In The News

The New Campaign Finance Landscape: Super PACs Spending Big in 2012 Election

The New Campaign Finance Landscape: Super PACs Spending Big in 2012 Election

Super PACs are a new kind of political action committee created in July 2010 following the outcome of the federal court case SpeechNow.org v. Federal Election Commission (SpeechNow.org v. Fed. Election Comm’n, 599 F.3d 686 (D.C. Cir. 2010) cert. denied, 131 S. Ct. 553, 178 L. Ed. 2d 371 (U.S. 2010)).

Securities and Exchange Commission Plays Campaign Finance Watchdog

While the courts are de-regulating campaign finance, other branches of government are searching for ways to clamp down. At the national level, the Securities and Exchange Commission has targeted individuals and entities that provide investment advisory services to government pension systems.

Litigation We’re Watching by Terry Martin

Lasted Updated 8/10/2018

United States v. Singh (9th Circuit, parties currently filing opening briefs): Ravneet Singh, a political consultant, was convicted under the “anti-shredding” provision of the Sarbanes-Oxley Act for his role in a campaign money laundering scheme which funneled campaign contributions from a wealthy Mexican businessman into San Diego local races. Recognizing that the particular theory of the Sarbanes-Oxley Act accepted by the trial court may impose additional, unenumerated reporting obligations on vendors of in-kind services to campaigns beyond the comprehensive reporting obligations of the Political Reform Act, Bell, McAndrews & Hiltachk attorneys filed an amicus brief in the U.S. Court of Appeals for the 9th Circuit urging the court to adopt an interpretation of the “anti-shredding” provision of the Sarbanes-Oxley Act that provides clear guidance to such vendors.

Thompson v. Hebdon (9th Circuit, oral argument set for June 11, 2018): First Amendment law forbids discriminating against speakers based on identity, with rare exceptions such as certain forms of foreign national participation in the political process. Alaska enforces a statutory provision that limits the aggregate contributions a candidate may accept from out-of-state residents. The law was challenged under the free speech clause for unconstitutionally discriminating against people who do not live in Alaska, but are still U.S. citizens. If Alaska’s law is upheld, the decision could undermine protections for national groups and donors engaged in political action.

Lair v. Motl (9th Circuit opinion issued, awaiting appeal): Montana’s campaign contribution limits for campaigns in state were challenged under the First Amendment as being too low and unsupported by evidence. The district court struck down the limits and the U.S. Court of Appeals for the 9th Circuit reversed. It is expected that the challengers will petition the U.S. Supreme Court for review. If review is granted, the case is expected to resolve whether limits on the amount a donor can contribute to candidates, committees, and political parties imposed by governments must be supported by evidence of the corruption they were enacted to combat. Another case, Zimmerman v. City of Austin, presents a similar issue in the context of the municipal campaign finance limits in Austin, Texas. As with Lair, a federal appellate court decision against the challenger was recently issued (5th Circuit) and is expected to be appealed to the U.S. Supreme Court.

Gil v. Whitford (U.S. Supreme Court, decision forthcoming): Although the Voting Rights Act and Equal Protection Clause have been held to disallow legislatures from drawing district lines that disfavor individuals on account of race, this concept has never successfully been extended to protecting voters on account of political party preference. Wisconsin’s statewide redistricting plan was challenged by Democrats as unfairly reducing their voting strength in state legislative elections. The lower court invalidated the map, relying on an “efficiency gap” concept that compares votes that are “wasted,” by either being for a losing candidate or for a winning candidate but not needed to secure that candidate’s victory, to the overall votes cast in the election. The case could either provide a standard by which future legislative maps must be restricted nationwide or determine that such questions are best left to the political process and inappropriate for the judiciary to hear.

Minnesota Voters Alliance v. Mansky (U.S. Supreme Court, decision forthcoming): U.S. Supreme Court precedent has permitted states to pass laws prohibiting campaigning inside a polling place. Minnesota currently has a law that bans the wearing of political apparel at the polling place. The law was challenged on First Amendment grounds when a voter was temporarily prevented from voting for wearing two items of political apparel: A t-shirt that stated “Don’t Tread on Me,” with a picture of the Gadsden Flag and a small Tea Party logo, and a button that stated “Please I.D. Me.” The challenger argues that the prior caselaw only permits states to enforce laws barring active campaigning, not passive political speech such as T-shirts. The case could potentially expand First Amendment protections for voters whose participation in the political process extends beyond voting into shows of support for favored candidates and issues.

Janus v. AFSCME (U.S. Supreme Court, decision forthcoming): Public sector unions may not, under current First Amendment law, compel membership in their organizations as a condition of employment. They may, however, charge an “agency fee” to non-members to help cover the cost of bargaining. Unions argue that this agency fee is necessary to prevent economic free riding. The challenger urges the U.S. Supreme Court to reconsider its prior holding permitting such fees, arguing that it infringes upon his right to free speech by compelling him to support a lobbyist for pro-labor policies.

United States v. Singh (9th Circuit, parties currently filing opening briefs): Ravneet Singh, a political consultant, was convicted under the “anti-shredding” provision of the Sarbanes-Oxley Act for his role in a campaign money laundering scheme which funneled campaign contributions from a wealthy Mexican businessman into San Diego local races. Recognizing that the particular theory of the Sarbanes-Oxley Act accepted by the trial court may impose additional, unenumerated reporting obligations on vendors of in-kind services to campaigns beyond the comprehensive reporting obligations of the Political Reform Act, Bell, McAndrews & Hiltachk attorneys filed an amicus brief in the U.S. Court of Appeals for the 9th Circuit urging the court to adopt an interpretation of the “anti-shredding” provision of the Sarbanes-Oxley Act that provides clear guidance to such vendors.

Thompson v. Hebdon (9th Circuit, argued and submitted): First Amendment law forbids discriminating against speakers based on identity, with rare exceptions such as certain forms of foreign national participation in the political process. Alaska enforces a statutory provision that limits the aggregate contributions a candidate may accept from out-of-state residents. The law was challenged under the free speech clause for unconstitutionally discriminating against people who do not live in Alaska, but are still U.S. citizens. If Alaska’s law is upheld, the decision could undermine protections for national groups and donors engaged in political action.

Lair v. Motl (9th Circuit opinion issued, awaiting appeal): Montana’s campaign contribution limits for campaigns in state were challenged under the First Amendment as being too low and unsupported by evidence. The district court struck down the limits and the U.S. Court of Appeals for the 9th Circuit reversed. It is expected that the challengers will petition the U.S. Supreme Court for review. If review is granted, the case is expected to resolve whether limits on the amount a donor can contribute to candidates, committees, and political parties imposed by governments must be supported by evidence of the corruption they were enacted to combat. Another case, Zimmerman v. City of Austin, presents a similar issue in the context of the municipal campaign finance limits in Austin, Texas. As with Lair, a federal appellate court decision against the challenger was recently issued (5th Circuit) and is expected to be appealed to the U.S. Supreme Court.

Deon v. Barasch (Middle District of Pennsylvania, awaiting ruling on plaintiffs’ motion for summary judgment): Pennsylvania law makes it illegal for persons associated with legal gambling to make campaign contributions to candidates for state or local office, or to political parties. Strikingly, Pennsylvania law extends this ban to contributions from such persons to groups that only make independent expenditures in support of or opposition to candidates. The state statutes were challenged as unconstitutional restrictions on the petitioners’ rights to free speech and association, as well as equal protection of the law. The case will provide an important data point in discerning to what extent governments can limit the political participation of regulated entities or industries. It comes against a developing legal landscape that includes a federal appellate court decision approving a ban on contributions to federal candidates, parties, and committees from federal contractors and a federal district court decision striking down a state law ban on contributions to candidates and political committees from a members of a particular regulated industry.

New Legislation and News from Ethics Agencies by Sarah Lang

Last updated 9/12/2018

Fair Political Practices Commission News

Frank Burgess of Banning paid more than $260,000 in attorney fees in successfully fighting a $5,000 fine imposed by the Fair Political Practices Commission. The Fourth District Court of Appeal held that Burgess was not seeking merely to vindicate personal interests and was entitled to attorney fees under the private attorney general statute. In addition to granting a writ ordering the FPPC to lift the fine and granting declaratory relief, the judge, in postjudgment proceedings, awarded Burgess $221,166 of the $268,170 he had been expended on attorney fees. Link to article

The FPPC Enforcement Division now has the capability to accept electronic payments, including Visa, MasterCard, and Discover Card, for penalties through the FPPC website. Link to press release

Federal Election Commission News

The Federal Election Commission has ruled that Microsoft may offer a free package of enhanced online security protections to its “election-sensitive customers,” including federal, state, and local candidates, national and state political party committees, campaign technology vendors, and think tanks and democracy advocacy nonprofits, without running afoul of Federal Election Commission contribution restrictions. Link to Advisory Opinion

San Francisco Ethics Commission News

At its next regular meeting on Friday, September 21, 2018, the San Francisco Ethics Commission will consider and possibly act on a set of proposed regulations to clarify the process for requesting opinions and advice from the Commission and Staff and the process that the Commission and Staff will undertake in response to such requests. Link to proposed regulations