Appendix — Federal Election Commission v. Political Contributions Data, Inc.

OCTOBER TERM, 1993

FEDERAL ELECTION COMMISSION, PETITIONER,

Vv.

POLITICAL CONTRIBUTIONS DATA, INC., RESPONDENT.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

APPENDICES TO PETITION

FOR WRIT OF CERTIORARI

LAWRENCE M. NOBLE

General Counsel

RICHARD B, BADER *

Associate General Counsel

VIVIEN CLAIR

Attorney

Attorneys for Petitioner

FEDERAL ELECTION COMMISSION

999 E Street, N.W.

Washington, D.C. 20468

(202) 219-8690

TABLE OF CONTENTS

APPENDIX A:

FEC v. Political Contributions Data, Inc., No. 92-

a een

APPENDIX B:

FEC v. Political Contributions Data, Inc., No. 89

Civ. 5288(SWK) (S.D.N.Y. July 30, 1992) .............

APPENDIX C:

Order dated August 3, 1993, in FEC v. Political

Contributions Data, Inc., No. 92-6240 (2d Cir.

June 17, 1993), denying FEC’s petition for rehear-

ing, with suggestion for rehearing en bane ............

APPENDIX D:

Supreme Court Order dated October 26, 1993, ex-

tending time for filing petition for writ of cer-

a sciniemstiieuintabansaiaaaamadianais

APPENDIX E:

FEC v. Political Contributions Data, Inc., No. 89

Civ. 5288(SWK) (S.D.N.Y. December 10, 1990)...

APPENDIX F:

FEC v. Political Contributions Data, Inc., No. 91-

6084 (2d Cir. August 21, 1991) .000000

APPENDIX G: ——

28 U.S.C. § 2412 (Equal Access to Justice Act) ....

APPENDIX H:

2 U.S.C. §488(a) (4) (FECA sale-or-use provi-

III sil cht hiss tadicatians aik ia tacaaaeacenenaancasapiinaablidaaniasiaemmenmaaas

11 C.F.R. § 104.15 (FEC sale-or-use regulations) ..

Page

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

No. 1369—August Term 1992

(Argued: April 23, 1993 Decided: June 17, 1993)

Docket No. 92-6240

FEDERAL ELECTION COMMISSION, PLAINTIFF-APPELLEE

—against—

POLITICAL CONTRIBUTIONS DATA, INC.,

DEFENDANT-APPELLANT

Before:

PRATT and JAcoss, Circuit Judges,

and Whitman Knapp, Senior District Judge for the

Southern District of New York, sitting by designation.

Appeal from an order of the United States District

Court for the Southern District of New York, Shirley

Wohl Kram, Judge, 807 F.Supp. 307 (S.D.N.Y. 1992),

(la)

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entered July 30, 1992, denying defendant’s motion for

attorney’s fees and other litigation costs.

Reversed and remanded for a determination of an

appropriate award of fees and expenses.

Judge Jacobs concurs in part and dissents in part

in a separate opinion.

VIVIEN CLAIR, RICHARD B. BADER, Washington,

D.C. (Federal Election Commission), for Plaintiff-

Appellee.

DaviD C. VLADECK, BRIAN WOLFMAN, Washington,

D.C. (Public Citizen Litigation Group), for Defendant-

Appellant.

KNAPP, Senior District Judge:

Defendant-appellant Political Contributions Data,

Inc. (“appellant”), which had previously obtained

from a panel of this Court an order dismissing the

complaint in this action, appeals an order of the

United States District Court of the Southern District

of New York denying its motion for attorney’s fees

and other litigation costs under the Equal Access to

Justice Act, 28 U.S.C. §2412(d) (“the EAJA”).?

The district court denied the application, finding it to

be untimely and further finding the position of

128 U.S.C. § 2412(d) (1) (A) provides that “a court shall

award to a prevailing party other than the United States fees

and other expenses .. . unless the ccurt finds that the position

of the United States was substantially justified or that special

circumstances make an award unjust.”

3a

plaintiff-appellee Federal Election Commission (“the

Commission”) in the underlying litigation to have

been “substantially justified.” For reasons that fol-

low, we reverse.

BACKGROUND AND FACTS

The underlying litigation began as an enforcement

suit brought by the Commission to enjoin appellant,

a private company, from selling reports analyzing

contributions to federal election campaigns. The

Commission alleged that the sale of such reports vio-

lated 2 U.S.C. § 438(a) (4), a provision of the Fed-

eral Election Campaign Act of 1971 (“the Act’)

which directs the Commission to make available to the

public lists identifying individuals who contribute

more than $200 to federal election campaigns, but

also provides that contributor information “may not

be used by any person for the purpose of soliciting

contributions or for commercial purposes.” The dis-

trict court granted the Commission’s motion for sum-

mary judgment and an appeal was taken.

A panel of this Court’? reversed and remanded

with instructions to enter summary judgment dis-

missing the Commission’s complaint, Federal Election

Com’n. v. Political Contrib. Data, 943 F.2d 190 (2d

Cir. 1991). The panel ruled that an analysis of legis-

lative history established that the Commission had

adopted an unreasonably restrictive interpretation of

the provision in question and of its own corresponding

regulation, 11 C.F.R. §104.15(c) (1991)*% It fur-

2 Meskill, Newman and Pratt, Circuit Judges.

8 The FEC promulgated the regulation in order to determine

what commercial activities are proscribed by the statute. The

regulation provides:

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ther ruled that such interpretation, by prohibiting the

distribution of appellant’s contributor lists, had de-

fied the congressional intent behind the Act, namely

to require disclosure of campaign contributions and

contributors “in order to inform the electorate where

campaign money comes from, to deter corruption, and

to enforce the act’s contribution requirements,” 943

F.2d at 191. It observed that the government’s read-

ing of its regulation “would very likely run afoul of

the first amendment,” id. at 197. Proceeding ‘“with-

out the guidance of a reasonable agency interpreta-

tion,” id. at 197, it determined that the purpose of

the commercial exception contained in § 438(a) (4)

was to protect political contributors from unwanted

entreaties from vendors of merchandise such as “cars,

credit cards, magazine subscriptions and cheap vaca-

tions,” id. at 197. It further determined that the

reports sold by appellant, which omitted the mailing

addresses and phone numbers of the contributors and

included a disclaimer against their use for soliciting

contributions or any commercial purposes, “posed

little, if any, risk” of unwanted harassment, id. at

197. It noted that the lists were “designed in a man-

ner that will further first amendment values and not

infringe contributor privacy by abetting solicitors,”

id. at 196. It accordingly concluded that their sale

did not run afoul of either § 438(a) (4) or the Com-

mission’s pertinent regulation.

The use of information, which is copied or otherwise

obtained from reports filed [with the FEC], in news-

papers, magazines, books or other similar communications

is permissible as long as the principle purpose of such

communications is not to communicate any contributor

information listed on such reports for the purpose of

soliciting contributions or for other commercial purposes.

i

Sa

On October 5, 1991, appellant inquired of counsel

for the Commission if it intended to seek certiorari,

stating that if not it would file an application for

fees pursuant to the EAJA. By letter dated October

30, counsel for the Commission responded that it had

been decided that further review would not be sought.

Subsequent attempts at settlement of the fee ques-

tion were unavailing. On December 17, the Commis-

sion rejected an offer from the appellant; two days

later, appellant filed its application for attorney’s

fees. The district court rejected the application, find-

ing that (1) it was untimely, and (2) that the Com-

mission’s position in the underlying enforcement suit

had been “substantially justified.”

Fee applications under the EAJA must be filed

within 30 days of a “final judgment,” 28 U.S.C.

§ 2412(d)(1)(B), which is defined as a determina-

tion “that is final and not appealable.” Jd. § 2412

(d)(2)(g). Reasoning, that the announcement that

the Commission did not intend to seek review of the

panel’s decision constituted a “final judgment,” the

district court determined that in order to comply

with the EAJA, appellant would have had to have

filed its fee application within 30 days of the October

30th letter, that is, by November 29, several weeks

before the application had actually been filed.

Alternatively, the district court found that the Com-

mission’s position in the underlying litigation had

been “substantially justified.” Noting that the Com-

mission had “adopted its interpretation of the Regu-

lation and its corresponding litigation position in the

absence of any contrary, or even clear, guidance from

either Congress or the courts,” it found that the

agency was to be accorded substantial deference in

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its interpretation of § 438(a) (4). Despite the panel’s

rejection of such interpretation, the district court

concluded that it was still entitled to find that the

Commission’s position had been “justified to a degree

that could satisfy a reasonable person.”

DISCUSSION

A. Timeliness of the Application

In its recent opinion in Melkonyan v. Sullivan, 111

S. Ct. 2157 (1991), the Supreme Court ruled that “a

‘final judgment’ for the purposes of 28 U.S.C. § 2412

(d)(1)(B) means a judgment rendered by the court

that terminates the civil action for which EAJA fees

may be received. The 30-day EAJA clock begins to

run after the time to appeal that ‘final judgment’ has

expired.” 111 S.Ct. at 2162.

The contention that the Commission’s October 30th

letter to counsel for appellant was a “final order”

which rendered appellant’s fee application untimely

was disposed of at oral argument. Commission coun-

sel then unequivocally admitted that, despite counsel’s

letter, the Commission had retained the absolute right

to change its mind and apply for certiorari at any

time up until the deadline for such an application,

namely on November 20, just thirty days before the

petition for fees was filed. Had counsel been similarly

forthcoming with the district court, that court might

not have erroneously concluded that his simple letter

constituted a final order terminating the civil action.

Ta

B. The “Substantial Justification” of the Commis-

sion’s Position

Where, as here, there is no claim of “special cir-

cumstances” which would “make an award unjust,”

attorney’s fees under the EAJA must be awarded to

the prevailing non-government party unless the court

finds that the position of the United States in the

pertinent litigation to have been “substantially justi-

fied.” 28 U.S.C. §2412(d)(1)(A). To justify such

a finding, the government must show that its position,

both administratively and before the courts, had a

reasonable basis in both law and fact. Pierce v. Un-

derwood, 487 U.S. 552, 566 & n.2 (1988). The test is

“essentially one of reasonableness,” H.R.Rep. No.

1418 at 10, reprinted in 1980 U.S.C.C.A.N. The gov-

ernment has the burden of demonstrating substantial

justification. Environmental Defense Fund, Inc. v.

Watt, 722 F.2d 1081, 1085 (2d Cir.1983). In our

statement of facts, supra, we note that the panel

which had previously considered this case on the

merits found the government’s position to have been

unreasonable. Thus we must determine the extent to

which we are bound by that panel’s finding that the

Commission had failed to provide “a ‘reasonable in-

terpretation’ of either its own regulation or of § 438

(a) (4),” 943 F.2d at 196.

Appellant maintains that the reasoning behind the

earlier panel’s decision conclusively establishes that

the government’s position was not substantially jus-

tified. It relies on a Ninth Circuit case which was

decided while this appeal was pending, Oregon Nat-

ural kesources Council v. Madigan, 980 F.2d 1330

(9th Cir. 1992). It was there held that a panel con-

”"

8a

sidering an EAJA fee application was bound by a

previous panel’s holding that the government’s posi-

tion had been unreasonable, at least when in so deter-

mining the first panel had carefully considered the

language and legislative history of the statute in

question.

The Commission, on the other hand, points to a

series of cases for the proposition that this inquiry is

a purely historical one, properly confined to an analy-

sis of how the situation looked to the government

before it lost its case. It reminds us that the EAJA

is not an automatic fee-shifting statute, Spencer v.

N.L.R.B., 712 F.2d 539, 550 (D.C.Cir. 1983), and

urges a standard for determining this question which

is “separate and distinct from whatever legal stand-

ards governed the merits phase of the case,” FEC v.

Rose, 806 F.2d 1081, 1087 (D.C.Cir. 1986); see also

United States v. Paisley, 957 F.2d 1161, 1167 (4th

Cir. 1992), cert. denied sub nom. Crandon v. United

States, 113 S.Ct. 73 (1992); Welter v. Sullivan, 941

F.2d 674, 676 (Sth Cir. 1991); Griffon v. United

States Dep’t. of Health and Human Services, 832

F.2d 51, 52 (5th Cir. 1987); Cinciarelli v. Reagan,

729 F.2d 801, 806 (D.C.Cir. 1984).

Having considered these positions, we conclude, as

did the Ninth Circuit, that the earlier panel’s careful

analysis of the government’s position allows no fur-

ther consideration of this issue. This is so because

the legal standards which governed the merits phase

of this litigation are precisely those to be applied to

the EAJA question. The government’s position is

deemed reasonable only if it has a “reasonable basis

both in law and in fact,” Pierce, 487 U.S. 552, 565.

In granting summary judgment to appellant, the pre-

—

9a

vious panel found the Commission’s position unrea-

sonable in light of the plain language and legislative

history of the statute. It also found that the lists,

compiled without addresses or phone numbers and

bearing a warning against commercial use, posed no

danger to the privacy interests which § 438(a) (4)

was designed to protect. Neither the terms of the

statute, its legislative history, nor the evidence con-

cerning the nature of the lists involved were unknown

to the Commission when it decided to undertake this

litigation. We therefore find that the previous panel

has conclusively established that the Commission’s

position was not substantially justified so as to bar

an award of attorney’s fees. Like the Ninth Circuit,

“Twl]e come to this conclusion not because the gov-

ernment lost its claim, but because a previous panel

of this court determined that the statutory language

and legislative history were clear.” 980 F.2d at 1332.

In brief, contrary to the suggestion in the dissent-

ing opinion, we have no occasion to assess the merits

of the district court’s exercise of discretion. We hold

that in this unusual situation where a previous panel

has specifically passed on every question before us,

and has found the Commission’s position to have been

unreasonable in that it frustrated the intent of Con-

gress and might jeopardize first amendment rights,

the district court was—as are we—bound by the

panel’s conclusions. It would be hard to imagine how

it could be held that one had been “substantially justi-

fied” in defying the will of Congress and jeopardizing

First Amendment rights.

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CONCLUSION

The order of the district court is reversed and the

matter is remanded for the purpose of determining

an appropriate award of fees and expenses.

JACOBS, Circuit Judge, concurring in part and dis-

senting in part:

I concur with the majority as to the timeliness of

the appellant’s fee application. I respectfully dissent

because I do not believe that the district court abused

its discretion in finding that the Commission was

substantially justified in pursuing its position on the

merits.

The Commission lost its claim on the merits—in

the only way it could lose on the merits of that claim

—upon a finding that it adopted an unreasonable

interpretation of the “commercial purposes” provi-

sion of 2 U.S.C. § 438(a) (4) (1988) and its corre-

sponding regulation, 11 C.F.R. §104.15(c) (1991).

See Federal Election Comm’n v. Political Contribu-

tions Data, Ine., 943 F.2d 190, 196 (2d Cir. 1991).

Nevertheless, PCD was not entitled to fees if, inter

alia, “the position of the United States was substan-

tially justified.” 28 U.S.C. § 2412(d)(1)(A) (1988)

(“EAJA’”’). Substantial justification (like the ruling

on the merits) is a question of reasonableness. Pierce

v. Underwood, 487 U.S. 552, 564 n.2 (1988) (“if a

reasonable person could think it correct”). However,

in the EAJA stage, the question is whether it was

unreasonable for the Commission to litigate the rea-

sonableness of its statutory interpretation. The

EAJA reasonableness question is therefore considered

eae

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from a different point of view: “not what the law

now is, but what the Government was substantially

justified in believing it to have been.” /d. at 561.

Whether the Commission was substantially justified

is a “historical” question. /d.

The majority (a) casts the issue as “the extent to

which we are bound” by the unreasonableness find-

ings of the previous panel; (b) adopts the Ninth

Cireuit rule that the EAJA panel is so bound if the

first panel carefully considered the language and

legislative history of the statute in question; and

(c) holds that “the earlier panel’s careful analysis

of the government’s position allows no further con-

sideration of this issue.” I disagree with this holding

on several grounds, not least because it tends to frame

the EAJA issue as a critique of the opinion on the

merits: Was the merits opinion carefully considered?

Was it clear and categorical? Was it inevitable?

At least in the first instance, this appeal concern-

ing substantial justification should be resolved by

reference to the district court opinion, rather than

to this Court’s 1991 opinion. Nothing in the 1991

opinion requires that we now reverse the district

court’s ruling on the distinct, historical issue of

substantial justification. Appellant’s sale of donor

lists for profit was not a “commercial purpose” un-

der § 438(a) (4), as the 1991 panel held, but that

result was not a foregone conclusion. The 1991

opinion found that § 438(a) (4) cannot be literally

applied; that § 438(a)(4) was made “skeletal” in

order to permit the Commission to define the ‘“com-

mercial purposes” prohibition; that “we must... .

seek further guidance outside the FECA itself”; and

that “the best guidance” is provided by legislative his-

tory. 943 F.2d at 194-98. A holding of unreasonable-

12a

ness at the merits stage, however sound, is not neces-

sarily a predictable result, especially where it turns

in large part (as here) on legislative history.

As to the district court’s opinion, we owe it more

deference than the majority opinion gives it. The

reasonableness standard applies at both stages of

review (merits and EAJA), but reasonableness for

EAJA purposes is considered from a different per-

spective and depends on a variety of factors that the

district court may be best situated to evaluate. Pierce

v. Underwood, 487 U.S. at 559-563. The Supreme

Court in Pierce therefore deferred to the district

court’s judgment, holding that the issue of substan-

tial justification presents “a multifarious and novel

question, little susceptible, for the time being at least,

of useful generalization, and likely to profit from the

experience that an abuse-of-discretion rule will per-

mit to develop.” Jd. at 562.

In the case on appeal, the district court’s carefully

considered opinion held that the Commission was

substantially justified ex ante in pursuing a position

that the district court upheld on summary judgment,

but that this Court, by way of a different analysis,

held to be unreasonable. The district court has given

detailed consideration to several factors, including

the clarity of the governing law at the time the Com-

mission acted; the foreseeable length and complexity

of the litigation; and the consistency of the Commis-

sion’s position. This Court previously considered

these factors to be relevant. See Dubose v. Pierce.

761 F.2d 913, 918 (2d Cir. 1985), vacated on other

grounds, 487 U.S. 1229 (1988).’ I think the district

1In Dubose v. Pierce, 761 F.2d 913 (2d Cir. 1985), this

Court conducted a de novo review, and reversed the lower

court’s finding that the Government’s position was not sub-

iaeeiaeiiaaiaiaaania

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court’s findings easily withstand review for abuse of

discretion. To the extent the majority expands the

1991 reasonableness analysis to resolve the EAJA

issue, the majority is engaging in de novo review.

To the extent the majority relies on the 1991 opinion’s

outcome, the majority treats EAJA as a fee-shifting

statute.

stantially justified. 579 F. Supp. 937 (D. Conn. 1984). The

Supreme Court vacated our judgment in light of Pierce v.

Underwood, 487 U.S. 552 (1988), which held that the proper

standard of review is abuse of discretion. On remand, apply-

ing that deferential standard, this Court affirmed the district

court’s finding. Dubose v. Pierce, 857 F.2d 889, 892 (2d Cir.

1988), cert. denied, 490 U.S. 1007 (1989).

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APPENDIX B

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

89 Civ. 5238 (SWK)

FEDERAL ELECTION COMMISSION, PLAINTIFF

-against-

POLITICAL CONTRIBUTIONS DATA, INC., DEFENDANT

MEMORANDUM OPINION AND ORDER

[Filed July 30, 1992]

APPEARANCES:

For Plaintiff:

Federal Election Commission

999 E Street, N.W.

Washington, D.C. 20463

By: Vivian Clair, Esq.

For Defendant:

Public Citizen Litigation Group

2000 P Street, N.W.

Suite 700

Washington, D.C. 20036

By: David C, Vladeck, Esq.

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Vladeck, Waldman, Elias & Engelhard, P.C.

1501 Broadway, Suite 800

New York, New York 10036

By: Anne C. Vladeck, Esq.

SHIRLEY WOHL KRAM, U.S.D.J.

Defendant Political Contributions Data, Ine.

(“PCD”) moves for an order, pursuant to the Equal

Access to Justice Act (“EAJA”), 28 U.S.C. § 2412

(d)(1)(A), awarding it $55,022.89 in attorneys’

fees and expenses incurred defending this action in

this Court and the Court of Appeals. See Federal

Election Com. v. Political Contributions Data, Inc.,

753 F. Supp. 1122 (S.D.N.Y. 1990), and 943 F.2d

190 (2d Cir. 1991). Because the Court does not -

have jurisdiction over PCD’s application, or in the

alternative, because the Federal Election Commission

(“FEC”), the plaintiff in the underlying action, was

“substantially justified” in bringing suit against

PCD, PCD’s application for attorneys’ fees and ex-

penses is denied.

Background *

In 1986, PCD’s parent company, Public Data Ac-

cess, Inc. (““PDA’’), compiled specialized contributor

1The Federal Election Campaign Act (“FECA”) requires

all political committees “supporting a candidate or candidates

for election to Federal office” to file reports of their respective

contributors and the corresponding donations with the FEC.

2 U.S.C. § 488(b) (3) (A). In turn, FECA requires that all

such reports filed with the FEC be made available to the

public for inspection and copying. 2 U.S.C. § 438 (a) (4). This

broad public disclosure policy was qualified, however, in 1971

by 2 U.S.C. § 438(a) (4), which provides that “any informa-

tion copied [from the FEC public records] ... shall not be

SS

16a

lists from the FEC computer tapes recording cam-

paign contributors. PDA then requested that the

FEC issue an advisory opinion as to whether the

selling of these lists comported with the statutory

prohibition set forth in 2 U.S.C. § 438(a)(4). The

FEC did so (Advisory Opinion 1986-25), concluding

that the “proposal to engage in the for-profit business

of selling lists of individual contributor information

copied from reports filed with the Commission” would

constitute use and sale for a “commercial purpose,”

thus violating 2 U.S.C. § 438(a) (4). Advisory Opin-

ion 1986-25, attached as Exhibit “3,” to FEC Com-

plaint.

Despite the Advisory Opinion (“AO 1986-25”),

PDA incorporated PCD to market these contributor

lists. Shortly thereafter, the National Republican

Congressional Committee filed a complaint with the

FEC coneerning PCD’s lists, prompting the FEC to

investigate PCD’s activities. The FEC found “prob-

able cause to believe” that PCD was violating the

“commercial purpose” language of 2 U.S.C. § 438

(a) (4), and after conducting unsuccessful negotia-

tions with PCD, the FEC brought this action for

declaratory and injunctive relief, and civil penalties.

Subsequently, this Court granted summary judg-

ment to the FEC, finding that the FEC’s interpreta-

sold or utilized by any person for the purpose of soliciting

contributions or any commercial purpose.” The prohibition

aimed to protect the privacy of those “very public-spirited

citizens” who contribute to political campaigns and those who

might contribute if disclosure of their identity were limited.

117 Cong.Rec. 30,057 (daily ed. Aug. 5, 1971) (statement of

Sen. Bellmon). It was believed that without this prohibition,

donating citizens would be subjected to “all kinds of harass-

ment.” 117 Cong.Rec. 30,057 (daily ed. Aug. 5, 1971).

17a

tion of 2 U.S.C. § 438(a) (4), ie., that the “commer-

cial purpose” language could include activities “other

than direct political solicitation,” was reasonable and

that under such interpretation, PCD’s sales of con-

tributor information lists could reasonably be char-

acterized as for “commercial purposes.” Federal

Election Com., 753 F. Supp. at 1126. Furthermore,

this Court found that the FEC had correctly con-

cluded that PCD’s lists were not exempt from the

prohibition under the “media exception,” contained

in 11 C.F.R. § 104.15(c) (the “Regulation”).? Fed-

eral Election Com., 753 F. Supp. at 1129.

On appeal, the Court of Appeals reversed this

Court’s decision and entered summary judgment in

PCD’s favor. The Court of Appeals held that PCD’s

use and sale of these lists was not proscribed by 2

U.S.C. § 438(a)(4) because the contributors’ ad-

dresses and phone numbers were not contained on

PCD’s marketed lists and the lists specifically stated

that the government forbade the information con-

tained in the lists from being used for solicitation

purposes. It further held that the FEC’s interpreta-

2 The Regulation was adopted by the FEC in furtherance of

2 U.S.C. § 488(a) (4). The Regulation provides in pertinent

part, that the copying of the FEC’s reports by “‘newspapers,

magazines, books or other similar communications is permis-

sible as long as the principal purpose of such communications

is not to communicate any contributor information ... for

the purpose of soliciting contributions or for other commercial

purposes.” 11 C.F.R. § 104.15(c) (1992).

Once the FEC concluded that an organization’s activities

were for a “commercial purpose,” it would determine whether

the activities fell within the exemption for the specified media

sources which would preclude a violation of 2 U.S.C. § 438

(a) (4).

$

18a

tion of the Regulation, as set forth in AO 1986-25,

was “unreasonable,” as it limited the “media excep-

tion” to those communications which were not using

the FEC information principally to further sales.

The Court of Appeals found this interpretation to be

contrary to “both the words of the statute and the

act’s [FECA’s] broader purpose” of promoting pub-

lic disclosure. Federal Election Com., 943 F.2d at 196.

The FEC did not appeal the Second Circuit’s deci-

sion, and, on December 19, 1991, PCD filed its motion

for an award of attorneys’ fees and expenses under

the EAJA.*

It is undisputed that PCD is the prevailing party

in the underlying action concerning the alleged viola-

tion of 2 U.S.C. § 438(a)(4).* Thus, the disputed

issues to be resolved in the present application for

attorneys’ fees and expenses are (I) the timeliness

of PCD’s application;® (II) whether the FEC’s posi-

tion was “substantially justified”; and (III) if PCD

8 The EAJA provides in pertinent part that:

a court shall award to a prevailing party other than the

United States fees and other expenses .. . incurred by

that party in any civil action . . . brought by or against

the United States in any court having jurisdiction of that

action, unless the court finds that the position of the

United States was substantially justified or that special

circumstances make an award unjust. 28 U.S.C. § 2412

(d) (1) (A).

* The Second Circuit directed summary judgment in PCD’s

favor. Federal Election Com. v. Political Contributions Data,

Inc., 943 F.2d 190 (2d Cir. 1991).

5 The EAJA requires that the party applying for an award

submit such application “within thirty days of final judgment

in the action.” 28 U.S.C. § 2412(d) (1) (B).

iii aiid

19a

did submit its application within the appropriate

time period, and if the FEC’s position was not sub-

stantially justified, what monetary award should be

granted to PCD.

Discussion

I. Timeliness of Application

It is well established that unless an EAJA appli-

cation for an award of fees and expenses is submitted

within thirty days of final judgment in the under-

lying action, the Court lacks jurisdiction over the

action. United States v. Sherwood, 312 U.S. 584,

586 (1941) (“the terms of [the Government’s] con-

sent to be sued in any court define that court’s juris-

diction to entertain the suit’); 28 U.S.C. § 2412

(d)(1)(B) (“within thirty days of final judgment

in the action’).

For purposes of commencing the 30-day filing

period, “final judgment” has been defined as “a judg-

ment that is final and not appealable.” 28 U.S.C.

§ 2412(d)(2)(G). While there is no doubt that the

finality of a judgment is most definitive when the

statutory time limit for appealing the decision has

actually expired, for EAJA purposes, a judgment

has been found to be final when the “losing party

asserts that no further appeal will be taken.” Taylor

v. United States, 749 F.2d 171, 174 (3d Cir. 1984)

(citing McDonald v. Schweiker, 551 F. Supp. 327,

330 (N.D. Ind. 1982), aff'd, 726 F.2d 311 (7th Cir.

1983) ).

While PCD agrees that a judgment may be deemed

final when the losing party asserts it will not appeal

the decision, it contends that the 30-day time period

does not begin running until the losing party males

20a

a “legally” or “formally” binding * assertion that it

will not appeal. The Court disagrees, and holds that

such “formal” notification is not required. Rather,

as the Eleventh Circuit held in Myers v. Sullivan,

916 F.2d at 679, all that is required to commence the

30-day filing period is ‘clear and unequivocal notice”

that the judgment will not be appealed. Jd. (since

three of the four plaintiffs were given “no clear in-

dication that [the Secretary of Health and Human

Services] would not file appeals,” the Court held that

the 30-day period did not commence until the time to

file an appeal expired; there was no requirement,

however, that the notice be “legally” binding upon the

Government).

In this case, the FEC provided clear and unequiv-

ocal notice that the Court of Appeals’ decision would

not be appealed. Such notification was given in re-

sponse to a letter from PCD’s attorney, David C.

Vladeck, which specifically requested information con-

cerning the status of an appeal. Mr. Vladeck re-

®PCD does not explicitly define what it would deem

“legally” or “formally” binding, but this Court assumes from

PCD’s language and from the cases that PCD cites that it

intends the terms to mean that “the government must bind

itself not to appeal in some enforceable way,” see Reply Of

Defendant Political Contributions Data, Inc. To The Federal

Election Commission’s Opposition To Defendant’s Motion For

An Award Of Attorneys’ Fees and Litigation Expenses, at

3-4, or that there must be some discrete event indicating the

finality of judgment. See, e.g., Myers v. Sullivan, 916 F.2d

659 (11th Cir. 1990) (post-remand final judgment of dis-

missal entered with the government’s consent); Smith v.

Sullivan, 739 F. Supp. 812 (S.D.N.Y. 1990) (remand order

dismissed case with prejudice pursuant to a settlement and

government stipulated that no further appeal would be

taken).

2la

quested that the FEC “inform [him] of the Commis-

sion’s intentions” with respect to continuing the liti-

gation. Letter dated October 2, 1991, attached to

FEC Opposition to Motion for Award of Attorneys’

Fees and Costs (“Pl. Opp.”), as FEC Exhibit “1.”

He also informed the FEC that “if the Commission

[did] not intend to pursue th[e] litigation further,

then [he] [would] simply go ahead and file [his] fee

application with the District Court... .” Id.

Richard Bader, FEC’s attorney, responded by letter

dated October 30, 1991 (the “Bader letter”), defin-

itively advising that no appeal would be taken. Addi-

tionally, the Bader letter set forth reasons which dem-

onstrated that the FEC would not revoke its decision.

Specifically, the letter stated that:

Because of the narrowness of the court’s decision

and the pendency of other cases raising the

broader statutory and constitutional issues that

constituted the bulk of the arguments in this

ease, the Commission has decided not to seek

certiorari in the PCD case. Letter dated October

30, 1991, attached to Pl. Opp., as FEC Exhibit

orn 7”

This Court finds that Bader’s letter commenced

the 30-day filing period as it clearly fulfilled Myers

demand for “clear and unequivocal notice.” Bader’s

letter constituted the final judgment for purposes

of the EAJA, just as the Government’s letters to the

court and the prevailing party did in Taylor. Con-

trary to PCD’s contention, notifying a court does not

result in any greater legal consequence than merely

notifying the other party, as was done by the FEC

in this case. In either situation, a court may estop a

22a

losing party which has executed such notification

from subsequently instituting an appeal. Further-

more, Mr. Vladeck’s letter clearly demonstrates that

he intended to rely upon the FEC’s response in de-

termining whether to move for attorneys’ fees and

expenses, regardless of whether or not the FEC no-

tified the Court of its choice.

Accordingly, the 30-day period for filing an appli-

cation for fees and expenses expired on November

29, 1991 (30 days after Mr. Bader wrote his letter),

nearly a month before PCD filed its application on

December 19, 1991.’

7 PCD contends that two other factors should be considered

by the Court in determining whether the time for filing had

expired prior to the actual filing. First, PCD claims that

because FEC did not correct PCD when PCD stated by mail

and telephone that it considered December 21, 1991 to be the

final date for filing, November 29, 1991 cannot be the date on

wiich the 30-day period expired. This argument is without

merit and does not effect the timeliness of PCD’s application

as the FEC had no duty to inform PCD of the correct date.

Second, PCD contends that because the FEC, itself, did not

believe that Mr. Bader’s letter commenced the 30-day filing

period, PCD should not have been expected to recognize the

significance of the letter’s date. PCD argues that if November

29, 1991 were the final day for filing an application for fees

and expenses, the FEC would not have engaged in settlement

discussions througi. December 17, 1991. That the FEC en-

gaged in settlement discussions after November 29, 1991, is

not, however, dispositive as the FEC may still have paid

PCD’s attorneys’ fees and expenses despite the absence of a

legal obligation to do so. Further, the record in this case

reveals that there was substantial confusion concerning the

date on which the filing period expired. Given this confusion,

the FEC could be expected to explore all possibilities, includ-

ing settlement, in case final judgment was found not to have

23a

II. Substantially Justified Governmental Claim

The Court holds alternatively that even if the

Court did have jurisdiction, PCD’s application would

properly be denied on the grounds that the FEC’s

position in the litigation was “substantially justified.”

Costs and fees pursuant to 28 U.S.C. § 2412(d)

(1)(A) may not be awarded to a claimant, if “the

position of the United States was substantially jus-

tified.” The Supreme Court has determined that a

position is “substantially justified” if it has a “rea-

sonable basis both in law and fact” or if it “could

satisfy a reasonable person.” Pierce v. Underwood,

487 U.S. 552, 565 (1988); accord Cohen v. Bowen,

837 F.2d 582, 585 (2d Cir. 1988); Jean v. Nelson,

863 F.2d 759, 767 (11th Cir. 1988); Myers, 916 F.2d

at 666; United States v. Yoffe, 775 F.2d 447, 449-50

(1st Cir. 1985); United States v. First Nat. Bank,

732 F.2d 1444, 1447 (9th Cir. 1984).

The D.C. Circuit established a 3-prong test to

determine whether a position taken by the Govern-

ment was “substantially justified.” See Spencer v.

been entered on October 30, 1991. But even if the FEC did

not recognize that Mr. Bader’s letter would signify the final

judgment for purposes of 28 U.S.C. § 2412(d) (1) (B), this

would not alter the fact that the letter did in fact commence

the filing period. See Long Island Radio Co. v. NLRB, 841

F.2d 474 (2d Cir. 1988) (because the United States govern-

ment had statutorily established the lentgh of time after an

action during which it would diminish its immunity from suit,

the NLRB could not voluntarily extend the filing deadline).

Accordingly, the notice given by Mr. Bader’s letter constituted

“final judgment” on October 30, 1991 and the time for filing

an application for fees and expenses expired on November 29,

1991.

24a

NLRB, 712 F.2d 539 (D.C. Cir. 1983).° Under Spen-

cer, a court should examine (i) the clarity of the

governing law, (ii) the foreseeable length and com-

plexity of the litigation, and (iii) the consistency of

the government’s position, in determining whether the

position of the Government was substantially justi-

fied. Spencer, 712 F.2d at 559-60. Based upon a re-

view of these three factors, the Court finds that the

FEC’s position was “substantially justified.”

(i) Clarity of the Governing Law

At the time the FEC brought suit against PCD for

selling lists of contributor data, in violation of 2

U.S.C. § 438(a) (4), there was little congressional or

judicial guidance concerning the relevant statutory

provisions. In fact, congressional enactments pro-

moted competing interests. While the general pur-

pose of FECA was to provide total disclosure of po-

litical contribution data, 2 U.S.C. § 438(a)(4) aimed

to protect contributors and would-be contributors

from solicitators by limiting the distribution of con-

tributing data. Federal Election Com., 943 F.2d at

191. Even the Court of Appeals recognized the ten-

sion between 2 U.S.C. § 438(a) (4), and the general

purpose of FECA, and in fact, concluded that because

the language of 2 U.S.C. § 438(a) (4) seemingly un-

dermined the general purpose of FECA, it could not

* In Pierce, the Supreme Court held that the Spencer stand-

ard was more demanding than the EAJA required. However,

the Court finds that the Spencer test remains relevant to the

determination of whether the FEC’s position was “substan-

tially justified.”

25a

interpret the statute according to its plain meaning.

Federal Election Com., 943 F.2d at 194-95.

Further, the legislative history supplied the FEC

with few guidelines for the interpretation of 2 U.S.C.

§ 438(a) (4). The only aid which the congressional

records provided was to indicate to which activities

the statute would apply. The discussion on the Sen-

ate floor revealed merely that list brokers were ex-

plicitly proscribed from selling lists of donors and

donations and that newspapers were expressly per-

mitted to publish such lists. 117 Cong.Rec. 30,057-58

(1971). Thus, the Senate created a broad spectrum

between permitted and proscribed activities, but did

not furnish the FEC with any further direction as

to the proper treatment of other actors which copied

FEC records for sale but which could not be defined

either as newspapers or list brokers.

Nor had the courts offered any meaningful inter-

pretation of 2 U.S.C. § 438(a)(4) or the Regula-

tion, 11 C.F.R. § 104.15(c), prior to this suit. The

only decision addressing the legality of a similar dis-

tributor’s activities under 2 U.S.C. § 438(a) (4),

National Republican Congressional Committee v.

Legi-Tech Corp., 795 F.2d 190 (D.C. Cir. 1986)

(“NRCC”), refused to determine whether the organi-

zation’s lists were forbidden, or even to enumerate

characteristics common to a prohibited activity or to

a “media exception,” similar to newspapers. The

Court instead found that Congress, in enacting 2

U.S.C. § 438(a) (4), had “ ‘left a gap for the [FEC]

to fill’ in determining what commercial activities

f[e]ll within the proviso’s prohibition (actively akin

to that of a list broker) and what commercial activity

26a

[was] not proscribed (activity akin to that of a news-

paper).”” NRCC, 795 F.2d at 193. The Court then

found that the FEC had filled this gap with the Reg-

ulation, 11 C.F.R. §104.15(c), but that since the

FEC had not yet interpreted this regulation, the

Court had to defer to the FEC for any substantive

determination. NRCC, 795 F.2d at 193. Thus, the

FEC was given no guidelines, and instead was en-

couraged to interpret its own Regulation.

(ii) Foreseeable Length and Complexity of the

Governing Law

The record indicates that the FEC did not engage

PCD in a foreseeably lengthy or complex proceeding.

In fact, the FEC originally aimed to settle its dispute

with PCD through negotiations, and it was not until

it appeared that no settlement could be reached that

the FEC filed this suit. Moreover, since this action

predominately involved issues of law, neither party

should have expected the proceedings to be particu-

larly lengthy or complex.

Further, review of an agency’s action, such as the

FEC’s, is frequently prompt and uncomplicated, as

a court must uphold the agency action unless the

agency’s interpretation is found to be “unreasonable.”

Chevron, U.S.A. Ine. v. National Resources Defense

Council, Inc., 467 U.S. 837 (1984).

(iii) Consistency of the Government’s Position

In Spencer, the D.C. Circuit held that if the Gov-

ernment was found to have “‘single[d] out’ par-

ticular private parties . . . [and] adopt[ed] a gen-

———

27a

eral policy in dealing with cases of a given variety

but take[n] a different position inexplicably or mali-

ciously in one or a few cases,” it was necessary for

the Government to present an especially powerful

justification for its position in order to avoid paying

the prevailing party’s attorneys’ fees and expenses.

Spencer, 712 F.2d at 560-1. The FEC’s position in

the underlying action manifested none of the above

attributes.

Since the FEC had not previously interpreted its

regulation, and had not attempted to classify or-

ganizations as either similar to the specifically pro-

hibited “list brokers” or to the explicitly exempted

“newspapers,” prior to AO 1986-25 issued to PCA,

it is not possible that the FEC’s position was incon-

sistent. Moreover, the FEC’s position in this action

greatly resembled the position of the plaintiff in the

primary precursor to this case, NRCC. NRCC, 795

F.2d 190.

Furthermore, in this case, the Government never

changed its position during the course of the pro-

ceedings or acknowledged the merit of its adversary’s

claims. In Myers, where three of the four consoli-

dated plaintiffs were awarded attorneys’ fees, -the

Secretary of Health and Human Services or the Ap-

peals Council for the agency ultimately awarded So-

cial Security benefits which originally had been denied

by the Secretary.’ Myers, 916 F.2d at 662-64. This

implicit admission that the Secretary improperly de

nied benefits lends significant weight to the conclusion

* The fourth plaintiff was denied attorneys’ fees due to an

untimely application, not because the Secretary was found to

be “substantially justified.”

28a

that the Government’s position was not “substantially

justified.” In this case, however, the FEC neither

capitulated, nor adopted a different or more harsh

position with PCD than with other possible violators.

Accordingly, this Court finds that the FEC’s position

satisfies each prong of the Spencer test.

Beyond the Spencer analysis, the Court finds that

the position adopted and pursued by the FEC had a

“reasonable basis both in law and fact” as “could

satisfy a reasonable person.” Pierce, 487 U.S. at

565.

The Court of Appeals found both the FEC’s inter-

pretation of 2 U.S.C. §$ 438(a)(4) and the FEC’s

application of that interpretation to PCD to be “un-

reasonable.” Consequently, PCD would have this

Court adopt the conclusion that the FEC’s position

cannot satisfy the “reasonable” standard established

in Pierce. But it is a well-established rule that a

court defers to an agency’s interpretation unless it

finds it to be “unreasonable.” See Chevron, U.S.A.

Inc. v. National Resources Defense Council, Inc., 467

U.S. at 844 (1984). Thus, using PCD’s analysis, any

decision overruling an agency’s interpretation would

automatically result in the Government paying at-

torneys’ fees and expenses to the other party. As

Spencer concluded, however, Congress did not intend

28 U.S.C. § 2412(d)(1)(A) to be an automatic fee-

shifting device. Spencer, 712 F.2d at 550. Accord-

ingly, this Court may not terminate its inquiry with

the Court of Appeals’ conclusion that the FEC’s in-

terpretation was “unreasonable,” but rather, the

Court must examine the legal basis for the FEC’s

interpretation of the Regulation and the factual basis

29a

for the FEC’s determination that PCD was akin to a

“loan broker.”

As set forth above, the FEC adopted its interpre-

tation of the Regulation and its corresponding litiga-

tion position in the absence of any contrary, or even

clear, guidance from either Congress or the courts.

Moreover, there was never any indication prior to

this litigation that the FEC’s interpretation was un-

reasonable. In fact, the NRCC Court discussed the

Regulation, yet never suggested that the Regulation’s

“principal purpose” clause * (the FEC’s interpreta-

tion of which the Court of Appeals subsequently

found “unreasonable’’) would affect the reasonable-

ness of the FEC’s interpretation, or that the clause

varied from congressional intent." NRCC, 795 F.2d

at 193.

Further, in adopting the Regulation and issuing

AO 1986-25, the FEC was forced to reconcile the two

conflicting goals of FECA, namely “total” disclosure

and the protection of public-spirited contributors. In

trying to accommodate these competing objectives,

10 The principal purpose clause provides in relevant part:

The use of information ... in newspapers, magazines, books

or other similar communications is permissible as long as the

principal purpose of such communications is not to com-

municate any contributor information listed on such reports

for the purpose of soliciting contributions or for other com-

mercial purposes.” 11 C.F.R. § 104.15(c) (emphasis added).

The Second Circuit’s opinion ultimately held that the

FEC’s construction of the “principal purpose” prohibition

constituted an “unreasonable” limitation upon Congress’ in-

tent, as demonstrated in both 2 U.S.C. § 438(a) (4) and the

“act’s broader purposes.” Federal Election Com., 943 F.2d at

195-96.

30a

the FEC fashioned a distinction between use of con-

tributor information which was “incidental” to sales,

and use for which the “primary focus” was creating

sales (the former deemed permissible and the latter

prohibited). AO 1986-25, at 4.

Ultimately, the Court of Appeals found this dis-

tinction to be “unreasonable,” as it impermissibly

narrowed the “media exception” of the Regulation

and the “newspaper exception” at 2 U.S.C. § 438

(a) (4). Federal Election Com., 943 F.2d. at 196.

The Court of Appeals thus placed greater emphasis

on the importance of public disclosure than the FEC

had, but the FEC had not abandoned the pursuit of

disclosure in its interpretation; it simply had at-

tempted to establish a compromise, alleviating the

inherent tension between the two goals. Given the

conflict between FECA’s terms, the lack of congres-

sional and judicial guidance, the ambiguous gap

which the FEC was required to fill, and that the

legislative history only established a “newspaper ex-

ception,” not an exception encompassing “similar

communications,” this Court finds that the FEC’s

position had a reasonable basis in law and was “sub-

stantially justified.”

The FEC’s factual determination that PCD’s activi-

ties were prohibited under 2 U.S.C. § 438(a) (4) was

127In a discussion of the purpose of 2 U.S.C. § 438(a) (4)

prior to adoption, Senator Nelson asked Senator Bellmon, who

presented the amendment to FECA on the Senate floor,

whether under the amendment, “newspapers may, if they

wish, run lists of contributors and amounts [7?].” Senator

Bellmon responded affirmatively, and no further media sources

were designated as exempt from the 2 U.S.C. § 438(a) (4)

prohibition. 117 Cong.Rec. 30058, col. 1.

———————

3la

also reasonable. The legislative history suggests a

broad continuum along which permitted and pro-

hibited activities are to be classified, but Congress

failed to indicate how particular classifications should

be determined. The NRCC Court found FECA “am-

biguous” as to which activities were similar to news-

papers and which were similar to list brokers and

provided that the FEC was the proper body to deter-

mine an activity’s permissibility. NRCC, 795 F.2d

at 192.

Relying upon the following factors, the FEC rea-

sonably characterized PCD as akin to prohibited list

brokers: (i) the list format in which the information

was distributed; (ii) the individualization and spe-

cialization of the lists available to accommodate PCD’s

clients’ needs; (iii) PCD was incorporated exclu-

sively for the purpose of advertising, marketing, and

selling printed compilations of the FEC information;

(iv) political parties or candidates and political con-

sultants—clients who reasonably could be expected to

make solicitations—comprised two-thirds of PCD’s

customers; and (v) during the FEC’s investigation

of PCD’s customers, two customers indicated that

they had intended to use PCD’s list to solicit money

for future campaigns. Federal Election Com., 753

F. Supp. at 1130.

The Court of Appeals found that because only two

of PCD’s clients had purchased the reports for solici-

tation purposes and neither had actually used the

lists for those purposes, PCD’s activities constituted

“similar communications,” exempted under the Regu-

lation’s “media exception.” But that some of PCD’s

18 See supra, n. 12,

32a

clients were interested in the lists for the exact pur-

pose prohibited by 2 U.S.C. § 438(a)(4) indicates

that the FEC did have a reasonable basis in fact to

believe that PCD’s activities may have violated the

prohibition. Although PCD’s lists did not contain

street addresses or telephone numbers, they were

hardly useless to a buyer aiming to make solicitations

based on the information contained. Contributors’

names, towns, states, and zip codes, and occasionally

occupations, were distributed along with the amount

of the respective contributions. Given this informa-

tion, it would be quite simple to gather the missing

information or contact the people despite its absence.

Additionally, that a warning existed is not disposi-

tive, as it is certainly conceivable that list brokers,

clearly prohibited enterprises under 2 U.S.C. § 438

(a) (4), could also include a warning in an effort to

limit their own liability.

Had PCD distributed a standard list of contribu-

tors’ names and donations, as well as other informa-

tion concerning political committees’ funding, spend-

ing, activities, and had PCD’s clients been primarily

professors and research institutes, the FEC might

not have been “substantially justified” in arguing

that PCD’s activities violated the “commercial pur-

pose” prohibition. But PCD’s actual lists and clients

were not nearly so definitively exempted.

Finally, the “incident to” and “primary focus”

terms used in AO 1986-25 which led the Court of

Appeals to find the FEC’s interpretation to be “un-

reasonable” and contrary to the general purpose of

FECA, were not the sole factors inducing the FEC to

file suit against PCD. While the FEC did find PCD’s

use of the FEC records to be more than incidental to

33a

sales, the FEC grouped PCD with “list brokers,”

rather than with “similar communications” for ad-

ditional reasons as well. The factors enumerated

above, concerning the format of PCD’s product, its

clients, and its exclusive purpose, also supported the

PCD’s “list broker” classification. These factors may

have reasonably led the FEC to the same conclusion,

even in the absence of the flawed “incident to”/“pri-

mary focus” distinction. Consequently, this Court

finds that the FEC’s position that PCD was “actively

akin” to list brokers, rather than newspapers, was

reasonably based in fact, and thus, “substantially

justified.”

This Court further rejects PCD’s contention that

the Court of Appeals’ opinion, which was “sharply

critical of the FEC’s argument,” precludes a finding

that the FEC’s position was substantially justified.

Memorandum Of Law In Support of Defendant’s Ap-

plication For An Award Of Attorneys’ Fees And

Litigation Costs, at 4-5. PCD’s argument effectively

ignores the Supreme Court’s decision in Pierce. Pierce

held that even a “string of losses” or a “string of suc-

cesses” could only be “indicative” of whether the

government’s position was “substantially justified.”

Pierce, 487 U.S. at 565. Such a rule of law certainly

would not permit this Court to find that a single

decision against the FEC by the Court of Appeals

necessitates, or even suggests, a finding that the FEC

was not “substantially justified.” PCD’s argument

is particularly weak in light of this Court’s earlier

decision favoring the FEC, which at the very least

invites doubt to the proposition that the government’s

position was not “justified to a degree that could

34a

satisfy a reasonable person.” Pierce, 487 U.S. at 565.

Nor does the Court of Appeals’ deciding the case on

summary judgment indicate that the FEC was not

“substantially justified,” as Pierce held that where

“the dispute centers upon questions of law rather

than fact,” the “objective fact that the merits were

decided at the pleadings stage” only proves that the

judge was “efficient,” not that the Government had

a weak position. Pierce, 487 U.S. at 568-69. Accord-

ingly, PCD’s argument does not alter this Court’s

finding that the FEC was “substantially justified”

under Pierce and the Spencer test.

III. Appropriate Monetary Award

As this Court finds that no attorneys’ fees and

expenses should be awarded under 28 U.S.C. § 2412

(d)(1)(A), there is no need to determine the appro-

priate hourly rate to be afforded to PCD’s attorneys.

Conclusion

For the reasons set forth above, the Court finds

that PCD’s application for an award of attorneys’

fees and costs, pursuant to the Equal Access for

Justice Act, was untimely and is thus denied. The

Court further finds that even if the application was

timely, the award would be denied, as the FEC was

“substantially justified” in bringing suit against

PCD.

SO ORDERED.

35a

s/ Shirley Wohl Kram

SHIRLEY WOHL KRAM

United States District Judge

Dated: New York, New York

July 30, 1992

36a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

At a stated term of the United States Court of

Appeals for the Second Circuit, held at the United

States Courthouse in the City of New York, on the

third day of August one thousand nine hundred and

ninety-three.

Docket Number: 92-6240

FEDERAL ELECTION COMMISSION, PLAINTIFF-APPELLEE

Vv

POLITICAL CONTRIBUTIONS DATA, INC.,

DEFENDANT-APPELLANT

[Filed Aug. 3, 1993]

A petition for rehearing containing a suggestion

that the action be reheard in banc having been filed

herein by Plaintiff-Appellee, Federal Election Com-

mission,

Upon consideration by the panel that decided the

appeal, it is

—

:

37a

Ordered that said petition for rehearing is DENIED.

It is further noted that the suggestion for rehear-

ing in banc has been transmitted to the judges of the

court in regular active service and to any other judge

that heard the appeal and that no such judge has

requested that a vote be taken thereon.

SO ORDERED:

FOR THE Court,

ELAINE B. GOLDSMITH

Clerk

By: /s/ Kathy Brouwer

KATHY BROUWER

Operations Mgr.

8-3-93

38a

APPENDIX D

SUPREME COURT OF THE UNITED STATES

No. A-350

FEDERAL ELECTION COMMISSION, PETITIONER

Vv.

POLITICAL CONTRIBUTIONS DATA, INC.

ORDER

UPON CONSIDERATION of the application of

counsel for the petitioner,

IT IS ORDERED that the time for filing a peti-

tion for a writ of certiorari in the above-entitled

case, be and the same is hereby, extended to and

including December 31, 1993.

/s/ Clarence Thomas

Associate Justice of the Supreme

Court of the United States

Dated this 26th day of October 1993.

39a

APPENDIX E

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

89 Civ. 5238 (SWK)

FEDERAL ELECTION COMMISSION, PLAINTIFF

-against-

POLITICAL CONTRIBUTIONS DATA, INC., DEFENDANT

MEMORANDUM OPINION

[Filed Dec. 10, 1990]

APPEARANCES:

For Plaintiff :

LAWRENCE M. NoBLE, General Counsel

Federal Election Commission

999 E Street, N.W.

By: Richard B. Bader, Associate General Counsel

Robert W. Bonham, III,

Acting Assistant General Counsel

Vivian Clair, Esq.

For Defendant:

Public Citizen Litigation Group

2000 P Street, N.W., Suite 700

By: David C. Vladeck

Alan B. Morrison

40a

Vladeck, Waldman, Elias & Engelhard, P.C.

1501 Broadway, Suite 800

New York, NY 10036

By: Anne C. Vladeck

SHIRLEY WOHL KRAM, U.S.D._J.

In this action for declaratory and injunctive relief,

the Federal Election Commission (the “Commission”

or the “FEC’’) seeks to enforce the provisions of the

Federal Election Campaign Act of 1971 to prohibit

defendant Political Contributions Data from selling

compilations of contributor data reportable to the

FEC under the Act. Defendant raises First Amend-

ment, Fifth Amendment, and other defenses. Cur-

rently before the Court are defendant’s motion and

plaintiff’s cross-motion for summary judgment.

BACKGROUND’

Plaintiff FEC is the independent agency of the

United States government empowered with adminis-

tering, interpreting, and enforcing the Federal Elec-

tion Campaign Act (the “Act,” or “FECA’’). See

generally 2 U.S.C. §§ 437¢e(b) (1), 437d(a) and 437¢

(1980). Defendant Political Contributions Data

(“PCD”) is a for-profit corporation, wholly owned

by Political Data Access, Inc. (“PDA”), which pro-

duces campaign contribution reports to sell to the

public.

FECA requires political committees to report iden-

tification information, including name, address, occu-

'The central facts are not in dispute by the parties, and

are related here from the uncontested portions of the Com-

plaint and the parties’ Local Rule 3(g) statements.

4la

pation and employer, of each person who contributes

to that committee $200 or more in a year. 2 U.S.C.

§ 434(b)(3)(A).2 The Act requires the Commission

to make all such reports and statements filed with

the Commission available for public inspection and

copying, at the expense of the person requesting such

copying, within 48 hours of the Commission’s receipt

of those documents. 2 U.S.C. § 438(a)(4). That

provision, however, prohibits the sale or use of in-

formation copied from such reports by any person

for the purpose of soliciting contributions or for com-

mercial purposes. Id.2 A rule promulgated by the

? That provision states:

Each report under this section shall disclose—

* ” * * *

(3) the identification of each—

(A) person (other than a political committee)

who makes a contribution to the committee during

the reporting period, whose contribution or contribu-

‘ions have an aggregate amount or value in excess of

$200 within the calendar year, or in any lesser

amount if the reporting committee should so elect,

together with the date and amount of any such con-

tribution.

2 U.S.C. § 484 (b).

§ The provision reads in full:

The Commission shall—

* ” * ” «

(4) within 48 hours after the time of the receipt by

the Commission of reports and statements filed with

it, make them available for public inspection, and

copying, at the expense of the person requesting such

copying, except that any information copied from

such reports or statements may not be sold or used

by any person for the purpose of soliciting contribu-

42a

FEC excepts newspapers, magazines, books or other

communications from this provision. 11 C.F.R.

§ 104.15(c).

In January 1986, PDA obtained from the FEC

certain computer tapes containing individual con-

tributor information compiled from the disclosure

reports, pursuant to § 434(b)(3)(A). By letters

dated March 21 and June 24, 1986, PDA requested

a formal advisory opinion from the Commission re-

garding the legality of selling individual contributor

information obtained from disclosure reports made

available by the Commission for public inspection and

copying. In its resulting Advisory Opinion, the Com-

mission stated that the sale of compilations of in-

dividual contributor information proposed by PDA

would violate FECA. Advisory Opinion 1986-25, at-

tached as Exhibit 7 to FEC’s Memorandum in Oppo-

sition to Defendant’s Motion for Summary Judgment

and in Support of Plaintiff’s Motion for Summary

Judgment (hereinafter “Pl. Mem. I”), at 4-5.

Thereafter, PDA incorporated defendant PCD,‘

and through it provided for the advertisement, mar-

tions or for commercial purposes, other than using

the name and address of any political committee to

solicit contributions from such committee. A political

committee may submit 10 pseudonyms on each report

filed in order to protect against the illegal use of

names and addresses of contributors, provided such

committee attaches a list of such pseudonyms to the

appropriate report. The Clerk, Secretary, or the

Commission shall exclude these lists from the public

record.

2 U.S.C. 3 438(a).

* Defendant explains that PCD was formed in response to

the FEC’s Advisory Opinion in an effort to insulate PDA,

43a

keting, and sale in printed form of various compila-

tions of the individual contributor information gov-

erned by § 438(a) (4). Defendant PCD compiled and

sold two standard written reports: the Congressional

District and the Corporate Affiliation contributors

reports.” These reports contained the names of se-

lected contributors, the amount and recipient of their

contributions, along with the contributors’ city, state

and zip code. The reports did not contain the street

address of the contributors. At the bottom of each

page of the reports, the following caveat appeared:

THIS REPORT MAY NOT BE USED OR

SOLD BY ANY PERSON FOR THE PUR-

POSE OF SOLICITING CONTRIBUTIONS OR

FOR ANY COMMERCIAL PURPOSE.

Defendant PCD also compiled and sold the results of

special computer “runs” of the individual contributor

information, often consisting of a short list of names

and contributions. These short lists were usually

communicated directly over the telephone or trans-

mitted in letters.

the parent company, from any liability that might flow from

an enforcement action brought by the FEC. Deposition of

Benjamin A. Goldman, President of PDA, taken January 8,

1990 (attached as Exhibit 17 to Plaintiff’s Motion to Dismiss)

(hereinafter “Goldman Deposition”), at 27-82; Deposition

of Dr. Jay M. Gould, Chairman of PDA, taken January 3,

1990 (attached as Exhibit 11 to Plaintiff's Motion to Dis-

miss) (hereinafter “Gould Deposition”), at 48-49,

5 The Congressional District Reports broke down the infor-

mation by the 435 congressional districts, while the Corporate

Affiliation Reports analyzed the contributions made by the

officers and high-level employees of the 706 largest corpora-

tions in the United States.

44a

As of June 6, 1987, defendants sold approximately

100 reports ranging in price from $5.00 for a single

report to $776.25 for a combination of reports. They

billed $9,398.76 and received $4,544.73 for their

products as of that date.

On August 2, 1989, the FEC brought this action

for declaratory and injunctive relief plus civil penal-

ties, alleging that PCD violated 2 U.S.C. § 438(a) (4).

Defendant answered on October 2, 1989, asserting

constitutional defenses. PCD has moved for summary

judgment on its defenses, arguing that the FEC’s

construction of that provision conflicts with the First

Amendment and infringes its rights of Equal Pro-

tection; it also contends that the FEC’s interpreta-

tion of the provision is incompatible with the provi-

sion itself and thus should be subject to a narrowing

construction by this Court. The Commission has

cross-moved for summary judgment. The Court first

considers PCD’s challenge to the rationality of the

Agency’s decision, because the Court should “not de-

cide a constitutional question if there is some other

ground upon which to dispose of the case.” Lowe v.

SEC, 472 U.S. 181, 190 (1985) (citations omitted).

DISCUSSION

I. Standards for Summary Judgment

Summary judgment is appropriate where “the

pleadings, depositions, answers to interrogatories and

admissions on file, together with affidavits, if any,

show that there is no genuine issue as to any material

fact and that the moving party is entitled to judg-

ment as a matter of law.” Rule 56(c). In testing

whether the movant has met this burden, the Court

must resolve all ambiguities against the movant.

45a

Lopez v. S.B. Thomas, Inc., 831 F.2d 1184, 1187 (2d

Cir. 1987) (citing United States v. Diebold, Inc.,

369 U.S. 654, 655 (1962) ).

The moving party bears the initial burden of dem-

onstrating the absence of a genuine issue of material

fact. Adickes v. S.H. Kress and Co., 398 U.S. 144,

157 (1970). The movant may discharge this burden

by demonstrating to the Court that there is an ab-

sence of evidence to support the non-moving party’s

case on which that party would have the burden of

proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317,

323 (1986).° The non-moving party then has the

burden of coming forward with “specific facts show-

ing that there is a genuine issue for trial.” Rule

56(e). The non-movant must “do more than simply

show that there is some metaphysical doubt as to the

material facts.” Matsushita Electric Industrial Co.

v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

Speculation, conclusory allegations and mere denials

are not enough to raise genuine issues of fact. To

avoid summary judgment, enough evidence must

favor the non-moving party’s case such that a jury

could return a verdict in its favor. See Anderson v.

Liberty Lobby, 477 U.S. 242, 248 (1986) (interpret-

ing the “genuineness” requirement).

* The moving party may rely on the evidence in the record

to point out the absence of genuine issues of material fact.

Celoter, supra, 477 U.S. at 323. The moving party does not

have the burden of providing evidence to negate the non-

moving party’s claims. Jd. As the Supreme Court recently

noted, “whether the moving party accompanies its summary

judgment motion with affidavits, the motion may, and should,

be granted so long as whatever is before the court demon-

strates that the standard for the entry of summary judgment,

as set forth in Rule 56(c), is satisfied.” Id.

46a

II. FEC’s Interpretation of 2 U.S.C. § 438(a) (4).

Section 438(a) (4) prohibits the sale “for the pur-

pose of soliciting contributions or for commercial

purposes” of information copied from the reports

mandatorily filed by political committees. The Com-

mission determined in its Advisory Opinion 1986-25

that the PCD reports were for commercial purposes

within the meaning of the statute. It also found that

the reports were more like brokers’ lists, which are

forbidden under § 438(a) (4), than like newspaper or

other traditional media publications, which are ex-

cepted, 11 C.F.R. § 104.15. |

Defendant now asks the Court, inter alia, to review |

that determination. PCD admits to selling informa-

tion copied from these reports, but denies that its

activity constituted use for “commercial purposes.”

It argues that the phrase “commercial purposes”

should be narrowly construed to prohibit only using

the lists directly for political solicitations, which PCD

is not alleged to have done.

This Court must defer to an agency’s reasonable

construction of its own enabling legislation, absent

‘inconsistency with an Act of Congress. Chevron,

USA v. Natural Resources Defense Council, 467 U.S.

837, 843-44 (1984) (question properly before district

court is not whether in its view the regulation is

inappropriate in the general context of the regulatory

program in question, but whether the Administrator’s

view that it is appropriate in the context of the pro-

gram is a reasonable one).

Consistent with Chevron, this Court will accord

deference to the FEC’s interpretation of its own

enabling legislation, the FECA. The FEC is “pre-

cisely the type of agency to which deference should

a

47a

presumptively be afforded.” FEC v. Democratic Sen-

atorial Campaign Committee, 454 U.S. 27, 37, 39

1981) (Court need only find that Commission’s con-

struction of statute is “sufficiently reasonable”) ;

accord Common Cause v. FEC, 842 F.2d 436, 448

(D.C. Cir. 1988) (deference particularly appropriate

in context of FECA, which explicitly relies on the

bipartisan Commission as its primary enforcer) ; see

also FEC v. Ted Haley Congressional Committee, 852

F.2d 1111, 1115 (9th Cir. 1988) (defer to FEC un-

less demonstrably irrational or clearly contrary to

plain meaning of statute) ; Orloski v. FEC, 795 F.2d

156, 164-67 (D.C. Cir. 1986) (according FEC’s in-

terpretation of the Act “considerable deference”).

Therefore, the Court will limit its inquiry to

whether the FEC’s determination that PCD’s activity

violates the Act is a reasonable one. It will review

the FEC determinations: (1) that the “commercial

purpose” language contained in the Act includes

activity other than direct political solicitations; (2)

that PDA’s sale of the information gathered from

the FEC’s reports is among the forbidden commercial

purposes; and (3) that PDA’s activity does not fall

within the media exception embodied in 11 C.F.R.

§ 104.15(c). Advisory Opinion 1986-25 at 4-5.

A. Breadth of the “Commercial Purpose” Provision

The Court first turns its attention to the FEC’s

finding that the “commercial purpose” language con-

tained in the Act may be construed to include certain

for-profit activity other than direct political solicita-

tion. In light of the legislative history of the provi-

sion, this conclusion appears to be well-founded.

48a

Senator Bellmon offered the present § 438(a) (4)

as an amendment on the floor of the Senate while a

number of amendments to the Act were being con-

sidered in 1974. He stated that the proviso’s purpose

“is to protect the privacy of the generally very public-

spirited citizens who make a contribution to a politi-

cal campaign or a political party.” 117 Cong. Rec.

30057, col. 3 (1971). Senator Belimon continued:

We all know how much of a business the matter

of selling lists and list brokering has become.

These names would certainly be prime prospects

for all kinds of solicitations, and I am of the

opinion that unless this amendment is adopted,

we will open up the citizens who are generous

and public spirited enough to support our politi-

cal activities to all kind of harassment, and in

that way tend to discourage them from helping

out as we need to have them do.

Id. In answer to a question from Senator Nelson,

Senator Bellmon further explained:

In the State of Oklahoma, our own tax d’vision

sells the names of new car buyers to list brokers,

for example, and I am sure similar practices are

widespread elsewhere. This amendment is in-

tended to protect, at least to some degree, the

men and women who make contributions to can-

didates or political parties from being victimized

by that practice.

117 Cong. Rec. 30058, col. 1. Senate discussion of

the amendment concluded with this exchange:

MR. NELSON: Do I understand that the only

purpose [of the amendment] is to prohibit the

lists from being used for commercial purposes?

49a

MR. BELLMON: That is correct.

MR. NELSON: The list is a public document,

however.

MR. BELLMON: That is correct.

MR. NELSON: And newspapers may, if they

wish, run lists of contributors and amounts.

MR. BELLMON: That is right; but the list

brokers, under this amendment, would be pro-

hibited from selling the list or using it for com-

mercial purposes.

Id. The amendment passed by a voice vote. Id.

Defendant argues that the FEC’s interpretation of

“commercial purposes” to include PCD’s activity is

unreasonable. PCD would instead have the Court

narrow the FEC’s interpretation so that the statute

would prohibit only the sale and use of contributor

lists by commercial “list-brokers.” Def. Mem. I at

17. It cites the above-quoted legislative history for

the limited proposition that the Bellmon amendment

“was designed to address one specific problem—the

sale and use of contributor lists by commercial ‘list-

brokers’—and nothing more.” Id. (emphasis added) ;

see also Def. Mem. I at 43.

The Court reviews the Commission’s determination

embodied in Advisory Opinion 1986-25 only for its

reasonableness and not for wisdom. PCD’s proposed

narrower reading is both unpersuasive and unneces-

sary. A review of all of Senator Bellmon’s remarks

shows that he was concerned that the reporting provi-

sions would open campaign contributors to a variety

of solicitations. not just direct political solicitations.

50a

See 107 Cong. Rec. 30057, Col. 3, supra (“these

names would certainly be prime prospects for all

kinds of solicitations’; “unless this amendment is

adopted, we will open up [contributors] to all kind

of harassment”) (emphases added).’ Under the

standards of due deference set forth in Chevron,

supra, 467 U.S. at 843-44, and in light of the Senate

floor debate recounted above, the Commission’s inter-

pretation is eminently reasonable. There is no cause

to limit the FEC to PDA’s cramped reading of the

Act, and the Court will not substitute its own judg-

ment for that of the Agency.

B. PCD Lists and the “Commercial Purposes”

Prohibition

The FEC has determined in its Advisory Opinion °

that PCD’s sales of its reports violate § 438(a) (4)

because they are for a “commercial purpose.” The

Commission ruled that the company’s status as a for-

profit corporation raises a presumption of commer-

cial purpose. Advisory Opinion 1986-25, at 4. The

™The Court also notes that when Congress undertook to

amend section 438(a) (4) in 1979, it did not disturb the Com-

mission’s broad construction of the “commercial purposes”

provision, which was in all relevant respects the same as now.

Pl. Mem. II at 4 & n.3 (citing 11 C.F.R. § 104.13 (1977);

H.R. Rep. 422, 96th Cong., 1st Sess. 23 (1979), reprinted in

FEC Legislative History of the Federal Election Campaign

Act Amendments of 1979 (1983) at 207).

8 The Court refers to PDA and PCD interchangeably when

discussing the FEC’s findings regarding the reports. PCD’s

alleged conduct is identical to that proposed by PDA at the

time of the request for an advisory opinion, but PCD was not

yet formed. PCD is the only named defendant in this action.

S5la

FEC noted defendant’s “plans to sell its lists to ‘all

who wish to buy them.’” Jd. PCD has responded,

both during the FEC investigation and during this

litigation, that the information is to be marketed and

sold primarily to public interest and nonprofit groups,

researchers and journalists at low costs. It argues

that although nominally for-profit,’ it has never ac-

tually turned a profit on its product, because the lists

are provided to nonprofit, nonpartisan groups at a

reduced price. See Goldman Deposition at 47. The

FEC determined that these statements do “not negate

this presumption of commercial purpose.” Advisory

Opinion 1986-25 at 4. The Commission concluded that

PCD’s activities are proscribed by the “commercial

purposes” provision of § 438(a) (4). Id.

In National Republican Congressional Committee

v. Legi-Tech Corp., 795 F.2d 190, 191 (D.C. Cir.

1986), the National Republican Congressional Com-

mittee (“NRCC”) challenged the activities of defend-

ant’s Campaign Contribution Tracking Service, a

product much like PCD’s, which copied contributor

information from the Commission and sold it for a

profit. At that time, the FEC had yet to rule on

whether such services violate § 438(a) (4), or instead

whether they would fall under the media exception

carved out by 11 C.F.R. § 104.15(c). The D.C. Cir-

cuit specifically left the question open, characterizing

the issue as a “gap” which Congress left for the FEC

to fill. 795 F.2d at 193; see Chevron, supra, 467 U.S.

at 843-44 (Congress explicitly leaving gap for agency

® Defendant also notes that 25% of PDA’s shares are owned

by the Council on Economic Priorities, a non-profit group

whose principal is Jay Gould. Gould is the Chairman of PDA.

Gould Dep., at 6.

52a

to fill constitutes express delegation of authority to

elucidate provision by regulation). It noted:

The record before us fails to identify the sub-

scribers to Legi-Tech’s new Tracking Service.

Furthermore, we do not know whether the FEC

would deem Legi-Tech’s communications to be

‘similar’ to those of a newspaper or how the FEC

would apply its ‘principal purpose’ test to these

facts. In light of the deference that must be ac-

corded the FEC’s interpretation of its own stat-

ute (and indeed its own regulation), any attempt

on our part to resolve the present controversy

would require judicial speculation as to the Com-

mission’s views. 7

Legi-Tech, supra, 795 F.2d at 193.

In the Agency proceedings underlying the instant

litigation, the FEC filled that gap. It ruled that

“copying and selling compilations comprised pri-

marily of individual contributor names is prohibited

by the Act.” Advisory Opinion 1986-25 at 5. The

Court now inquires whether there are genuine issues

of material fact going to whether that resolution is

arbitrary, capricious, or contrary to the statute.

Chevron, supra, 467 U.S. at 844. It concludes that

there are no such issues.

The Commission is entitled to rely on PCD’s for-

profit status as an indicator of its commercial pur-

pose. The fact that PCD has not turned a profit on

its product at this time does not indicate that it

would not in the future, or does not intend to do so.

PCD’s own Chairman, Dr. Jay Gould, indicated at

his deposition that although PDA had not yet been

profitable, he was “still hopeful that in the long term

53a

it has a very viable future ... PDA is only four years

old so we have another possibly five, six years to go.”

Gould Deposition, at 11; see id. at 19-20 (“it would

be wonderful if some day [the burden of raising

money for his business] could be alleviated by the

prospect of earning revenues, and it’s beginning to

happen”); see also Goldman Deposition at 26 (‘‘we |

certainly hoped to receive income that would cover

the cost for producing this and would have certainly

enjoyed any additional income, but we didn’t’).

Although the Court does not doubt the sincerity of

PDA Chairman Gould’s stated public-interest orien-

tation,” his intent and that of PDA/PCD is not at

issue. The critical point, rather, is that the company

is engaged in a commercial venture using informa-

10 The Certificates of Incorporation of PDA and PCD read

in relevant part as follows:

The purposes for which the corporation is formed are: ...

+ * * * *

To provide economic information of public interest,

taken from federal, state or other public files, and to edit,

interpret and disseminate such information in the form

of computer printouts, publications, diskettes and online

retrieval for both private and public sector use.

PDA Certificate of Incorporation, Paragraph SECOND (at-

tached as Exhibit 2 to Plaintiff’s Motion for Summary Judg-

ment); PCD Certificate of Incorporation, Paragraph SEC-

OND (attached as Exhibit 8 to Plaintiff’s Motion for Sum-

mary Judgment).

Dr. Gould indicates that through this business he wishes

to foster greater public access to information regarding the

interrelationships among donors, corporations, and congres-

sional districts. He is interested in the issue of campaign

finance from a public policy perspective. Gould Dep. at 21,

24, 26.

eae

54a

tion copied from the FEC reports. The depositions

of the principals indicate that the companies formu-

lated a complex pricing schedule and hired market-

ing consultants to help target likely purchasers. Gold-

man Deposition at 18-26. While PCD protests that

it also gave reports away or sold them at nominal

cost to nonprofit organizations, those numbers are

quite small: PCD’s invoice list names approximately

105 different customers who purchased its reports,

whereas PDA president Goldman points out that it

gave away reports to 6-12 journalists and “a few”

persons in nonprofit or academic settings. Goldman

Deposition at 44, 47.

The Commission has made the required showing

that there [is] no evidence to support defendant’s con-

tention of the unreasonableness of the FEC’s conclu-

sion regarding commercial purpose. Celotex, supra,

477 U.S. at 323.

C. Applicability of the Media Exception to PCD

Reports

Once the Commission determines that defendant’s

activity is for a commercial purpose, a potential dis-

tributor of FEC contributor information, such as

PCD, may attempt to fit under the exception for

“newspapers, magazines, books, or other similar com-

munications.” 11 C.F.R. § 104.15(c). The FEC con-

siders that the “ ‘commercial purpose’ prohibition

does not preclude the communication of contributor

information by” news media, so long as that use is

“incident to” the sale of these publications. Advisory

Opinion 1986-65 at 4.

The FEC ruled that PDA’s use of contributor in-

formation in its reports “is not merely incident to

55a

their sales but is the primary focus of PDA’s activ-

ity.” Id. In support of this ruling, the Commission

pointed to the fact that the reports are “compilations

composed primarily, if not exclusively, of individual

contributor information and incorporating nearly all

of the identification of individual contributors re-

ported to the Commission. . . .” Jd. The Commission

took notice of defendant’s statements that its purpose

is to further research and reporting on patterns of

political contributions, and noted its placement of the

warning on each page of the reports; but the Opinion

continued on to say that the FEC “does not view

[these factors] as determinative of the principal pur-

pose requirement” of §104.15(c). Id. The FEC

reasoned that PCD’s lists would have value to list

owners, managers[,] brokers and others, and that

they are “essentially indistinguishable” from those of

a list broker used for soliciting contributions or for

commercial purposes. Id., at 4-5.

PCD disputes this finding, maintaining that the

commercial value of the lists is severely diminished,

if not destroyed, by the omission of street addresses

from the list,’ the “salting” provisions of the report-

ing requirement,” and the warnings on each page

1 PCD apparently never received the addresses of contribu-

tors from the FEC. Defendant’s response to Interrogatories

before the FEC, § 2 n.1, dated June 6, 1987 (attached as Ex-

hibit 11 to Plaintiff’s Motion for Summary Judgment).

12 Tn 1980 Congress added a “salting provision,” which ap-

pears in the final two sentences of the current version of

§ 438(a) (4). That amendment provides:

A political committee may submit 10 pseudonyms on each

report filed in order to protect against the illegal use of

the names and addresses of contributors, provided such

56a

that the information contained therein is not to be

reproduced for commercial purposes.

The Court finds no factual question concerning the

reasonableness of the Commission’s conclusion that

the FEC contributor information contained in PCD’s

reports is not incident to the sales but is the primary

focus. Donor lists are an extremely valuable asset to

political committees, “created through an expensive

and laborious process of targeting and soliciting

likely contributors.” Legi-Tech, supra, 795 F.2d at

191 (referring to plaintiff NRCC’s donor list as its

“principal business asset”); see also Affidavit of

Wyatt A. Stewart III, Director of Finance and Ad-

ministration Division, National Republican Congres-

sional Committee (Attached as Exhibit 25 to Plain-

tiff’s Reply Mem.) (hereinafter “Stewart Aff.’’), at

{| 9-14 (describing multi-step process of developing

and protecting NRCC’s mailing lists); Babcock,

“Mailing Lists of ’88 Contributors are Future Assets

for Kemp, Robertson,” Washington Post, March 13,

1988, at Al4 (Attached as Exhibit 26 to Pl. Mem.

II) (referring to donor lists in the 100,000-name

range as “tangible asset[s]” of a campaign commit-

tee). Sixty-four of the 105 reports that PCD sold

committee attaches a list of such pseudonyms to the ap-

propriate report. The Clerk, Secretary, or the Commis-

sion shall exclude these lists from the public record.

See Pub. L. 97-187, § 109 (1980). The amendment “allows a

committee to ‘salt’ the reports it files under the Act as a means

of determining whether the names and addresses of its con-

tributors are being used illegally.” H.R. Rep. No. 96-522,

96th Cong., Ist Sess. 23-24 (1979).

PCD argues that the FEC has not been able to point to a

single instance where a pseudonymous entity receive a solici-

tation as a result of the distribution of PCD reports.

57a

were issued directly to campaign committees of po-

litical parties or candidates, and another eight went

to political consultants. These two categories alone

constituted two-thirds of PCD’s customers. Summary

of PCD Purchasers, Annexed as Attachment 2 to

Affidavit of Shelley Garr, FEC Paralegal Specialist,

at 1.° The FEC has submitted uncontested evidence

that several of the twenty-six PCD customers which

the Commission was able to contact did in fact pur-

chase the lists for solicitation purposes. One PCD

customer, the Secretary and Treasurer of a political

campaign committee, indicated in response to an

FEC subpoena that the lists were not used for solici-

tation purposes because fundraising became unneces-

sary after the list was received in August 1986; how-

ever, he indicated that the lists “would have been

used to solicit money for future campaigns.” Letter

of Fred Baier, Jr. to Lawrence M. Noble, General

Counsel, FEC, dated June 24, 1988 (attached as Ex-

hibit 13 to Plaintiff’s Motion for Summary Judg-

ment). Another customer, of unstated relationship to

the Democratic Party, indicated that he purchased

PCD product in the hope that it “might prove useful

in support of the party’s fundraising efforts.” He

ultimately decided not to use the information for

solicitation purposes. He noied the disclaimer, the

absence of mailing addresses, and the fact that only

large contributors ($500 or more) were listed and

that those people were for the most part already

known to the Party or were Republicans who could

18 Defendant does not challenge Garr’s categorization of

any of these customers. The Court notes that these numbers

do not reflect the 6-12 reports that were provided to journal-

ists, and the “few” others that went to academics or non-

profit organizations gratis.

58a

not be expected to provide funds to the party. Letter

of Robert F. Bauer, Counsel to Hal Kilshaw, to

Lawrence M. Noble, General Counsel, FEC, dated

August 4, 1988, at 2.

Defendant proffers the testimony of the journalist

Edward Zuckerman and political consultant John

Podesta in support of the proposition that using

PCD’s reports for political or commercial solicita-

tions would not be economically feasible. Affidavit of

Edward Zuckerman, Editor and Publisher of PACs

& Lobbies, attached as Exhibit 8 to Defendant’s Mo-

tion for Summary Judgment (hereinafter “Zucker-

man Aff.”), at 719-20; Affidavit of John D. Po-

desta, Vice President and General Counsel, Podesta

Associates, Inc., attached as Exhibit 8 to Defendant’s

Motion for Summary Judgment (hereinafter ‘“Po-

desta Aff.’”’), at { 11. The Court considers this testi-

mony as speculative, because Zuckerman is not a

political fundraiser and Podesta does not have first-

hand experience working with PCD reports. Zucker-

man Aff., 1 1-4; Podesta Aff. { 8. Such speculation

is, of course, insufficient to raise genuine issues of

fact. Matsushita Electric Industrial Co., supra, 475

U.S. at 586. Moreover, even accepting their tesimony

as true, the theory for which it stands does not defeat

plaintiff's summary judgment motion. The mere

availability of cheaper and more accessible substi-

tutes would not excuse PCD’s product from compli-

ance with § 438(a)(4) if it were otherwise pro-

hibited under the statute.

For summary judgment purposes, the uncontested

record supports as reasonable the Commission’s con-

clusion that PCD’s product does not fall under the

§ 104.15(c) exception. Any inherent limitations on

the reports’ commercial value can be easily overcome

using techniques common in fundraising circles. For

59a

example, the missing addresses and phone numbers

from PCD’s lists may be supplied from other sources.

PCD’s Answers to Interrogatories, attached as Ex-

hibit 11 to Plaintiff’s Motion for Summary Judgment,

at 10. Also, PCD reports may be used as a cross-

check to update and correct other lists. Goldman Dep-

osition at 52 (PCD corrected transposed zip codes and

standardized corporate spellings and other informa-

tion); Advisory Opinion 1986-25 at 4-5; see also

FEC v. American International Demographic Serv-

ices, Inc., 629 F. Supp. 317 (E.D. Va. 1986) (“com-

mercial purpose” provision prohibits copying and

selling lists incorporating nearly all identification in-

formation, because of comparison value) ; Advisory

Opinion 1985-16 (use of contributor information to

update or correct solicitation or mailing lists or other-

wise to enhance their commercial value prohibited).

Similarly, the lists have value in that they may be

used to remind fundraisers of potential donors whose

addresses they already know. FEC Exhibit 18 at 24-

25."

* PCD so states in its answers to interrogatories; but its

Chairman, Jay Gould, indicates that in his opinion it would

be very difficult and uneconomical to match the names on

PCD reports, which are organized by Congressional District

and zip code, with the telephone book, which is otherwise

organized. Gould Dep., at 76-78, 81-83.

% There is also uncontested evidence on the record that

PCD’s marketing agent targeted groups which perform sub-

stantial political solicitation activities. These “obvious key

markets for PDA data” included committees registered with

the FEC; state and local candidates; incumbent office holders;

and lobbyists/trade groups/party committees. The fifth group

was Baron Report/Cook Political Report/CQ subs. Memo-

randum of Sean Strub, Strub/Collins Inc., to Mike Tanzer,

60a

The “salting” provisions are not of much assistance

to PCD’s argument because of the small numbers

involved. Of the approximately 250,000 contributions

that were reported to the FEC during the 1983-84

election cycle, the period which PCD’s lists covered,

each committee could use only a maximum of 10 such

names, and some used none. Pl. Mem. II at 7 n.5

(citing 2 U.S.C. § 438(a)(4)). Therefore, the likeli-

hood of any such “seed” appearing on a PCD list was

relatively small.

The fact that non-fundraisers might also find PCD’s

lists to be useful is quite beside the point.** Even

principal of PDA, dated May 21, 1986 (attached as Exhibit

22 to Plaintiff’s Motion for Summary Judgment, at 1.) The

Court cannot but conclude that even PCD’s own marketing

consultants believed that these data would be useful for com-

mercial and/or solicitation purposes,

16Qne academic has submitted an affidavit on behalf of

defendant indicating that, although he himself has not used

PCD reports in his political science research, the reports could

be of value to academics who study patterns of contributions

in federal elections. Affidavit of Dr. Herbert Alexander, at-

tached as Unnumbered Exhibit to Defendant’s Motion for

Summary Judgment (hereinafter “Alexander Affidavit,’”) at

77 13, 14. On the other hand, another of PCD’s academician-

customers who was contacted by the Commission did not find

the reports particularly interesting or useful, and therefore

discarded them. FEC Exhibit 13 at 15.

Defendant also submitted the affidavit of a journalist who

indicated that the PCD reports were “invaluable” in his field,

and gave several examples of how they could be used by jour-

nalists for non-commercial purposes. Zuckerman Aff. {{ 9,

13-14, 17 et passim. Similarly, PCD submitted an affidavit

from a political consultant who indicates that although he

himself has not used PCD reports, he is of the opinion that

PCD reports could be useful in conducting opposition research.

Podesta Aff. at {/] 7-10.

6la

giving the benefit of the doubt to the testimony of

defendant’s witnesses, as is required on plaintiff’s

summary judgment motion, the mere fact that the

reports could be used for a non-violative purpose does

not raise a genuine issue of fact as to whether they

are prohibited under § 438(a)(4). Regardless of to

whom PCD prefers or anticipates selling its reports,

the record indicates that most of PCD’s customers

were in fact political consultants, campaigns or com-

mittees, and that relatively few were academics or

journalists. PCD Customer List, attached as Exhibit

12 to Plaintiff’s Motion to Dismiss. The Court is not

even so much concerned with whether the campaign

committees that received PCD reports actually used

the lists for solicitation purposes; more to the point

is these entities’ predominance among PCD customers,

which belies PCD’s statement that the reports are of

interest “only to those involved in analyzing the role

of contributions in the political process.” Def. Mem.

I at 8; see Def. Mem. II at 21.

Moreover, examining the legislative history, the

Court is unable to say as a matter of law that the

Commission’s construction of the media exception as

not including PCD’s activity is unreasonable. The

Commission construes § 104.15(c) to except media

use of contributor information in such contexts as

news stories, commentaries, or editorials. Jd. (citing

117 Cong. Ree. $30,058 (daily ed. Aug. 5, 1971)

(remarks of Sen. Nelson), reprinted in FEC, Legisla-

tive History of the Federal Election Campaign Act of

1971 at 582 (1981) and Legi-Tech, supra). Turning

again to the transcript of the Senate floor debate,

Senators Nelson and Bellmon expressed the view. that

despite the prohibition on commercial use of con-

62a

tributor information, newspapers ought to be able-to

present this information to the public. 117 Cong. Rec.

S30058. The Commission concluded that the PCD re-

ports, which virtually duplicate the FEC files ver-

batim, do not principally serve the purpose contem-

plated in the legislative history of the amendment.

There are no factual issues which would prevent the

Court from holding that this conclusion is reasonable,

and the Court declines to disturb the FEC’s determi-

nation in this respect.

III. Constitutional Challenges ™

A. First Amendment

PCD’s First Amendment challenge is directed at

§ 438(a)(4). Defendant argues that any prohibition

on publishing contributor lists, such as the one found

here for commercial purposes, is an “unlawful re-

straint on publishing lawfully obtained truthful infor-

mation... .” Def. Mem. I at 24 (citing Smith v.

Daily Mail Publishing Co., 443 U.S. 97, 101-02

(1979) ; Landmark Communications Inc. v. Virginia,

435 U.S. 829, 838 (1978); Oklahoma Publishing Co.

v. District Court, 430 U.S. 308 (1977); Cox Broad-

casting Co. v. Cohn, 420 U.S. 469, 495 (1975) ); Def.

Mem. II at 3 (citing The Florida Star v. B.J.F., ——

U.S. ——, 109 S. Ct. 2603, 2607-13 (1989) ).

It is well-settled that commercial speech is subject

to diminished first-amendment protection. ‘“Communi-

cation in a commercial setting may be subjected to

regulation that ordinarily would be impermissible in

a public forum.” Lowe v. SEC, 472 U.S. 181, 182

17 The Court considers these issues de novo.

63a

(1985) (citing Ohralik v. Ohio State Bar Assn., 436

U.S. 447, 456 (1978)). The Supreme Court has rec-

ognized that the Government “does not lose its power

to regulate commercial activity deemed harmful to the

public whenever speech is a component of that ac-

tivity.” Ohrahk, supra, 436 U.S. at 456.

Under this lower standard, PCD cannot success-

fully invoke First Amendment protection for its re-

ports. The cases upon which PCD primarily relies

are distinguishable in that they stand for the rights

of traditional news organizations against various state

interests that sought to enjoin widespread publication

of certain information. See, e.g., Smith v. Daily Mail

Publishing Co., supra, 443 U.S. at 101-102 (state

cannot forbid newspapers from publishing otherwise

public name of youth charged as juvenile offender) ;

Oklahoma Publishing, supra, 430 U.S. at 311 (simi-

larly) ; Cox Broadcasting, supra, 420 U.S. at 495 (re-

versing judgment of liability against news reporter

for disclosing rape victim’s name, obtained from

publicly-available court files); Florida Star, supra,

109 S. Ct. at 2607 (similarly). Here, by contrast,

the Commission specifically provides for traditional

news media to publish the information contained in

FEC files so long as the use of that information is

“incident to the sale of such communications,” and

the “principal purpose” of the communications is not

to communicate any contributor information for solic-

itation or other commercial purpose. 11 C.F.R.

§ 104.15 (c)."

18 Obviously, this distinction is contingent on the outcome

of PCD’s Equal Protection challenge, based on the Commis-

sion’s differential treatment of PCD and the “traditional

media,” post.

64a

The purpose of the statute, as discussed ante, is to

prevent harassment of political contributors as a result

of the Act’s disclosure provisions. In enacting FECA,

which seeks to enhance the integrity of the electoral

process, Congress struck a delicate balance between

competing considerations of public disclosure, privacy

and free speech. Buckley v. Valeo, 424 U.S. 1, 64

(1976). The Court recognized that “compelled dis-

closure, in itself, can seriously infringe on privacy

of association and belief guaranteed by the First

Amendment.” Jd. Congress has required committees

to report the names of contributors, and the Court

has upheld that provision against challenges based

on privacy of association and belief. Jd. Recognizing

the potential associational and privacy concerns con-

nected with such a disclosure requirement, it is cer-

tainly rational for Congress to limit certain uses of

that information through the Bellmon Amendment.

PCD emphasizes the ease with which a contributor

may discard any such unwanted solicitations as might

result from commercial publication of the FECA lists.

See, e.g., Def. Mem. I at 26 (describing the interest in

freedom from the nuisance of having to throw away

unwanted commercial solicitations as “trivial” and

“weak’’).”* This formulation of the issue misses the

12PCD remarks that this interest is “much too weak to

justify a blanket restraint on speech.” Def. Mem. I at 26.

However, the provision provides no such “blanket restraint,”

as is evidenced by the final substantive passage of the Ad-

visory Opinion, which provides as follows:

PDA’s use of the contributor information in its database

for academic research projects may be permissible, as

long as this activity does not involve the sale or use of

contributor information for the purpose of soliciting con-

tributions or for other commercial purposes. [Citations

j

:

65a

point. As Senator Bellmon observed, contributors

might be dissuaded from making any such contribu-

tions if they knew that their identities would be

reported to a governmental clearing house for sale to

other hopefuls.

The provision serves rational economic ends as well.

Through this provision, Congress expressed its legiti-

mate concern that a contribution to one political com-

mittee represents one fewer contribution to another.

See Pl. Mem. II at 20 n.17 (“the more times a denor

is solicited and donates the less likely that donor is

to give again”) (citing Stewart Aff., at { 15; Hunt-

singer, “Direct Mail: Sweeping Changes Since 1969,”

Fundraising Management, April 1989, at 64-66 (re-

ferring to direct mail fundraising as a “finite

market”) ). It is perfectly reasonable for Congress

to prohibit private businesses from using this infor-

mation to the detriment of the committees who report

to the FEC under mand:te. This “zero-sum” situation

distinguishes the present facts from those in the

cases cited by defendant. See, e.g., Shapero v. Ken-

tucky Bar Ass’n, 486 U.S. 466 (1988) (striking down

ban on mailings by lawyers to consumers) ; Consoli-

dated Edison Co. v. Public Service Comm'n of New

York, 447 U.S. 530, 542 (1980) (overturning order

which forbade utilities from including “bill inserts”

addressing public issues); Lamont v. Commissioner

of Motor Vehicles, 269 F. Supp. 880 (S.D.N.Y.)

(denying attempt to enjoin Commissioner of Motor

omitted] Since PDA has not described a specific research

project, however, this opinion should not be relied upon

as approving any particular research activity. [citations

omitted].

Advisory Opinion 1986-25 at 5.

66a

Vehicles to sell automobile registration records to po-

tential advertisers), aff'd, 386 F.2d 449 (2d Cir.

1967), cert. denied, 891 U.S. 915 (1968).

Moreover, there are many other available routes by

which this information circulates. The Commission

supplies the information free of charge to all comers;

it permits traditional media sources to publish the

information if it is incident to their profitmaking

activities; and the Commission permits unrestricted

use or sale of contributor information copied from its

files for academic research, “criticism, comment,

{and] news reporting.” Pl. Mem. I at 30 (quoting

Legi-Tech, supra, 795 F.2d at 192) ; Advisory Opinion

1986-25 at 5. Commercially-oriented firms may also

obtain this information themselves from the reporting

committees, on whatever terms they choose to negoti-

ate, and do with that information what they will.”

There is no factual issue precluding this Court from

holding that the “commercial purposes” provision

serves a rational purpose and does not impermissibly

infringe on any cognizable free speech rights.

20 Additionally, the Commission expressly permits a political

committee to post copies of reports of receipts and expendi-

tures which were filed with the Commission, Advisory Opin-

ion 1988-2 [75910], 2 Fed. Elec. Camp. Fin. Guide (CCH)

[7 5910], and permits candidates for federal office to contact

individual contributors listed on the reports filed by a politi-

cal committee to inform them that the committee was un-

authorized. Advisory Opinion 1984-2, reprinted in 2 Fed.

Elec. Camp. Fin. Guide (CCH) 75748 (Feb. 14, 1984). It

also permits candidates to use FEC lists to contact an oppo-

nent’s contributors to correct allegedly defamatory statements

made by the opponent. Advisory Opinion 1981-4, 1 Fed. Elec.

Camp. Fin. Guide (CCH) [{ 5590].

67a

B. Equal Protection

The FEC has promulgated a regulation excepting

newspapers, magazines, books or other similar com-

munications from the proscription on use or sale of

the information collected in the political contributor

lists. 11 C.F.R. § 104.15. The rule allows these tra-

ditional media sources to use the information so long

as the use is “incident to the sale of such com-

munications,” and the “principal purpose” of the

communications is other than to communicate con-

tributor information for solicitation or other com-

mercial purposes.** Id. (citing 117 Cong. Ree.

$30,058 (daily ed. Aug. 5, 1971) (remarks of Sen.

Nelson), reprinted in FEC, Legislative History of the

Federal Election Campaign Act of 1971 582 (1981) ;

Legi-Tech, supra, 795 F.2d at 192). If the principal

object of such communications is to communicate con-

tributor information for solicitation or other com-

mercial purpose, the use is impermissible. Jd. The

FEC ruled that PDA’s intended use of contributor

information does not fall into the “newspapers, maga-

zines, books or other communications” exception prom-

ulgated in 11 C.F.R. § 104.15(c), because the lists

are not merely incident to their sales but are the

primary focus of PDA’s activity. Id. at 4.

PCD challenges the constitutionality of the regula-

tion from the standpoint of the Equal Protection

Clause of the Fourteenth Amendment, as_ back-

incorporated against the Federal Government by the

Fifth Amendment Due Process Clause. Johnson v.

Robison, 415 U.S. 361, 364 n.4 (1974). It contends

that by allowing traditional media sources to pub-

21 This distinction was found appropriate in Legi-Tech,

supra, and codified at 11 C.F.R. 104,15(c).

68a

lish information reported to the FEC while forbid-

ding non-media firms from doing the same, the

Agency is engaging in constitutionally impermissible

favoritism. It cites several cases for the proposition

that the government “may not grant the use of a

forum to people whose views its [sic] finds accept-

able, but deny use to those wishing to express less

favored or more conventional views.” Def. Mem. I

at 36 (quoting Carey v. Brown, 447 U.S. 455, 461-62

(1980); and citing First National Bank of Boston v.

Bellotti, 485 U.S. 765, 785-86 (1978); Consolidated

Edison, supra, 447 U.S. at 537-38). PCD also con-

tests the Commission’s ability evenhandedly to deter-

mine the publisher’s “‘principal purpose,” citing cases

for the proposition that the Government should not

be in the business of examining the content of publi-

cations. Def. Mem. I at 38. Finally, PCD argues

that the press should enjoy no greater access to gov-

ernment information than that of the general public.

Id., 39-40.

At the outset the Court notes that even if it were

to find PCD’s Equal Protection arguments availing,

such would not necessarily help PCD. For if the

Court were to strike down the newspapers exception

to § 438(a) (4), the proscription on “commercial pur-

poses” use would remain intact. PCD’s argument, if

successful, might only stop newspapers from publish-

ing this information, and would not necessarily es-

tablish PCD’s right to sell the information.

In any event, the Court would find the Equal Pro-

tection arguments unavailing. The Supreme Court

recently upheld a media exemption to a state statute

prohibiting the expenditure of general corporate

treasury funds on candidate elections. Austin v.

69a

Michigan Chamber of Commerce, US. —,

110 S. Ct. 1391, 108 L. Ed. 2d 652, 1999 US LEXIS

1665 (1990), presented a challenge to the State of

Michigan’s Campaign Finance Act. That Act, inter

alia, prohibited corporations from expending general

treasury funds for independent expenditures in sup-

port of political candidates. The Act excluded from

the definition of “expenditure” any “expenditure by

a broadcasting station, newspaper, magazine, and

other periodical or publication for any news story,

commentary, or editorial in support of or opposition

to a candidate for elective office . . . in the regular

course of publication or broadcasting.” Jd. at 1401

(citing Mich. Comp. Laws § 169.206(3) (d)) (foot-

note omitted). The Court, applying a “compelling

state purpose” test, upheld the disparate treatment.

It reasoned that

media corporations differ Significantly from

other corporations in that their resources are

devoted to the collection of information and its

dissemination to the public. We have consist-

ently recognized the unique role that the press

plays in ‘informing and educating the public,

offering criticism, and providing a forum for

discussion and debate.’

Id. at 1401-02 (quoting Bellotti, supra, 435 U.S. at

781) (other citation omitted). The Court concluded

that the media exemption from the campaign expen-

diture law does not offend the Equal Protection

Clause:

A valid distinction thus exists between corpora-

tions that are part of the media industry and

70a

other corporations that are not involved in the

regular business of imparting news to the public.

Id. at 1402.

The Court finds this analysis equally applicable to

the case at bar. The provision at issue imposes fewer

restrictions on the expression of traditional media

businesses than on certain other businesses, namely,

PCD’s report-selling operation. This distinction, how-

ever, is justified by a compelling governmental inter-

est in assuring that the disclosure purposes of the

Act are not frustrated by the protective device of

§ 438(a) (4). Like in Austin, the press in this case

plays a “unique role” in the context of campaign

finance, “informing and educating the public, offer-

ing criticism, and providing a forum for discussion

and debate.” Jd. at 140. These concerns have already

been upheld by the Supreme Court as suvstantial

governmental interests. In Buckley v. Ve‘ex supra,

424 U.S. at 60-85, the Court identified these viterests

as follows:

First, disclosure provides the electorate with in-

formation ‘as to where political campaign money

comes from and how it is spent by the candidate’

in order to aid the voters in evaluating those

who seek federal office.

* * *

Second, disclosure requirements deter actual cor-

ruption and avoid the appearance of corruption

by exposing large contributions and expenditures

to the light of publicity.

* * *

Third, and not least significant, recordkeeping,

reporting and disclosure requirements are an es-

RS ar Ae AE Os wee eee

Tla

sential means of gathering the data necessary to

detect violations of the contribution limitations

described above.

Id. at 66-68 (citations and footnotes omitted).

It is constitutionaily permissible for Congress and

the FEC to have concluded that these interests would

be thwarted if media were not excepted from § 438

(a)(4), but are not substantially threatened by the

exclusion of other publication of contributor informa-

tion for commercial purposes. Accordingly, the rule

excepting traditiona! media from § 438(a) (4) satis-

fies substantial governmental interests.

None of the defendant’s theories convince the

Court otherwise. The cases it cites in support of its

first and second theories are all distinguishable in

that the statutory schemes there in question look to

the nature of the communication in granting the use

of a forum to a specific class of speakers. See, e.g.,

Carey v. Brown, supra, 447 U.S. at 462-63 (strik-

ing down statute prohibiting picketing of residences

but exempting peaceful labor disputes); First Na-

tional Bank v. Bellotti, supra, 435 U.S. at 784 (state

may not prohibit corporations from communicating

to public its views not “materially affecting” cor-

porate business); Consolidated Edison, supra, 447

U.S. at 537-88 (declaring unconstitutional Public

Service Commission order prohibiting inclusion in

monthly utility bills of inserts discussing “political

matters”); FCC v. League of Women Voters of Cal-

ifornia, 468 U.S. 364, 383 ( 1984) (striking down

scheme requiring agency to determine whether a tele-

vision program editorializes on “controversial issues

of public importance”); Arkansas Writers’ Project

v. Ragland, 481 U.S. 221, 229 (1987) (invalidating

72a

scheme which required tax commissioner to determine

which publications were exempted from tax scheme

based on content).

By contrast, nothing in the rules challenged here

obligates the Commission to examine the contents of

publications disclosing campaign finance information

gleaned from FEC files. The Commission’s “princi-

pal purpose” inquiry involves no substantive exami-

nation of the reports. In making the “principal pur-

pose” determination in the present case, the Com-

mission looked to solely non-content-based criteria,

including, inter alia: (1) the corporation’s for-profit

status; (2) PCD’s clientele. both actual and poten-

tial; and (3) PCD’s willingness to sell reports to

anyone who would pay their fees. See generally Ad-

visory Opinion 1986-25. None of these bases involve

the government “in the business of examining the

content” of the reports (which, the Court addition-

ally notes, express no political viewpoint whatsoever).

Accordingly, the cited cases are inapposite.

PCD’s third Equal Protection theory must also fail

because under certain circumstances, the govern-

ment may accord the press special privileges over

members of the general public. See Austin, supra,

110 S. Ct. at 1401, and accompanying discussion; see

also Buckley v. Valeo, supra, 424 U.S. at 93 n.127

(citations omitted) (special news media protections

“the rule, not the exception”); cf. Readers Digest

Assn. v. FEC, 509 F. Supp. 1210 (S.D.N.Y. 1981)

(press exemption only applies to normal press func-

tions; other political activities by institutional press

subject to Act’s restrictions). For the reasons dis-

cussed above, those circumstances are satisfied here.

In sum, the exemption of traditional media organ-

izations embodied in the regulations at issue here ful-

73a

fills a substantial governmental interest and does not

offend the Equal Protection clause. The Court ac-

cordingly denies summary judgment to defendant

PCD on its Equal Protection defense and grants sum-

mary judgment to the plaintiff FEC on its claims.

CONCLUSION

For the reasons stated above, the Court declines

to disturb the FEC’s determination that PCD’s sale

of its reports are proscribed by 2 U.S.C. § 488 (a)

(4). It also rejects PCD’s First and Fifth Amend-

ment challenges to that provision and 11 C.F.R.

104.15(c).

The Court accordingly DENIES defendant’s sum-

mary judgment motion in its entirety; and it

GRANTS plaintiff’s motion for summary judgment

in full.

Settle Order Accordingly.

/s/ Shirley Wohl Kram

SHIRLEY WOHL KRAM

United States District Judge

Dated: New York, New York

December 16, 1990

74a

APPENDIX F

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

No. 1779—August Term 1990

Argued: July 8, 1991 Decided: August 21, 1991

Docket No. 91-6084

FEDERAL ELECTION COMMISSION,

PLAINTIFF-APPELLEE

—against—

POLITICAL CONTRIBUTIONS DATA, INC.,

DEFENDANT-APPELLANT

Before:

MESKILL, NEWMAN and PRATT,

Circuit Judges.

Defendant appeals from a judgment of the United

States District Court for the Southern District of

New York, Shirley Wohl Kram, Judge, granting plain-

tiff’s motion for summary judgment, and (1) declar-

ing that defendant violated 2 U.S.C. § 438(a) (4),

(2) imposing a civil penalty of $5,000 on defendant,

and (3) permanently enjoining defendant from “sell-

ing or using for the purpose of soliciting contributions

or for commercial purposes any information copied

75a

from reports and statements filed with the Federal

Election Commission pursuant to the Federal Elec-

tion Campaign Act of 1971”.

Reversed and remanded.

RICHARD B. BADER, Associate General Counsel,

Washington, DC (Lawrence M. Noble, General Coun-

sel, Vivien Clair, Federal Election Commission, of

Counsel), for Plaintiff-A ppellee.

Davip C. VLADECK, Washington, DC (Public Citi-

zen Litigation Group, Alan B. Morrison; Vladeck,

Waldman, Elias & Engelhard, Anne C. Vladeck, New

York, NY, of Counsel), for Defendant-Appellant.

MITCHELL H. BERNSTEIN, Washington, DC (Skad-

den, Arps, Slate, Meagher & Flom, Thomas J. Casey,

Roberto Iraola, of Counsel), for amicus curiae Legi-

Tech, Ine.

PRATT, Circuit Judge:

It is a cardinal principle of statutory construction

that congress is presumed to have passed statutes

which are constitutional. Thus, we are obliged to

construe statutes to avoid constitutional problems

whenever possible. See, e.g., DeBartolo Corp. v.

Florida Gulf Coast Bldg. & Const., 485 U.S. 568, 575

(1988); Lowe v. Securities and Exchange Comm'n,

472 U.S. 181, 207 (1985) (“the apparent intent of

Congress [was] to keep the Act free of constitutional

infirmities”); Hooper v. California, 155 U.S. 648,

657 (1895) (“every reasonable construction must be

resorted to, in order to save a statute from unconsti-

76a

tutionality”). Moreover, when congress indicuies

that its goal in passing a statute is to avoid constitu-

tional problems, our task is made easier. This is such

a case.

Congress passed the Federal Election Campaign

Act of 1971 (“FECA”, or “the act’) in order to,

inter alia, require disclosure of campaign contribu-

tions and contributors. Congress determined that this

disclosure was necessary in order to inform the elec-

torate where campaign money comes from, to deter

corruption, and to effectively enforce the act’s contri-

bution limitation requirements. See generally Buck-

ley v. Valeo, 424 U.S. 1, 66-68 (1974).

The FECA’s broad disclosure requirements, as well

as the legislative history of the act, indicate that the

FECA holds, as its overarching philosophy, the prin-

ciple that “[p]publicity is justly commended as a

remedy for social and industrial diseases. Sunlight is

said to be the best disinfectant; electric light the most

efficient policeman.” Brandeis, What Publicity Can

Do, Harper’s Weekly, Dec. 20, 1913, at 10 (quoted in

Senate Comm. on Commerce, Federal Election Cam-

paign Act of 1971, S. Rep. 96, 92d Cong., 2d Sess.

(additional views of Sen. Griffin), reprinted in 1972

U.S. Code Cong. & Admin. News 1773, 1816).

Today, we are faced with FEC’s attempt to limit

the FECA’s broad disclosure requirements through

the “commercial purposes” restriction contained in

2 U.S.C. § 4388(a) (4). Specifically, we must decide

whether the defendant, a corporation which produces

campaign contribution reports to sell to the public,

“sold or used” information culled from the FEC in

violation of § 438(a) (4). Since we answer that ques-

tion in the negative by reading the statute in a man-

ner that avoids the first amendment problems that

77a

the FEC’s interpretation would engender, we not

only further the intent of congress, but also need not

reach the “important and troubling First Amend-

ment implications raised by any construction of the

statute that bars the use of the information at issue

in this case by organizations such as” the defendant.

National Republican Cong. Comm. v. Legi-Tech

Corp., 795 F.2d 190, 194 (D.C. Cir. 1986) (Wright,

J., concurring) (hereinafter “NRCC”’).

LEGISLATIVE HISTORY OF § 438(a) (4)

The § 438(a) (4) “commercial purposes” exception

was proposed as an amendment to that section by

Senator Bellmon of Oklahoma:

Mr. President, the purpose of this amendment

is to protect the privacy of the generally very

public-spirited citizens who may make a contri-

bution to a political campaign or a_ political

party. We all know how much of a business the

matter of selling lists and list brokering has be-

come. These names would certainly be prime

prospect for all kinds of solicitations, and I am

of the opinion that unless this amendment is

adopted, we will open up the citizens who are

generous and public spirited enough to support

our political activities to all kinds of harassment,

and in that way tend to discourage them from

helping out as we need to have them do.

117 Cong. Rec. 30,057 (daily ed. Aug. 5, 1971)

(statement of Sen. Bellmon). Senator Bellmon’s

amendment was grudgingly accepted by the bill’s

sponsor, Senator Cannon, who replied:

Mr. President, this is certainly a laudable

objective. I do not know how we are going to

78a

prevent it from being done. I think as long as

we are going to make the lists available, some

people are going to use them to make solicita-

tions. But as far as it can be made effective, I

am willing to accept the amendment, and I yield

back the remainder of my time.

Id. (statement of Sen. Cannon). Senator Bellmon

went on to give an example of the evils he was at-

tempting to combat with this amendment:

Mr. BELLMON. * * *.

In the State of Oklahoma, our own tax divi-

sion sells the names of new car buyers to list

brokers, for example, and I am sure similar

practices are widespread elsewhere. This amend-

ment is intended to protect, at least to some de-

gree, the men and women who make contribu-

tions to candidates or political parties from be-

ing victimized by that practice.

Mr. NELSON. Do I understand that the only

purpose is to prohibit the lists from being used

for commercial purposes?

Mr. BELLMON. That is correct.

Mr. NELSON. The list is a public document,

however.

Mr. BELLMON. That is correct.

Mr. NELSON. And newspapers may, if they

wish, run lists of contributors and amounts.

Mr. BELLMON. That is right; but the list

brokers, under this amendment, would be pro-

hibited from selling the list or using it for com-

mercial solicitation.

Id. at 30,058,

79a

FACTS AND BACKGROUND

The Federal Election Commission (“FEC” or the

“Commission”) is the independent agency of the

United States government charged with the adminis-

tration, and civil enforcement of the FECA. See 2

U.S.C. §§ 487c(b) (1), 487d(a) & (e), 437f, 437g.

FEC is specifically authorized to formulate policy

under the act. 2 U.S.C. § 487c(b) (1). One of FEC’s

responsibilities is to serve as a clearinghouse for all

campaign finance reports and statements filed under

the requirements of the FECA. 2 U.S.C. §§ 482(g),

438 (a) (10).

FEC maintains a computerized database which

contains much of the financial information reported

to the commission. This database can be searched by,

inter alia, contributor’s name, hometown, zip code, or

employer. The public may obtain computer printouts

of such searches and may also purchase magnetic

computer tapes containing contributor information.

During the 1987 calendar year, FEC received more

than 70,000 such requests for information.

Defendant Political Contributions Data, Inc.

(“PCD”) is a New York corporation which is wholly

owned by Public Data Access, Inc. (“PDA”), another

New York corporation. PDA, in turn, is owned by

its employees, private investors, and _ non-profit

groups. PCD was formed in order to assemble and

disseminate FEC data at a profit. In the words of

Benjamin A. Goldman, an executive vice-president of

PDA, PCD’s compilations of FEC data “show how

financial contributions support the current political

superstructure, particularly with respect to the ad-

vantage enjoyed by incumbents over challengers.”

According to Goldman, these reports “facilitate re-

search into the reason why contributors, both as indi-

80a

viduals and on behalf of their affiliated companies,

favor one candidate or another, particularly in light

of their congressional committee assignments.”

PCD marketed two standard reports. One, a “cor-

porate affiliation contributor report,” analyzed the

contributions made by officers and upper-level em-

ployees of the 700 largest United States corporations.

The other, a “congressional district report,” listed the

name of each major ($500.00 and up) contributor lo-

cated within each of the country’s 435 congressional

districts, along with the recipient of the contribution,

the contributor’s occupation, and the amount of each

donation. In addition, PCD occasionally compiled and

sold the results of special computer searches, consist-

ing of a short list of names and contributions.

None of PCD’s reports contained the mailing ad-

dresses or phone numbers of contributors. Each page

of each PCD report contained this warning:

THIS REPORT MAY NOT BE USED OR

SOLD BY ANY PERSON FOR THE PUR-

POSE OF SOLICITING CONTRIBUTIONS OR

FOR ANY COMMERCIAL PURPOSE.

PCD’s promotional brochure repeated this caveat and

added: “Users must understand that under FEC

regulations the use of FEC data for fund raising is

strictly forbidden, and that the FEC records are

probably ‘seeded’ to detect such unwarranted usage.”

The “seed” warning refers to the second sentence

of 2 U.S.C. § 488(a)(4) (commonly known as the

“salting” provision), which allows political commit-

tees to

submit 10 pseudonyms on each report filed in

order to protect against the illegal use of names

and addresses of contributors, provided such

8la

committee attaches a list of such pseudonyms to

the appropriate report. The Clerk, Secretary, or

the Commission shall exclude these lists from the

public record * * *,

As of June 6, 1987, PCD had sold approximately

100 reports, ranging in price from $5.00 (for one re-

port) to $776.25 (for a combination of reports).

They had billed $9,398.76 and had received $4,544.73

for their products as of that date. PCD’s chairman,

Jay Gould, was nevertheless “still hopeful that in the

long term [PCD] has a very viable future,” as he

indicated at his deposition.

On August 15, 1986, in response to a request from

PDA, the FEC issued advisory opinion 1986-25, in

which the FEC concluded that

PDA’s proposed activity that involves the copy-

ing and selling of compilations comprised pri-

marily of individual contributor names is pro-

hibited by the Act. PDA’s use of the contributor

information in its database for academic re-

search may be permissible as long as this activity

does not involve the sale or use of contributor

information for the purpose of soliciting contri-

butions or for other commercial purposes. See,

11 CFR 104.15(c); Advisory Opinion 1985-16.

PDA thereafter formed PCD as a subsidiary, and

PCD continued to market the contributor lists.

In November 1986 the National Republican Con-

gressional Committee (“NRCC”) filed an adminis-

trative complaint with the FEC alleging that PCD’s

sale and use of information filed with the Commission

by NRCC and others violated § 438(a) (4) of the act.

After conducting an investigation, the FEC found

“probable cause to believe” that PCD had violated

82a

§ 4388(a)(4). The FEC and PCD were unable to

settle their dispute without judicial intervention, and

on July 25, 1989 the FEC filed a civil enforcement

suit against PCD in the Southern District of New

York.

After discovery, the parties filed cross-motions for

summary judgment. In an opinion reported at 753

F. Supp. 1122 (S.D.N.Y. 1990), Judge Kram granted

the FEC’s motion. First, Judge Kram determined

that the commission’s construction of § 438(a) (4)

was a reasonable one, and accepted the commission’s

determinations (1) that the “commercial purposes”

language of the act prohibited more than just direct

political solicitations; (2) that PCD’s sale of the in-

formation was among the prohibited “commercial

purposes”; and (3) that PCD’s activities did not fall

within the “media exception” of 11 C.F.R. 104.15(c).

753 F. Supp. at 1126-32.

Since Judge Kram found that PCD’s activities

were prohibited by the terms of § 438(a) (4), she

then addressed PCD’s constitutional challenges to the

statute, none of which she found compelling. 753 F.

Supp. at 1132-37.

The judgment entered in favor of the commission

(1) declared that PCD had violated § 438(a) (4),

(2) imposed a civil penalty of $5,000.00 on PCD, and

(3) permanently enjoined PCD from “selling or us-

ing for the purpose of soliciting contributions or for

commercial purposes any information copied from re-

ports and statements filed with the Federal Election

Commission pursuant to the Federal Election Cam-

paign Act of 1971.”

PCD has renewed each of its arguments on appeal.

83a

DISCUSSION

Although this is an appeal from a summary judg-

ment, there is no dispute between the parties over

any material fact. The only dispute is the applica-

tion of § 438(a) (4) of FECA to the undisputed facts.

As this is strictly a question of law, our review is

de novo.

A. Plain language of the statute

Section 438 (a) (4) of the FECA reads:

(a) Duties of Commission

The Commission shall—

* * * *

(4) within 48 hours after the time of the

receipt by the Commission of reports and state-

ments filed with it, make them available for pub-

lic inspection and copying, at the expense of the

person requesting such copying, except that any

information copied from such reports or state-

ments may not be sold or used by any person for

the purpose of soliciting contributions or for

commercial purposes, other than using the name

and address of any political committee to solicit

contributions from such committee. A political

committee may submit 10 pseudonyms on each

report filed in order to protect against the illegal

use of names and addresses of contributors, pro-

vided such committee attaches a list of such

pseudonyms to the appropriate report. The

Clerk, Secretary, or the Commission shall ex-

clude these lists from the public woumes:?.* ©.

| (emphasis added). It is undisputed that PCD did

. not use FEC information “for the purpose of solicit-

84a

ing contributions”; thus, PCD’s use of FEC material

can only run afoul of § 438(a)(4)—if at all—by

being “sold or used * * * for commercial purposes.”

The FEC concedes as much. See FEC brief at 8.

The FEC contends that PCD’s activities fall

squarely within the sweep of the “commercial pur-

poses” prohibition, since PCD sold information com-

piled from FEC reports for a profit. FEC admits,

however, that a literal application of the statute

“would obviously impede, if not entirely frustrate,

the underlying purpose of the disclosure provisions of

FECA,” as it “would bar newspapers and other com-

mercial purveyors of news from publishing the infor-

mation contained in those reports under any circum-

stances.” NRCC, 795 F.2d at 192 (emphasis in orig-

inal). PCD agrees with the FEC that reference to

the plain language of the statute is insufficient; thus,

we must move outside the four corners of the statute

to “established canons of construction” in order to

construe it. Chisom v. Roemer, 111 S. Ct. 2354, —,

59 U.S.L.W. 4696, 4702 (June 20, 1991) (Scalia, J.,

dissenting). See United States v. American Truck-

ing Ass’ns, 310 U.S. 534, 543-44 (1940) (“plain lan-

guage” rule); Caminetti v. United States, 242 US.

470, 485-86 (1917) (same).

B. The FEC’s regulation

Pursuant to its statutory authority, see 2 U.S.C.

§ 437d(a) (8), the FEC promulgated regulations in

order to flesh out § 438(a)(4)’s skeletal “commercial

purposes” prohibition. This gap was left “‘* * *

for the [FEC] to fill’ in determining what commer-

cial activities fall within the proviso’s prohibition”.

NRCC, 795 F.2d at 193 (quoting Chevron, U.S.A.

Inc. v. National Resources Defense Council, Inc., 467

85a

U.S. 837, 843 (1984)). See also Dial Information

Services Corp. of New York v. Thornburgh, No. 90-

6289, slip op. 6289, 6300-01 (2d Cir. July 15, 1991).

FEC attempted to fill the gap with this regulation:

The use of information, which is copied or

otherwise obtained from reports filed [with the

FEC], in newspapers, magazines, books or other

similar communications is permissible as long as

the principal purpose of such communications is

not to communicate any contributor information

listed on such reports for the purpose of solicit-

ing contributions or for other commercial pur-

poses.

11 C.F.R. §104.15(c) (1991). Thus, under the

FEC’s regulation, we shift our attention, at least ini-

tially, to the two prongs of the regulation: (1)

whether PCD’s use of FEC data is a “similar com-

munication” to a newspaper, magazine, or book; and

(2) if so, whether the “principal purpose” of PCD’s

communication is other than for “other commercial

purposes.”

1. “Similar communication”

PCD’s use of FEC data may survive scrutiny

under the first prong of the regulation only if the use

is “similar” to a newspaper, magazine, or book. The

FEC asserts that it promulgated this regulation in

order to effectuate congressional intent. See FEC

brief at 45 n.27. Since the FECA’s broad disclosure

provisions indicate an unmistakable preference for

first amendment values of publicity and exposure,

see S. Rep. No. 229, 92d Cong., 2d Sess. 4, reprinted

im 1972 U.S. Code Cong. & Admin. News 1821, 1823

(“Disclosure, if it is to be effective, must mean total

86a

disclosure”), we conclude that by the term “similar”

communication congress intended to include one that

furthers the “profound national commitment to the

principle that debate on public issues should be un-

inhibited, robust, and wide-open.” New York Times

v. Sullivan, 376 U.S. 254, 270 (1964). The only

shred of legislative history relating to the “news-

paper” exception to § 438(a)(4) supports the con-

clusion that congress intended to further this national

commitment: ‘[N]ewspapers may, if they wish, run

lists of contributors and amounts [without violating

§ 438(a) (4)].” 117 Cong. Rec. 30,058 (daily ed.

Aug. 5, 1971) (remarks of Sen. Nelson).

In advisory opinion 1986-25, FEC construed the

“similar communications” requirement of 11 C.F.R.

§ 104.15(c) in a more limiting manner:

Commission regulations provide that the “use”

of information, copied or obtained from these re-

ports, in “newspapers, magazines, books or other

similar communications” is permissible as long

as the “principal purpose” of such communica-

tions is not to communicate any contributor in-

formation listed on such reports for the purpose

of soliciting contributions or for other commer-

cial purposes. * * * The “commercial purpose”

prohibition does not preclude the use of contrib-

utor information by newspapers, magazines,

books, or other similar communications such as

in news stories, commentaries, or editorials, al-

though such use may be incident to the sale of

such communications. [citations omitted]

[PCD’s] intended use of contributor information

is not merely incident to their sales but is the

primary focus of [PCD’s] activity.

87a

FEC advisory opinion 1986-25, at 4. Here, the FEC

only hinted as to what it believes is “similar” to a

newspaper, magazine, or book, and it does so by cre-

ating a further distinction: between use which is

“incident to” the sale and use which is the “primary

focus” of the sale.

It is true, as the FEC reminds us, that “a court

may not substitute its construction of a statutory

provision for a reasonable interpretation by the

agency charged with administering the statute,”

NRCC, 795 F.2d at 193; but neither should it bow

and curtsy to every interpretation an agency can in-

vent. The FEC’s interpretation, however, does not

serve the congressional purposes of furthering the

openness and disclosure purposes of the FECA, while

avoiding—to the extent possible—the invasions of

contributor privacy that would be occasioned by all

kinds of solicitations. We thus cannot say that FEC

advisory opinion 1986-25 offered a “reasonable in-

terpretation” of either its own regulation or § 438

(a) (4).

The “incident to”’/“primary focus” distinction

proffered by the FEC in its advisory opinion is con-

trary to both the words of the statute and the act’s

broader purposes. Indeed, the FEC’s reading of the

statute could bar even newspapers, magazines or

books whenever FEC information was the “primary

focus” of their publication. At bottom, the FEC’s

advisory opinion boils down to a “we know it when

we see it” interpretation of § 438(a) (4), cf. Jacobel-

lis v. Ohio, 378 U.S. 184, 197 (1964) (Stewart, J.,

concurring), and we do not believe that congress in-

tended to grant the FEC such uncabined discretion.

Rather, the question of what is or is not “similar” to

the enumerated examples should be answered by

88a

closer attention to congress’s intent to expose this

information to beneficial sunlight, while protecting

contributors, as best as possible, from the harass-

ment of solicitors,

We conclude that PCD used the information ob-

tained from the FEC in a communication “similar”

to a newspaper, magazine, or book. PCD’s lists, al-

though not “traditional” media, are much closer to

“commercial purveyors of news,” NRCC, 795 F.2d at

192, than they are to a list of sales prospects. They

are designed in a manner that will further first-

amendment values and not infringe contributor priv-

acy by abetting solicitors. In fact, we have previously

noted that amicus Legi-Tech, Inc. (a for-profit cor-

poration which assembles and markets publicly-avail-

able information—quite similar to PCD) is “an organ

of the press.” Legi-Tech, Inc. v. Keiper, 766 F.2d

728, 730 (2d Cir. 1985).

2. “Principal purpose”

The second prong of 11 C.F.R. § 104.15(c) re-

quires that ‘‘the principal purpose of the communica-

tion is not to communicate any contributor informa-

tion listed on such reports * * * for other commercial

purposes.” The FEC, in its advisory opinion, han-

dled this “commercial purposes” language in the fol-

lowing manner:

The Commission has considered [PCD’s] state-

ments that its purpose is to further research and

reporting of the patterns of political contribu-

tions and its promise that a warning relating to

the Act’s sale or use restriction will be printed

on each page of the lists or packages, but does

not view them as determinative of the principal

purpose requirement. The Commission concludes

that lists that compile individual contributor in-

’ |

89a

formation by congressional district and by em-

ployer will have commercial value to list own-

ers, managers, brokers, and others, even though

street addresses are omitted. The format and

content of [PCD’s] lists are essentially indistin-

guishable from those of a list broker used for

soliciting contributions or for commercial pur-

poses.

FEC advisory opinion 1986-25, at 4-5. In this ad-

visory opinion, the FEC accepted that PCD’s purpose

“is to further research and reporting on patterns of

political contributions,” yet the FEC still concluded

that “purpose” was not relevant to the interpretation

of § 488(a) (4) or the FEC regulation.

Again, we disagree with the FEC. “Purpose” per-

meates the very text of § 438(a)(4). There is little,

if any, risk that PCD’s lists will result in solicitation

or harassment of contributors. The absence from

PCD’s reports of mailing addresses and phone num-

bers, as well as the cuveat on each page against solici-

tation and commercial use, make it virtually certain

that these reports will be used for informative pur-

poses (similar to newspapers, magazines, and books,

which are “commercial purveyors of news”, NRCC,

795 F.2d at 192), not for commercial purposes (simi-

lar to soliciting contributions or selling cars). The

undisputed facts confirm this analysis: of over 100

PCD customers, only two said that they had pur-

chased the reports for solicitation purposes; neither

one actually solicited using PCD’s lists: and one of

them specifically noted the disclaimer and the lack

of addresses as factors which led him to abandon that

idea. See 753 F. Supp. at 1130.

Under the FEC’s interpretation of the “principal

purpose” requirement, no newspaper could print, for

90a

example, a list of contributions made by the top ex-

ecutives of a military contractor who had just re-

ceived a large government contract (information that

would surely be protected by the statute, if not by

the first amendment). Nor could that newspaper

print a list of the larger donors in the congressional

districts that its circulation serves. In short, such a

reading would plainly be contrary to the broader pur-

poses of the FECA, and would very likely run afoul

of the first amendment.

Without the guidance of a reasonable agency inter-

pretation, we must again seek further guidance out-

side the FECA itself. When we lcok to the legislative

history of the § 488a)(4) prohibition, we find that

Senator Bellmon, in proposing the amendment, was

concerned with the possibility that contributors would

have their personal lives interrupted by unwanted

solicitations. The purpose of this restriction, he said,

was “to protect the privacy of” campaign contribu-

tors by insulating them, as best as possible, from

“all kinds of solicitations”.

These remarks seem to offer the best guidance for

interpreting § 438(a)(4)’s prohibitions; they clearly

indicate that the overarching goal of the prohibitions

was to protect campaign contributors from “all kinds”

cf unwanted solicitations. Without the “commercial

purposes” prohibition, the only solicitations at which

the statute would be aimed would be solicitations for

contributions. Since those prohibitions extend to “the

purpose of soliciting contributions” and “commercial

purposes”, we read the latter prohibition to encom-

pass only those commercial purposes that could make

contributors “prime prospects for all kinds of solici-

tations”, 117 Cong. Rec. 30,057 (remarks of Sen.

Bellmon) (emphasis added), i.e., not merely solicita-

tions for “contributions”, but solicitations for cars,

9la

credit cards, magazines, subscriptions, cheap vaca-

tions, and the like. In light of the prohibition’s pur-

ported aim of protecting the privacy of campaign

contributors and the FECA’s broader aim of full dis-

closure, not to mention the serious constitutional

problems that FEC’s reading would engender, see,

e.g., Communications Workers of America v. Beck,

487 U.S. 735, 761 (1988), this is the proper, reason-

able reading of the “commercial purposes” provision.

Moreover, the privacy interests of contributors—

the focus of the Bellmon amendment—are in no way

damaged by this reading of the statue. The “use” of

the information “for the purposes of soliciting con-

tributions or for commercial purposes” is still pro-

hibited by the terms of the statute. The “salting”

provision of § 438(a) (4) helps to ensure that anyone

who us. the information for any sort of solicitation

—whether for contributions or for other forms of

commerce—will be caught. The § 438(a)(4) pro-

hibition is only violated by a use of FEC data which

could subject the “public-spirited” citizens who con-

tribute to political campaigns to “all kinds of solicita-

tions”. PCD’s publications plainly are not designed

in that manner. Since none of PCD’s publications is

of the type that could infringe on the contributors’

privacy interests, the publications at issue may be

sold without violating § 488(a)(4) of the FECA.

CONCLUSION

Because we interpret § 438(a) (4) to allow the sale

of PCD’s publications, we do not reach the first

amendment and equal protection issues raised by

PCD. The judgment of the district court is reversed,

and the case is remunded with instructions to enter

summary judgment for PCD dismissing the FEC’s

complaint.

2a

APPENDIX G

EQUAL ACCESS TO JUSTICE ACT

28 U.S.C. § 2412

§ 2412. Costs and fees

(a) Except as otherwise specifically provided by

statute, a judgment for costs, as enumerated in sec-

tion 1920 of this title, but not including the fees and

expenses of attorneys, may be awarded to the pre-

vailing party in any civil action brought by or

against the United States or any agency or any offi-

cial of the United States acting in his or her official

capacity in any court having jurisdiction of such ac-

tion. A judgment for costs when taxed against the

United States shall, in an amount established by

statute, court rule, or order, be limited te reimburs-

ing in whole or in part the prevailing party for the

costs incurred by such party in the litigation.

(b) Unless expressly prohibited by statute, a court

may award reasonable fees and expenses of attor-

neys, in addition to the costs which may be awarded

pursuant to subsection (a), to the prevailing party

in any civil action brought by or against the United

States or any agency or any official of the United

States acting in his or her official capacity in any

court having jurisdiction of such action. The United

States shall be liable for such fees and expenses to

the same extent that any other party would be liable

under the common law or under the terms of any

statute which specifically provides for such an award.

(c)(1) Any judgment against the United States

or any agency and any official of the United States

acting in his or her official capacity for costs pur-

suant to subsection (a) shall be paid as provided in

93a

sections 2414 and 2517 of this title and shall be in

addition to any relief provided in the judgment.

(2) Any judgment against the United States or

any agency and any official of the United States act-

ing in his or her official capacity for fees and ex-

penses of attorneys pursuant to subsection (b) shall

be paid as provided in sections 2414 and 2517 of this

title, except that if the basis for the award is a find-

ing that the United States acted in bad faith, then

the award shall be paid by any agency found to

have acted in bad faith and shall be in addition to

any relief provided in the judgment.

(d)(1)(A) Except as otherwise specificaily pro-

vided by statute, a court shall award to a prevailing

party other than the United States fees and other

expenses, in addition to any costs awarded pursuant

to subsection (a), incurred by that party in any civil

action (other than cases sounding in tort), including

proceedings for judicial review of agency action,

brought by or against the United States in any court

having jurisdiction of that action, unless the court

finds that the position of the United States was sub-

stantially justified or that special circumstances

make an award unjust.

(B) A party seeking an award of fees and other

expenses shall, within thirty days of final judgment

in the action, submit to the court an application for

fees and other expenses which shows that the party

is a prevailing party and is eligible to receive an

award under this subsection, and the amount sought,

including an itemized statement from any attorney

or expert witness representing or appearing in be-

half of the party stating the actual time expended

and the rate at which fees and other expenses are

computed. The party shall also allege that the posi-

94a

tion of the United States was not substantially jus-

tified. Whether or not the position of the United

States was substantially justified shall be determined

on the basis of the record (including the record with

respect to the action or failure to act by the agency

upon which the civil action is based) which is made

in the civil action for which fees and other expenses

are sought.

(C) The court, in its discretion, may reduce the

amount to be awarded pursuant to this subsection, or

deny an award, to the extent that the prevailing

party during the course of the proceedings engaged

in conduct which unduly and unreasonably protracted

the final resolution of the matter in controversy.

(2) For the purposes of this subsection—

(A) “fees and other expenses” includes the

reasonable expenses of expert witnesses, the rea-

sonable cost of any study, analysis, engineering

report, test, or project which is found by the

court to be necessary for the preparation of the

party’s case, and reasonable attorney fees (The

amount of fees awarded under this subsection

shall be based upon prevailing market rates for

the kind and quality of the services furnished,

except that (i) no expert witness shall be com-

pensated at a rate in excess of the highest rate

of compensation for expert witnesses paid by the

United States; and (ii) attorney fees shall not

be awarded in excess of $75 per hour unless the

court determines that an increase in the cost of

living or a special factor, such as the limited

availability of qualified attorneys for the pro-

ceedings involved, justifies a higher fee.) ;

(B) “party” means (i) an individual whose

net worth did not exceed $2,000,000 at the time

95a

the civil action was filed, or (ii) any owner of

an unincorporated business, or any partnership,

corporation, association, unit of local govern-

ment, or organization, the net worth of which

did not exceed $7,000,000 at the time the civil

action was filed, and which had not more than

500 employees at the time the civil action was

filed; except that an organization described in

section 501(c) (3) of the Internal Revenue Code

of 1954 (26 U.S.C. 501(c)(3)) exempt from

taxation under section 501(a) of such Code, or

a cooperative association as defined in section

15(a) of the Agricultural Marketing Act (12

U.S.C. 1141j(a)), may be a party regardless of

the net worth of such organization or coopera-

tive association ;

(C) “United States” includes any agency and

any official of the United States acting in his or

her official capacity;

(D) “position of the United States” means,

in addition to the position taken by the United

States in the civil action, the action or failure to

act by the agency upon which the civil action is

based; except that fees and expenses may not be

awarded to a party for any portion of the litiga-

tion in which the party has unreasonably pro-

tracted the proceedings;

(E) “civil action brought by or against the

United States” includes an appeal by a party,

other than the United States, from a decision of

a contracting officer rendered pursuant to a dis-

putes clause in a contract with the Government

or pursuant to the Contract Disputes Act of

1978;

96a

(F) “court” includes the United States

Claims Court;

(G) “final judgment” means a judgment that

is final and not appealable, and includes an

order of settlement; and

(H) “prevailing party”, in the case of emi-

nent domain proceedings, means a party who

obtains a final judgment (other than by settle-

ment), exclusive of interest, the amount of

which is at least as close to the highest valua-

tion of the property involved that is attested to

at trial on behalf of the property owner as it is

to the highest valuation of the property involved

that is attested to at trial on behalf of the Gov-

ernment.

(3) In awarding fees and other expenses under

this subsection to a prevailing party in any action

for judicial review of an adversary adjudication, as

defined in subsection (b)(1)(C) of section 504 of

title 5, United States Code, or an adversary adjudi-

cation subject to the Contract Disputes Act of 1978,

the court shall include in that award fees and other

expenses to the same extent authorized in subsection

(a) of such section, unless the court finds that dur-

ing such adversary adjudication the position of the

United States was substantially justified, or that

special circumstances make an award unjust.

(4) Fees and other expenses awarded under this

subsection to a party shall be paid by any agency

over which the party prevails from any funds made

available to the agency by appropriation or other-

wise.

(5) The Director of the Administrative Office of

the United States Courts shall include in the annual

report prepared pursuant to section 604 of this title,

97a

the amount of fees and other expenses awarded dur-

ing the preceding fiscal year pursuant to this sub-

section. The report shall describe the number, na-

ture, and amount of the awards, the claims involved

in the controversy, and any other relevant informa-

tion which may aid the Congress in evaluating the

scope and impact of such awards.

(e) The provisions of this section shall not apply to

any costs, fees, and other expenses in connection with

any proceeding to which section 7430 of the Internal

Revenue Code of 1954 applies (determined without

regard to subsections (b) and (f) of such section).

Nothing in the preceding sentence shall prevent the

awarding under subsection (a) of section 2412 of

title 28, United States Code, of costs enumerated in

section 1920 of such title (as in effect on October 1,

1981).

(f) If the United States appeals an award of costs

or fees and other expenses made against the United

States under this section and the award is affirmed

in whole or in part, interest shall be paid on the

amount of the award as affirmed. Such interest shall

be computed at the rate determined under section

1961(a) of this title, and shall run from the date of

the award through the day before the date of the

mandate of affirmance.

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APPENDIX H

2 U.S.C. § 438 (a) (4)

§ 438. Administrative provisions

(a) Duties of Commission. The Commission

shall—

(1) prescribe forms necessary to implement

this Act;

(2) prepare, publish, and furnish to all per-

sons required to file reports and statements un-

der this Act a manual recommending uniform

methods of bookkeeping and reporting;

(3) develop a filing, coding, and cross-index-

ing system consistent with the purposes of this

Act;

(4) within 48 hours after the time of the re-

ceipt by the Commission of reports and state-

ments filed with it, make them available for

public inspection, and copying, at the expense

of the person requesting such copying, except

that any information copied from such reports

or statements may not be sold or used by any

person for the purpose of soliciting contributions

or for commercial purposes, other than using the

name and address of any political committee to

solicit contributions from such committee. A

political committee may submit 10 pseudonyms

on each report filed in order to protect against

the illegal use of names and addresses of contrib-

utors, provided such committee attaches a list of

such pseudonyms to the appropriate report. The

Clerk, Secretary, or the Commission shall ex-

clude these lists from the public record;

mM , ——————

99a

11 C.F.R. § 104.15

§ 104.15 Sale or use restriction (2 U.S.C.

438(a)(4)).

(a) Any information copied, or otherwise ob-

tained, from any report or statement, or any copy,

reproduction, or publication thereof, filed with the

Commission, Clerk of the House, Secretary of the

Senate, or any Secretary of State or other equivalent

State officer, shall not be sold or used by any person

for the purpose of soliciting contributions or for any

commercial purpose, except that the name and ad-

dress of any political committee may be used to

solicit contributions from such committee.

(b) For purposes of 11 CFR 104.15, “soliciting

contributions” includes soliciting any type of contri-

bution or donation, such as political or charitable

contributions.

(c) The use of information, which is copied or

otherwise obtained from reports filed under 11 CFR

Part 104, in newspapers, magazines, books or other

similar communications is permissible as long as the

principal purpose of such communications is not to

communicate any contributor information listed on

such reports for the purpose of soliciting contribu-

tions.or for other commercial purposes.

©. 8. COVERRBERT PeieTine orrice; 1993 360668 87005