Ralph NADER, Plaintiff, v. FEDERAL ELECTION COMMISSION, Defendant.
Civil Action No. 10-989 (RCL).
United States District Court, District of Columbia.
Nov. 9, 2011.
ROYCE C. LAMBERTH, Chief Judge.
Seth E. Nesin, David Brett Kolker, Kevin Deeley, Federal Election Commission, Washington, DC, for Defendant.
ROYCE C. LAMBERTH, Chief Judge.
Before the Court are plaintiff‘s Motion [16] for Summary Judgment and defendant‘s cross-Motion [18] for Summary
I. BACKGROUND
In May 2008, former Independent Party Presidential candidate Ralph Nader filed an administrative complaint with the Federal Election Commission (FEC). AR at 1. He alleged a conspiracy by many individuals, law firms, and political organizations affiliated with the Democratic Party to deny him and his running mate, Peter Camejo, ballot access in 18 states as candidates for President and Vice President of the United States in the 2004 general election. Id. at 2. This effort allegedly resulted in violations of the
Nader‘s complaint contained three counts. Count 1 alleged that the Democratic National Committee (DNC), 18 state or local Democratic Parties, the Kerry-Edwards Campaign, the Ballot Project, and at least 95 lawyers from 53 law firms made unreported contributions to the Kerry-Edwards Campaign, in violation of
The FEC assigned Nader‘s complaint a Matter Under Review (MUR) number of 6021, and notified him that the respondent(s) in the complaint would receive notice within five business days, id. at 576, as is required by FECA.
In September 2008 (and again in January 2009), Mr. Nader supplemented his complaint, naming dozens of additional alleged violators of FECA and adding what amounted to a fourth count, which asserted that Pennsylvania state employees had worked on petition challenges at taxpayer
In November 2009, the FEC‘s General Counsel, Thomasenia P. Duncan, submitted a 32-page report to the Commission that recommended, inter alia, that the Commission find no reason to believe that the DNC, the Kerry Committee, their treasurers, or John Kerry personally violated FECA. Id. at 1730.32. The Commission later voted 6-0 in favor of the General Counsel‘s recommendations, and closed MUR 6021. Id. at 1810-11. Specifically, the Commission made the following findings:
- Find no reason to believe that the Democratic National Committee, and Andrew Tobias, in his official capacity as treasurer, violated
2 U.S.C. §§ 441a(f) ,441b and434(b) . - Find no reason to believe that Kerry for President 2004, Inc. and David Thorne, in his official capacity as treasurer, violated
2 U.S.C. §§ 441b ,441a(f) and434(b) . - Find no reason to believe that Kerry-Edwards 2004, Inc. and David Thorne, in his official capacity as treasurer, violated
2 U.S.C. §§ 441b ,441a(f) and434(b) . - Find no reason to believe that John Kerry violated the
Federal Election Campaign Act of 1971 , as amended, or the Commission‘s regulations. - Find no reason to believe that America Coming Together violated
2 U.S.C. §§ 434(b) and441a(a)(1)(A) with respect to the allegation that it made an undisclosed excessive in-kind contribution. - Find no reason to believe America Coming Together violated
2 U.S.C. § 433 . - Dismiss the complaint as to The Ballot Project.
- Dismiss the complaint as to National Progress Fund, Uniting People for Victory, and Americans for Jobs.
- Dismiss the complaint as to America Coming Together with respect to the allegation that it violated
2 U.S.C. § 434 by failing to report ballot expenditures. - Approve the Factual and Legal Analyses, as recommended in the First General Counsel‘s Report dated November 30, 2009....
- Approve the appropriate letters.
- Close the MUR 6021 file as to all Respondents and other persons and entities named in the complaint, as supplemented.
Id. at 1810-11.
After MUR 6021 was closed, Nader filed this complaint in this Court for wrongful dismissal pursuant to
II. STANDARD OF REVIEW
Congress passed the
Under FECA, [a]ny person who believes a violation of [the] Act ... has occurred, may file a complaint with the FEC.
This Court may set aside the FEC‘s dismissal of Nader‘s complaint only if its action was contrary to law, see
III. THE PARTIES’ MOTIONS [16, 18] FOR SUMMARY JUDGMENT
Mr. Nader wants the FEC‘s decision to close MUR 6021 and dismiss the complaint as to various groups and individuals set aside, arguing that the agency ignored evidence, employed faulty reasoning, and violated FECA‘s procedural rules by failing to notify each and every one of the hundreds of individuals, law firms, and political entities named in his administrative complaint of the lawsuit filed against them. The FEC seeks deference to its decision, arguing that its determination that an investigation should not be initiated is supported by the administrative record and reasonable in the light of the insufficiency of Nader‘s allegations and supporting evidence as well as the significant administrative burden placed upon the agency by Nader‘s 575-page administrative complaint. The Court will discuss these and other arguments in the context of the four counts Nader brought in his administrative complaint, as supplemented.
A. Count 1: Illegal and Unreported Contributions and Expenditures
The heart of Mr. Nader‘s administrative complaint is his allegation in Count 1 that numerous individuals, law firms, and political entities made millions of dollars in illegal and unreported contributions and expenditures to benefit the Kerry-Edwards Campaign. AR at 91. This general allegation involves a number of independent legal violations. First, the
1. Legal Standards
FECA contains numerous provisions relating to reporting by candidates and political organizations, as well as limits on the amount of money groups and individuals can contribute. Section 434 requires treasurers of political committees to file periodic reports of receipts and disbursements with the FEC.
A contribution under the Act includes any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office. Id. § 431(8)(A)(i). Contribution also includes the payment by any person of compensation for the personal services of another person which are rendered to a political committee without charge for any purpose, id. § 431(8)(A)(ii), as well as expenditures made by any person in cooperation, consultation, or concert, with, or at the request of suggestion of, a candidate, his authorized political committees, or their agents.... Id. § 441a(a)(7)(B)(i). Excluded from the definition of contribution is the value of services provided without compensation by any individual who volunteers on behalf of a candidate or political committee (the volunteer exception). Id. § 431(8)(B)(i).
Contributions are subject to strict limits. See, e.g., §§ 441a(a)(1)(A), 441a(a)(2)(B), 441a(d). Candidates may not knowingly accept a contribution in excess of these limits. Id. § 441a(f).
In addition to these reporting requirements and dollar limits on contributions, FECA also prohibits corporations and unions from making any contributions in connection with an election to any political office. Id. § 441b(a). However, independent expenditures by corporations and unions in connection with elections for political office are lawful. Citizens United v. FEC, 558 U.S. 310, 130 S. Ct. 876, 913, 175 L. Ed. 2d 753 (2010).
2. Analysis
While the FEC‘s General Counsel believed that Count 1 of Nader‘s complaint was based upon a viable theory—namely, that spending by corporate law firms to remove a candidate from the ballot may constitute prohibited contributions—she concluded that the available facts do not support the allegations. Id. at 1730.10. This ground, adopted by the Commission in its Factual and Legal Analysis, see id. at 1836-41, formed the basis for the Commission‘s conclusion that there was no reason to believe that John Kerry, his campaign organizations (Kerry for President 2004, Inc. and Kerry-Edwards 2004, Inc.) or their treasurers, or the DNC or its treasurer violated the Act or the Commission‘s regulations. Id. at 1730.16, 1858, 1810 (Findings Nos. 1-4). The Court finds that
The first problem the Commission identified in Nader‘s complaint was that, although he named over 53 law firms and 95 lawyers that assisted individuals and Democratic state and local parties in initiating ballot-access litigation across the country, he did not specify, with one exception, which firms allegedly provided free services or to whom, which of those firms are incorporated, and of those, which firms compensated their attorneys who worked on the ballot challenges. Id. at 1730.10, 1837. Nader says that this mis-describes his complaint. Pl.‘s Mot. Summ. J. [16-1] 13. His complaint, he says, states that the named law firms provided their legal services for the benefit of the Kerry-Edwards Campaign and that nearly every lawyer working on the challenges apparently received normal compensation from their law firms. Id. (quoting AR at 92). Nader further argues that as to the issue of whether these law firms were incorporated, this allegation could be confirmed by the FEC by a simple internet search. Id.
The Court finds that the FEC‘s evaluation of this aspect of Nader‘s complaint was reasonable and supported its decision. The mere fact that these law firms, or individual lawyers employed by them, intend[ed] to benefit the Kerry-Edwards Campaign, AR at 92, would not make their activities contributions to the Kerry-Edwards Campaign that would be subject to the restrictions of FECA. Even assuming that the lawyers engaged in this ballot-access work were not acting as volunteers pursuant to FECA‘s volunteer exception because their law firms paid them their normal compensation while they were engaged in challenging Nader-Camejo‘s nomination papers in various states, a law firm, whether incorporated or not, can spend as much as it wants exercising its First Amendment right to freedom of speech so long as these expenditures are not made in coordination with a candidate or political committee. See Citizens United, 130 S. Ct. at 913. FECA only restricts expenditures made in cooperation, consultation, or concert, with, or at the request of suggestion of, a candidate, his authorized political committees, or their agents.... Id. § 441a(a)(7)(B)(i). However, for nearly every one of the 53 named firms, Nader doesn‘t tell the FEC how the law firm coordinated with the Kerry-Edwards Campaign such that its expenditures would constitute regulated contributions rather than protected independent expenditures.
As to these law firms’ corporate status, which is central to Nader‘s allegation that they violated
Not all of the FEC‘s reasoning, however, is satisfactory. The FEC believed that Nader‘s allegations with respect to one law firm—Reed Smith—were sufficiently specific, but also found these allegations to be contradictory. AR at 1730.10, 1837. The FEC notes that in one place Nader
But as to the crucial issue of coordination, the FEC reasonably determined that Nader‘s supporting facts were insufficient. Nader claims that the Ballot Project, Inc., which he describes as a Section 527 group established to prepare legal challenges to the ballot qualifications of candidates for public office, AR at 39, directed the ballot-access litigation in various states in conjunction with the DNC and the Kerry-Edwards Campaign, id. at 50, but the FEC noted that this allegation was insufficient to suggest coordination absent supporting facts suggesting that the Ballot Project‘s efforts were on behalf of the Kerry Committee or other indicia of concerted activity.... Id. at 1852. Although Nader claims that the Ballot Project‘s recruitment of law firms was for the express purpose of benefitting the Kerry-Edwards Campaign, the most that he has alleged is parallel conduct and shared goals, not coordination.
As to Reed Smith, Nader‘s complaint suggests that ties between John Kerry and the firm, as well as the fact that 18 of its attorneys worked on a ballot-access challenge to Nader-Camejo in Pennsylvania, establishes coordination, id. at 49-50, but it was not unreasonable for the FEC to conclude otherwise. That 18 attorneys at a law firm with somewhere north of 1,600 attorneys decided to dedicate their skills to the task of getting their preferred candidate elected, even adding the fact the John Kerry may have retained that firm‘s services in the past, provides no evidence of coordination between Reed Smith or its attorneys and the Kerry-Edwards Campaign with regard to the Pennsylvania ballot-access litigation. The FEC‘s commissioners did not act unreasonably in wanting more from Nader on this point before launching an expensive, time-consuming, and far-reaching investigation of allegations that, by April 2010, had grown long in the tooth.
The FEC also considered evidence highlighted by Nader as conclusive on the issue of coordination, and found it to be lacking. Id. at 1853-54, 1838-39. The first is an e-mail from Caroline Adler—described by Nader as a DNC and Kerry-Edwards Campaign employee, id. at 7—to DNC employees working on challenges to Nader-Camejo‘s nominating papers. Id. at 160-61. An attachment to the e-mail, titled Script for Nader Petition Signers, was allegedly used by DNC employees when calling people who had signed Nader-Camejo petitions. Id. at 7. However, Nader doesn‘t explain how this e-mail establishes coordination or even between whom. While Nader claims that the telephone script was authored by a lawyer associated with the DNC and John Kerry, there remains a yawning gap between these allegations and the conclusion that law firms were making unreported expenditures, coordinated with the DNC or the Kerry-Edwards Campaign.
Nader also cites as proof of coordination the testimony, from a 2004 hearing before the Maine Bureau of Corporations, Elections and Commissions, of Maine Democratic Party Chair Dorothy Melanson. Id. at 4; Pl.‘s Opp‘n Def.‘s Mot. Summ. J. [19] 3. Nader claims that this testimony shows that Ms. Melanson was directed, by the DNC, to initiate a ballot challenge to Nader-Camejo in Maine, and that the DNC paid her to do so. AR at 4. While this testimony, in this Court‘s opinion, provides some support for the claim that Ms. Melanson‘s activities were performed in coordination with the DNC, see e.g., AR at 106, 108, elsewhere she gives testimony to the effect that her ballot-access activity was performed on her own initiative. Id. at 110. In any event, she testified that the Democratic Party promised to pay her for her work, which raises an obvious problem for Nader‘s claim that unreported contributions were made to the DNC by Ms. Melanson. Id. at 111-12. Therefore it was not unreasonable for the FEC to conclude that the evidence cited by Nader failed to support his contention that lawyers and law firms made unreported contributions, in the form of free legal services, to either the DNC or the Kerry-Edwards Campaign.
The FEC likewise determined that Nader‘s allegations related to a 2008 Pennsylvania Grand Jury Presentment failed to support his claim that law firms were mak-
In sum, the Court‘s evaluation of the administrative record and the FEC‘s reasoning leads it to conclude that the agency‘s determination that, as to Count 1, there was no reason to believe that the DNC, the Kerry Committee, their treasurers, or John Kerry personally violated FECA is not contrary to law. The fact that the FEC at one point believed internally that this matter was of a high enforcement priority does not automatically render its ultimate decision to dismiss contrary to law. See White v. FEC, No. Civ. A. 94-2509, 1997 WL 459849, *3 (D.D.C. July 31, 1997). Nor does it put the lie to the FEC‘s argument that the issue of resource allocation played an important role in its decision to dismiss. It seems eminently reasonable that a complaint involving high-profile political figures and over a hundred groups and individuals was initially thought by the FEC to merit special attention, but that upon further examination the agency concluded that there was not enough there there to warrant a complex investigation.
B. Count 2: Illegal and Unreported Contributions and Expenditures
Count 2 of Mr. Nader‘s administrative complaint accuses the Service Employees International Union (SEIU) and a Section 527 group called America Coming Together (ACT) of making undisclosed contributions to the DNC in connection with an effort to deny Nader-Camejo ballot access in Oregon, in violation of
In evaluating Nader‘s allegations and factual support, the FEC identified many of the same problems with these allegations vis á vis SEIU and ACT as it found with respect to Nader‘s allegations in Count 1 against the DNC, Kerry Committee, John Kerry, and various law firms and lawyers. The FEC stated in its General Counsel report and in its factual and legal analyses that Nader‘s complaint does not allege, and the available information does not suggest, that SEIU‘s and ACT‘s activities in Oregon were coordinated with the
In reaching this conclusion, the agency examined Nader‘s claim that SEIU and the DNC maintained close political and financial ties in part because Anna Burger—SEIU‘s Secretary-Treasurer—is a DNC official. Id. at 76. Nader believes that the fact that Ms. Burger is a DNC official plainly establishes reason to believe that ACT and SEIU coordinated with the DNC or the Kerry-Edwards Committee on the Oregon ballot challenges, Pl.‘s Mot. Summ. J. [16-1] 17. However, the FEC reasonably concluded otherwise, and its determination is entitled to deference by this Court. The FEC determined that the fact that Ms. Burger is a member-at-large of the DNC (which is the lowest level on the DNC totem pole, AR at 388-99) provided no basis for inferring that she was involved in the DNC‘s decision making such that coordination between the DNC and SEIU arose from her activities. AR at 1730.19 (applying
The FEC also reasonably discounted the evidence Mr. Nader offered to support his claim that the SEIU made large, unreported contributions to the DNC, thereby violating FECA‘s prohibition against labor union contributions to national political committees. Id. at 76 (citing
In sum, the Court finds that the FEC‘s decision to find no reason to believe that ACT violated FECA and to close the MUR with respect to SEIU and other individuals and groups connected with Nader‘s allegations in Count 2, id. at 1810-11, is not contrary to law.
C. Count 3: Failure to Register
Count 3 of Nader‘s administrative complaint alleges that the Section 527 Respondents—namely, the National Progress Fund, United Progressives for Victory, Uniting People for Victory, the Ballot Project, and Americans for Jobs—failed to register with the FEC as political committees, in violation of FECA. Id. at 9, 18, 19 (citing
As to the other Section 527 groups—United Progressives for Victory, Uniting People for Victory, Americans for Jobs, and the National Progress Fund—the FEC recognized that these groups, based on the allegations in Nader‘s complaint, may have engaged in political activity that would have obligated them to register as political committees, but it concluded that each of them was either defunct or had ceased operations, and that in those circumstances its prosecutorial discretion should be exercised to dismiss the allegations as to those groups. Id. at 1730.30.
The Court finds that the FEC‘s decision to dismiss the complaint as to the Section 527 groups named in Count 3 was not contrary to law, and represents a reasonable exercise of the agency‘s considerable prosecutorial discretion. The FEC has broad discretionary power in determining whether to investigate a claim, and its decisions to dismiss complaints are entitled to great deference as well, as long as it supplies reasonable grounds. Akins, 736 F. Supp. 2d at 21. Nader has not provided any evidence or presented any arguments that suggest abuse of this discretion; he appears only to argue that it should have been exercised differently. Pl.‘s Mot. Summ. J. [16-1] 19-20. However, as the Supreme Court has noted, a decision to not investigate a claim involves a complicated balancing of various factors that are peculiarly within [the agency‘s] expertise, including whether a violation has occurred, whether the agency‘s resources are better used elsewhere, whether its action would result in success, and whether there are sufficient resources available to take any action at all. Heckler v. Chaney, 470 U.S. 821, 831, 105 S. Ct. 1649, 84 L. Ed. 2d 714 (1985).
While, unlike in the Heckler case, judicial review is available under FECA to complainants dissatisfied with the FEC‘s decisions not to investigate, see
D. Count 4: Allegations Involving the 2006 Romanelli Campaign
What the FEC calls Count 4 of Nader‘s complaint relates to a series of allegations set out in an October 2008 supplement to Nader‘s administrative complaint. AR at 741. That supplement notified the FEC of new information arising out of a Grand Jury Presentment released by a Pennsylvania Attorney General in July 2008. Id. In general, the Presentment concerned charges of conspiracy, theft, and conflict of interest against members and employees of the Pennsylvania House Democratic Caucus. Id. Nader claimed that the use of taxpayer money for campaign purposes alleged in the Presentment was also involved in the Nader-Camejo ballot challenge in that state. Id. He asked the FEC to name additional respondents (i.e., various Pennsylvania state legislators), to investigate the information in the Presentment to determine whether Respondents committed civil violations of FECA, and to refer MUR 6021 as a whole to the Justice Department for a criminal investigation. Id. at 742. He also asked the FEC to add additional respondents and to investigate civil violations of FECA related to an alleged scheme relating to a ballot challenge against Carl Romanelli, who was a Green Party candidate for United States Senate in 2006. Id. This latter allegation is perhaps most properly labeled as an additional count, since the information in the Presentment related to Reed Smith and the state legislators appears to relate only to the allegations in Count 1.
As to Nader‘s claim related to a ballot-access challenge against Carl Romanelli, Nader appears to have abandoned that claim and does not address it anywhere in his summary-judgment submissions. Nevertheless, the FEC‘s decision to close MUR 6021 as to any respondents and entities associated with Count 4 is not contrary to law. Id. at 1811. The FEC reasonably concluded that Nader‘s claim was too speculative to warrant an investigation. Id. at 1730.31. For example, Nader alleged in his original complaint in this Court that the Senate campaign of Bob Casey was involved in the challenge to Mr. Romanelli‘s nominating papers, using the labor of state employees and misappropriated taxpayer funds, Compl. [1] 19, but the FEC reasonably concluded that Nader‘s allegations represented an expansive gloss on the Presentment, which did not charge Mr. Casey, his campaign, or lawyers working on his behalf with any wrongdoing. AR at 1730.31.
The FEC‘s decision not to proceed with an investigation of the allegations in Count 4 was further supported by its determination that a state investigation of criminal activity by state employees was ongoing, and that an investigation by the FEC would require an extensive amount of the agency‘s limited resources. Id. Particularly given that Mr. Nader fails to present any arguments to the contrary in his summary-judgment submissions, the agency‘s conclusions on this score are reasonable and not contrary to law.
While the agency‘s decision to essentially dismiss Count 4 would be entitled
In sum, the FEC‘s decision to close MUR 6021 as to all respondents and entities associated with Count 4 of Nader‘s complaint, as supplemented, is not contrary to law.
E. The FEC‘s Failure to Notify Various Individuals and Entities
Perhaps the most persuasive aspect of Mr. Nader‘s motion is his argument that the FEC mishandled his administrative complaint. He claims that the agency‘s decision to dismiss the complaint should be set aside because it violated FECA by failing to notify dozens of respondents concerning the administrative complaint filed against them. Pl.‘s Mot. Summ. J. [16-1] 6-11.
The Court finds that Nader is correct that the FEC‘s failure to notify all persons and entities who were alleged to have violated the Act was improper. FECA says very clearly that [w]ithin 5 days after receipt of a complaint, the Commission shall notify, in writing, any person alleged in the complaint to have committed [a violation of FECA].
However, despite this clear defect in the FEC‘s handling of Nader‘s administrative complaint, this was harmless error. The FEC‘s failure to follow the notice procedures in Section 437g of FECA should be disregarded by courts if such errors are harmless. FEC v. Club For Growth, Inc., 432 F. Supp. 2d 87, 90 (D.D.C.) (quoting Doolin Sec. Sav. Bank v. Office of Thrift Supervision, 139 F.3d 203, 212 (D.C. Cir. 1998)). While Nader says that the FEC‘s failure to follow FECA‘s procedural requirements was no harmless error, Pl.‘s Mot. Summ. J. [16-1] 12, he doesn‘t specifically identify the harm to him that flowed from the FEC‘s error.
At various points in his submissions, Nader suggests that certain information that would have been useful to the FEC could have been obtained if it had served each and every one of the persons and entities named in his administrative complaint, but at no time is it clear that by doing so a benefit to Nader would have resulted. The Court finds no reason to believe that had the FEC properly notified all alleged respondents, it would have
The notice procedures set out in Section 437g are for the benefit of those whom Nader alleges violated the Act, not for Nader‘s benefit. Since MUR 6021 was closed as to all persons and entities named in Nader‘s complaint, the only persons and entities who could have been prejudiced by the FEC‘s error were ultimately absolved of liability.
Therefore the Court finds that the FEC‘s failure to follow the notice requirements of Section 437g is harmless.
IV. CONCLUSION
Although the FEC‘s decision making in this case was, at times, of less than ideal clarity, and although its practices with respect to notification of respondents merit the agency‘s attention given the drift this Court has observed between those practices and the procedural requirements of FECA, the agency‘s decision in this case is not contrary to law. Therefore, for the reasons stated above, the Court will grant defendant‘s Motion [18] for Summary Judgment and deny plaintiff‘s Motion [16] for Summary Judgment.
A separate Order consistent with this Memorandum Opinion shall issue this date.
ROYCE C. LAMBERTH
CHIEF JUDGE