Source: http://nyccfb.info/law/advisory-opinion-requests/2009-7-guidance-on-law-relating-to-third-party-expenditures/
Timestamp: 2019-04-25 11:49:27+00:00

Document:
Re: New York City Administrative Code ("Admin. Code") §§ 3-702(8), 3-703(1)(d), 3-703(1)(f), 3-703(1)(l), 3-708(5), 3-711(1), 3-719(2)(b); New York City Campaign Finance Board Rules 1-02, 1-04(e), 1-04(g), 1-08(f)(1), (2), (4), 2-02(c); Op. No. 2009-7.
The New York City Campaign Finance Board (the "Board") is issuing an advisory opinion in response to a July 7, 2009 letter from Jerry H. Goldfeder of Stroock & Stroock & Lavan LLP on behalf of Green for New York, Mark Green's principal committee for the 2009 public advocate election, in which Mr. Goldfeder requested an advisory opinion as to how the Board "intends to interpret and implement the law relating to third party expenditures, and, specifically, what constitutes sufficient evidence to warrant a finding of improper ‘coordination'."1 The issues raised by this request are extremely important and the Board is committed to ensuring that the law with respect to non-independent expenditures is enforced vigorously and consistently. The Board is issuing this advisory opinion in order to provide guidance as to how it interprets the New York City Campaign Finance Act (Admin. Code §§ 3-701, et seq.) (the "Act") and the rules of the Board promulgated pursuant thereto (the "Board Rules") with respect to third party expenditures.
The determination of whether a particular expenditure is independent or non-independent is necessarily fact-specific.17 Of course, the Board is not privy to the communications that campaigns have with third parties. Thus, the information about whether campaign-related activity has been discussed or otherwise coordinated between a campaign and a third party is uniquely within the campaign's possession. For this reason, each campaign bears the burden of demonstrating that any third party activity conducted on the campaign's behalf is indeed independent.18 Further, it is very difficult in the abstract to say whether a particular activity would or would not lead to a conclusion that activity is non-independent. Evidence of non-independent activity is usually largely circumstantial and must be evaluated based on the totality of the circumstances.
Common vendors: 1199 SEIU served as a vendor to Ms. Palma's campaign for, among other things, phone banking, literature production and distribution, and election day activities, yet also allegedly provided these same services as independent third party expenditures.
Literature production and distribution: Campaign literature paid for by Ms. Palma's campaign and literature paid for by 1199 SEIU contained identical or substantially similar photographs, text, contribution cards and contact information.
Election day activities: Various activities on primary election day and the days leading up to primary election day were conducted by Ms. Palma's campaign in conjunction with 1199 SEIU, including recruitment of election day workers, staffing at the campaign's election day space and the campaign's headquarters, campaign management and oversight, poll-site operations, literature distribution, get-out-the-vote efforts, use of a sound truck, food for election workers, and use of a "mobile office."
Shared office space: Ms. Junior's campaign shared office space with the Unity Democratic Club, which also made purportedly independent third party expenditures on Ms. Junior's behalf for, among other things, campaign literature, food and transportation.
Election day activities: Primary day workers operating on behalf of Ms. Junior's campaign were materially supported (e.g., provided food and transportation) by the Unity Democratic Club, but were supervised by an employee of the campaign.
Joint strategy meeting: 1199 SEIU officials attended a campaign strategy meeting in the month preceding the election, which Mr. Ferrer and campaign staff also attended.
Common employees: Key personnel on leave from their positions at 1199 SEIU were involved with organizing the campaign's field operations and get-out-the-vote efforts, which extensively utilized 1199 SEIU members, as evidenced by accounts of election day activities and newspaper reports.
As noted above, campaigns are the best source of information about the true nature of third party expenditures. In determining where to focus its investigative resources, the Board relies on information it receives from and about campaigns, through formal and informal complaints, through disclosure to the Board, and from other sources. The Board investigates fully every complaint it receives.22 Candidates are encouraged to report to the Board any information they come across regarding third party expenditures. Such information will assist the Board in its efforts to enforce the law vigorously and consistently.
2 Third parties are any persons or entities separate from the campaign, including, but not limited to labor organizations, political parties, and political clubs.
3See Admin. Code § 3-702(8) and Board Rules 1-02 and 1-04(g).
4See Admin. Code § 3-703(1)(f).
5 Campaigns are prohibited from accepting contributions from corporations, limited liability companies and partnerships. See Admin. Code §§ 3-703(1)(l), 3-719(2)(b); Board Rule 1-04(e).
6 Admin. Code § 3-702(8).
7 This is also commonly referred to as "coordinated activity."
8See Board Rule 1-08(f). These factors are used for evaluating all third party expenditures, regardless of the intended audience for the activity. With respect to labor organizations, the Act and Board Rules make no distinction between "member-to-member" activity and "member-to-non-member" activity; this distinction exists only in federal law, within the context of an entirely distinct regulatory scheme. See 2 U.S.C. §§ 441b(b)(2)(A), 441b(b)(4)(A). The Board's analysis of even purely member-to-member activity turns on the same determination as that of any other third party activity: whether the campaign authorized, requested, suggested, fostered, or otherwise cooperated in such activity. See Admin. Code § 3-702(8). Of course, the Act does not directly regulate the activity of labor organizations or any other third parties, which are fully entitled to engage in campaign-related activity (whether independent or non-independent) in support of campaigns; rather, the Act regulates only a campaign's obligation to account for and report non-independent third party activity.
9 This factor applies to, among others, "common vendors." Once an entity provides goods or services to a campaign for fair market value, it becomes a vendor. A vendor cannot, in most circumstances, logically "sell" goods and services to a campaign and make independent expenditures on behalf of that campaign, particularly for the same kinds of activities for which it billed that campaign, since once a vendor has provided these goods or services to a campaign, it has acquired knowledge and information about the campaign's activities that will render the provision of the same kinds of goods and services a non-independent expenditure. See Board Rule 1-08(f)(1)(v).
17 For this reason, it would not be useful for the Board to opine on the hypothetical examples posed in the Goldfeder Letter, which contain limited facts and vague descriptions. See Goldfeder Letter at 2. The Board would need to evaluate the relevant evidence available in each case. For example, in "Example A," it might be relevant whether the communication by the member organization was a one-time "you can count on our members to help" conversation versus conversation(s) during which a specific strategy of where to deploy members to the best effect was discussed. Instead of opining on hypothetical examples, this advisory opinion provides examples of the indicia of non-independent activity which underlay several recent Board determinations. See discussion infra.
18See Admin. Code § 3-703(1)(d).
19 This is not an exhaustive review of all cases in which the Board has found non-independent activity. Indeed, in addition to the examples discussed herein and others, the Board determined that Mr. Green's 2001 mayoral campaign violated the Act by accepting an over-the-limit in-kind contribution arising from non-independent activity by SEIU Local 32BJ.
20 Of course, by definition, a campaign is not involved in independent expenditures on its behalf. Thus, in many instances, a truly independent expenditure may just as easily risk hurting the candidate it was intended to benefit (e.g., through duplication of efforts or conveying a divergent message).
21 In light of the seriousness of this violation of the Act, "cooperation in alleged independent expenditures . . . that are in fact authorized, requested, suggested, fostered or cooperated in" by the campaign may constitute a fundamental breach of certification, which will result in a candidate being ineligible to receive public funds and the forfeiture of any previously received public funds. See Board Rule 2-02(c). (However, it should be noted that the Board did not find any of the campaigns discussed in this advisory opinion to be in breach of their certification). Candidates and treasurers may also be assessed penalties up to the maximum amount for each violation ($10,000). See Admin. Code § 3-711(1).
22 As part of its investigations, the Board has the authority to, inter alia, depose witnesses, issue subpoenas for documents, require sworn interrogatory responses, and compel all relevant parties (including candidates and any alleged independent actors) to appear before the Board. See Admin. Code §3-708(5).

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