Ognibene v. ParkesOgnibene v. Parkes
- Reporters:
- , , , ,
- Before:
- Livingston, Calabresi, Crotty
MICHELE RUSSO and LEROY COMRIE, Plaintiffs,
-v.-
JOSEPH P. PARKES, S.J., in his official capacity as Chairman of the New York City Campaign Finance Board, DALE C. CHRISTENSEN, JR., in his official capacity as Member of the New York City Campaign Finance Board, KATHERYN C. PATTERSON, in her official capacity as Member of the New York City Campaign Finance Board, MARK S. PIAZZA, in his official capacity as Member of the New York City Campaign Finance Board, MARK DAVIES, in his official capacity as Executive Director of the New York City Conflicts of Interests Board, MONICA BLUM, in her official capacity as Member of the New York City Conflicts of Interests Board, STEVEN ROSENFELD, in his official capacity as Member of the New York City Conflicts of Interests Board, ANDREW IRVING, in his official capacity as
Before: LIVINGSTON, CALABRESI, Circuit Judges, and CROTTY, District Judge.**
Plaintiffs-Appellants1 brought this action in February 2008 against the Defendants-Appellees,2 challenging the constitutionality of certain provisions of New York City‘s political campaign finance and lobby laws that (1) limit campaign contributions by individuals and entities that have business dealings with the City; (2) exclude such contributions from matching with public funds under the public financing scheme; and (3) expand the prohibition on corporate contributions to include partnerships, LLCs, and LLPs. Plaintiffs appeal from a February 6, 2009 decision of the United States District Court for the Southern
Affirmed.
JAMES BOPP, JR., Joe LaRue, of counsel, Bopp, Coleson & Bostrom, Terre Haute, IN, and Charles Capetanakis, Davidoff Malito & Hutcher LLP, New York, NY, for Plaintiffs-Appellants.
JANE L. GORDON, Senior Counsel (Edward F.X. Hart, Jonathan Pines, Lisa F. Grumet, Andrew J. Rauchberg, on the brief), for Michael A. Cardozo, Corporation Counsel of the City of New York, New York, NY, for Defendants-Appellees.
Paul M. Smith, Luke P. McLoughlin, David Newman, Jenner & Block, LLP, New York, NY, for Amicus Curiae 2009 City Counsel Candidates Brad Lander and Mark Winston Griffith.
John H. Snyder, Proskauer Rose LLP, New York, NY, for Amicus Curiae Citizens Union.
PAUL A. CROTTY, District Judge:
Appellants seek declaratory and injunctive relief, alleging that recently enacted amendments to the New York City Administrative Code, commonly known as the “pay-to-play” rules, violate the First Amendment to the U.S. Constitution by unduly burdening protected political speech and association, the
I. Facts
In 1988, after a recent wave of local scandals, the New York City Council passed the Campaign Finance Act (“CFA“), establishing the Campaign Finance Program (“Program“). (A-819.) The Campaign Finance Board (“Board“) administers the Program and provides public matching funds to candidates running for the three citywide offices of Mayor, Comptroller, and Public Advocate; the five offices of Borough President; and the fifty-two offices of the City Council. The CFA imposes certain obligations on all candidates, including the filing of financial disclosure statements reporting contributions and expenditures, limitations on the amount of contributions from any single donor, and the obligation to respond to the Board‘s requests to verify compliance with the Program.
Additionally, candidates who seek to participate in the public financing system must agree to limitations on the total amount of money the campaign spends promoting the candidate‘s nomination or election. A participating candidate‘s campaign receives public matching funds for all eligible individual private contributions from New York City residents of up to $175 at a rate of six dollars in public funds for every one dollar in private contributions.
In 1998, the New York City Charter Revisions Commission (“Commission“) sought to resolve problems that the existing law did not address. (A-314-A-316.) It proposed, and the City‘s voters passed by referendum, a Charter amendment that directed the Board to prohibit corporate contributions for all participating candidates; required these candidates to disclose contributions from individuals and organizations doing business with the City; and directed the Board to promulgate rules fleshing out these “doing business” limitations. N.Y.C. Charter
In 2006, after several public hearings and studies, the Board reported that over twenty percent of the contributions in the 2001 and 2005 election cycles were from individuals and entities doing business with the City, who comprised less than six percent of contributors, and that large contributions were more likely than small contributions to come from such donors. N.Y.C. Campaign Fin. Bd., Interim Report on “Doing Business” Contributions 12, 13 (June 19, 2006) (“Interim Report“). In addition, incumbents–considered to have greater influence on city decisions–were more likely to receive these large donations than challengers. N.Y.C. Campaign Fin. Bd., Public Dollars for the Public Good: A Report on the 2005 Elections 122 (2006) (“2005 Election Report“). In order to
That year, the City passed Local Laws 15 and 17, which created a mandatory electronic filing system for lobbyists; required full lobbyist disclosure of all fundraising and consulting activities; banned all gifts from lobbyists to City Officials; and excluded contributions from lobbyists and the individuals identified on their statements of registration from the definition of “matchable contribution.”
In 2007, the City Council voted 44-4 to pass Local Law 34, requiring disclosure of, and restricting contributions from, individuals and entities who have business dealings with the City, as defined in the CFA. The law lowers these donors’ contribution limits approximately twelve-fold, to $400 (from the generally-applicable level of $4,950) for the three City-wide offices; to $320 (from $3,850) for Borough offices; and to $250 (from $2,750) for City Council.6 The law
[w]hile there is nothing intrinsically wrong with contributions from those doing business with the City, the ability of such individuals to contribute could create a perception, regardless of whether such perception is accurate, that such individuals have a higher level of access to the City‘s elected officials. It is important to eradicate this perception and reduce the appearance of undue influence associated with contributions from individuals doing business with the City.
(N.Y.C. Council, Comm. on Gov‘tl Affairs, Report of the Govt‘l Affairs Div., for Int. No. 586-2007, 24-25 (June 12, 2007) (“Committee Report“).) The Committee Report explained that the expansion of the corporate contribution ban addressed a “loophole” that allowed similarly structured business entities to circumvent the contribution limits. (Id. at 29.)
The “doing business” limits apply to contributions from any natural person who is a chief executive officer, chief financial officer, and/or chief operating officer; serves in a senior managerial or equivalent capacity; or has an interest exceeding ten percent in an entity that has “business dealings” with the City or affiliate agency, unless that person is the candidate or a relative.
Section 3-702 of the Administrative Code contains two definitions of “lobbyist.” The first is narrow, referencing
As of June 30, 2008, New York City agencies (excluding affiliated entities) held 19,578 open contracts worth approximately $55.4 billion. (Simpson Decl. ¶ 5). A wide range of for-profit and non-profit entities qualify as having business dealings with the City, including Con Edison, Waste Management of New York LLC, the New York City Ballet, the Legal Aid Society, the Brooklyn Botanic Garden Corporation, various health and social services providers, day care centers, religious organizations, and labor organizations. See generally Doing Business Portal, http://www.nyc.gov/html/doingbiz/home.html (last visited Aug, 10, 2011). Although several labor organizations and union-affiliated entities have business dealings on account of procurement contracts with the City, “collective bargaining with City employee unions is a distinct process that is governed by State law.” (Simpson Decl. ¶ 8). As a result, the procurement rules (and, consequently, the “doing business” limits) do not apply to collective bargaining with City unions or to employer-employee relationships for non-unionized employees. (Id.)
Appellants filed an original and amended complaint in February 2008 and, in April 2008, moved for a preliminary injunction on some of the claims asserted, raising facial challenges to these three provisions. After the district court
II. The District Court Decision on Motion for Summary Judgment
By Order dated February 6, 2009, the district court denied Appellants’ motions for preliminary and permanent injunctive relief and granted Appellee‘s motion for summary judgment on the same grounds: that the challenged limits served a sufficiently important governmental interest–addressing the reasonable concern about actual and apparent corruption by those doing business with the City. While there was no recent evidence of actual corruption with respect to campaign contributions, the district court reasoned, given the public‘s perception of continuing corruption, fueled by actual pay-to-play scandals in the 1980s, the City properly imposed the challenged limits to combat corruption, correct misperceptions, and instill public confidence in the City‘s political and governmental processes. 599 F. Supp. 2d at 445-46. The court also found that the contribution limits were closely drawn to respond to this interest in eliminating actual and apparent corruption, rejecting Appellants’ arguments concerning the failure to index for inflation and viewpoint discrimination. Id. at 454-55.
Finally, the district court upheld the ban on contributions from partnerships, LLCs, and LLPs for the same reasons that it found justified prohibiting corporate contributions, specifically, to prevent circumvention of the valid contribution limits and the use of business forms to deploy for political ends business assets amassed for business reasons. Id. at 459-60. The court also rejected the argument that this prohibition is overbroad, underinclusive, or overinclusive. Id. at 460-61.
III. Analysis
A. Standard of Review
We review a district court‘s grant of summary judgment de novo. Weinstock v. Columbia Univ., 224 F.3d 33, 40 (2d Cir. 2000). We affirm an order granting summary judgment “only when no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law.” Riegel v. Medtronic, Inc., 451 F.3d 104, 108 (2d Cir. 2006). The parties here agree that these motions present no issue of material fact.
B. Applicable Legal Standards
The Government bears the burden of justifying its contribution limits in light of a facial challenge. Nixon v. Shrink Missouri Gov‘t PAC, 528 U.S. 382, 387-88 (2000).
In evaluating constraints on such speech and related activity, Buckley v. Valeo distinguished between campaign expenditures and campaign contributions. 424 U.S. 1 (1976). Strict scrutiny applies to restraints on the former, while limits on the latter are more leniently reviewed because they pose only indirect constraints on speech and associational rights. See Beaumont, 539 U.S. at 161-62 (holding that restrictions on the activity of contributing to a candidate‘s campaign are “merely ‘marginal’ speech restrictions subject to relatively complaisant review“); Fed. Election Comm‘n v. Colo. Republican Fed. Campaign Comm., 533 U.S. 431, 440 (2001); Buckley, 424 U.S. at 20-21. For this reason, contribution limits and bans are permissible as long as they are closely drawn to address a sufficiently important state interest. See, e.g., Davis v. Fed. Election Comm‘n, 554 U.S. 724, 737 (2008); Beaumont, 539 U.S. at 162; Buckley, 424 U.S. at 25; Green Party of Conn. v. Garfield, 616 F.3d 189, 198 (2d Cir. 2010).
The Supreme Court has consistently held that the prevention of actual and perceived corruption qualifies as a sufficiently important state interest. See, e.g., McConnell, 540 U.S. at 143; Shrink Missouri, 528 U.S. at 390; Buckley, 424 U.S. at 27; see also Davis, 554 U.S. at 740-41 (noting that the use of personal campaign funds, as opposed to contributions, actually reduces the threat of corruption). It is not necessary to produce evidence of actual corruption to demonstrate the sufficiently important interest in preventing the appearance of corruption. See McConnell, 540 U.S. at 150. On the other hand, “mere conjecture” is insufficient. See Shrink Missouri, 528 U.S. at 392. That is, the threat of corruption cannot be “illusory.” Buckley, 424 U.S. at 27. “The quantum of empirical evidence needed to satisfy heightened judicial scrutiny . . . will vary up or down with the novelty and plausibility of the justification raised.” Shrink Missouri, 528 U.S. at 391.
In Citizens United, the Supreme Court held that the government cannot prohibit independent expenditures in support of a political candidate based on the source‘s corporate identity. 130 S.Ct. 876. Contrary to Appellants’ exhortations, however, Citizens United applies only to independent corporate expenditures. It reaffirms existing precedent on the propriety of contribution limits. It therefore has no impact on the issues before us in this case:
[U]nlike limits on independent expenditures, [contribution limits] have been an accepted means to prevent quid pro quo corruption. Citizens United has not made direct contributions to candidates, and it has not suggested that the Court should reconsider whether contribution limits should be subject to rigorous First Amendment scrutiny.
Citizens United, 130 S.Ct. at 909 (citations omitted). Citizens United confirmed the continued validity of contribution limits, noting that they most effectively address the legitimate governmental interest, identified by Buckley, in preventing actual or perceived corruption. Id. at 908-09 (quoting the standard of Fed. Election Comm‘n v. Nat‘l Right to Work Comm., 459 U.S. 197 (1982)); see also In re Cao, 619 F.3d 410, 422-23 (5th Cir. 2010) (holding
Since the Supreme Court preserved the distinction between expenditures and contributions, there is no basis for Appellants’ attempt to broaden Citizens United. Appellants’ selective and misleading quotes carefully skip over the Court‘s clear distinction between limits on expenditures and limits on contributions.10 (See, e.g., Reply Br. 3.) The Supreme Court has repeatedly stated that the Circuit Courts are to apply the law as it exists, unless it is expressly overruled. See Agostini v. Felton, 521 U.S. 203, 237 (1997) (“[I]f a precedent of this Court has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to
After handing down Citizens United, the Supreme Court invalidated an Arizona public financing scheme under which public matching funds were triggered by a privately financed candidate‘s level of expenditures. Bennett, 131 S.Ct. 2806. Arizona gives publicly financed candidates an initial allotment of public funds to begin their campaigns. Under the challenged law, if a privately financed, opposing candidate‘s expenditures (combined with independent expenditures in support of the privately financed candidate and opposed to the publicly financed candidate) exceeded the amount of this initial outlay, the publicly financed candidate received a proportionate amount of additional matching funds, up to twice the initial amount. Id. at 2814-15.
The Supreme Court determined that the provision posed a “markedly more significant burden” than the Millionaire‘s Amendment struck down in Davis, 128 S.Ct. 2759, particularly because it effectively punished the nonparticipating candidate for spending his own money on his own campaign. Bennett, 131 S.Ct. at 2819. The Court repeated its holding that there is no
Bennett binds us, but for reasons we explain later, it does not control the outcome in this case. Bennet reaffirmed several key holdings: (1) that the lower closely drawn standard applies to contribution limits, 131 S.Ct. at 2817; (2) that preventing corruption and its appearance is a compelling state interest, id. at 2825; and (3) that public financing is still a valid means of funding political candidacy. Id. at 2828.
In addition, this Court recently struck down the State of Connecticut‘s ban on lobbyist contributions. Green Party, 616 F.3d 189. The Court found that there was “insufficient evidence to infer that all contributions made by state lobbyists give rise to an appearance of corruption.” Id. at 206 (emphasis in original). It reasoned that an outright ban was not closely drawn because a
Green Party sustained a ban on contributions from state contractors because they had been implicated in a series of recent scandals. Id. at 204-05. While a limit may address the actual and perceived corruption, it does not entirely eliminate it because some exchange of money is still allowed. When the appearance of corruption is particularly strong due to recent scandals, therefore, a ban may be appropriate.
Appellants urge us to expand Citizens United, Bennett, and Green Party to invalidate the three provisions they challenge. We conclude, however, that their arguments do not comport with the express language and reasoning of these opinions.
C. “Doing Business” Contribution Limit
Although Citizens United stated that mere influence or access to elected officials is insufficient to justify a ban on independent corporate expenditures, improper or undue influence presumably still qualifies as a form of corruption.13 See Bennett, 131 S.Ct. at 2827 (discussing the “‘interest in alleviating the corrupting influence of large contributions‘” served by contribution limits (emphasis added) (quoting Buckley, 424 U.S. at 55)); Colo. Republicans, 533 U.S. at 440-41 (“[L]imits on contributions are more clearly
While independent corporate campaign expenditures may influence a candidate, or facilitate access that non-speakers may not enjoy, Citizens United emphasized the right to speech and its independence from the candidate. Direct giving to the candidate, or the candidate‘s campaign committee, stands on a different footing. Since neither candidate nor contributor is likely to announce a quid pro quo, the appearance of corruption has always been an accepted justification for a campaign contribution limitations. See McCormick v. United States, 500 U.S. 257, 272-73 (1991) (holding that an elected official‘s receipt of a campaign contribution amounts
Furthermore, such donations certainly feed the public perception of quid pro quo corruption, and this alone justifies limitations or perhaps an outright ban. Citizens United, 130 S.Ct. at 908, 910. When those who do business with the government or lobby for various interests give disproportionately large contributions to incumbents, regardless of their ideological positions, it is no wonder that the perception arises that the contributions are made with the hope or expectation that the donors will receive contracts and other favors in exchange for these contributions. The threat of quid pro quo corruption in such cases is common sense and far from illusory. See, e.g., NCRL v. Bartlett, 168 F.3d 705 (4th Cir. 1999) (upholding
Indeed, the Supreme Court recently attributed the particular threat of corruption posed by campaign contributions to the risk of mixing money and politics. Bennett, 131 S.Ct. at 2826 (observing that “‘the use of personal funds reduces the candidate‘s dependence on outside contributions and thereby counteracts the coercive pressures and attendant risks of abuse’ of money in politics” (quoting Buckley, 424 U.S. at 53)). Doing business contributions mix money and politics on both ends of the equation, making them that much more risky and questionable. Contributions to candidates for City office from persons with a particularly direct financial interest in these officials’ policy decisions pose a heightened risk of actual and apparent corruption, and merit heightened government regulation. Mere access or influence based on independent corporate speech, therefore, is not the concern here. This is so even though the record occasionally also speaks to the presence of mere “influence.”
Indeed, as the district court reasoned, Ognibene, 599 F. Supp. 2d at 448 n.12, to require evidence of actual scandals for contribution limits would conflate the interest in preventing actual corruption with the separate interest in preventing apparent corruption. In other words, if every case of apparent corruption required a showing of actual corruption, then the former would simply be a subset of the latter, and the prevention of actual corruption would be the only legitimate state interest for contribution limits. Green Party is consistent with Supreme Court precedent rejecting this argument, due to the difficulty of detecting actual corruption and the equal importance of eliminating apparent corruption. See McConnell, 540 U.S. at 153; Buckley, 424 U.S. at 27.
Appellants do not dispute that the generally applicable contribution limits responded to actual pay-to-play scandals in New York City in the 1980s. (Appellant Br. 4-5.) Rather, they argue that these initial limits have been successful, so that lower limits are unnecessary. This determination, however, is a matter of policy better suited for the legislature, which has
In addition, it is clear that the City Council properly studied this issue before concluding that doing business contributions are particularly problematic and merit special treatment. The record contains several reports
While Appellants pretend to be skeptical, their assertions are not credible. Not only is the connection between money and municipal action objectively reasonable, but their own deposition testimony confirms that the public perceives this connection to exist. See, e.g., Pines Decl., Ex. II, Deposition of Martin Malave Dilan at 33-34; Pines Decl., Ex. JJ, Deposition of Thomas V. Ognibene at 31-32; Pines Decl., Ex. LL, Deposition of Fran Reiter at 52; Pines
Appellants also argue that these restrictions are underinclusive because they do not apply to all contributors with the influence and incentive
Appellants additionally contend that these provisions are overinclusive because they may be applied using the broader definition of “lobbyist.” Appellees concede, however, that the narrower definition applies. (Appellee‘s Br. 11 n.5). This narrower definition comports with, and is no broader than necessary to address, the interest in eliminating actual and perceived corruption. Appellants acknowledge that the public perceives lobbyists as influencing or attempting to influence elected officials through their campaign contributions. (See Pines Decl., Ex. LL, Deposition of Fran Reiter at 52; Pines Decl., Ex. NN, Deposition of Viviana Vazquez-Hernandez at 44.)
Appellants further assert that these provisions are poorly tailored because they are not indexed for inflation and discriminate based on viewpoint. The mere failure to index for inflation, however, does not compel a finding that the provisions are not closely drawn. Randall pointed to the failure to index for inflation as only one of five factors which, taken together, led to its conclusion that certain contribution limits violated the First Amendment. See 548 U.S. at 253-263 (also weighing the fact that the limits applied to contributions by political parties and included volunteers’ expenses). But the real problem in Randall was that the limits were so low that a candidate could not communicate meaningfully with constituents. The limits challenged here apply only to certain contributions and for citywide elections; and they are not as “suspiciously low” as those in Randall. Id. at 261; see also Green Party, 616 F.3d at 205 (noting that a limit of $50 per election would effectively address the problem of actual corruption without “wholly extinguish[ing] a contractor‘s associational rights“). Appellants do not provide any evidence that the reduced dollar amount which can be contributed prevents the running of a competitive campaign. Furthermore, Randall was concerned that such low limits would “magnify the advantages of
Viewpoint discrimination is a subset of content discrimination in which the government impermissibly targets, not the subject matter itself, but rather particular views taken on the subject. See Rosenberger v. Rector & Visitors of Univ. of Va., 515 U.S. 819, 829, 831 (1995); Make the Road by Walking, Inc. v. Turner, 378 F.3d 133, 150 (2d Cir. 2004). Appellants argue that the challenged provisions discriminate based on viewpoint because neighborhood, community, and labor organizations, which are not necessarily subject to the doing business limitations, share a significantly different viewpoint than do business owners and members of management. Appellants have failed, however, to offer any evidence that these organizations share a single viewpoint.18 While a neighborhood association may have a different mission than a construction business, their interests may be precisely aligned on a particular project. It also does not follow that all neighborhood
D. Non-Matching Provisions
Sections 3-702(3) and 3-703(1-a) exclude contributions from individuals subject to the lower doing business limits, including lobbyists, as well as contributions from any other person required to be included in a lobbyists’ statement of registration from the matching provisions of the public financing scheme. Non-matching does not prevent someone from making a contribution, but it does minimize the value of that contribution. In this respect, it is similar to a limit and subject to the less stringent standard of review. For the reasons discussed, the non-matching provision is closely drawn to address a sufficiently important governmental interest.
Additionally, the use of the broader definition of lobbyist for non-matching purposes does not render it overinclusive. Insofar as the provision
The Supreme Court has held that the “degree of scrutiny turns on the nature of the activity regulated,” not on the fact that contributions are outright banned, as opposed to just limited. Beaumont, 539 U.S. at 162. Accordingly, the more lenient standard of review also applies to the entity ban. On the other hand, the analysis of whether a restriction imposes a ban or merely a limit is relevant to the closely drawn analysis. See Green Party, 616 F.3d at 206-07.
Beaumont recognized four justifications for the federal ban on corporate contributions: (1) the anti-corruption interest already discussed, 539 U.S. at 154; (2) the anti-distortion interest, stemming from the “special characteristics of the corporate structure that threaten the integrity of the political process . . . [by] permit[ting] [corporations] to use resources amassed in the economic marketplace to obtain an unfair advantage in the political marketplace,” id. at 153-54 (internal quotations omitted); (3) the dissenting-shareholder interest in protecting individuals’ investments in the corporation from being used to support political candidates these individuals might oppose, id. at 154; and (4) the anti-circumvention interest in preventing the evasion of valid contribution limits. id. at 155. Since the anti-corruption
The anti-corruption rationale presents a sufficiently important governmental interest for the reasons already discussed, and applies equally to LLCs, LLPs, and partnerships, as to corporations. In addition, the organizational form of an LLC, LLP, and partnership, like a corporation, creates the opportunity for an individual donor to circumvent valid contribution limits.22 See Beaumont, 539 U.S. at 155, 157 (noting that National Right to Work, 459 U.S. 197 rejected the argument that the rationale for the corporate contribution ban “turns on details of the corporate
The record contains sufficient evidence from which one could infer circumvention and perceive corruption. For example, these entities have become more active contributors since the corporate ban; LLC contributions more than doubled from 2.8% in the 2001 election to 6.2% in the 2005 election.23 2005 Election Report, at 121. Most compelling is the overwhelming percentage of contributions from such entities for incumbent candidates.24 While the rise in contribution activity could be attributed to innocent causes, the grossly disproportionate support for candidates based not on ideology or voting record, but rather on their relative position of power and ability to return favors, creates the appearance of impropriety.
Entity contributions also undermine the CFA‘s goal of transparency, because they only have to be attributed to the partner or owner when they exceed $2,500. Committee Report, 29. Transparency is a particular problem for LLCs because many are involved in city business, especially land use, yet
The pressing question here is whether the entity ban is closely drawn.26
For the reasons that justify the corporate contribution prohibition, therefore, the legislature permissibly determined that there is no room in City campaigns for entity contributions. While limits may minimize circumvention and the appearance of corruption, the City is free to decide that these evils must be eliminated to ensure the public‘s faith in the electorate system.
CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the district court upholding the constitutionality of the contribution limits, non-matching provision, and entity ban.