Amicus Curiae Brief — Austin v. Michigan Chamber of Commerce

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: ' | Bupreme Court, U.S"

(») | FILED

No. 88-1569 JUL 26 109

IN THE cette

Supreme Court of the United States ‘

OCTOBER TERM, 1989

RICHARD H. AUSTIN, eta,

Appellants,

Vv.

MICHIGAN STATE CHAMBER OF COMMERCE,

Appellee.

On Appeal from the United States

Court of Appeals for the Sixth Circuit

BRIEF OF THE AMERICAN CIVIL LIBERTIES UNION,

AMICUS CURIAE, IN SUPPORT OF APPELLEE

ARTHUR B. S PITZER

AMERICAN CIVIL LIBERTIES

UNION OF THE NATIONAL

CAPITAL AREA

1400 20th Street, N.W.

Washington, D.C. 20036

(202) 457-0800

Of Counsel: Counsel of Record

_ for Amicus Curiae

JOHN A. POWELL

JOEL M. GORA

AMERICAN CIVIL LIBERTIES UNION FOUNDATION

132 West 43rd Street

New York, N.Y. 10036

(212) 944-9800

July 28, 1989

SE2Q.

TABLE OF CONTENTS

Page

INTEREST OF AMICUS CURIAE .000.......ccccccccseesssseseee sete: l

SUMMARY OF ARGUMENT .u.......ccccccceceeccetecee ceeeeeeee 3

ARGUMENT:

I. SECTION 54(1) DIRECTLY RESTRICTS SPEECH

AT THE CORE OF THE FIRST AMENDMENT’S

RIFE ARIE SP ne gg ene Oe 4

Il. SECTION 54(1) SERVES NO COMPELLING

GOVERNMENTAL INTFREST... ....0........0.0.0000005 ~ 7

A. Eliminating Corruption or the Appearance of

SUIT Colicieicidsilininibedionieaiah décitbatdesaienieeeeneses 7

1. Independent Expenditures by Non-Profit

Corporations Do Not Pose a Threat of

EERSTE REAR roe eae 8"

2. A Complete Ban on Independent Spending by

Non-Profit Corporations that Receive Corpo-

rate Contributions is Not Necessary to Prevent

Spending by Business Corporations. .........

3. A Complete Ban on Independent Spending by

Non-Profit Corporations Gives Government

Too Potent a Weapon to Harass Public Issue

III. icsinninctesaraninisbisiiiiediin damnibbmesincnises

B. Protecting the Rights of Dissenting Members ......

C. Avoiding the “Unfair Deployment of Wealth”

and Protecting the “Integrity of the Political

a alah es namebennees

ELE ERT ESERIES AEN DEEE EA ao ae

TABLE OF AUTHORITIES

Page

CASES:

Abood v. Detroit Board of Education, 431 U.S. 209

SETUP vcinisisinteiaccencnseentsesn sncmtuninnisdtnenmesinnins snetntanitete 20

American Civil Liberties Union v. Jennings, 366 F. Supp.

1041 (D.D.C. 1973) (three-judge court), vacated as moot

sub nom. Staats v. American Civil Liberties Union, 422

Tt |. . Seen 2

Board of Airport Commissioners of Los Angeles v. Jews for

Jesus, Inc., 482 U.S. S69 (1987) ..........cscccccsscecceseeees sonees 4

Board of Education v. Allen, 392 U.S. 236 (1968) ............. 13

Boos v. Barry, 108 S. Ct. 1157 (1988) ........ccceeeeneeeenens 11

Brown v. Socialist Workers '74 Campaign Committee, 459

Te BI vniccsacencccvindsceneticcntionn ‘santipeiavestintvanasevionssiiniit te 2

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

Buckley v. Valeo, 519 F.2d 821, 871 (D.C. Cir. 1975)

CEI YD ecececcccccoscrevenscssessessses <ucceneesmeonesenssvesseneaionne witreeonees 2

California Medical Association v. Federal Election

Commission, 453 U.S. 182 (1981) .............sccsecseeeeeeree ones l

Citizens Against Rent Control v. Berkeley, 454 U.S. 290

nT 7

Common Cause v. Schmitt, 455 U.S. 129 (1982)..... 1, 10, 24

iil

Consolidated Edison Co. v. Public Service Comm’n of New

Peay, Gar UF ED ehsetedsinesittataceamneididiis baa 5, 6

Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S.

Pe? QED Wisttiitisnittinimastataiii dain 26

Eastern RR Presidents Conference v. Noerr Motor Freight,

San, FD Va Ta Ge ecitcitcintieentie ee 19

Everson v. Board of Education, 330 U.S. 1 (1947)... 13

Federal Election Commission v. Central Long Island Tax

Reform Immediately Committee, 616 F.2d 45 (2d Cir.

BOD CI. ccinisctcsonnininias ae ae

Federal Election Commission v. Furgatch, 807 F.2d 857

COU COR, FOE cecseisasinsttenttinibiiiar ane 15

Federal Election Commission v. Massachusetts Citizens for

LM, Gas. SFO US. Tae CORD cctesecsensscincecssnniniiiiiainns passim

Federal Election Commission v. National Conservative

Political Action Committee, 470 U.S. 840 (1985)... passim

Federa/ Election Commission v. National Organization for

Wermen, C.A. No. 87-2269 (D.D.C. 1989) ...000000..... 15, 16

Federal Election Commission v. National Right to Work

Committee, 459 U.S. 197 (1982) ......ccccccecccecceseeeeeeees 16, 22

Federal Election Commission v. Survival Education Fund.

Inc., No. 89-Civ-0347 (S.D.N.Y. filed January 17, 1989) 2

First National Bank of Boston v. Bellotti, 435 U.S.

FED (OGG cccnccsstcsvvscnsencsnsuianis aaa 5. 17. 20, 23

In Re ACLU, Dkt. MUR 1802 (Federal Election Commission,

eli ai aiaseneneninmaiehanhiebetene esmveeeimaecocs 2

Lovell v. City of Griffin, 303 U.S. 444 (1938)... 27

Meyer v. Grant, 108 S. Ct. 1886 (1988)............ 2, 5, 7, 18, 29

Mills v. Alabama, 384 U.S. 214 (1966) .............:000: 4, 25, 26

Mississippi University for Women v. Hogan, 458 U.S. 718

I hi ices ia Sabdsaneniidalindinttemcaneiratoiiee wovversceneees 18

NAACP v. Button, 371 U.S. 415 (1963) .......ccccceeeeeeeees 14

NCAA v. Tarkanian, 109 S. Ct. 454 (1988) .........cccceecs 23

New York Times v. Sullivan, 376 U.S. 254 (1964)............ 14

Regan v. Taxation With Representation of

Washington, 461 U.S. 540 (1983) .........ccccccccecceeeeeeeees ; 12, 13

Roemer v. Board of Public Works, 426 U.S. 736 (1976)... 13

Staats v. American Civil Liberties Union, 422 U.S. 1030

Nila, iaiidtipinidinidassonans sqrt <tsssonesnnees 2

Thomas v. Collins, 323 U.S. 516 (1945) .......ccccccceeeeeeseeees 19

Tilton v. Richardson, 403 U.S. 672 (1971) .......c.:ccccccceeeee 13

United States v. Automobile Workers, 352 U.S. 567

es 1 aidlusinsnteoninntenentin eoonoserees 22, 23

United States v. Congress of Industrial Organizations, 335

a scseeambliiatannvennsioninesenes ons 20

United States v. National Committee For Impeachment, 469

Pam Ps seuiseiaasoene 2

Virginia State Board of Pharmacy v. Virginia Citizens

Consumer Council, Inc., 425 U.S. 748 (1976) ....cccccccceceseeees 6

—

2 U.S.C. § 441b ScaesenitSienitabendenis tainted a 15

Rc CI ce 12, 13

Rta ea ea a 25, 27

EE cia inccicetilssetieasies cin: ataapualbdleideeiaiesiuminicnseuts sisi 4

EEN en 11

EST Tat. SN ee a TA Pee 4

EEA a agp ene aC 6

M ISCELLANEOUS :

The Am Law 1001, The American Lawyer, July/August 1989

TIES RARE Ra et Nae RS RSET RT 24

Glasser, Ira, Presidential Politics and the ACLU, speech at the

National Pres Club, Washington, D.C. (Oct. 6, 1988)......... 20

U.S. Bureau of the Census, STATISTICAL ABSTRACT OF THE

I I iin sii aicctsssanisstnein edssnmianbinssonees 19, 24

Webster’s Deluxe Unabridged Dictionary 1059 (2d ed..

I seissiniilbscaescidies scpdspanddinascapideostanadeoaemniasacodiane nhekcossoecs 23

BRIEF OF THE AMERICAN CIVIL

LIBERTIES UNION, AMICUS CURIAE,

IN SUPPORT OF APPELLEE

The American Civil Liberties Union submits this brief as

amicus curiae in support of the judgment of the United States

Court of Appeals for the Sixth Circuit, holding section 54(1)

of the Michigan Campaign Finance Act unconstitutional as

applied to the independent expenditures of a non-profit,

membership corporation.

Letters from counsel for each of the parties, consenting

to the filing of this amicus brief, have been filed with the Clerk

of the Court.

INTEREST OF AMICUS CURIAE

The American Civil Liberties Union, Inc. (“ACLU”), is

a non-profit, membership corporation incorporated under the

laws of the State of New York, with approximately 250,000

members throughout the United States. For nearly seventy

years, the ACLU has been dedicated to upholding and pro-

tecting the First Amendment rights of all persons, irrespective

of their partisan political interests or affiliations.

In defense of the fundamental First Amendment right of

individuals and associations to engage in political expression,

the ACLU has been an active participant in litigation involving

government regulation of election campaign speech. The New

York Civil Liberties Union, an affiliate of the ACLU, was one

of the plaintiffs in Buckley v. Valeo, 424 U.S. 1 (1976), the

landmark challenge to the constitutionality of federal election

laws. The ACLU has participated as amicus curiae in Cali-

fornia Medical Association v. Federal Election Commission,

453 U.S. 182 (1981); Common Cause v. Schmitt, 455 U.S.

129 (1982): Federal Election Commission v. National

Conservative Political Action Committee, 470 U.S. 840

(1985); Federal Election Commission v. Massachusetts Ci'i-

zens for Life, Inc., 479 U.S. 238 (1986); Meyer v. Grant, 108

S. Ct. 1886 (1988), and other cases raising issues similar to

those presented here.

In addition, the ACLU has represented various groups

and individuals, of all ideological persuasions, whose political

advocacy has been prohibited, restricted or inhibited by

campaign finance laws.! Moreover, the ACLU has had to

defend itself against the unconstitutional application of

campaign finance laws to its non-partisan activities. See

American Civil Liberties Union v. Jennings, 366 F. Supp.

1041 (D.D.C. 1973) (three-judge court), vacated as moot sub

nom. Staats v. American Civil Liberties Union, 422 U.S. 1030

(1975); Buckley v. Valeo, 519 F.2d 821, 871 (D.C. Cir. 1975)

(en banc); In Re ACLU, Dkt. MUR 1802 (Federal Election

Commission, 1984).

The ACLU, like the appellee here, and like thousands of

other organizations that engage in political speech, has chosen

to operate in corporate form. Laws that prohibit all corpora-

tions from engaging in otherwise constitutionally-protected

conduct, for no other reason than that they hold corporate

charters, threaten the ability of such groups and their mem-

bers—including the ACLU and its members—to participate

fully in the important national debates of our time.

| See, e.g., Brown v. Socialist Workers ‘74 Campaign Committee.

459 U.S. 87 (1982); United States v. National Committee For

Impeachment, 469 F.2d 1135 (2d Cir. 1972); Federal Election

Commission v. Central Long Island Tax Reform Immediately

Committee, 616 F.2d 45 (2d Cir. 1980) (ea banc); Federal Election

Commission v. Survival Education Fund, Inc., No. 89-Civ-0347

(S.D.N.Y. filed January 17, 1989).

SUMMARY OF ARGUMENT

The Michigan law at issue in this case strikes at the heart

of what the First Amendment protects: public discussion about

how our Nation shall be governed. The fact that the associa-

tion wishing to participate in that debate exists in corporate

form does not place it outside the protection of the First

Amendment, and thus the statute works a direct and substan-

tial abridgment of core constitutional rights. Accordingly, it

must be struck down unless the State can demonstrate a com-

pelling need for its enforcement.

No such need has been or can be shown. Independent

expenditures made for the purpose of purchasing public

political speech simply do not amount to a corruption of the

political process, and do not present the appearance of such

corruption, as this Court has consistently held. Nor are the

draconian prohibitions involved here necessary to prevent the

flow of business money through non-profit corporations and

into political speech, since bookkeeping and _ reporting

requirements, deemed sufficient by Congress and this Court in

similar contexts, can serve that purpose adequately.

The statute at issue also does not serve a compelling

purpose with respect to the rights of dissenting members or

shareholders of corporations, since the law’s own provisions

and history indicate that this was not its purpose; in any event,

governmental suppression of the speech of private entities

because of dissent internal to such entities would raise very

serious constitutional difficulties of its own. Finally, there is

nothing special about the nature of corporations or the source

of their income that makes them more legitimately subject to

political censorship than other organizations and associations.

The effort to regulate corporate political speech is fraught

with unsupportable assumptions and impossible distinctions,

and poses a continuing threat to the free speech rights of all. It

should be abandoned as inconsistent with the First Amend-

ment.

ARGUMENT

L. SECTION 541) DIRECTLY RESTRICTS SPEECH

AT THE CORE OF THE FIRST AMENDMENT’S

PROTECTION.

Section 54 of the Michigan Campaign Finance Act, MCL

§ 169.254, J.S. App. 104a, makes it a felony, punishable by

up to three years’ imprisonment and a fine of up to $10,000,

for any corporation (or any individual acting on its behalf) to

make any expenditure—including an __ independent

expenditure—“in assistance of, or in opposition to, the nomi-

nation or election of a candidate.” J.S. App. 91a.?

It is beyond dispute that “a major purpose of [the First]

Amendment was to protect the free discussion of governmen-

tal affairs. This of course includes discussions of candidates.”

Mills v. Alabama, 384 U.S. 214, 218 (1966). Thus, commu-

nications such as the one involved in this case—an indepen-

dent expenditure? made to purchase a newspaper advertise-

ment supporting the election of a candidate for public office—

lie “at the core of the First Amendment.” Federa/ Election

Commission v. National Conservative Political Action Com-

2 There is no indication that this broad statutory prohibition is

restricted to “express advocacy” as this Court has developed that concept

in cases from Buckley through Massachusetts Citizens for Life.

Although the proposed advertisement in this case would appear to be

iquarely within the concept of “express advocacy,” the statute's facial

overbreadth is susbstantial. See Board of Aiport Commissioners of Los

Angeles v. Jews for Jesus, Inc., 482 U.S. 569 (1987).

3 By “independent expenditure,” we mean an expenditure that is

neither a contribution to, nor coordinated with, a candidate's campaign.

See MCL § 169.209, J.S. App. 97a (defining “independent expenditure”

in similar terms).

mittee, 470 U.S. 840 (1985) (*NCPAC ”); Buckley v. Valeo,

424 U.S. 1, 39 (1976). And it is by now well settled that ex-

penditures made to finance such communications, which are a

sine qua non of effective political speech “in today’s mass

society,” Buckley, 424 U.S. at 19, also “are entitled to full

First Amendment protections.” NCPAC, 470 U.S. at 496; see

also Buckley, 424 U.S. at 19-23.

This Court, therefore, 2s consistently struck down laws

restricting the independent expenditure of money to engage in

political speech. See, eg., Buckley, 424 U.S. at 39-51;

NCPAC, supra; FEC v. Massachusetts Citizens for Life, Inc.,

479 U.S. 238 (1986) (“ MCFL”); Meyer v. Grant, 108 S. Ct.

1886 (1988). Michigan law makes such activity a felony if the

actor is a corporation or its agent. But, as this Court has held,

the constitutional right of free speech inures to the benefit of

corporations as well as individuals and unincorporated

associations. See First National Bank of Boston v. Bellotti,

435 U.S. 765 (1978): Consolidated Edison Co. v. Public

Service Comm'n of New York, 447 U.S. 530 (1980).

Accordingly, the mere fact that appellee is incorporated cannot

justify this restriction on its speech. :

Appellants and amic’ Common Cause recognize that

Section 54(1) is a substantial limitation on protected speech,

and that a demonstration of compelling governmental interests

is therefore required if the statute is to be upheld. See Brief

for Appellants at 23-34; Brief for Common Cause at 3.

Amicus FEC, however, asserts that the statute “does not

restrict the State Chamber's political speech.” FEC brief at 8

(initial capitals omitted).

The gist of the FEC’s argument is that the restrictions of

Section 54(1) can simply be ignored because Michigan law

permits a corporation to establish a “separate segregated fund”

that can make certain political expenditures. See MCL §

169.255, J.S. App. 106a-109a. The FEC made precisely the

same argument in Massachusetts Citizens for Life, see 479

U.S. at 252, and the Court rejected it, recognizing that the

establishment and operation of such a fund is an onerous task,

see id. at 253-55 (plurality opinion); 266 (O’Connor, J., con-

curring), and that since “the avenue [for speech] it leaves open

is more burdensome than the one it forecloses,” id. at 255, that

is “sufficient to characterize [the statutory scheme] as an

infringement on First Amendment activities.” /d.

Thus, the fact that the Michigan State Chamber of Com-

merce (the “State Chamber”) already operates a separate seg-

regated fund is of no constitutional significance. Indeed, the

fact is that Massachusetts Citizens for Life, Inc., a/so had a

separate segregated fund; that did not change this Court's

conclusion that it was entitled to make political expenditures

using corporate funds. See MCFL, 479 U.S. at 255 n.8. A

person who has chosen to comply with an unconstitutional

law does not thereby waive the right to challenge it. One

might as well argue that because a taxpayer had paid a partic-

ular tax, thereby demonstrating that he could afford to do so,

his protest against it should be dismissed.

If appellee has a constitutional right to engage in political

speech directly, the fact that it can also do so indirectly,

through its separate segregated fund, is simply irrelevant, for

the Court has “consistently rejected the suggestion that a

government may justify a content-based prohibition by

showing that speakers have alternative means of expression.”

Consolidated Edison v. PSC, 447 U.S. at 541 n.10. See also

Virginia State Board of Pharmacy v. Virginia Citizens

Consumer Council, Inc., 425 U.S. 748, 757 n.15 (1976) (the

availability of alternative methods of communication does not

justify governmental restraints on a speaker’s preferred

means). As a unanimous Court emphasized only last year,

“the First Amendment protects appellees’ right not only to

advocate their cause but also to select what they believe to be

the most effective means for so doing.” Meyer v. Grant, 108

S. Ct. 1886, 1893 (1988).

“When a Statutory provision burdens First Amendment

rights, it must be justified by a ¢ mpelling state interest.”

MCFL, 479 U.S. at 256. Accordingly, the prohibition on

corporate independent expenditures in the Michigan Campaign

Finance Act, like the parallel prohibition of the Federal Elec-

tion Campaign Act involved in MCFL, must be tested by that

strict standard.

ll. SECTION S41) SERVES NO COMPELLING

GOVERNMENTAL INTEREST.

Appellants assert that the political censorship at issue

here is justified by the government’s interests in eliminating

political corruption or the appearance thereof, and in protecting

individuals against the use of their .noney to support causes

they may oppose. Amici FEC and Common Cause addition-

ally argue that Section 54(1) serves a compelling interest in

protecting the integrity of the political system against the

“unfair deployment of wealth.” Common Cause brief at 5; see

FEC Brief at 11-12. None of these interests are sufficiently

compelling, in the context of this case, to survive the “exacting

scrutiny applicable to limitations on core First Amendment

rights of political expression.” Buckley, 424 U.S. at 44-45.

A. Eliminating Corruption or the Appearance of

Corruption.

This Court “held in Buckley and reaffirmed in Citizens

Against Rent Control | v. Berkeley, 454 U.S. 290 (1981)] that

preventing corruption or the appearance of corruption are the

only legitimate and compelling government interests thus far

identified for restricting campaign finances.” NCPAC, 470

U.S. at 496-97. But the phrase “corruption or the appearance

of corruption” is not a magic spell the mere incantation of

which suffices to tump free speech rights. Rather, the burden

rests squarely on the government to show that its asserted

interests actually justify the censorship it wishes to impose.

See Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767,

777 (1986). Nothing even remotely approaching such a

showing has been made here.

1. Independent Expenditures by NonProfit

Corporations Do Not Pose a Threat of

Corruption.

“Corruption,” the Court has explained, “is a subversion

of the political process” whereby “[e]lected officials are influ-

enced to act contrary to their obligations of office by the

prospect of financial gain to themselves or infusions of money

into their campaigns. The hallmark of corruption is the finan-

cial guid pro quo: dollars for political favors.” NCPAC, 470

U.S. at 497.

Thus, as the Court has repeatedly explained in earlier

cases, there is simply no actual or apparent “corruption”

involved in making a public statement—through the purchase

of newspaper space or media time—of support for or opposi-

tion to a candidate in an election campaign. Here, as in

NCPAC, “the conduct proscribed is not contributions to the

candidate, but independent expenditures,” /d., a distinction that

makes a “fundamental constitutional difference,” id, because

they involve no guid pro quo, and, indeed, may be quite unap-

preciated by the candidate. See id; see also Buckley, 424 US.

at 47. Accordingly, the Court held in Buckley and reaffirmed

in NCPAC and MCEFL, such independent expenditures cannot

be banned based on an unsupported cry of “corruption.”

There is nothing in the record of this case that should cause the

Court to alter its conclusion.4

Of course, the State Chamber is a corporation, but

“associations do not suddenly present the specter of corruption

merely by assuming the corporate form.” MCFL, 479 U.S. at

263. In fact, both Massachusetts Citizens for Life, Inc., and

the National Conservative Political Action Committee, Inc.,

were corporations. See MCFL, 479 U.S. at 241; NCPAC.

470 U.S. at 496. Like them, appellee is a non-profit, member-

ship corporation, whose ordinary activities include promoting

its members’ interests through a variety of political activities.

See J.S. App. 41a-42a.5 There is simply no greater reason to

presume that appellee’s independent public expressions of

support for a candidate are “corrupt” than there is to conclude

that independent speech by an individual is corrupt, a pre-

sumption rejected in Buckley; or that independent speech by a

large political action committee is corrupt, a presumption

rejected in NCPAC; or that independent speech by a non-

4 Common Cause states that this interest “has never been more

compelling,” noting the “continuing series of scandals in the federal

government [involving] the misuse of corporate money to influence

government decisions, and the deleterious effects of such corruption on

public confidence in our governing institutions.” Common Cause Brief

at 6, citing the influence-peddling now being uncovered at HUD, the “Ill

Wind” investigation into procurement fraud at the Pentagon, and direct

corporate gifts to Members of © gress in retum for direct assistance.

id at 60.14. The ACLU does not condone such misconduct any more

than Common Cause does. We fail, however, to see what those exam-

ples—all of which involve the direct and surreptitious exchange cf

money for favors—have to do with the constitutionality of Section 54(1),

which prohibits the public expression of political views.

> The fact that the Chamber of Commerce also engages in non-po-

litical activities hardly makes its political activities suspect. See intra

note |4,

10 11

2. A Complete Ban on Independent Spending by

Non-Profit Corporations that Receive Corpo-

rate Contributions is Not Necessary to Prevent

profit membership corporation, much like appellee except in

size, is corrupt, a presumption rejected in MCFL. ©

To be sure, the State Chamber’s treasury may be larger

than that of Massachusetts Citizens for Life, but NCPAC’s

pocket was apparently even deeper. See Brief for Appellant

Common Cause at 33 n.53, Common Cause v. Schmitt, No.

88-847 (O.T. 1980) (reporting that NCPAC collected more

than $7.6 million in 1979-1980 for use in the 1980 cam-

paigns). The size of these figures, however, is irrelevant.

Wealth is not synonymous with corruption. Even a small

bribe is corrupt; even a large independent expenditure is not.’

In short, appellants assert an interest in preventing

corruption or its appearance only because that is the judicially-

approved route to upholding statutes that restrict political

funding. But the facts of this case do not entitle appellants to

proceed down that route.

6 Buckley and NCPAC make it clear that even large independent

expenditures do not raise the specter of corruption, and cannot be prohib-

ited on that ground. Yet the Michigan law challenged here bans inde-

pendent expenditures of even small sums of money.

7 Indeed, the size of an independent expenditure is not even a

particularly good proxy for the size of a political favor. A single

personal appearance by a political or entertainment celebrity may capture

more votes for a candidate than a million dollars’ worth of television

commercials, and leave the candidate feeling more grateful for the favor.

If the government has a compelling interest in eliminating grateful

feelings on the part of politicians, then a ban on political endorsements

by popular public figures will be the next logical step in election

campaign “reform.”

Spending by Busi C .

Appellants and their amici also argue that, because the

State Chamber has members who are business corporations, it

must be prohibited from making independent expenditures in

order to prevent it from acting as a “conduit” for money from

such entities. See Brief for Appellants at 39-40, 46; FEC brief

at 15; Common Cause brief at 20-24. Even assuming that

such activity constitutes “corruption” and can constitutionally

be prohibited,® it is simply not necessary to ban independent

expenditures by groups such as the State Chamber in order to

achieve that goal. Non-profit corporations can be required to

fund their independent expenditures out of income from other

sources, and to keep such records or file such reports as the

government requires to demonstrate compliance with such

limitations. See MCFL, 479 U.S. at 262 (reporting require-

ments of federal law “provide precisely the information neces-

sary to monitor MCFL’s independent spending activity and its

receipt of coniributions”).?

8 But see intra Part U-C-1.

9 The Court of Appeals in this case stated that the reporting re-

quirements of Section 5! of the Michigan law would serve this purpose.

See J.S. App. 25a-26a. The State responds that Section 5! does not

apply to corporations. Bnet for Appellants at 24. Assuming the State to

be correct, the constitutional solution is for Michigan to enact an appro-

priate reporting requirement. A State cannot impose a direct, content-

based restriction on core First Amendment nghts when a iess restrictive

alternative is available, simply because it doesn't feel like using the

altemative. See Boos v. Barry, 108 S. Ct. 1157, 1165-68 (1988)

(Distnet of Columbia law banning demonstrations near embassies struck

down im light of more narrowly drawn federal statute that adequately

Common Cause argues that because “[mJoney is

fungible,” such segregation of funds is meaningless.

Common Cause brief at 21. However, neither Congress nor

this Court shares that view, as federal legislation and judicial

decisions demonstrate.

In the Internal Revenue Code, Congress has provided

that non-profit, tax-exempt organizations qualified under 26

U.S.C. § 501(c)(3) (contributions to which are tax-deductible

to the donor) may not engage in a substantial amount of lob-

bying activity, while organizations qualified under § 501(c)(4)

(contributions to which are not deductible) may lobby freely.

The congressional purpose is to avoid subsidizing lobbying

with tax-deductible funds. See Regan v. Taxation With Rep-

resentation of Washington, 461 U.S. 540, 544 (1983). A

great many non-profit organizations (including the ACLU)

consist of affiliated (c)(3) and (c)(4) corporations. All that is

required is “that the two groups be separately incorporated and

keep records adequate to show that tax-deductible contribu-

tions are not used to pay for lobbying.” /d, 461 U.S. at 544-

45 n.6. But the (c)(3) organizations can exercise “control .. .

over the lobbying of their § 501(c)(4) affiliates,” and the (c)(4)

organizations can engage in “lobbying explicitly on behalf of

their § 501(c)(3) affiliates.” /d at 553 (Blackmun, J., concur-

ring). Under Common Cause’s reasoning, this careful statu-

tory scheme is “economic nonsense,” Common Cause brief at

20, because “money from one source that is used for one

activity frees up money from other sources to be used for

served same interests, even though legislation would be necessary to

make federal statute applicable in the District of Columbia).

other activities.” /d at 21. Obviously, Congress does not

agree with that assessment. !©

Nor does this Court share the view that Common

Cause urges here. In a series of constitutional cases arising

under the Establishment Clause of the First Amendment, the

rule has been established that government financial assistance

to private, religious schools for discrete, secular activities will

not be considered as a subsidy for the schools’ religious

activities merely because “money from [the government]

source that is used for one activity frees up money from other

sources to be used for [religious] activities.” See Everson v.

Board of Education, 330 U.S. 1 (1947); Board of Education v.

Allen, 392 U.S. 236 (1968): Tilton v. Richardson, 403 U.S.

672 (1971); Roemer v. Board of Public Works, 426 U.S. 736

(1976).'' Accordingly, there is no reason to assume that any

concern about the use of non-profit corporations as “conduits”

for the funds of business corporations cannot be adequately

addressed through bookkeeping and reporting requirements.

Moreover, to the extent that such requirements are not a

foolproof guarantee against some small leakage of business

funds into non-profit expenditures, the Court has already

explained that direct and substantial restraints on political

speech “cannot be sustained simply by invoking the interest in

10 The ACLU, as amicus curiae in Taxation With Representation.

argued that the statutory restrictions on lobbying by § 501(c)(3)

organizations were unconstitutional. The Court concluded, however, that

the requirements of separate mcorporation and bookkeeping were “not

unduly burdensome.” 461 U.S. at 544-45 0.6. By contrast, the Court

emphasized the extensiveness and complexity of the “separate segregated!

fund” restrictions involved in MCFL, and concluded that they were

unduly burdensome.

1! Whether the line has been correctly drawn under the Establish-

ment Clause is a separate issue. But as long as it exists, the rule of seg-

regated funds can and should be applied in this context as well.

maximizing the effectiveness” of other regulations. Buckley,

424 U.S. at 44. This is so because the First Amendment is not

a disfavored “loophole” in an edifice of governmental regula-

tion of speech; under our Constitution, it is the other way

around: “debate on public issues should be uninhibited, ro-

bust, and wide-open,” New York Times v. Sullivan, 376 U.S.

254, 270 (1964). It is not government censorship that must be

augmented for -optimal effectiveness, but “First Amendment

freedoms [that] need breathing space to survive.” NAACP v.

Button, 371 U.S. 415, 433 (1963).

3. A Complete Ban on Independent Spending by

Non-Profit Corporations Gives Government

Too Potent a Weapon to Harass Public Issue

Advocacy.

Appellants argue that the criteria identified by this Court in

MCFL for constitutionally exempting certain non-profit .cor-

porations from statutory prohibitions on political campaign

expenditures are not met in this case. Amici FEC and Com-

mon Cause, however, would essentially have this Court limit

that decision to its special facts, thereby denying First

Amendment protection to non-profit corporations that accept

any contributions from business corporations.

These suggestions must be analyzed in the context of the

total statutory ban on any corporate political expenditures and

the frequently malleable nature of the “express advocacy"

concept that defines such expenditures. In Buckley, this Court

recognized the danger that a broad definition of “expenditure”

could ensnare a wide range of vital discussion of public issues

in the net of campaign finance restrictions. Accordingly, the

Court ruled that regulation of independent expenditures could

only attach to “communications that include explicit words of

advocacy of election or defeat of a candidate.” 424 U.S. at 43.

But as important as this limitation has been, it is subject to the

vagaries of context and interpretation. !2

The Federal Election Commission has persistently pressed

for a broad and expansive interpretation of the “express advo-

cacy” concept, to the point where one court chastized it for

pursuing a “totally meritless” complaint over a $135 expendi-

ture, see Federal Election Commission v. Central Long Island

Tax Reform Immediately Committee, 616 F.2d 45, 53 (2d Cir.

1980) en banc ), with a concurring opinion charging that the

Commission had “failed abysmally” to show sensitivity to

First Amendment rights. /d. at 5S (Kaufman, C.J.).

The combination of an aggressive agency view of what

constitutes “express advocacy” and broad statutory prc! »!-

tions on corporate expenditures that could be so characterized

puts at considerable risk the political speech of many issue-

oriented organizations that take corporate form. If their public

advocacy can in any way be construed by the Commission as

“express advocacy”—for example, if it criticizes an incumbent

President during an election year—then they risk a charge of

having made an illegal expenditure under 2 U.S.C. § 441b.

Indeed, in recent years such charges have been filed with the

Commission against such groups as Planned Parenthood, the

National Organization for Women, the Wilderness Society. the

Sierra Club and the Committee for Sane Nuclear Policy. The

Commission even entertained charges against the ACLU, and

it took a ten-page General Counsel's Report for the Commis-

12 Compare MCFL, 479 U.S. at 248-50 (finding express advocacy)

atid Federal Election Commission v. Furgatch, 807 F.2d 857 (9th Cur.

1987) (same) with Federal Election Commission v. Central Long Island

Tax Reform Immediately Committee, 616 F.2d 45 (2d Cir. 1980) (en

bane) (finding no express advocacy) and Federal Election Commission

v. National Organization for Women, C.A. No. 87-2269 (D.D.C. 1989)

(same).

sion to conclude that there was “no reason to believe” that

ACLU fund-raising mailings, attacking President Reagan's

record on civil liberties during a Presidential election year,

constituted an illegal corporate expenditure.

For these reasons, any narrowing of MCFL will place

issue organizations in even greater danger of being the target

of enforcement proceedings on claims, however marginal, Lat

their political speech constitutes “express advocacy.” Simi-

larly, a rule that automatically prevents non-profit corporations

from qualifying for the MCFL exemption if they receive any

contributions from business corporations would disable many

advocacy organizations from invoking the MCFL protections,

since many do receive a small portion of their contributions

from business organizations. See FEC v. N.O.W., supra.

Thus, non-partisan issue-oriented organizations require

careful protection against government harrasment of their

speech: both a strict definition of the "express advocacy"

concept, and a broad First Amendment-based rule that non-

profit organizations cannot be punished for such advocacy

under statutory prohibitions of corporate expenditures that

were intended to apply to profit-making business corporations,

not issue-oriented organizations that take the corporate form.

B. Protecting the Rights of Dissenting Members.

The second interest advanced by the State as a justifica-

tion for Section 54(1) is the interest in “protect{ing]

shareholders who have paid money into a corporation ‘for

purposes other than the support of candidates from having that

money used to support candidates to whom they may be op-

posed.’” Brief for Appellants at 35, quoting Federal Election

Commission v. National Right to Work Committee, 459 U.S.

197, 208 (1982). This purported interest is not truly present in

this case, nor would it be compelling if it were.

1. This Court has already disapproved this alleged state

interest as one that can justify governmental prohibition of

corporate speech in circumstances such as those presented

here. In Bellotti, supra, Massachusetts law prohibited busi-

ness corporations from spending money to urge the passage or

defeat of ballot questions. In defense of the law, the State

asserted the same interest in “preventing the use of corporate

resources in furtherance of views with which some

shareholders may disagree” that appellants proffer here. See

435 U.S. at 792-93.

Assuming, arguendo, that such an interest could be

compelling, the Court rejected the State’s submission, noting

that :he State's asserted purpose was “belied . . . by the provi-

sions of the statute,” id. at 793. which were both underinclu-

sive and overinclusive: underinclusive in that thay permitted

corporations to engage in other political advocacy (such as

lobbying) without regard to the displeasure of dissenting

shareholders, and permitted unincorporated organizations to

urge the passage or defeat of ballot questions without regard to

the views of dissenting members; overinclusive in that they

prohibited a corporation from engaging in such speech even if

the shareholders had unanimously authorized it. /d at 793-95.

The circumstances here are preciseiy the same. The

State’s purported purpose is belied by its own law, which

permits corporations to engage in other forms of political

speech, including lobbying on controversial proposed leg-

islation and public advocacy for or against ballot questions,

“though the displeasure of disapproving shareholders is un-

likely to be any less.” Bellotti, 435 U.S. at 793. Similarly, the

restriction does not apply to unincorporated “entities or orga-

nized groups in which numbers of persons may hold an inter-

est or membership,” even though “[mlinorities in such groups

or entities may have interests with respect to institutional

speech quite comparable to those of minority shareholders in a

corporation.” /d. Finally, Michigan law is identically overin-

clusive, prohibiting the specified communications “even if its

shareholders [or members] unanimously authorized the . . .

expenditure.” /d. at 794. Moreover, appellants have produced

no evidence indicating that the protection of shareholders’

rights was, in fact, a purpose of the Michigan Campaign Fi-

nance Act. See Mississippi University for Women v. Hogan,

458 U.S. 718, 730 (1982) (State’s asserted justification for

constitutionally-suspect legislation rejected in part because it

“failed to establish that the alleged objective is the actual pur-

pose” of the law).

Thus, whatever force this asserted interest might have in

a proper case, it is clear that it is not in fact an interest that

Michigan views as compelling in the context of election

finance regulation.

2. Nor is there any reason to believe that the members of

the State Chamber joined that organization or pay their dues in

ignorance of, or in disagreement with, its activities or its

political orientation: as an advocaie for the interests of the

business community. '> While there may be other benefits of

13 Both Common Cause and the FEC insist that the State Chamber

is wholly unlike MCFL because MCFL is an ideological organization,

while “the Chamber was established by business corporations to promote

their economic interests.” Common Cause brief at 12; see also FEC

brief at 16. But a great déal of political debate involves the economic

interests of various groups. When the Grange lobbies for crop supports,

the AFL-CIO campaigns for an imcrease in the minimum wage, the

AARP works for catastrophic health inrurance for the elderly, the VFW

pushes for an extension of the GI Bill, cr the CCNV demonstrates for

low-income housing, they are engaging in political activity to advance

the economic, as well as the ideological, interests of their members.

This does not render their advocacy an: less than fully protected by the

First Amendment. See, e.g., Meyer v. Grant, supr., 108 S. Ct. at 1894

membership, such as the ability to purchase group insurance

or to receive Chamber publications at discount rates, see

Common Cause brief at 13-14; FEC brief at 13-14,'4 this is

hardly a situation where Michigan businesswomen and men

have little choice but to belong to the Chamber of Commerce

regardless of their sympathy with its politics.'5 Thus, like the

(political activity by Coloradans for Free Enterprise, Inc., to repeal state

regulation of the trucking industry is at the “zenith” of First Amendment

freedoms); Eastern RR Presidents Conference v. Nverr Motor Freight,

Inc., 365 U.S. 127, 139 (1961) (“A construction of the Sherman Act

that would disqualify people from taking a public position on matters in

which they are financially interested would . . . deprive the people of

their nght to petition m the very mstances in which that right may be of

the most importance to them”); Thomas v. Collins, 323 U.S. 516, 540

(1945) (the First Amendment protects “he who seeks to rally support for

any social, business, religious or political cause”). This is a free speech

case, not an economic substantive due process case. Business interests

are not seeking to avoid government regulation of their business; they are

resisting government censorship of their speech.

14 There are probably few major membership organizations that

engage im political advocacy and do not also provide some valuable

benefits to members, including the ACLU. For example, the Sierra Club

organizes wildemess excursions for its members, offers a variety of

camping and outdoor equipment and publications for sale at a discount to

members, and publishes a monthly membership magazine. The Ameri-

can Automobile Association provides its members with emergency road

service, maps and vacation planning services, and group insurance, and

also engages in political speech on behalf of the interests of motorists, as

the AAA views those interests. i

15 Appellee has approximately 8,000 members, of which more than

6,000 are corporations. J.S. App. 4la. There are over 3,277,000 active

corporations in the United States. See U.S. Bureau of the Census,

STATISTICAL ABSTRACT OF THE UNITED STATES: 1989, at 516 (Table

846) (1985 data). If only 2% of them operate in Michigan (presumably a

very low estimate), then fewer than 10% of Michigan businesses are

members of the State Chamber of Commerce.

resources available to MCFL, the resources available to the

State Chamber “are not a function of its success in the

economic mavketplace, but its popularity in the political

marketplace.” MCFL, 479 U.S. at 259.

In reality, “[iJt is unduly stretching language to say that

the members or stockholders are unwilling participants in such

normal organizational activities, including the advocacy . . . of

governmental policies affecting their interests, and the support

thereby of candidates thought to be favorable to their inter-

ests.” United States v. Congress of Industrial Organizations,

335 U.S. 106, 123 (1948). Members who disagree frequently

enough, or strongly enough, with the views expressed by an

organization to which they voluntarily belong, or by a corpo-

ration in which they own stock, can always quit or sell their

stock, and frequently do. '®

3. Even if a State legislated unambiguously in further-

ance of this interest, however, and even if there were a signifi-

cant number of dissenting members or shareholders, it would

seriously threaten basic constitutional values to allow the gov-

ernment to override a private, voluntary organization’s right of

free expression. It is, for example, no secret that with respect

to virtually every issue on which the ACLU expresses a public

position, some of its members disagree, often strongly. 17 By

16 Of course, different principles apply when membership in, or

payments to, an organization are legally or practically compulsory.

Compare, e.g., Abood v. Detroit Board of Education, 431 U.S. 209

(1977), with Bellotti, 435 U.S. at 794 n.34 (noting this “critical

distinction”).

17 “Most of our decisions are made by a board of directors by a

vote of 42 to 36, with 12 abstentions, and three motions to :econsider. [|

would be surprised if there was a single member of the ACLU that di.in't

disagree with 10 or 12 things that we do—and that includes me.” Ira

Glasser (Executive Director, ACLU), Presidential Politics and the

the same token, some members of Common Cause no doubt

disagree with some of the views that it has expended their

dues to express.'8 Some shareholders of the Mobi! Corpora-

tion surely disagree with the views it has expressed in its

series of newspaper commentaries, and some shareholders of

Texaco Inc. probably can’t stomach the Metropolitan Opera.

Endorsements of candidates occupy no special position with

respect to engendering shareholder or membership dissent. If

the government could, by asserting a “compelling interest in

protecting minority rights,” silence the voices of private, vol-

untary organizations. whenever a minority of the organization’s

members disagreed with the majority’s decision, the First

Amendment would be seriously ailuted.

C. Avoiding the “Unfair Deployment of Wealth” and

Protecting the “Integrity of the Political Process.”

1. Appellants and their amici play their basic theme in

close harmony: that it is “unfair,” Brief for Appellants a: 41:

Common Cause brief at 2, and “corrosive,” FEC brief at 12,

for “concentrated corporate wealth,” id., “amassed through the

corporate form,” Common Cause brief at 2, in “the economic

marketplace,” Brief for Appellants at 41, to be allowed into

election campaigns.

Of course these arguments, however valid they may be

with respect to business corporations, have nothing to do with

the activities of non-profit membership corporations such as

the State Chamber. And when they are subjected to the “close

ACLU, speech at the National Press Club, Washington, D.C. (Oct. 6.

1988).

18 Many people are members of both the ACLU and Common

Cause, and cannot possibly agree with their divergent positions on the

controversial political issue of election campaign finance — ulation.

REST AVANT ABI Fenp

examination of [their] underlying rationale” that the First

Amendment requires, MCFL, 479 U.S. at 257, it is not at all

clear why independent expenditures even by business cor-

porations are constitutionally different from expenditures by

so-called “ideological” corporations, unincorporated associa-

tions and individuals, all of which have been protected.

The argument appears to rest on two _ interrelated

grounds: that corporate funds are different because they are

““amassed by the special advantages which go with the corpo-

rate form of organization,” Brief for Appellants at 42, quoting

MCFL, 479 U.S. at 257, and that corporate funds are different

because corporations earn their money through the sale of

goods and services, rather than receiving voluntary political

contributions, see FEC brief at 13; Common Cause brief at 6.

Upon examination, however, neither ground persuasively

distinguishes the funds earned by a corporation from those

earned by others.

With respect to the first ground, it is exceedingly difficult

to identify the special advantages of corporate form that are

thought to be relevant, or to learn why or how they are thought

to be relevant, to the asserted distinction. In MCFL, the Court

noted this theory, 479 U:S. at 257, without specifying the

relevant advantages or explaining their significance, but citing

to National Right to Work Committee, supra, 459 U.S. at 207.

That case, in turn, noted the concern about the “special advan-

tages which go with the corporate form of organization,” jd,

citing United States v. Automobile Workers, 352 U.S. 567,

579 (1957), but again did not specify what these advantages

were or indicate why money earned by corporations was dif-

ferent from money earned by partnerships, proprietorships or

individuals. The NRWC Court did, however, identify the

underlying governmental interest in regulating the political use

of corporate money: it was the interest in preventing

“corruption threatened by large financial contributions.” Id. at

208 (emphasis added). The Automobile Workers case con-

tains no discussion of any special advantages of corporate

form at the cited page; indeed the case, and the discussion at

that page, involved congressional concern with large contribu-

tions made by powerful labor unions. The trail ends there.

It is, of course, true that corporations have some advan-

tages compared to other forms of organization, for example.

they are subject to “special rules relating to such matters as

limited liability, perpetual life, and the accumulation, distribu-

tion, and taxation of assets.” Be//otti,435 U.S. at 809 (White,

J., dissenting). But the majority in Be//otti viewed these dif-

ferences as irrelevant to a corporation’s right to engage in free

speech with respect to ballot issues, and no reason has been

suggested here why they are any more relevant with respect to

speech about candidates. !9

The second prong of appellants’ argument is that it is

“unfair” for “resources amassed in the economic marketplace”

to be used “in the political marketplace” because these

resources reflect “the economically motivated decisions of

investors and customers” rather than “popular support for the

corporation’s political ideas.” MCFL at 258. But except for

funds raised by explicitly political organizations such as

MCFL and NCPAC, virtually a// money “amassed” in the

19 It is worth noting that other forms of organization have special

advantages of their own: tax exemption, for example. And some part-

nerships or unincorporated associations have existed far longer than most

corporations and have accumulated far greater assets than most corpora-

tions—Lloyd’s of London, for example, has been wm unimecorporated

existence since the early 18th Century, see Webster's Deluxe Unabndged

Dictionary 1059 (2d ed., 1979), and some law partnerships have contin-

ued for several generations. Likewise, the National Collegiate Athletic

Association, a large and well-financed organizai.on, 1s an unincorporates.

association. See NCAA v. Tarkaman, 109 S. Ct. 454, 455 (1988).

United States is earned in the “economic marketplace” and

reflects something other than popular support for the

“amasser’s” political views. An individual who is wealthy

because he made a better mousetrap cannot constitutionally be

prohibited from spending it on political speech, even if he is a

Socialist and most rodent-hunters are Republicans. Why,

then, should the owners of Better Mousetrap, Inc., be prohib-

ited from doing so?

Indeed, the Court has acknowledged that there is nothing

special about corporations in this regard, except that they are

“the most prominent example” of wealthy entities. MCFL,

479 U.S. at 258 n.11. In other words, legislatures have cho-

sen to restrict the political speech of corporations “because

that’s where the money is,” or so they think.2° But that is

surely not the kind of narrow tailoring required of laws that

directly restrict core political speech, for “the desire for a

bright-line rule . . . hardly constitutes the compelling state

20 In actuality, singling out corporations for regulation on this

basis is not even particularly accurate. Some corporations have lots of

money, but most have very little. See U.S. Bureau of the Census,

STATISTICAL ABSTRACT OF THE UNITED STATES: 1989 at 516 (Table

847) (over 700,000 corporations with gross receipts of less than $25,000)

(1985 data). At the same time, some unincorporated associations are

quite wealthy, see, e.g., Brief for Appellant Common Cause at 33 2.53,

Common Cause v. Schmitt, No. 88-847 (O.T. 1980) (reporting that

NCPAC collected more than $7.6 million in 1979-1980 for use in the’

1980 campaigns), as are some partnerships, some sole proprietorships,

and some individuals, see STATISTICAL ABSTRACT OF THE UNITED

STATES: 1989 at 516 (Table 847) (nearly 480,000 partnerships and

1,200,000 non-farm proprietorships with receipts greater than $100,000

in 1985); see also The Am Law 100, The American Lawyer,

July/August 1989, special insert at 10 (reporting 100 law firms—most of

which are unincorporated— with gross revenues of more than $52 mil-

lion per year; the first-ranked firm had over $440 million in revenues in

1988).

interest necessary to justify any infringement on First Amend-

ment freedom." /d. at 263 (emphasis in original). Nor, under

Buckley and NCPAC, can there be a compelling governmental

interest in the prohibition of independent expenditures by any

person whose speech is protected vy the First Amendment.

The Court has already held that affluent candidates,

political action committees, and individuals cannot be pre-

cluded from using their wealth to attempt to influence the out-

come of elections through public speech, because there is

simply “nothing invidious, improper, or unhealthy in permit-

ting such funds to be spent” in political debate. Buckley, 424

U.S. at 56. To the contrary, “the concept that government may

restrict the speech of some elements of our society in order to

enhance the relative voice of others is wholly foreign to the

First Amendment.” /d. at 48-49. And as shown above, there

is nothing about the sources of corporate money that makes its

expenditure any less “healthy.”

2. Even on its own terms, the prohibition of corporate

expenditures is unworkable and senseless. The clearest exam-

ple of why this is so is the universally-recognized necessity of

exempting the press from such restrictions. For example,

Section 6(3)(d) of the Michigan Campaign Finance Act

exempts from the prohibition against corporate expenditures

any “expenditure by a broadcasting station, newspaper, maga-

zine, or other periodical or publication for any news story,

commentary, or editorial in support of or in opposition to a

candidate... .” MCL 169.206(3)(d), J.S. App. 92a-93a.

Newspapers, magazines and other media are generally

owned by corporations, yet the First Amendment plainly will

not tolerate a law prohibiting the expenditure of corporate

funds by the Washington Post Company or the New York

Times Company to endorse or oppose a candidate for public

office. As the Court observed in Mills v. Alabama, 384 U.S.

214, 219 (1966), “[i]t is difficult to conceive of a more obvi-

ous and flagrant abridgment of the constitutionally guaranteed

freedom of the press.” But if it is impermissible to prohibit

Booth Newspapers, Inc. (the corporate publisher of the Grand

Rapids Press) from spending its money to publish an editorial

endorsing Dan Quayle on page 16, how can it properly be

made a crime for the Michigan State Chamber of Commerce—

or the Grand Rapids Furniture Company—to spend its money

to buy space on page 17 endorsing Jesse Jackson?

The answer cannot be that one company is in the busi-

ness of communicating and the other is not. Nearly all corpo-

rations ccramunicate with the public. The Mobil Corporation,

for example, has been running a series of paid editorial

columns in newspapers for years. Nor are the media always

owned by corporations whose major business is communica-

tive: NBC, for example, is owned by the General Electric Co.

And is a newspaper that operates at a substantial deficit, sub-

sidized by a sister corporation that manufactures widgets, to be

prohibited from publishing campaign editorials because the

“real” expenditure is by the widget company? For that matter,

even a profisable newspaper derives much of its income from

the sale of advertising in the “economic marketplace,” not from

contributions from ideological supporters.

It was in part, perhaps, unanswerable questions like

these that led a majority of the Court to conclude, in Dun &

Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749

(1985), that “the rights of the institutional media are no greater

and no less than those enjoyed by other individuals or organi-

zations engaged in the same activities.” /d. at 784 (dissenting

opinion of Brennan, J., joined by Marshall, Blackmun and

Stevens, JJ.); 773 (White, J., concurring in judgment) (“the

First Amendment gives no more protection to the press . .

than it does to others exercising their freedom of speech”).

In the District Court, appellee challenged the Michigan

statute’s exemption for media corporations as a denial of equal

protection. That court, properly doubting that it could distin-

guish between media corporations and others, interpreted Sec-

tion 6(3)(d) to make “no distinction between media and non-

media corporations,” and rujed that “Any corporation . . . may

avail itself of the exemption.” J.S. App. 73a. Under that

interpretation, the State Chamber was apparently free, under

the Michigan statute, to spend corporate furmis to have ten

thousand copies of its proposed advertisement printed as a

handbill and distributed around town—a classic exercise of

freedom of the press, see Lovell v. City of Griffin, 303 U.S.

444, 452 (1938) (“[t]he liberty of the press . . . necessarily

embraces pamphlets and leaflets”).

What possible legitimate state interest can it serve to

permit that activity but prohibit the same entity from paying to

have the same message published as an advertisement in the

newspaper? Or, in an election in which a major issue dividing

the candidates is free trade vs. protectionist tarriffs, what sense

can it make to permit a corporation to publish an advertisement

explaining why it is important to encourage free trade, but

send its CEO to jail if the advertisement also identifies which

candidate favors free trade or which favors high tarriffs?

After all, the “|ajdvocacy of the election or defeat of candi-

dates for [public] office is no less entitled to protection under

the First Amendment than the discussion of political policy

generally or advocacy of the passage or defeat of legislation,”

Buckley, 424 U.S. at 48—in both of which activities corpora-

tions have a constitutionally-protected right to engage.

Likewise, a regulatory scheme permitting corporations to

speak freely on the “issues” but criminalizing any speech

endorsing or opposing candidates draws such an indiscernable

line that it must inevitably result either in self-censorship by

corporations anxious to stay out of jail, or the prosecution of

companies engaged in protected speech, or both.

Even appellees’ bright-line rule against independent

expenditures by non-profit corporations that receive funds

from business firms cannot resolve these difficulties, which

illuminate the profound inadequacy of the government’s regu-

latory approach to political speech. The only approach that

avoids the sorts of arbitrary and discriminatory line-drawing

noted above is to draw the bright line in the other direction:

declaring that freedom of speech extends to corporations in

this area as in others.

3. Moreover, there are positive features of corporate

independent expenditures that, like the one proposed here, take

the form of direct, open and public expression of political

opinion and preference. Appellants and their amici dwell on

the various ways in which corporations are allowed to use

their funds for political activity: subsidizing the operation of

separate segregated funds, lobbying, debating public issues,

and the like, see Brief for Appellants at 49-56; Common

Cause brief at 9-10, and conclude that corporations already

have "enough" political speech alloted them and do not need

the additional right to make independent political expenditures.

We draw a different conclusion: since there is already such

significant corporate-generated expressive activity, what is the

incremental harm in interpreting the First Amendment to per-

mit independent political expenditures as well? Indeed, a paid

editorial advertisement in a local newspaper, openly sponsored

by particular corporation, is not only political speech of the

purest kind, but, unlike some of the less visible sorts of

corporate expenditures that are already allowed, it can be

assessed by-the public at face value. As the Court recently and

unanimously observed: “the people in our democracy are

entrusted with the responsibility for judging and evaluating the

nee Le ee

relative merits of conflicting arguments. ... The State's fear

that voters might make an ill-advised choice does not provide

the State with a compelling justification for limiting speech.”

Meyer v. Grant, 108 S. Ct. at 1894 n.7 (internal quotations

and citations omitted).

4. Finally and even more basically, the attempt to keep

money out of politics is both futile and dangerous. Common

Cause correctly observes that “[mjoney is fungible.” Com-

mon Cause brief at 21. But that is only half the story. Money

is also the universal medium of exchange, and in a society in

which communication and advocacy can be carried out in an

infinitude of ways, it is, ultimately, simply not possible to

prevent those who have money and care about politics from

using their resources in the political world. If you are rich

enough, you can buy (or establish) a newspaper.

This is not to say that some uses of money cannot be

effectively prevented—bribery, for example, or other direct

quid pro quo arrangements. But the attempt to sweep money

utterly out of politics will not only fail, but will result in ever-

greater restrictions on First Amendment freedoms while

pushing money into new and perhaps even less desirabie

channels.

This Court has never upheid a direct restriction on the

independent expenditure of funds used to create political

speech. It has emphasized, rather, that “legislative restrictions

on advocacy of the election or defeat of political candidates are

wholly at odds with the guarantees of the First Amendment.”

Meyer v. Grant, 108 S. Ct. at 1895, quoting Buckley v. Valeo,

424 U.S. at 50. Here, Michigan has made such conduct a

criminal offense for corporations and their agents. “The bur-

den that [it] must overcome to justify this criminal law is well-

nigh insurmountable.” /d at 1894. It has not been sur-

mounted here.

CONCLUSION

The judgment of the Court of Appeals should be

affirmed.

Respectfully submitted,

ARTHUR B. SPITZER