ORAL ARGUMENT NOT YET SCHEDULED

Case No. 12-5134

In the

United States Court of Appeals

For the D.C. Circuit

Ralph Nader,

Appellant,

v.

Federal Election Commission,

Appellee.

On Appeal from the United States District Court 

For the District of Columbia

Case No 1:10-cv-00989-RCL

Honorable Royce C. Lamberth Presiding

CORRECTED REPLY BRIEF OF APPELLANT

OLIVER B. HALL

1835 16th Street, N.W.

Washington, D.C. 20009

(617) 953-0161

Counsel for Appellant.

September 26, 2012

USCA Case #12-5134 Document #1396503 Filed: 09/26/2012 Page 1 of 18
TABLE OF CONTENTS

Table of Contents................................................................................................ i

Table of Authorities............................................................................................ ii

Glossary.............................................................................................................. iii

Summary of Argument....................................................................................... 1

Argument............................................................................................................ 1

I. The FEC’s Failure to Serve a Majority of Respondents Who

Committed the Alleged Violations Was Contrary to

Law................................................................................................. 1

A. The FEC Does Not Dispute That the Plain Terms of the Act

and Its Own Regulations Require It to Serve Respondents...... 2

B. The FEC’s Belief That It Should Have Discretion Not to

Serve Administrative Complaints Is Neither Relevant Nor

Sufficient to Justify Its Refusal to Do So in This Case............ 3

C. The FEC’s Failure to Serve a Majority of Respondents Who

Committed the Alleged Violations Was Not Harmless Error.... 7

II. The District Court Erred By Concluding That the FEC’s

Dismissal of the Administrative Complaint Was Not Contrary to

Law. ............................................................................................... 9

A. The FEC’s Conclusion That It Had No Reason to Believe

Respondents Made Illegal and Unreported Contributions and

Expenditures to Benefit the DNC, Kerry-Edwards 2004 or

John Kerry Contradicts Evidence in the Record.......................

B. The FEC’s Conclusion That It Had No Reason to Believe

 SEIU Violated the Act Contradicts Evidence in the Record.....

9

11

Conclusion.......................................................................................................... 12

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TABLE OF AUTHORITIES

Cases

American Fed. of Labor v. FEC, 

333 F.3d 168 (D.C. Cir. 2003)......................................................... 3

Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 

467 U.S. 837 (1984)........................................................................ 3

Edwards v. Balisok, 

520 U.S. 641 (1997)........................................................................ 7

*Orloski v. FEC, 

795 F.2d 156 (D.C. Cir. 1986)......................................................... 2

Statutes

2 U.S.C. § 437g(a)(1)............................................................................... 2,7

2 U.S.C. § 437g(a)(8)............................................................................... 7

Regulations

11 C.F.R. § 111.5(a).................................................................................. 2

11 C.F.R. § 114.9(1).................................................................................. 10

11 C.F.R. § 114.9(2)(i).............................................................................. 10

*Authorities upon which we chiefly rely are marked with an asterisk.

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GLOSSARY

EPS: Enforcement Priority System

FEC: Federal Election Commission

FECA: Federal Election Campaign Act of 1971 (as amended)

SEIU: Service Employees International Union

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Appellant Ralph Nader (the “Candidate”) respectfully submits this Reply

Brief to the brief filed by Appellee Federal Election Commission (“FEC” or the

“Agency”) on September 10, 2012.

SUMMARY OF ARGUMENT

The Candidate and the FEC present sharply contrasting versions of events in

this case, but it is easy to see which one accurately reflects the facts and law, and

which one distorts them. The claims alleged in the Candidate’s Administrative

Complaint rely on a valid legal theory, and are supported by extensive citation to

specific pieces of evidence in the record. Candidate’s Br. at 19-21. By contrast, the

FEC directly violated the express terms of the Federal Election Campaign Act of

1971, as amended (“FECA” or the “Act”), and the Agency’s own regulations, by

dismissing those claims without serving a majority of the respondent parties

(collectively, “Respondents”). The FEC also makes almost no attempt to address

the evidence cited by the Candidate, which contradicts the Agency’s factual

findings and legal conclusions. The FEC’s disposition of this action was therefore

contrary to law, and its dismissal of the Administrative Complaint should be

reversed.

ARGUMENT

I. The FEC’s Failure to Serve a Majority of Respondents Who 

Committed the Alleged Violations Was Contrary to Law. 

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A. The FEC Does Not Dispute That the Plain Terms of the Act 

and Its Own Regulations Require It to Serve Respondents. 

There can be no doubt that the FEC directly violated the plain terms of the

Act and its own regulations by refusing to serve a majority of Respondents who

committed the alleged violations. The FEC does not deny it. Even the District

Court, which deferred to the FEC on almost every other factual and legal issue,

conceded that the Agency’s failure to serve these Respondents “clearly violated”

the Act. JA 21. As the District Court explained: 

The FEC has not identified any statutory or other authority for the 

proposition that, despite the Act’s clear language, it has discretion to notify 

whomever it wants as “respondents” to the administrative complaint. The 

statute clearly strips the agency of that discretion.

JA 21. The FEC nonetheless insists on this appeal that it has such “discretion,”

even though it again fails to cite any statutory or legal authority for that assertion.

(FEC Br. at 15-21.) The FEC also fails to address the direct contradiction between

its assertion and the plain terms of the Act and the Agency’s regulations, both of

which expressly provide that the FEC “shall” serve each named respondent. See 2

U.S.C. § 437g(a)(1)); 11 C.F.R. § 111.5(a). Consequently, the FEC does not and

cannot dispute that its disposition of this matter was “contrary to law,” because the

Agency relied on “an impermissible interpretation of the Act” to dismiss the

Administrative Complaint without serving Respondents. Orloski v. FEC, 795 F.2d

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156, 161 (D.C. Cir. 1986) (internal citation omitted).

B. The FEC’s Belief That It Should Have Discretion Not to 

Serve Administrative Complaints Is Neither Relevant Nor 

Sufficient to Justify Its Refusal to Do So in This Case. 

Unable to show that it complied with its statutory duty to serve Respondents,

the FEC instead embarks on a lengthy discussion of the reasons it believes, as a

matter of policy, it should have discretion not to serve them. (FEC Br. 17-28.) This

discussion is not relevant. In cases where “Congress has spoken ‘directly ... to the

precise question at issue,’” both the Court and the FEC “must give effect to

Congress’s unambiguously expressed intent.” American Fed. of Labor v. FEC

(“American Fed. of Labor II”), 333 F.3d 168, 172 (D.C. Cir. 2003) (quoting

Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837,

842-43 (1984)). Because the Act unambiguously requires that the FEC serve

Respondents, therefore, the Agency cannot justify its refusal to do so by secondguessing the wisdom of that requirement. See id. 

The “potential problems” the FEC envisions are not only insufficient, as a

matter of law, to justify its refusal to comply with the Act’s mandatory procedures,

but the Agency’s resort to such hypotheticals also misrepresents this case in three

critical respects. (FEC Br. at 17.) First, the claims alleged in the Administrative

Complaint are not “frivolous,” as the FEC repeatedly implies, (FEC Br. at

3

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17,18,21). Rather, the Agency’s own general counsel concluded that they rely on a

“viable theory”. JA 243. Further, the FEC designated this as a matter of the highest

importance under its Enforcement Priority System (“EPS”), which uses objective

criteria to evaluate every administrative complaint the Agency receives. JA 235. To

the extent the FEC now attempts to justify its unlawful refusal to serve

Respondents by attacking the merits of the Administrative Complaint, therefore,

the Agency’s own legal analysis contradicts such post hac rationalizations. 

 Second, the FEC contends that serving Respondents as required by the Act

“had the potential to derail the progress of the MUR, jeopardizing the ability to

complete the enforcement process prior to the statute of limitations deadline,”

(FEC Br. at 27), but in fact the opposite is true. By refusing to serve the very

Respondents who could have confirmed that the violations alleged in Count 1 and

Count 2 occurred, the FEC guaranteed that no enforcement process would

commence against them. And while the FEC notes that it “retained the authority”

to proceed against those Respondents if it later “received information” providing

reason to believe they violated the Act, (FEC Br. at 24), the Agency actually did

receive such information, but still refused to serve the relevant Respondents. 

In two supplements to the Administrative Complaint, the Candidate

submitted evidence that Respondent Reed Smith, LLP, a law firm retained by

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Respondent DNC during the 2004 general election, filed a legal challenge for the

benefit of Respondent Kerry-Edwards 2004, which Pennsylvania state employees

illegally prepared at taxpayer expense. JA 143-59. Such evidence included Reed

Smith partner Efrem Grail’s reported admission that his firm “gave away” $1

million in legal services in connection with the effort, JA 154, at a time when Reed

Smith reportedly represented Respondent John Kerry in other matters. JA 88 n.91.

None of that evidence, however, was enough to prompt the FEC to serve Reed

Smith – as the Act already required it to do.

Similarly, when presented with sworn testimony that Reed Smith trained the

state employees who illegally prepared Respondents’ Pennsylvania challenge at

taxpayer expense, JA 161, and that Efrem Grail was responsible for coordinating

their efforts, JA 161, the FEC again refused to serve Reed Smith and the other

relevant Respondents. Now, in an attempt to explain away its willful refusal to

comply with the Act’s mandatory procedures, the FEC misrepresents the foregoing

evidence by asserting that it relates to “a 2006 Pennsylvania Senate Campaign,”

(FEC Br. at 6), and that it is “not part of this appeal.” (FEC Br. at 9.) That is false.

Further, such assertions merely underscore the FEC’s inability to reconcile its

disposition of this matter with the evidence in the record. 

Third, the FEC significantly exaggerates the burden that merely serving

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Respondents as required by law would impose, and ignores reasonable steps the

Agency could have taken to mitigate that burden. For example, the FEC could have

served Respondents electronically, and requested that they waive any formal

service requirement. The FEC also could have served each law firm Respondent,

and requested that it respond on behalf of the individual Respondents it employed.

Further, as the FEC well knows, having entered into tolling agreements with the

few Respondents it actually served, it could have done so with the Respondents it

refused to serve, if it were concerned about completing an investigation within the

1-1/2 years before the statute of limitations expired. 

Instead, the FEC contends, its refusal to serve a single law firm Respondent

or the Service Employees International Union (“SEIU”) was a “measured

approach,” (FEC Br. at 24), because the Agency “reasonably concluded” that

serving them would impose “an unwarranted burden.” (FEC Br. at 28.) But even if

that conclusion were reasonable – and it is not – the Act does not permit the FEC to

make such determinations. Therefore, it is not the “judiciary” that threatens to “ride

roughshod over agency procedures” in this case, as the FEC suggests, (FEC Br. at

28 (citation omitted)), but the Agency itself. Presented with a valid administrative

complaint that relies on a valid legal theory and specific, credible evidence that

Respondents made millions of dollars in illegal and unreported contributions and

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expenditures, the FEC refused to take the most rudimentary steps necessary to

determine whether it had reason to believe the violations actually occurred. Such

deliberate failure to comply with the Act’s mandatory enforcement procedures is a

paradigmatic example of agency action that is contrary to law and arbitrary and

capricious. 

C. The FEC’s Failure to Serve a Majority of Respondents Who

Committed the Alleged Violations Was Not Harmless Error. 

The FEC contends, in the alternative, that its failure to serve the

Administrative Complaint as required by the Act was “harmless error,” because the

Candidate “can point to no actual harm to himself” that resulted therefrom. (FEC

Br. at 29-33.) But the FEC’s reliance on the harmless error doctrine is misplaced.

As a threshold matter, the Act expressly recognizes that complainants are

“aggrieved” by the Agency’s dismissal of their complaints. See 2 U.S.C. 437g(a)(8)

(A). The Candidate was therefore aggrieved, within the meaning of the Act, by the

FEC’s failure to pursue any enforcement action against the Respondents it refused

to serve. 

Further, as the FEC concedes, its error in failing to serve Respondents

cannot be excused as harmless if the error affected the outcome of this matter.

(FEC Br. at 29.) And as the FEC elsewhere concedes, the Act precluded it from

making a reason to believe finding against any Respondent it failed to serve. (FEC

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Br. at 17 (quoting 2 U.S.C. § 437g(a)(1)). Therefore, by the FEC’s own admission,

its error necessarily had an outcome-determinative effect on this matter, by

guaranteeing it would make no reason to believe finding against such Respondents

unless and until the Agency remedied its error – which it never did. 

Thus, while the FEC contends that the Candidate “has skipped over a step”

in his analysis of the Agency’s error, (FEC Br. at 31), in fact it is the FEC that

skipped every single step mandated by the Act following the filing of the

Administrative Complaint. It hardly takes a “shaky series of unlikely predictions”

to recognize the resulting harm, as the FEC asserts. (FEC Br. at 32.) Rather, such a

fundamental error is necessarily prejudicial, because it precluded the FEC from

obtaining any evidence from the Respondents it failed to serve. See Edwards v.

Balisok, 520 U.S. 641, 646 (1997) (recognizing, in prison disciplinary context, that

certain procedural errors are so fundamental that they “necessarily imply”

prejudice). But such harm need not be inferred here. On the contrary, the FEC

expressly relied on its supposed lack of information regarding the Respondents it

failed to serve as the basis for its dismissal. (FEC. Br. at 37-39 (asserting that

Agency lacked evidence of “coordination” between law firm Respondents and the

DNC and Kerry-Edwards 2004); FEC Br. at 42-43 (asserting that Agency lacked

evidence of “coordination” between SEIU and the DNC and Kerry-Edwards

8

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2004).) Because this information would have been available to the FEC but for its

refusal to serve those Respondents, its failure to do so was not harmless error. 

II. The District Court Erred By Concluding That the FEC’s 

Dismissal of the Administrative Complaint Was Not Contrary to 

Law. 

The FEC asserts, no fewer than 22 times, that the Candidate’s allegations

were “speculative,” (e.g. FEC Br. at 34), and that this justifies the Agency’s failure

to serve Respondents as required by the Act. In particular, the FEC asserts that the

Administrative Complaint was “devoid of evidence” that Kerry-Edwards 2004

played a role in the alleged conduct. (FEC Br. at 34.) If that were so, however, it

should have been an easy matter for the FEC to address the specific pieces of

evidence the Candidate cites in support of those allegations, (Candidate’s Br. at 19-

21), and to explain why the Agency found such evidence lacking. Instead, the FEC

conspicuously disregards almost all of that evidence, including the email records

demonstrating that a high-level Kerry-Edwards 2004 staffer drafted at least one of

Respondents’ complaints. (Candidate Br. at 19-20). The FEC’s reasoning therefore

contradicts evidence in the record. 

A. The FEC’s Conclusion That It Had No Reason to Believe 

Respondents Made Illegal and Unreported Contributions 

and Expenditures to Benefit the DNC, Kerry-Edwards 2004

or John Kerry Contradicts Evidence in the Record. 

The FEC asserts that the Candidate “merely speculated” that Kerry-Edwards

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2004 and the DNC coordinated Respondents’ legal challenges. As the evidence

cited in the Candidate’s brief demonstrates, this assertion is false. (Candidate Br. at

19-21.) The FEC simply fails to address the relevant evidence.

The FEC is also incorrect that it received “sworn denials from multiple

respondents” that “specifically refut[ed]” any allegation of coordination. (FEC Br.

at 38.) In fact, apart from the Ballot Project Respondents’ affidavits, the FEC did

not receive a sworn statement from any Respondent. Further, the Agency cites

nothing in the record to support its otherwise conclusory assertion, which confuses

certain Respondents’ mere denial of the legal conclusion that they violated the Act

with a refutation of the evidence suggesting they did. 

The FEC also makes much of the “possibility that the [Respondent]

attorneys were engaged in lawful conduct” under the Act’s so-called “Volunteer

Exception.” (FEC Br. at 41 (citing 2 U.S.C. § 431(8)(B)(i)). That provision is

inapplicable to the facts of this case, however, because the FEC’s regulations make

clear that conduct qualifies only where the “volunteer” attorney makes “occasional,

isolated, or incidental use” of the law firm’s facilities. 11 C.F.R. § 114.9(1). The

“safe harbor” contemplated by the provision thus applies only where the “volunteer

activity...does not exceed one hour per week or four hours per month.” 11 C.F.R. §

114.9(2)(i). The FEC’s reliance on the Volunteer Exception is therefore misplaced. 

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B. The FEC’s Conclusion That It Had No Reason to Believe 

SEIU Violated the Act Contradicts Evidence in the Record. 

 

The FEC asserts that it “was reasonable in refusing to infer” that SEIU

coordinated with the DNC and Kerry-Edwards 2004 based on the allegations and

evidence in the Administrative Complaint. (FEC Br. at 43.) The issue, however, is

whether the FEC acted contrary to law by drawing that conclusion without serving

SEIU or seeking its response. As set forth supra at Part I, such failure to follow the

Act’s mandatory provisions was contrary to law, and the FEC does not and cannot

dispute it. 

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CONCLUSION

For the foregoing reasons, and those stated in the Candidate’s opening brief,

the District Court should be reversed, and this case should be remanded to the

Federal Election Commission. 

Respectfully submitted,

/s/Oliver B. Hall 

Oliver B. Hall

D.C. Bar No. 976463

1835 16th Street, NW, Suite 5

Washington, DC 20009

(617) 953-0161

oliverbhall@gmail.com

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CERTIFICATE OF SERVICE

I certify that on September 26, 2012, I caused the foregoing Corrected Reply

Brief of Appellant to be served by means of the Court’s CM-ECF system on the

following:

Seth Nesin

FEDERAL ELECTION COMMISSION

999 E Street, N.W.

Washington, D.C. 20463

(202) 694-1650

Counsel to Appellee Federal Election Commission

/s/Oliver B. Hall 

Oliver B. Hall

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CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION,

TYPEFACE REQUIREMENTS, AND TYPE STYLE REQUIREMENTS

1. This brief complies with the type-volume limitation of Fed. R. App.

P. 32(a)(7)(B) because it contains less than 7,000 words, excluding the parts of the

brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App. P.

32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because it was

prepared in a proportionally spaced typeface using Micrsoft Word in 14 point

Times New Roman type style.

/s/Oliver B. Hall 

Attorney for Plaintiff-Appellant

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