___________ No. 95-2857

___________ Shrink Missouri Government PAC, * a political action committee; * W. Bevis Schock; Frederick T. * Dyer, * * Appellees, * * Appeal from the United States v. * District Court for the * Eastern District of Missouri. John Maupin, in his official * capacity as Chair of the * Missouri Ethics Commission; * Jeremiah W. Nixon, is his * official capacity as Missouri * Attorney General, * * Appellants. *

___________ Submitted: September 13, 1995 Filed: December 19, 1995

___________ Before BOWMAN, ROSS, and JOHN R. GIBSON, Circuit Judges.

___________ BOWMAN, Circuit Judge.

Missouri's Campaign Finance Disclosure Law, Mo. Rev. Stat. Ch. 13 0 (1994), was amended t wice in 1994. In July the state legislature adopted a measure commonly kn own as Senate Bill 650, and in November the citizens of Missouri adopted a ballot initiative commonly known as Proposition A. Both o f these measures limit election campaign contributions an d expenditures and thus tend to limit the free exercise of political speech that the First Amendment guarantees. W. Bevis Shock and Frederick T. Dyer ,

### The Honorable Catherine D. Perry, United States Distric t 1 

### Judge for the Eastern District of Missouri.
The state d oes not appeal the District Court's decision that 2 

### the "approved and authorized" requirement of Mo. Ann. Stat

. § 130.031 is unconstitutional, so that issue is not before us.
-2- prospective candidates for public office, and Shrink Missouri Government PAC, a political action committee (PAC) planning to make campaig n contributions in future elections, sought a permanent injunction against the im plementation and enforcement of the following provisions of th e amended Campaign Finance Disclosure Law: (1) the Proposition A limits on campaign contributions, Mo. Ann. Stat. § 130.100 (Vernon Supp. 1995), as applied to contributions by candidates to their own campaigns; (2) th e limits on total expenditures by candidates, id. §§ 130.052, 130.053; (3) the res trictions on carrying over campaign funds from one election t o another, id. § 130.130; and (4) the requirement that negative campaig n advert isements state that they were approved and authorized by th e candidate on whose behalf they were disseminated, id. § 130.031. On cross

motions fo r summary judgment, the District Court held that each of these 1 provis ions violated the First Amendment rights of candidates and thei r contributors. The court enjoined the Attorney G eneral of Missouri and the Chair of the Missouri Ethics Commission (referred to herein jointly as "th e state" ) from implementing, enforcing, or acting in reliance on th e challenged provisions. Shrink Missouri Government PAC v. Maupin , 892 F. Su pp. 1246 (E.D. Mo. 1995). The state now timely appeals. After a d e 2

novo review of the District Court's judgment, see Maitland v. University of Min nesota , 43 F.3d 357, 360 (8th Cir. 1994), we conclude that th e challenged provisions violate the First Amendment. We therefore affirm th e well-reasoned decision of the District Court.

### -3- I.
As a preliminary matter, we must add ress the state's contention that

sum maryjudgment should not have been granted because genuine issues o f material fact remain in dispute. See Fed. R. Civ. P. 56(c). The state di d not make this contention in the District Court. Moreover, as the stat e notes, both sides agreed that the case could be decided on the cros s motions for summary judgment. The state thus has waived the issue. See Empire St ate Bank v. Citizens State Bank , 932 F.2d 1250, 1253 (8th Cir

. 1991). In any event, we are satisfied that no genuine issues of material fact remain in dispute.

II.
The State argues that the District C ourt erred when it (1) addressed the constitutionality of applying the Propositio n A contribution limits to the ca ndidates themselves because no Article III case or controvers y existed between the p arties with respect to that issue; (2) held that the state's "voluntary" expenditure limits scheme is unconstitutional; and (3) held that the restrictions on carrying over campaign funds from on e election to another is unconstitutional. We will address each of thes e arguments in turn.

A.

The District Court held that the Pro position A campaign contribution limits are unconstitutional to the extent that they limit a candidates's ability to use his or her personal funds or property in support of th e candidate 's own campaign for public office. See Mo. Ann. Stat
. § 130.100 (Vernon Supp. 1995) (limiting "contributions"); Mo. Rev. Stat. § 130.011(12)(a) (1994) (defining "contributions" to include a "candidate' s
own money"). The state argues that the District Court was withou t jurisdiction to consider

### -4-

this question, there being no Article III case or controversy because stat e officials have not threatened to prosecute candi dates for making over-thelimit cont ributions to their own campaigns. We need not consider th e jurisdictional point, however, because in a companion case this Court has held t hat the Proposition A contribution limits are unconstitutional o n their face. Carver v. Nixon , No. 95-2608, slip op. at 25 (8th Cir. Dec. 19, 1995). Thus thos e limits necessarily are unconstitutional as applied to candidates as well as to other contributors.

B.

The District Court held that Senate Bill 650's "program of voluntary expenditure ceilings," State's Brief at 13, is coercive, restrict s protected speech, and fails to pass constitution al muster under the strict scrutiny test. Shrink Missouri Gov't PAC , 892 F. Supp. at 1252. The stat e
ar gues that these voluntary spending limits are constitutional unde r Buckley v. Valeo , 424 U.S. 1 (1976) (per curiam), in which, inter alia , th e Supreme Court struck down spending limits imposed by the Federal Election Campaign Act of 1971 as amended in 1974, 2 U.S.C. § 441a (1976).

The s tatute at issue in this case requires candidates for electe d public office in Missouri to file an affidavit stating whether they will comply with spending limits that vary depending on the office sought. Mo. Ann. Stat. § 130.052.1 (Vernon Supp. 1995). The affidavit must be filed with the candidate's declaration of candidacy. Candidates who choose not to com ply with the spending limits may accept contributions fro m indiv iduals only and must refuse contributions from PACs, politica l parties, labor unions, corporations, etc. Id. § 130.052.3. Non-complying candidates also must submit daily disclosure reports once they exceed the spendin g limits. See id. § 130.052.3. No such restrictions o r requirements are placed on candidates who swear to

### Because the Missouri expenditure limits are distinguishabl e 3 

### fromthe scenario described in the Buckleyfootnote, we need no t an d do not address the difficult question of the extent of th e state' s power to condition the receipt of benefits on th e renu nciation of constitutionally protected rights. See Rust v
. Sullivan , 500 U.S. 173, 197 (1991) (distinguishing constitutional conditions placed on uses of government funds by benefit rec ipients and unconstitutional conditions placed on recipients themselves); compar e Rodney A. Smolla, The Reemergence of the Right-Privileg e Distinction in Constitutional Law, 35 Stan. L. Rev. 69 (1982 ), with WilliamW. Van Alstyne, The Demise of the Right-Privileg e Distinction in Constitutional Law, 81 Harv. L. Rev. 1439 (1968).
-5- abide by the limits, though they are penalized i f they spend more than the applicable limit, see id. § 130.053.1.

When considering whether a campaign finance law unconstitutionall y infringes freedom of speech, this Court's task is to decide whether th e provision in question actually "burdens the exercise of political speech and, if it does, whether it is narrowly tailored to serve a compellin g state interest." Austin v. Michigan Chamber of Commerce , 494 U.S. 652, 65 7 (1990) (citing Buckley , 424 U.S. 1); see also Day v. Holahan , 34 F.3d 1356 , 1361 (8th Cir. 1994), cert. denied , 115 S. Ct. 936 (1995).
Relying on a footnote in Buckley , the state argues that th e expenditure limits are clearly constitutional regardless of the level of scrutiny applied because they are voluntary and merely provide an incentiv e for compliance. In Buckley , the Supreme Court held that limitations on th e tot al expenditures by a candidate for federal office violated the Firs t Amendment. 424 U.S. at 54-58. The Court nonetheless noted that
Congress may engage in public financing of election campaigns and may condition acceptance of public funds on an agreement by th e candidate to abide by specified expenditure limitations

. Just as a candidate may voluntarily limit the size of th e con tributions he chooses to accept, he may decide to forg o private fundraising and accept public funding.

Id. at 57 n.65. The spending limits adopted by the Missouri legislature differ substantially from the scenario describedin footnote 65 of Buckley and are thus distinguishable. The Senate 3

### -6-

Bill 650 limits are n ot voluntary because they provide only penalties for noncompliance rather than an incentive for voluntary compliance. Therefor e the state's reliance on the dicta in footnote 65 of Buckleyis misplaced.

In the hy

pothetical set out in footnote 65, a candidate agreeing to limit h is or her expenditures receives the benefit of public funding

. Candidates who do not so agree do not receive public funding, but are not penalized for their reliance on private funding. Under Senate Bill 650, however, a candidate agreeing to abide by the spending limits receives no benefit other than th e state's blessing to seek the private funding he or she would be free to seek in any event. At the same time, candidates who do not agree to abide by the spending limits are penalized in two ways: (1 ) the state makes it unlawful to seek important sources of private funding that otherwise they would be free to seek; and (2) the state requires dail y reporting of expendit ures. These penalties make the limits coercive, not voluntary. The state, however, does not believe that it is withdrawing an otherwise available source of funding; it characterizes the availability of organizational funding as the incentive that it offers to candidates to agree to abide by the spending limits. We disagree with the state' s characterization.

Fr omthe state's perspective, it is providing complying candidate s with a substantial benefit by "allowing" PACs, political parties, labo r uni ons, corporations, and other organizations to make campaig n contri butions. The state's argument, however, assumes that it properl y could ban such organizations from making any contributions to candidates running for state office. This assumption is in correct. We believe it is clear that a ban on

### -7-

campaign contributions by organizations would no t survive a constitutional challenge. See , e.g. , Federal Election Comm'n v. Massachusetts Citizens for Life, Inc. , 479 U.S. 238, 263 (1986) (striki ng down federal limitation on use of corporate f unds in connection with federal elections as applied to nonprofit corporation); Day v. Holahan , 34 F.3d at 1365-66 (invalidatin g Min nesota's $100 limit on contributions from individuals and PACs). W e note that the Supreme Court has indicated that expenditure limits applied to organizations "imp inge on protected associational freedoms" as well as freedom of speech. Buckley , 424 U.S. at 22. Thus the state's argumen t that it offers an incentive by allowing candidates to accept suc h contributions is disingenuous. Organizational contributions ar e constitutionally protected irrespective of any a greement by a candidate to abide by the state-imposed expenditure limits. No candidate woul d vol untarilyagree to comply with the expenditure limits in exchange fo r
acc ess to sources of funding to which he or she already has a constitutional right of access. Rather, Senate Bill 650 forces compliance by imposing substantial penalties for non-compliance. The purporte d benefit is illusory, and the statute is coercive.

We therefore conclude that Senate Bill 650 "impose[s] direct an d substantial restraints on the quantity of political speech," speech that is "at the core of . . . the First Amendment fre edoms." Buckley , 424 U.S. at 39 (internal quotation marks and citation omitted); see also Day v
. Holahan , 34 F.3d at 1 360 (holding that limits on independent expenditures infringe protected speech). Even though the statute infringes protected speech, the statute nonetheless will be upheld " if the state can show that it is nar rowly drawn to serve a compelling state interest." Day v
. Holahan , 34 F.3d at 1 361; see also Austin , 494 U.S. at 657. In this case the state has failed to meet its burden.
First the state argues that the "ove r-arching state interest" served by Senate Bill 650 is the reduction of corruption and the

### Austin v. M ichigan Chamber of Commerce , 494 U.S. 652 (1990), 4 

### is not to the contrary. While the Supreme Court upheld Michigan's restriction on independent exp enditures by corporations in support of or in opposition to candidates for state office, the Court did not overrule Buckley and "hint ed" that its decision was limited by the fact that the restriction applied only to independen t expenditures by corporate entities and did not apply to such expenditures by individuals. See Lillian R. BeVier, Campaig n Finance Reform: Specious Arguments, Intractable Dilemmas, 9 4 Colum. L. Rev. 1258, 1270 (1994).
-8- appearance of corruption in the state's election process. State's Brief at 15. The state als o refers to its related concerns with "the integrity of the [el ectoral] process," id. at 20, and public "confidence in th e system of representative government," id. at 30 (quotation marks an d citation omitted). W hile the state's interest in reducing corruption and its related concerns constitute a compelling sta te interest, the state has failed to explain how the campaign spending limits here in question ar e
narrow lytailored to serve this interest or address these concerns

. Indeed, we are hard-pressed to discern how the interests of good governmen t could possibly be served by campaign expenditure laws that necessarily hav e the effect of limiting the quantity of political speech in which candidate s for public office are allowed to engage. See Buckley , 424 U.S. at 55-57.

The stat e also argues that the expenditure limits are justified b y its interests in (1) maintaining the individual citizen's participation in and responsibility for the conduct of government and (2) discouraging "the
race t oward hugely expensive campaigns, especially at the local level, " Sta te's Brief at 17-18. The state's interest in maintaining individua l participation is what the District Court correctly described as an effort to "`leve l[] the playing field' between the rich and the poor." Shrin k Missouri Gov't PAC , 892 F. Supp. at 1253. The Supreme Court in Buckley , however, specifically held that the government may not "restrict the speec h of some elements of o ur society in order to enhance the relative voice of other s," Buckley , 424 U.S. at 48-49, and no subsequent decision of th e Court has undermined that holding. With respect to the state's interest 4 in keeping down the

### -9-

costs of running for office, we note that the Bu ckleyCourt held that "the
me re growth in the cost of . . . election campaigns in and of itsel f provides no basis for governmental restrictions on the quantity of campaig n spe nding." Buckley , 424 U.S. at 57. This Court is not at liberty t o disregard the explicit holdings of Buckley . We therefore hold that th e state, having failed to show that the expenditur e limits here at issue are narrowly drawn to serve a compelling state inter est, has not justified the substantial burden that these limits place on speech that is at the core of the First Amendment.
Our analysis is not complete, howeve r, because the state argues that the District Court should not have enjoined enfo rcement and implementation of sections 130.052 and 130.053 in their entirety. The state contends tha t several provisions can be implemented constitutionally despite th e invali dity of the expenditure limits. These provisions include th e requir ement that candidates declare whether they will keep thei r exp enditures within the unconstitutional limits, the unconstitutiona l limits themselves (described by the state for pu rposes of its severability argument as "the legislature's views as to the appropriate ceilings o n expenditures," State' s Brief at 30), and the disclosure requirements that are triggered by exce eding the unconstitutional limits. The state argues that these provisions should have been severed from the invalid parts of the statute. See Mo. Rev. Stat. § 1.140 (1994) (providing for genera l severability of all Missouri statutes).

The District Court did not address t he severability of any remaining portions of Senate Bill 650 under Missouri law, see Kinley Corp. v. Iowa Utilities Board , 999 F.2d 354, 359 (8th Cir.

### -10-

1993) (holding that questions regarding severabi lity of state statutes are controlled by state l aw), but we think the proper response to the state's argument is clear: the remaining portions of se ctions 130.052 and 130.053 are not severable.

Once the unconstitutional portions of a statute are excised, th e remain der can be upheld under Missouri law if it "is in all respect s complet e and susceptible of constitutional enforcement" and the cour t concludes that it would have been adopted even if it had been known that "the excluded portion was invalid." Millsap v. Quinn , 785 S.W.2d 82, 85 (Mo. 1990) (en banc). In Ryan v. Kirkpatrick , the Missouri Supreme Court left intact the remainder of the Campaign Finance Disclosure Law afte r invalidating one discrete provision. 669 S.W.2d 215, 219-20 (Mo. 1984) (e n banc)

. That court held that the unconstitutional portions "are not s o intertwined with [the law's] valid provisions as to leave it too enervated to stand." Id. In this case, the District Court did not invalidate all of Senate Bill 650; here the state asks us to le ave intact portions of the verysame discrete provisions that impose unconstitutional restraints on First Amendment right s. We cannot oblige the state. Every subsection of sections 130.052 and 130.053 makes some reference to the expenditure limit s that we have held unconstitutional. The invalidportions are inextricably intertw ined with the remainder of the statute. Moreover, the statut e provides that "[c]ampaign expenditures shall be limited pursuant to this section" and that "[t]o be in compliance with the expenditure limits . .

., the follo wing expenditure limits . . . may not be exceeded by a candidate committee." Mo. Ann. Stat. § 130.052 (Vernon Supp. 1995 ) (emp hasis added). The state proposes that we convert this mandator y language into a non-b inding legislative recommendation. The legislature, however, did not enact a set of suggestions.

In sum, any remaining valid provisions of sections 130.052 an d 130.053 are not complete and susceptible of constitutional

### The legislature, in Senate Bill 650, earlier adopted a 5 

### similar, but less restrictive, measure. See Mo. Ann. Stat
. § 130.038 (Vernon Supp. 1995). Only the Proposition A "war chest" limitation is challenged in this case.
-11- enforcement and we cannot conclude that the legi slature would have adopted them had it known the expenditure limits were unconstitutional. Th e Dist rict Court thus did not err when it enjoined the enforcement an d implementation of sections 130.052 and 130.053 in their entirety.

C.
In Proposition A the citizens of Mis souri adopted a measure designed to address the practice of carrying over "war chests" of campaign funds fo r future elections. Under the ballot initiative measure, withinninety days 5 of an election a candidate must turn over any ex cess funds, "except for an amount no greater than ten times the individual contribution limit" for th e office sought, to the Missouri Ethics Commission or to contributors. Mo. Ann. St at. § 130.130 (Vernon Supp. 1995). This is popularly known as a "spend-down provision" because candidates will m ost likely choose to spend all of th eir funds during the last days of the campaign rather tha n returning funds to contributors or turning them over to the state. Th e ability of a candidate to retain contributions for future elections is thu s substantially limited.

The District Court held that the spend-down provision imposes a substa ntial burden on political speech by requiring that funds raise d during a p articular campaign be spent during the campaign. The cour t rejected t he state's assumption that "blind support" in the form of a contribut ion that can be used in the current campaign or any futur e campaign "must constitute an impermissible attempt at improper quid pro qu o influence." Shrink M issouri Gov't PAC , 892 F. Supp. at 1254. The state,
on th e other hand, argues that the spend-down provision does not limi t speech but encourages it by

### -12-

req uiring candidates "to do precisely what the contributors intend: t o speak." State's Brie f at 38. In our opinion, the state's argument makes an unwarranted assumption about the intention of campaign contributors and badlymisrepresents reality. Some contributors undoubtedly do intend to give a candidate "blind support," and they do so without any hope o f gaining improper influence with that candidate. Beyond that, we believe the state's characterization of the provision confirms the District Court' s decis ion that it infringes the First Amendment. From the state' s perspective, the provision is intended to require the candidate to speak in the current election. We note that "the right of freedom of though t pro tected by the First Amendment against state action includes both th e rig ht to speak freely and the right to refrain from speaking at all. " Wooley v . Maynard , 430 U.S. 705, 714 (1977). From the appellees ' perspective, the prov ision limits the quantity of a candidate's speech in future elections. We note that this effect is identical to the effect of the expenditure limits addressed earlier in this opinion except that the impact of the provision is postponed to future elections. Whether w e accept the state's or the appellees' characterization of the spend-dow n provision is irrelevant. Either way, we conclud e that rights protected by the First Amendment are implicated and that the provision must be subjecte d to strict scrutiny.

Whi le strict scrutiny may not always be fatal to a challenge d restriction on speech, it is in this case. The state has not demonstrated that the spend-down provision is narrowly tailored to serve a compelling gov ernment interest. The state argues that this provision serves thre e interests.
First, it attacks corruption and its appearance by (1 ) preventing the kinds of quids pro quo that occur when money is given to candidates in uncontested races, and (2) e nsuring that th e contributions limits of Proposition A . . . have a measurable effect on the political system . . . . Second, it prese rves the integrity of the electoral process by (1 ) counterbalancing any

### -13- discriminatoryeffects against challengers and in favor o f incumbents that are created by Proposition A's contributio n limits, (2) ensuring the opportunity of all citizens, not just those w ho have amassed large war chests in noncompetitiv e races, to participate in the political process as candidates, and (3) protecting the free speech interests of contributors. Third, it promotes speech and fairness, thus sustaining th e active, alert responsibility of the individual citizen in our democracy.

State's Brief at 38-39 (citations omitted). At the outset, we note that any in terest related to the effective operation of Proposition A' s
con tribution limits fails to qualify as compelling because we have hel d that those limits are unconstitutional. See Carver v. Nixon , slip op. at 25. We further note that any interest defined by reference to funds raise d in "noncompetitive" or "uncontested races" is un helpful because the spenddown provision applies to funds raised in all campaigns; thus the provisio n is not na rrowly tailored to serve such an interest. The sole remainin g interes ts asserted by the state are that the provision "preserves th e integrity of the electoral process by . . . protecting the free speec h interests of contributors" and that it "promotes speech and fairness, thus sustaining the active, alert responsibility of the individual citizen in
our de mocracy." Assuming that the state has articulated compellin g interests, we conclude that the state has failed to demonstrate that the spend-down provision is narrowly tailored to do either of the things that the state asserts it will do. Although the state asserts that th e provision protects the free speech interests of contributors, it is just
as likely that the provision infringes those interests. Surely th e contributor's political free speech interests are not well served if a candidate is compelle d (1) to waste campaign contributions on unnecessary speech (in order to spend down the campaign's accumulated assets) or (2) to turn over those contributions to the Missouri Ethics Commission o r return them to contributors. With respect to the provision's impact on th e "active , alert responsibility of the individual citizen," the state' s arguments are broad and

### -14-

con clusory. The state makes no attempt to show how the spend-dow n pro vision is narrowly tailored to serve that interest, saying only tha t "[c ]itizens now may decline to participate in a particular race . .

. because of the overwhelming advantage carried over from another day" and that the "carryover r estriction may well be the difference between having noncompetitive races, in which there is little or no speech, and havin g active campaigns in which there is uninhibited, robust, and wide-ope n debate on public issues," State's Brief at 45 (internal quotation marks an d citation omitted). T hese statements fall far short of a showing that the spend- down provision is narrowly tailored to promote "the active, aler t responsibilityof the individual citizen in our democracy." We conclude that section 130.130 cannot withstand strict scr utiny and that it violates freedoms that the First Amendment protects.

III.

In sum , we hold that the expenditure limits of Senate Bill 650 an d the spend-down provision of Proposition A restri ct expression protected by the F irst Amendment and that the state has not demonstrated that thes e provisions are narrowly tailored to serve a compelling government interest

. Furthermore, based on this Court's decision in Carver v. Nixon , slip op. at 25, which holds that Proposition A's contribution limits are facially
unco nstitutional, we conclude that those limits are necessaril y unconstitutional insofar as they would limit contributions by candidates to their own campaign s. The judgment of the District Court enjoining the Attor neyGeneral of Missouri and the Chair of the Missouri Ethic s Commis sion from implementing, enforcing, or acting in reliance on th e challenged provisions is therefore affirmed.

### -15- A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.