UNITED STATES DISTRICT COURT . '., P~C[l'lEG 

FOR THE DISTRICT OF SOUTH CAROL'lNA:·i.u". ','t',,:'! ;:';7';"ii.SC 

CHARLESTON DIVISION 201" 

II OCT I b A 1/: 51 

KUHN FOR CONGRESS ) 

) 

) 

Plaintiff, ) 

) 

Civil No. 2:13-cv-03337-PMD 

WWD 

vs. ) 

) 

) 

OBJECTIONS TO REPORT 

AND RECOMMENDATION 

FEDERAL ELECTION COMMISSION, ) 

) 

Defendant. ) 

------------------------~) 

PLANTIFF KUHN FOR CONGRESS'S 

WRITTEN OBJECTIONS TO MAGISTRATE JUDGE'S 

REPORT AND RECOMMENDATION 

In the instant action, the United States Magistrate Judge and the Defendant Federal 

Election Commission completely missed the point of the Plaintiffs filing this lawsuit in the 

Federal District Court and the point of the Plaintiffs Complaint and Argument. The Plaintiff, 

Kuhn For Congress, does not challenge the decision of the Federal Election Commission to fine 

the Plaintiff$S,SOO for late filing of its April, 2013, Quarterly Report. To the contrary, Plaintiff 

admits that it filed the Quarterly Report late and the Plaintiff admits that it should pay a fine. 

The reason for the lawsuit is that the Defendant's fine is extremely egregious for a mere 

late filing of a report that is not even election sensitive. The Plaintiff s Complaint and 

Memorandum do challenge the amount of the fine of$8,800 as being arbitrary and capricious. 

Moreover, the Plaintiff complains that the FEC's statutes and procedures are unconstitutional as 

applied to the First, Fifth, and Eighth Amendments. Furthermore, Plaintiff clearly argues that the 

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FEC did not do an adequate job of notifying the Plaintiff that it was under review for violation of 

the FEC's reporting deadlines. Also, the Plaintiff argues that the FEC's staff, either 

inadvertently or intentionally, thwarted the Plaintiffs ability to represent itself at the FEC's inhouse administrative-fines proceeding. The FEe staff did this by telling the Plaintiff that it had 

no chance to successfully argue its case at the administrative-fines hearing because the three 

permissible grounds for challenges to the administrative fine were extremely narrow, that all the 

Plaintiffs arguments were outside the permissible grounds for challenges, and that Kuhn For 

Congress "might as well appeal directly to the Federal District Court." Therefore, Kuhn for 

Congress effectively did not have an opportunity to be heard at the FEC's in house 

administrative-fines proceeding and now, under the recommendation of the United States 

Magistrate Judge, Kuhn For Congress will still not have an opportunity to be heard in this case. 

This is a Constitutional lack of Due Process. The Plaintiff pleads for the Court to allow it Due 

Process. 

Moreover, because of the statements of the United States Magistrate in his letter to the 

Plaintiff and Defendant, dated August 22, 2014 (Exhibit A), the Plaintiff is under the impression 

that the Magistrate Judge did not even read "Plaintiff Kuhn For Congress's Memorandum to 

Deny Defendant's Motion to Dismiss," filed with the Federal District Court on July 29, 2014. In 

this letter the United States Magistrate states: "I have carefully reviewed the motion, the 

response to the motion, and the Commission's reply." Nowhere does he state that he also 

reviewed the Plaintiffs following Memorandum. It is no wonder that the United States 

Magistrate then states in his letter: "My review of these papers leads to the inexorable 

conclusion that the Commission's argument in support of the motion to dismiss is correct." If 

the United States Magistrate had also reviewed the Plaintiffs Memorandum (which contains the 

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Plaintiffs legal argument) there could hardly be any way that the Magistrate could come to "the 

inexorable conclusion that the Commission's argument in support of the motion to dismiss is 

correct." 

The Plaintiff s argument is not that the FEC is correct in stating how it proceeded under 

its guidelines (in fact, Plaintiff admits that the FEC is correct in its statement of its own 

guidelines); the Plaintiffs legal argument is the Defendant's guidelines and internal statutes are 

arbitrary and capricious and unconstitutional. Also, the Plaintiffs legal argument is that the fine 

itself is capricious and arbitrary and unconstitutional; the Plaintiffs legal argument is that the 

FEC denied Kuhn For Congress all Due Process under the law. Moreover, the Plaintiffs factual 

argument is that the FEC effectively blocked Kuhn For Congress from appealing within the 

FEC's in-house system of review. Therefore, Kuhn for Congress is pleading to argue its case in 

this Honorable Court. And, the Plaintiff is pleading that this Honorable Court read the Plaintiff s 

Memorandum, filed with this Honorable Court on July 29, 2014. 

SPECIFIC OBJECTIONS TO PROPOSED FINDINGS OF FACT 

Paragraph 1. Admit. 

Paragraph 2. Admit, except that an Agent or other member of the committee may file 

the reports electronically. 

Paragraph 3. Admit. 

Paragraph 4. Admit. 

Paragraph 5. Admit, except that the Federal District Court does have judicial review of 

the Federal Agency. 

Paragraph 6. Admit. 

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Paragraph 7. Admit. 

Paragraph 8. Admit as stated. However, the fact that the FEC promulgated regulations 

and implemented an administrative fines mechanism does not mean that the regulations are not 

arbitrary and capricious. This is, in fact, Plaintiffs argument: Just because the FEC promulgates 

internal regulations does not automatically make them fair and sensible. In fact, this is precisely 

why we have Federal Judicial review in the United States: We want to have checks and balances 

on what Federal Agencies unilaterally promulgate and implement and we want the Judiciary to 

have the power to veto regulations and internal statues that are arbitrary and capricious. 

Paragraph 9. Admit. 

Paragraph 10. Admit, except that the April, 2013, Quarterly Report was filed by the 

Plaintiff as soon as humanly possibly once the Candidate found out that it was late. As soon as 

John Kuhn personally found out that his Committee had not filed a Quarterly Report, he 

immediately had the Report filed. There was no delay whatsoever once he found out. Just 

because the FEC sent his campaign an email saying that his filing was late does not actually 

mean that John Kuhn actually received the email. (See, Paragraph 16.) 

Paragraph 11. Paragraph 11 is exactly one of the points in contention by the Plaintiff. 

The FEC states that "These penalty schedules take into account whether the untimely (or not 

filed) report was election sensitive, how late is was filed, the dollar amount of receipts and 

disbursements it detailed, and the number of prior violations by the respondent. The Plaintiff 

meets two of these four points, on the third point the Plaintiff did all it humanly could 

considering the circumstance, and the fourth point the FEC makes is completely and 

unadulterated arbitrary and capricious. 

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First, this particular report was not election sensitive because it was due to be filed after 

the election was lost by the candidate. Therefore, the fine should be significantly lower. 

Second, the Plaintiff had no prior violations whatsoever. In fact, the FEC did not take 

into account at all. The Plaintiff had filed all three prior election sensitive reports on a timely 

basis. This is crucial because it proves that the Candidate wanted to make sure everyone (his 

opponents, the Press, and any other human being) saw his expenditures and receipts (donations) 

on a timely basis during the election. Extremely important is that Candidate did, in fact, 

accomplish that. That is the only thing that should be paramount to the FEC and that was 

accomplished: That anyone could see the candidate's full expenditures and receipts right 

through the election on a timely basis. Therefore, the fine should be minimal according to the 

Commission's own internal statute. 

Third, how late the report was filed should be decidedly tempered by the fact that the 

Candidate was not actually notified by the Commission for over three months after the report 

was due. The Candidate did not receive the only notification the Commission claims to have 

sent the Candidate, a May 3, 2013 email to the Committees Treasurer (who was no longer 

involved because she had a baby ten days after the election and because the Candidate lost). The 

FEC should absolutely have to mail an actual letter to the Candidate (in addition to an email that 

could be in a spam folder, or be lost on a server due to size regulations, or might not even have 

gone out at all if there was a glitch in the cyber-world somewhere) noticing the Candidate that it 

has not filed one of its quarterly reports. Indeed, the Commission is going to initiate an 

administrative-fines proceeding against the Kuhn Committee (which it did in July, 2013) without 

ever actually sending the Committee a mailed letter? That is unbelievable. And, it certainly 

does not constitute Notice ofa very important judicial proceeding against the Candidate's 

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Committee. This is an egregious violation of due process (as argued in the Plaintiffs 

Memorandum, filed with this Honorable Court on July 29, 2014). This even violates every iota 

of sensibility when it comes to Notice in a normal Judicial Proceeding, such as in this Honorable 

Court where every proceeding has to be Notified to all parties by mail and by formal filing. 

Finally, once the Candidate found out that his Committee had not filed the April, 2013, Quarterly 

report on a timely basis with the FEC, he immediately remedied the problem by filing the report. 

This shows a good-faith effort by the Candidate to file immediately, just as the fact that the 

Candidate filed all prior reports on a timely basis shows a good-faith effort to file and to notify 

the public. Should this good-faith effort, coupled with several mitigating circumstances, 

legitimately end up in a fine of Eight-Thousand-Eight-Hundred Dollars to the Candidate for a 

late filing of a non-election sensitive Quarterly Report? Plaintiff contends that this is the very 

definition of arbitrary and capricious on the part of the FEC. 

Fourth, how can the Commission get any more arbitrary and capricious than by basing its 

Committee fines on "the dollar amount of receipts and disbursements it detailed?" This is a late 

filing of an information-only Quarterly Report. This is not the late filing of a lawsuit, or the late 

or the late paying of someone's rent, or the late filing of a tax return. In fact, even the IRS does 

not fine a person or entity as a percentage of the amount of tax the person or entity owes. The 

IRS, for the egregious violation of late filing a tax return, still only fines a set amount based upon 

how late the return is. (This is not to be confused with the fact that the IRS will charge interest 

as a percentage of the tax that is overdue, if any tax is overdue. Yet, even in that worse-casescenario, the IRS is still only charging a percentage of late tax due - not a percentage of arbitrary 

amounts that go through a person's checking account the year the tax is due.) Compare that with 

the FEC, which does exactly that: Bases a Campaign's late filing fee upon the arbitrary amount 

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of how much money just so happened to go through the Campaign's checking account that 

quarter! This would be kin to the Probate Court arbitrarily basing the fee for late filing of a 

Motion in Probate Count on the amount of the Gross Probate Estate! For example, if the Gross 

amount of a person's probate is zero, we will fine him nothing for late filing; if the gross probate 

is $500,000 we will fine him $15,000; and, if the gross estate is $1 Million, we will fine him 

$30,000 for a mere late filing! No, that would not be a simple fine by the probate court for late 

filing; that would be an egregious and capricious and arbitrary levy for a late filing. However, 

by their own admission, that is exactly how the FEC comes up with its fine for late filing of an 

information-only quarterly election report: It fines the Candidate based simply on how many 

dollars just-so-happened to go through the candidates campaign bank account that month: If the 

candidate raised $1,000 that month, the late filing fee is about $30. If the candidate raised 

$343,963 that particular quarter, his late filing fee for the informational report is $8,800! Ifthe 

candidate just so happens to raise $500,000 for the quarter in question, then the Candidate's fine 

by the FEC is $10,450. You cannot possibly get more arbitrary and capricious than this. 

Moreover, think of the chilling effect this will have on American Citizens (like schoolteachers) 

who are thinking about filing to run for United States Congress: "Mam, don't forget that if you 

file a late quarterly informational report to the FEC you are facing average fines of 

approximately $8,800." "Oh, and Mam, no excuses allowed whatsoever, not even after you have 

filed several reports on time and the election is over." "It's $8,800 under the FEC 'civil money 

penalty,' take it or leave it, Mam." 

Paragraph 12. Admit. 

Paragraph 13. Admit. 

Paragraph 14. Admit 

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Paragraph 15. Admit 

Paragraph 16. The FEC states: "On May 3, 2013, the FEC's Assistant Staff Director 

emailed the Kuhn Committee a letter notifying the Committee and its treasurer that the April 

2013 Quarterly Report had not been filed by the statutory deadline." The FEC emailed a letter? 

That is not actually mailing a letter. And, to whom? Because the Kuhn Committee did not get 

the email. In fact, the Kuhn For Congress computers were gone at that point because the election 

was over. And its treasurer? We don't think so. She was home with her newborn baby at that 

time. How about to the Candidate himself? Absolutely not, because he did not receive the 

email. There are many, many, many reasons why one may not receive an email. Why would not 

the FEC be required to actually mail the letter by US Mail, the same way almost every institution 

in the United States requires if they are going to Notify someone of some important deadline that 

has enormous fines attached to it? (Oh, because they make their own rules and statutes.) 

Certainly the IRS does not operate by email. Certainly the Federal Courts do not operate by 

email. This is definitely not Notice. Under no stretch of the imagination can an email by the 

FEC be considered notice to the Candidate of a late report or, worse yet, of an internal hearing. 

Therefore, the Proposed Findings of Fact and Conclusions of Law certainly cannot state in 

Paragraph 16 that which it states: "That letter (sic, email, not letter) advised the Committee to 

file the report immediately and warned that civil money penalties might result from the 

Committee's failure to timely file the report." In fact, we can clearly see that the Committee did 

not warn that civil penalties might result from the Committee's failure to file the report." 

Because the email was not received by eth Committee, or by anyone associated with the 

Committee, the Committee had no idea that it was subject to civil penalties, and the Committee 

still had no idea that an internal hearing would be held to fine the Committee. 

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Paragraph 17. This paragraph jumps right to the conclusion that "The Kuhn Committee 

filed its April 2013 Quarterly Report on August 20,2013, or more than 120 days after the 

statutory deadline for filing the report." First, this is not a "statutory deadline." This is an 

administrative agency deadline. Second, what about notice to the Candidate that there is going 

to be an internal FEC hearing - an "administrative fines proceeding?" There was no written 

notice to the Candidate whatsoever that there would be an "administrative-fines proceeding 

against the Kuhn Committee." This is a blatant violation of a person's Due Process by the 

Federal Election Commission. Surely the Commission should be required to notify a Candidate 

by United States Mail. The Commission did not even notify the Candidate or the Committee or 

the Treasurer by email that the Commission was conducting a hearing. 

Paragraphs 18, 19 and 20. The Commission initiated an administrative-fines proceeding 

against the Kuhn Committee and on July 23, 2013, the Commission decided by a 5-0 vote to find 

the Committee had violated 52 U.S.C. $30104(a). This all took place without the Candidate 

having any idea the FEC was having a hearing for fining him. In fact, this all took place without 

any notice to the Committee or the Candidate whatsoever. This is Unconstitutional and a 

violation of Due Process. 

Paragraphs 21 and 22. The Commission arbitrarily and capriciously fined the Kuhn 

Committee $8,800 at a hearing he was not even informed that he should attend. 

Paragraph 23. The paragraph states, "The Commission notified the Kuhn Committee and 

its treasurer, Amanda Michelle Perry, ofits 'reason-to-believe' determination in a letter dated 

July 24, 2013, that was successfully delivered the following day. (AR038-050, AR 051-052). 

Finally! A letter from the FEC to the Kuhn Committee. And, voila, the Candidate indeed finds 

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out about the administrative hearing and the $8,800 penalty since the FEC finally mailed an 

actual letter by U.S. Mail. Of course, this is the first time the Candidate even finds out that the 

April, 2013, Quarterly Report was not filed; let alone, the first time the Candidate finds out there 

was to be a hearing and there was to be a fine. The Plaintiff repeats its complaint: The FEC 

cannot operate without Notice and without Due Process. 

Paragraphs 25. As soon as former Candidate John Kuhn received the July 24,2013, letter 

from the Commission, he immediately called the Commission to see why he was in trouble and 

see why he was being fined the outrageous fine of $8,800 for a late informational report that he 

did not even know was not filed. This was in early August, 2013. At that time he got Sari 

Pickerall of the FEC on the telephone to ask her what had happened and why the letter he just 

received from the Commission said, "any challenge to the Commission's reason-to-believe 

finding and/or civil penalty calculation must be submitted to the Commission in writing and 

received within 40 days of that finding." Unfortunately, after Ms. Pickeralllisted to Mr. Kuhn's 

reasons why the quarterly report was not filed, Ms. Pickerall informed Mr. Kuhn that "he might 

as well not waste his time challenging the FEC's finding because none of Mr. Kuhn's reasons 

were going to fit in the thee permissible grounds for challenges to an administrative fine and that 

he might as well just proceed with appealing to the Federal District Court. Mr. Kuhn took the 

FEC at their word, and did not bother to file an internal challenge to the Commissions finding 

and decided to appeal to the Federal District Court, as Ms. Pickerall suggested. The FEC staff 

should not tell a Candidate there is no point to appeal internally if that is going to estop the 

Candidate from appealing to the Federal District Court. However, in this case, that is exactly 

what happened and, therefore, Kuhn For Congress has not had its hearing or day in court. Worse 

yet, the Kuhn Committee did not even know about the first administrative proceeding against it 

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where the determination was made by the FEC to fine the Committee the egregious amount of 

$8,800 for a late filing of a non-election-sensitive information-only quarterly report. 

Paragraphs 26 and 27. The notification letter that the Kuhn Committee had lost the 

internal hearing is way too late in the proceeding to notify the Candidate that the internal 

proceeding is even happening. One cannot notify a candidate by writing after the hearing that 

there has been a hearing, and worse yet, a definitive determination has been made at the hearing. 

Again, utter lack of Notice and utter lack of Due Process. The Commission has violated its own 

statute, 52 U.S.C. Sec. 30109(a)(4)(C)(ii), the '''Commission may not make any determination 

adverse' to a person regarding a reporting disclosure requirement 'until the person has been 

given written notice and an opportunity to be heard before the Commission.'" 

Paragraph 28. Does not apply because the Commission did not notify the Candidate in 

writing, by either email or written letter in the U.S. Mail, that the first internal hearing was going 

to take place on July 23,2013. Furthermore, the FEC staff informed the Candidate that it would 

be a waste of time to appeal the decision so the Candidate did not challenge the finding" within 

the FEC internally. 

Paragraph 29 and 30. Not relevant since the Commission did not give the Candidate 

notice to the original violation and hearing, and the Commission told the Candidate not to bother 

with its internal appeal because the grounds to appeal are limited to issues the Candidate did not 

have according to the FEC Staff member. 

Paragraphs 31-36. The very reason that the Plaintiff has to petition to the U.S. District 

Court is because the Plaintiff has been actually been denied Due Process by lack of Notice and 

has been effectively denied Due Process by statements made by the FEC's own staff. And, 

because of this, the Plaintiff still has not had its "day in court." 

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CONCLUSIONS 

Under Paragraph 2 of the "Conclusions Of Law" of the United States Magistrate's 

PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LA W, it states: Under the 

Administrative Procedure Act, "courts must uphold agency action unless it was 'arbitrary, 

capricious, an abuse of discretion, or otherwise not in accordance with law. ,,, The Plaintiff has 

demonstrated, unequivocally, that the Federal Election Commission arbitrarily and capriciously 

fined Kuhn For Congress $8,800 for the late filing of a non-election-sensitive, information-only 

report (after the Committee had already filed all three prior reports on a timely basis). The FEC 

did this by: 1. Not notifying the Candidate in writing, by U.S. Mail or otherwise, that it was 

initiating an administrative-fines proceeding, thereby not giving the Candidate any Notice 

whatsoever, 2. By failing to give Mr. Kuhn Due Process by telling him that the second hearing 

was "a waste of his time" because he could not fit within the FEC internal guidelines for internal 

appeal, and 3. By fining the Committee capriciously by basing the fines on whatever "the 

amount of money that happens to go through the campaign checking account that quarter." 

Furthermore, the proposed finding under Paragraph 13, "The $8,800 civil penalty 

assessed by the FEC against the Plaintiff was properly calculated pursuant to FECA and the 

FEC's regulations ... " is irrelevant because it is the basis for the calculations themselves that are 

"arbitrary and capricious." This is a violation of the Plaintiff s Constitutional Rights, as 

delimitated in the Plaintiff s Memorandum. 

Paragraph 15 of the Conclusions of Law misses the whole point of the Plaintiffs 

Complaint and argument. The Plaintiff is not arguing the "best efforts" defense. The Plaintiff 

surly fails under the "best efforts" defense. Rather, the Plaintiff is proving exactly what is 

argued throughout this whole brief, and which we have clearly stated in our Conclusions directly 

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above: The Magistrate correctly states that "under the Administrative Procedures Act, courts 

must uphold agency action unless it was 'arbitrary, capricious, an abuse of discretion, or 

otherwise not in accordance with law.'" And, that is exactly the Plaintiffs complaint and 

argument: In this case the FEC's fine is arbitrary and capricious; in this case the FEC's Notice 

was arbitrary and capricious and not in accordance with the law, and the FEC's self-created 

internal regulations, regulating punishments for late filings, are arbitrary and capricious and not 

in accordance with law. Therefore, the Defendants Motion to Dismiss should be denied and the 

Plaintiff should finally have its day in court (since the FEC did not give this Committee its day in 

court because of its lack of Notice and its Staff admonition to the Committee that appealing 

internally to the FEC was "a waste of time."). 

Also of grave importance in this matter is the opening paragraph of the FEC's Rule 

12(b)(6) Motion to Dismiss in which the FEC states point-blank: "The motion should be 

granted, because the FEC did not act arbitrarily, capriciously, or otherwise contrary to law in 

assessing a civil money penalty against Kuhn For Congress for its failure to timely file a 

statutorily mandated campaign-finance disclosure report in April 2013, as required by the 

Federal Election Campaign Act." In fact, Kuhn For Congress has just shown, unequivocally, 

that the FEC did, in fact, act arbitrarily, capriciously and otherwise contrary to law in assessing 

its extremely arbitrary fine on Kuhn For Congress and did so while blocking Kuhn For Congress 

from legitimate Due Process. Moreover, clearly Kuhn For Congress has a Claim and the Claim 

has not been waived by Kuhn For Congress; contrarily, the Claim has been very effectively 

blocked by the FEC and its Staffby failing to give Notice to the Committee of the first hearing 

and then misleading the Committee as to the second hearing. 

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Finally, the Plaintiff has demonstrated that the chilling effect that the FEC is creating on a 

normal American desiring to run for Public Office is significant and the FEC should be required 

to remove the chilling effect by promulgating more reasonable fines and regulations. This 

Constitutional argument is also under the sole review by the Federal District Court because it is a 

Constitutional argument and cannot even be heard at the Administrative level. The 

Administrative rules and procedure do not apply when the Constitutionality of the Federal 

Agency's regulations comes into question. 

F or the reasons stated above, Plaintiff respectfully requests that this Honorable Court 

deny the Defendant's motion to dismiss and allow Plaintiff adequate due process based on an 

adverse agency decision. 

Respectfully submitted, 

Date: October 16,2014 ~-

John R. Kuhn, Esq. 

Attorney 

FOR PLAINTIFF 

KUHN FOR CONGRESS 

39 Broad St., Suite 301 

Charleston, SC 29401 

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