Court Opinion

ID: 3066464
Source: CourtListenerOpinion
Date Created: 2015-10-15 00:53:09.1672+00
Date Added: 2024-06-11T11:49:49.343579
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 19, 2013             Decided August 5, 2014

                       No. 13-5008

 STOP THIS INSANITY INC EMPLOYEE LEADERSHIP FUND, ET
                         AL.,
                      APPELLANTS

                             v.

             FEDERAL ELECTION COMMISSION,
                       APPELLEE

        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:12-cv-01140)

    Tara A. Brennan argued the cause for appellants. With
her on the briefs were Tillman J. Breckenridge, Patricia E.
Roberts, and Dan Backer.

    Erin Chlopak, Acting Assistant General Counsel, Federal
Election Commission, argued the cause for appellee. With
her on the brief were Anthony Herman, General Counsel,
Kevin Deeley, Acting Associate General Counsel, and Steve
Hajjar, Attorney. Adav Noti, Acting Associate General
Counsel, Federal Election Commission, entered an
appearance.
                               2
   Before: BROWN and GRIFFITH, Circuit Judges, and
SENTELLE, Senior Circuit Judge.

    Opinion for the Court filed by Circuit Judge BROWN.

    Senior Circuit Judge SENTELLE concurs in the judgment.

     BROWN, Circuit Judge. The iconic musician Mick Jagger
famously mused, “You can’t always get what you want. But
if you try sometimes, well, you just might find, you get what
you need.” The Rolling Stones, You Can’t Always Get What
You Want, on Let It Bleed (Decca Records 1969). Here, Stop
This Insanity—a grassroots organization—wants to remove
the congressionally-imposed binds on solicitation by separate
segregated funds, a type of political action committee
connected to a parent corporation. What it needs, however, it
already has—an unrestrained vehicle, in the form of that
parent corporation, which can engage in unlimited political
spending.      Because this less-obsolete and less-onerous
alternative exists, we decline Stop This Insanity’s invitation
for us to tinker with what has become a statutory artifact.

                               I

     The Federal Election Campaign Act sets forth ground
rules for, inter alia, the participation of corporations in the
electoral process. See 2 U.S.C. § 441b; FEC v. Beaumont,
539 U.S. 146, 149 (2003). Corporations, for example, cannot
contribute directly to candidates for federal office or parties.
2 U.S.C. § 441b(a). And before the Supreme Court’s decision
in Citizens United v. FEC, 558 U.S. 310 (2010), they could
not use their treasuries to pay for independent expenditures,
i.e., funds used to expressly advocate for or against a
candidate. See 2 U.S.C. § 441b(a); see also id. § 431(17);
Citizens United, 558 U.S. at 320–21, 372. But the pre-
                                3
Citizens United landscape did not leave corporations
completely exiled from the political process. Instead, the Act
permitted limited corporate participation through separate
segregated funds, a type of political action committee. 2
U.S.C. § 441b(b)(2), 431(4)(B). “Though the treasuries of a
corporation and its fund [were to be] kept separate, a
corporation [could] nonetheless control how the separate
segregated fund [spent] its money.” FEC v. NRA, 254 F.3d
173, 179–80 (D.C. Cir. 2001) (citations omitted). A fund was
“separate . . . only in the sense that there [was] a strict
segregation of its monies from the corporation’s other assets.”
FEC v. Nat’l Right to Work Comm., 459 U.S. 197, 200 n.4
(1982) (internal quotation marks omitted).

     These funds, however, came with strings attached. They
were subject to organizational, recordkeeping, and reporting
requirements. See 2 U.S.C. §§ 432–34. The Act also placed
constraints on the funds’ ability to solicit. For one, the Act
restricted whom the funds could solicit: only the connected
company’s stockholders, executives, and administrative
personnel, in addition to their respective families. See id.
§ 441b(b)(4)(A)(i); see also Citizens United, 558 U.S. at 321.
Solicitation of the public was off limits. See McConnell v.
FEC, 540 U.S. 93, 118 n.3 (2003), overruled on other
grounds by Citizens United, 558 U.S. at 310 (“As a general
rule, [the Act] permits corporations . . . to solicit contributions
to their PACs from their shareholders or members, but not
from outsiders.”). The other major restriction came in the
form of when the funds could solicit: twice yearly to any
corporate employee or family member thereof, with responses
being anonymous. See 2 U.S.C. § 441b(b)(4)(B). But with
the strings came benefits: because the funds were so closely
tied to their parent corporations, they were not required to
disclose the corporation’s contributions or expenditures for
“the establishment, administration, and solicitation of
                                 4
contributions.” Id. § 441b(b)(2)(C). Citizens United, of
course, did away with the ban on corporate independent
expenditures. But the funds—now functionally obsolete—
still remained.

    Stop This Insanity, Inc. (“STII” or “the Corporation”) is a
corporation that had a past life as a “nonconnected,”
standalone political action committee engaged in political
advocacy. See Appellee’s Br. at 14. It later deregistered as
such a committee, and instead formed a segregated fund—the
Employee Leadership Fund (“the Fund”). See J.A. at 10. The
Corporation asked the Federal Election Commission (“the
Commission”) for guidance on whether the Fund could open a
separate unrestricted account devoted to making independent
expenditures that could solicit the general public. See J.A. at
31–34. The Commission’s response was the regulatory
equivalent of a shrug—one memorandum said yes, while
another one said no. See J.A. at 41–71. At an impasse, the
Commission declined to issue advice. J.A. at 73.

     Unhappy with this nonresponse, STII, the Fund, two
individuals, and another corporation filed a complaint in
district court, alleging the restrictions on the segregated fund
were unconstitutional. J.A. at 4–11. The plaintiffs moved for
a preliminary injunction. J.A. at 79–81. The Commission
moved to dismiss. J.A. at 185–89. Siding with the
Commission, the district court dismissed the case. See Stop
This Insanity, Inc. Employee Leadership Fund v. FEC, 902 F.
Supp. 2d 23 (D.D.C. 2012). The plaintiffs timely appealed.1

1
 We lack jurisdiction over the individuals’ claims, as they were not
made through the en banc certification process prescribed in 2
U.S.C. § 437h. See Wagner v. FEC, 717 F.3d 1007, 1016 (D.C.
Cir. 2013).
                                5
                                II

     Simply put, Stop This Insanity would like to use its
segregated fund to solicit the entire public while concealing
its expenses for such solicitation. It claims Citizens United
compels such a result. Even assuming the Corporation’s
constitutional analysis is correct, it is far from a foregone
conclusion that the Act is severable in a way that would
eliminate the restrictions but leave intact the partial waiver on
disclosure. See Alaska Airlines, Inc. v. Brock, 480 U.S. 678,
685 (1987) (“The more relevant inquiry in evaluating
severability is whether the statute will function in a manner
consistent with the intent of Congress.” (emphasis added)).
Thankfully, we need not make that determination, for STII’s
arguments fall short on the merits. We review de novo the
district court’s grant of a motion to dismiss for failure to state
a claim. Rudder v. Williams, 666 F.3d 790, 794 (D.C. Cir.
2012).

                                A

     Political participation is integral to our democratic
government; for this reason, limitations on political
contributions and expenditures “operate in an area of the most
fundamental First Amendment activities.” Buckley v. Valeo,
424 U.S. 1, 14 (1976) (per curiam). Accordingly, limits on
independent expenditures, which do not implicate the
anticorruption rationale, are subjected to the highest form of
scrutiny and are generally unconstitutional. See, e.g., Citizens
United, 558 U.S. at 340, 357. Limits on direct contributions
to candidates to avoid corruption or the appearance of
corruption, however, are tolerated, subjected to a milder form
of scrutiny. See Buckley, 424 U.S. at 25; see also McConnell,
540 U.S. at 140–41.
                              6
     Congress crafted the segregated fund scheme at a time
when this reality was not fully realized—in other words, at a
time when direct participation by corporations was banned.
Segregated funds were limited vehicles through which
corporations could participate in the political process. See
NRA, 254 F.3d at 179 (“Notwithstanding [the Act’s]
prohibition[s], . . . the statute does permit corporations to
participate in the electoral process in a limited fashion.”).
After Citizens United, segregated funds became a vintage—
yet still operable—relic. Though these funds have the
advantage of being able to directly contribute to candidates—
something parent corporations still cannot do—they are no
longer necessary for independent expenditures. And yet, STII
decided to form a separate segregated fund.

     The crux of the Corporation’s argument is simple:
Citizens United prohibits restrictions based on distinctions
between organizational entities, and such restrictions are
subject to our highest form of scrutiny. Because segregated
funds are singled out for the solicitation restrictions, STII
reasons the constraints should be subjected to the more
exacting half of the Buckley paradigm.

     We do not share the Corporation’s confidence that
Citizens United is apposite here. This case does not present
an “outright ban” on political speech, see Citizens United, 558
U.S. at 337; it is governmental “regulat[ion] [of] corporate
political speech,” not suppression, see id. at 319. Indeed, the
Citizens United Court even acknowledged the existence of
these segregated funds—as the so-called counterparts to the
then-speechless corporate entities, the funds formed a critical
part of the Court’s analysis. See id. at 321. The Court
indicated these segregated funds were capable of speaking,
not unduly restrained by their various obligations. In no
uncertain terms, the Court stated “a PAC created by a
                               7
corporation can still speak.” Id. at 337; see id. at 338 (“PACs
have to comply with these regulations just to speak.”); id. at
339 (“PACs, furthermore, must exist before they can speak.”).
Never did the Court suggest the statutory scheme for
segregated funds “muzzled” their speech. See Appellants’ Br.
at 15.

     There are other reasons for considering Citizens United
inapposite. The corporation in that case was thrust into a
scenario where its only avenue of speech was a type of
entity—the political action committee—that could not speak
on behalf of the corporation and was a “burdensome
alternative[].” Id. at 337 (“A PAC is a separate association
from the corporation. . . . Even if a PAC could somehow
allow a corporation to speak—and it does not—the option to
form PACs does not alleviate the First Amendment
problems. . . . PACs are burdensome alternatives; they are
expensive to administer and subject to extensive
regulations.”). Contrary to the representations of Appellants’
counsel at oral argument, the converse is not true. Nothing
prevents the corporation from speaking on behalf of the PAC;
in fact, the regulatory scheme specifically provides for such
activity, albeit with strings attached. See 11 C.F.R. §
114.5(g). Moreover, independent expenditures are less
burdensome through the corporate alternative. Despite the
availability of a more robust option—at least, when it comes
to independent expenditures—the Corporation has decided to
do things the hard way. And now, trapped in a snare it has
fashioned for itself, STII decries its inability to use the Fund
in the way it sees fit—without the limits Congress attached to
the operation of these funds.

    That observation exposes the critical flaw in the
Appellants’ argument. This case does not present a choice
between “unfettered political speech and subjection to
                               8
discriminatory fundraising limitations.” Davis v. FEC, 554
U.S. 724, 739 (2008); cf. Buckley, 424 U.S. at 57 n.65. STII’s
decision to form the more cumbersome segregated fund was
purely voluntary; the statutory scheme did not compel the
Corporation to form the segregated fund, lest it be without a
vehicle for political speech in the form of independent
expenditures. The Corporation even acknowledged the
tradeoff; in its advisory opinion request to the Commission,
STII noted the “distinction between Connected and Non-
Connected PACs,” and “the trade-off between the subsidized
administrative and operating costs . . . and the corresponding
restriction on fundraising.” J.A. at 33. By clothing itself in
the letter of Citizens United, the Corporation claims there is a
constitutional right to do things the hard way. We cannot
sanction such an illogical conclusion.

     As the Appellants observe, the Court did make it clear the
First Amendment prohibits the silencing of an entire class of
speakers, i.e., corporations, see Citizens United, 558 U.S. at
341–42, because they were “disfavored associations of
citizens,” id. at 356. In conjunction with this observation, the
Appellants also cite our pre-Citizens United decision in
EMILY’s List v. FEC, 581 F.3d 1 (D.C. Cir. 2009), where we
held “hybrid” political action committees are entitled to
unlimited expenditure accounts. According to the Appellants’
legal arithmetic, Citizens United “eliminated distinctions
between” various organizational forms; ergo, it should have
access to the same type of unlimited expenditure account
sought in EMILY’s List, notwithstanding the fact that the Fund
is not a “hybrid” political action committee. See Appellants’
Br. at 21.

    But it would be disingenuous to say the Corporation is
simply seeking equalization across different types of
organizations. The type of account EMILY’s List sought in
                                 9
that case also came with strings: disclosure requirements, the
sort the Appellants are endeavoring to avoid. Cf. EMILY’s
List, 581 F.3d at 19 n.16 (“This case does not involve
reporting and disclosure obligations.”). What the Appellants
are looking for, no political action committee has.

      Solicitation restrictions are difficult to categorize, as they
do not fit neatly into the Buckley framework. But Citizens
United aside, we have other reasons for concluding the
restrictions here are not properly treated as constraints on
independent expenditures. For one, they “do[] not restrict the
amount or manner in which . . . [a political entity] can spend
money.” Siefert v. Alexander, 608 F.3d 974, 988 (7th Cir.
2010) (emphasis added). Nor can we say the restriction truly
silences the segregated fund as the speaker—instead, it serves
to “limit contributions . . . from certain persons or groups,”
i.e., non-employees, in exchange for administrative ease.
Wolfson v. Concannon, 750 F.3d 1145, 1153 (9th Cir. 2014)
(emphasis omitted).          Though STII suggests the First
Amendment allows the unfettered ability to solicit, “[n]either
the right to associate nor the right to participate in political
events is absolute. Nor are the management, financing, and
conduct of political campaigns wholly free from
governmental regulation.” U.S. Civil Serv. Comm’n v. Nat’l
Ass’n of Letter Carriers, 413 U.S. 548, 567 (1973) (citations
omitted); see id. at 567 n.13 (citing, inter alia, a ban on the
solicitation of political contributions). Though we cannot
speak to solicitation restrictions generally, this idiosyncratic
and outmoded congressional arrangement is not deserving of
the closest sort of scrutiny.

                                 B

    What Citizens United does do, however, is highlight the
oddity of the segregated funds’ existence in the wake of that
                              10
case. STII insists we treat the Fund as if it existed in
isolation, with a distinct set of constitutional protections
attendant to it. But it is unclear whether our analysis should
be so formalistic. Cf. Burwell v. Hobby Lobby Stores, Inc., ---
S. Ct. ----, 2014 WL 2921709, at *13 (U.S. June 30, 2014).
After all, the Corporation begot the Fund, the Corporation
runs the Fund, and there is a great deal of—if not complete—
overlap between the political speech of the Corporation and
that of the Fund. See Nat’l Right to Work Comm., 459 U.S. at
200 n.4 (“The separate segregated fund may be completely
controlled by the sponsoring corporation or union, whose
officers may decide which political candidates’ contributions
to the fund will be spent to assist.”). If the Corporation and
the Fund are two parts of the same whole, neither likely has a
First Amendment claim; if the Fund is unable to speak on an
issue or candidate of concern, the Corporation can, making
any burden “merely theoretical,” rather than substantial. See
Buckley, 424 U.S. at 19. And that would extinguish any First
Amendment claim. See Libertarian Party of Ohio v. Husted,
751 F.3d 403, 418 (6th Cir. 2014) (describing the nature of
the “burden imposed on core First Amendment activity” as
“largely theoretical and speculative”).

     But let us assume STII is right in stating the Fund should
be assessed in isolation. We must discern whether the
Government has demonstrated “a sufficiently important
interest” and “employ[ed] means closely drawn to avoid
unnecessary abridgement of associational freedoms.”
Buckley, 424 U.S. at 25. STII is resolute in asserting there
can be no governmental interest other than preventing quid
pro quo corruption, which it claims is not present here. See
Reply Br. at 8; see also EMILY’s List, 581 F.3d at 6 (“[T]he
Court has recognized a strong governmental interest in
combating corruption and the appearance thereof. This,
indeed, is the only interest the Court thus far has recognized
                               11
as justifying    campaign     finance   regulation.”   (citations
omitted)).

     The Commission does not necessarily dispute the first
half of that observation; instead, its position reflects an
anticorruption interest more robust than the anemic one
portrayed by the Appellants. See McCutcheon v. FEC, 134 S.
Ct. 1434, 1459 (2014) (plurality opinion) (“Disclosure
requirements are in part ‘justified based on a governmental
interest in “provid[ing] the electorate with information” about
the sources of election-related spending.’” (quoting Citizens
United, 558 U.S. at 367)). The evolving technological and
political landscape has altered the scope of the anticorruption
rationale. See id. at 1460 (“Today, given the Internet,
disclosure offers much more robust protections against
corruption. . . . Because massive quantities of information can
be accessed at the click of a mouse, disclosure is effective to a
degree not possible at the time Buckley, or even McConnell,
was decided.”). Although McCutcheon intimates disclosure is
an obvious antidote to corruption and so appropriately
included within the anticorruption rationale, the correlation is
not self-evident and disclosure cannot be reflexively
substituted as the Commission’s raison d’etre. Not every
intrusion into the First Amendment can be justified by
hoisting the standard of disclosure. Buckley, 424 U.S. at 64.

    As the Appellants point out, we observed in
SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010) (en
banc), that “[a]n informational interest in ‘identifying the
sources of support for and opposition to’ a political position
or candidate is not enough to justify [a] First Amendment
burden.” Id. at 692 (citing Citizens Against Rent Control v.
City of Berkeley, 454 U.S. 290, 298 (1981)). But the en banc
court, in rejecting First Amendment challenges to
organizational and reporting requirements, remarked “the
                                12
public has an interest in knowing who is speaking about a
candidate and who is funding that speech, no matter whether
the contributions were made towards administrative expenses
or independent expenditures.” Id. at 698. The Commission
clings to that interest now, claiming it is “protect[ing] the . . .
First Amendment rights of the public to know the identity of
those who seek to influence their vote.” Appellee’s Br. at 39
(citing Citizens United, 558 U.S. at 369–71). There may be
circumstances in which disclosure requirements could
facilitate intimidation and give free rein to animus in a way
that impoverishes and inhibits public debate instead of
protecting First Amendment concerns. See, e.g., NAACP v.
Alabama, 357 U.S. 449 (1958); see also McConnell, 124 S.
Ct. at 735–36 (Thomas, J., concurring in the judgment). But
this is no such case; STII makes no attempt to refute the
legitimacy of the interest invoked here or examine how
closely the restrictions on the segregated fund hew to the
interest. Instead, its response is “only quid pro quo”—hardly
a response at all. Therefore, we are satisfied with the
Commission’s explanation for maintaining the status quo. If
the Fund wishes to solicit freely, it must do so in the light.

     STII is already capable of sweeping solicitation. And
yet, it wants a vehicle capable of soliciting without
transparency. The Court has endorsed disclosure as “a
particularly effective means of arming the voting public with
information,” McCutcheon, 134 S. Ct. at 1460, and the
Appellants’ approach would stifle the Government’s ability to
achieve that endeavor. Our Constitution does not compel
such a result.

                                III

    We may never know why the Appellants wish to do
things the hard way. The Constitution, however, does not
                             13
guarantee a right to be obstinate. Try as it might, STII will
get no satisfaction. The district court’s dismissal is

                                                   Affirmed.