Money, Money, Money!: How the Supreme Court's Decision in Mccutcheon v. Fec Could Impact Shareholders and Corporations
| Jurisdiction | United States,Federal |
| Publication year | 2014 |
| Citation | Vol. 1 No. 1 |
Money, Money, Money!: How the Supreme Court's Decision in McCutcheon v. FEC Could Impact Shareholders and Corporations
Patrick Hartobey
Barely four years out from the landmark (and controversial) decision in Citizens United v. FEC,2 the Supreme Court was faced with yet again the task of balancing First Amendment rights and the need to ensure elections free from corruption.3 The case before the Court, McCutcheon v. FEC, challenged the constitutionality of the aggregate campaign contribution limits on the grounds that it impeded fundamental First Amendment rights.4 The Court granted the appeal directly from the D.C. District Court as a result of special provisions contained in the Bipartisan Campaign Reform Act of 2002 (BCRA).5 As part of the judicial review process laid out in this act, the D.C. District Court must hear constitutional challenges to the BCRA.6 The District Court's decisions to these constitutional challenges can only be challenged through a direct appeal to the Supreme Court.7
On October 9, 2013, the Supreme Court heard oral arguments in this most recent case in the Court's campaign finance and contribution jurisprudence.8 The oral argument transcript indicates that the justices were split among three potential outcomes. These three potential outcomes that the Court appeared to be divided over were: finding the aggregate limits unconstitutional, finding the limits constitutional, or deeming the record insufficient and remanding for
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further proceedings.9 Ultimately, in the decision issued on April 2, 2014, the Supreme Court ruled that the aggregate limits on contributions violated First Amendment rights.10 It is this decision that represented the most interesting possible outcome, as it allows individuals to participate through contributions at a greater level in elections through direct campaign contributions to candidates and Political Action Committees (PACs).11 In turn, this ruling in favor of McCutcheon, eliminating the aggregate contribution limits, now allows corporations to participate in elections through their segregated funds PACs an a greater level.12 Corporate PACs could potentially participate in elections at greater levels because without an aggregate contribution limit13 , shareholders, executives, and employees14 , although still limited by base contribution caps, would be able to donate to an increased number of PACs.15 This in turn may lead the PACs to be more accountable to their contributors.
This essay seeks to examine the impact that the Court's decision declaring aggregate limits unconstitutional as a violation of the First Amendment could have on future campaign spending. Specifically this essay addresses the potential impacts of the McCutcheon decision on corporate PACs. The essay begins with a discussion of the District Court case and the FEC regulations that related to the case. The essay will then move on to discuss the oral arguments before the Supreme Court and briefly address the pluralities opinion. The essay
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will conclude with a discussion of what the removal of aggregate contribution limits means for corporate PACs.
The path to the Supreme Court for McCutcheon v FEC, began on September 28, 2012, in the D.C. District Court.16 As a result of this challenge arising out of a constitutional challenge to the BCRA, the district court had to the hear the case in an unusual manner.17 The case was presented before the district court with a panel of three judges, 1 appellate circuit judge and 2 district judges.18 It was in this setting that the initial challenges and decision regarding McCutcheon's challenge to the aggregate limits took place. A review of the district court's decision helps to establish what is at stake, as well as provide some insight into the Supreme Court ultimate decision that the aggregate limits were unconstitutional.
Shaun McCutcheon is an Alabama resident and registered voter.19 During the 2011-12 election cycle, McCutcheon had contributed less than the aggregate contribution limit.20 Mr. McCutcheon desired, however, to contribute additional funds, which would have put him over the amounts allowed under FEC regulations.21 The Republic National Committee (hereinafter RNC), the other plaintiff in the case, asserted that it would like to receive such donations, as they do not violate the individual contribution base limits, only the aggregate limits.22
The first step in understanding the McCutcheon case and its impact on shareholders and corporations is a look at the challenged regulations. The statute on point for this case is the BCRA, which is implemented by the FEC.23 The BRCA was created in 2002 in order to regulate campaign finance systems.24 In addition to setting up the appeals process that McCutcheon utilized, the act also established a series of base limits for contributions.25
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There are essentially two sets of limits on contributions, per candidate or entity and aggregate limits.26 The most pertinent limit for this essay—the one McCutcheon challenged—is the aggregate limit, which prohibits total biannual contributions above $123,200.27
At the outset, the Court acknowledged the standard that contributions and expenditures in political campaigns implicates political speech and association and therefore, fundamental First Amendment rights.28 Thus, the first aspect of the case that the high court addressed was the appropriate level of scrutiny.29 This was important because it established the government's burden in overcoming a First Amendment challenge.30 The Court noted that all of the Supreme Court decisions related to the area of campaign contributions have been given a level of scrutiny below strict.31
The Court here drew a distinction between political speech and political contributions.32 The Court acknowledged that the line between these two has become increasingly blurred.33 Of particular interest and importance in the Court's decision is its statement regarding how it drew this line. "Although we acknowledge the constitutional line between political speech and political contributions grows increasingly difficult to discern, we decline plaintiff's invitation to anticipate the Supreme Court's agenda."34 What makes this statement so interesting is that it reveals a potential hidden undertone of willingness to accept plaintiff's argument but for an adherence to stare decisis.35
After establishing that the level of scrutiny would not be the desired strict scrutiny of the plaintiffs, the Court went on to determine if the facts of the case violated the applicable standard of scrutiny.36 The Court began by first
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asserting that the aggregate limits challenged could be upheld as a means of preventing the appearance of actual corruption.37 In looking at this, however, it asserted the logic from Citizens United to establish that contributing large dollar amounts does not necessary amount to corruption.38
The district court's decision to uphold the aggregate limits as meeting the established government interest in anti corruption could not be met by actual quid pro quo corruption and instead evolved from an idea of implied quid pro quo.39 ". . .[I]t is not hard to imagine a situation where the parties implicitly agree to such a system . . . and there is no reason to think the quid pro quo of an exchange depends on the number of steps in the transaction."40 It was this idea of the extended quid pro quo where the lower court grounded its justification for the aggregate limits.41
The district court ultimately ruled in favor of the FEC and upheld the aggregate limits on campaign contributions.42 McCutcheon appealed the decision, pursuant to the provisions in the BCRA, to the Supreme Court.43 Both parties filed their briefs with the Court, along with numerous amici curiae briefs.44 Oral arguments were heard on October 8, 2013.45
McCutcheon's argument can be distilled down to two major points: aggregate limits impermissibly burden free speech and the limits do not further any legitimate government interest.46 In the Court's earlier case, Buckley v. Valeo, it had been decided that the legitimate government interest, which could trump free speech rights in campaign contributions, was the prevention of
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corruption or the appearance thereof.47 This is important for the McCutcheon case, and in understanding the oral arguments, as McCutcheon's brief and oral arguments assert that aggregate limits do not prevent corruption or its appearance.48 The Court heard from three attorneys during oral arguments: Ms. Murphy representing Mr. McCutcheon, Mr. Burchfield on behalf of Sen. Mitch McConnell as amicus curiae, and Solicitor General Verrilli on behalf of the FEC.49
In the oral argument presented by Mr. McCutcheon's attorney, the focus of the justices' questions revolved around the idea that removing aggregate limits would allow individuals to circumvent the per-candidate contribution limits. In the first line of questioning the focus was on a particular area of circumvention known as earmarking.50 In this instance, counsel for Mr. McCutcheon noted that the FEC already has regulations that prevent donations of this nature.51 Several of the justices also expressed questions regarding situations where the individual donates to PACs that no longer state they will give to a candidate expressly but instead to those who support a singular idea.52 The fear then appeared to be that as a result there would some sort of...
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