Court Challenge Seeks to Outlaw Super PACs

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By Kenneth P. Doyle

Nov. 4 — A court challenge arguing that super political action committees are illegally allowing unlimited contributions to influence federal elections could provide a vehicle for the courts to roll back recent rulings that have largely deregulated campaign financing, proponents said ( Lieu v. FEC, D.D.C., No. 16-cv-2201, filed 11/4/16 ).

The case was filed Nov. 4 in the U.S. District Court for the District of Columbia on behalf of a bipartisan coalition of members of Congress and 2016 congressional candidates. The lawsuit, led by Reps. Ted Lieu (D-Calif.) and Walter Jones (R-N.C.), and Sen. Jeff Merkley (D-Ore.), points to the rising influence of super PACs as a corrupting force that has given too much power to wealthy donors and diminished the role of candidates and ordinary voters.

The suit seeks to reverse a 6-year-old federal appeals court ruling that created super PACs and “has resulted in an explosion of spending in elections across the country,” according to a statement announcing the court action. Targeted is the March 2010 ruling by the U.S. Court of Appeals for the District of Columbia Circuit in SpeechNow.org v. FEC, which created super PACs by holding that the federal law limiting all PAC contributions to $5,000 per person annually doesn’t apply to PACs that promise to make only “independent expenditures” in campaigns.

The D.C. Circuit’s decision followed closely on the heels of the Supreme Court’s decision in Citizens United v. FEC, which struck down decades-old rules barring independent corporate spending to directly influence federal elections. The SpeechNow.org ruling was based on Citizens United’s logic that independent spending can’t corrupt candidates; the D.C. Circuit ruling wasn’t appealed in 2010 and has never been tested before the Supreme Court.

Legal Scholars Back Lawsuit

Joining the legal challenge, along with the lawmakers and three nonincumbent candidates for the U.S. House, are the nonprofits Free Speech For People and Campaign for Accountability, which have pushed for tougher campaign finance rules and enforcement. The candidate plaintiffs are Democrats Zephyr Teachout (New York) and Michael Wager (Ohio), and Republican John Howe (Minnesota).

The legal team working for the plaintiffs includes Brad Deutsch of the law firm of Garvey Schubert Barer, who served as lead counsel to the 2016 Democratic presidential campaign of Vermont Sen. Bernie Sanders, and previously was an aide to FEC Commissioner Steven Walther, an independent who holds a Democratic seat on the commission.

A bipartisan group of academics and lawyers specializing in First Amendment law, corruption and government ethics also is backing the case. These include Prof. Laurence Tribe of Harvard Law School; Prof. Albert Alschuler of the University of Chicago Law School; former Ambassador Norman Eisen, who served as chief ethics counsel to President Barack Obama; and Prof. Richard Painter of the University of Minnesota Law School, who served as chief ethics counsel to President George W. Bush.

Impact of $1 Billion Raised by Super PACs

The lawsuit focuses on the impact of super PAC spending in recent elections and alleges that super PACs have now become vehicles for wealthy donors to evade campaign contribution limits designed to prevent corruption and the appearance of corruption of candidates.

The 21-page complaint says more than 40 percent of federal super PAC contributions, as of April 2016, had come from just 50 funders and their families. By late October 2016, federal super PACs had reported total receipts of more than $1 billion and total expenditures of nearly $800 million.

“While much of the national media coverage of super PACs focuses on presidential elections, super PACs are increasingly dominant in the funding of congressional elections,” the lawsuit said.

“Recent empirical research demonstrates that top donors to super PACs and other outside spending groups simultaneously contribute directly to the very candidates who benefit from the independent expenditures drawn from those donors’ contributions,” the complaint said. “In other words, large donors to super PACs also maintain direct financial relationships with candidates—a coordinated contribution strategy that enables the contributor to bridge the distance between candidate and super PAC, and circumvent federal contribution limits by amplifying direct contributions beyond the legal maximum.”

Federal candidates are allowed to accept individual contributions in the current election cycle in amounts of no more than $2,700 per election.

‘Publicity Stunt.’

David Keating is president of the nonproft Center for Competitive Politics and was the lead plaintiff in the SpeechNow.org case in 2010. He said in an e-mail to Bloomberg BNA that the new lawsuit challenging the D.C. Circuit ruling “proposes a ridiculous theory and is a publicity stunt.”

Even worse, he said, the lawsuit was “filed by congressmen who want to silence those who disagree with them.”

The plaintiffs admit in the complaint that they fear they “will be open to attack” from super PAC spending, Keating said. “It shows the real motivation of those behind the case, they want government to control speech.”

Follow-Up to FEC Complaint

Before filing the lawsuit, the candidates and lawmakers filed an administrative complaint with the FEC asking for enforcement action against a group of major super PACs that spent money opposing them in recent campaigns.

The super PACs referred to in the FEC complaint included organizations closely linked to the major political parties and others that have raised and spent millions of dollars in this election cycle: House Majority PAC, Congressional Leadership Fund, Senate Majority PAC, Senate Leadership Fund, American Alliance PAC, Bold Agenda PAC, Defending Main Street SuperPAC Inc., ESAFund, Freedom Partners Action Fund Inc. and New York Wins PAC.

The FEC hasn’t yet announced action on the complaint, which was filed in July, and the lawmakers, candidates and their allies are now going to court to try to force action.

Deutsch, the former Sanders campaign counsel and FEC staffer now working on the new lawsuit, told Bloomberg BNA that the legal challenge presents “an uphill battle, no doubt about it.” He added, however, that the Citizens United case itself once appeared to be a long shot, involving only the narrow issue how FEC disclosure rules affected a 2008 video about Hillary Clinton. Deutsch noted that the Citizens United case ended up as a vehicle for the Supreme Court to strike down decades-old restrictions on corporate spending in campaigns.

“They asked for a cookie and got the whole kitchen,” he said.

Waiting for Election Results

Prospects for future court action on campaign finance issues remain highly uncertain due to a prolonged vacancy on the Supreme Court and uncertainty over how the Nov. 8 elections will turn out. The future course of the law on campaign finance and other key issues will depend on who is elected to the White House and Congress and how the Supreme Court vacancy is filled, legal experts noted.

Besides those filing the new lawsuit, other critics of the current campaign finance system have pointed to record spending by super PACs and other outside groups as the basis for potential legal or legislative action after the election to curb this spending and what they view as its negative consequences.

A study released Nov. 3 by Fred Wertheimer, a veteran supporter of campaign finance regulation who heads the nonprofit Democracy 21, found the increased role of outside spending is most pronounced in the battle between Republicans and Democrats for control of the Senate. In seven of the eight key battleground races, Wertheimer said, spending by outside groups has exceeded the total spending by the two major-party candidates by margins as high as 4 to 1.

Outside spending in these races has been used mainly for ads attacking the Senate candidates, with outside groups spending $377 million opposing candidates compared to $59 million to support of candidates.

“Negative attacks ads breed skepticism, cynicism and anger about officeholders and government,” Wertheimer said in a statement. “Since there is no way to hold outside groups accountable for what they say, truth all too often falls by the wayside.”

“The Supreme Court has long recognized that ‘corruption’ is ‘inherent in a system permitting unlimited financial contributions’ to candidates,” Wertheimer’s statement said, adding that the Supreme Court has never decided the question of whether contributions to super PACs can be constitutionally limited.

A new Supreme Court majority favorable to campaign finance laws could uphold the constitutionality of such limits, which existed for more than three decades until they were struck down in the SpeechNow decision by the D.C. Circuit.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Paul Hendrie at phendrie@bna.com

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