Opinion ID: 682427
Heading Depth: 4
Heading Rank: 2

Heading: Federal Common Law & Other States' Laws

Text: 30 To govern the liability of candidates for federal office for the contractual debts of their principal campaign committees, the RNC entreats us to abandon state law in favor of what, in essence, would amount to a federal common law. The RNC argues that such a radical approach is necessary because the application of state law to the facts of this case would jeopardize two vital and related federal interests: (1) attracting candidates to seek federal elective office, and (2) ensuring the vigor of the entire federal electoral process itself. As federalism imparts to all states a duty not to interfere with preeminent federal policy, the RNC entreats, we should interpret state law in a manner that will least affect these federal interests. 31 The RNC contends that citizens will be discouraged from seeking federal office if, as candidates, they can be held liable under state law for the debts incurred by their campaign committees. As this case illustrates, the RNC continues, modern campaigns involve significant amounts of money and require a wide range of services that often must be procured from numerous vendors scattered throughout the country. Consequently, deduces the RNC, if each state's law is applied to determine whether a candidate for federal office is liable for debts incurred in that state by his campaign committee, then the candidate will be exposed to a nightmarish specter of liability, and will run the risk of being haled into court in any state to answer under each state's substantive law. 32 The RNC also maintains that the application of each state's law to determine the liability of a candidate for federal office will harm the entire election process. The RNC posits that applying each state's law could result in more cautious and less informative campaigning, as the fear of personal liability might make candidates reluctant to take advantage of the various methods and media available to communicate their message. The RNC perceives these policy concerns to be somewhat analogous to those that prompted the development of the doctrine of official immunity and thus asks us to look by analogy to immunity jurisprudence in fashioning a federal common law rule to apply today. 33 The RNC does not go so far as to advocate a rule that would immunize candidates from all liability: Rather, the RNC urges that candidates be held liable only in circumstances [w]here a candidate expressly and intentionally (even if unwisely) assents to personal liability. The RNC argues that this standard dovetails neatly with the common law of agency as applied by some states, which, according to the RNC, provides that neither the candidate nor campaign officials will be held personally liable for campaign debts except insofar as such debts are personally and specifically authorized by the individual in question. 23 34 Although mindful of the concerns raised by the RNC, we decline its invitation either to abandon the established law of Texas or Pennsylvania in favor of another state's law or to fabricate from the whole cloth a new and entirely untested federal common law. 24 We are not convinced that candidates for federal office are so imperiled by the application of state law to determine their liability for their committees' debts as to warrant either such extreme measure. 25 35 A candidate for federal office already has at least two methods by which he could protect himself from personal liability for the contracts entered into by his principal campaign committee. First, he could incorporate his campaign committee. 26 If the committee were incorporated, then the candidate--whether or not he is a shareholder--is shielded from personal liability by the corporate entity, 27 assuming, of course, that he takes no personal action that creates liability apart from the corporation's. Second, a candidate could include in all contracts entered into by his principal campaign committee a provision expressly stipulating that the contracting party may look only to the committee and its assets for compensation, 28 thereby eschewing the candidate's personal liability, either directly or indirectly. 36 The test of time, we believe, confirms that these options are sufficient to protect candidates. Independent of the briefs filed with this court, our research has revealed remarkably few cases in which vendors have sought to hold candidates, or the officers of campaign committees for that matter, liable for the debts of the committee. We find this particularly noteworthy in light of the significant number of elections held periodically and the huge sums spent in such campaigns. We speculate that those few vendors who do not insist on payment in full in advance simply assume the risk of nonpayment, especially from losing candidates, lest such vendors acquire an undesired reputation within the political industry. Also, we gather that some losing candidates, looking ahead to possible future campaigns, seek to avoid an equally unsavory reputation in that industry by paying the financial obligations incurred by their campaign committees. Thus, there is a dearth of caselaw on the subject. 29 37 We are not convinced that any of the traditional reasons for abandoning settled law is present here. Applying state law has not heretofore proved to be significantly unworkable or inequitable. Courts have not abandoned this approach; neither have the circumstances surrounding the liability of candidates generally so changed of late as to rob this approach of its past relevance or justification. 30 Although the RNC argues that the application of state law to determine a candidate's liability exposes him to a nightmarish specter of liability and lawsuits, these precise concerns were raised in dissent and rejected by the majority when the question was considered by the Tennessee Court of Appeals more than thirty-five years ago: 38 It is now a matter of general knowledge that a state-wide race for public office, either in a primary or general election, requires the expenditure of many, many thousands of dollars through many different hands for many different purposes.... Obviously, the candidate himself cannot supervise all of these many activities and many others not mentioned above, though he knows and intends that they will be done for him in behalf of his candidacy. In my humble opinion it would not be in the public interest to saddle upon every candidate for state-wide office a potential liability of so many thousands of dollars and the possibility of multiple claims against him with such limited opportunity to protect and indemnify himself against such liability. 31 39 Finally, we remain cognizant of the salient fact that this case is before us on diversity jurisdiction. We therefore sit as an Erie court, relegated to applying the applicable state law to the facts before us; federalism instructs us that it is not our place within the constitutional firmament to conjure up a new legal paradigm to replace one already fashioned by our learned colleagues in the state judiciary, or to supplant their considered judgment with that from another state. 32 Accordingly, contrary to the RNC's exhortation to spin new gold out of old straw, we discern this case to burden us with a far more modest, albeit equally difficult, task: to apply faithfully and federalistically the appropriate state law to the facts of this dispute. This, of course, requires that we next determine which state's laws to apply.