EDVa Strikes Down Ban on Corporate Direct Candidate Contributions

Today, Senior Judge James C. Cacheris, applied Citizens United v FEC, 130 U.S. 876 (2010), to dismiss a count of directing corporate contributions to a Presidential campaign, holding that a complete ban on corporate contributions to candidates is unconstitutional (Judge Cacheris notes that the same limits that apply to individual contributions would apply to corporate contributions).

RNLA First Vice President Lee Goodman (of LeClair Ryan) assisted the Federal Public Defenders Office and lead counsel Todd Richman in securing the opinion in U.S. v Danielczyk. et al., 1:11cr85 (JCC) (E.D.Va. 2011) The case was brought on a motion to dismiss charges against two executives of Galen Capital for violating several provisions of federal campaign finance laws in relation to contributions to HIllary Clinton's 2006 Senate campaign and 2008 Presidential camapign.

With respect to count 4 which charged Defendants with directing corporate contributions in violation of 2 USC 441b, Judge Cacheris reasoned that the same rationale underlying the Supreme Courts decision in Citizens United compelled him to find the ban on direct corporate contributions unconstitutional.

In Buckley v Valeo, 424 U.S. 1 (1976), the Court justified individual contribution limits based on the government's interest in preventing corruption and the appearance of corruption, but rejected limits on independent expenditures because of the much lower risk of quid pro quo corruption. Two years later, in First National Bank of Boston v Belotti, 435 U.S. 784 (1978), the Supreme Court held that, especially in the context of political speech, the identity of a corporation as "speaker" is irrelevant to the First Amendment protection afforded. In Citizens United, the Court used Buckley's holding that independent expenditures by individuals do not corrupt, along with the holding in Belotti that corporate identity does not impact First Amendment political speech protections, to find that corporations can not be banned from making the same independent expenditures as individuals.

Judge Cacheris follows the reasoning to its logical conclusion--if individuals can make direct contributions within the limits imposed by FECA (presently $2,500 per person per election) without risk of quid quo pro corruption, then following Bellotti, a corporation can make direct contributions within the limits imposed by FECA without a similar risk of quid pro quo corruption.

Unfortunately (for development of the law, not for the defendants), Judge Cacheris dismissed only this count, so the rest of the prosecution may proceed and this issue appears unlikely to be raised on any appeal. Nevertheless, Goodman's argument and Judge Cacheris' opinion set the stage for additional challenges to the ban on direct corporate contributions. So, I wouldn't go advising my Eastern District of Virginia clients to start soliciting corporate contributions quite yet, but the day may come.