13

urged readers to “vote pro-life” in the upcoming pri-
mary elections, and identified by name each candi-
date who supported what MCFL considered the pro-
life position and each candidate who was opposed to
that position. As the court of appeals found, what-
ever else section 441b might apply to, it clearly is
applicable to a corporation’s expenditure of its treas-
ury funds to distribute this sort of explicit election
advocacy to the public.

Report of the Special Committee to Investigate Campaign
Expenditures, H.R. Rep. No. 2739, 79th Cong., 2d Sess. 42
(1946). The Committee concluded that “American Action,
Inc., is a Delaware corporation and, as such, under the Federal
Corrupt Practices Act, is prohibited from making any con-
tributions in connection with any election at which a Repre-
sentative to Congress is to be chosen.” Id. at 42-43. Senator
Taft confirmed during the Senate debate on the 1947 Amend-
ments to the Corrupt Practices Act (see pp. 15-16, infra)
that the prohibition would apply to a corporation established
for religious purposes. 98 Cong. Rec. 6440 (1947), reprinted
in II NLRB, Legislative History of The Labor Management
Relations Act, 1947, at 1535 (1948). In proposing the
amendments to this statute that were adopted in 1971, Con-
gressman Hansen also noted that the provision would apply to
such nonprofit corporations as the National Association of
Manufacturers and the American Medical Association. 117
Cong. Rec. 48,380 (1971), reprinted in FEC, Legislative His-
tory of the Federal Election Campaign Act of 1971, at 758
(1981) (hereafter “1971 Leg. Hist.”). Finally, in 1975 the
Commission issued Advisory Opinion 1975-16, 1 Fed. Elec.
Camp. Fin. Guide (CCH) 95111 (Aug. 19, 1985), which con-
cluded that section 441b would apply to nonprofit, issue-ori-
ented corporations such as an incorporated post of the Vet-
erans of Foreign Wars. Congress effectively adopted this
interpretation by reenacting the statutory language a year
later without material change. See Merrill Lynch, Pierce,
Fenner & Smith v. Curran, 456 U.S. 358, 381 (1982) ; Lorillard
v. Pons, 434 U.S. 575, 580-581 (1978).


34

Act as a whole reflects “Congress’ effort to achieve
‘total disclosure’ by reaching ‘every kind of political
activity’ in order to insure that the voters are fully
informed and to achieve through publicity the maxi-
mum deterrence to corruption and undue influence
possible.” Buckley v. Valeo, 424 U.S. at 76. Section
441b was intended to serve this purpose by requiring
that corporations and unions make their political con-
tributions and expenditures only from a separate seg-
regated fund, which Congress has specifically included
in the definition of political committee, 2 U.S.C.
§ 431(4) (B). Congress has thus indicated particular
concern for disclosure by corporations and unions, for
the primary effect of this special provision is to re-
quire a separate segregated fund to report both its
expenditures and its sources of funding for disclosure
on the public record under 2 U.S.C. § 484 even before
its financial activity reaches the minimum level for
other groups to become political committees under 2
U.S.C. § 431(4) (A).

This Court has found Congress’ interest in public
disclosure of the sources of campaign funding to be
compelling even when applied to those making inde-
pendent expenditures rather than contributions, con-
cluding that “the informational interest can be as
strong as it is in coordinated spending, for disclosure
helps voters to define more of the candidates’ con-
stituencies.” Buckley v. Valeo, 424 U.S. at 81. If the
court of appeals’ decision is permitted to stand, the
voting public will be denied the identities of the in-
dividuals who finance the political expenditures of cor-
porations like MCFL, information which Congress has
properly determined to be important to maintenance
of an informed electorate. In fact, as discussed su-
pra, pp. 26-27, the court of appeals indicated that


30

As the Court has explained,” Congress acted to pre-
vent the use of the general assets of corporations and
unions to influence federal elections only after it
became aware of widespread abuses that were thought
to present imminent danger of corruption to the fed-
eral election process, resulting in a decline of public
confidence in the integrity of elected officials and the
fair operation of government. This Court has re-
peatedly recognized the elimination of such cireum-
stances to be a governmental interest of the highest
order,”* and has found that Congress’ “careful legis-
lative adjustment of the federal electoral laws .. .
to account for the particular legal and economic at-
tributes of corporations and labor organizations war-
rants considerable deference . .. [and] reflects a per-
missible assessment of the dangers posed by those
entities to the electoral process.” FEC v. National
Right to Work Committee, 459 U.S. at 209.

The court of appeals’ conclusion that this interest
was inapplicable here rested upon its view that
MCFL/s expenditures in this case “did not incur any
political debts from legislators” (J.S. App. 22a).
However, in National Right to Work Committee, this
Court refused to evaluate the constitutionality of sec-
tion 441b by focusing narrowly upon either the par-
ticular attributes of the corporation or the effects of
the particular expenditures before the Court, as the
court of appeals had done. Instead, the Court upheld
the constitutionality of section 441b as applied to
the nonprofit, ideological corporation in that case

15 FEC v. National Right to Work Committee, 459 U.S. at
207; United States v. UAW, 352. U.S. at 570-584.

16 See, ¢.g., FEC v. National Right to Work Committee, 459
US. at 208; First National Bank of Boston v. Bellotti, 435
US. at 788 n.26; Buckley v. Valeo, 424 U.S. at 27; United
States v. UAW, 352 U.S. at 570, 571, 575.


7

late section 441b (J.S. App. 80a-34a). The district
court also opined that if MCFL’s expenditures did
violate the Act, application of section 441b to MCFL’s
expenditures “would violate its rights to freedom of
speech, press and association... .” (J.S. App. 38a).

D. Proceedings in the Court of Appeals

The court of appeals rejected the district court’s
conclusion that MCFL’s expenditures were not cov-
ered by 2 U.S.C. § 441b, and found that those expen-
ditures violated section 441b as alleged by the Com-
mission. First, the court held that both the language
and legislative history confirmed that section 441b
was intended to prohibit corporations from using
treasury funds to make independent election expendi-
tures like those in this case. Second, the court rea-
soned that since the “Special Election Edition ex-
pressly advocated the election of clearly identified
candidates within the meaning of Buckley [v. Valeo,
424 U.S. 1 (1976)]” there was no need to decide
whether or not section 441b reached expenditures that
do not involve “express advocacy” (J.S. App. 16a).
Finally, the court held that the Special Election Edi-
tion did not fall within the statutory exemption for
certain activities by the communications media.* The
court found that, whether or not the regular MCFL
newsletter was a periodical publication under the ex-
emption, the Special Election Edition was not “be-

62 U.S.C. § 481(9) (B) (i) excludes from the definition of
“expenditure”

any news story, commentary, or editorial distributed
through the facilities of any broadcasting station, news-
paper, magazine, or other periodical publication, unless
such facilities are owned or controlled by any political
party, political committee, or candidate... .


17

This Court’s conclusion in the UAW case remains
as valid today as when that case was decided. Al-
though Congress has amended section 441b and its
predecessor (former 18 U-S.C. §610) twice since
then, it has never indicated any intent to overrule
the UAW decision or to narrow the scope of the pro-
hibition of “expenditures” by corporations and unions
in connection with federal elections. To the contrary,
Congressman Hansen, the author of the 1971 amend-
ment to 18 U.S.C. § 610, expressly affirmed that “sec-
tion 610 as it stands, and under my proposal, repre-
sents a complete victory for those who believe that
corporations and unions have no moral right to uti-
lize their organizations’ general funds for active pub-
lic partisan politicking.” 117 Cong. Rec. 48,380
(1971), 1971 Leg. Hist. at 758.° Similarly, Senator
Cannon, the floor manager of the 1976 bill which
transferred the provision prohibiting corporate ex-
penditures, with some modifications, from the crim-
inal code to the Federal Election Campaign Act
(codified at 2 U.S.C. § 441b), stated that “if [corpo-
rations or unions] are trying to elect or defeat some-
one for Federal office they are not exempt.” 122

°® See also 117 Cong. Rec. 43,381 (remarks of Rep. Hansen),
1971 Leg. Hist. at 759, quoted in Pipefitters v. United States,
407 U.S. at 481; 117 Cong. Rec. 48,384-385 (remarks of Reps.
Thompson and Udall), 1971 Leg. Hist. at 762-63; 117 Cong.
Rec. 43,386 (remarks of Rep. Crane), 1971 Leg. Hist. at 764;
117 Cong. Rec. 43,389 (remarks of Rep. Steiger) (“the evil”
section 610 was intended to correct was the “use of union
funds to influence the public at large to vote for a particular
candidate or a particular party”), 1971 Leg. Hist. at 767; 117
Cong. Rec. 43,409 (remarks of Rep. Conte), 1971 Leg. Hist.
at 787; 117 Cong. Rec. 28,814 (remarks of Sen. Prouty), 1971
Leg. Hist. at 460.


35

immunizing MCFL from this disclosure requirement
was actually one of the objectives of its decision.
Moreover, it is not only the identity of individual
contributors that would be withheld from the public
under the court of appeals’ decision. Although it ap-
pears that at the time of its expenditures in this case
MCFL may have had a voluntary policy against ac-
cepting money from business corporations (J.A. 168-
169), nonprofit, issue-oriented corporations covered
by the lower court’s decision can and often do receive
funding from commercial corporations and/or un-
ions. The court of appeals’ decision could for the
first time enable such corporations, bearing “seduc-
tive names that may tend to conceal the true identity
of the source,” Citizens Against Rent Control v. City
of Berkeley, 454 U.S. 290, 298 (1981), to convert
into campaign expenditures unlimited amounts of
money received from corporations or unions with sub-
stantial commercial interests in the causes they advo-
cate, without ever disclosing to the public the true
source of financing.”® Thus, despite the court of ap-
peals’ assumption that its decision only invalidates
section 441b’s requirements with respect to nonprofit,
issue-oriented corporations, this decision’s actual ef-
fect is to open the way to the use of such corpora-

18 For example, the National Right to Work Committee ad-
mitted that it received funding from commercial corporations.
See FEC v. National Right to Work Committee, No. 81-1506,
Joint Appendix at 19-22.

19For example, an organization engaged in apparently
“Gdeological” opposition to nuclear power might receive fund-
ing from a corporation engaged in coal mining that is inter-
ested in reducing its competition, or an organization engaged
in apparently “ideological” advocacy of increased defense
spending could be funded primarily by defense contractors.



ec nea EET SEE ET LIS TE TEE

Cases—Continued:

Lorillard v. Pons, 434 U.S. 575 (1978) ..
Lowe v. SEC, 105 S. Ct. 2557 (1985)
Merrill Lynch, Pierce, Fenner & Smith v. Curran,
456 U.S. 353 (1982)
Minnesota v. Clover Leaf Creamery Co., 449 U. ‘Ss.
456 (1981)
NLEB »v. Jones Laughlin Steel Corp., 301 U.S. 1
(1987) ..
Oklahoma
U.S. 186 (1946)
Pipefitters Local Union No. 562 v. United States,
407 U.S. 385 (1972)
Railway Employes’ Dept. v. Hanson, 351 U.S. 225
(1956) ....
Regan v. Taxation With Representation, 461 US.
540 (1983)
Rostker v. Goldberg, 458 U.S. 57 (1981
Spence v. Washington, 418 U.S. 405 (1974).
United States v. CIO, 385 U.S. 106 (1948)
United States v. Morton Salt Co., 338 U.S. 632
(1950) ...
United States v. UAW, 352 U.S. 567 (1957)
Walters v. National Association of Radiation Sur-
vivors, 105 S. Ct. 3180 (1985)...
Zauderer v. Office of Disciplinary Counsel of the
Supreme Court of Ohio, 105 S. Ct. 2265 (1985)...

United States Constitution:
First Amendment

Statutes and Regualtions:

2 U.S.C. § 481 (4)...
431(4) (A
431 (4) (B)
431(9) (B
431 (9) (B) (i)
432 .
433...
434.
437g (a) (6)
437g (a) (6) (A)...

Page

13
25

13
19
22

25

passim

31

25



28

In sum, there has been no showing in this case that
section 441b has interfered with the freedom of any
corporation or union to expend as much as it wants,
through a separate segregated fund, to publicize its
views on federal candidates. In the absence of such
a showing, there is no basis for this Court to overrule
the considered judgment of Congress that section 441b
is consistent with the requirements of the first amend-
ment.

B. The Compelling Governmental Purposes Which This
Court Has Found To Support Section 441b Are Ap-
plicable To Expenditures By Nonprofit Corporations

We have shown above that section 441b has neither
the intent nor the effect of restricting the amount,
content or methods of corporate and union political
expression. However, even if the court of appeals
were correct in concluding that section 441b indi-
rectly burdens speech by making fundraising less “sim-
ple,” the statute would still not be unconstitutional.

[1]t is clear that “[n]either the right to associate
nor the right to participate in political activities
is absolute.” CSC v. [National Ass’n of] Letter
Carriers, 418 U.S. 548, 567 (1973). Even a
“ ‘Significant interference’ with protected rights
of political association” may be sustained. if the
State demonstrates a sufficiently important in-

expenditure to publish a nonpartisan statement, the applicabil-
ity of section 441b in such circumstances can be resolved at
that time; it is not presented by this case. See California
Medical Association v. FEC, 453 U.S. at 197 n.17. We note,
however, that the Commission has adopted regulations pro-
viding that section 441b is inapplicable to the distribution of
candidates’ voting records in a truly nonpartisan manner. 11
C.F.R. § 114.4(b) (4).


14

The fact that MCFL apparently did not coordinate
its expenditure with any candidate’s campaign or-
ganization does not exempt it from the prohibition of
section 441b. To the contrary, this Court determined
long ago that the prohibition of corporate and union
“expenditures” was added to section 441b’s predeces-
sor in 1947 for the purpose of reaching expenditures
in connection with federal elections that were claimed
to be independent of a candidate’s campaign. In
United States v. UAW, 352 U.S. 567 (1957), this
Court reviewed a district court’s dismissal of an in-
dictment which “charged appellee with having used
union dues [contained in its treasury] to sponsor
commercial television broadcasts designed to influence
the electorate to select certain candidates for Con-
gress in connection with the 1954 elections.” Id. at
585. The indictment in that case did not allege that
the union’s expenditures had been approved by or co-
ordinated with any candidate. Nevertheless, this
Court reversed the district court’s decision and found
that the indictment contained all the elements neces-
sary to allege a violation of the statute.

To deny that such activity, either on the part
of a corporation or a labor organization, consti-
tuted an “expenditure in connection with any
[federal] election” is to deny the long series of
congressional efforts calculated to avoid the dele-
terious influences on federal elections resulting
from the use of money by those who exercise
control over large aggregations of capital. More
particularly, this Court would have to ignore the
history of the statute from the time it was first
made applicable to labor organizations.

Id. at 585 (brackets in original).


20

sumption of constitutionality, Flemming v. Nestor, 368
U.S. 608, 617 (1960), which is enhanced in this case
not only because of Congress’ special expertise and
experience with election campaigns, but also because
this Court has already found the bulk of section
441b’s scheme for regulating corporate and union
campaign spending to be constitutional as applied to
a nonprofit, issue-oriented corporation. FEC v. Na-
tional Right to Work Committee, 459 U.S. at 207-211.

As we show below, the court of appeals identified
no concern adequate to overcome this presumption of
constitutionality in this case, for the application of
section 441b to expenditures by nonprofit corpora-
tions does not unduly restrict either the amount or
manner of their political expression, and it is sup-
ported by several governmental interests that this
Court has previously found to be compelling enough
to overcome similar constitutional objections.

A. Section 441b Does Not Restrict Corporate Political
Speech

As stated by the sponsor of the 1971 amendments
to the predecessor of section 441b, Congress did not
intend for that provision to prevent corporations and
unions from publishing their views on federal elec-
tions, but only to prohibit “the use of corporate and
union treasury funds to reach the general public in
support of, or opposition to, Federal candidates... .”
117 Cong. Rec. 48,381 (1971) (remarks of Rep.
Hansen) (emphasis added), quoted in Pipefitters v.
United States, 407 U.S. at 431. To make this limited
purpose clear, Congress in 1971 enacted an explicit
exception from the statute’s prohibitory language,
proposed by Congressman Hansen and currently codi-
fied at 2 U.S.C. § 441b(b) (2) (C), which allows cor-


16

lations of the provisions of said section, whether or
not said expenditures are with or without the knowl-
edge or consent of the candidates.” H.R. Rep. No. 2739,
79th Cong., 2d Sess. 46 (emphasis added), quoted
in United States v. UAW, 352 U.S. at 582. The
Senate Committee urged a similar amendment. S.
Rep. No. 1, Part 2, 80th Cong., 1st Sess. 38-39.
Section 304 of the Labor Management Relations Act
of 1947 (“Taft-Hartley Act”), 61 Stat. 186, incor-
porated these recommendations, permanently apply-
ing the prohibition to labor organizations as well as
corporations and extending it to prohibit “expendi-
tures” as well as contributions. See United States v.
UAW, 352 U.S. at 583-584. In the UAW decision
this Court concluded, on the basis of this legislative
history, that Congress’ primary purpose in adding
the prohibition of “expenditures” to the statute in
1947 was to ensure that it reached a corporation’s or
union’s independent expenditure of its own funds to
influence the outcome of a federal election.

As indicated by the reports of the Congressional
Committees that investigated campaign expendi-
tures, it was to embrace precisely the kind of in-
direct contribution alleged in the indictment that
Congress amended § 318 to proscribe “expendi-
tures.” ... Because such conduct was claimed
to be merely “an expenditure ‘[by the union] of
its own funds to state its position to the world,”
the Senate and House Committees recommended
and Congress enacted, as we have seen, the pro-
hibition of “expenditures” as well as “contribu-
tions” to “plug the existing loophole.”

Id. at 585 (brackets in original).


29

terest and employs means closely drawn to avoid
unnecessary abridgement of associational free-
doms.

Buckley v. Valeo, 424 U.S. at 25, quoting Cousins v.
Wigoda, 419 U.S. 477, 488 (1975). Accord, FEC v.
National Right to Work Committee, 459 U.S. at 207.

In FEC v. National Right to Work Committee, this
Court discussed two governmental interests behind
section 441b which it found to be sufficiently compell-
ing to overcome the first amendment claims of a non-
profit, issue-oriented corporation. First, as the Court
described it last Term, “in NRWC we held that the
compelling governmental interest in preventing cor-
ruption supported the restriction of the influence of
political war chests funneled through the corporate
form... .” FEC v. National Conservative Political
Action Committee, 105 S. Ct. at 1471. See also FEC
v. National Right to Work Committee, 459 U.S. at
207; United States v. UAW, 352 U.S. at 579. The
NRWC case thus “turned on the special treatment
historically accorded corporations.” FEC v. National
Conservative Political Action Committee, 105 S. Ct.
at 1468. Corporations are artificial entities whose ac-
cumulation of capital is enhanced by such special
advantages as limited liability, perpetual life, and
special tax treatment. As such, corporations “are
endowed with public attributes. They have a collec-
tive impact upon society, from which they derive the
privilege of acting as artificial entities.” United
States v. Morton Salt Co., 888 U.S. at 652. Such
“[fjavors from government often carry with them
an enhanced measure of regulation.” Id. Accord,
FEC v. National Conservative Political Action Com-
mittee, 105 S. Ct. at 1469.


11

of this application of section 441b. Second, this
Court found that section 441b protects individuals
whose money goes to make up a corporation’s treas-
ury from having that money used to support political
candidates to whom they may be opposed. This pro-
tection is also applicable to MCFL, for there is no
basis for assuming that everyone who supports
MCFL’s anti-abortion education and lobbying efforts
would automatically choose the candidates they sup-
port solely on that basis.

Finally, application of section 441b to MCFL is
supported by Congress’ interest in ensuring that the
electorate is fully informed about the sources of cam-
paign financing. In Buckley v. Valeo, 424 US. at 81,
this Court found this interest to be compelling even
for independent expenditures, since it helps voters
define the candidates’ constituencies. Section 441b
serves this interest by requiring unions and corpora-
tions to make their campaign expenditures from a
separate segregated fund which is required to report
the names of its contributors just like any other po-
litical committee. If nonprofit corporations were per-
mitted to make campaign expenditures from their
treasury funds without reporting the sources of those
funds, such corporations could be used as vehicles
through which commercial corporations and unions
could funnel unlimited amounts of their treasury
funds into expenditures to influence federal elections,
without ever disclosing to the public the true source
of the funds. 4

In sum, over the last 80 years Congress has care:
fully developed section 441b into a balanced statute
which serves important governmental purposes with
a minimum of interference with corporate and union
political activities. Congress’ considered judgment


3
STATEMENT OF THE CASE
A. Background

The Federal Election Campaign Act prohibits “any
corporation whatever” or any labor organization from
utilizing treasury funds to finance contributions or
expenditures in connection with a federal election.
2 U.S.C. § 441b(a). It permits, however, the use of
such treasury funds for “the establishment, admin-
istration, and solicitation of contributions to a sepa-
rate segregated fund to be utilized for political pur-
poses. ...” 2 U.S.C. § 441b(b) (2) (C). In turn, cor-
porations and labor organizations are restricted to
soliciting contributions to those separate segregated
funds from a restricted class: for unions, members
and their families, and for corporations, stockholders,
executive and administrative personnel and their
families, and members of membership corporations.
2 U.S.C. § 441b(b) (4). The statutory definition of
“political committee” specifically includes separate
segregated funds, 2 U.S.C. § 431(4)(B), so that
they are governed by the same reporting and dis-
closure requirements applicable to other political com-
mittees. See 2 U.S.C. §§ 488 and 434.

On January 26, 1978, Massachusetts Citizens for
Life, Inc. (hereafter “MCFL”) was incorporated un-
der the laws of the Commonwealth of Massachusetts
as a non-stock, non-membership corporation (J.A.
92-96).° Since its inception MCFL distributed a
newsletter by mail to the 2,000 to 6,000 people who
had contributed or paid dues to MCFL during the
year of distribution (J.A. 23). Each of these news-
letters bore a masthead identifying it as the “Massa-

*In 1980, MCFL amended its articles of incorporation in

order to become a membership corporation (J.A. 21-22,
109-110).


26

segregated funds, “any ... group of persons” which
makes more than $1,000 in election expenditures dur-
ing a calendar year. 2 U.S.C. § 481(4)(A). The
court of appeals suggested no reason why, merely be-
cause it is a corporation, MCFL has a first amend-
ment right to make group political expenditures on
behalf of its supporters without the inconvenience of
complying with these regulations, while other groups
of individuals who have not incorporated do not. In
fact, this Court’s decisions indicate that, far from
enjoying such a privileged position, “[i]n return for
the special advantages that the State confers on the
corporate form, individuals acting jointly through
corporations forgo some of the rights they enjoy as
individuals.” FEC v. National Conservative Political
Action Committee, 105 S. Ct. at 1468, citing FEC v.
National Right to Work Committee, 459 U.S. at 209-
210. See also United States v. Morton Salt Company,
338 U.S. 632, 653 (1950). Thus, in Regan v. Tawxa-
tion With Representation, 461 U.S. 540, 548-546
(1983), this Court found no first amendment viola-
tion in Congress’ decision to require that a group
choosing to incorporate to obtain the tax benefits of
26 U.S.C. § 501(c) (3) must establish a separate af-
filiated corporation to finance its lobbying activities.
As in Regan, where the group’s expenditures on lob-
bying remained unrestricted so long as they were
financed solely through contributions to the separate
affiliated corporation, under section 441b corporate
political expenditures remain unrestricted so long as
they are financed solely through contributions to a
separate segregated fund.

The court of appeals’ assertion (J.S. App. 21a
n.7) that the first amendment requires a general ex-
emption from section 441b for corporations like


hla a iy a aatks 5 Rit aN

23

and the Constitution. It consists of a strong pro-
hibition on the use of corporate and union treas-
ury funds to reach the general public in support
of, or opposition to, Federal candidates and a
limited permission to corporations and unions,
allowing them to communicate freely with mem-
bers and stockholders on any subject .. . and to
make political contributions and expenditures fi-
nanced by voluntary donations which have been
kept in a separate segregated fund. This amend-
ment writes that balance into clear and unequiv-
ocal statutory language.

117 Cong. Rec. 48,381 (1971), 1971 Leg. Hist. at
759, quoted in Pipefitters v. United States, 407 U.S.
at 431. This explicit Congressional determination
that the regulations now contained in section 441b are
an appropriate way to attain important governmental
objectives in light of the constitutional concerns iden-
tified by this Court ‘‘warrants considerable deference”
from the courts. FEC v. National Right to Work
Committee, 459 U.S. at 209, citing Rostker v. Gold-
berg, 453 U.S. 57, 64, 67 (1981). See also, e.g.,
Walters v. National Association of Radiation Sur-
vivors, 105 S. Ct. 3180, 3188-3189, 3193 (1985);
Columbia Broadcasting System v. Democratic Na-
tional Committee, 412 U.S. at 103.

Nothing in the record of this case justifies the
court of appeals’ decision to override Congress’ con-
sidered judgment that the financial regulations con-
tained in 2 U.S.C. § 441b represent a permissible con-
stitutional balance. As accurately predicted in Pipe-
fitters v. United States, 407 U.S. at 443 (Powell, J.,
joined by Burger, C.J., dissenting), the explicit au-
thorization of the sort of separate segregated funds
described in that decision has “open[ed] the way for
major participation in politics by the largest aggrega-


i
4

4

tA UE AERIS

Legislative History—Continued:

VIE

117 Cong. Rec. 43,384-5 (1971)
117 Cong. Rec. 43,386 (1971)
117 Cong. Rec. 43,389 (1971)
117 Cong. Ree. 48,409 (1971).
122 Cong. Rec. $8556 (1976)
H.R. Rep. No. 2739, 79th Con: .
S. Rep. No. 1, Part 2, 80th Cong., 1st Sess. (1947).. 15, 16

Miscellaneous :

Advisory Opinion 1975-16, 1 Fed. Elec. Camp. Fin.

Guide (CCH) { 5111. 18
FEC Disclosure Series No. 8: Corporate Related

Political Committee Receipts and Expenditures,

1976 Campaign (1977) ..... — 24
FEC Disclosure Series No. 10: Labor-Related Po-

litical Committee Receipts and Expenditures,

1976 Campaign (1978) . 24
FEC, Legislative History of the Federal Election

Campaign Act of 1971 (1981)... 18, 17, 23
FEC, Legislative History of the Federal Election

Campaign Act Amendments of 1976 (1977)........ 18
FEC Reports on Financial Activity 1983-1984,

Vol. I (May 1985) a 24
II NLRB, Legislative History of the Labor Man-

agement Relations Act, 1947 (1948) 2.0... 13



VI

Statutes and Regulations—Continued : Page

AAD a neeccnneecnneee
441b (a). oe
441b(b) (2) (C 3, 20
441b(b) (4)... 3, 21
441b (b) (4) (A) (i) 22
441b(b) (4) (C) ..... 22
Former 18 U.S.C. §610 (amended and codified
in 1976) .............. - 17
26 U.S.C. § 501 (c) (3) 26
28 U.S.C. § 1252 2
2101 (a) ... 2
11 C.F.R. § 114.4(b) (4) 28
Federal Corrupt Practices Act of 1925, 43 Stat.
1070 (1925) 15
Federal Election Campaign Act of 1971, Pub. L.
No. 92-225, 86 Stat. 3 (1972) 2
Federal Election Campaign Act Amendments ‘of
1974, Pub. L. No. 93-443, 88 Stat. 1263 (1974)... 2
Federal Election Campaign Act Amendments of
1976, Pub. L. No. 94-283, 90 Stat. 475 (1976). 2
Federal Election Campaign Act Amendments of
1979, Pub. L. No. 96-187, 93 Stat. 1339 (1980)... 2
Labor Management Relations Act of 1947 (Taft-
Hartley Act), 61 Stat. 136 (1947). 16
Social Security Amendments of 1977, Pub. L. No.
95-216, Title V, Sec. 502, 91 Stat. 1509, 1565
(1977) 2
Trademark Clarification Act of 1984, Pub. L. No.
98-620, Title IV, Sec. 402, 98 Stat. 3335, 3357
(1984) ... 2
War Labor Disputes Act of 1943 (Smith- Connally .
Act), 57 Stat. 167 (1943) . 15

Legislative History:

89 Cong. Rec. 5781 (1943)
93 Cong. Rec. 6440 (1947) ....

117 Cong. Rec. 28,814 (1971) 17
117 Cong. Rec. 43,380 (1971) 13,17
117 Cong. Rec, 43,381 (1971) -17, 20, 23



12

that this statute represents an appropriate balance
between these competing interests is entitled to sub-
stantial deference from this Court, and there is noth-
ing in the record of this case that would provide suf-
ficient grounds to reject that judgment.

ARGUMENT

I. THE COURT OF APPEALS CORRECTLY FOUND
THAT MCFL VIOLATED 2 US.C. §441b BY EX-
PENDING CORPORATE TREASURY FUNDS TO
DISTRIBUTE THE SPECIAL ELECTION EDITION
TO THE PUBLIC

Section 441b prohibits “any corporation whatever”
or any labor organization from making a “contribu-
tion or expenditure in connection with any election”
for federal office, “or in connection with any primary
election . . . held to select candidates” for federal
office. In this case, MCFL’s violation of that provi-
sion is established by uncontested facts. As dis-
cussed supra, pp. 3-5, MCF Lis a corporation organized
under the laws of Massachusetts, and it admittedly
expended $9,812.76 from its corporate treasury to
pay for the printing and distribution of the Special
Election Edition in connection with the 1978 primary
election." The Special Election Edition expressly

TIt is uncontested in this case that section 441b applies to
nonprofit, issue-oriented corporations like MCFL. The provi-
sion explicitly states that it applies to “any corporation what-
ever,” without exception. See 89 Cong. Rec. 5781 (1948)
(remarks of Cong. Hatch) (“[T]he language further says ‘or
any corporation whatever.’ Mr. President, that language is
about as broad as language can be... .”). One of the groups
studied by a special committee established by the House of
Representatives in the 1940’s to investigate campaign expendi-
tures was American Action, Inc., which “claim[ed] to be moti-
vated by patriotic purposes and to seek no personal gain... .”


2

JURISDICTION

The final judgment of the court of appeals holding
2 U.S.C. § 441b, a provision of the Federal Election
Campaign Act of 1971, as amended, 2 U.S.C. §§ 431
et seg. (hereafter “the Act”)? unconstitutional as
applied, was entered July 31, 1985. The Commission
filed a timely notice of appeal in the United States
Court of Appeals for the First Circuit on August 28,
1985 (J.S. App. 40a-42a). On October 25, 1985, the
Commission filed its jurisdictional statement, and on
January 13, 1986 the Court noted probable jurisdic-
tion. (J.A. 185). The jurisdiction of this Court is
invoked under 28 U.S.C. §§ 1252 and 2101(a).

CONSTITUTIONAL AND
STATUTORY PROVISIONS INVOLVED

The First Amendment to the Constitution of the
United States provides:

Congress shall make no law respecting an estab-
lishment of religion, or prohibiting the free ex-
ercise thereof; or abridging the freedom of
speech, or of the press; or the right of the peo-
ple peaceably to assemble, and to petition the
Government for a redress of grievances.

The full text of 2 U.S.C. § 441b is reprinted at

J.S. App. 75a-80a.

2The Federal Election Campaign Act of 1971, Pub. L.
No. 92-225, 86 Stat. 3 (1972), was amended by the Federal
Election Campaign Act Amendments of 1974, Pub. L. No. 93-
448, 88 Stat. 1268, by the Federal Election Campaign Act
Amendments of 1976, Pub. L. No. 94-283, 90 Stat. 475, by the
‘Social Security Amendments of 1977, Pub. L. No. 95-216,
Title V, Sec. 502, 91 Stat. 1509, 1565, by the Federal Election
Campaign Act Amendments of 1979, Pub. L. No. 96-187, 98
Stat. 1839 (1980), and by the Trademark Clarification Act of
1984, Pub. L. No. 98-620, Title IV, Sec. 402, 98 Stat. 3335,
3357.


18

Cong. Ree. $3556 (daily ed. March 16, 1976), re-
printed in FEC, Legislative History of the Federal
Election Campaign Act Amendments of 1976, at 388
(1977).

Finally, MCFL’s Special Election Editions are not
exempt from the prohibition of section 441b as a
periodical publication under 2 U.S.C. § 481(9) (B)
(i). As the court of appeals found, even if MCFL’s
newsletters were considered to be periodical publica-
tions under the Act, the evidence in the record shows
that the Special Election Edition was neither pub-
lished nor distributed “through the newsletter’s facil-
ities” (J.S. App. 18a-19a). Rather than a periodical
publication distributed to the newsletter’s normal
readers, the Special Election Editions were simply
political flyers, most of which were distributed to
members of the public who had never received the
MCFL newsletter, in order to influence their votes in
the upcoming primary election. If flyers like these
were within the news media exemption it would vir-
tually eliminate section 441b’s prohibition on ex-
penditures, for it would permit any of the many cor-
porations and unions that operate house organs to
use their treasury funds to distribute unlimited ex-
press election advocacy to the general public.

In sun, it is clear that the court of appeals was
entirely correct when it concluded (J.S. App. 15a)
that MCFL’s expenditure of corporate treasury funds
to distribute the Special Election Edition to the pub-
lic violated 2 U.S.C. § 441b. As we show below, how-
ever, the court of appeals erred when it concluded
that this application of section 441b is unconstitu-
tional.


No. 85-701

Iu the Supreme Court of the United States

OcTOBER TERM, 1985

FEDERAL ELECTION COMMISSION, APPELLANT,
v.

MASSACHUSETTS CITIZENS FOR LIFE, INC., APPELLEE.

ON APPEAL FROM THE UNITED STATES COURT
OF APPEALS FOR THE FIRST CIRCUIT

BRIEF FOR APPELLANT
FEDERAL ELECTION COMMISSION

CHARLES N, STEELE *
General Counsel

RICHARD B. BADER «
Assistant General Counsel

CAROL A. LAHAM
Attorney

Attorneys for
“FEDERAL ELECTION.COMMISSION
999 E. Street, N.W.
Washington, D.C. 20463
- (202) 376-8200
* Counsel of Record

February 27,1986 ,



7
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Pf
a
i

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5

The front page of the flyer was captioned “EV-
ERYTHING YOU NEED TO KNOW TO VOTE
PRO-LIFE.” (R., Vol. I, Pleading 16, Ex. A at p. 1).
It warned that “[n]Jo pro-life candidate can win in
November without your vote in September,” and re-
quested the reader to join “in voting in the primary
and together let us make our votes shout against the
continuing killing of the unborn.” The back page of
the flyer had “VOTE PRO-LIFE” written on it in
large bold-faced capital letters. This exhortation was
part of a coupon which was to be clipped out and
taken to the polls with the name of the pro-life
candidates in the reader’s district filled in. To facil-
itate this choice, the flyer listed the candidates for
each state and federal office in every voting district
in Massachusetts, and identified each one as either
supporting or opposing what MCFL considered the
pro-life position on three issues highlighted by the
flyer. A “y” meant the candidate supported the pro-
life view of the issue and an “n” meant the candi-
date opposed it. An asterisk was placed next to the
names of certain incumbent candidates to indicate
their “special contribution to the unborn in maintain-
ing a 100% pro-life voting record in the state house
by actively supporting MCFL legislation.” The flyer
also featured the pictures of thirteen candidates out
of the more than 400 running for office. Each candi-
date featured had received a triple “y” rating or was
identified either as having a 100% pro-life voting
record or as having stated a pro-life position. No
candidate was pictured who had received even one
“n” rating.

MCFL expended $9,812.76 to prepare, print and
distribute the Special Election Edition (J.A. 9). This
entire amount was paid from the corporation’s gen-
eral treasury funds (J.A. 9), for MCFL did not


4

chusetts Citizen for Life Newsletter,” as well as a
volume and issue number (R., Vol. I, Pleading 17, Ex.
B, pp. 1, 9, 25, 32, 50, 82, 112). They contained
articles of interest to MCFL supporters, such as in-
formation on relevant legislation, opinions and com-
mentary on pro-life issues, and entertainment in-
formation (J.A. 88-89, 98-99).

In September of 1978, MCFL prepared and printed
a flyer entitled “Special Election Edition” for distri-
bution prior to the September 19, 1978, primary elec-
tions. Unlike the MCFL newsletter, which was never
distributed to more than about 6,000 people (J.A.
24-27, 127-128), more than 100,000 copies of the
Special Election Edition were printed for distribu-
tion (J.A. 172-178). This election flyer was edited
by Marianne Rea-Luthin, an officer of MCFL who
was never part of the staff that prepared the MCFL
newsletters (J.A. 143).° The Special Election Edi-
tion was mailed free of charge and without request
to 5,986 people who had contributed or paid dues to
MCFL and to 50,674 other people whom MCFL con-
sidered to be sympathetic to its goals (J.A. 18-27,
128). The remaining copies apparently were dis-
tributed publicly (J.A. 174).

+The May, 1978, newsletter was Volume 5, Number 6 and
concluded a Volume which had begun in January 1977. Dur-
ing discovery in this case, MCFL represented that the Special
Election Edition distributed in September, 1978, was “Volume
5, Number 8” of its newsletter (J.A. 163). However, the
copy of the Special Election Edition given to the Commission
during discovery had “Volume 5, Number 3” written in by
hand (R., Vol. I, Pleading 17, Ex. B at 144), and the actual
Volume 5, Number 3 newsletter, distributed in May-June,
1977, is also in the Record (R., Vol. I, Pleading 17, Ex. B
at 120).

®° Ms. Rea-Luthin was director of the separate segregated
fund MCFL established in 1980 (J.A. 22).


* Counsel of Record
February 27, 1986

37

statute is narrowly drawn to serve these important
purposes without unnecessary infringement upon cor-
porate and union political activities. In these cireum-
stances, there is no basis for finding section 441b to
be unconstitutional.

CONCLUSION

For the foregoing reasons, the decision of the court
of appeals that 2 U.S.C. § 441b is unconstitutional as
applied to uncoordinated expenditures of nonprofit
corporations should be reversed.

Respectfully submitted,

CHARLES N. STEELE *
General Counsel

RICHARD B. BADER
Assistant General Counsel

Caro. A. LAHAM
Attorney

Attorneys for
FEDERAL ELECTION COMMISSION
999 E Street, N.W.
Washington, D.C. 20463
(202) 376-8200

WU. 5, GOVERNMENT PRINTING OFFICE; 1986 150509 21011


25

the inconvenience involved in establishing and operat-
ing a separate segregated fund in accordance with the
Act’s administrative requirements for political com-
mittees, 2 U.S.C. §§ 432-434. Since section 441b
leaves the amount and content of a separate segre-
gated fund’s expenditures unrestricted, however, these
regulations alone do not constitute a first amendment
violation, for “it is well settled that ‘[t]he '[First]
Amendment does not forbid . . . regulation which
ends in no restraint upon expression or in any other
evil outlawed by its terms and purposes.’” Lowe v.
SEC, 105 8S. Ct. 2557, 2581 n.8 (1985) (White, J.,
concurring), quoting Oklahoma Press Publishing
Company v. Walling, 327 U.S. 186, 198 (1946). See
also Zauderer v. Office of Disciplinary Counsel of the
Supreme Court of Ohio, 105 S. Ct. 2265, 2282 n.14
(1985) (“the First Amendment interests implicated
by disclosure requirements are substantially weaker
than those at stake when speech is actually sup-
pressed”). The court of appeals cited no case in which
this Court has ever found a statute which did not
limit speech to violate the first amendment merely
because it regulated the task of financing it.

As noted, the requirements of 2 U.S.C. §§ 482-434
are applicable to all political committees as defined
in the Act, which includes, in addition to separate

%3 Linmark Associates v. Willingboro, 431 U.S. 85, 98-94
(1977) and Spence v. Washington, 418 U.S. 405, 411 n.4
(1974), relied upon by the court of appeals (J.S. App. 20a-
21a), are not on point. In those cases the Court concluded
that the availability of alternative means of communicating
did not save statutes that prohibited a particular method of
speech. Section 441b does not affect the method of communica-
tion employed by corporations and unions; so long as it is
financed out of a separate segregated fund, a corporation or
union can utilize any methods of communication it desires.


24

tions of economic power, the great unions and corpo-
rations.” During the 1983-84 election cycle more
than 2900 separate segregated funds established by
corporations and unions reported making $169.1 mil-
lion in contributions and expenditures out of $185.6
million they received in voluntary political contribu-
tions. See FEC Reports on Financial Activity 1983-
1984, Vol. I, p. 78 (May 1985).% There is no evi-
dence that any corporation or union has been unable
to adequately publicize its political views through a
separate segregated fund; even MCFL itself has es-
tablished a separate segregated fund through which
it has made political expenditures in every election
since 1980. This graphically demonstrates that, in
contrast to the statutes this Court found unconstitu-
tional in such cases as First National Bank of Boston
v. Bellotti, 435 U.S. 765, 775-795 (1978); Buckley v.
Valeo, 424 U.S. at 39-59; and FEC v. National Con-
servative Political Action Committee, 105 S. Ct. 1459,
1465-1471 (1985), section 441b has neither the pur-
pose nor the effect of limiting the free flow of political
information and opinion from corporations and un-
ions to the public.

The court of appeals nevertheless found the statute
unconstitutional because it eliminated what the court
considered “the simplest method” (J.S. App. 20a) of
financing corporate speech, apparently referring to

12 This reflects tremendous growth in both the number and
spending of separate segregated funds. As recently as the
1975-76 election cycle there were 853 separate segregated
funds which reported expending only $26 million. See;FEC
Disclosure Series No. 8: Corporate-Related Political Commit-
tees Receipts and Expenditures, 1976 Campaign, p. 8 (1977),
and FEC Disclosure Series No. 10: Labor-Related Political
Committees Receipts and Expenditures, 1976 Campaign, p. 6
(1978).


ROR

Iu the Supreme Court of the United States
OcToBER TERM, 1985

No. 85-701

FEDERAL ELECTION COMMISSION, APPELLANT,
Vv.
MASSACHUSETTS CITIZENS FOR LIFE, INC., APPELLEE.

ON APPEAL FROM THE UNITED STATES COURT
OF APPEALS FOR THE FIRST CIRCUIT

BRIEF FOR APPELLANT
FEDERAL ELECTION COMMISSION

OPINIONS BELOW

The July 31, 1985 opinion of the United States
Court of Appeals for the First Circuit is published
at 769 F.2d 13 and appears at J.S. App. lat. The
June 29, 1984 decision of the United States District
Court for the District of Massachusetts is published
at 589 F. Supp. 649 and appears at J.S. App. 25a-
38a.

1“J.S. App.” references are to the appendix to the jurisdic-
tional statement filed by the Federal Election Commission
(hereafter “the Commission” or “the FEC”). “J.A.” refer-
ences are to the Joint Appendix, and “R.” references are to
the Record certified from the district court.

(1)


15

The history of the statute referred to by the Court
consisted primarily of the reports of special commit-
tees established by both houses of Congress after
World War II to investigate and make recommenda-
tions on amendments to the existing campaign fi-
nance laws.’ Among the problems uncovered by these
committees was the ability of unions, after they were
brought under the prohibition on federal campaign
contributions in 1943, to evade the intent of the stat-
ute by making expenditures of their own money to
advocate the election of their favored candidates, in-
stead of contributing to the candidates’ own cam-
paigns. Report of the Special Committee to Investi-
gate Campaign Expenditures, H.R. Rep. No. 2739,
79th Cong., 2d Sess. 39-40 (1946); Investigation of
Senatorial Campaign Expenditures, S. Rep. No. 1,
Part 2, 80th Cong., 1st Sess. 38-39 (1947). To rem-
edy this problem, the House Committee recommended
that the statute “be clarified so as to specifically pro-
vide that expenditures . . . by the prohibited orga-
nizations in connection with elections, constitute vio-

8 Prior to 1948, only corporate contributions to federal can-
didates of “anything of value” were prohibited by the Federal
Corrupt Practices Act of 1925, 43 Stat. 1070. The War Labor
Disputes Act of 1943, 57 Stat. 167, extended this prohibition
to unions, but this statute was only effective for the duration
of the war. Thus, special committees were established because
it was clear that postwar legislative action would be necessary
in this area. The rest of the long history of section 441b and
its predecessors, dating back to 1907, has been reviewed by
this Court in a number of cases and need not be repeated here.
See United States v. CIO, 335 U.S. 106, 112-120 (1948) ; United
States v. UAW, 852 U.S. at 570-584; Pipefitters Local Union
No. 562 v. United States, 407 U.S. 385, 402-432 (1972) ; FEC
v. National Right to Work Committee, 459 U.S. at 208-209.


32

tal interest in “‘sustain[ing] the active, alert re-

sponsibility of the individual citizen in a democracy
for the wise conduct of government’” by guarantee-
ing each individual the opportunity to make a per-
sonal decision about the election options he or she will
support. First National Bank of Boston v. Bellotti,
485 U.S. at 788-789, quoting United States v. UAW,
352 U.S. at 575. The Court’s recognition of the va-
lidity of this Congressional purpose behind section
441b in National Right to Work Committee, a case
challenging its applicability to a nonprofit, issue-
oriented corporation, demonstrates that the court of
appeals here erred when it concluded that this pur-
pose is inapplicable to such corporations.

The court of appeals rejected the Commission’s re-
liance upon this second purpose behind section 441b
because it believed that MCFL’s contributors do not
need this sort of protection. This view was not sup-
ported by any evidence; the court itself candidly
stated (J.S. App. 22a) that it was merely assuming
that anyone who supported MCFL’s anti-abortion ob-
jectives would necessarily be willing to contribute to
MCFL’s efforts to elect sympathetic candidates (J.S.
App. 22a-23a). However, there is no reasonable basis
for assuming that every individual who opposes abor-
tion necessarily uses this as the sole criterion for
choosing which candidates to support. While many
opponents of abortion may also support some of the
candidates MCFL considers to be anti-abortion—ei-
ther because of the candidates’ position on abortion
or for other unrelated reasons—there is no reason to
assume that these individuals are any less interested
than other Americans in being able to decide for
themselves whether or not their money will be used
to assist candidates for federal office at all, and if so,


|

i

83

which candidates it will be used to support. Many
of MCFL’s contributors may desire only to support
the corporation’s lobbying or educational activities,
and not to participate in electoral politics at all.
Others may, rather than passively trusting MCFL to
make such decisions for them, prefer to make their
electoral choices in other ways. For example, they
might choose to follow a tradition of party loyalty or
they might favor a candidate that does not oppose
abortion because of that candidate’s positions on a
variety of other issues they consider important.

Most importantly, however, the court of appeals’
assumption reflects its view on a question of policy,
not law, and its view is directly contravened by the
considered policy judgment of Congress in enacting
the statute. Thus, during the debates on the 1947
amendments, Senator Taft was specifically asked
what effect this amendment would have on a corpora-
tion organized for religious purposes which wanted
to support a candidate on purely moral grounds. Sen-
ator Taft responded that so long as the organization
was incorporated the statute would ensure that it
“cannot take the church members’ money and use it
for the purpose of trying to elect a candidate or de-
feat a candidate, and they should not do so.” 93 Cong.
Rec, 6440 (1947). See also pp. 12-13 n.7, supra.
Congress’ determination that it is desirable to ensure
that contributors to nonprofit corporations have the
opportunity to make an informed choice in this im-
portant area clearly outweighs the court of appeals’
view that this policy is unnecessary. See Walters v.
National Association of Radiation Survivors, 105
S. Ct. at 3190.

Finally, a third compelling interest undermined by
the court of appeals’ decision is the public disclosure
of the sources of federal campaign financing. The


21

porations and unions to use their treasury funds to
operate a voluntary separate segregated fund for
political purposes. A “separate segregated fund may
be completely controlled by the sponsoring corpora-
tion or union, whose officers may decide which politi-
cal candidates contributions to the fund will be spent
to assist.” FEC v. National Right to Work Commit-
tee, 459 US. at 200 n4. See also Pipefitters v.
United States, 407 U.S. at 414-417. Such separate
segregated funds have been aptly described as noth-
ing more than the “political arms of the parent or-
ganizations.” The corporation or union operating
the fund can use its own treasury money to pay the
fund’s administrative costs and to solicit contribu-
tions from the corporation’s or union’s members,
stockholders and executive and administrative per-
sonnel, and their families. 2 U.S.C. § 441b(b) (4).
Thus, unlike any other political committee, they can
turn every dollar of contributions they collect into
political contributions or expenditures. See California
Medical Association v. FEC, 453 U.S. 182, 199 n.19
(1981).

It is, therefore, clear that section 441b has been
carefully limited to restricting only the use of a cor-
poration’s or union’s treasury funds to influence fed-
eral elections. Through its separate segregated fund,
a corporation or union can contribute up to $5,000
directly to any federal candidate and make unlimited
independent expenditures communicating to the pub-
lic the corporation’s or union’s support for, or opposi-
tion to, any candidate. In fact, section 441b would
not prohibit MCFL’s distribution of the same election

10 Bread Political Action Committee v. FEC, 635 F.2d 621,
624 n.3 (7th Cir. 1980) (en banc), rev’d on other grounds,
455 U.S. 577 (1982).


Vv
Argument—Continued: Page

B. The Compelling Governmental Purposes
Which This Court Has Found To Support
Section 441b Are Applicable To Expendi-

tures By Nonprofit Corporations ..................-- 28
CONCLUSION . 37
TABLE OF AUTHORITIES

Cases:
Abood v. Detroit Board of Education, 481 U.S.
209 (1977) ... 31
Bread Political Action Committee v. FEC, 685
F.2d 621 (7th Cir. 1980) (en banc), rev’d, 455
U.S. 577 (1982) 21

Brown v. Socialist Workers ’74 Campaign Com-
mittee (Ohio), 459 U.S. 87 (1982).. -
Buckley v. Valeo, 424 U.S. 1 (1976) .
California Medical Association v. FEC, 453 U.S.
182 (1981) .....
Citizens Against Rent Control v. City of Berkeley,
454 U.S. 290 (1981)
Columbia Broadcasting System v. Democratic Na-
tional Committee, 412 U.S. 94 (1973) .
Cousins v. Wigoda, 419 U.S. 477 (1975)
CSC v. National Association of Letter Carriers,
413 U.S. 548 (1978) ........ 28
Dennis v. United States, 34

19
FEC v. National Conservative Political Action
Committee, 105 S. Ct. 1459 (1985) .....24, 26, 29

FEC v. National Right to Work Committee, 459
U.S. 197 (1982) ......
Ferguson v. Skrupa, 872 U.S. 726 (1963).
First National Bank of Boston v. Bellotti, 485 U.S.
765 (1978)

Flemming v. Nestor, 868 U.S. 603 (1960). - 20
International Association of Machinists v. Street,
367 U.S. 740 (1961) 381

Linmark Associates v.
(1977)



8

cause the editions were not distributed through the
newsletter’s facilities, were not published by the news-
letter staff, did not contain the newsletter masthead,
and were not limited to the usual MCFL newsletter
circulation” (J.S. App. 18a-19a).

The court affirmed the district court’s judgment in
favor of MCFL, however, because it concluded that
section 441b is unconstitutional as applied to expen-
ditures by nonprofit, “ideological” corporations like
MCFL (J.S. App. 24a). The court recognized that
section 441b does not restrict corporate expenditures
so long as they are financed through a separate segre-
gated fund, but found that the statute infringed the
corporation’s first amendment rights by eliminating
the “simplest method” of financing such expenditures
without a compelling governmental interest for doing
so. The court found the compelling interests behind
section 441b to be inapplicable because it believed
that MCFL’s expenditures in this case did not pose
the risks to the “integrity of the electoral process”
which section 441b was designed to prevent (J.S.
App. 21a-22a). For these reasons, the court of ap-
peals found that section 441b was unconstitutional
as applied to expenditures by a nonprofit, “ideologi-
eal” corporation (J.S. App. 24a).

SUMMARY OF ARGUMENT

A, The Court Of Appeals Properly Found That Appellee
Violated 2 U.S.C. § 441b

A provision of the Federal Election Campaign Act,
2 U.S.C. § 441b, prohibits “any corporation what-
ver” from using its corporate treasury funds to make
expenditures in connection with a federal election.
Appellee Massachusetts Citizens for Life, Inc. is a
nonprofit corporation, and it violated section 441b


10

contributions for that purpose by the individuals who
make up the corporation or union. Such a fund can
be completely controlled by the corporation or union,
so long as its money is kept in a separate account.
The corporation or union can then use the separate
segregated fund to make contributions to federal can-
didates and to make unlimited expenditures to inform
the public of its views on federal candidates. Thou-
sands of corporations and unions have successfully
utilized separate segregated funds to make millions
of dollars in contributions and expenditures in con-
nection with federal elections. Thus, unlike statutes
limiting political spending which this Court has found
unconstitutional, section 441b has neither the intent
nor the effect of limiting corporate and union political
speech.

Even if section 441b were found to have an in-
direct effect on corporate and union political expres-
sion, it would not be unconstitutional since it is sup-
ported by several governmental purposes which this
Court has found to be compelling. In FEC v. Na-
tional Right to Work Committee, 459 U.S. 197
(1982), this Court found two purposes underlying
this provision to be compelling enough to overcome
the first amendment objections of the nonprofit, ideo-
logical corporation in that case. First, the Court
found section 441b serves to protect the integrity of
the electoral process from the undue influence that
could be exerted by aggregations of money accumu-
lated through use of the corporate form. Since the
Court found the provision to be a prophylactic meas-
ure properly aimed at the potential for such influ-
ence inherent in the corporate form of organization,
the actual effect on an election of MCFL’s particu-
lar expenditure is irrelevant to the constitutionality


a SLR: NNR RPE ARNON AT NTE eR ETT I

row

TABLE OF CONTENTS

QUESTION PRESENTED
OPINIONS BELOW.
JURISDICTION

CONSTITUTIONAL AND STATUTORY PROVI-
SIONS INVOLVED

STATEMENT OF THE CASE a
A. Background

B. The Commission Proceedings .
C. Proceedings Before the District Court .................
D. Proceedings in the Court of Appeals .................-

SUMMARY OF ARGUMENT

A. The Court Of Appeals Properly Found That
Appellee Violated 2 U.S.C. § 441D oo.

B. Section 441b Is Not Unconstitutional ...............

ARGUMENT

I. THE COURT OF APPEALS CORRECTLY
FOUND THAT MCFL VIOLATED 2 U.S.C.
§441b BY EXPENDING CORPORATE
TREASURY FUNDS TO DISTRIBUTE THE
SPECIAL ELECTION EDITION TO THE
PUBLIC 00... eecssceeeceeeessseessneesenneeseueeeeneeseneeseeeeeete

II. CONGRESS DID NOT VIOLATE THE FIRST ~

AMENDMENT BY REQUIRING ALL COR-
PORATIONS AND UNIONS TO SEGREGATE,
AND PUBLICLY DISCLOSE THE SOURCES
OF, THE FUNDS CONTRIBUTED BY THEIR
CONSTITUENTS FOR FEDERAL ELEC-
TORAL ACTIVITY

A. Section 441b Does Not Restrict Corporate
Political Speech

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12

12

19

20


31

because it is a “prophylactic measure[]” which is
permissibly aimed at “the special characteristics of
the corporate structure.” FEC v. National Right to
Work Committee, 459 U.S. at 209.

While § 441b restricts the solicitation of corpora-
tions and labor unions without great financial
resources, aS well as those more fortunately sit-
uated, we accept Congress’ judgment that it is
the potential for such influence that demands
regulation.
Id. at 210. MCFL’s corporate structure carries the
same potential for influencing elections as NRWC’s
since both are nonprofit, issue-oriented corporations.
Plainly, the court of appeals’ conclusion that MCFL’s
status as a “nonprofit, ideological” corporation pro-
tects it from application of this prophylactic statute
cannot be reconciled with this Court’s holding to the
contrary in National Right to Work Committee.
The second purpose behind section 441b “is to pro-
tect the individuals who have paid money into a cor-
poration or union for purposes other than the support
of candidates from having that money used to sup-
port political candidates to whom they may be op-
posed.” FEC v. National Right to Work Committee,
459 U.S. at 208. By ensuring that individuals have
the opportunity to make an informed and voluntary
choice as to whether their money will be used by
others to support political candidates, section 441b
serves to safeguard the individual’s first amendment
interest in not being required to contribute to the
support of any political candidates without his or her
consent.” It also furthers the important governmen-

AED TNR DET I ta es

17 See generally International Association of Machinists v.
Street, 367 U.S. 740 (1961) ; Abood v. Detroit Board of Educa-
tion, 481 U.S. 209 (1977) ; Railway Employes’ Dept. v. Hanson,
351 U.S. 225 (1956).



19

Il CONGRESS DID NOT VIOLATE THE FIRST
AMENDMENT BY REQUIRING ALL CORPORA-
TIONS AND UNIONS TO SEGREGATE, AND PUB-
LICLY DISCLOSE THE SOURCES OF, THE FUNDS
CONTRIBUTED BY THEIR CONSTITUENTS FOR
FEDERAL ELECTORAL ACTIVITY

As we demonstrate infra, pp. 30-31, 32-33, the
reasoning underlying the court of appeals’ determina-
tion that section 441b is unconstitutional as applied
to election expenditures by nonprofit, ideological cor-
porations rests largely upon the court’s view that
regulation of such activity is not necessary to protect
the integrity of the electoral process. It is well set-
tled, however, that “it is up to legislatures, not courts,
to decide on the wisdom and utility of legislation,”
Minnesota v. Clover Leaf Creamery Company, 449
U.S. 456, 469 (1981), quoting Ferguson v. Skrupa,
372 U.S. 726, 729 (1963), and that “[t]he judgment
of the Legislative Branch cannot be ignored or un-
dervalued simply because one [group] . . . casts its
claims under the umbrella of the First Amendment.”
Columbia Broadcasting System v. Democratic Na-
tional Committee, 412 U.S. 94, 103 (1978).

[First Amendment] cases are not an exception
to the principle that we are not legislators, that
direct policymaking is not our province. How
best to reconcile competing interests is the busi-
ness of legislatures, and the balance they strike
is a judgment not to be displaced by ours, but
to be respected unless outside the pale of fair
judgment.
Dennis v. United States, 341 U.S. 494, 539-540
(1951) (Frankfurter, J., concurring). Accordingly,
this Court has long recognized that congressional en-
actments such as section 441b are entitled to a pre-


QUESTION PRESENTED

Whether Congress reached a permissible balance
under the First Amendment to the Constitution of the
United States in 2 U.S.C. § 441b, which requires all
corporations and labor organizations to finance all of
their expenditures in connection with federal elections
from separate segregated funds containing contribu-
tions voluntarily designated for political purposes.

{09}


27

MCFL because of the statute’s requirement that the
names of large contributors to all political commit-
tees, including separate segregated funds, be disclosed
to the voting public, was effectively rejected by this
Court long ago. In Buckley v. Valeo, 424 U.S, at 68,
this Court upheld the Act’s reporting requirements
against first amendment attack as “the least restric-
tive means of curbing the evils of campaign ignorance
and corruption that Congress found to exist.” The
Court then rejected the argument that the first
amendment entitles fringe groups to a blanket exemp-
tion from the reporting requirement, and ruled that
exemption from the Act’s reporting requirements is
constitutionally mandated only if a group presents
specific evidence that its contributors are likely to be
subjected to harassment if their names are disclosed.
Id. at 72-74. See also Brown v. Socialist Workers ’74
Campaign Committee (Ohio), 459 U.S. 87, 91-98
(1982). MCFL has never attempted to make such a
showing, and the court of appeals did not explain why
this Court’s holding in Buckley would not be as ap-
plicable to MCFL as to any other group.*

14 The court of appeals’ further observation (J.S. App. 21a
n.7) that some corporations might not find the separate segre-
gated fund option palatable because they have chosen to be
nonpartisan, is not relevant to this case. Since MCFL actually
established a separate segregated fund in 1980, which has
been active in every election since, it is clear that MCFL
cannot claim that establishing a separate segregated fund is
contrary to its principles. Moreover, as shown supra, pp. 5, 7,
12-13, the court of appeals correctly concluded (J.S. App. 16a)
that the expenditure in this case was for a flyer that expressly
advocated the election or defeat of specified federal candidates.
If a case ever arises in which the Commission charges a non-
profit corporation with violating section 441b by making an


36

tions as a vehicle through which any corporation or
union would be able to transform unlimited amounts
of its treasury funds into political expenditures,
while keeping the actual source of the financing secret.

The Congressional scheme accomplishes this com-
pelling objective of disclosing the true sources of
campaign financing in the least intrusive manner.
If corporations are permitted to make political ex-
penditures from their general treasury funds, the
only way in which Congress can ensure that the
actual sources of these funds are disclosed to the
public is to require corporations to file reports listing
the sources of the corporations’ general treasury
funds.” By requiring the corporation to segregate
its political contributions in a separate fund, segre-
gated from its general corporate treasury, Congress
has been able to satisfy its important interest in pub-
lic disclosure of the sources of financing of political
expenditures without requiring any disclosure of the
names of the contributors to the corporation’s other
activities who choose not to support its electoral ac-
tivities. Since this scheme has resulted in no dis-
cernible restriction on the amount or nature of cor-
porate and union political expression during the al-
most 40 years that it has been in effect, it is entitled
to substantial deference from this Court.

In sum, the application of section 441b in this case
is fully supported by governmental interests which
this Court has already recognized as compelling. The

°0In fact, it is arguable that if MCFL’s more than $9,000
in expenditures are lawful “expenditures” under 2 U.S.C.
§ 431(9) (B), as the court of appeals concluded, the definition
of “political committee” currently contained in 2 U.S.C.
§ 431(4) would require the corporation itself to register and
report as a “political committee.”


22

flyers to the same people in the same manner it did
here, so long as it was financed through a separate
account containing contributions voluntarily desig-
nated for political purposes." *

This statutory balance was not arrived at haphaz-
ardly. Over an 80 year period Congress has carefully
developed the statutory scheme now contained in sec-
tion 441b “in a ‘cautious advance, step by step... .’”
FEC v. National Right to Work Committee, 459 U.S.
at 209, quoting NLRB v. Jones Laughlin Steel Corp.,
301 U.S. 1, 46 (1937). In particular, when it added
to the statute in 1971 the explicit exceptions permit-
ting the establishment of separate segregated funds,
Congress focused upon the problem of balancing the
statute’s objectives against the constitutional concerns
identified in this Court’s opinions construing section
441b’s predecessors. As summarized by Congressman
Hansen when he introduced this amendment on the
floor of the House of Representatives,

[T]here is broad agreement as to the essence of
the proper balance in regulating corporate and
union political activity required by sound policy

1 MCFL has argued (Motion to Affirm at 10) that, even
though it has reported making expenditures through its sepa-
rate segregated fund in every election since 1980, it could not
have done so in 1978 because at that time it had no members
within the meaning of 2 U.S.C. § 441b(b) (4) (C) from whom
it could have solicited contributions. However, 2 U.S.C. § 441b
(b) (4) (A) (i) would have permitted MCFL to solicit up to
$5,000 for a separate segregated fund from each of its: execu-
tive and administrative officers and their families. More im-
portantly, MCFL’s lack of bona fide members was a self-
imposed restriction which MCFL itself chose to include in its
articles of incorporation. MCFL apparently had little diffi-
culty in removing this restriction in 1980 when it decided to
establish its separate segregated fund.


6

establish a separate segregated fund until 1980 (J.A.
309-310).

B. The Commission Proceedings

On May 1, 1979, a complaint was filed with the
Commission alleging that MCFL had violated the Act
by utilizing corporate funds to distribute the Special
Election Edition to the public. On June 27, 1979,
the Commission found reason to believe that MCFL
had violated 2 U.S.C. § 441b(a) and initiated an in-
vestigation. On October 21, 1980, the Commission
found probable cause to believe that MCFL had vio-
lated 2 U.S.C. § 441b(a) by using corporate funds to
prepare, print and distribute its Special Election
Edition to members of the general public. After the
Commission’s attempt to conciliate failed to produce
an acceptable agreement, the Commission authorized
the filing of this civil enforcement action pursuant to
2 U.S.C. § 487g¢(a) (6) (A). (J.S. App. 48a-47a).

C. Proceedings Before the District Court

On February 22, 1982, the Commission filed its
complaint in this case, seeking a civil penalty as pro-
vided in 2 U.S.C. § 487g(a) (6), and such other relief
as the court deemed appropriate (J.S. App. 47a).
MCFL admitted that it had expended corporate funds
to prepare, print and distribute the Special Election
Edition and Complimentary Partial Copy (distrib-
uted to correct some errors) as alleged, but claimed
that this was not an unlawful “expenditure” under
the Act, and that 2 U.S.C. § 441b was unconstitu-
tional if it was (J.A. 8-14). Both parties filed mo-
tions for summary judgment and on June 29, 1984,
the district court granted summary judgment in
favor of MCFL, concluding on several grounds that
MCFL’s expenditure of corporate funds did not vio-


Solan a Aa

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9

when it expended $9,812.76 from its corporate treas-
ury to distribute a flyer to the general public
which expressly advocated that readers “vote pro-
life” and identified by name which candidates in the
upcoming primary elections it believed to have taken
a “pro-life” position and which candidates it be-
lieved had opposed that position.

MCFL’s election fiyer was not exempt from sec-
tion 441b as a “periodical publication” under 2
U.S.C. § 481(9) (B) (i) even if MCFL’s newsletter
was, because it was not prepared or distributed
through the facilities of MCFL’s newsletter and be-
cause it was distributed primarily to members of
the public who had never received MCFL’s newslet-
ter. The fiyer also was not beyond the coverage of
section 441b merely because MCFL did not coordi-
nate its distribution with any candidate’s campaign.
Indeed, this Court recognized in United States v.
UAW, 352 U.S. 567 (1957), that Congress’ primary
purpose in extending the statutory prohibition to
union and corporate “expenditures” in addition to
“contributions” was precisely to reach such election
expenditures made independently of a candidate’s
own campaign. Accordingly, the court of appeals
properly found that MCFL’s expenditure violated 2
US.C. § 441b.

B. Section 441b Is Not Unconstitutional

The court of appeals erred in concluding that ap-
plication of section 441b to expenditures by nonprofit
corporations violates the first amendment. Section
441b does not restrict the amount, content or meth-
ods of corporate and union political speech. The Act
permits a corporation to utilize its treasury funds to
etsablish a separate segregated fund to be used for
political purposes, which can be funded by voluntary