Amicus Brief — First Nat. Bank of Boston v. Bellotti

-

4 Suvreme Cora, u. 4

1

| 9 1 1977

No. 761172 U ROOAK, N. CLERK |

—

athe Supreme dent of the Wied State

Ocroser Term, 1976

2

Tue Fist NATIONAL Bank or Boston, New ENGLAND

Mercuants Nationa, Bank, THE Guerre Com-

Pax, Diarra, Equipment CORPORATION, AND

Wryman-Gorpon CoMPANY, APPELLANTS

v

Francis X. BMTLorrt, Arrorney GENERAL, APPELLEE

ON APPEAL FROM THE SUPREME JUDICIAL COURT FOR THE

COMMONWEALTH OF MASSACHUSETTS

WILLIAM C. OLDAKER.,

General Counsel.

CHARLES N. STEELE.

Amate General Counsel.

Federal Election Commission.

Washington, D.C. 20563.

INDEX

Cases : —

Abood v. Detroit Board of Education, 45 U.S. L. W.

ee 6, 17

Abrams v. United States, 250 U.S. 616 (1919) ~.-.--- 13

Asbury Hospital v. Cass County, 327 U.S, 207 (1945) _- 5

Ashwander v. Tennessee Valley Authority, 297 U.S.

65D —— ͤ—öʒ— — 15

Associated Press v. United tSates, 326 U.S. 1 (1945)... 7

Bates v. State Bar of Arizona, 45 U.S.L.W. 4895

(TERED coccocccececscecessccsesccesssesescescese 20

Bigelow v. Virginia, 421 U.S. 809, 811 (1978) 5

Board of Education v. Barnette, 319 U.S. 624 (1913) 12

Buckley v. Valeo, 424 U.S. 1 (1976 2222222 6, 12

Burroughs and Cannon v. United States,200US.534.. 11

California Bankers Assn v. Schultz, 416 U.S, 21

— ST a ee 3, 9. 15

Cammarano v. United States, 358 U.S. 498 (1939) 18

Civil Service Commission v. Letter Carriers, 413 U.S.

SER ee aE 12, 15

Cort v. Ach, 423 US. (1975) ........2<<---.---<e 10

Cousins v. Wigoda, 419 477 (17) 222 6

Dartmouth College v. Woodward, i7 U.S. (4 Wheat)

Al TA TR AE eI 4,9

Doran v. Salem Inn, Inc., 422 U.S. 922 (17 4

Elrod v. Burns, 427 U.S. 347 (1976222222 6, 12

Er Parte Curtis, 106 U.S, 371 (18822222222 12

Er Parte Siebold, 100 U.S, (187999222 11

Ex Parte Yarbrough, 110 U.S. 651 (1884) 22 11

Garrison v. Louisiana, 379 U.S. 64 (1964))) 12

Grosjean v. American Press Co., 297 U.S. 233 (1936).. 4. 7

aque v. CAO, 307 U.S. 496 (1939972 5

ale v. Henkel, 201 U.S. 43 (1906) 5

Llarper v. Virginia Board of Elections, 383 U.S. 663

ae 6

Hemphill v. Orloff, 277 U.S. 587 (19268222 5. 9

Joseph Burstyn, Inc. v. Wilson, 343 U.S. 495 (1932) — 4.8

Cases—Continued

Katzenbach v. Morgan, 384 U.S. 641 (19662

Kingsley International Pictures v. Regents, 360 U.S.

3 (1080) ceccocecccccecececoceccesccosecescece

Longshoremen’s Union v. Boyd, 347 U.S, 222 (1954) --

Mills v. Alabama, 384 U.S. 714 (1966)

NAACP v. Button, 371 U.S. 415 (1963)

New York Times Co. v. Sullivan, 376 U.S, 254 (1964)

New York Times v. United States, 403 U.S. 713

(BEB) caccccccccceseecseccesssccssscssssccssse

N.L.H. h. v. Virginia Electric Power Co., 314 U.S, 469

09.

N. L.A. B. v. Gissel Packing Co., 395 U.S. 575 (1969)

Northwestern Life Ins. Co. v. Riggs, 203 U.S. 243

—

Oregon v. Mitchell, 400 U.S, 112 (19700722

Pierce v. Society of Sisters, 268 U.S. 510 (1923)

Pipefitters Local 562 v. United States, 407 U.S. 385

(1972) afirming 434 F. 2d 1116 (1970) 10, 11,

Prudential Insurance Co. v. Cheek, 259 U.S. 530

OO)

Red Lion Broadcasting v. FCC, 395 U.S. 367 (1969)

Reynolds v. Sims, 377 U.S. 533 (1964) ———

Schwartz v. Romnes, 357 F. Supp. 30 (1973) rev'd on

other grounds, 495 F. 2d 844 (2d Cir. 1976)

Smiley v. Holm, 285 U.S, 355 (1932222222222

South Carolina v. Katzenbach, 383 U.S, 301 (1966)

Southwestern Promotions, Ltd., v. Conrad, 420 U.S.

B68 (96T8) ccccccccccctecececenescccccecescccess

Sweezy v. New Hampshire, 354 U.S. 234 (19577

Time, Inc. v. Hill, 385 U.S. 374 (1967) 22

United Public Workers v. Mitchell, 380 U.S. 75 (197)

United States v. Boyle, 482 F.2d 755 (D.C. C.) cert.

den. 414 U.S. 1076 (1978) ........................

United States v. Chestnut, 533 F.2d 40 (2d Cir., 1976)

cert. den. 429 U.S. 829 (1976)

United States v. C10., 335 U.S. 106 (1948) 10,

United States v. Classic, 313 U.S, 299 (1941) 2

United States v. Harriss, 347 U. S

United States v. Morton Salt, 338 U.S, 632 (1950)

United States v. Mosley, 238 U.S. 383 (1913)

United States v. U.A.W., 352 U.S, 567 (19377

15,17

an >

11,15

10

15,17

11

12

5. 9

III

Cases - Continued

United States v. United States Brewers Ass'n, 239 Fed.

B68 CWEAFO, 901łç-6

United States v. White, 332 U.S, 694 (1943) 7222

Virginia Pharmacy Board v. Virginia Citizens Coun-

e

Wesberry v. Sanders, 376 U.S. 1 (1964) —

Western Turf den v. Greenberg, 204 U.S, 359 (1907)

Wilson v. United States, 221 U.S. 361 (19117222

Yick Wo v. Hopkins, 118 U.S, 356 (618882222222

Miscellaneous :

Analysis of Federal and State Campaign Finance Law

Quick-Reference Charts-Summaries (Prepared for

the Federal Election Commission under contract by

the Library of Congress, American Law Division)

(Dec. 1976—Jan. 1977) (U.S. Dept. of Commerce,

NTIS, PB 265-219. PB 265-220)

Barber, R. The American Corporation, p. 19-20, 1970

Berle, A. and Means, G. The Modern Corporation and

Private Property, Revised Ed. 19688

Kaysen, C., Zhe Corporation, How Much Power? What

Scope’ The Corporation in Modern Society, 104

—— . — —

Statutory and Legislative History :

FECA 1971, as amended:

1 ͤm- 8

. ͤ„ͥ1

Securities and Exchange Act of 1934:

Be Wee —m—

1. —

r ee

United States Constitution :

1 cccecenecnceceseseseseecs

1 .

Final Report of the Senate Select Comm. on Presiden-

tial Campaign Activities, S. Rept. No. 981, 93d Cong.,

8 ˙———̃—ñ—ñ———

Hearings on H.R. 7612 and S. 372 before the Subcomm.

on Elections of the House Comm. on House Admin-

istration, 93d Cong., Ist Sess. (197h))))9)7

Hearings on a Survey of Public Attitudes before the

Subcomm. on Intergovernmental Relations of the

Senate Comm. on Government Operations, 93d

I. ] ¼wm—nꝛ

19

17

17

17

10

18

18

18

18

11

11

16

16

16

IV

Statutory and Legislative History—Continued

Hearings on S. 1103, S. 1954, and S. 2417 before the

Subcomm. on Privileges and Elections of the Sen-

ate Comm. on Rules and Administration, 93d Cong.,

Orb GRE, COR T..

Hearings on S. 372 before the Subcomm. on Com-

munications of the Senate Comm, on Commerce, 93d

Cong., Ist Sess. (1973) ........--.----.-----------

Hearings on S. 372 before the Subcomm. on Privileges

and Elections of the Senate Comm. on Rules and

Administration, 93d Cong., Ist Sess. (1973)

Hearings before the Senate Select Comm. on Presi-

dential Campaign Activities, 93d Cong., Ist Sess.

CREED — — ——

Hearings on S. 3496, Amendment No, 732, S. 2006, S.

2965 and S. 3014 before the Senate Comm. on Fi-

nance, 89th Cong., 2d Sess. (1966) ..........-.-..-.

Gn the Supreme Court of the United States

Ocroper Trnu, 1976

Tur First NATIONAL. Bank or Boston, New EnGLanp

MERCHANTS NATIONAL. BANK, THE GrLLeTte Com-

PaNy, Diorral. Equipment CoRPORATION, AND

WyMan-Gorpon COMPANY, APPELLANTS

v.

Francts X. Betzorri, Arrorney GENERAL, APPELLEE

ON APPEAL FROM THE SUPREME JUDICIAL COURT FOR THE

COMMONWEALTH OF MASSACHUSETTS

STATEMENT OF INTEREST

The Federal Election Commission has primary

jurisdiction over the administration and enforcement

of the Federal Election Campaign Act of 1971, as

amended, 2 U.S.C. § 431 et seq., (“the Act”). (Pub.

I. No. 92-225, 86 Stat. 3 (1972); Pub. L. 93-443, 88

Stat. 1263 (1975); Pub. L. No. 94-283, 90 Stat. 475

(1976) ). The Commission is authorized to appear in

and defend against actions with regard to the ad-

ministration and enforcement of that Act, as well as

a)

the related provisions of the Internal Revenue Code

(Title 26 U.S.C., Chapters 95 and 96). 2 U.S.C.

§§ 437d(a) (6), 437h; 26 U.S.C. §§ 9010, 9040. This

brief is submitted pursuant to Supreme Court Rule

42(4).

The Federal Election Campaign Act makes it

unlawful for any national bank, or any corporation

organized by authority of any law of Congress, to

make a contribution or expenditure in connection

with any election to any political office... or for any

corporation whatever, or any labor organization to

make an expenditure in connection with any elee-

tion . . .” to any federal office. 2 U.S.C. § 441b. The

Massachusetts statute challenged by appellants con-

tains similar restrictions, not directly at issue in this

ease, which state that no corporation shall directly

or indirectly give, pay, expend or contribute or pro-

mise to give, pay, expend or contribute, any money

or other valuable thing for the purpose of aiding,

promoting or preventing the nomination or election

of any person to public office . . .” (Mass. Gen. Law,

C.55, See. 8). *

The Commission's interest in this case extends to its

impact on the constitutionality of the statute within

its jurisdiction. The Commission is given substantial

powers to structure resolution of questions concerning

the application of the federal statute to the diverse

factual and legal questions raised by its provisions.

See, generally, 2 U.S.C. Sees. 437¢, 437d. The Com-

mission is authorized to bring actions to construe

the constitutionality of statutory provisions under

its jurisdiction. 2 U.S.C. $§437h; 26 U.S.C. §9011

(b). The Commission can give advisory opinions on the

application of the law to specific facts. 2 U.S.C. § 437f.

Where events afford it reason to believe that the Act

may have been violated, the Commission has power to

reach a voluntary resolution of such matters, either

because a person demonstrates that no action should

be taken (2 U.S.C. §437g¢(a)(4)) or because an

agreement reached as a result of the statute’s com-

mand “to correct or prevent such violation by infor-

mal methods of conference, conciliation and persua-

sion,“ permits resolution of questions raised (2 U.S.C.

§ 437g¢(a)(5)). Provisions of the Act can only be en-

forced through the courts (2 U.S.C. § 437g(a)(5));

Commission decisions not to take enforcement action

are also reviewable by direct action in the courts

(2 U.S.C. § 437g(a)(9)).

Acceptance of appellant’s broad statements of the

extent and nature of the rights of corporations under

the first amendment to the United States Constitution

would, however, affect judgments on similar issues

under the provisions of the Act.“ Declination by this

Court of the broad arguments advanced by appellants

would serve to elucidate the balance of the rights of

individuals within a corporation, of the material inter-

* Appellants apparently concede (Appellants’ Brief, p. 36, n.

17) that the resolution of this case on the merits need not neces-

sarily affect judgment on the issues presented under the Act. As

to the justiciability of the particular statutory provisions in the

absence of a concrete factual record to which the statute has been

applied, or the mootness of the present action, the Commission

expresses no opinion as such questions relate to the operation of

the particular Massachusetts statutory provisions.

4

ests of the corporation and of the public interest in an

electoral system free of improper influences, in spe-

of the choices posed by particular resolutions. Accord-

‘ingly, the Commission urges the Court, if it concludes

that it has present jurisdiction over this action, to

reject appellants’ broad claims and to restrict any

decision to the facts of the case before it.

I. THIS COURT SHOULD REJECT APPELLANT'S ARGUMENT

THAT EXPENDITURE OF FUNDS BY CORPORATIONS IN CON-

NECTION WITH ELECTIONS IS PROTECTED FROM REG-

ULATION RY THE FIRST AMENDMENTS TO THE UNITED

STATES CONSTITUTION.

It cannot be maintained as a historical proposition

that corporations of every kind are accorded as a

matter of constitutional right all of the protections

afforded to natural persons by the Constitution. Dart-

mouth College v. Woodward, 17 U.S. (4 Wheat.) 518,

561 (1819) ; Pierce v. Society of Sisters, 268 U.S. 510,

535 (1925) Rather, the Constitution has always been

read to afford to corporations constitutional protec-

tions only as they relate to the protection of their in-

terests. See, e.g., Doran v. Salem Inn, Inc., 422 US.

922 (1975); Southwestern Promotions, Ltd., v. Con-

rad, 420 U.S. 546 (1975); New York Times Co. v. Sul-

livan, 376 U.S. 254 (1964); Joseph Burstyn, Inc. v.

Wilson, 343 US. 495 (1952); Grosjean v. American

Press Co., 297 U.S. 233 (1986). Corporations have not

been permitted to avail themselves of many of the con-

5

stitutional protections, particularly with respect to

the personal freedoms, such as self-incrimination.

Hale v. Henkel, 201 U.S. 43, 74-75 (1906); Cali-

fornia Bankers Ass’n. v. Shultz, 416 U.S. 21, 55, 71

(1974). Corporations do not possess “liberty” rights

guaranteed by the fourteenth amendment to natural

persons. Western Turf Ass’n. v. Greenburg, 204 U.S.

359, 363 (1907); Northwestern Life Ins. Co. v. Riggs,

203 U.S. 243 (1906). Nor are they citizens within the

meaning of the privileges and immunities clause of

the fourteenth amendment. Hague v. CIO, 307 U.S.

496 (1939); Hemphill v. Orloff, 277 U.S. 537 (1928);

Asbury Hospital v. Cass County, 327 U.S. 207 (1945).

There is no corporate privilege against self-incrimi-

nation, (United States v. White, 322 U.S. 694

(1944); Wilson v. United States, 211 U.S. (1911)),

nor to rights of privacy, (United States v. Morton

Salt, 338 U.S. 632, 651-652 (1950).

Appellants bold assertion that corporations have an

unabridgeable right to expend money for political

purposes asks this Court to conclude that the first

amendment does not distinguish between citizens and

artificial entities themselves incorporated by the gov-

ernment.’ Yet this Court has long emphasized the

personal natttre of both first amendment guarantees

and the electoral rights which they protect. The an-

nals of this Court abound with decisions emphasizing

In view of the Court’s holding that the fourteenth amendment

makes the first amendment applicable to action by states, the issues

are considered as direct first amendment problems. See, Bigelow v.

Virginia, 421 U.S. 809, 811 (1975).

243-007 —77——2

that the first amendment stakes out an area of per-

sonal freedom for citizens on which the government

can neither make, nor brook, interference, except

where the most compelling circumstances prevail. See,

e.g., Buckley v. Valeo, 424 U.S. 1, 14 (1976) ; Abood v.

Detroit Board of Education, — U.S. —, 45 U.S.L.W.

4473, 4480. The right to associate for political pur-

poses is preeminently an individual right. ‘‘Our form

of government is built on the premise that every citi-

zen shall have the right to engage in political expres-

sion and association.” Sweezy v. New Hampshire, 354

U.S. 234, 250 (1957). We require only that the rights

of every citizen to believe as he will and to act and as-

sociate according to his beliefs be free to continue as

well.” Elrod v. Burns, 427 U.S. 347, 372 (1976). See

also, Cousins v. Wigoda, 419 U.S. 477, 487 (1975).

The most personal right protected by the Constitution,

not extended to corporations, is the right to vote.

“Citizens, not history or economic interests, cast

votes.” Reynolds v. Sims, 377 U.S. 533, 565 (1964).

See also, Harper v. Virginia Board of Elections, 383

U.S. 663 (1966); Wesberry v. Sanders, 376 U.S. 1

(1964). Voting is the “fundamental political right,

because preservative of all rights,” Yick Wo v. Hop-

kins, 118 U.S. 356, 379 (1885).

Appellants seek support for their claim of direct

first amendment rights for corporations in this

Caurt's decisions that corporations whose existence

involves the exercise of activities protected by the first

amendment have standing to assert them. Ignoring the

constitutional exception which frees the institutional

7

press from government control, appellants insist that

decisions which establish that the first amendment’s

protection for freedom of the press extends to cor-

porations in the business of communications suggest

that incorporation itself brings with it first amend-

ment rights. Each of the cited decisions emphasizes,

however, the special role of the press in our system

of freedom of expression. Appellants heavy reliance

on Grosjean v. American Press Co, 297 U.S. 233

(1936) exemplifies the short reach of the decisions

cited. Specifically reaffirming the validity of general

taxes, this Court found a special tax on newspapers

which had “a long history of hostile misuse against

the freedom of the press” to be a “deliberate and cal-

culated device in the guise of a tax to limit the cir-

culation of information to which the public is entitled

in virtue of the constitutional guarantees.” 297 U.S.

at 250. See, Associated Press v. United States, 326

U.S. 1 (1945). Appellants citation of New York Times

v. Sullivan, 376 U.S. 254 (1964) seems similarly in-

apposite, since the foundation of that decision’s elabo-

ration of traditional libel tests was precisely the im-

portance of the role of a free press in fostering robust

and uninhibited debate. 376 U.S. at 270. F allx, this

*Red Lion Broadcasting v. FCC, 395 U.S. 367, 390 (1969).

makes clear that it is not corporate rights but the balance of public

interests, varying with the medium of expression, which controls :

“But the people as a whole retain the interest in free speech by

radio and their collective right to have the medium function con-

sistently with the ends and purposes of the First Amendment. It

is the r ht of the viewers and listeners, not the right of the

broadcasters, which is paramount.” 395 U.S. at 390. That decision

Court, in holding that an incorporated association

has standing to assert rights of association tu secure

legal redress for constitutional rights, expressly lim-

ited the decision to corporations whose very activity

was the furthering of such association:

We think petitioner may assert this right

on its own behalf, because, though a corpora-

tion, it is directly engaged in those activities,

claimed to be constitutionally protected, which

the statute would curtail. NAACP v. Button,

371 U.S. 415, 428 (1963).

In effect, appellants rely upon the undoubted abil-

ity of citizens to pool their financial resources to bat-

tle for political and social goals to argue that all

corporations must be deemed substantially equivalent

to such traditional voluntary associations. That, how-

ever, ignores the substantially different purposes for

which corporations generally exist, and the paramount

influence that that has upon the rights which flow

to them. This Court has long emphasized that the

character of the corporation measures the protections

afforded it: “Being a mere creature of law it pos-

sesses only those properties which the charter of its

creation confers upon it, either expressly, or as in-

reaffirmed. therefore, with specific reference to the electronic

media, the basic idea set forth as to more traditional press media

in cases such as Time, Inc. v. Hill, 385 U.S. 374 (1967), Joseph

Burstyn, Ine. v. Wilson, 343 U.S. 495 (1952) and Kingsley Inter-

national Pictures v. Regents, 360 U.S. 684 (1959), cited by ap-

pellants. See, also, Virginia Pharmacy Board v. Virginia Citizens

Council, 425 U.S. 748, 761-765 (1976).

cidental to its very existence.” Dartmouth College

v. Woodward, 17 U.S. at 636. Appellees are cor-

porations and therefore, it is said, they cannot claim

for themselves the liberty which the fourteenth

amendment guarantees. Accepted in the proper sense,

this is true . . [citations omitted]. But they have

business and property for which they claim protec-

tion.” Pierce v. Society of Sisters, 268 U.S. at 535.

„ corporations can claim no equality with indivi-

duals in the employment of a right of privacy. They

are endowed with public attributes. They have a col-

lective impact upon society, from which they derive

the privilege of acting as artificial entities.” United

States v. Morton Salt Co., 338 U.S. at 651-652. See,

also, California Bankers Ass'n. v. Schultz, 416 U.S.

at 65; Hemphill v. Orloff, 277 U.S. at 550; Prudential

Insurance Co. v. Cheek, 259 U.S. 530, 536 (1922).

Appellants’ attempt to extend first amendment pro-

tections to all business corporations as a matter of

right should be rejected by the Court. The holdings

that the interest of the corporation defines its protee-

tion rest on the recognition that corporations are sub-

ject to an entirely different form of regulation, appro-

priate to their unique and powerful role in the control

of the economic wealth of our society. That the same

rights guaranteed to individuals are often applicable

to corporations should not allow corporations to rely

upon rights particularly guaranteed to individuals.

II. ANY INTEREST IN CONTRIBUTIONS AND EXPENDITURES

BY CORPORATIONS IN CONNECTION WITH ELECTIONS IS

OUTWEIGHED BY THE IMPORTANT POLICIES OF PROTEC-

TION OF ELECTIONS FROM EITHER THE APPEARANCE OR

THE ACTUALITY OF UNDUE INFLUENCE OR CORRUPTION

AND OF PROTECTION OF NATURAL PERSONS FROM FORCED

ASSOCIATION WITH VIEWS NOT THEIR OWN,

This Court has never ruled on the constitutionality

of the ban on expenditures and contributions by cor-

porations in connection with federal elections.‘ How-

ever, it has long recognized that the prohibitions serve

two major purposes: the prevention of undue in-

fluence over the electoral process by corporations (and

unions) and the protection of stockholders (or union

members) who do not wish to contribute to those

eauses which the organizations have chosen to support.

The legitimacy of those aims has frequently been

recognized by this Court. See, e.g., Cort v. Ash, 422

U.S. 66, 80-82 (1975); Pipefitters Local 562 v. United

States, 407 U.S. 385, 402, 413-427 (1972); United

States v. UAW, 352 U.S. 567, 593 (1957); United

States v. CIO, 335 U.S. 106, 113-115 (1948). Lower

courts which have had oceasion to reach the issue have

upheld the restrictions for those reasons, expressly

ruling them constitutiona!. United States v. Chestnut,

533 F. 2d 40, 50, 51 n. 12 (2d Cir. 1976), cert. den.,

429 U.S. 829 (1976); United States v. Boyle, 482 F.

2d 755 (D.C. Cir. 1973), cert. den., 414 U.S. 1076

National banks, subject to direct federal regulation, are also

prohibited from such activity in state elections as well. 2 U.S.C.

§ 441b.

11

(1973); United States v. Pipe ſitters Local 562, 434

F. 2d 1116 (8th Cir. 1970), rev’d on other grounds,

407 U.S. 385 (1972); Schwartz v. Romnes, 357 F.

Supp. 30, 36 (S. D. N. V. 1973), rev’d on other grounds,

495 F. 2d 844 (2d Cir. 1976) ; United States v. United

States Brewers’ Ass’n., 239 Fed. 163 (W. D. Pa. 1916).

This Court’s considered refusal to issue broad con-

stitutional rulings on the issues arguably posed by

these restrictions rests on principles of the highest

order in constitutional litigation. On the one hand,

Congress has extensive power to regulate federal elec-

tions, founded in the express provision of article I,

section 4 of the Constitution for elections to Congress

and the power implied from article II to regulate

presidential elections. Burroughs & Cannon v. United

States, 290 U.S. 534, 545-47 (1934); Smiley v. Holm,

285 U.S. 355 (1932). See, also, United States v. Mos-

ley, 238 U.S. 383 (1915); Ex Parte Yarbrough, 110

U.S. 651 (1884); Ex Parte Siebold, 100 U.S. 371

(1879) ; United States v. Classic, 313 U.S. 299 (1941).

The Congress has broad latitude in determining the

means necessary to those ends. The power of Con-

gress to protect the election of President and Vice

President from corruption being clear, the choice of

means to that end presents a question primarily ad-

dressed to the judgment of Congress.” Burroughs &

Cannon v. United States, 290 U.S. at 547. See, also,

Oregon v. Mitchell, 400 U.S. 112 (1970); Katzenbach

v. Morgan, 384 U.S. 641 (1966); South Carolina v.

Katzenbach, 383 U.S. 301 (1966). Nor does that power

12

extend solely to the protection of the government from

the undue influence of particular groups upon its se-

lection and operation. United States v. Harriss, 347

U.S. 612, 625-626 (1954); Ex Parte Curtis, 106 U.S.

371, 373 (1882); Civil Service Commission v. Letter

Carriers, 413 U.S. 548, 564-65 (1973); Buckley v.

Valeo, 424 U.S. at 25-29. Nor need such laws be nar-

rowly drawn, to strike only at actual corruption or

undue influence: “Of almost equal concern as the dan-

ger of actual quid pro quo arrangements is the im-

pact of the appearance of corruption stemming from

public awareness of the opportunities for abuse inher-

ent in a regime of large individual financial contribu-

tions.” Buckley v. Valeo, 424 U.S. at 27. In short, the

interests of the citizens in protection of the electoral

process are of the highest magnitude.

On the other hand, contribution and expenditure

limitations operate in an area of the most funda-

mental first amendment activities.” Buckley v. Valeo,

424 U.S. at 14. Speech concerning public affairs is

more than self-expression; it is the essence of self-

government.” Garrison v. Louisiana, 379 U.S. 64, 74

75 (1964). See, also, Board of Education v. Barnette,

319 U.S. 624 (1943); Elrod v. Burns, 427 U.S. at 372.

Free and unfettered discussion of ideas, not readily

severable into categories of truth or falsity, belief or

fact, constitutes the lifeblood of our constitutional po-

litical system: . . there is practically universal

agreement that a major purpose of that Amendment

[the first] was to protect the free discussion of gov-

ernment affairs. .”, Mills v. Alabama, 384 U.S. 214,

218 (1966). Our society is thus founded on the belief

that. . the ultimate good desired is better reached

by the free trade in ideas—that the best test of truth

is the power of the thought to get itself accepted in

the competition of the market . . .”, Abrams v. United

States, 250 U.S. 616, 630 (1919) (Holmes, J., dis-

senting).

Where these two great interests of the citizens in-

teract, this Court has stated that it will overturn the

Congressional balance only upon a clear showing of

interference with protected rights, and will defer its

judgments until government authorities seek to bar

specific activity. With regard specifically to the fed-

eral prohibition on expenditures and contributions by

corporations and unions, Mr. Justice Frankfurter,

speaking for the Court, warned:

Counsel are prone to shape litigation, so far

as it is within their control, in order to secure

comprehensive rulings. . . . Such desire on

their part is not difficult to appreciate. But the

Court has its responsibility. Matter now buried

under abstract constitutional issues may, by the

elucidation of a trial, be brought to the surface,

and in the outcome constitutional questions

may disappear. Allegations of the indictment

hypothetically framed to elicit a ruling from

this Court or based upon misunderstanding of

the facts may not survive the test of proof.“

United States v. UAW, 35 UB. at 592 (1957).

14

Due to similar considerations this Court, when the

Hatch Act’s prohibitions on individual political ac-

tivity first came before it, declined to declare the Act

unconstitutional on allegations of hypothetical first

amendment injury comparable to those made here:

“The power of courts, and ultimately of this

Court, to pass upon the constitutionality of

acts of Congress arises only when the interests

of litigants require the use of this judicial au-

thority for their protection against actual in-

terference. A hypothetical threat is not enough.

We can only speculate as to the kinds of politi-

cal activity the appellants desire to engage in

or as to the contents of their proposed public

statements or the circumstances of their pub-

lication. It would not accord with judicial re-

sponsibility to adjudge, in a matter involving

constitutionality, between the freedom of the

individual and the requirements of public order

except when definite rights appear upon the one

side and definite prejudicial interferences upon

the other.” United Public Workers v. Mitchell,

300 U.S. 75, 89-90 (1937) (footnote omitted).

That judicial restraint enabled the Court, when the

issues returned to it almost thirty years later, to view

the proscriptions in the light of the experience of

actual or threatened enforcement of the Act against

specific conduct. As the Court then noted:

The Commission was to issue notice, hold

hearings, adjudicate, and enforce. This process,

inevitably and predictably, would entail further

development of the law . . and would be pro-

15

ductive of a more refined definition of what

conduct would or would not violate the statu-

tory prohibition of taking an active part in

political management and political campaigns.

“ . It is to these regulations purporting to

construe § 7324 as actually applied in practice,

as well as to the statute itself, with its various

exclusions, that we address ourselves in reject-

ing the claim that the Act is unconstitutionally

vague and overbroad.” (citations omitted, em-

phasis added)

Civil Service Commission v. Letter Carriers, 413 US.

at 575. See, also, Longshoremen’s Union v. Boyd, 347

U.S. 222, 224 (1954); South Carolina v. Katzenbach,

383 U.S. at 316-17; California Bankers Ass’n. v.

Shultz, 416 U.S. at 56, 75-76; Ashwander v. Tennessee

Valley Authority, 297 U.S. 288, 341 (1936) (Brandeis,

J., coneurring).

In essence, this Court’s decisions warrant the con-

clusion that extreme care should be exercised before

accepting the conclusion urged by appellants that the

legislative balance should be overthrown because none

of the interests supporting the statute could warrant

the restrictions placed. The amount of evidence con-

sidered by Congress in enacting and reenacting these

prohibitions has been massive. Congress legislated the

initial Federal Corrupt Practices Act on the basis of

voluminous evidence of the corrupting influence of

corporate contributions. In expanding the prohibition

to cover labor unions, even more corroborative evi-

dence came before Congress. See, United States v.

‘CIO, 335 US. at 113-115; Pipefitters Local 562 v.

United States, 407 US. at 402-413. That reeord ex-

panded further when Congress in the faee of substan-

tial evidence regarding the funding of the 1972 elec-

tions, reaffirmed the prohibition on expenditures and

contributions by corporations and unions.’

Nor should this Court conclude that Congress had

no reason for its eoneern that the secondary policy

underlying the statute—of protecting the interests of

stockholders and corporate officers or agents from

forced support of views not their own—could not be

achieved without the present prohibitions. This Court

has, of course, previously concluded ‘that those inter-

ests underlay previous statutes. See, United States v.

Even a cursory glance at the legislative history of the 1974

‘Campaign Act Amendments reveals the depth of Congressional

concern with illicit contributions from corporations, their effect

upon the legislators, and the growing public disillusionment with

the electoral system. See, e.g., Final Report of the Senate Select

Comm. on Presidential Campaign Activities. S. Rept. No. 981 93d

Cong., 2d Sess. (1974) ; Hearings before the Senate Select Comm.

on Presidential Campaign Activities, 93d Cong., Ist Sess. (1973) :

Hearings on a Survey of Public Attitudes before the Subcomm. on

Intergovernmental Relations of the Senate Comm. on Government

Operations, 93d Cong., Ist Sess. (1973); Hearings on H.R. 7612

and S. 372 before the Subcomm. on Elections of the House Comm.

on House Administration, 93d Cong., 1st Sess. (1973) ; Hearings

on S. 372 before the Subcomm. on Communications of the Senate

‘Comm. on Commerce, 93d Cong., Ist Sess. (1973); Hearings on

S. 372 before the Subcomm. on Privileges and Elections of the Sen-

ate Comm. on Rules and Administration, 93d Cong., Ist Sess.

(1973) ; Hearings on S. 1108 S. 1954, and S. 2417 before the Sub-

comm. on Privileges and Elections of the Senate Comm. on Rules

and Administration, 93d Cong., Ist Sess. (1973) ; Hearings on

S. 3496, Amendment No. 732, S. 2006, S. 2965 and S. 3014 before

the Senate Comm. on Finance, 89th Cong., 2d Sess. (1966).

17

CIO, 335 U.S. at 111-113. Pipefitters Local 562 v.

United States, 407 U.S. at 409-410, n. 20. When Con-

gress: enaeted the 1976 Amendments to the Federal

Election. Campaign Act, it reacted to this Court's

decision in Pipefitters, amplifying the statute with a

detailed scheme for assuring the voluntary nature of

contributions by those individuals to funds separate

and segregated from corporate (and union) treasury

funds, including specific provisions for veiling the iden-

tity of small contributors (and noncontributors). 2

U.S.C. §441b(b)(3) and (4). In the fact of such leg-

islative concern, this Court should not readily con-

clude that such protection is unnecessary for individ-

uals whose economic well-being can be substantially

influenced by the organization. See, Abood v. Detroit

Board of Education, 45 U.S.L.W. at 4480-4481.

Balaneed against the considerations in support of

these prohibitions are not the interests of natural per-

sons, but the far more restricted rights of corpora-

tions. Thus, even assuming, arguendo, that corpora-

tions have first amendment rights, those rights are

clearly subject to restrictions appropriate to corpor-

ate existence. Initially, of course, their basi¢ existence

is regulated by charter from the government.“ Al-

though the bulk of corporate law is state law, a sur-

vey of federal securities regulations alone is sufficient

* See, e. g., R. Barber, The American Corporation 19-20 (1970) ;

A. Berle & G. Means, The Modern Corporation and Private Prop-

erty (Rev. ed. 1968); C. Kaysen, The Corporation in Modern

Society 104 (1959). See, also, Brief of Amicus, Chamber of Com-

merce, pp. 8-10.

18

to demonstrate the broad regulatory control over cor-

porate affairs, includiag regulation of corporate

speech. See, e.g., provisions of the Securities and Ex-

change Act of 1934, codified in 15 U.S.C. §78n (reg-

ulation of the content of proxy statements), 578 j (b)

(prohibition of deceptive statements in connection

with any sale of securities), §78p (regulation of in-

sider trading). These regulations include restrictions

on the content of corporate speech, in matters mate-

rially affecting their interests. Tax laws are specially

constructed, recognizing the proper classification of

corporations for these purposes. See, e.g., Cammarano

v. United States, 358 U.S. 498 (1959) (protected ight

to lobby not accorded tax protection; 26 U.S.C. § 23

(a)(1)(A)). Similarly, the expression of corporate

employees, as well as individuals, can be regulated to

protect labor peace and free elections. NLRB v. Gissel

Packing Co., 395 U.S. 575 (1969); NLRB v. Virginia

Electric Power Co., 314 U.S. 469 (1941). And the

Federal Trade Commission has the power to impose

cease and desist orders restraining unfair methods of

competition. 15 U.S.C. § 45(b). See, New York Times

v. United States, 403 U.S. 713, 731 n. 1 (1972) con-

curring opinion).

No prohibition here appears on individuals from

speaking their beliefs; the prohibition is against the

use of corporation funds to amplify those statements.

Nor does anything in the law prohibit the pooling of

resources by individuals whose views coalesce ; indeed,

the federal law permits such coalescence of voluntary

funds under the auspices of corporations and unions.

19

That money is essential to effective communication

does not establish the corollary proposition that money

in elections must be unregulated, no matter its source.

Business corporations are organized for the purposes

of increasing financial gain and furthering the eco-

nomic interests of their stockholders; attempts to

influence the political process are prima facie for the

purpose of furthering the financial return from their

investments and the dangers of a quid pro quo ar-

rangement between elected public officials and corpo-

rate contributors can be seen as even more compelling

than the dangers of the same arrangement between

such an official and a private individual.

Appellants’ arguments essentially attack legislative

judgments about where the appropriate lines should

be drawn in balancing these interests. The Federal

Election Campaign Act is replete with the Congres-

sional judgment that campaign financing regulation

is necessary but that the balance required by the

competing interests should be the result of experi-

ence with the administration of such laws.’ Where

The federal statute also directs the Commission to gather and

assess the experience gained from the operation of state laws and

thus “to serve as a national clearinghouse for information in re-

spect to the administration of elections.” 2 U.S.C. § 438 (b). State

regulation of election campaign laws has proceeded with a variety

of limitations; some do not restrict corporate expenditures and

contributions, some ban them with regard to ballot issues, some

with regard to contributions. See, Analysis of Federal and State

Campaign Finance Law—Quick-Reference Charts—Summaries

(Prepared for the Federal Election Commission under contract by

the Library of Congress, American Law Division (Dec. 1976-

Jan. 1977) (U.S. Dept. of Commerce, NTIS, PB 265-219, PB

265-220).

no evidence exists to rebut the legislative judgment

that such dangers exist, the hypothetical fear of depri-

vation of the rights of citizens to hear diverse view-

points should not overturn the considered legislative

judgments without further factual consideration: of

the legislative prohibition.“

CONCLUSION

If the Court concludes that it has jurisdiction over

this matter, it should affirm the judgment of the court

below.

Respectfully submitted.

WILIA C. OLDAKER,

General Counsel.

CHARLES N. STEELE,

Associate General Counsel.

* While the Commission takes no position on the overbreadth

or vagueness arguments as to this particular statute, the argu-

ment that adjudication over factual issues will best illuminate the

constitutional questions subsumes much of them; overbreadth and

vagueness in the clash of the electoral and political interests in-

volved can best be resolved and balanced on the basis of the

statute as applied in practice. That logic leads to the conclusion

that the Court should reject appellants’ attempt to have the statute

declared unconstitutional even before it is applied to them. See,

also, Bates v. State Bar of Arizona, 45 U.S.1L.W. 4895, 4903

(June 27, 1977).

US GOVERNMENT PRINTING OFFICE tOT7