Ognibene v. ParkesOgnibene v. Parkes
- Reporters:
- Before:
- Calabresi, Livingston, Crotty
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 District of New York (Swain, J.) granting the Defendants’ motion for summary
Affirmed.
Judge Calabresi and Judge Livingston concur in separate opinions.
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. (
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 § 3-211‘s definition of “every person or organization retained, employed or designated by any client to engage in lobbying.” The second is broader, encompassing anyone included in § 3-211, as well as the lobbyist‘s spouse or domestic partner; unemancipated children; and, for entities, the organization‘s officers and employees who engage in lobbying or work for a division of the organization that engages in lobbying activities and their family members.8
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. (
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.
The district court subjected the non-matching provisions to the same analysis and concluded that they were permissible. Id. at 456. It reasoned that the legislature should not be required to use taxpayer dollars to match contributions it has determined present a risk of corruption. Id. The court also held that using the broader definition of lobbyist does not render these provisions overbroad because this expanded reach is necessary to prevent circumvention of the contribution limits. Id. at 457.
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.
The party requesting permanent injunctive relief must demonstrate (1) irreparable harm (here, a constitutional violation) and (2) actual success on the merits. Cartier v. Symbolix, Inc., 454 F. Supp. 2d 175, 186 (S.D.N.Y. 2006); see also Amoco Prod. Co. v. Vill. of Gambell, AK, 480 U.S. 531, 546 n.12 (1987) (“The standard for a preliminary injunction is essentially the same as for a permanent injunction with the exception that the plaintiff must show a likelihood of success on the merits rather than actual success.“). Denials of injunctive relief, like grants of summary judgment, are reviewed de novo when they concern rights under the First and Fourteenth Amendments. See Ferris v. Cuevas, 118 F.3d 122, 125 & n.3 (2d Cir. 1997); Nat‘l Awareness Found. v. Abrams, 50 F.3d 1159, 1164 (2d Cir. 1995). In such cases, “an appellate court has an obligation to ‘make an independent examination of the whole record’ in order to make sure that ‘the judgment does not constitute a forbidden intrusion on the field of free expression.‘” Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485, 499 (1984) (quoting New York Times Co. v. Sullivan, 376 U.S. 254, 284-86 (1964)).
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).
The judiciary owes special deference to legislative determinations regarding campaign contribution restrictions. See, e.g., Fed. Election Comm‘n v. Beaumont, 539 U.S. 146, 155 (2003); McConnell v. Fed. Election Comm‘n, 540 U.S. 93, 137 (2003). While paying deference, the judiciary must also protect the fundamental First Amendment interest in political speech.
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).
In certain cases, however, contribution restrictions may severely impact political dialogue, for example by preventing “candidates and political committees from amassing the resources necessary for effective advocacy.” Buckley, 424 U.S. at 21. This question focuses on differences in kind, rather than of degree. Id. at 30. A showing of special justification is required for such restrictions to be closely drawn. See Randall v. Sorrell, 548 U.S. 230, 261 (2006).
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.
This Court must consider three important decisions that have issued subsequent to the district court‘s opinion: Citizens United, 130 S.Ct. 876; Arizona Free Enterprise Club‘s Freedom Club PAC v. Bennett, 131 S.Ct. 2806 (2011); and Green Party, 616 F.3d 189.
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.
The doing business limitations have three characteristics that place them outside the scope of Citizens United and Green Party: First, they deal with contributions (as opposed to expenditures). Second, they are limits (as opposed to outright bans). Third, they address the appearance of corruption (as opposed to the appearance of influence). The doing business limitations are only indirect constraints on protected speech and associational rights; they are not subject to strict scrutiny but rather to the more lenient, closely drawn standard of review. In addition, the heightened evidentiary requirement urged by Appellants does not apply.12
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 We hold that it is. The expansion of the corporate ban to include these
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.
As Jesus looked up, he saw the rich putting their gifts into the temple treasury. He also saw a poor widow put in two very small copper coins. “Truly I tell you,” he said, “this poor widow has put in more than all the others. All these people gave their gifts out of their wealth; but she out of her poverty put in all she had to live on.”
Luke 21:1-4.
I join the majority opinion because it properly describes and follows the current law of campaign finance. But all is not well with this law, and I believe it appropriate to state in a judicial opinion why I think this is so.
Judge Crotty has performed a careful analysis of corruption (actual and its appearance), and only of corruption, as a ground for upholding the regulations at issue in this case.1 His is the necessary analysis under Supreme Court case law. The High Court has told us that the First Amendment protects the right to speak through the use of money, but that the existence of this right does not prevent governments from enacting campaign finance regulations in furtherance of their interest in limiting actual or apparent corruption. McConnell v. FEC, 540 U.S. 93, 143 (2003) (“Our cases have made clear that the prevention of corruption or its appearance constitutes a sufficiently important interest to justify political contribution limits.“). At the same time, the Court has rejected the idea that governments may, by campaign finance regulations, pursue the separate interest in what it has rather derisively called “leveling the playing field.” Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett, 131 S. Ct. 2806, 2825-26 (2011). That is, under current Supreme Court doctrine, governments cannot defend campaign finance regulations on the ground that such regulations take into account and respond to the different
I agree completely with the Supreme Court that the First Amendment protects each person’s right to express political beliefs through money. Where I disagree with the Court is in its repeated insistence that any recognition of the “level playing field” interest (elsewhere referred to as the “antidistortion interest,” Citizens United v. FEC, 130 S. Ct. 876, 903 (2010)) is inconsistent with this right. To the contrary, the antidistortion interest promotes this right in two important ways. First, it prevents some speakers from drowning out the speech of others. And second, it safeguards something of fundamental First Amendment importance—the ability to have one’s protected expression indicate the intensity of one’s political beliefs. These values, moreover, have not gone unrecognized in underlying First Amendment jurisprudence.
The first benefit of antidistortion measures is not difficult to see. If an external factor, such as wealth, allows some individuals to communicate their political views too powerfully, then persons who lack wealth may, for all intents and purposes, be excluded from the democratic dialogue. In much the same way that anti-noise ordinances help to prevent megaphone users from drowning out all others in the public square, contribution limits can serve to prevent the wealthiest donors from rendering all other donors irrelevant—from, in effect, silencing them. For an articulation of this concern—i.e., that, without regulation, the rich would be able to use their wealth to overwhelm the voices of the poor—one need look no further than the Supreme Court’s decision in Red Lion Broadcasting Co. v. FCC, where, in upholding the FCC’s “fairness
The second benefit of antidistortion measures is perhaps more subtle, but of no less importance: it relates to the ability of all persons, rich and poor, to express the intensity of their feelings. In many circumstances, the intensity of a speaker’s expression tells us much about the intensity of that speaker’s beliefs. Polite applause conveys less enthusiasm than a shouted “Bravo!” Passing criticisms convey weaker disagreement than passionate harangues. And, of course, the tone of a judicial opinion provides some indication of how bleakly a judge views a certain area of the law. But where speech takes the form of a monetary expenditure, the link between intensity of beliefs and intensity of expression, as measured by the amount contributed, can too easily break down. This is a result of the unequal distribution of wealth, which makes the amount of money an individual spends on behalf of a political cause an unreliable measure of the intensity and depth of that individual’s support for the cause. “In other words, and crucially, a large contribution by a person of great means may influence an election enormously, and yet may represent a far lesser intensity of desire than a pittance given by a poor person.” Landell v. Sorrell, 406 F.3d 159, 161 (2d Cir. 2005) (Calabresi, J., concurring in the denial of rehearing en banc), rev’d sub nom. Randall v. Sorrell, 548 U.S. 230 (2006).
To return to the example of the megaphone in the public square, the problem with its loudness is not just that it drowns out the voices of others, but also that it misrepresents, to an outside observer, the relative intensity of the speaker’s views. That is, even if the megaphone
The foregoing example may seem fanciful, but money is not. And there is perhaps no greater a distortive influence on the intensity of expression than wealth differences. The wider the economic disparities in a democratic society, the more difficult it becomes to convey, with financial donations, the intensity of one’s political beliefs. People who care a little will, if they are rich, still give a lot. People who care a lot must, if they are poor, give only a little. Jesus’s comment about the rich donors and the poor widow says it all. Today, the amount of an individual’s campaign contribution reflects the strength of that individual’s preferences far less than it does the size of his wallet. In this sense, all political donations—by rich and poor alike—lose a crucially important aspect of their communicative value when campaign funds are unrestricted. And that is a problem of profound First Amendment significance.
It is no small irony, then, that in refusing to recognize the existence of a state interest in “leveling the playing field“—an interest which prior Supreme Court precedents had suggested was compelling, and certainly is at least legitimate—the Court purports to safeguard “the ’unfettered interchange of ideas.’” Bennett, 131 S. Ct. at 2826 (quoting Buckley v. Valeo, 424 U.S. 1, 14 (1976) (per curiam)). Far from standing in the way of this ideal, the antidistortion interest is vital to its fulfillment. Left unregulated, the “distorting effects of immense aggregations of wealth,” Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), overruled by Citizens United, 130 S. Ct. at 913, will garble the political debate, trumpeting
Indeed, if the Court were correct that the level playing field interest does not provide an appropriate reason for regulating campaign contributions, then it becomes difficult to see why the First Amendment does not give individuals the right to pay other individuals to vote for candidates in elections. Such a practice need not raise the specter of quid pro quo corruption; one might still buy votes on behalf of one’s preferred candidate even if one could ask nothing from the candidate in return. The critical problem with vote-buying is not corruption; it is rather that allowing the practice would give the wealthiest individuals a huge effect over political elections, making even their relatively minor preferences matter immensely and the possibly intense preferences of the poor matter not much at all. This same concern, of course, explains why a state has a valid interest in leveling the playing field with respect to campaign contributions. Yet, curiously, the Supreme Court seems to accept the validity of vote-buying regulations without
I am not suggesting that expressing the intensity of one’s views is the only thing that matters in campaign finance doctrine, or in election law more generally.6 Nor am I suggesting that the playing field must be fully level. This is an area of law in which many considerations come into play, some of which, such as the dangers of quid pro quo corruption, counsel in favor of state regulation, while others, such as the dangers of incumbent entrenchment, counsel against. What specific limitations are and are not appropriate is not for me to say or even to suggest as a judge.7 They are not the kinds of things courts are suited to decide but instead constitute matters as to which legislative judgment is crucial. What this in turn means is simply stated: So long as the Supreme Court refuses to recognize the importance of the antidistortion interest, and its connection to the ability to express the intensity of one’s feelings, the Court will be ignoring a variable of critical constitutional importance and excluding the most important players—democratically elected legislatures—from their proper role in regard to that variable.
What is at stake here—what everyone knows is at stake here—is what was recognized and expressed so directly, succinctly, and powerfully in the story of the widow’s mite. The ability to express one’s feelings with all the intensity that one has—and to be heard—is a central element of the right to speak freely. It is, I believe, something that is so fundamental that sooner or later it is going to be recognized. Whether this will happen through a constitutional amendment or through changes in Supreme Court doctrine, I do not know. But it will happen. Rejection of it is as flawed as was the rejection of the concept of one-person-one-vote. And just as constitutional law eventually came to embrace that concept, so too will it come to accept the importance of the antidistortion interest in the law of campaign finance.
It is with that faith in a better future, along with an understanding of the requirements of our flawed present, that I join the majority opinion.
I join in Parts I, II and III.A of the majority opinion. I write separately as to Part III.B-E only to make clear my disagreement with the majority’s conclusion that improper or undue influence is a form of corruption that may be addressed with closely drawn contribution limits. To the extent that this conclusion is one basis on which the majority upholds the special contribution limits and non-matching provisions that New York City’s campaign finance law imposes on those “doing business” with the City, I respectfully disagree with its analysis.1 I nevertheless conclude that these provisions pass constitutional muster pursuant to the Supreme Court’s and this Court’s precedents. Accordingly, I concur in the judgment as expressed in Part III.B-E.
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Since the enactment of its Campaign Finance Act (“CFA“) in 1988, New York City has imposed limits on the amount of money that may be contributed to a single candidate for public office in a given calendar year.2 These generally applicable limits are $4,950 to each candidate running for mayor, public advocate, or comptroller; $3,850 to each candidate running for borough president; and $2,750 to each candidate running for city council. N.Y.C. Admin.
“Doing business” contributors include, inter alia, individuals with specified ownership or management roles in entities with valuable City contracts or grants, or relations with the City that concern the acquisition or disposition of real property.3 Lobbyists are also included within the stricter contribution limits.
“Doing business” contributors are strictly limited in their contributions as compared to others: they may donate only approximately one twelfth as much to a candidate as those who are deemed not to be “doing business” with the City. Because the “doing business” contribution limits, unlike the regular limits, are not indexed for inflation, moreover, the disparity between these two sets of limits is only likely to increase over time. Compare N.Y.C. Admin. Code
The City also operates a public campaign financing program in which candidates for the various City offices specified above may choose to participate. In this program, the City matches the campaign contributions of most individuals to candidates who participate in the public funding program at a rate of six to one (with up to $1,050 of public funds available for matching per contributor per candidate).
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I agree with the majority that the “doing business” contribution limitations in this case are subject to scrutiny for whether “they are closely drawn to serve a sufficiently important interest.” Davis v. FEC, 554 U.S. 724, 737 (2008) (internal quotation marks omitted); see Maj. Op. at 21. The Supreme Court has repeatedly indicated that, while expenditure limitations are subject to strict scrutiny, which requires courts to assess whether the challenged “restriction ’furthers a compelling interest and is narrowly tailored to achieve that interest,’” Citizens United v. FEC, 130 S. Ct. 876, 898 (2010) (quoting FEC v. Wis. Right to Life, Inc., 551 U.S. 449, 464 (2007) (opinion of Roberts, C.J.)), contribution limits are subject to less searching scrutiny because campaign contributions “lie closer to the edges than to the core of political expression.” FEC v. Beaumont, 539 U.S. 146, 161 (2003); see also Nixon v. Shrink Mo. Gov’t PAC, 528 U.S. 377, 387-88 (2000); Buckley v. Valeo, 424 U.S. 1, 25 (1976) (per curiam). At the same time, with regard to contribution no less than expenditure limits, the First Amendment “has its fullest and most urgent application precisely to the conduct of campaigns for political office.” Buckley, 424 U.S. at 15 (quoting Monitor Patriot Co. v. Roy, 401 U.S. 265, 272 (1971)) (internal quotation mark omitted). The scrutiny required by the First Amendment is thus both “exacting,” see id. at 16; Shrink Mo., 528 U.S. at 386, and “rigorous,” Buckley, 424 U.S. at 29.
I likewise agree that the non-matching provisions here are similarly subject to “closely drawn” analysis. See Maj. Op. at 38. At least in the circumstances in this case, matching funds given to a candidate as a result of a contribution from a private donor are the functional equivalent of a contribution, so that limits on such funds are functionally equivalent to contribution limits. See FEC v. Colo. Republican Fed. Campaign Comm., 533 U.S. 431, 456 (2001) (determining that “party coordinated spending [is] the functional equivalent of contributions,” id. at 447, and accordingly applying “scrutiny appropriate for a contribution limit,” id. at 456). Therefore, this Court must analyze both sets of provisions to determine whether “they are closely drawn to serve a sufficiently important interest.” Davis, 554 U.S. at 737 (internal quotation marks omitted). The City bears the burden of proof in this inquiry. Shrink Mo., 528 U.S. at 387-88.
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In Citizens United, the Supreme Court unequivocally stated that when Buckley identified the prevention of corruption or its appearance as “a sufficiently important governmental interest” to render closely drawn contribution limits acceptable under the First Amendment, ”that interest was limited to quid pro quo corruption.” 130 S. Ct. at 909 (emphasis added).6 The Court recognized that favoritism and influence, unlike corruption, are unavoidable in representative politics, in which a legitimate and substantial
Even if it were not clear after Citizens United (as, in fact, it is) that
The majority distinguishes between “mere influence or access to elected officials” and “improper or undue influence,” suggesting that while the former may be an insufficient basis on which to limit
This is no unimportant point. By requiring that a regulation suppressing political speech and association be closely drawn to address the threat of quid pro quo corruption (or the perception that large contributors will secure their quid), courts strive to draw a principled constitutional line—a line that permits legislatures to address the significant danger corruption poses to representative democracy while it vigorously protects political speech by ensuring that
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Focusing properly only on the prevention of quid pro quo corruption or its appearance, I next conclude that the New York City restrictions at issue are “closely drawn” to serve the interest which justifies the limitations they place on
The Supreme Court has not yet addressed the
The law at issue, to survive
The majority relies in part on the “objective[] reasonable[ness]” of “the connection between money and municipal action” to uphold the strict limits New York City‘s law places upon the free speech and associational rights of those “doing business.” Maj. Op. at 31. The Supreme Court has stated, however, that “[w]hen the Government defends a regulation on speech as a means to redress past harms or prevent anticipated harms, it must do more than simply posit the existence of the disease sought to be cured. It must demonstrate that the recited harms are real, not merely conjectural.” Turner Broad. Sys, Inc. v. FCC, 512 U.S. 622, 664 (1994) (plurality opinion) (citation omitted) (internal quotation marks omitted); see also Colo. Republican Fed. Campaign Comm. v. FEC, 518 U.S. 604, 618 (1996) (opinion of Breyer, J.) (applying Turner in the campaign finance context); Shrink Mo., 528 U.S. at 392 (“We have never accepted mere
On balance, however, and upon a close examination of the record, I agree with the majority‘s conclusion that the City has adequately demonstrated that its “doing business” contribution limits address a real and not a conjectural corruption concern. First, a report prepared for the Campaign Finance Board (“CFB“) in 2006 reported that those “doing business” with the City tend to give larger contributions to candidates (albeit within the 1988 contribution limits) as compared to those lacking such business relationships. See Loprest Decl., Ex. A, Municipal Campaign Finance and “Pay-to-Play“: An Analysis of Doing Business Contributions in New York City (“Pay-to-Play Report“) at 12.9 The Report cites to specific instances of large donations by real estate developers, in particular, during the very period when matters in which these developers had
Granted, the record also contains troubling indications that at least some of the proponents of the “doing business” limits may have aimed at curtailing the influence of “doing business” contributors as much as corruption or its appearance. See, e.g., Pines Decl., Ex. F. Report of the New York City Charter Revision Comm‘n at 19 (noting that donations by “doing business” contributors “at a minimum . . . create the perception that [such] donors have the opportunity and desire to exercise undue influence over elected officials“). The anticorruption interest pressed by the City in justification of the new
First, those “doing business” within the meaning of the law are held to the stricter contribution limits only while doing business and for a short period thereafter—strongly suggesting that the law is aimed at the particular danger of real or apparent quid pro quo arrangements, rather than mere influence. See McConnell, 540 U.S. at 167 (noting that certain “regulations . . . are reasonably tailored, with various temporal . . . limitations designed to focus the regulations on the important anticorruption interests to be served“). The Supreme Court has said, moreover, that contribution limits, as opposed to bans, “involve[] little
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Despite some disagreement with the majority in terms of the analysis here, I share much common ground with the majority opinion. I agree that the ban on contributions by LLCs, LLPs, and partnerships must be upheld pursuant to FEC v. Beaumont, 539 U.S. 146, which the Supreme Court declined to overrule in Citizens United. More fundamentally, I agree that individual citizens, not their government, should determine who may speak and to whose speech others will listen. See Maj. Op. at 14-15. The Supreme Court has recognized that “[l]eveling electoral opportunities [by restricting political speech] means making and implementing judgments about which [candidates‘] strengths should be permitted to contribute to the outcome of an election.” Davis, 554 U.S. at 742. The
Notes
All of these incidents occurred in the New York State area. While none implicates an elected New York City official, the public is not as parsing as Appellants would hope. The City Council need not wait for this outbreak to infect its own members, so that the public may specifically lose faith in that legislative body, as well. Ranging from before 2006--when the first of the challenged laws passed--to the present, these scandals have created a climate of distrust that feeds the already established public perception of corruption. Appellants argue that the City may, in defending the law, rely only on those scandals that predate it. To consider only the scandals that predate the law would lead to an absurd result in cases, unlike this one, where a history of actual corruption is required (e.g., a ban): If the law were struck down as a result, the Council could immediately pass the exact same law, citing the exact same scandals which now would be prior to the passage of the law, and that law would be upheld.