTL narrowed

the range of ECs subject to spending restrictions, the

logic goes, so too must it have narrowed the range of

ECs subject to disclosure requirements. In this

revisionist view, disclosure requirements are

derivative of the contribution restrictions and

therefore do not apply to unrestricted spending. See

Appellant Br. at 12, 42, 48-49. With this sleight of

hand, Appellant attempts to make the government’s

interests in disclosure disappear. See id. at 42.

7

Appellant cannot, however, erase the extensive

body of law rejecting its view. In case after case, this

Court has upheld disclosure requirements even while

rejecting spending restrictions and even when

candidate funding was not at issue. See MCFL, 479

U.S. at 262 (noting benefits of disclosure even when

underlying expenditure restrictions were

unconstitutional); Citizens Against Rent

Control/Coalition for Fair Housing v. City of

Berkeley, 454 U.S. 290, 298-99 (1981) (upholding

7 On this basis, Appellant implores this Court to apply strict

scrutiny to all the regulations at issue. See Appellant Br. at 12,

42, 48. This Court and lower courts have repeatedly held that

disclosure requirements are subject to “exacting,” or

intermediate, scrutiny. See, e.g., McConnell, 540 U.S. at 196;

Buckley v. Am. Constitutional Law Found., Inc., 525 U.S. 182,

202 (1999) (noting that Buckley v. Valeo upheld FECA’s

recordkeeping, reporting and disclosure provisions as

substantially related to important government interests);

Buckley, 424 U.S. at 64, 66; N.C. Right to Life Comm. Fund for

Indep. Political Expenditures v. Leake, 524 F.3d 427, 439 (4th

Cir. 2008) (citing Buckley v. Valeo and McConnell in rejecting

argument that strict scrutiny should apply to state election

disclosure requirements); Alaska Right to Life Comm. v. Miles,

441 F.3d 773, 788 (9th Cir. 2006) (describing standard applied

in McConnell). This issue was undisputed in WRTL.
16

requirement that contributors to ballot initiatives

disclose their identities); Buckley, 424 U.S. at 44, 80

(striking expenditure limits but upholding

disclosure).8 Simply speaking, disclosure contributes

to an informed debate on issues of public importance.

In addition, disclosure requirements facilitate

enforcement of much more than contribution limits

with respect to corporations. Gathering data on

corporate political spending facilitates enforcement

against all the categories of potential violations

described above, including the restrictions on

coordination, solicitation, and the content of ECs.

Thus, even assuming Appellant is correct that

Hillary: The Movie is not the functional equivalent of

express advocacy and not subject to BCRA’s funding

restrictions, the disclosure requirements remain

constitutionally valid in this case because they

support important governmental interests.

A. Disclosure Provides the Public with

Valuable Information to Assess

Corporate Political Involvement

Disclosure requirements inform members of the

voting public about the economic interests behind

certain political messages so that they can assess

those messages in that light. See, e.g., First Nat’l

Bank of Boston v. Bellotti, 435 U.S. 765, 791-92 n.32

(1978) (“Identification of the source of advertising

may be required as a means of disclosure, so that the

8 See also R.I. Affiliate, Am. Civil Liberties Union, Inc. v.

Begin, 431 F. Supp. 2d 227, 236, 238 (D.R.I. 2006) (citing MCFL

and Berkeley as holding funding restrictions unnecessary in

light of disclosure requirements).
17

people will be able to evaluate the arguments to

which they are being subjected.”); accord McConnell,

540 U.S. at 231 (Rehnquist, C.J.) (holding that

disclosure “bears a sufficient relationship to the

important governmental interest of ‘shed[ding] the

light of publicity’ on campaign financing”) (citation

omitted); id. at 321 (Kennedy, J., concurring) (finding

§ 201’s disclosure requirements substantially related

to the public’s informational interest).

Further, such exposure tends to discourage

corporate misconduct with respect to political

spending. “[D]isclosure requirements deter actual

corruption and avoid the appearance of corruption by

exposing large contributions and expenditures to the

light of publicity. This exposure may discourage

those who would use money for improper purposes

either before or after the election.” Buckley, 424 U.S.

at 67. The Buckley court said the disclosure

mandates reflect the wisdom of Justice Louis

Brandeis, who observed that, “[p]ublicity is justly

commended as a remedy for social and industrial

diseases. Sunlight is said to be the best of

disinfectants; electric light the most efficient

policeman.” Id. (citation omitted).9

9 Disclosure requirements also facilitate enforcement of

campaign finance restrictions after the fact. See McConnell,

540 U.S. at 195 (disclosure serves the government’s interest in

“gathering the data necessary to enforce more substantive

electioneering restrictions”); MCFL, 479 U.S. at 262 (rejecting

independent expenditure restrictions on certain non-profit

organizations partly because “reporting obligations provide

precisely the information necessary to monitor MCFL’s

independent spending activity”); Buckley, 424 U.S. at 67-68

(“Disclosure requirements are an essential means of gathering

the data necessary to detect violations of the contribution

limitations.”).
18

Citizens United and the United States Chamber

of Commerce (“Chamber”), writing as Amicus Curiae,

contend that disclosure rules are “content-based

restrictions on political speech” (Appellant Br. at 43,

53) that “force” corporations “into silence” (Ch. of

Comm. Br. at 6-8). The Chamber laments that it

could have spent much more than the $15.7 million it

spent on ECs in 2008 if its corporate members were

able to spend anonymously, without exposing

themselves to “risk.” Id. at 6, 12.10 The risk the

Chamber fears is not the “threat of physical coercion,

and other manifestations of public hostility,” such as

that faced by members of the NAACP in the 1950s

American South. See NAACP v. Alabama, 357 U.S.

449, 451, 462-63 (1958). Nor is it the “reasonable

probability” of “threats, harassment, or reprisals

from either Government officials or private parties”

faced by members of minor political parties. See

McConnell, 540 U.S. at 197-99, 201 (except in rare

cases, “[FECA’s] disclosure requirements are

constitutional because they ‘d[o] not prevent anyone

from speaking’”) (quoting McConnell v. Federal

Election Comm’n, 251 F. Supp. 2d 176, 241 (D.D.C.

2003)). The “risk,” quite plainly, is that consumers

and shareholders may hold corporations accountable

for the political views they espouse. See Ch. of

Comm. Br. at 13 n.8.

10 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, 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 the CPA and The Zicklin Center.
19

That corporations have a First Amendment right

to express those views does not diminish the public

need for information about them. That an EC might

reasonably be interpreted as something other than a

call to vote for or against a particular candidate

under WRTL does not mean the EC does not have

the purpose or effect of influencing the electoral

process. See WRTL, 127 S. Ct. at 2667. Coincidence

cannot explain Citizens United’s eagerness to run its

ads promoting Hillary: The Movie just before the

Democratic primary.11 The Chamber pointedly notes

its desire to spend more on corporate-supported ECs

prior to elections because “both candidates and the

American public are most receptive and attuned to

such communications during pre-election periods.”

Ch. of Comm. Br. at 6. The public should not be

denied the benefit of knowing who paid for an EC

that is clearly intended to shape its opinion of a

candidate immediately prior to an election.

This Court has repeatedly sustained disclosure

requirements against First Amendment challenges

in the context of issue speech, even when speech

lacks any reference to a candidate. See, e.g., Buckley

v. Am. Constitutional Law Found., Inc., 525 U.S.

182, 202-03 (1999) (Colorado requirement that

sponsors of ballot initiatives disclose their names

and expenditures serves a substantial state interest

in checking “domination of the initiative process by

affluent special interest groups”); Citizens Against

11 Indeed, Citizens United believed running its ads before

the primary election was so urgent that it sought, and was

denied, preliminary injunctive relief. See Citizens United v.

Federal Election Comm’n, 530 F. Supp. 2d 274 (D.D.C. 2008),

appeal dismissed for lack of jurisdiction, 128 S. Ct. 1732 (2008).
20

Rent Control/Coalition for Fair Housing, 454 U.S. at

298-99 (requirement that contributors to ballot

initiatives disclose their identities serves to inform

voters “whose money supports or opposes a given

ballot measure”). WRTL did not alter this Court’s

approval of disclosure requirements.12

Appellant asserts a First Amendment interest in

airing its issue speech – regardless of the source of

funding – but “ignores the competing First

Amendment interests of individual citizens seeking

to make informed choices in the political

marketplace.” See McConnell, 540 U.S. at 197

(quoting McConnell v. Federal Election Comm’n, 251

F. Supp. 2d at 237). The application of longstanding, constitutionally firm disclosure

requirements here imposes no significant or unique

burden on Appellant that outweighs the important

interests in informing the public, facilitating

enforcement, and preventing corruption.

12 This Court recently declined review of a case in which the

Supreme Court of Washington rejected a First Amendment

challenge to Washington’s disclosure requirements for political

committees. Voters Educ. Comm. v. Wash. State Pub.

Disclosure Comm’n, 166 P.3d 1174, 1186 (Wash. 2007), cert.

denied, 128 S. Ct. 2898 (2008). In that case, a corporation paid

for a television advertisement criticizing the state’s former

insurance commissioner, who was running for attorney general.

Id. at 1177. Like Hillary: The Movie, the Voter Education

Committee’s advertisement focused on the candidate’s record in

her prior position without mentioning her candidacy for higher

office. Id. at 1177-78. Nevertheless, the Washington court held

that the advertisement was in “opposition to” the candidate

because the ad sharply criticized her record as insurance

commissioner while she was a candidate for another office. Id.

at 1185-86.
21

B. Disclosure Discourages Use of

Corporate Funds for Political Causes

Not Approved by Shareholders

Mandatory disclosure enables shareholders to

monitor the use of corporate funds for political

activity and to exercise their right to object to uses of

which they disapprove. The government has a

significant interest in protecting shareholders’ rights

because it provides the legal framework that enables

corporations to operate and to generate wealth. See

Austin, 494 U.S. at 660 (upholding Michigan’s

restriction on corporations’ independent

expenditures from general treasury funds as justified

by “state-conferred corporate structure that

facilitates the amassing of large treasuries,” which

may be used to influence elections).

Justice Brennan’s concurring opinion in Austin

noted that Michigan’s law protects dissenting

shareholders – in that case, dues-paying members of

the Michigan Chamber of Commerce – who object to

the funneling of their money to political campaigns.

Id. at 673 (Brennan, J., concurring).

While the State may have no

constitutional duty to protect the

objecting Chamber member and

corporate shareholder in the absence of

state action, the State surely has a

compelling interest in preventing a

corporation it has chartered from

exploiting those who do not wish to

contribute to the Chamber’s political

message. . . . We have long recognized

the importance of state corporate law in
22

“protect[ing] the shareholders” of

corporations chartered within the State.

Id. at 675 (citations omitted); cf. Beaumont, 539 U.S.

at 163. (“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 some shareholders or members, and it lets the Government regulate campaign

activity through registration and disclosure.”).

The federal government likewise has a

substantial interest in protecting dissenting

shareholders of companies engaged in interstate

commerce. These corporations collect and use

shareholders’ funds under the auspices of federal

law, and the government has an interest, if not an

obligation, to hold them accountable to their

shareholders under those same laws.

Disclosure provides shareholders with the

information necessary to make informed decisions,

without restricting the corporation from engaging in

political activity. Shareholders can choose to use

this information as they see fit – for example, they

may divest, or they may seek change from within.

See Austin, 494 U.S. at 710 (Kennedy, J., dissenting).

Without disclosure requirements, however,

shareholders lack the means to make that choice.

C. Disclosure Enables Shareholders and

Directors to Oversee a Company’s

Political Involvement

Just as disclosure requirements provide the

electorate with information to assess candidates and

issues, so too do they provide information to
23

corporate shareholders and directors to assess a

corporation’s internal governance. The government

lacks the capacity to monitor the vast majority of

corporate political activity, and therefore has an

abiding interest in supporting the strong corporate

governance that characterizes healthy corporations.

Corporate donations do not always reach the

purpose or destination intended by the corporation.

“In recent years, some institutional investors have

argued that political contributions could come back

to haunt companies. . . . [T]hese investors have

argued that corporate donations should be disclosed

publicly so shareholders can assess any investment

risks they may pose.” Bernstein, supra. Political

spending can be especially damaging if it ensnares

the corporation in a political scandal. See

Cummings, supra (discussing Tom DeLay).

Further, a large corporation has many employees

and agents with different personal and political

agendas. In a 2006 survey by Mason-Dixon Polling

& Research, nearly three-quarters of shareholder

respondents agreed that corporate giving advances

the private interests of executives rather than the

interests of the company and its shareholders.

Cummings, supra. Studies show that corporate

managers do engage in such “rent-seeking behavior,”

particularly by spending corporate funds to influence

taxation changes that benefit them personally. See

Sanjay Gupta and Charles W. Swenson, RentSeeking by Agents of the Firm, 46 JOURNAL OF LAW

AND ECONOMICS 253 at 254-56, 266 (April 2001).

The growing concern among shareholders,

institutional investors, and the general public over

corporate political spending has alerted the attention
24

of such companies as Freddie Mac, Westar Energy,

Sears Roebuck, and PepsiCo. Center for Political

Accountability, Open Windows: How Codes of

Conduct Regulate Corporate Political Spending and

a Model Code to Protect Company Interests and

Shareholder Value, at 1. “Companies not only have

paid record fines, run up hefty legal bills and faced

reputational knocks over the past few years because

of political expenditures, but prosecutors are now

taking a harder look at contributions as possible

bribes.” Id.

More corporations are adopting disclosure rules to

address these risks, often in response to pressure

from shareholders. Freed & Sandstrom, supra.

Mandatory public disclosure by both corporations

and those who receive corporate funds supports

voluntary compliance and enables corporate directors

and shareholders to detect potentially troublesome

donations.

13 Without disclosure requirements,

corporations lose one of the strongest tools for

effective internal governance.

Appellant imagines a campaign finance landscape

in which corporations, relieved of the suddenly heavy

burdens of disclosure, are free to engage in

“uninhibited, robust, and wide-open” speech. See

McConnell, 540 U.S. at 196-97 (citation omitted).

The plaintiffs in McConnell sought permission for

organizations such as “Citizens for Better Medicare,”

funded by the pharmaceutical industry, to run

advertisements without disclosing their funding

13 Compliance programs also invite leniency by enforcement

agencies in the event that an officer or director is found to have

committed a violation. See U.S. SENTENCING GUIDELINES

MANUAL § 8B2.1 (2008).
25

sources. Much like those plaintiffs, Appellant “never

satisfactorily answer[s] the question of how

‘uninhibited, robust, and wide-open’ speech can occur

when organizations hide themselves from the

scrutiny of the voting public.” See id. at 197.

Corporations are coming to understand that

members of the public demand greater transparency

from companies that receive their investment and

consumer dollars. Disclosure requirements cast light

on the risks that secret political spending pose to our

economy and our democracy, before they can become

scandals that further erode the public trust.

CONCLUSION

This Court should affirm the judgment of the

United States District Court for the District of

Columbia.

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

February 23, 2009