176 F. Supp. 3d 685
E.D. Ky.2016Background
- Protect My Check, Inc. (PMC) is a §501(c)(4) corporation authorized to do business in Kentucky that wishes to make direct contributions to state/local candidates and to form/finance PACs to advance its political goals.
- Kentucky Constitution §150 and implementing statutes (KRS 121.025, KRS 121.035, KRS 121.150(2), and related regs) prohibit corporations from making direct or indirect contributions; violations carry forfeiture and criminal penalties.
- PMC argues the corporate ban violates the First Amendment (political speech/association) and the Fourteenth Amendment (equal protection) because unions and LLCs are not subject to the same restrictions.
- Defendants contend the ban serves the compelling interest of preventing quid pro quo corruption and note that corporations may participate indirectly via PACs or advisory-opinion interpretations permitting certain independent expenditures or PAC administration.
- At oral argument defendants conceded the ban cannot permissibly treat corporations differently from LLCs/unions and that all three groups should be treated equally with respect to forming/administering state PACs; the parties therefore narrowed the dispute largely to the First Amendment question about a corporate ban on direct contributions (given a PAC option).
- The court considered precedent distinguishing contribution limits (subject to a "closely drawn" standard) from independent-expenditure limits (subject to more exacting review), and evaluated PMC’s motion for a preliminary injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kentucky’s ban on direct corporate contributions violates Equal Protection by treating corporations differently than LLCs/unions | Ban discriminates against corporations; similarly situated groups must be treated the same | State conceded differential treatment between corporations and LLCs/unions cannot survive strict scrutiny | Enjoined enforcement to the extent the ban treats corporations differently; PMC likely to succeed on equal protection claim |
| Whether Kentucky’s complete ban on direct corporate contributions (even if PAC option exists) violates the First Amendment | Citizens United reasoning should extend to direct contributions; PAC option is an inadequate, burdensome alternative | Beaumont and related precedent permit bans on direct contributions where a PAC/SSF option exists to prevent corruption/anti-circumvention | Denied broad relief — PMC has not shown strong likelihood of success on its First Amendment claim given existing precedent and a PAC option; but relief granted to prevent unequal treatment |
| Whether the PAC/SSF option makes a complete ban on direct contributions "closely drawn" to prevent corruption | PAC option is insufficient; less restrictive alternatives (disclosure, caps) exist | PAC option allows participation without corporate-fund corruption risk; courts have upheld bans with PAC option | Court found PAC option can make a ban closely drawn; PAC option suffices here absent evidence it is unavailable or applied unequally |
| Scope of preliminary injunction sought by PMC | Seeks declaration that §150 and implementing laws are unconstitutional and a broad injunction allowing direct contributions | State urged deference and reliance on Supreme Court precedent upholding contribution bans with PAC option | Court granted preliminary relief only to prevent disparate treatment and to ensure corporations may administer/state PACs like LLCs/unions; denied further relief pending clarification |
Key Cases Cited
- Citizens United v. Federal Election Comm’n, 558 U.S. 310 (Supreme Court) (corporate political speech protected; struck down ban on independent corporate expenditures)
- Federal Election Comm’n v. Beaumont, 539 U.S. 146 (Supreme Court) (upheld federal ban on direct corporate contributions where PAC/SSF option exists)
- McCutcheon v. Federal Election Comm’n, 572 U.S. 185 (Supreme Court) (distinguished contribution limits from independent-expenditure limits; contributions reviewed under a "closely drawn" standard)
- Buckley v. Valeo, 424 U.S. 1 (Supreme Court) (established distinction between contributions and expenditures; accepted limits on contributions to prevent corruption)
- McConnell v. Federal Election Comm’n, 540 U.S. 93 (Supreme Court) (upheld certain aggregate rules and recognized PAC/SSF option as constitutionally meaningful)
- Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (Supreme Court) (earlier decision restricting corporate independent expenditures; later overruled in part by Citizens United)
- Kentucky Right to Life, Inc. v. Terry, 108 F.3d 637 (6th Cir.) (upheld Kentucky’s corporate contribution prohibition under the closely drawn standard)