209 F. Supp. 3d 727
D. Del.2016Background
- In 2010 Christine O’Donnell’s campaign committee (Friends of Christine O’Donnell) leased a townhouse to use as campaign headquarters; O’Donnell moved in and used it as her personal residence for ~15 months.
- The committee paid the lease ($1,410/month) and utilities; O’Donnell paid the committee quarterly $770 (~$256.67/month) without a written sublease; utilities totaled roughly $4,264.40 for the period.
- The FEC investigated, found probable cause, and sued alleging conversion of campaign funds to personal use in violation of 52 U.S.C. § 30114(b).
- Defendants argued either (a) the FEC’s regulation applies only when the candidate owns the property, or (b) the regulation/statute is unconstitutional under the First Amendment; they also raised factual defenses including alleged FEC advice.
- The court held as a matter of law that rent and utility payments for a candidate’s personal residence constitute prohibited personal use, that Defendants underpaid for O’Donnell’s residence (thus converting campaign funds), and that the statute/regulation survive constitutional challenge.
- The court granted summary judgment for the FEC on liability, dismissed Defendants’ counterclaims, but left remedy (penalty/disgorgement) unresolved due to factual disputes (notably about claimed FEC advice) and directed the parties to propose next steps.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether rent/utilities paid with campaign funds for a candidate’s residence constitute "personal use" under FECA | Prohibits any home mortgage, rent, or utility payment as personal use; applies to residence whether owned or rented | Regulation should be read to require ownership: per E&J the rule addresses property owned by the candidate | Court: Statute and regulation unambiguously prohibit rent/utilities for any part of candidate’s personal residence; FEC interpretation stands |
| Whether Defendants actually converted campaign funds (liability) | Committee paid most rent/utilities; O’Donnell paid only $770/quarter, less than her fair share | O’Donnell asserted limited use, claimed payments covered security or legal "residence" only; contested allocation methods | Court: Undisputed facts show O’Donnell lived there and underpaid (even under conservative allocation), so conversion occurred; summary judgment for FEC on liability |
| Whether the statute/regulation violate the First Amendment (as-applied and facial challenges) | Personal-use rule targets non-expressive personal expenses and advances anti-corruption/administrative interests | Restrictions on campaign expenditures implicate strict scrutiny (Buckley/Citizens United); overbroad as applied to some campaign spending | Court: No First Amendment burden because payments were personal (not political speech); facial challenge fails for lack of substantial overbreadth; statute/regulation withstand rational-basis review |
| Whether the court can determine remedies on current record | FEC seeks disgorgement and civil penalty based on violation and statutory authorization | Defendants contend remedies can be set now; argue good-faith reliance on alleged FEC staff advice | Court: Cannot resolve remedy now—factual disputes (notably credibility about claimed FEC advice) preclude deciding penalty/disgorgement; parties ordered to propose further proceedings |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (agency deference where statute ambiguous)
- Auer v. Robbins, 519 U.S. 452 (deference to agency interpretation of its own regulation)
- Citizens United v. FEC, 558 U.S. 310 (strict scrutiny for laws that burden political speech)
- Buckley v. Valeo, 424 U.S. 1 (distinction between expenditure limits implicating speech and contribution limits)
- Broadrick v. Oklahoma, 413 U.S. 601 (facial overbreadth standard)
- FCC v. Beach Communications, 508 U.S. 307 (rational-basis review principles)
- Reeves v. Sanderson Plumbing Products, 530 U.S. 133 (credibility determinations and summary judgment limits)
- FEC v. Craig for U.S. Senate, 816 F.3d 829 (D.C. Cir. 2016) (discussed in context of personal-use and enforcement)