Supreme Court Strikes Down Campaign Finance Regulation for Corporations

The Supreme Court of the United States struck down portions of a federal campaign finance law in an opinion published Jan. 21, 2010, ruling that the law impermissibly discriminated against the First Amendment rights of corporations to expressly support political candidates for political office.

"By suppressing the speech of manifold corporations, both for-profit and nonprofit, the Government prevents their voices and viewpoints from reaching the public and advising voters on which persons or entities are hostile to their interests," Justice Anthony Kennedy wrote for the majority in Citizens United v. FEC, 130 S. Ct. 876 (2010). "Factions will necessarily form in our Republic, but . . . factions should be checked by permitting them all to speak, and by entrusting the people to judge what is true and what is false."

The majority's opinion in Citizens United ruled unconstitutional portions of the Bipartisan Campaign Reform Act (BCRA) of 2002, 2 U. S. C. § 441b, that prohibited corporations and unions from using their general treasury funds to make independent expenditures for an "electioneering communication" or for speech that expressly advocated the election or defeat of a candidate.

The BCRA defines an electioneering communication as "any broadcast, cable, or satellite communication" that "refers to a clearly identified candidate for Federal office" that is made within 30 days of a primary election and that is "publicly distributed." The law required that corporations and unions establish separate political action committees (PACs) for advocacy or electioneering communications purposes.

In January 2008, Citizens United, a nonprofit corporation funded by individual and corporate donations, released a documentary titled "Hillary: The Movie." The film was a critical portrayal of then-Sen. Hillary Rodham Clinton, who at that time was a candidate seeking endorsement by the Democratic Party for a presidential run. According to the opinion, "Hillary" was released in theaters and on DVD, and Citizens United planned to make the documentary available for free on cable television through video-on-demand.

Concerned about possible civil and criminal penalties for violating the BCRA, Citizens United sought declaratory and injunctive relief in the U.S. District Court for the District of Columbia to prevent the Federal Election Commission (FEC) from enforcing the law, arguing, among other claims, that § 441b was unconstitutional.

In its ruling, the majority overruled a 1990 Supreme Court case, Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), that allowed political speech to be banned based on the speaker's corporate identity.

"Austin was a significant departure from ancient First Amendment principles," Kennedy wrote in the majority opinion, citing a concurrence from Justice Antonin Scalia in FEC v. Wisconsin Right to Life, Inc., 551 U.S. 449 (2007). "The Government may regulate corporate political speech through disclaimer and disclosure requirements, but it may not suppress that speech altogether."

"The Court is thus confronted with conflicting lines of precedent: a pre-Austin line that forbids restrictions on political speech based on the speaker's corporate identity and a post-Austin line that permits them," Kennedy wrote about the decision to reverse the 1990 case. "Austin interferes with the 'open marketplace' of ideas protected by the First Amendment."

The Court ruled that, although § 441b would have applied to "Hillary" because the movie was both electioneering and direct advocacy, the law was unconstitutional.

"The law before us is an outright ban, backed by criminal sanctions. Section 441b makes it a felony for all corporations - including nonprofit advocacy corporations - either to expressly advocate the election or defeat of candidates or to broadcast electioneering communications," Kennedy wrote. "Thus, the following acts would all be felonies under § 441b: The Sierra Club runs an ad, within the crucial phase of 60 days before the general election, that exhorts the public to disapprove of a Congressman who favors logging in national forests; the National Rifle Association publishes a book urging the public to vote for the challenger because the incumbent U.S. Senator supports a handgun ban; and the American Civil Liberties Union creates a website telling the public to vote for a Presidential candidate in light of that candidate's defense of free speech. These prohibitions are classic examples of censorship."

The Court held that the § 441b provision permitting the creation of PACs was not a sufficient protection of speech. "Even if a PAC could somehow allow a corporation to speak - and it does not - the option to form PACs does not alleviate the First Amendment problems with § 441b.. . . PACs have to comply with [extensive] regulations just to speak. This might explain why fewer than 2,000 of the millions of corporations in this country have PACs."

"By taking the right to speak from some and giving it to others, the Government deprives the disadvantaged person or class of the right to use speech to strive to establish worth, standing, and respect for the speaker's voice," Kennedy wrote. "The Government may not by these means deprive the public of the right and privilege to determine for itself what speech and speakers are worthy of consideration. The First Amendment protects speech and speaker, and the ideas that flow from each."

In its opinion, the Court noted that it had extended First Amendment protection to corporations in at least 23 previous cases. "This protection has been extended by explicit holdings to the context of political speech. Under the rationale of these precedents, political speech does not lose First Amendment protection "simply because its source is a corporation." Kennedy wrote. "Corporations and other associations, like individuals, contribute to the 'discussion, debate, and the dissemination of information and ideas' that the First Amendment seeks to foster. The Court has thus rejected the argument that political speech of corporations or other associations should be treated differently under the First Amendment simply because such associations are not 'natural persons.'"

The majority did uphold portions of the law requiring a disclaimer that the sponsoring corporation is responsible for the content of the advertisement, including the name and address of the person or group that funded the advertisement.

"Disclaimer and disclosure requirements may burden the ability to speak, but they do not prevent anyone from speaking," Kennedy wrote. "The Court has explained that disclosure is a less restrictive alternative to more comprehensive regulations of speech."

Chief Justice John Roberts filed a concurring opinion, specifically addressing the Court's decision to overrule Austin, an opinion that allowed the Court to prohibit "expenditures out of concern for 'the corrosive and distorting effects of immense aggregations of wealth' in the marketplace of ideas."

"A speaker's ability to persuade, however, provides no basis for government regulation of free and open public debate on what the laws should be," Roberts wrote.

In another concurring opinion, Justice Scalia wrote to defend First Amendment protections for corporations from a language-based interpretation of the Constitution. "The [First] Amendment is written in terms of 'speech,' not speakers," Scalia wrote. "Its text offers no foothold for excluding any category of speaker, from single individuals to partnerships of individuals, to unincorporated associations of individuals, to incorporated associations of individuals - and the dissent offers no evidence about the original meaning of the text to support any such exclusion."

Justice Clarence Thomas also wrote a concurring opinion, although he dissented with the majority's decision to uphold the requirement to disclose a political sponsor's identity in electioneering materials. According to Thomas, who was the only member of the Court who dissented on the issue of disclosure, the dangers of retaliation or intimidation caused by disclosure of campaign contributions have an impermissible chilling effect on political speech.

"Disclaimer and disclosure requirements enable private citizens and elected officials to implement political strategies specifically calculated to curtail campaign-related activity and prevent the lawful, peaceful exercise of First Amendment rights," Thomas wrote. "I cannot endorse a view of the First Amendment that subjects citizens of this Nation to death threats, ruined careers, damaged or defaced property, or pre-emptive and threatening warning letters as the price for engaging in 'core political speech.'"

In an extensive dissent, Justice John Paul Stevens, who was joined by three other justices, wrote that the majority's opinion was "profoundly misguided."

"The real issue in this case concerns how, not if, the appellant may finance its electioneering . . . all that the parties dispute is whether Citizens United had a right to use the funds in its general treasury to pay for broadcasts during the 30-day period," Stevens wrote. "The basic premise underlying the Court's ruling is its iteration, and constant reiteration, of the proposition that the First Amendment bars regulatory distinctions based on a speaker's identity, including its 'identity' as a corporation. While that glittering generality has rhetorical appeal, it is not a correct statement of the law."

Stevens continually criticized the majority's assertion that the free speech rights of corporations are coextensive with those of individuals. "Our lawmakers have a compelling constitutional basis, if not also a democratic duty, to take measures designed to guard against the potentially deleterious effects of corporate spending in local and national races," Stevens wrote. "The fact that corporations are different from human beings might seem to need no elaboration, except that the majority opinion almost completely elides it.. . . They reflect the economically motivated decisions of investors and customers.. . . It might also be added that corporations have no consciences, no beliefs, no feelings, no thoughts, no desires. Corporations help structure and facilitate the activities of human beings, to be sure, and their 'personhood' often serves as a useful legal fiction. But they are not themselves members of 'We the People' by whom and for whom our Constitution was established."

Stevens also took issue with the majority's characterization of Austin, which he stated showed too little respect for the principle of stare decisis, or following the Court's precedent. "The Court today rejects a century of history when it treats the distinction between corporate and individual campaign spending as an invidious novelty born of Austin," Stevens wrote. "In the end, the Court's rejection of Austin . . . comes down to nothing more than its disagreement with their results.. . . The only relevant thing that has changed since Austin . . . is the composition of this Court."

"At bottom, the Court's opinion is thus a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self government since the founding, and who have fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt," Stevens concluded. "It is a strange time to repudiate that common sense. While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics."

The opinion, which was released nearly five months after the Court held oral arguments on the case, prompted extensive commentary in both the media and political arena.

In a January 21 post on The Volokh Conspiracy blog, UCLA law professor Eugene Volokh wrote that the decision would be likely to reduce the influence of the mainstream news media's editorial voice, but would increase the amount of income media organizations will earn from political spending. He also said Citizens United helps guarantee the media's free speech rights.

"Most mainstream media is organized as corporations, and as the Court pointed out[,] the argument for lesser protection for corporate speech would equally apply to speech by media corporations," Volokh wrote. "So far, Congress has exempted the media from bans on corporate advocacy for or against candidates; but now it's clear that the media corporations (alongside other corporations) are constitutionally entitled to so editorialize."

In a January 22 story on the Huffington Post's website, Harvard Law Professor Lawrence Lessig wrote that the decision would increase the public's cynicism about the political process. "The vast majority of Americans already believe that money buys results in Congress," Lessig wrote. "This Court's decision will only make that worse."

Some predicted that the decision would not significantly affect campaigns. "I don't see my clients jumping into the fray here," said Ken Gross, the head of the political law practice at the Washington D.C. law office of Skadden, Arps, Slate, Meagher & Flom, in a January 21 post on The Wall Street Journal's Law Blog. "My clients have shareholders, and shareholders don't want their investments put into partisan politics. The last thing a company wants to have to do is explain at an annual shareholders' meeting why it spent hundreds of thousands on some political race."

President Barack Obama issued a statement on January 21 saying that the opinion gave a "green light to a new stampede of special interest money" into American politics. "It is a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans," the statement said. "I am instructing my Administration to get to work immediately with Congress on this issue. We are going to talk with bipartisan Congressional leaders to develop a forceful response to this decision. The public interest requires nothing less."

Obama also addressed the Citizens United opinion in his weekly radio and Internet address on January 23, and in his State of the Union address on January 27, in which he said "the Supreme Court reversed a century of law that, I believe, will open the floodgates for special interests, including foreign corporations, to spend without limit in our elections."

"I don't think American elections should be bankrolled by America's most powerful interests or, worse, by foreign entities," Obama said in the address. "They should be decided by the American people. And I urge Democrats and Republicans to pass a bill that helps correct some of these problems."

Democratic lawmakers and Obama's cabinet members, surrounding the six of nine justices who turned out for the event, stood and applauded, The Washington Post reported in a January 28 story. According to The Post, the remarks prompted Justice Samuel Alito, who sided with the majority in Citizens United, to say what appeared to be the words "Not true, not true," as he shook his head and furrowed his brow.

An April 23 National Public Radio (NPR) story reported that Sen. Charles Schumer (D-N.Y.) and Rep. Chris Van Hollen (D-Md.) were planning to introduce a bill that would limit corporate spending while attempting to comport with the limits imposed by Citizens United. NPR reported that the main focus of the bill would be on limiting the campaigning ability of foreign-owned corporations, enhancing disclosure requirements, and prohibiting coordination between corporate donors and candidate campaigns.

In a January 23 report, the First Amendment Center released a list of states that have begun to re-examine their campaign-finance laws in response to the Supreme Court's decision. According to the report, at least 18 states have begun the process of determining whether their state regulations would survive constitutional analysis under the Citizens United standard.

- JACOB PARSLEY
SILHA FELLOW AND BULLETIN EDITOR

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This page contains a single entry by cla published on June 7, 2010 2:11 PM.

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