U.S. defends corporate campaign ban

By Lyle Denniston
on Jun 1, 2011 at 4:44 pm

The Obama Administration urged a federal judge on Wednesday to rethink a ruling striking down a federal ban on corporations giving money directly to federal political candidates, arguing that the ban remains valid but that its constitutional status now must be left to the Supreme Court.  One of two business executives being charged with a crime for channeling corporate funds to a candidate, however, urged the judge to clear the way for an immediate appeal on the issue.

In the course of a new brief on the sudden and lively new constitutional controversy over campaign finance, the Administration’s lawyers apologized to U.S. District Judge James C. Cacheris for leaving out of earlier briefing what its new brief called “the salient and binding precedent” — the Supreme Court’s 2003 decision in Federal Election Commission v. Beaumont.   The new brief then went on to vigorously defend that precedent, saying it has not been disturbed by the Supreme Court’s controversial corporate free-speech decision last year in Citizens United v. FEC.

The dispute over the corporate donation ban has arisen primarily because Judge Cacheris, who sits in Alexandria, Va., ruled last week that the ban is unconstitutional, relying on the Citizens United decision and concluding that corporations cannot be barred from making campaign donations that individual citizens are allowed to make.  The judge thus dismissed a criminal charge that two business executives illegally channeled corporate funds to the senatorial and presidential campaigns of Hillary Rodham Clinton.

After a public complaint by critics of the decision that the judge had not even mentioned the Beaumont precedent, which some believe reaffirmed the constitutionality of the corporate donation ban, Cacheris called for a new round of briefs on the status of Beaumont.   In response, the Administration filed a brief, as did the two accused Virginia executives, William F. Danielczyk, Jr., and Eugene R. Biagi.   The Danielczyk brief is here, and the Biagi brief here. 

In addition, a Terre Haute, Ind., lawyer who was involved in the Citizens United case and has been pursuing challenges across the country to federal campaign finance restrictions, James Bopp Jr., filed an amicus brief for the James Madison Center for Free Speech.  It urged Judge Cacheris not to reconsider his decision against the corporate ban.  That brief is here.

Bopp argued, as did lawyers for the two business executives, that the Beaumont precedent was not a controlling holding on the constitutionality of the corporate ban, because that was not an issue before the Court in that case.  Thus, these briefs asserted, there is no need to consider whether it has been overruled directly or by implication by the Citizens United decision.

“If Beaumont had held that the federal ban on contributions was facially unconstitutional,” Bopp’s brief said, “this Court [Judge Cacheris] would be bound to follow it.  However, Beaumont did not consider the facial constitutionality of the ban, because that issue was not before the Court. Rather, all the Court considered was whether [advocacy-type, non-business corporations must be given an exemption… It ruled that they did not.”

Perhaps the most intereting new wrinkle to enter the Danielczyk case through these added briefs was the suggestion by counsel for executive Danielczyk that Judge Cacheris consider avoiding any ruling himself on the validity of the corporate ban, vacate its decision against the ban, put the criminal case on hold so that Danielczyk could then file a new lawsuit directly challenging the validity of that ban.

Under federal campaign finance law, the brief pointed out, Judge Cacheris must then immediately certify the constitutional question to the Fourth Circuit Court, for en banc review.

As an alternative, Danielczyk’s attorneys suggested that the Justice Department could now file an appeal of last week’s decision against the ban, and seek a stay of the criminal trial — now set to begin July 6 — in the meantime.  Either approach, the brief said, “would ensure prompt appellate review of this important First Amendment issue.”

And, it added, either alternative would spare Danielczyk (and Biagi) from having to undergo a criminal trial on a charge that Judge Cacheris had found to be unconstitutional.

Judge Cacheris has scheduled a hearing for Friday on the new dispute over Beaumont.

(Thanks to two readers for supplying copies of the supplemental briefs.)