DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                  i

   

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

							

	 	 	 	 	 	 )	

FEDERAL	ELECTION	COMMISSION,	 )	

	 	 	 	 	 	 )	

	 	 Plaintiff,	 	 	 )	

	 	 	 	 	 	 )	

	 	 v.	 	 	 	 )	 No.	15‐cv‐00017‐LPS	

	 	 	 	 	 	 )	

FRIENDS	OF	CHRISTINE	O’DONNELL	 )	

CAMPAIGN	COMMITTEE,	et al.	 	 )	

	 	 	 	 	 	 )	

	 	 Defendants.	 	 	 )	

	 	 	 	 	 	 )	

SUR REPLY BRIEF IN SUPPORT OF DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND IN ANSWER TO FEC’S MOTION FOR SUMMARY JUDGMENT		

April	25,	2016	

		

/s/	S.M. Hoersting		 	 	

		 	 	 	 	 	 	 Chris	Gober	(Lead	Counsel)	

cg@gobergroup.com	

Stephen	M.	Hoersting*	

sh@gobergroup.com	

THE	GOBER	GROUP	PLLC	

PO	Box	341016	

Austin,	TX	78734	

(202)	849‐9006	

	 	 	 	 	 	 	 *Admitted	pro hac vice

ATTORNEYS	FOR	DEFENDANTS	

		

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                  ii

   

TABLE OF CONTENTS

A.	 THE	O’DONNELL	DEFENDANTS’	OVERVIEW	OF	FEC’s	ASSERTIONS	ON	REPLY	...............	1	

B.	 THE	O’DONNELL	DEFENDANTS’	FIVE	ARGUMENTS	......................................................................	2	

Argument	1	.............................................................................................................................................................	2	

Argument	2	.............................................................................................................................................................	4	

Argument	3	.............................................................................................................................................................	7	

Argument	4	..........................................................................................................................................................	10	

Argument	5	..........................................................................................................................................................	10	

C.	 AN	ADDITIONAL	THOUGHT	....................................................................................................................	12	

D.	 CONCLUSION	..................................................................................................................................................	13	

	 	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                  iii

   

TABLE OF AUTHORITIES

Cases

Chevron USA, Inc. v. Nat. Resources Defense Council,		

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

Davis v. FEC,		

554	U.S.	724	(2008)	............................................................................................................................................	1	

Other Authorities

Advisory	Op.	2014‐03	(Edward	Lindsay)	......................................................................................................	8	

OhioWatchDog.org,	“Ohio	False	Statements	Law	Declared	Unconstitutional,”		

http://watchdog.org/170273/false‐statement‐law‐unconstitutional/	(Sept.	12,	2014)	....	9	

Federal Regulations

60	Fed.	Reg.	7862	.......................................................................................................................................	1,	2,	3,	9	

United States Code

47	U.S.C.	§	315	............................................................................................................................................................	9	

52	U.S.C.	§	30111	...................................................................................................................................................	10	

52	U.S.C.	§	30114	........................................................................................................................................	1,	4,	7,	8	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 1

   

A. THE O’DONNELL DEFENDANTS’ OVERVIEW OF FEC’s ASSERTIONS ON REPLY

The	FEC	asserts	“there	were	other	properties	available	for	rent	at	Greenville	Place,	

which	presumably	had	 the	same	level	of	security	as	 the	Townhouse	and	which	O’Donnell	

could	have	rented	as	a	residence	using	her	own	personal	funds.”	Reply	Br.	at	15‐16.	The	FEC	

makes	this	statement	all	the	while	certain	there	are	no	bedrooms	for	rent	behind	the	security	

structures	of	Greenville	Place	as,	presumably,	one	must	rent	an entire apartment	to	gain	the	

security	 features	 available	 there,	 not	 just	 a	 bedroom	 with	 an	 attached	 bath.	 With	 this	

assertion,	the	FEC	portrays	the	socio‐economic	cast	lurking	within	the	per se	prohibition—

and	it	isn’t	pretty.	If	the	per se	rule	prohibited	campaign	committees	from	paying	rent	for	any

property	 owned	 or	 leased	 by	 candidates,	 that	 might	 be	 one	 thing.	 But	 under	 the	

Commission’s	rulemaking,	an	established	landowner	who	makes	a	run	for	office	can	rent‐out	

his	beach	house—or	his	warehouse,	or	a	second	home—to	his	campaign	committee	and	his	

campaign	committee	can	pay	him	rent	at	full‐market	rates,	with	no	“personal	use”	accruing	

to	the	landowner‐candidate	under	the	“personal	use”	statute	and	Commission’s	regulations.	

52	 U.S.C.	 §	 30114;	see also Expenditures; Reports by Political Committees; Personal Use of

Campaign Funds,	 60	 Fed.	Reg.	 7862,	 7865	 (Feb.	 9,	 1995)	 (“Explanation	and	 Justification,”	

“E&J”).	

This	 disparity	 demonstrates	 the	 constitutional	 infirmity	 in	 the	 FEC’s	 litigation	

position,	as	well:	A	per se	ban—as	the	FEC	would	have	it;	though	its	E&J	says	otherwise—on

subleasing	from	a	campaign	committee	under	allocation	formulas	at	market	rates,	burdens	

that	candidate’s	 fundamental	 right	 to	commit	personal	resources	 toward	a	 run	 for	public	

office.	See Davis v. FEC,	554	U.S.	724	(2008).	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 2

   

So	long	as	Ms.	O’Donnell	is	paying	the	Campaign	Committee	(the	lessee	to	commercial	

lessor,	Greenville	Place)	and	the	Campaign	Committee	is	not	paying	Ms.	O’Donnell—either	

as	owner	of	Greenville	Place	(which	Ms.	O’Donnell	is	not)	or,	perhaps,	as	a	first‐leaseholder	

with	Greenville	Place	(which	Ms.	O’Donnell	is	not),	she	should	be	permitted	to	sublease	from	

the	Campaign	Committee	at	market	rates	according	to	allocation	formulas—based,	in	this	

case,	on	a	ratio	of	square‐footage.	This	is	veritably	the	same	interpretation	that	Ms.	O’Donnell	

testified	that	Vicki	Davis	provided	her	and	her	late‐mother,	Carole	O’Donnell.	

Defendants	are	not	arguing	an	agency	estoppel	that	flows	from	the	statements	of	Ms.	

Davis;	 rather,	 Defendants	 argue	 a	 good	 faith	 that	 flows	 from	 a	 federal	 statute;	 from	 the	

questions	posed	to	Ms.	Davis	by	Ms.	O’Donnell,	Ms.	O’Donnell’s	late	mother,	and	by	others	

within	 the	 campaign;	and	 from	 the	legal	 representation	Ms.	O’Donnell	and	 the	 Campaign	

Committee	retained	during	the	election	cycle.	

B. THE O’DONNELL DEFENDANTS’ FIVE ARGUMENTS

The	multiple	factors	at	play	in	this	case	make	it	necessary	to	state	the	arguments	the	

O’Donnell	Defendants	are	making.	

Argument 1

Defendants’	first	argument	is	that	the	per se	prohibitions	do	not	apply	to	the	scenario	

presented	in	this	case:	Ms.	O’Donnell	did	not	own	then,	and	does	not	own	now,	the	property	

located	at	1242	Greenville	Place.	The	Explanation	and	Justification	makes	clear	that	the	per

se	rules,	for	campaign	funds	and	real	property	(not	for	clothing,	etc.),	were	only	to	apply	to	

properties	owned	by the candidate or a member of the candidate’sfamily.	See	Explanation	and	

Justification	 at	 7865	 (emphasis	 added).	 The	 E&J	 could	 not	 be	 more	 clear:	 “Paragraph	

(g)(1)(i)(E)”—the	per se	prohibition	at	issue	in	this	case—“addresses	the	use	of	campaign	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 3

   

funds	 for	mortgage,	rent	or	utility	payments	on	real	or	personal	property owned by the

candidate or a member of the candidate’s family.”	 Perhaps	 that	 rationale	 could	 be	

extended	to	property	for	which	the	candidate,	or	a	member	of	the	candidate’s	family,	is	the	

lessor	and	the	campaign	committee	subleases	from	the	candidate,	as	there	is	some	risk	that	

such	transactions	may	not	be	conducted	at	arm’s	length	for	fair‐market	value.	But	not	even	

that	arrangement	is	applicable	here.	The	Commission’s	 rulemaking	delineating	 the	per se

categories	was	designed	to	ensure	that	the	rates	paid	by	the	campaign	committee	were	for	

fair‐market	value	and	 that	excessive	payments	would	not	go	 to	a	landowner‐candidate	in	

something	short	of	an	arm’s	length	transaction.	We	know	this	because	of	the	other	part	of	

the	 rulemaking;	 the	 part	 that	 applies	 to	 other	 buildings	 owned	 by	 a	 candidate	 or	 a	

candidate’s	family.	In	those	instances,	the	campaign	committee	and	property	owner	must	be	

able	 to	establish	 that	 the	rental	 transaction	 for	a	building	other	 than	 the	place	 the	owner	

resides	was	for	fair	market	value.	E&J	at	7865.	It	is	important	to	realize	that	Greenville	Place	

is	a	commercial	landholder	and	lessor:	It’s	entire	business	model	and,	therefore,	its	long‐run	

existence,	depends	upon	charging	fair‐market	rates	to	lessees	for	the	properties	it	leases.	

The	 FEC	 is	 bound	 by	 the	 interpretation	 of	 its	 own	 E&J.	 Chevron USA, Inc. v. Nat.

Resources Defense Council,	467	U.S.	837,	844	(1984)	(“If	Congress	has	explicitly	left	a	gap	for	

the	agency	 to	 fill,	 there	is	an	express	 delegation	 of	authority	 to	 the	agency	 to	elucidate	a	

specific	 provision	 of	 the	 statute	 by	 regulation.	 Such	 legislative	 regulations	 are given

controlling weight	unless	they	are	arbitrary,	capricious,	or	manifestly	contrary	to	the	statute	

(emphasis	added)).	That	E&J	makes	plain	that	the	per se	prohibition	does	not	apply	where	

the	candidate	or	his	family	does	not	own	the	property	in	question.	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 4

   

The	FEC	says	the	O’Donnell	Defendants	are	hiding	the	statute	behind	ellipses.	Reply	

Br.	at	6.	But	this	is	not	true.	The	statute	at	§	30114(a)	lists	permitted	uses	of	campaign	funds.	

52	U.S.C.	§	30114(a).	Section	30114(b)(1)	begins	the	discussion	of	prohibited	uses	and	states	

that	 campaign	 funds	 “shall	 not	 be	 converted	 by	 any	 person	 to	 personal	 use.”	 Section	

30114(b)(2)	 states	 the	 general	 test	 for	 personal	 use:	 “any	 commitment,	 obligation	 or	

expense	 of	 a	 person	 that	 would	 exist	 irrespective	 of	 the	 candidate’s	 election	 campaign;”	

meaning	an	item	is	for	personal	use	if	an	individual	would	have	to	spend	money	on	that	item	

even	if	he	or	she	were	not	running	for	office.	Section	30114(b)(2)	of	the	statute	goes	on	to	

list	examples	of	personal	use,	“including—(A)	a	home	mortgage,	rent,	or	utility	payment.”	

And	here	is	the	salient	point:	It	is	the	Commission’s	E&J	that	explains	that	the	items	listed	

after	the	word	“including”	in	the	statute	are	per se	prohibitions;	the	statute	does	not	use	the	

words	“per	se.”	And it is that E&J that makes plain the per	se categories apply only to property

the candidate owns, or a member of the candidate’s family owns.	When	 the	candidate	 or	a	

member	of	the	candidate’s	family	does	not	own	the	property	in	question,	as	is	in	this	case,	

the irrespective test detailed in the statute at §	30114(b)(2) comes back into effect. This	is	

irrefutable;	by	both	a	blackletter	reading	and	straightforward	application	of	the	statute	and	

Commission’s	rulemaking.	

Argument 2

Defendants’	second	argument	is	as	follows:	Because	the	per se	categories	do	not	apply,	

and	 the	 irrespective	 test	 comes	 back	 into	 effect,	 the	 allocation	 method	 of	 enforcing	 the	

statute	does	apply.	No	one	is	arguing	that	the	inapplicability	of	the	per se	prohibition	obviates	

the	need	to	prevent	campaign	funds	from	being	converted	to	the	personal	use	of	any	person.	

What	is	being	argued	between	Plaintiff	FEC	and	 the	O’Donnell	Defendants	is	whether	 the	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 5

   

determination	is	made	per se,	or	based	on	the	irrespective	test.	The	irrespective	test	permits	

the	use	of	allocation	formulas,	whereas	the	per se	prohibition	(inapplicable	in	this	case)	does	

not.	On	this	score,	Ms.	O’Donnell	used	allocation	formulas	at	fair	market	value:	She	paid	the	

Campaign	Committee	 fair‐market	value	 for	 the	bedroom	and	bathroom	she	designated	as	

her	 legal	 residence.	 The	 fair	 market	 value	 was	 dictated	 by	 the	 arm’s	 length	 agreement	

between	the	commercial	lessor,	Greenville	Place,	and	the	lessee,	Campaign	Committee.	That	

market	 rates	 were	 paid	 in	 the	 transaction	 between	 Greenville	 Place	 and	 the	 Campaign	

Committee	 is	 undisputed.	 And,	 of	 course,	 that	 market	 rates	 were	 paid	 by	 the	 Campaign	

Committee	 to	 the	utility	companies	is	equally	undisputed.	The market rates Ms. O’Donnell

paid the Campaign Committee for her sublease are derivative of those arm’s‐length

transactions:	Ms.	O’Donnell	paid	an	allocable	share	of	the	Campaign	Committee’s	fair‐market	

rent	by	first	calculating	the	square	footage	she	used,	then	applying	that	calculation	as	a	ratio	

to	the	total	rent	at	1242	Greenville	Place—rent	set	by	a	commercial	lessor.	

Ms.	O’Donnell	paid	$770	per	quarter	to	the	Campaign	Committee	for	her	share	of	the	

rent	and	utilities.	See	FEC’s	Requests	for	Admission	(“RfA”)	at	¶23.	She	made	the	payments	

quarterly	because	the	Campaign	Committee	reported	with	the	FEC	quarterly.	Ms.	O’Donnell	

testified	 that	 she	 and	 her	 team	 made	 square‐footage	 measurements.	 But	 any	 lay	 person	

realizes	that	if	the	townhouse	was	a	3‐bedroom	townhouse,	then	approximately	one‐third	of	

the	 upper	 floor	was	 dedicated	 to	 the	legal	 residence	 of	Ms.	O’Donnell.	 If	 one‐third	 of	 the	

upper	floor	was	dedicated	to	Ms.	O’Donnell’s	residence,	that	would	mean	that	one‐sixth	of	

the	square	footage	of	two	floors,	or	16.6%	of	the	total	square	footage	for	those	two	floors	

was	allocable	to	Ms.	O’Donnell.	That	would	mean	Ms.	O’Donnell	should	have	paid	rent	and	

utility	 payments	 in	 amounts	 roughly	 equal	 to	 16.6%	 of	 the	 amounts	 the	 Campaign	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 6

   

Committee	paid	in	a	base	month.	A	base	month—for	determining	how	much	utility	usage	is	

attributable	to	one	tenant—is	a	month	which	indicates	very	little	campaign	activity	at	the	

Campaign	Committee.	

There	 are	 3	 months	 in	 a	 quarter.	 One‐third	 of	 $770	 equals	 $256.66,	 which	 is	 the	

amount	 Ms.	 O’Donnell	 paid	 monthly	 to	 sublease	 her	 bedroom	 and	 bath	 within	 the	

townhouse.	In	January	of	2010,	the	Campaign	Committee	paid	$1,960.84	for	rent	and	utilities	

(possibly	for	usage	in	the	month	prior).	FEC	RfA	at	9.	16.6%	of	$1,960.84	=	$325.49,	which	

is	slightly	more	than	the	$256.66	that	Ms.	O’Donnell	paid	for	that	month.	In	February	2010,	

the	 Campaign	 Committee	 paid	 $3,559.98	 in	 rent	 and	 utilities.	 FEC	 RfA	 ¶	 10.	 16.6%	 of	

$3,559.98	is	$590.95,	which	is	more	than	the	$256.66	Ms.	O’Donnell	paid.	But	in	March	2010,	

the	 Campaign	 Committee	 paid	 $108.00	 in	 rent	 and	 utilities,	 FEC	 RfA	 ¶	 12,	 making	 Ms.	

O’Donnell’s	share	paid	 for	that	month	more	than	 fourteen	times	the	amount	she	owed.	 In	

April	 2010,	 the	 Campaign	 Committee	 paid	 $2,114.33	 for	 rent	and	utilities.	 FEC	RfA	 ¶	 12.	

16.6%	of	$2,114.33	is	$350.97	or	slightly	more	than	the	$256.66	that	Ms.	O’Donnell	paid.	In	

May	 2010,	 the	 Campaign	 Committee	paid	 $1,792.00	in	 rent	 and	 utilities.	 FEC’s	 RfA	 ¶	 13.	

16.6%	of	$1,792.00	=	$297.47	or	just	slightly	more	than	the	$256.66	Ms.	O’Donnell	paid	for	

that	month.	The	average	 rent	paid	by	 the	Campaign	Committee,	well	before	 the	height	of	

campaign	season,	was	(Jan.	+	Feb.	+,	etc.)	$1,907.	16.6%	of	$1,907	equals	an	average	monthly	

payment	due	of	$316.56,	or	just	over	the	$256.66	Ms.	O’Donnell	was	paying.	But	when	this	

Court	 considers	 that	 1242 Greenville Place contained both a basement and a garage

overflowing	 with	 campaign	 yard	 signs,	 the	 square‐footage	 allocation‐ratios	 improve	

substantially	in	Ms.	O’Donnell’s	favor—removing	all	doubt	that	the	sublease	payments	she	

paid	were	every	bit	or	more	her	share	of	the	totals	owed	the	commercial	service	providers.	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 7

   

So	far	we	know	1)	that,	by	the	terms	of	the	E&J,	the	per se	prohibition	does	not	apply	

to	the	subleasing	arrangement	here	(because	Ms.	O’Donnell	does	not	own	1242	Greenville	

Place),	 2)	 that	 applicable	 allocations	 determine	 fair‐market	 value	 where	 the	 per se

prohibition	does	not	apply,	and	3)	that	Ms.	O’Donnell	used	a	reasonable,	objective	method	of	

creating	ratios	that	resulted	in	the	payment	of	fair‐market	sublease	payments.	Defendants	

suggest	to	this	Court	that	these	are	the	best	ways	to	resolve	this	dispute	without	adjudicating	

the	many	and	substantial	constitutional	infirmities	that	lie	in	applying	the	per se	prohibition	

to	the	Defendants	in	this	case.

Argument 3

There	is	one	more	line	of	argument	this	Court	can	adopt	and,	at	the	same	time,	avoid	

any	need	to	resolve	the	constitutional	issues	teeming	beneath	the	surface	of	this	case.	This	is	

the	Defendants’	third	argument.	This	Court	can	find	that	Ms.	O’Donnell’s	decision	to	make	

the	 townhouse	 her	legal	 residence	was	 a	 commitment	 or	 obligation	 that	would	 not	 have	

exist[ed]	irrespective	of	the	candidacy.	In	their	Answering	Brief,	the	O’Donnell	Defendants	

detail	the	reasons	why	Ms.	O’Donnell’s	decision	to	declare	the	campaign	headquarters	her	

legal	residence	was	a	safety	measure;	necessary	to	protect	her	and	her	staff	from	threats	and	

harassment.	The	O’Donnell	Defendants	then	go	on	to	explain	why	that	safety	measure	was	a	

qualified	 campaign	 expense;	 a	 commitment,	 obligation	 or	 expense	 that	 would	 not	 have	

exist[ed]	irrespective	of	the	candidacy.	See	52	U.S.C.	§	30114(b)(2).	

If	 this	Court	 finds	 that	 the	decision	 to	list	 the	Campaign	Committee	address	as	Ms.	

O’Donnell’s	legal	residence	was	an	obligation	that	would	not	have	existed	irrespective	of	the	

candidacy,	then	any	expenses	associated	with	that	decision	are	qualified	campaign	expenses,	

not	conversions	to	the	personal	use	of	any	person.	Remember,	the	regulations	are	binary:	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 8

   

any	obligation	that	is	a	campaign	expense	is	not	a	conversion	to	personal	use.	E&J	at	7862	

(The	FEC	must	determine,	in	each	case,	whether	an	expenditure	is	 for	official	business,	a	

qualified	campaign	expense,	or	for	personal	use).	If	so,	any	payments	Ms.	O’Donnell	already	

made	were	unnecessary,	and	this	case	is	at	an	end.	

But	the	FEC	is	not	so	sure	the	decision	to	list	1242	Greenville	Place	as	Ms.	O’Donnell’s	

legal	address	to	the	public	was	a	measure	to	prevent	threats	or	harassment.	Reply	Br.	at	15,	

n.1.	 Indeed,	 the	FEC	says	 there	were	“rumors	that	O’Donnell	was	not	a	Delaware	resident	

and	that	she	had	lost	a	home	to	foreclosure.”	Id.	What’s	more,	adds	the	FEC,	“[i]t	might	have	

been	politically	inconvenient	for	O’Donnell	to	tell	the	public	that	she	was	living	rent‐free	at	

an	aunt’s	house,	in	an	undisclosed	location	(O’Donnell	Dep.	at	32).”	Id.	It	seems	the	FEC	is	

suggesting	that	Ms.	O’Donnell	a)	listed	the	residence	as	her	legal	address	to	get	elected,	but	

b)	actually	lived,	resided,	and	laid	her	head	elsewhere.	Defendants	wonder	whether	the	FEC	

ever	stops	to	consider	that	this	suggestion	and	allegation,	if	true	(despite	the	sweep	of	the	

record	which	suggests	it	is	not	true)	would	only	further	demonstrate	that	the	decision	to	list	

the	 property	 as	 her	 legal	 residence	was for campaign purposes?	 A	 decision	 on	 that	 basis	

would	not	have	been	made	for	personal	reasons.	Any	related	expense	would	not	have	existed	

irrespective	of	the	O’Donnell	candidacy.	No	resulting	payments	would	have	been	converted	

to	the	personal	use	of	anyone:	such	payments	would	have	been	for	campaign	use.		

It	 seems	 the	 FEC	 believes	 it	 has	 caught	 Ms.	 O’Donnell	 in	 the	 act	 of	 dishonest	

campaigning	(no	doubt	a	rarity	in	American	politics).	But	that	is	not	the	jurisdiction	of	the	

FEC.	The	Commission,	itself,	has	long	held	that	Federal	candidates	have	wide	discretion	with	

respect	to	campaign	spending,	Advisory	Op.	2014‐03	(Edward	Lindsay),	which,	in	lay	speak,	

means	 candidates	 have	 a	 right	 to	 say	 pretty	 much	 whatever	 they	 want.	 Federal	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 9

   

communications	law	prohibits	broadcasters	from	having	any	“power	of	censorship”	over	the	

messages	of	candidates.	47	U.S.C.	315(a).	And	just	recently,	the	Supreme	Court	unanimously	

granted	 standing	 to	challengers	of	a	 “false	 [campaign]	 statements”	law	ministered	 by	 the	

Ohio	Elections	Commission;	a	law	the	High	Court	disparaged	at	oral	argument	for	erecting	

George’s	Orwell’s	Ministry	of	Truth;	a	law	subsequently	struck	down	by	a	 federal	district	

court	 on	 remand.	 OhioWatchDog.org	 “Ohio	 False	 Statements	 Law	 Declared	

Unconstitutional,”	 Sept.	 12,	 2014,	 available	 at	 http://watchdog.org/170273/false‐

statement‐law‐unconstitutional/.	 The	 FEC’s	 jurisdiction	 is	 to	 police	 the	 personal	 use	

statute—and	every	step	the	FEC	takes	to	prove	Ms.	O’Donnell	listed	a	legal	residence	to	save	

her	 campaign,	 not	 to	 rest	 her	 head,	is	a	 step	 closer	 to	 proving	 the	expenses	weren’t	 of	a	

personal	nature.	The	FEC	cannot	have	it	both	ways.	Again,	the	operation	of	the	personal	use	

statute	(and	regulation)	is	binary:	there	is	no	such	thing	as	an	expense	that	is	both	personal	

and	campaign.	E&J	at	7862.	

The	FEC	also	alleges	that	the	Defendants	are	trying	to	create	an	issue	of	fact	at	the	

summary	judgment	stage	of	these	proceedings.	Reply	Br.	at	2.	Not	true.	The	undisputed	fact	

is	 that	 Ms.	 O’Donnell	 declared	 1242	 Greenville	 Place	 as	 her	 legal	 residence.	 The	 legal	

question	this	Court	must	resolve	is	whether	that	fact	is	subject	to	the	per se	prohibition	(it	

isn’t);	whether	it	is	subject	to	allocation	formulas	to	determine	whether	fair‐market	value	

was	 paid,	 or;	 whether	 that	 fact	 of	 legal	 residence	 is	 not	 personal	 use	 because	 it	 is	 an	

obligation,	 commitment,	 or	 expense	 that	 would	 not	 have	 existed	 irrespective	 of	 Ms.	

O’Donnell’s	candidacy.	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 10

   

Argument 4

Defendants’	fourth	set	of	arguments—though	this	Court	need	not	reach	them	to	reach	

a	proper	result	in	this	case—are	constitutional	in	nature.	They	have	been	addressed	briefly	

in	two	of	Defendants’	Answering	Briefs,	one	in	Opposition	to	the	FEC’s	Motion	for	Summary	

Judgment	 and	 the	 other	 in	 Opposition	 to	 the	 FEC’s	 Motion	 to	 Dismiss	 Defendants’	

Counterclaims.	Defendants	haven’t	 the	pages	here	 to	 flesh	out	 these	arguments	and	must	

rely	on	their	description	in	other	filings.	

Argument 5

The	Defendants’	fifth	argument	can	be	paired	with	every	other	argument	in	this	case:	

the	argument	of	good	faith.	The	Defendants	have	alleged	good	faith	reliance	on	a	regulatory	

interpretation	in	 accordance	 with	 the	 Safe	Harbor	 provision	 of	52	U.S.C.	 §	 30111(e).	 See

Answer	 and	 Counterclaims,	 ¶	 34.	 That	 regulatory	 interpretation	 comes	 right	 out	 of	 the	

Commission’s	E&J	at	7865:	the	per se	prohibition	does	not	apply	to	property	not	owned	by	

candidates	or	their	families.		With	regard	to	attorneys,	Defendants	do	not	assert	that	a	New	

York	attorney	told	campaign	manager	Matt	Moran	that	subleasing,	in	this	instance,	is	legal	

and	that	the	substance	of	the	advice	proves	compliance.	The	FEC	contends	that	would	trigger	

a	 waiver	 of	 attorney‐client	 privilege	 on	 that	 point	 because	 the	 fact	 of	 the	 representation	

would	 be	 used	 to	 prove	 the	 substance	 of	 the	advice	given	as	 to	the	 scope	 of	 federal	law.	

Defendants	respect	the	FEC’s	contention	(for	this	limited	purpose).	Therefore,	Defendants’	

testimony	is	that	there	is	a	person	named	Matt	Moran,	who	worked	for	the	campaign,	who	

told	Ms.	O’Donnell	he	received	advice	on	the	subleasing	question	from	a	New	York	lawyer	

who	knows	campaign	law.	The	fact	the	question	was	asked,	and	that	the	advice—whatever	

that	advice	was—was	followed,	demonstrates	good	faith.	Likewise,	Defendants	assert	that	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 11

   

the	Campaign	Committee	was	later	represented	by	Cleta	Mitchell,	and	counsel	to	Defendants	

represents	 to	 this	 Court	 that	 Ms.	 Mitchell	 is	 perhaps	 one	 of	 the	 top	 ten	 or	 top	 twenty	

campaign	finance	attorneys	in	the	United	States.	The	fact	of	the	representation,	the	fact	of	

the	advice	that	was	provided	on	the	relevant	question	(whatever	that	advice	was),	and	the	

fact	that	Ms.	O’Donnell’s	testimony	is	that	she	followed	the	advice,	all	demonstrate	good	faith.	

Last	is	Ms.	O’Donnell’s	assertion	that	she	and	her	late‐mother,	Carole	O’Donnell,	called,	more	

than	once,	FEC	employee	Vicki	Davis	on	the	matter	of	subleasing,	which	also	constitutes	a	

good	faith	effort	to	comply	with	the	personal	use	statute.	

That	leaves	the	 factual	dispute	between	the	testimony	of	Ms.	O’Donnell	and	that	of	

Ms.	Vicki	Davis.	Defendants	believe	that	can	be	accounted	for	with	the	following	explanation.	

Ms.	O’Donnell	testified	that	she	and	her	late‐mother,	Carole	O’Donnell,	called	Ms.	Davis	more	

than	once	on	this	question	and	obtained	a	 favorable	response:	As	long	as	the	candidate	is	

paying	the	committee	at	fair‐market	rates,	and	the	committee	is	not	paying	the	candidate,	it	

should	be	okay.	(This	dovetails	with	the	E&J).	Yet	neither	Ms.	O’Donnell	nor	Carole	O’Donnell	

appear	 on	 the	 RAD	 call	 log	 with	 regard	 to	 this	 question	 (though	 they	 appear	 for	 other	

questions).	Ms.	O’Donnell	noted	during	her	deposition	that	there	may	have	been	a	gap	in	the	

call	log.	In	a	separate	deposition,	Ms.	Davis	offered	knowledge	that	Carole	O’Donnell	was	Ms.	

O’Donnell’s	mother.	See	Deposition	of	Vicki	Davis,	attached	as	Ex.	A.	Both	Ms.	Davis	and	a	

Fed.	R.	Civ.	P.	30(b)(6)	expert	provided	by	the	FEC,	see	Deposition	of	Nataliya	Ioffe,	Ex.	B,	

testified	that	a	call	to	the	Reports	Analysis	Division	only	triggers	a	report	entry	on	a	call	log	

if	the	RAD	analyst	initiates	an	entry;	entries	are	not	created	automatically.	See	Call	Log	at	Ex.	

C.	Both	deponents	testified	that	each	analyst	becomes	the	go‐to	person	for	a	batch	of	political	

committees	and	that	Ms.	Davis	was	the	go‐to	person	for	the	O’Donnell	Committee.	Ms.	Davis	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 12

   

had	been	asked	by	supervisors	to	enter	more	calls,	albeit	before	the	time	of	the	O’Donnell	

calls	on	this	topic.	The	deponents	also	made	clear	that	the	FEC	supervisors	audit	the	advice	

analysts	give	Committee	 representatives.	Analysts	 receive	 follow	up	 from	supervisors	 for	

unapproved	advice.	And	despite	the	FEC’s	assertion	that	analysts	don’t	give	legal	advice,	all	

the	entered	answers	on	the	call	logs	are	based	in	federal	campaign	law,	and	are	no	different	

in	difficulty	than	the	question	posed	by	Carole	O’Donnell	and	Ms.	O’Donnell.	

Defendants	 believe	 it	 is	 possible	 that	 Ms.	 Davis	 did	 not	 record	 on	 the	 call	 log	 the	

substance	of	the	calls	on	the	matter	of	personal	use,	either	because	she	forgot,	or	because	

she	knew	her	answer	would	be	audited	by	her	superiors.	In	any	event,	Ms.	O’Donnell	testified	

that	she	asked	Ms.	Davis	this	question.	If	Davis	had	told	her	no,	where	is	the	logged	call	saying	

no?	And	if	Ms.	O’Donnell	never	made	a	call	to	Ms.	Davis	on	the	question	and	was	trying	to	

evade	 the	 discovery	 of	illegal	activity,	why	 did	Ms.	O’Donnell	make	 disbursements	 to	 the	

Campaign	Committee	that	are,	in	turn,	reported	to	the	FEC	and	later	to	the	general	public?	

C. AN ADDITIONAL THOUGHT

It	is	easy	to	look	at	the	duration	of	these	proceedings	and	to	suppose,	“Well,	the	FEC	

has	come	all	this	way;	there	must	be	a	‘there’	there.”	But	this	Court	should	not	be	so	sure.	

The	FEC’s	Counsel	is	nothing	if	not	professional:	but	even	professionals	can	engage	in	error.	

Because	the	costs	of	error	in	regulating	campaign	speech	are	high,	they	must	be	corrected	by	

the	nation’s	federal	courts.	After	all,	no	less	than	our	nation’s	highest	Court	has	held	that	the	

FEC’s	“business	is	to	censor.”	Citizens United,	558	U.S.	at	335.	

In	America,	attempting	to	better	the	system	by	running	for	public	office—no	matter	

one’s	political	views	or	socio‐economic	station—is	no	civil	offense.	Ms.	O’Donnell	has	spent	

six	years	in	the	proceedings	and	should	not	be	charged	in	excess	of	$20,000	for	campaign	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 13

   

expenses	incurred	by	the	Campaign	Committee	for	the	office	space	and	utilities	needed	to	

launch	an	upstart	campaign	to	federal	office.	

D. CONCLUSION

Defendants’	Motion	for	Summary	Judgment	should	be	granted.	Plaintiff	FEC’s	Motion	

for	Summary	Judgment	should	be	denied.	

Respectfully	submitted,	

	 	 	 	 	 	 	 	 		

						

	 /s/	S.M. Hoersting		 	

		 	 	 	 	 	 	 Chris	Gober	(Lead	Counsel)	

cg@gobergroup.com	

Stephen	M.	Hoersting*	

sh@gobergroup.com	

THE	GOBER	GROUP	PLLC	

PO	Box	341016	

Austin,	TX	78734	

(202)	849‐9006	

	 	 	 	 	 	 	 *Admitted	pro hac vice

ATTORNEYS	FOR	DEFENDANTS	

Dated:	April	25,	2016	

	 	

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DEFENDANTS’	SUR	REPLY	BRIEF                                                                                                                 14

   

CERTIFICATE OF SERVICE

I	hereby	certify	that	on	the	25th	day	of	April,	2016,	I	electronically	filed	the	foregoing	

with	the	Clerk	of	Court	using	the	CM/ECF	system	which	will	send	notification	of	such	filing	

to	the	following:	

Daniel	A.	Petalas	

Acting	General	Counsel	

dpetalas@fec.gov	

Lisa	Stevenson	

Deputy	General	Counsel	–	Law	

lstevenson@fec.gov	

Kevin	Deeley	

Acting	Associate	General	Counsel	

kdeeley@fec.gov	

Harry	J.	Summers	

Assistant	General	Counsel	

hsummers@fec.gov	

Robert	W.	Bonham	

Senior	Attorney	

rbonham@fec.gov	

Seth	Nesin	

Attorney	

snesin@fec.gov		

FEDERAL	ELECTION	COMMISSION	

999	E	Street,	N.W.	

Washington,	D.C.	20463	

(202)	694‐1650	

								 /s/ S.M. Hoersting

	 	 	 	 	 	 	 	 Stephen	M.	Hoersting	

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