OPINION & ORDER
Kentucky’s campaign finance law includes certain limitations on corporate contributions that do not similarly apply to contributions from unincorporated groups, including unions and LLC’s. Plaintiff, Protect My Check, Inc. (PMC) is a non-profit
I
PMC is a § 501(c)(4) corporation organized in Florida and authorized to do business in Kentucky. As such, it seeks to expand employee rights through promoting legislation for “right to work” protections in the states that lack such protections through both direct and indirect contributions to candidates for state and local offices; contributions to organizations, parties, and committees that support such candidates; and by establishing, financing, maintaining, and controlling a PAC to make such contributions. [R. 1 ¶ 8; R. 19-2.] Section 150 of the Kentucky Constitution prohibits corporations from using money or -other things of value to influence elections, stating that corporar tions may not “directly or indirectly, offer, promise or give, or [] authorize, directly or indirectly, any person to offer, promise or give any money or any -thing of value to influence the result of any election .in this State, or the vote of any voter authorized to ■ vote therein.” Ky. Const. § 150. Corporations that violate this prohibition forfeit the right to do business in Kentucky, and corporations or corporate officers and employees who knowingly violate it can be guilty of a Class D felony and fined up to $10,000. Id.) Ky. Rev. Stat. § 121.990. A related implementing statute, KRS 121.025, provides in part: “No corporation authorized to do business in this state ... and no officer or agent of a corporation on its behalf, shall contribute, either directly or indirectly, any money, service, or other thing of value towards the nomination or election of any state, county,: city, or district officer in this state_” Ky. Rev. Stat. § T2l.'025.
Other related statutes at issue include KRS 121.150(2), which prohibits political candidates, committees, contributing organizations or anyone on their behalf from knowingly accepting a contribution from a corporation, directly or indirectly. Ky. Rev. Stat. § 121.50(20). KRS 121.035 similarly prohibits any corporation or its officers, agents, or employees from disbursing, distributing, paying out, or even handling any money or any thing of value that would be used “or employed in any way for the purpose of aiding, assisting, or advancing any candidate for public office in this state in any way whatever.” Ky. Rev. Stat. § 121.035(2). The same statute also prohibits corporations or their officers or employees from giving, furnishing, or after-
PMC contends that these laws (collectively referred to as “Section 150”) violate its rights to free speech and association under the First Amendment to the federal Constitution, and that but for this ban, PMC would contribute to candidates, parties, and political committees to support candidates who share its goals. [R. 19-1 at 7.] Defendants, however, maintain that these laws have been in place since 1891 and were enacted due to concern about the undue corporate influence of railroad corporations follоwing the Civil War that bribed Kentucky lawmakers to give them favorable treatment. [R. 20 at 7.] Defendants further point out that several other implementing statutes mitigate some of PMC’s concerns. For instance, KRS 121.035(3) states that “Nothing in this chapter shall be construed to prohibit a not-for-profit corporation, which does not derive a substantial portion of its revenue from for-profit corporations, from making independent expenditures.” [R. 20 at 10-11 (quoting Ky. Rev. Stat. § 121.035(3)).] Defendants also point to KRS 121.150(21) which allows a corporation to “administer its permanent committee insofar as its actions can be deemed not to influence an election as prohibited by KRS 121.025,” and note that the Attorney General has construed such language as requiring such permanent committees (also known as political action committees or PACs) to reimburse any expenditure made by a host corporation in administering the PAC. [R. 20 at 11.] Moreover, according to Defendants, owners of corporations may make in-kind contributions to a candidate or PAC but must reimburse any actual costs from doing so to the corporation from the owner’s personal funds, аnd a candidate cannot accept the use of a corporation’s assets unless the fair market value is billed to the campaign and paid-for with campaign funds. 32 KAR 2:170.
Defendants also state that various Advisory Opinions have determined that corporations may form unauthorized campaign committees and may contribute to such committees in unlimited amounts in order to make independent expenditures only, and they may form state PACs to receive contributions from permissible sources and make expenditures from those PACs to support or oppose state candidates. [R. 20 at 12 (citing Advisory Opinions 2010-001 and 2010-002).] Additionally, corporations in Kentucky may form federal PACs which can then make contributions to state and local candidates. [Id. (citing Advisory Opinion 2010-006).]
PMC, however, maintains that because unions and LLCs are not under similar restrictions, such disparate treatment violates the federal Fourteenth Amendment’s Equal Protection Clause. Accordingly, PMC'moves for declaratory and injunctive relief, requesting that the Court declare the following laws unconstitutional and enjoin Defendants from enforcing them to the extent they prohibit PMC from contributing to political candidates, PACs, or party committees: Section 150 of the Kentucky Constitution, KRS 121.025, KRS 121.035, KRS 121.150(20), and 32 Ky. Admin. Regs. 2:170. PMC does not seek unrestricted ability to engage in unlimited campaign contributions, but only requests that it be treated the same as LLCs and unions. Defendants assert that these laws should be upheld because the prohibition on corporate contributions “matches the state’s objective to prevent actual and apparent quid pro quo corruption in .elections.” [R. 20 at 3.]
During oral argument, the parties agreed that despite the broad language of
II
A
“A preliminary injunction is an extraordinary remedy which should be granted only if the movant carries his or her burden of proving that the circumstances clearly demand it.” Overstreet v. Lexington-Fayette Urban Cnty. Gov’t,
With that said, “ ‘[wjhen a party seeks a preliminary injunction on the basis of a potential violation of the First Amendment, the likelihood of success on the merits often will be the determinative factor.’ ” Jones v. Caruso,
B
The parties agreed during oral argument that Defendants’ concession largely resolved PMC’s Equal Protection Claim and that as between these particular parties, PMC’s only -remaining claim before the Court is that Kentucky’s complete ban on direct corporate contributions violatеs the First Amendment. Before addressing
PMC contends that “[w]hatever valid campaign finance limits apply to unions and LLCs should apply to corporations and vice versa,” [R. 19-1 at 15], a point which Defendants now concede. Tr. at 58-63. During oral argument, however, Defendants admitted these groups should all be treated the same in this context, but also maintain that although Section 150 was enacted before some organizations, such as LLCs, came into existence, later implementing statutes now take that into account. For instance, Defendants point to KRS 446.010(11), under which the term “corporation” may be applied to any corporation, company, partnership, joint stock company or association. Tr. (Oral Arguments Feb. 26, 2016) at 54, 59. According to Defendants, such broad language also encompasses LLCs and unions. Id. Defense counsel also conceded that all three groups should be treated equally with regard to exercising a PAC option. Id. at 58-59. Thus, as applied, Defendants acknowledge that the historic distinctions between them would likely not survive scrutiny under the Fourteenth Amendment, and that the ban on direct contributions should apply equally to LLCs and unions as well as corporations. Id. at 54-61. This concession on the part of Defendants moots the controversy concerning PMC’s equal protection claim. See id.
The Court agrees with the parties that such arbitrary distinctions could not survive strict scrutiny. However, the alleged unequal treatment of corporations from entities such as LLCs that has occurred up to this point still requires some analysis because, despite Defendants’ concessions, the Court is unaware of any actual change in the existing law or its application that would prevent such disparity from occurring again in the future. In other words, defense counsel’s agreement that corporations, LLCs, and unions should all be treated the same in the context of direct contributions does not necessarily alter the way the law is written or applied. See Johnson v. City of Cincinnati,
“The purpose of the equal protection clause of the Fourteenth Amendment is to secure every person ... against intentional and arbitrary discrimination, whether occasioned by express terms of a statute or by its improper execution through duly constituted agents.” Village of Willowbrook v. Olech,
When equal protection rights' are called into question, especially in the realm of political speech, strict scrutiny applies. See Lac Vieux Desert Band of Lake Superior Chippewa Indians v. Michigan Gaming Control Bd.,
Because “the First Amendment stands against attempts to disfavor certain subjects or viewрoints,” it also prohibits “restrictions distinguishing among different speakers, allowing speech by some but not others.” Citizens United,
Accordingly, to prevail on PMC’s equal protection claim, Defendants must justify the disparate treatment at issue. According to PMC, Kentucky’s contribution ban involves a total prohibition on direct corporate, contributions and allegedly prevents corporate formation of PACs, but at the same time allows unions and LLCs to form PACs and сontribute up to the ordinary PAC limits. Defendants, however, have not sufficiently explained why corporations should be treated differently from unions or LLCs. During oral argument, Defendants further conceded that there are no relevant differences between LLCs and corporations in this context that would justify such disparate treatment. Tr. at 53-59. Although Defendants suggest the threat of corruption might be greater with regard to corporations than for unions or LLCs, the parties agree that under strict scrutiny analysis Defendants must show a causal link between the disparate treatment and preventing corruption, but so far they have not done so. This is not to say there could never be a valid re'ason for treating corporations differently than unions or LLCs, but so far Defendants have not presented one,, and during oral argument defense counsel conceded that the ban should apply equally to all three
Thus, to the extent that Section 150 of the Kentucky Constitution and its implementing statutes and regulations treat corpоrations differently from LLCs and unions by placing more restrictions on their political speech, they are overbroad and unconstitutional under the Equal Protection Clause of the Fourteenth Amendment.
C
The First Amendment provides that “Congress shall make no law ... abridging the freedom of speech.” U.S. Const. Amend. 1. Political speech concerning candidates for public office is “at the core of our First Amendment freedoms.” Republican Party of Minnesota v. White,
Citing the above principles, PMC contends that the protected political speech of corporations includes the right to make direct contributions to candidates as well as independent expenditures. [R. 19-1 at 5.] According to- PMC, the reasoning in Citizens United that struck down the federal ban on independent corporate expenditures should also be applied to strike down Kentucky’s ban on direct contributions by corporations. At the very least, PMC. argues that because the Supreme Court has never upheld bans. on direct contributions unless the regulation at issue provided for indirect contributions through a PAC option, Kentucky’s ban should be struck down because it lacks a similar option. [Id. at 13-14.] In response, Defendants argue that because Citizens United only addressed independent expenditures, the Supreme Court decision in Federal Election Com’n v. Beaumont,
Defendants’ apparent concessions during oral arguments may have resolved some of
Third, the relevant case law indicates that complete bans on direct contributions are generally upheld in situations where the corporation still can participate in the political process through a PAC or a separate segregated fund (SSF).
Given this framework,- the primary question before the Court is whether a complete ban on direct contributions by corporations is constitutional in the aftermath of Citizens United. The parties agree that Citizens United addressed the question of corporate independent expenditures, but PMC contends that its reasoning can and should be extended to bans on direct contributions as well because “[flndependent expenditures are not a substitute for direct candidate contributions.” [R. 23 at 11.] An integrally related question is whether having a PAC option necessarily makes the ban on direct contributions permissible, or whether even a ban with a PAC option impermissibly infringes on a corporation’s freedom of speech.
In addressing this issue, the parties agree on the appropriate standard of review the Court should apply. Tr, at 9-12. Generally, “[flaws that burden political speech are subject to strict scrutiny, which requires the Government to prove that the restriction furthers a compelling interest and -is narrowly tailored to achieve that interest.” Citizens United, 558 U.S. at 340,
The parties agree that this standard should be applied to PMC’s First Amendment claim, and that this is a less rigorous standard than the strict scrutiny applied to the Equal Protection claim discussed above. Tr. at 9-12; see also Wagner v. Federal Election Com’n,
1
Despite the protections on political speech, the government can restrict such speech in order to solve certain problems. McCutcheon,
Defendants’ primary support for the constitutionality of Kentuсky’s ban on direct contributions is FEC v. Beaumont,
Historically there have been four main reasons for bans on corporate contributions and expenditures — the anti-distortion rationale, the anti-corruption interest, a shareholder-protection • interest, and an anti-circumvention rationale. Citizens United invalidated the anti-distortion and the shareholder-protection interests, affirmatively upheld the anti-corruption rationale, and did not address the anti-circumvention rationale. See
Citizens United specifically rejected the anti-distortion rationale used in Austin, which is based on the idea that corporations have an ability to amass great wealth and influence the economy, and therefore should be regulated more heavily in an attempt to “equalize” the relative financial ability of such organizations to influence public discussion. In doing so, the Court reiterated prior precedent finding that “political speech cannot be limited based on a speaker’s wealth,” which is connected to the First Amendment rule prohibiting the suppression of political speech “based on the speaker’s identity.”
The Citizens United Court also rejected the • shareholder-protection interest because such abuses can be corrected by shareholders themselves “through the procedures of corporate democracy,” and there are other less restrictive regulatory mechanisms that can solve this problem.
Several years after Citizens United, the Supreme Court in McCutcheon v. Federal Election Commission, — U.S. -,
Although PMC recognizes that Citizens United focused on independent expenditures rather than bans on direct corporate contributions, PMC contends that its reasoning makes Beaumont no longer applicable even in the context of direct contributions. Contrary to PMC’s implication, however, Beaumont, decided nearly seven years before Citizens United, remains good law and appears to be more controlling in the present case. In Beaumont, a nonprofit advocacy group challenged the federal ban on corporate contributions as applied to nonprofit corporations.
PMC is correct that some of the reasons discussed in Beaumont for justifying restrictions on corporate campaign contributions have been rejected by Citizens United. As explained above, Citizens United makes clear that corporate political speech should not be restricted simply because of the speaker’s identity in the corporate form, nor because of corporations’ ability to aggregate great wealth.
As explained above, the interest in preventing actual or apparent corruption was specifically affirmed by the Supreme Court in Citizens United and in McCuteheon, and is the only reason proffered by Kentucky’s government in the case at hand. Although Citizens United reasoned that independent expenditures by corporations did not give rise to quid pro quo corruption, the Court indicated that preventing such corruption is still a valid interest for other speech restrictions.
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. Although Kentucky’s interest in preventing quid pro quo corruption or the appearance thereof is a legitimate problem for governments to solve, and is sufficiently important to justify certain restrictions on speech, the inquiry does not end there. See McCutcheon,
Here, Defendants contend that Kentucky’s ban on direct contributions is sufficiently closely drawn because corporations “should be able to form a state PAC and administer a state PAC and give money to candidates through that PAC.”
In particular, the Beaumont Court found that the federal ban on direct corporate contributions was constitutional, and its rationale for this has not been overruled. It should be noted that in determining the federal ban was “closely drawn” to achieve the government’s valid interest, the Court observed that it was not “a complete ban” because the law allowed corporations and unions to participate in the federal electoral process through PACs. Beaumont,
Second, PMC relies upon language in Citizens United which indicates that a PAC option is not sufficient to justify bans on independent expenditures. There, the Court characterized PACs as “burdensome alternatives,” which, because they “are expensive to administer and subject to extensive regulations,” did “not alleviate the First Amendment problems” with the federal ban on corporate independent expenditures.
Third, PMC is cоrrect that because disclosure requirements “do not impose a ceiling on speech,” the Supreme Court has noted that “disclosure often represents a
Finally, the Sixth Circuit “has held that Kentucky’s corporate contribution prohibition is “closely drawn” to the goal of combating corruption.” See Kentucky Right to Life,
Even if the PAC option did not exist, PMC does not point to any authority where bans on direct contributions were found unconstitutional due to the lack of a PAC option, or indeed were found unconstitutional at all. Moreover, because Defendants maintain that a PAC option does exist in Kentucky, until PMC establishes otherwise, the concern over the absence of a PAC option is rather academic. In sum, PMC has not provided the Court with
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Finally, it is important to remember that at this stage in the litigation we are primarily focused on PMC’s likelihood of success on the merits. Concerning the argument that bans on direct corporate contributions are unconstitutional, PMC’s success is rather doubtful, though not necessarily impossible, on the record presented thus far. Of particular importance to this determination is that neither Citizens United nor subsequent cases have repudiated Beaumont. The Citizens United Court directly explained how and why it was overruling Austin, see
In fact, in its discussion of Buckley,
Moreover, in direct contrast to Beaumont, the Citizens United Court focused exclusively on independent expenditures, which the parties agree are not at issue here, and it specifically declined to address the context of contribution limits. See
Although the Sixth Circuit does not appear to have addressed this issue since Citizens United, other courts have rejected similar arguments that Beaumont -is no longer controlling or that the reasons for striking- down bans on independent expenditures should also be extended to restrictions on direct corporate contributions. See, e.g., Wagner v. Federal Election Com’n,
Ill
Thus, apart from controlling authority clearly directing otherwise, this Court will not expand the Supreme Court’s holding in Citizens United into the context of direct corporate contributions, especially in a case such as this where the main controversy between the parties before- it has been largely resolved. As noted above, PMC has the fairly heavy “burden of proving that the circumstances clearly demand” the requested injunctive relief in this situation, and no preliminary injunction should issue unless PMC clearly meets that burden. Overstreet,
1. Plaintiff PMC’s Motion for Preliminary Injunction [R. 19] is GRANTED in PART and DENIED in PART.
2. Defendants are enjoined from enforcing Section 150 and its implementing laws against PMC in a manner that results in disparate treatment of corporations, unions, and LLCs.
3. Defendants are enjoined from enforcing Section 150 and its implementing laws in a manner that would prohibit PMC from participating in the political process through a state PAC in the same manner as unions and LLCs are allowed to participate.
4. On the record presented thus far, PMC has not shown a likelihood of success to warrant further injunctive relief concerning its First Amendment claim. To the extent that PMC still seeks further relief, the parties must provide further clarification to the Court within thirty (30) days from the entry of this Order as to:
a. Whether there is any remaining dispute between them, and if so,
b. Their respective positions concerning that dispute.
Notes
. If, however, the statutes defining corporations are applied in a way that includes LLCs, and if KRS 446.010(11) is applied to include unions, as Defendants maintain, then the ban does not offend Equal Protection principles.
. Much of PMC's argument for striking down Kentucky’s law on First Amendment grounds is integrally tied to its Fourteenth Amendment claim that the ban on direct corporate contributions -cannot be justified on the basis of
. SSFs are political committees established and administered by corporations and labor unions. They can only solicit contributions
. Part of the Court’s reason for striking down the federal ban on independent expenditures was that the previous rationales for limiting corporate independent expenditures were largely based on the speakers’ corporate identity, which is not a sufficient justification for limiting a speaker’s political speech.
. The Court notes, however, that Citizens United restricted its holding even in this regard to independent expenditures, which are not at issue here. See
. As support for this statement, defense counsel points to KRS 121.150 (21) and admits that although a previous Advisory Opinion from 1991 has been followed as the policy of the agency for many years, in light of recent changes such as Citizens United, it should no longer be intérpreted as preventing corporations such as PMC from administering a state PAC. Tr, at 40-43.
. PMC argues that the laws as written on their face do not appear to allow for this option. [R. 23 at 14; Tr. at 42-43.]
.Part of PMC’s support for this argument is that the ban does not apply to unions and LLCs, Given Defendants’ concession, however, that the ban should apply equally to simi- . larly situated groups, it appears that PMC’s remaining argument concerning "fit” consists of PMC’s contention that a ban even with a PAC option is still overbroad. As explained herein, however, if the ban does mot apply to unions and LLCs as well as to corporations, PMC is correct that the ban is not sufficiently closely drawn to achiеve the government’s stated objective.
. Again, this conclusion is partly based on Defendants’ concession that the unequal treatment of corporations and LLCs concerning bans on corporate contributions is not permissible. The Court agrees with PMC that if the ban applies unequally to similarly situated groups, it is not sufficiently closely drawn.
. The Federal Election Commission has acknowledged that because of Citizens United the prohibition on independent expenditures is no longer enforceable and has made appropriate changes to the law’s application, but no such changes have been made concerning direct contributions. See Independent Expenditures and Electioneering Communications by Corporations and Labor Organizations, 79 FR 62797-02; see also FEC Statement on Carey v. FEC, Oct. 5, 2011, available at http://www.fec. gov/press/press2011/20111006postcarey. shtml.
. In the context of alleged constitutional infringements, “the likelihood of success on the merits often will be the determinative factor,” Connection Distrib. Co.,