Amicus Curiae Brief — Austin v. Michigan Chamber of Commerce

Supreme Court, U.S,

EIDED

Jue 26. 08

No. 88-1569 JOSEPH F. SPANIOL, JR,

CLERK

Y

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1989

RICHARD H. AUSTIN, Michigan Secretary of State, and

FRANK J. KELLEY, Michigan Attorney General,

Appellants,

v.

MICHIGAN STATE CHAMBER OF COMMERCE,

Appellee.

On Appeal from the United States Court of Appeals

for the Sixth Circuit.

BRIEF FOR THE CENTER FOR PUBLIC

INTEREST LAW AS AMICUS CURIAE

IN SUPPORT OF APPELLEE

ERIC B. SCHNURER

125 South Ninth Street

Suite 401

Philadelphia, PA 19107

(215) 923-4206

ROBERT C. FELLMETH*

Center for Public Interest Law

University of San Diego

Alcala Park

San Diego, CA 92110

(619) 260-4806

Counsel for Amicus Curiae

Center for Public Interest Law

July 26, 1989 “Counsel of Record

PACKARD PRESS / LEGAL DIVISION, 1617 J.F.K BOULEVARD, PHILA, PA 19103 (215) 563-9000

QUESTION PRESENTED

Whether the government may, consistent

with the first amendment, limit campaign

expenditures by for-profit corporations’ that

pose the well-recognized potential for

corrupting the electoral process, and, if so,

whether a state statute that fails to require

ideological, non-profit corporations to

segregate monies received from for-profit

corporations from its funds expended on

political campaign speech may nonetheless

constitutionally regulate expenditure of such

funds.

TABLE OF CONTENTS

INTEREST OF AMICUS ...eeeeeecerecevees

SUMMARY OF ARGUMENT. ....----eeeeeeeeees

ARGUMENT. ccccccccccecccceceeesesesese

I. THE REGULATION OF CORPORATE

CAMPAIGN EXPENDITURES, NECESSITATED

BY THE WELL-RECOGNIZED POTENTIAL

FOR CORRUPTION OF THE ELECTORAL

PROCESS BY SUCH EXPENDITURES, IS

NOT PROHIBITED BY THE FIRST

AMENDMENT... ..ceeccccccreccecesccens

A. Money and speech are not

CONBPUCNE.. wee eee eee eeseeesesees

B. Expenditures may be limited

where the speech that such

expenditures facilitate may

itself be limited--irrespective

of its content -- because of

inherent limitations of the

forum or system of free speech...

C. Reasonable expenditure limits

are required to ration access to

the most expensive and effective

means of political speech on

some basis other than wealth.....

D. The constitutionality of

government rationing of access

to effective but limited fora on

some basis other than wealth is

reinforced by the need to reduce

the corrupting effects of money

on the political process.........

Page

viii

xi

1

10

18

23

CONCLUSION.

E. Rationing access to effective

but limited campaign fora on

some basis other’ than wealth is

especially justified when

applied to corporations

organized for profit.............

II. THE MICHIGAN LEGISLATURE HAS

NOT EXERCISED ITS POWER TO BAN ALL

CORPORATE FUNDS FROM ENTERING THE

POLITICAL MARKETPLACE, BUT RATHER

HAS SIMPLY BARRED ALL NON-PAC

CORPORATE EXPENDITURES; HENCE,

EXPENDITURES BY THE CHAMBER -- A

NON-PROFIT IDEOLOGICAL CORPORATION

PROTECTED UNDER MCFL -- ARE LAWFUL..

- 335°

Page

30

38

TABLE OF AUTHORITIES

Cases . Page

Bolger v. Youngs Drug Prods. Corp.,

463 U.S. 60 (1983)...... Se eeseecece 32

Brown v. Hartlage, 456 U.S. 45 (1982).. Ss

Buckley v. Valeo, 424 U.S. 1 (1976)....passim

Bullock v. Carter, 405 U.S. 134 (1971). 29

CBS v. Democratic Nat’l Comn.,

so 8” ee Be. See 20

Clark v. Community for Creative

Non-Violence, 468 U.S. 288 (1984). Tae

Eisenstadt v. Baird, 405 U.S. 438

BOVE Pee cesecesosoereeeceseos Seeeeee 32

FEC v. Massachusetts Citizens for Life,

479 U.S. 238

FEC v. National Conrervative Political

Action Committee, 470 U.S. 480....passim

1985).

FEC v. National Right to Work Committee,

459 U.S. 197

First National Bank of Boston v. Bellotti,

435 U.S. 765

In re Primus, 436 U.S. 412 (1978)...... 31

Lubin v. Panish, 415 U.S. 709 (1974)... 29

Michigan State Chamber of Commerce v.

Austin, 856 F.2d 783

C. gl Oe ree ere 1,40-41

Page

Minneapolis Star & Tribune Co. v.

Minnesota Comm’r of Revenue,

460 U.S. 575 (1983)... eee eeees 10

NAACP v. Claiborne Hardware, 458 U.S. 886

CRUE No6e60006e68660608 *eee#neeee © © @ @ 32

Ohralik v. Ohio State Bar Ass’n,

Bee Selle SES LEPeMreccceeeceooccese 31

Organization for a Better Austin v. Keefe,

402 U.S. 415 (1971) PPrrrTrTryTTTTiTTs 32

Paris Adult Theatre I v. Slayton,

413 U.S. 49 (1973)...... eoccccccce 7

Perry v. Sinderman, 408 U.S. 593 (1972) 42

Pipefitters Local Union 562 v. United

States, 407 U.S. 385 (1972) oes 66% 3

Police Dept. v. Mosley, 408 U.S. 92 (1972) 9

Red Lion Broadcasting Co. v. FCC, 395 U.S.

De BE PUbeeheb66e6 66 6 eee e ee eee. 19-21

Schacht v. United States, 398 U.S. 58

Diet. sbae eee 860666 660468660 668 7

Secretary of State of Maryland v.

Joseph H. Munson Co., 467 U.S. 947

eth h eae cade 6 bi oes 6 84 080.00 11

Speiser v. Randall, 357 U.S. 513 (1958) 43

Stanley v. Georgia, 394 U.S. 557 (1969) 6

Vv

Texas v. Johnson, 57 U.S.L.W. 4770

f. 3 @ |

Tinker v. Des Moines Indep. Sch. Dist.,

393 U.S. 503 (1969

United States v. Container Corp.,

393 U.S. 333 (1969)........- beenes

United States v. International Union,

United Automobile Workers,

352 U.S. 567 (1957)... cc cece eee

United States v. O’Brien, 391 U.S. 367

Ps 646566000606 h06e008 ee fetee# # @# @ @

Virginia State Bd. of Pharmacy v.

Virginia Citizens Consumer Council,

Eng GEO Cols FED CbOTOdccccccces

Statutes & Regulations

a Serene Gs Metin dk ooeee 666 bees seece

Be Beets BOO, BES c BREE dc cvcccccececccce

26 C.F.R. Sec. 53.4945-2... cc cccccccces

Books & Articles

M. Barone & G. Ujifusa, The Almanac of

American Politics: 1988 (1987)....

Budde, Business-Related Political Action

Committees -- A Permanent Force

After One Decade, 3 J.L. & Pol. 449

(1986) *e ff # © &© @ *eenereer#sefhiee#+5fe#e###e#%*###* @#®« «6

- vyio-

31

43

39

44

25

27

Page

Cong. Res. Svce., Report on Campaign

Financing (Update, July 2, 1987).. 26

Conlon, The Declining Role of Individual

Contributions in Financing

Congressional Campaigns, 3 J.L. &

Pol. 467 DPPC SEE aS Ebe eee cccees 25

Cox, Constitutional Issues in the

Regulation of the Financing of

Election Campaigns, 31 Cleve. St.

L. Rev. 395 rTos2y.. eeece seoesrvreoss $8,08

T. Emerson, The System of Freedom of

Expression (1970)........ obese ke ee 14,23

Freund, Commentary in A. Rosenthal,

Federal Regulation of Campaign

Finance: Some Constitutional

Questions (Citizens’ Research

Foundation Study No. 18) (1971)... 28

A. Meiklejohn, Free Speech and Its

Relevance to Self-Government

(1944S pi ccccccccccccccscceas *eeeeee 13,15

Wald, Two Unsolved Constitutional

Problems, 49 U. Pitt. L. Rev. 753

(1988)... eeoveus cone bee ee oe 64.0 0 25

Wright, Money and the Pollution of

Politics: Is the First Amendment an

Obtsacle to Political Equality?,

82 Colum. L. Rev. 609 (1982)....15,16,25

epeciai rorum on tf

Reforms in Campaign Financing,

3dJ.L. & Pol. 419 (1986 ) pegeboeceec 24

- yvii-

1

INTEREST OF AMICUS

The Center for Public Interest Law is an

academic public interest research and

advocacy center at the University of San

Diego School of Law. The Center has been

vitally interested and involved in issues of

open government; taxpayer, consumer and voter

advocacy; and political, regulatory and

systemic reforn.

The Center for Public Interest Law has

participated in numerous public interest law

suits, including the successful defense of

Proposition 103, the "Voter Revolt to Cut

Insurance Rates" initiative passed by the

California electorate in November, 1988. The

1

Consent to the filing of this

brief has been obtained from counsel to the

paries.

-viir

California Supreme Court unanimously upheld

the measure in May, 1989. The Center is also

the named plaintiff in litigation defending

Proposition 68, the "Campaign Spending Limits

Act" initiative passed by the voters in June,

1988, which raises many of the same issues

presented in this case.

The Center also publishes the California

Regulatory Law Reporter (the only publication

in the Nation that comprehensively covers the

regulation of business by state government),

educates 40 interns each year in areas of

state regulatory procedures, and engages in

advocacy projects.

These projects have included drafting

the law that provided the California Open

Meetings Act with a meaningful civil remedy;

drafting a counterpart open meetings law

applicable to local governments; the creation

by regulatory petition of an entity to

represent ratepayers before the California

Public Utilities Commission; and the drafting

- ix-

of and successful lobbying for the first

deregulation statute to abolish a major

regulatory agency in California in the past

twenty years. The Center has particularly

advocated the strengthening of open meetings

laws and related "sunshine” statutes.

SUMMARY OF ARGUMENT

The expenditure of money, generally

speaking, is not speech; rather, it is

conduct that facilitates speech. The

government may not, however, impose lim!t~ on

the expenditure of money in such a way that

the exercise of first emendment rights is

itself unconsititutionally constrained.

Such an expenditure limitation does not

unconstitutionally constrain speech, however,

where the speech may itself be limited to

promote the values of the system of freedom

of expression. Such is the case when a forum

is naturally limited in such a way that.

government rationing is justified in order to

keep some speakers from monopolizing access

to the forum whether due to “unregulated

talkativeness" or unregulated expenditure of

their wealth.

Mass media -- particularly electronic

mass media -- have become the indispensable

and central instruments of political speech,

and have helped drive the spiraling costs of

campaigning for public office. This Court

has already recognized that access to these

media may be rationed on some basis. other

than wealth. The failure to do so has_ made

wealth even more important in the political

context, and led to subtle and not-so-subtle

corruption of the political process, which

this Court has recognized may in itself

justify some regulation of speech-related

conduct.

The impact of concentrated wealth on the

political process and on the system of

freedom of expression is exacerbated in the

context of for-profit corporate expenditures.

First amendment interests in protecting such

expenditures are at their lowest. The

government may therefore regulate or prohibit

- sii

entirely corporate political campaign

expenditures.

Non-profit, ideological corporations are

protected from this power, however, by the

first amendment. The Chamber of Commerce, as

an ideological non-profit that is not the

subsidiary of any profit-making corporation,

is entitled to that protection, even if this

arguably represents a potentially large

loophole through which for-profit corporate

funds could leak back into the campatgn

arena. Legislatures have the means at their

disposal to prohibit the funneling of

for-profit corporate monies through such

ideological associations; the law in question

has not utilized such means, however.

-xiit

ARGUMENT

I. THE REGULATION OF CORPORATE CAMPAIGN

EXPENDITURES, NECESSITATED BY THE

WELL-RECOGNIZED POTENTIAL FOR CORRUPTION OF

THE ELECTORAL PROCESS BY SUCH EXPENDITURES,

IS NOT PROHIBITED BY THE FIRST AMENDMENT.

There is no doubt that political speech

"lies at the core of the first amendment."

Buckley v. Valeo, 424 U.S. 1, 14-15 (1976).

And as the Court of Appeals held below,

"[t]jJhe Chamber [of Commerce ]} does not

surrender its first amendment rights merely

by assuming the corporate form of

organization." Michigan State Chamber of

Commerce v. Austin, 856 F.2d 783, 787 (6th

Cir. 1988) (emphasis added). And see FEC vy.

Massachusetts Citizens for Life ("MCFL"), 479

U.S. 238, 263 (1986) (MCFL "does not suddenly

present the spectre of corruption merely by

assuming the corporate form") (emphasis

added); First National Bank of Boston .v.

Bellotti, 435 U.S. 765, 784 (1978) ("speech

that otherwise would be within the protection

of the First Amendment [does not] lose[] that

protection simply because its source is a

corporation") (emphasis added).

However, this Court has long recognized

the special justifications for regulation of

corporate expenditures in the campaign

context. "([P]Jreventing corruption or the

appearance of corruption,” are, in fact, “the

only legitimate and compelling government

interests thus far identified for restricting

campaign finances." FEC Vv. National

Conservative Political Action Committee

("NCPAC"), 470 U.S. 480, 496-97 (1985). And

the necessity of fighting corruption or the

appearance thereof has been recognized by

this Court as a particularly pregnant concern

in the corporate context. "(T]he special

characteristics of the corporate structure

require particularly careful regulation."

FEC v. National Right to Work Committee

("NRWC"), 459 U.S. 197, 209-10 (1982).

As the Court noted in MCFL, 479 U.S. at

257, “the long history of regulation of

corporate political activity,” is grounded on

the need to restrict "the influence of

political war chests funneled through the

corporate form,” NCPAC, 470 U.S. at 501;

"eliminate the effect of aggregated wealth on

federal elections,” Pipefitters Local Union

562 v. United States, 407 U.S. 385, 416

(1972); curb the political influence of

"those who exercise control over the large

aggregations of capital,” United States v.

International Union, United Automobile

Workers, 352 U.S. 567, 585 (1957); and

regulate the "substantial aggregations of

wealth amassed by the special advantages

which go with the corporate form of

organization,” NRWC, 459 U.S. at 207.

The Court therefore wrote in MCFL that

"(rjegulation of corporate political activity

thus has reflected concern not about use of

the corporate form per se, but about the

potential for unfair deployment of wealth for

political purposes," 479 U.S. at 259, and

that the concerns that arise from allowing

for-profit corporations to wield their

economic clout in the political arena justify

departure from the standard first amendment

analysis applied to advocacy expenditures by

individuals and voluntary associations.

The MCFL Court, however, specifically

did not decide the constitutional limits on

regulation of political expenditures by

traditional profit-making corporations, MCFL,

479 U.S. at 263. In reaching its holding,

however, the Court did note that regulations

requiring that campaign spending be

accomplished out of segregated political

action funds were “of course distinguishable

from the complete foreclosure of any

opportunity for political speech that we

invalidated in the state referendum context

in First National Bank of Boston v. Bellocti,

435 U.S. 765 (1978)." 479 U.S. at 259 n.12.

Nevertheless, the NCPAC Court asserted

that "[i]n Bellotti, of course, we did not

reach, nor do we need to reach in these

cases, the question whether a corporation can

constitutionally be restricted in making

independent expenditures to influence

elections for public office." 470 U.S. at

496. |

Amicus respectfully submits that this

case presents the Court with an opportunity

to re-evaluate both Bellotti’s assessment

that corporations are entitled to full first

amendment protection, and, in particular,

Buckley’s emphasis on money as a form of

speech, 424 U.S. at 16 ("({T]jhis Court has

never suggested that the dependence of a

communication on the expenditure of money

operates itself to introduce a nonspeech

element or to reduce the exacting scrutiny

required by the First Amendment.").: In

short, it is therefore urged that the Court

recognize that free speech rights: do not

inure to the profit-making corporate form to

such an extent as to prohibit legislative

proscription and, a fortiori, lesser

regulation of such corporations’ political

campaign expenditures.

A. Money and speech are not congruent.

The expenditure of money is not’ speech.

The act of spending money as one chooses is

itself therefore afforded no particular

constitutional protection. It is generally

accepted that the government may prohibit

individuals from spending money to _ purchase

narcotic or haleucenogenic drugs; firearms;

the services of prostitutes; slaves; or

votes. Despite the first amendment right to

possess and read obscene pornography, Stanley

v. Georgia, 394 U.S. 557 (1969), individuals

may nonetheless be prohibited from spending

money in pursuit of such activities. Paris

Adult Theatre I v. Slayton, 413 U.S. 49

(1973) ("A man may be entitled to read an

obscene book in his room. . .. But if he

demands a right to obtain the books and

pictures he wants in the market .. . then to

grant him his right is to affect the world

about the rest of us, and to impinge on other

privacies.") (emphasis omitted).

Of course, the giving or spending of

money is an action that, like many actions,

can be imbued with expressive conduct. See,

e.g@., Texas Vv. Johnson, 57 U.S.L.W. 4770,

4772 (June 20, 1989) (flag burning); Clark v.

Community for Creative Non-Violence, 468 U.S.

288 (1984) (sleeping); Tinker v. Des _ Moines

Indep. Sch. Dist., 393 U.S. 503, 505 (1969)

(wearing of armbands); United States v.

O’Brien, 391 U.S. 367, 376 (1968) (burning of

draft card); Schacht v United States, 398

U.S. 58 (1970) (wearing of military

uniforms).

The giving of money to a cause or

candidate, including the amount given, can be

an expressive act. But the amount given or

spent does not in and of itself necessarily

indicate intensity of support -- it might

merely reflect the giver’s ability to pay.

Cf. Buckley, 424 U.S. at 21 ("At most, the

size of the contribution provides a very

rough index of the intensity of . . . support

- + «-"). Thus, neither does the spending or

giving away of money in itself constitute

speech, nor do limitations on the level of

expenditures (at least beyond the initial

quantum expressing support ) pose any

Significant infringement on free expression

in terms of whatever expressive value inheres

in the actual giving or expending of the

money.

While government clearly cannot suppress

the propagation of political views, see,

e.g., Brown v. Hartlage, 456 U.S. 45 (1982)

(first amendment has its "fullest and most

A ON aN Sete sin Set OE

AC Me Sema. Ie

urgent" application in the case of regulation

of the content of political speech); Police

Dept. v. Mosley, 408 U.S. 92, 95-96 (1972),

it is not at all apparent that that principle

applies "to the expenditure of money to

propagate political views, rather than to the

propagation of those views unaccompanied by

the expenditure of money." NCPAC, 470 U.S.

at 493. Cf. O’Brien, 391 U.S. at 376-77

(regulation of speech-related conduct is

constitutional if it serves important

governmental interest and if that interest is

unrelated to suppression of speech); Clark v.

Community for Creative Non-Violence, 468 U.S.

at 293.

Any first amendment limitation on the

regulation of campaign expenditures and

contributions, then, must be found in the

extent to which the limitation of monetary

constrains

expenditures constitutionally

protected speech made possible by those

expenditures.

B. Expenditures may be limited where the

speech that such expenditures facilitate

may itself be limited -- irrespective of

its content -- because of inherent

limitations of the forum or system of

free speech.

In some instances prohibiting the

spending of money would clearly foreclose

constitutionally protected opportunities for

speech and thus run afoul of the first

amendment. As the Court noted in Buckiey,

virtually every means of communicating

ideas in today’s mass society requires

the expenditure of money. The

distribution of the humblest handbill or

leaflet entails printing, paper, and

circulation costs. Speeches and rallies

necessitate hiring a hall and

publicizing the event.

424 U.S. at 19. And sec Minneapolis Star &

Tribune Co. v. Minnesota Comm’r of Revenue,

460 U.S. 575 (1983) (state may not impose

additional tax on paper and ink required to

produce newspapers).

Thus, first amendment actors must be

allowed to pay for the ink for their presses,

the paper for their handbills, even the

administrative overhead for their first

amendment activities, see Secretary of State

of Maryland v. Joseph H. Munson Co., 467 U.S.

947 (1984). But clearly not all limitations

on individuals’ ability to expend money to

propagate their views unconstitutionally

limits speech, for two reasons: (1) the

expenditure limitation may have negligible,

if any, effect on the exercise of the first

amendment right, or (ii) the exercise of the

first amendment right itself may conflict

with the requirements of the system of

freede® of expression and may thus. properly

be limitable.

An example of the first situation would

be a campaign expenditure limit of $1

million. Virtualiy no person or entity

(other than the official campaign

organization itself) is likely to spend $1

» $9 «

million on campaign-related speech. But see

Cox, Constitutional Issues in the Regulation

of the Financing of Election Campaigns, 31

Cleve. St. L. Rev. 395, 395 (1982) ("The

first massive infusion of special interest

money into a federal election campaign

occurred in 1832 when Nicholas Biddle and the

Bank of the United States-spent $800,000 --

$1,000,000 in present-day dollars in a vain

effort to prevent the reelection of Andrew

Jackson." )

The lower the ceiling the more pressing

the question whether, and to what extent, the

ability to speak is actually being impinged

by the limitation. This is a factual

question answerable only by reference to the

actual workings of the real world. cf.

NCPAC, 470 U.S. at 493 ("({Fljor purposes of

presenting political views in connection with

a nationwide Presidential election, allowing

the presentation of views while forbidding

the expenditure of more than $1,000 to

» 49 «

present them is much like allowing a_ speaker

in a public hall to express his views while

denying him the use of an amplifying

system").

In those instances in which a

restriction on spending is found actually to

curtail the ability to speak, there may

independently be governmental power to limit

the volume of expenditure because of power to

limit the "volume" (or amount) of speech. As

Alexander Meiklejohn has observed, there is a

difference between abridging the "freedom of

speech" -- which is forbidden -- and

abridging speech, which is in some instances

permissible. A. Meiklejohn, Free Speech and

Its Relevance to Self-Government 19 (1948).

As Professor Emerson noted, while

government may not regulate "expression that |

is thought to harm other social interests,"

government may regulate speech to “promote

the goals of the system" of free expression

itself, including improvement in the "quality

« 28 «

and meaningfulness of expression." T.

Emerson, The System of Freedom of Expression

633 (1970). In Emerson’s view, the question

is “whether there has been an ‘abridgment’ of

freedom of expression," and the answer is

"framed in terms of accomodation of interests

within the system," meaning "promotion rather

than deterence of expression." Id. at 629

(emphasis added).

In short, neither Emerson, Meiklejohn,

nor Amicus here would assert that speech

could be limited to improve its "quality". by

eliminating speech that the government

regarded as of inferior ideological or

intellectual content, for this involves’ the

abridgme®t of speech on the basis of values

derived outside the system of free expression

itself. However, government may, in proper

instances, act as a “traffic cop" to improve

the quality of the functioning of the systen,

much as government keeps traffic flowing

through an intersection.

» £8 «

Thus, Meiklejohn has observed that

"(t]he First Amendment . .. is not the

guardian of unregulated talkativeness."

Meiklejohn, supra, at 25. Thus, in

Meiklejohn’s famous example, speech may be

limited at a town meeting in order to ensure

other speakers their right to speak.

Similarly, Judge Skelley Wright has asserted

that

[e]xpenditure limits and other curbs’ on

campaign finance practices are analogous

to rules of order at a town meeting,

enforced so that the deliberative

process is not distorted. The first

amendment does not permit curbs on

general discussion of political,

economic, or social controversies. But,

like the loud mouth and long talker at

the town meeting, untrammeled spending

during an election campaign does not

serve the values of self-government, nor

can it lay claim to first amendment

protection.

Wright, Money and the Pollution of Politics:

Is the First Amendment an Obtsacle to

Political Equality?, 82 Colum. L. Rev. 609,

639 (1982).

This does not mean that the government

could, without more prohibit repetitive

speech -- a campaign expenditure level would

not be acceptable simply because it is high

enough to let one say what he or she has to

say once, but no more. In the absence of a

compelling governmental interest -- or a

competing interest springing from the system

of free expression itself -- the government

may not regulate "talkativeness” or the

speaker’s right to repeat his message as much

as he likes or attempt to reach as many

listeners as he wishes.

Thus, such limitation of speech must be

predicated upon the "the forum[’s being]

limited by physical, technological, or

economic factors." Wright, supra, 82 Colum.

L. Rev. at 640. The fact that one individual

may possess greater skills or resources in

putting across his message does not suffice

to show such an inherent limitation in the

forum as to require government interference

- £6 «

in rationing access to the forun. Rather,

the nature of the forum itself must’ require

the rationing.

In the campaign context, it can be

argued that there is no inherent rationing

required because each citizen is as free as

the next to spread her views through

speaking, handbilling, and other first

amendment actions; thus, the greater ability

of those with greater resources to attain

their goals through the free market of

expression is constitutionally irrelevant.

See, e.g., Buckley, 424 U.S. at 39-51. But

this ignores the realities of modern

campaigns.

= 89 «

C. Reasonable expenditure limits are

required to ration access to the most

expensive and effective means of

political speech on some basis other

than wealth.

As the per curiam opinion in Buckley

acknowledged, "[t]jJhe electorate’s increasing

dependence on television, radio, and other

mass media for news and information has made

these expensive modes of communication

indispensable instruments of effective

political speech." Buckley, 424 U.S. at 19

(emphasis added). And see NCPAC, 470 U.S. at

493 ("The PACs in this case, of course, are

not lone pamphleteers or street corner

orators in the Tom Paine mold; they spend

substantial amounts of money in order to

communicate their political ideas through

sophisticated media advertisements." ). And,

as this Court has recognized, access to these

expensive and indispensable instruments of

effective political speech -- particularly

television -- by their nature must be

» 18 «

rationed, and ought properly be rationed on

some basis other than mere wealth.

In Red Lion Broadcasting Co. v. FCC, 395

U.S. 367 (1969), this Court’ upheld the

constitutionality of the FCC “fairness

doctrine" requiring broadcasters to give free

air time, in specific instances, to those

with opposing viewpoints. The Court

recognized that this limitation on the

broadcaster’s right to use as he saw fit the

broadcast time he "owned" would “enhance

rather than abridge the freedoms of speech °

and press." Id. at 375. This was because of

the “scarcity of broadcast frequencies, the

Government’s role in allocating those

frequencies, and the legitimate claims of

those unable without governmental assistance

to gain access to those frequencies for

expression of their views." Id. at 400.

In short, as the airwaves are a

physically or technologically limited forun,

regulation that adds to the stock of

» 46 «

expressed attitudes on a more equal basis is

permissible. It is, after all, “the purpose

of the First Amendment to preserve an

uninhibited marketplace of ideas in which

truth will ultimately prevail, rather than to

countenance monopolization of that market."

Red Lion, 395 U.S. at 390.

Thus, in rejecting a rule that would

compel broadcasters to air paid messages, the

Court in CBS:v. Democratic Nat’l Comm., 412

U.S. 94 (1973), found that a right to’ spend

as much money as one wanted to "speak" on

television would be "so heavily weighted in

favor of the financially affluent, or those

with access to wealth" that the system of

freedom of expression "would scarcely. be

served." Id. at 123. "[{T]he views of the

affluent could well prevail over those of the

others," Chief Justice Burger observed for

the Court, "since they would have it within

their power to

purchase time more

frequently." Id.

» 6 @

This Court has thus found that the right

to spend money to facilitate speech is not

unlimited; rather, where access to the

relevant forum is itself limited, government

may ration that access on a content-neutral

basis other than wealth. "Just as the

Government may limit the use of sound

amplifying equipment potentially so noisy

that it drowns out civilized speech, so may

the Government limit the use of broadcast

equipment. The right of free speech of a

broadcaster, the user of a sound truck, or

any other individual does not embrace a right

to snuff out the free speech of others." Red

Lion, 395 U.S. at 387.

A legislative body could well find that,

as this Court itself has stated, expensive

mass media -- particularly the electronic

media -- are the “indispensable instruments

of effective political speech" central to

campaign communication today, Buckley, 424

U.S. at 19 (emphasis added), and that

» 68 «

rationing of access to such media is

essential to preserving the integrity of the

political process and the first amendment.

And as major campaign contributors primarily

"spend substantial amounts of money in order

to communicate their political ideas through

sophisticated media advertisements," NCPAC,

470 U.S. at 493 (emphasis added), a rational

legislature could today conclude that’ the

valid rationing of access to mass media in

the campaign context and the limitation of

campaign expenditures are essentially

synonymous.

In short, the legitimate protection of

"the system of freedom of expression" in the

modern

dominant fora of the political

campaign essentially requires regulation of

campaign expenditures. Thus, legislative

limitations on political campaign

expenditures, so long as reasonable within

the foregoing analytic framework, ought to

carry a fair presumption of constitutionality

oe £8 eo

under the first amendment.

Accord T.

Emerson, The System of Freedom of Expression

639-40 (1970) (campaign limits permissible

because they “are directed to a limited end

and deal with a limited situation").

D. The constitutionality of government

rationing of access to effective but

limited fora on some basis other than

wealth is reinforced by the need to

reduce the corrupting effects of money

on the political process.

That the de facto rationing of access to

the most effective means of communication in

modern campaigns should not be carried out on

the sole basis of access to large

agglomerations of money is bolstered by this

Court’s long-held conviction that "preventing

, corruption or the appearance of corruption"

constitute a legitimate and compelling

governmental interest in the regulation of

campaign finance. NCPAC, 470 U.S. at 496-97.

e £9 -

In NCPAC, the Court objected, however, that

"precisely what the ‘corruption’ may consist

of we are never told with assurance.” 470

U.S. at 498. The corruption of the political

process at issue, of course, is not outright

bribery -- but open bribery is not the only

form that. corruption may take.

Money, in the popular imagination and in

fact, appears to be the largest, if not’ the

single, determinant of electoral success. As

Michael S. Berman, a_ long-time national

political operative, has commented, "[Li]n his

experience as a campaign organizer, he had

always operated under the premise that ‘if I

had enough money, I can do it [win the

election]’." Comments, Special Forum on

Proposed Reforms in Campaign Financing, 3

J.L. & Pol. 419, 500 (1986). And as_ two

esteemed federal judges have observed, the

FEC has reported that a two-to-one

expenditure advantage over one’s opponent

translates into a 93% probability of

«e @6 «

election. See, Wald, Two Unsolved

Constitutional Problems, 49 U. Pitt. L. Rev.

753, 754 (1988); Wright, Money and the

Pollution of Politics, supra, 82 Colum. L.

Rev. at 622 (1982).

The amount of money required to obtain

public office, meanwhile, is sky-rocketing.

Candidates for the Senate spent five times as

much, and House candidates four times as

much, in 1985-86 as a decade earlier. See M.

Barone & G. Ujifusa, The Almanac of American

Politics: 1988, at 1363 (1987). The result

has, not unpredictably, been the declining

relevance of the small, individual

contributor. Contributions of $100 or less

fell from 38% of the financing of U.S. Senate

races in 1974 to only 23% in 1986; for House

races, the drop off is even more dramatic,

falling from 46% to only 13% in the last

election cycle. Conlon, The Declining Role

of Individual Contributions in Financing

Congressional Campaigns, 3 J.L. & Pol. 467,

471, 476 n.4, 479 (1986).

The role of PAC’s has concommitantly

grown; PAC contributions have risen from only

$12 million in 1974 to $132 million in 1986

and ’87. Cong. Res. Svce., Report on

Campaign Financing 6 (Update, July 2, 1987).

While some of these PAC’s still represent

"mechanisms by which large numbers of

individuals of modest means can join

together," NCPAC, 470 U.S. at 494, PAC’s are

by no means purely, or even predominantly,

"ideological mutual funds." PAC’s are,

rather, the predominant means by which large

aggregations of corporate wealth are injected

into the electoral process today. In fact,

the vice president for "political education"

of the Business-Industry Political Action

Committee has asserted that "{i]f anything,

corporate America has been timid in the full

campaign

exercise of its power to make

contributions and influence candidates."

=

Co

Budde, Business-Related Political Action

Committees -- A Permanent Force After One

Decade, 3 J.L. & Pol. 449, 453 (1986).

The individuals or entities that can

supply (whether

indirectly through the

official campaign apparatus, or directly

through his own expenditures on behalf of the

candidate) the large cash infusions needed to

compete for office today are the candidate’s

and officeholder’s lifeblood. Thus, the

point is not that "candidates and elected

officials may alter or reaffirm their own

positions on issues in response to political

messages paid for by the PACs," NCPAC, 470

U.S. at 498, but that candidates and elected

officials must, in general, "alter or

reaffirm their . positions on issues in

response to" the availability of large

aggregations of money, if they wish to remain

competitive.

As Professor Freund has observed, such

large contributors "are operating vicariously

» £9 «

through the power of their purse, rather than

through the power of their ideas, and... I

would scale that relatively lower in the

hierarchy of First Amendment values."

Freund, Commentary in A. Rosenthal, Federal

Regulation of Campaign Finance: Some

Constitutional Questions 74 (Citizens’

Research Foundation Study No. 18) (1971).

The insidious effects of large

concentrations of money in our politics are

not just that this money in large measure

predestines election results, thereby

predisposing politicians toward the positions

of the wielders of such sums, but also that

the positions taken by candidates -- at

least, those who run to win end not just to

state their principles -- are largely

constrained by the preferences not of the

electorate as a whole but rather of the

purveyors of the necessary campaign finances.

See, e.g., Cox, Constitutional Issues in the

Regulation of the Financing of Election

» 8 -«

Campaigns, supra, 31 Cleve. St. L. Rev. at

399-401. ;

We should certainly be concerned where

the range of positions presented to the

electorate is constrained, in no small

degree, by those entities with large sums of

money available, cf. Bullock v. Carter, 405

U.S. 134 (1971) (large candidate filing fee

unconstitutionally limits voter choice to

those views supported by substantially monied

voters); Lubin v. Panish, 415 U.S. 709

(1974). This is even more true where those

exercising this inordinate influence are not

even themselves entitled to vote but are,

rather, artificial and purely commercial

"persons."

o £89 «

E. Rationing access to effective but

limited campaign fora on some basis

other than weaith is especially

justified when applied to corporations

organized for profit.

The use of the corporate form to collect

money for profit and then expend it in the

political campaign context is particularly

problematic. As the Court recently asserted,

concern over the corrosive influence of

concentrated corporate wealth reflects

the conviction that it is important to

protect the integrity of the marketplace

of political ideas.. . . Direct

corporate spending on political activity

raises the prospect that resources

amassed in the economic marketplace may

be used to provide an unfair advantage

in the political marketplace... . . The

reasources in the treasury of a business

corporation . . . are not an indication

of popular support for the corporation’s

political ideas. They reflect instead

the economically motivated decisions of

investors and customers. The

availability of these resources may make

a corporation a formidable political

presence, even though the power of the

corporation may be no reflection of the

power of its ideas.

MCFL, 479 U.S. at 257-58.

@- OO «

Thus, the argument for full first

amendment protection of corporate political

campaign expenditures has already been

severely undercut on several fronts. The

well-established doctrine of commercial

speech, see Virginia State Bd. of Pharmacy v.

Virginia Citizens Consumer Council, Inc., 425

U.S. 748 (1976), in fact provides lessened

first amendment protection not for commercial

speech but for commercial speakers:

The same substantive speech (e.g., wage

rates, product quality, or business

patronage ) becomes fully-protected,

non-commercial speech when spoken by someone

other than the commercially concerned entity.

Compare Ohralik v. Ohio State Bar Ass’n, 436

U.S. 447 (1978) (state may bar lawyer

solicitation for pecuniary gain), with In re

Primus, 436 U.S. 412 (1978) (state may not

normally bar legal organization from

soliciting in furtherance of "political and

ideological goals of the association"); and

» 94 -

compare Bolger v. Youngs Drug Prods. Corp.,

463 U.S. 60 (1983) (government may bar

commercial circulation of birth control

materials and brochure advocating their use)

with Eisenstadt v. Baird, 405 U.S. 438 (1972)

(state cannot proscribe dispensing of birth

control materials or advocacy of their use).

And see NAACP v. Claiborne Hardware, 458 U.S. .

886 (1982); Organization for a Better Austin

v. Keefe, 402 U.S. 415 (1971). Thus, one’s

status as a commercial actor has already been

accepted as justification at least in part

for lessened first amendment protection.

That for-profit corporations have

lessened first amendment rights is certainly

not a novel proposition. In Bellotti, after

noting that "([cJertain ‘purely personal’

guarantees, such as the privilege against

compulsory incrimination" -- or “equality

with individuals in the enjoyment of a right

to privacy," -- “are unavailable to

corporations and other organizations because

o Of «

the ‘historic function’ of the particular

guarantee has been limited to the protection

of individuals," 435 U.S. at 779 n.14 (per

curiam opinion) (citations omitted), the

Court wrote that "[w]hether or not a

particular guarantee is ‘purely personal’ or

is unavailable to corporations for some other

reason depends on the nature, history, and

purpose of the particular constitutional

provision. Id.

As Justice White noted in his Bellotti

dissent, though, "what some have considered

to be the principal function of the First

Amendment, the use of communication as a

means of self-expression, self-realization,

and self-fulfillment, is not at all furthered

by corporate speech." Id. at 304-05 (White,

J., dissenting) (citing T. Emerson, Toward a

General Theory of the First Amendment 4-7

(1966); West Virginia Bd. of Ed. v. Barnette,

219 U.S. 624 (1943)). Indeed, the Court has

long recognized in the antitrust context that

- 33 -

the government may curtail business

corporations’ speech and associational rights

so as to preclude combining expenditures or

any aspect of operations unless trade is not

restrained, or to forbid even basic or

indirect communication on matters of price.

See, e.g., United States v. Container Corp.,

393 U.S. 333 (1969).

The first amendment question at issue

here, then, “is not one of equalizing the

resources of opposing candidates or opposing

positions, but rather of preventing

institutions which have been permitted to

amass wealth as a result of special

advantages extended by the State for certain

economic purposes from using that wealth to

acquire an unfair advantage in the political

process." Bellotti. at 809. Since the state

“indirectly assist[s] the propagation of

corporate views because of the advantages its

laws give to the corporate acquisition of

funds to finance such activities[, sJuch

» #4 «@

expenditures may be viewed as seriously

threatening the role of the First Amendment

as @ guarantor of a free marketplace of

ideas." Id. at 810. And see id. at 825-26

(Rehnquist, J., dissenting).

Limitiations on corporate political

speech, moreover, do not infringe on the

ability of any individual to participate in

.

campaign speech -- the true "core value" of

the first amendment -- because any corporate

investor, owner, or manager is free to use

his or her own resources for first amendment

purposes as he or she chooses. A

corporation, after all, is not a real person

with any right to participate in the

electoral system; it is a legal device for

the promotion of enterprise through the

pooling of resources ~by any number of

individuals -- all of whom are free to use

their resources, including those they gain

from their corporate investments, for

expressive purposes.

As noted at the outset, moreover, the

level of political expenditure relates only

very tenuously to any expressive content

beyond simply the initial marginal act of

spending. The incongruity between the

“expressive content of the expenditure and the

pure economic value of the expenditure is

exacerbated in the for-profit corporate

context, however, by the fact that the amount

of money available to traditional,

profit-making corporations does not function,

as this Court has acknowledged, as any more

than "a rough barometer of public support

for" their ideas, see MCFL, 479 U.S. at 258.

The particular merit, at least for first

amendment purposes, of the ideological

corporation, in contrast, is that its capital

is accumluated specifically for the purpose

of communicating the views in question.

For-profit coporate money may, instead, in

fact be used to espouse views contrary ta

those of the shareholders or workers who made

o 96 «

the funds available, and who have no

realistic ability to protest or control such

uses, see NRWC, 459 at 207. There is thus

even less reason to suppose that the first

amendment protects the for-profit corporation

against restrictions on transferring its

unique clout in the economic marketplace

directly to the political marketplace.

In sum, the protections of the first

amendment are at their lowest in the context

of political expenditures by a purely

commercial corporate entity. The potentially

corrupting effect on the political process of

political expenditures is also at its

highest. Moreover, the legislative interest

in limiting politcal campaign expenditures in

the reality of the modern campaign

environment actually itself furthers a valid

and compelling first amendment objective of

providing adequate speech for all speakers by

rationing access to the most "indispensable"

political fora. This Court should therefore

- OF «

uphold legislative proscription or limitation

of corporate political campaign expenditures.

II. THE MICHIGAN LEGISLATURE HAS NOT

EXERCISED ITS POWER TO BAN ALL CORPORATE

FUNDS FROM ENTERING THE POLITICAL

MARKETPLACE, BUT RATHER HAS SIMPLY BARRED ALL

NON-PAC CORPORATE EXPENDITURES; HENCE,

EXPENDITURES BY THE CHAMBER -- A NON-PROFIT

IDEOLOGICAL CORPORATION PROTECTED UNDER MCFL

-- ARE LAWFUL.

In the foregoing Section, Amicus

suggested that corporate funds can be

completely banned from injection into a

politicai campaign.

As noted, however, the corporate form is

not the determinant eo ipso of when electoral

integrity concerns are sufficient to overcome

amendment

traditional - first protection;

"voluntary associations" and id. dslogical

corporations may not and should not be

treated in the same way as. profit-making

enterprises.

"Voluntary political

» £6 «

:

associations do not suddenly present’ the

spectre of corruption merely by assuming the

corporate form." MCFL, 479 U.S. at 263. For

example, the Federal Election Commission

permits a political committee to incorporate

“for liability limitation purposes only." i11

C.F.R. Sec. 114.12(a).

"Undoubtedly, as this Court has

recognized, see NAACP v. Button, 371 U.S. 415

(1963), there are some corporations formed

for the express purpose of advancing certain

ideological causes shared by all their

members, or, as in the case of- the press, of

disseminating information and ideas. Under

such circumstances, assceciation in a

corporate form may be viewed as merely a

means of achieving effective self-expression.

But this is hardly~ the case generally with

corporations operated for the purrose of

making profits." Bellotti, 435 U.S. at 805

(White, J. dissenting).

- 39 -

Thus, “voluntary associations," whether

incorporated or not, are afforded -- as are

individuals ae full first amendment

protection in expenditures constituting

political advocacy. MCFL, 479 U.S. at 263.

Traditional, profit-making corporations,

however, can be subject to stringent

regulation of campaign expenditures because

of the serious threat to “the integrity of

the marketplace of political ideas" raised by

concentrated

"the corrosive influence of

corporate wealth." Id. 257. "As we said in

California Medical Ass’n v. FEC, 453 U.S. 182

(1981), the ‘differing structures and

purposes’ of different entities ‘may require

different forms of regulation in order to

protect the integrity of the electoral

process.’" NRWC, 459 U.S. at 210.

The Court of Appeals -- noting that

"(t]he Chamber is not a sub-corporation

established by a parent corporation,"

Austin, 856 F.2d at 789 -- found that’ the

o O08 «

press eee —

/

_ profit-making enterprises.

Chamber of Commerce was a "voluntary

political association," 856 F.2d at 788, and

therefore could not be subject to corporate

campaign expenditure restrictions.

Appellants and supporting amici

argue

that this finding opens up a potentially

massive loophole in corporate campaign

contribution legislation, allowing such

organizations to do an end-run around “the

distinction between corporations formed for

ideological purposes and those formed as

It is argued that

allowing ostensibly ideological, non-profit

corporations formed primarily by for-profit

corporations to qualify for full first

amendment protection equally with non-profits

associated

and voluntary associations not

with the profit-making sector would vitiate

the “different forms of regulation" needed to

structures and

address "the ‘differing

purposes’ of different entities". in the

context of "protect[ing] the integrity of the

« 6h «

electoral process." National Right to Work

Comm., at 210.

business-affiliated non-prorit,

ideological corporations do indeed constitute

a large hole in any comprehensive attempt

eliminate corporate funds from the political

environment. However, Court has

recognized, such an exemption is required by

a ee

amendment. supra.

Nonetheless, a hole if not

closeable, is at least bridgeable.

The government only prohibit

corporations from directly injecting money

into the political campaign process;

also prohibit corporations indirectly

funneling money process’ through

non-profit, ideological corporations.

such ideological

voluntary associations

cannot be denied the exercise of their

amendment rights simply because

receipt of corpcrate funds in other contexts,

cf. Perry v. Sinderman, 408 U.S. (1972);

Speiser v. Randall, 357 U.S. 513, 526 (1958),

they may be required to segregate such funds

from their political activities.

For instance, ideological corporations

or voluntary associations can be required to

maintain segregated accounts to demonstrate

that corporate funding of those organizations

do not subsidize political campaign

activities. Federal regulations currently

provide that federal political committees

that cannot accept business or labor

contributions may nonetheless establish

non-federal accounts that accept such funds

for state campaigns, where permitted by state

law. See 11 C.F.R. Sec. 102.5.

Similarly, the Internal Revenue. Code

prohibits orivate foundations from making

grants earmarked for lobbying, but allows

such foundations to provide general support

grants to public charities that doin fact

lobby but requires such charities to.

demonstrate that their lobbying activities

- 43 -

were not subsidized by the foundation grants.

See 26 C.F.R. Sec. 53.4945-2.

In short, segregation of funds is

already a commonly applied and easily

enforced principle. It allows the government

to address the valid concern with corporate

contributions somehow "leaking" into

electoral advocacy. But, as corporate gifts

are often vital to a non-profit, ideological,

or voluntary organization’s charitable or

civic activities unrelated to electoral

politics, such segregation-of-funds

regulations allow these organizations to

continue the first amendment activities

central to their existence as well as their

constitutionally protected . electoral

advocacy. In this way, the first amendment

concerns prompting corporate campaign

expenditure limitations, see supra Section I,

can be advanced without mandating that

voluntary and ideological organizations

choose between alternative first amendment

e 64 «

activities, both of which they are

constitutionally permitted to pursue.

However, this the Michigan legislature

has not done. The Michigan Campaign Finance

Act prohibits contributions and expenditures

by corporations, except through segregated

PAC accounts; such a restriction, under MCFL,

cannot apply to aen~eref it, ideological

corporations, which thé Court of Appeals

found to include the Michigan Chamber of

Commerce. The Act contains no separate

provision such as those discussed above,

requiring a non-profit such as the Chamber to

segregate funds originating from corporate

sources and those to be used for campaign

advocacy, however.

The Chamber was thus entitled to expend

its funds on campaign advocacy. This case

requires the careful balancing of, on the one

hand, the state’s power to protect its

democratic institutions from domination by

large aggregations of wealth through the

a @2 «

limitation or proscription of corporate

campaign expenditures; and, on the other

hand, the constitutional protection of

non-profit, ideologically based expression

and giving through the corporate format. The

result in the Court of Appeals’ therefore

ought to be affirmed.

CONCLUSION

For these reasons, the judgment of the

court below should be affirmed.

Respectfully submitted,

ERIC B. SCHNURER

125 South Ninth Street,

Suite 401

Philadelphia, PA 19107

(215) 923-4206

ROBERT C. FELLMETH*

Center for Public Interest Law

University of San Diegp

Alcala Park

San Diego, CA 92110

(619) 260-4806

Counsel for Amicus Curia

Center for Public Interest Law

_ July 26, 1989 * Counsel of Record

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