Petition for Writ of Certiorari — Federal Election Commission v. Williams

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1) 9%-601 OCT - 5 1997

OFFICE OF THE CLERK

No.

In the Supreme Court of the Anited States

OCTOBER TERM, 1996

FEDERAL ELECTION COMMISSION, PETITIONER

Vv.

LARRY R. WILLIAMS

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

SETH P. WAXMAN

Acting Solicitor General

LAWRENCE M. NOBLE EDWIN S. KNEEDLER

General Counsel Deputy Solicitor General

RICHARD B. BADER KENT L. JONES

Associate General Counsel Assistant to the Solicitor

DAVID KOLKER General

Attorney Department of Justice

Federal Election Commission Washington, D.C. 20530-0001

Washington, D.C. 20463 (202) 514-2217

QUESTIONS PRESENTED

1. Whether a suit by the Federal Election Com-

mission to obtain an injunction against future

violations of the Federal Election Campaign Act is

subject to the statute of limitations that applies to an

“action, suit or proceeding for the enforcement of any

civil fine, penalty, or forfeiture” (28 U.S.C. 2462).

2. Whether, when a defendant fraudulently con-

ceals willful violations of federal campaign contri-

bution limitations, the Federal Election Commission

is deemed, as a matter of law, to have notice sufficient

to commence the running of the statute of limitations

from routine reports filed with it that do not disclose

the violations.

(I)

TABLE OF CONTENTS

Page

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oi FE ROSA II Dp IRE RR I 3

Reasons for granting the petition .........ccccccccesseccoceeeeses 10

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8 ARETE TOTS EES ARIES Se nS 2la

PINE SE Niclcbaeriispbrichiectis Licaccrtaatcciidicias Go... 23a

RUN eit 33a

TABLE OF AUTHORITIES

Cases:

Badaracco v. Commissioner, 464 U.S. 386 (1984) . 11

Bailey v. Glover, 88 U.S. (21 Wall.) 342 (1874) ....... 20

Buckley v. Valeo, 424 U.S. 1 (1976) veccccccccocsccceoses. 4

Cope v. Anderson, 331 U.S. 461 (1947) ...... 14, 15, 17, 18

Crown Coat Front Co. v. United States, 386 U.S.

503 (1967) ....... oie edietiabiansndetibbeiea nics siavedie ounasitiewniasensis 23

E. I. Dupont de Nemours & Co. v. Davis, 264 U.S.

oe nc gE EAS TRNAS AS ERG aa ORO RE 11

Exploration Co. v. United States, 247 U.S. 435

PN Nadi iainicon tots cuhdhasieia cess siksoesedse sou oo ccs: 20

FEC vy. Christian Coalition, 965 F. Supp. 66

EOP LES ©» SORA SR RBP SE Se NEUEN 18, 19

FEC v. Machinists Non-Partisan Political League,

655 F.2d 380 (D.C. Cir.), cert. denied, 454 U.S.

ieihhe dee ee hn EAST TAS NE PR EGS 24, 25

FEC vy. National Republican Senatorial Comm.,

Wee PU. TR CEILS. BIB) coe ovcncsccsesceceesccses.s, 1]

(IT)

Cases—Continued: Page

FEC v. National Rifle Ass’n, 553 F. Supp. 1331

CEP Etats REE dadsbndubabadbiaebhagiicktinseciemnocemenieniabeanie 23

FEC v. National Right to Work Comm., Inc.,

916 F. Supp. 10 G).D.0. 1006) .....ccscccconcseccnecssosesees 19

Gruca v. United States Steel Corp., 495 F.2d

LS GE Gs SE sik ke thi coskicenincectdins aes cascuens 18

Holmberg v. Armbrecht, 327 U.S. 392 (1946) ....... 8, 13,

17, 18, 20

Klehr v. A.O. Smith Corp., 1178. Ct. 1984 (1997). 24-25

Nemkov v. O’Hare Chicago Corp., 592 F.2d 351

CFU SN SIT? si cecensnencsraxiansnssesrusetuubvigeie) Memabeaenes 18

Republican National Comm. v. FEC, 76 F.3d 400

(D.C. Cir. 1996), cert. denied, 117 S. Ct. 682

CAGED tiisccnncss stenisticntamiahasbabaasctaabaecmdiastintanicocks 21

Russell v. Todd, 309 U.S. 280 (1940) ................000 17, 18

Sierra Club v. Chevron U.S.A., Inc., 834 F.2d

ROSE CORR aes RIED. cxnidcssinstoksctiatatgcdetiinicciapnatneniacs 23

Swan v. Board of Higher Educ., 319 F.2d 56

CRE CRE. TD) sdincevcctsitcevctiennsenstnscdscieivaaickoaioeness 18

UA Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d

1465 (9th Cir. 1994), cert. denied, 116 S. Ct. 297

CEI? iccsscicsecorntdevtiandis eeaiaecenenasdsetahnnea sie 22

United States v. Banks, 115 F.3d 916 (11th Cir.

RUUD scccinserlacsdchenivedetnitianticstnaieusascaenins aibebe 10-11, 12, 15

United States v. Hobbs, 736 F. Supp. 1406 (E.D.

Va. 1990), aff’d, 947 F.2d 941 (4th Cir. 1991) ........ 19

United States v. Telluride Co., 884 F. Supp. 404

CE), COE. TORB) sciveceicidccvesbcsovtsesasessatabione anbacenaeke 19

United States v. Whited & Wheless, 246 U.S. 552

CUBES) ‘sivcsedcvncteacstaudavcdixevenceeda tebe aoe os 12, 13

Statutes and regulation: Page

Federal Election Campaign Act of 1971, 2 U.S.C.

431 et seq.:

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15 U.S.C. 45(I) .....: sikeueidieiaadsekinpinbsbbedinbiaidediiecinia sacs 19

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Miscellaneous:

1 Pomeroy’s Equity Jurisprudence (5th ed. 1941)... 16,17

In the Supreme Court of the United States

OCTOBER TERM, 1996

No.

FEDERAL ELECTION COMMISSION, PETITIONER

Vv.

LARRY R. WILLIAMS

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

The Acting Solicitor General, on behalf of the

Federal Election Commission, respectfully petitions

for a writ of certiorari to review the judgment of the

United States Court of Appeals for the Ninth Circuit

in this case.

OPINIONS BELOW

The opinion of the court of appeals (App., infra, la-

14a) is reported at 104 F.3d 287. The opinions of the

district court (App., infra, 15a-20a, 21a-22a) are

unreported.

JURISDICTION

The judgment of the court of appeals was entered

on December 26, 1996. A petition for rehearing was

denied on June 5, 1997. On August 15, 1997, Justice

(1)

O’Connor extended the time for filing a petition for a

writ of certiorari to October 3, 1997. The jurisdiction

of this Court is invoked under 28 U.S.C. 1254(1).

STATUTORY PROVISIONS INVOLVED

1. 2 U.S.C. 437g(a)(6)(A) provides, in relevant part:

If the Commission is unable to correct or

prevent any violation of this Act * * * by the

[conciliation] methods specified in paragraph

(4)(A), the Commission may, upon an affirmative

vote of 4 of its members, institute a civil action

for relief, including a permanent or temporary

injunction, restraining order, or any other ap-

propriate order (including an order for a civil

penalty which does not exceed the greater of

$5,000 or an amount equal to any contribution or

expenditure involved in such violation) in the

district court of the United States for the district

in which the person against whom such action is

brought is found, resides, or transacts business.

2. 2 U.S.C. 437g(a)(6)(C) provides, in relevant part:

In any civil action for relief instituted by the

Commission under subparagraph (A), if the court

determines that the Commission has established

that the person involved in such civil action has

committed a knowing and willful violation of this

Act * * * , the court may impose a civil penalty

which does not exceed the greater of $10,000 or an

amount equal to 200 percent of any contribution or

expenditure involved in such violation.

ee ee

3. 28 U.S.C. 2462 provides:

Except as otherwise provided by Act of Con-

gress, an action, suit or proceeding for the

enforcement of any civil fine, penalty, or forfei-

ture, pecuniary or otherwise, shall not be enter-

tained unless commenced within five years from

the date when the claim first accrued if, within

the same period, the offender or the property is

found within the United States in order that

proper service may be made thereon.

STATEMENT

1. The Federal Election Campaign Act prohibits

individuals from making contributions “to any candi-

date and his authorized political committees with

respect to any election for Federal office which, in the

aggregate, exceed $1,000.” 2 U.S.C. 441a(a)(1)(A).

The Act further prohibits individuals from “mak[ing]

a contribution in the name of another person or know-

ingly permit[ting] his name to be used to effect such a

contribution.” 2 U.S.C. 441f. A “contribution{] in the

_ name of another” includes “[gliving money * * *

which was provided to the contributor by another

person * * * without disclosing the source of [the]

money.” 11 C.F.R. 110.4(b)(2)(i). In applying these

limitations, “all contributions made by a person,

either directly or indirectly, on behalf of a particular

candidate, including contributions which are * * *

directed through an intermediary or conduit to such

candidate, shall be treated as contributions from such

person to such candidate.” 2 U.S.C. 441a(a)(8).

The Federal Election Commission is an independ-

ent agency that Congress has vested with “primary

and substantial responsibility for administering and

enforcing the Act.” Buckley v. Valeo, 424 U.S. 1, 109

(1976). The Commission is authorized to institute

investigations when “it has reason to believe that a

person has committed, or is about to commit, a

violation” of the Act. 2 U.S.C. 487g(a)(2). If the Com-

mission determines that a violation of the Act has

been committed, or is about to be committed, the

Commission is then to attempt, “for a period of at

least 30 days, to correct or prevent such violation by

informal methods of conference, conciliation, and

persuasion” (2 U.S.C. 437g(a)(4)(A)()). If the Com-

mission is unable to correct or prevent any violation

of the Act through such informal conciliation, it

may then commence an action in federal district

court seeking any of the following relief (2 U.S.C.

437g(a)(6)(A)):

a permanent or temporary injunction, restraining

order, or any other appropriate order (including

an order for a civil penalty which does not exceed

the greater of $5,000 or an amount equal to any

contribution or expenditure involved in such

violation) * * * .

In any case involving a willful violation of the Act,

“the court may impose a civil penalty which does

not exceed the greater of $10,000 or an amount equal

to 200 percent of any contribution or expenditure

involved in such violation.” 2 U.S.C. 437g(a)(6)(C).

2. In an effort to raise funds for the presidential

campaign of Jack Kemp in 1987, respondent Larry

Williams devised a scheme to circumvent the federal

limitations on campaign contributions. The Kemp

campaign was sponsoring a fundraising promotion

that allowed any individual who contributed $1,000

to purchase a ticket to the Super Bowl for $100.

Respondent purchased a large number of Super Bow]

tickets at $100 apiece and “gave those tickets to

people whom he persuaded to contribute $1000 to

Kemp’s campaign” (App., infra, 2a). In 22 instances,

however, “Williams ‘advanced’ $1000 to the con-

tributor” and then “later resold the tickets and re-

covered the sums advanced” (ibid.). Respondent thus

violated 2 U.S.C. 441f by personally contributing in

excess of $22,000 to the Kemp campaign through the

use of others as his proxies (App., infra, 18a-19a). In

arranging and executing this scheme, respondent was

aware of the federal campaign contribution limita-

tions and knowingly violated them (id. at 18a-19a &

n.1).

Respondent’s scheme required the contribution

checks to the Kemp campaign to be issued by the

individuals who Williams reimbursed, rather than by

Williams himself. The disclosure reports filed

with the Federal Election Commission by the Kemp

campaign committee thus revealed the names and

addresses of the 22 donors but provided no indication

that Williams had reimbursed these individuals for

the contributions. See S.E.R. 109-134.'

3. On September 12, 1988, a former employee of

respondent named Richard Hooton filed a sworn

administrative complaint with the Federal Election

Commission. The complaint alleged that respondent

had made illegal campaign contributions. Prior to

receiving that complaint, the Commission had no

“reason to suspect Williams’s involvement in [the 22

individual] contributions” (App., infra, 11a (Fletcher,

J., dissenting)). When informed of Hooton’s charges,

' “S.E.R.” refers to the Supplemental Excerpts of Record

filed with the Commission’s brief in the court of appeals.

respondent denied them, stating that they were the

“wild allegations” of a “disgruntled” former employee

(S.E.R. 11-17).

4. a. After an investigation and attempted con-

ciliation of the violations—as required by 2 U.S.C.

437g(a)(2) and (4)—the Commission brought this civil

enforcement action against respondent in federal

district court on October 19, 1993. The Commission

sought a monetary civil penalty for respondent’s past

willful violations of the Act (2 U.S.C. 437g(a)(6)(C))

and an injunction barring any future violations

(2 U.S.C. 437g(a)(6)(A)).

b. Respondent moved to dismiss the complaint,

contending that the Commission’s suit was barred by

28 U.S.C. 2462. That statute specifies that, “[e]xcept

as otherwise provided by Act of Congress, an action,

suit or proceeding for the enforcement of any civil

fine, penalty, or forfeiture, pecuniary or otherwise,

shall not be entertained unless commenced within five

years from the date when the claim first accrued”

(ibid.).

The district court denied the motion to dismiss.

The court noted that Congress had provided a

three-year limitation period for criminal enforcement

actions under the Federal Election Campaign Act (2

U.S.C. 455) but had specified “no time limit for civil

actions” (App., infra, 25a). The court stated that this

“was not a mistake or an oversight” but instead

reflected a legislative intent that there be “no time

limit on FECA civil actions” (ibid.). The court con-

cluded that “the catchall statute of limitations” of

28 U.S.C. 2462 is therefore inapplicable to civil suits

to enforce the federal campaign contribution laws

(App., infra, 26a).

c. On the merits, the district court granted judg-

ment to the Commission. The court found that

respondent’s scheme plainly violated the campaign

contribution limitations and that “there is no doubt

[respondent] knew of the Act’s prohibitions” (App.,

infra, 19a). The court concluded that “[t]his is

sufficient to establish willfulness under the Act” and

therefore imposed a civil penalty against respondent

“in the amount of $10,000” (ibid.). See 2 U.S.C.

437g(a)(6)(C). Noting that respondent, in the face of

clear evidence of his actions, expressed the “con-

tinuing belief he committed no wrong-doing,” the

court also enjoined respondent “from similar vio-

lations of the Act for a period of 10 years” (App.,

infra, 19a-20a).

5. a. The court of appeals reversed (App., infra, 1a-

9a), with one judge dissenting (id. at 9a-14a). The

majority held (id. at 3a-5a) that the statute of

limitations contained in 28 U.S.C. 2462 applies to this

case because the Commission’s suit is an “action

* * * for the enforcement of [a] civil * * * penalty”

(ibid.). The majerity rejected the Commission’s

contention that this statute of limitations—which, by

its terms, applies to suits to enforce civil penalties—

“does not apply to actions for injunctive relief” (App.,

infra, 5a). The court stated (ibid.):

This assertion runs directly contrary to the

Supreme Court’s holding in Cope v. Anderson,

331 U.S. 461, 464 (1947). Cope holds that “equity

will withhold its relief in such a case where the

applicable statute of limitations would bar the

concurrent legal remedy.” In other words, be-

cause the claim for injunctive relief is connected

to the claim for legal relief, the statute of

limitations applies to both.

The majority also rejected the Commission’s argu-

ment that, if this statute of limitations applies to

this case, it was nonetheless tolled by respondent’s

fraudulent concealment of his unlawful acts. The

majority agreed that the limitations period imposed

by 28 U.S.C. 2462 “is subject to equitable tolling”

when the material facts have been fraudulently

concealed by the defendant (App., infra, 7a, citing

Holmberg v. Armbrecht, 327 U.S. 392 (1946)). The

court also did not doubt that respondent’s scheme

involved a fraudulent concealment of the facts. The

court stated, however, that a plaintiff relying on this

tolling doctrine must establish that it exercised “due

diligence” to discover the facts. The court concluded

that the Commission could not meet that requirement

in this case because, in the court’s view, the federal

“campaign finance reporting requirements are, as a

matter of law, sufficient to give FEC ‘notice of facts

that, if investigated, would indicate the elements of a

cause of action’” (App., infra, 7a). The court stated

that there is “no allegation” that the campaign

finance reports filed in connection with respondent’s

activities “contained false information,” and it con-

cluded that the Commission, “through a duly diligent

exercise of its investigatory power, * * * could have

discovered the operative facts giving rise to this suit”

(id. at 8a). See note 6, infra.

b. Judge Fletcher dissented (App., infra, 9a-14a).

She accepted without comment the conclusion of the

majority that the statute of limitations in 28 U.S.C.

2462 applies to actions to impose civil penalties under

the Federal Election Campaign Act. She also did not

address the majority’s conclusion that this statute

of limitations applies equally to the Commission’s

request for an injunction as to its request for civil

penalties. She disagreed with the majority, however,

in the application of the doctrine of equitable tolling

to this case.

Judge Fletcher concluded (i) that the statute of

limitations was tolled in this case by the fraudulent

concealment of facts by respondent and (ii) that the

disclosure reports on which the majority relied could

not commence the running of the limitations period

because those reports, in fact, “prevent(ed] discovery

of that violation” by the Commission (App., infra,

10a). Judge Fletcher noted that the majority’s con-

trary conclusion “in effect imposes a duty on the FEC

to investigate every report even though nothing on

its face indicates illegal activity, or else risk being

barred by the statute of limitations when a violation

comes to light” (id. at 11a). She stated (id. at 12a):

If the statute of limitations is not equitably tolled

in penalty proceedings involving the kind of

violation that was committed in this case, the

result will be a perverse reward for violators of

the campaign-finance laws: those who are most

clever in deceiving the FEC and concealing their

illegal contributions will be the least likely to be

prosecuted successfully, since their violations will

take the longest time to come to light.

Judge Fletcher concluded that “[e]quitable tolling

is proper in this case” because, “‘without any fault or

want of diligence or care’, the FEC did not disover

Williams’s fraud until the complaint against him was

made to the FEC in September 1988” (App., infra,

10a). She explained that the action was timely

because the statute of limitations (i) was first tolled

by respondent’s fraudulent concealment of the facts

until the administrative complaint was filed and (ii)

was then further tolled during the period that manda-

tory notice and conciliation efforts were conducted

pursuant to 2 U.S.C. 487g(a)(4)(A) (App., infra, 12a-

14a).

REASONS FOR GRANTING THE PETITION

The decision of the court of appeals creates a con-

flict among the circuits on recurring issues of sub-

stantial importance to the enforcement of numerous

federal laws. The decision also creates significant

obstacles to enforcing the Federal Election Campaign

Act against persons who evade its requirements and

conceal their conduct by causing the filing of reports

that disclose what appear to be lawful contributions.

Review by this Court is therefore warranted.

1. Congress has specified that “an action, suit or

proceeding for the enforcement of any civil fine,

penalty, or forfeiture, pecuniary or otherwise, shall

not be entertained unless commenced within five

years from the date when the claim first accrued” (28

U.S.C. 2462). This case involves whether that statute

of limitations applies to suits in equity brought by the

United States to obtain an injunction barring future

violations of a substantive statutory prohibition. The

Ninth Circuit held in this case that, when the “claim

for injunctive relief is connected to the claim for legal

relief, the statute of limitations applies to both” (App.,

infra, 5a). The Eleventh Circuit, by contrast, has

expressly rejected the reasoning of the Ninth Circuit

in this case and has concluded that “[tjhe plain

language of section 2462 does not apply to equitable

remedies.” United States v. Banks, 115 F.3d 916, 919

& n.6 (1997).

The decision in the present case thus creates a

conflict on a recurring, important question of federal

law. Moreover, in holding that 28 U.S.C. 2462 applies

not only to suits brought to obtain “enforcement of

any civil fine, penalty, or forfeiture” (ibid.) but also to

suits in equity to enjoin future violations of the law,

the court of appeals has fundamentally misapplied the

decisions of this Court.

a. The plain language of 28 U.S.C. 2462 provides a

limitations period only “for the enforcement of any

civil fine, penalty, or forfeiture” (ibid.). Nothing in

that text states or implies that the statute governs

the availability of injunctive relief. As the Eleventh

Circuit correctly concluded, “[t]he plain language of

section 2462 does not apply to equitable remedies.”

United States v. Banks, 115 F.3d at 919. Accord, FEC

v. National Republican Senatorial Comm.. 877 F.

Supp. 15, 21 (D.D.C. 1995) (“appllying] the § 2462

statute of limitations to both legal and equitable relief

* * * is contrary to the express language of the

statute”).

The fact that the statute of limitations does not

apply by its terms to suits for injunctive relief is

dispositive of the question whether it bars such suits

by implication. This Court “long ago pronounced the

standard: ‘Statutes of limitation sought to be applied

to bar rights of the Government, must receive a

strict construction in favor of the Government.”

Badaracco v. Commissioner, 464 U.S. 386, 391 (1984),

quoting E. I. Dupont de Nemours & Co. v. Davis,

264 U.S. 456, 462 (1924). As the Eleventh Circuit

concluded in United States v. Banks, the “canon of

statutory construction that any statute of limitations

sought to be applied against the United States

must receive a strict construction in favor of the

Government” requires the conclusion that 28 U.S.C

2462 applies, as its text reflects, “only to civil penal-

ties” and does not bar claims for injunctive relief. 115

F.3d at 919.

The principle that a statute of limitations must be

express in limiting suits by the government applies

even when, as in the present case, the government has

two remedies that stem from the same substantive

right.” This Court has consistently held that, when a

statute of limitations expressly limits only one of two

alternative remedies, the other is not barred by

implication. United States v. Whited & Wheless, 246

U.S. 552, 564 (1918). The doctrine “that where there

are two remedies for the protection of a right one

may be barred and the other not, is no novelty in the

law.” Id. at 564. The Court has emphasized that

this general principle has particular force in cases

involving the remedies of the United States, for it is

(id. at 561) (citation omitted)

settled “as a great principle of public policy” that

the “United States, asserting rights vested in

them as a sovereign government, are not bound by

any statute of limitations, unless Congress has

2 The Commission is authorized by 2 U.S.C. 437g(a)(6)(A) to

“institute a civil action for relief, including a permanent or

temporary injunction, restraining order, or any other appro-

priate order (including an order for a civil penalty * * * ).”

The Federal Election Campaign Act contains a statute of

limitations on criminal enforcement, 2 U.S.C. 455, but contains

no limitation for civil actions brought to obtain either the

injunctive relief or the civil penalties authorized by Sec-

tion 437g(a)(6)(A). See App., infra, 26a.

clearly manifested its intention that they should

be so bound” * * * ,

The rule requiring “a restrictive, a strict, con-

struction” of statutes that “bar the rights of the

Government” (United States v. Whited & Wheless,

246 U.S. at 561) thus requires that 28 U.S.C. 2462 not

be interpreted to exclude remedies other than those

that the statute particularly and expressly encom-

passes. This statute of limitations is directed, by its

terms, only to suits “for the enforcement of any civil

fine, penalty, or forfeiture” (ibid.). An injunction

against future violations of law is not a “fine, penalty

or forfeiture” for past violations and therefore does

not fall within the plain language of the statute. In

the present case, as in Whited & Wheless, because the

“statute of limitations did not create the right of

action * * * or either of the remedies * * * and in

terms applies only to one remedy,” the second remedy

is not barred (246 U.S. at 561, 564).

This conclusion would seem especially obvious

when, as in the present case, the alternative remedy

is an equitable one. It has long been established that

statutes of limitation govern only legal rights; they

do not control the availability of equitable relief. As

this Court explained in Holmberg v. Armbrecht, 327

U.S. 392, 396 (1946) (emphasis added):

Traditionally and for good reasons, statutes of

limitation are not controlling measures of

equitable relief. Such statutes have been drawn

upon by equity solely for the light they may shed

in determining that which is decisive for the

chancellor’s intervention, namely, whether the

plaintiff has inexcusably slept on his rights so as

to make a decree against the defendant unfair.

* * *

Equity eschews mechanical rules; it depends on

flexibility. Equity has acted on the principle that

“laches is not like limitation, a mere matter of

time; but principally a question of the inequity of

permitting the claim to be enforced—an inequity

founded upon some change in the condition or

relations of the property or the parties.” * * *

And so, a suit in equity may lie though a

comparable cause of action at law would be bar-

red.

b. In concluding that 28 U.S.C. 2462 governs equi-

table relief, as well as suits “for the enforcement of

any civil fine, penalty, or forfeiture,” the court of

appeals did not discuss (or even cite) any of these

decisions of this Court. Instead, the court of appeals

relied exclusively on the statement in this Court’s

decision in Cope v. Anderson, 331 U.S. at 464, that

“equity will withhold its relief in such a case where

the applicable statute of limitations would bar the

concurrent legal remedy” (App., infra, 5a). The court

of appeals believed that, under the “concurrent”

remedy doctrine, “because the claim for injunctive

relief is connected to the claim for legal relief, the

statute of limitations is applicable to both” (ibid.).

The court of appeals erred in its understanding of

Cope and of the “concurrent” remedy doctrine. In

Cope, the receiver of a failed national bank brought

an action in equity for monetary relief, seeking to

enforce the assessed liability of the bank’s stock-

holders pursuant to the National Bank Act. Although

the receiver could have brought multiple suits at law

against each individual stockholder, he was permitted

to bring a single action in equity that consolidated

the claims against all of the shareholders. 331 U.S.

at 463. The Court concluded in Cope that this “con-

current” equitable proceeding should not be _per-

mitted to proceed because the statute of limitations

would bar the same relief if sought in separate legal

actions against the individuals. Jd. at 464.

The court of appeals erred for two reasons in rely-

ing on Cope in this case. First, Cope involved litiga-

tion between private parties in which the rule of

strict construction of statutes of limitation asserted

against the government was not implicated. As the

Eleventh Circuit stated in criticizing the opinion in

the present case, the court of appeals erred in relying

on Cope by “failling] to distinguish between the

application of the statute of limitations to the United

States in its private versus its sovereign capacity.”

United States v. Banks, 115 F.3d at 919 n.6.

The court of appeals also erred in assuming that

the “concurrent” remedy doctrine discussed in Cope

has any application to this case. That doctrine does

not, as the court of appeals incorrectly stated, apply

to the ordinary situation in which “the claim for

injunctive relief is connected to the claim for legal

relief” (App., infra, 5a) simply in the sense that the

two remedies are available for the same misconduct.

Instead, the “concurrent” remedy doctrine describes

the situation in which, as in Cope, the equity court

acts merely in aid of the legal remedy and is not

exercising its “exclusive” equitable jurisdiction.

Equity courts have long recognized a distinction

between their “concurrent jurisdiction” and their

“exclusive jurisdiction.” The “concurrent jurisdic-

tion” of equity courts refers to those situations in

which the “law must, through its judicial procedure,

give some remedy of the same general nature as

that given by equity, but this legal remedy is not,

under the circumstances, full, adequate, and com-

plete.” 1 Pomeroy’s Equity Jurisprudence § 139, at

191-192 (5th ed. 1941). By contrast, injunctive relief of

the type sought in the present case is part of equity’s

“exclusive jurisdiction,” not its “concurrent jurisdic-

tion” (id. § 136, at 186; id. § 138, at 189):

This distinction or opposition between the

“exclusive” and the “concurrent” relates wholly

to the nature and form of the remedies which are

administered by equity courts * * *. [R]emedies

granted may be of a kind which are peculiar to

equity courts, such as reformation, cancellation,

injunction * * * ,

* * * Cases in which the remedy sought and

obtained is one which equity courts alone are

able to confer must * * * belong to the exclusive

jurisdiction of equity, even though the primary

right * * * is one which courts of law recognize,

and * * * give some remedy. * * * [T]he parti-

cular fact or event which occasions the peculiar

equitable remedy * * * may also be the occasion

of alegal remedy * * *. These * * * cases

cannot, however, be regarded or treated as

belonging to the concurrent jurisdiction * * *.

The criterion which I have given is always simple

and certain in referring to the exclusive jurisdic-

tion all cases in which the remedy is given by

courts of equity alone, without regard to the

nature of the substantive right which forms the

basis of the action * * *.

This Court has recognized and applied this distinc-

tion between the concurrent and exclusive jurisdic-

tion of equity courts. In Russell v. Todd, 309 U.S.

280, 289 (1940), the Court explained that “when * * *

the suit is brought in aid of a legal right, equity will

withhold its remedy if the legal right is barred by the

* * * statute of limitations.” “But where the equity

jurisdiction is exclusive and is not exercised in aid or

support of a legal right, * * * statutes of limitations

barring actions at law are inapplicable.” Jbid. See

also Holmberg v. Armbrecht, 327 U.S. at 396. In the

present case, as in Russell v. Todd, 309 U.S. at 289,

“the equity jurisdiction is exclusive” because the

remedy sought is not available at law. The “statutes

of limitations barring actions at law are [therefore]

inapplicable.” Ibid.

The “concurrent” remedy doctrine described in

Cope vhus has no application to the action brought by

the Commission to obtain prospective injunctive

relief in this case. In Cope, the Court explained that

“it is only the scope of the relief sought and the

multitude of parties sued which give equity con-

current jurisdiction to enforce the legal obligation.”

331 U.S. at 463-464 (emphasis added). The claim at

issue in that case—involving the assessed monetary

liability of the stockholders—did not arise in equity.

Instead, it involved enforcement of a legal right. The

jurisdiction of the equity court in Cope derived solely

from its ability to bring the entire class of stock-

holders into a single proceeding. See 1 Pomeroy’s

Equity Jurisprudence, supra, §§ 174, 175, 181, 243.

Equity was invoked in Cope to “enforce the legal

obligation” (331 U.S. at 464), not to provide a remedy

that was exclusively within its jurisdiction. It is only

when equitable jurisdiction is invoked to “enforce the

legal obligation” that the equity court is to “withhold

its relief’ when the statute of limitations on the legal

claim has expired. Jbid. Accord, Russell v. Todd,

309 U.S. at 289.

In the present case, the prospective injunctive

relief sought by the government was an exclusively

equitable, rather than concurrent, remedy. The

government’s “suit in equity [therefore] may lie

though a comparable cause of action at law would be

barred.” Holmberg v. Armbrecht, 327 U.S. at 396.°

e. The question presented in this case has sub-

stantial recurring importance. Numerous statutes

specifically authorize government agencies to obtain

civil penalties for past violations and injunctive relief

3 The courts of appeals are divided in their understanding

of this traditional distinction between the concurrent and ex-

clusive jurisdiction of equity courts. Some circuits have

applied the same erroneous understanding of the “concurrent”

remedy doctrine that the court of appeals adopted in this case.

See, e.g., Nemkov v. O’Hare Chicago Corp., 592 F.2d 351, 355

(7th Cir. 1979) (if the “sole remedy is not in equity and an

action at law can be brought on the same facts, the remedies

are concurrent”); Swan v. Board of Higher Educ., 319 F.2d

56, 59-60 n.5 (2d Cir. 1963) (plaintiff “is not here asserting ‘a

federal right for which the sole remedy is in equity, * * *

and hence the situation is one of ‘concurrent’ legal and

equitable jurisdiction”).

Other courts, however, have correctly applied the “concur-

rent” remedy rule. See Gruca v. United States Steel Corp.,

495 F.2d 1252, 1257-1258 (3d Cir. 1974) (“although plaintiff’s

demand for legal and equitable relief arises out of the same

factual complex, it does not necessarily follow that the

jurisdiction of equity is ‘concurrent’ with that of law, as

that word is used in Russell v. Todd); FEC v. Christian

Coalition, 965 F. Supp. 66, 70-72 (D.D.C. 1997) (under the

principles of Cope and Russell, 28 U.S.C. 2462 does not bar the

government’s claim for equitable relief).

barring future violations. The proper application of

the statute of limitations for actions to enforce a

“civil fine, penalty, or forfeiture” (28 U.S.C. 2462) to

the injunctive relief authorized by these statutes is

an issue that is frequently litigated and on which the

courts have frequently disagreed. Compare, e.g., FEC

v. Christian Coalition, 965 F. Supp. 66 (D.D.C. 1997)

(Section 2462 does not bar agency claim for injunctive

relief); United States v. Hobbs, 736 F. Supp. 1406

(E.D. Va. 1990) (same), with FEC v. National Right

To Work Committee, 916 F. Supp. 10 (D.D.C. 1996)

(Section 2462 does bar agency claim for injunctive

relief); United States v. Telluride Co., 884 F. Supp.

404 (D. Colo. 1995) (same). Review by this Court is

warranted to resolve the conflict that exists among

the courts of appeals on this important recurring

question.

2. The court of appeals correctly acknowledged

that, to the extent that 28 U.S.C. 2462 applies to

this case, the statute of limitations “is subject to

equitable tolling” because of the fraudulent con-

cealment of facts by respondent (App., infra, 7a). As

the court explained (id. at 6a-7a):

The doctrine of equitable tolling provides that

“where a plaintiff has been injured by fraud and

remains in ignorance of it without any fault or

* Many statutes authorize government agencies to obtain

both civil penalties and injunctive relief to protect the public.

See, e.g., 15 U.S.C. 45(l) (Federal Trade Commission to prevent

unfair trade practices); 21 U.S.C. 134e (Secretary of Agricul-

ture to prevent spread of disease); 29 U.S.C. 212(b), 216(e), 217

(Secretary of Labor to enjoin and punish violations of child

labor. laws); 42 U.S.C. 2280, 2282 (Nuclear Regulatory Com-

mission to enforce rules concerning the handling of nuclear

material).

want of diligence or care on his part, the bar of the

statute does not begin to run until the fraud is

discovered. . . .” Holmberg v. Armbrecht, 327

U.S. 392, 397 (1946) (internal quotations omitted).

“This equitable doctrine is read into every federal

statute of limitation.” Id.

See also Exploration Co. v. United States, 247 U.S.

435 (1918); Bailey v. Glover, 88 U.S. (21 Wall.) 342

(1874).°

The court of appeals erred, however, in its appli-

cation of the doctrine of equitable tolling to the

present case. The court noted that a party that

contends that the statute of limitations is tolled by

fraudulent concealment of facts must establish that it

exercised “due diligence” to discover those facts

(App., infra, 7a). The court held that the Commission

could not meet that requirement in this case because,

in the court’s view, the federal “campaign finance

reporting requirements are, as a matter of law,

sufficient to give FEC ‘notice of facts that, if investi-

gated, would indicate the elements of a cause of

action’” (ibid.). The court concluded that, “through a

duly diligent exercise of its investigatory power, [the

Commission] could have discovered the operative

facts giving rise to this suit” (7d. at 8a).

This holding is premised upon a fundamental mis-

understanding of the investigatory powers of the

> In Bailey v. Glover, 88 U.S. (21 Wall.) at 349-350, the Court

stated that “when there has been no negligence or laches on the

part of a plaintiff in coming to the knowledge of the fraud

which is the foundation of the suit, and when the fraud has

been concealed, or is of such character as to conceal itself, the

statute does not begin to run until the fraud is discovered

* * * »

Commission. It incorrectly presupposes that the

Commission has the authority, and the resources, “to

investigate every report, even though nothing on its

face indicates illegal activity” (App., infra, 11a)

(Fletcher, J., dissenting). Moreover, the court’s

holding would provide “a perverse reward for vio-

lators * * * who are most clever in deceiving the

[Commission] and concealing their illegal con-

tributions” (id. at 12a) (Fletcher, J., dissenting).

Review by this Court is warranted to avert the

substantial threat that this holding creates for the

legitimate enforcement activity of the Commission.

a. The Federal Election Campaign Act imposes an

obligation on the treasurer of a political committee to

report the name, address, occupation, and employer of

any donor who gives more than $200 in a single year.

2 U.S.C. 431(13), 434(b)(3)(A). “Neither the Act nor

any other law * * * requires donors [themselves] to

disclose this information.” Republican National

Comm. v. FEC, 76 F.3d 400, 403 (D.C. Cir. 1996), cert.

denied, 117 S. Ct. 682 (1997). If the treasurer exer-

cises “best efforts” to obtain and report this in-

formation, the committee’s disclosure reports will

comply with the Act even if identifying information is

missing. 2 U.S.C. 432(i). When, as in the present

case, an unlawful contribution is made through a

conduit, the treasurer of the recipient committee may

have no reason to suspect the violation. In the

absence of any reason for the treasurer to believe that

the conduit was not the actual source of the con-

tribution, the disclosure report will reflect an

apparently lawful contribution from the conduit.

In the present case, for example, the Kemp com-

mittee’s reports disclosed the names and addresses of

the 22 individuals but contained no information that

would cast suspicion on the lawfulness of the contri-

butions. S.E.R. 109-134. If, as the court of appeals

held in this case, such routine and uninformative

reports preclude tolling of the statute of limitations,

it is difficult to imagine circumstances in which the

fraudulent concealment doctrine could be applied to

campaign contribution violations.’ As the dissent

correctly concluded, the statute of limitations was

tolled by respondent’s fraudulent concealment of the

truth because, “‘without any fault or want of dili-

gence or care’, the [Commission] did not discover

Williams’s fraud until the [administrative] complaint

against him was made * * * in September 1988”

(App., infra, 10a).’

6 The court of appeals stated, without any explanation, that

“{t]here is no allegation that the 22 contributions by Williams’

employees and friends were not listed in the campaign reports,

or otherwise contained false information” (App., infra, 8a)

(emphasis added). It is the very essence of the Commission’s

position, however, that reporting the contributions as if they

were from the 22 individuals when, in fact, they were from

respondent is “false information.” That the Kemp committee

was presumably unaware of the false facts contained in its

reports does not mean that the reports did not “contain[] false

information.”

7 Under the doctrine of fraudulent concealment, the period

of limitations was further tolled when, in response to the

administrative complaint, Williams urged the Commission to

take no action because Hooton was a “former, and disgruntled,

employee” who filed a “sour grapes” complaint (S.E.R. 11-13).

A year later in September 1989, Willliams asserted that

Hooton would “recant his previous testimony,” which Williams

characterized as “wild allegations” (S.E.R. 16-17). “Where a

plaintiff suspects the truth but investigates unsuccessfully,

fraudulent concealment will toll the statute.” UA Local 343 v.

Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1475 (9th Cir. 1994),

cert. denied, 116 S. Ct. 297 (1995).

The statute of limitations was then further tolled

“during those periods in which the [Commission was

required to] follow mandatory notice and conciliation

procedures” (App., infra, 12a (Fletcher, J., dissent-

ing), citing Sierra Club v. Chevron U.S.A., Inc., 834

F.2d 1517 (9th Cir. 1987)). The Federal Election Cam-

paign Act contains elaborate administrative proce-

dures—including two levels of formal findings and

briefing, an investigation, and mandatory concilia-

tion—that the Commission must satisfy before it may

bring a civil enforcement suit. 2 U.S.C. 437g(a). An

action filed by the Commission before it exhausts

these mandatory procedures would be dismissed as

premature. FEC v. National Rifle Ass’n, 553 F.

Supp. 1331, 1337-1339 (D.D.C. 1983). Cf. Crown Coat

Front Co. v. United States, 386 U.S. 503, 511-512

(1967) (cause of action does not accrue until

“completion of the administrative proceedings con-

templated and required” by applicable law because,

until those proceedings are completed, the plaintiff

has no “right to resort to the courts”). As Judge

Fletcher noted, a minimum of 65 days were required

for the mandatory administrative procedures to be

performed under the Act (App., infra, 12a). The

action filed by the Commission in this case was

therefore timely (ibid.).

b. The court of appeals fundamentally misappre-

hended the statutory powers of the Commission in

concluding that, through a “diligent exercise of

its investigatory power, [the Commission] could

have discovered the operative facts” involved in re-

spondent’s fraudulent concealment of the truth (App.,

infra, 8a). Although the Commission is empowered to

conduct investigations, 2 U.S.C. 437d(a)(9), it is not

authorized to investigate potential violations of the

Act until at least four of its six members determine

that there is “reason to believe that a person” has

violated the Act. 2 U.S.C. 437g(a)(2). The disclosure

reports filed by the Kemp committee in this case

provided no information that would have supported

such a finding.

Moreover, a vote to find “reason to believe” can

take place only “upon receiving a complaint” filed

with the Commission or “on the basis of information

ascertained in the normal course of carrying out its

supervisory responsibilities” (2 U.S.C. 487g(a)(2)).

Unlike other government agencies that have broad

discretion to gather information and conduct periodic

investigations, the “FEC has no such roving statu-

tory functions.” FEC v. Machinists Non-Partisan

Political League, 655 F.2d 380, 387 (D.C. Cir.), cert.

denied, 454 U.S. 897 (1981). In most instances, inves-

tigations “may begin only if an individual first files a

signed, sworn, notarized complaint with the Com-

mission.” Jbid. “[Mlere ‘official curiosity’ will not

suffice as the basis for FEC investigations, as it

might in others.” Jd. at 387-388.

In view of the limited nature of the disclosures

required by the Act and the significant statutory

restrictions on the Commission’s authority to in-

vestigate violations of the Act, the court of appeals

seriously erred in concluding that the “reports

required by FECA provide sufficient information to

FEC that through a duly diligent exercise of its

investigatory power, it could have discovered the

operative facts giving rise to this suit” (App., infra,

8a). Application of the due diligence requirement

for tolling the statute of limitations in cases of

fraudulent concealment must take account of the

particular statutory scheme. See Klehr v. A.O.

siiemmaiaimiaaattaia iii

Smith Corp., 117 S. Ct. 1984, 1998 (1997). As Judge

Fletcher explained in dissent, the court’s holding

would improperly “impose[] a duty on the FEC to

investigate every report, even though nothing on its

face indicates illegal activity” (App., infra, 11a). The

Commission lacks any such “roving” authority (FEC

v. Machinists Non-Partisan Political League, 655

F.2d at 387), however, and the holding in this case

thus provides “a perverse reward” for those “who are

most clever in * * * concealing their illegal contri-

butions” (App., infra, 12a) (Fletcher, J., dissenting).

The decision of the court of appeals threatens

substantially to impair the important enforcement

functions that Congress has assigned to the Commis-

sion. Review by this Court is therefore warranted.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

SETH P. WAXMAN

Acting Solicitor General

LAWRENCE M. NOBLE EDWIN S. KNEEDLER

General Counsel Deputy Solicitor General

age nei * pest Counsel KENT L. JONES

Assistant to the Solicitor

DAVID KOLKER General

Attorney

Federal Election Commission

OCTOBER 1997

APPENDIX A

UNITED STATES COURT OF APPEALS

NINTH CIRCUIT

D.C. No. CV-93-06321 ER

No. 95-55320

FEDERAL ELECTION COMMISSION,

PLAINTIFF-APPELLEE

Vv.

LARRY R. WILLIAMS,

DEFENDANT-APPELLANT

APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE CENTRAL DISTRICT OF

CALIFORNIA

Presiding: EDWARD RAFEEDIE, District Judge

[Argued and Submitted June 5, 1996]

[Decided Dec. 26, 1996]

Before: FLETCHER, BEEZER and KLEINFELD,

Circuit Judges.

BEEZER, Circuit Judge:

Larry R. Williams appeals the district court’s

denial of his motion to dismiss and grant of a motion

for summary judgment in favor of the Federal

Election Commission (FEC). Williams argues, inter

alia, that the FEC action is time-barred under 28

(la)

U.S.C. § 2462, and that he is not liable for civil

penalties under the Federal Election Campaign Act

(FECA), 2 U.S.C. §§ 431- 455.

The district court had jurisdiction under 28 U.S.C.

§ 1331. Williams timely filed a notice of appeal. We

have jurisdiction under 28 U.S.C. §§ 1291. We hold

that 28 U.S.C. § 2462 applies, and we reverse.

Jack Kemp sought the 1988 Republican Presiden-

tial nomination. At the end of 1987, his campaign com-

mittee engaged in a fundraising promotion involving

tickets to the Superbowl. The Philadelphia Eagles

made a number of tickets available to Kemp’s cam-

paiyn for $106 each. Donors who contributed $1000 to

the Kemp campaign were given the right to purchase

one of these $100 tickets.

Williams purchased 40 of these tickets from the

Philadelphia Eagles for $4000. He then gave those

tickets to people whom he persuaded to contribute

$1000 to Kemp’s campaign, including a number of

Williams’ friends and employees. In 22 cases, Williams

“advanced” $1000 to the contributor as the resale

price of the ticket. Williams later resold these tick-

ets and recovered the sums advanced. The fate of the

other 18 tickets is not relevant to this case. These

events occurred between the autumn of 1987 and the

end of January, 1988.

On September 12, 1988, Richard Hooton, a former

Williams employee, filed an administrative complaint

with FEC. FEC notified Williams, provided a copy of

the complaint and offered him an opportunity to

respond. On September 13, 1989, FEC found reason to

believe that Williams violated 2 U.S.C. §§ 441f and

441a(a)(1)(A).

After an investigation and finding probable cause to

believe that Williams had violated FECA. FEC con-

ducted a statutorily mandated attempt at conciliation

from May 24, 19938 to July 20, 1993. Conciliation failed.

FEC filed suit on October 19, 1993, seeking the

imposition of civil penalties as well as declaratory and

injunctive relief. The district court denied Williams’

motion to dismiss on limitations grounds and par-

tially granted FEC’s motion for summary judgment

on January 31, 1995. The district court fixed a $10,000

civil penalty and enjoined Williams from similar viola-

tions of FECA for 10 years. After a stipulated dis-

missal of the remaining count, the court entered final

judgment on March 7, 1995. Williams filed a timely

notice of appeal.

We review de novo a grant of summary judgment.

Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th

Cir.1995), cert. denied, —- U.S. ——, 116 S.Ct. 1261,

134 L.Ed.2d 209 (1996).

FECA does not contain an explicit statute of limita-

tions for the bringing of actions for civil penalties.

Williams argues that the default statute of limita-

tions, 28 U.S.C. § 2462, applies. It provides:

Except as otherwise provided by Act of Congress,

an action, suit or proceeding for the enforcement

of any civil fine, penalty, or forfeiture, pecuniary

or otherwise, shall not be entertained unless com-

menced within five years from the date when the

claim first accrued if, within the same period, the

offender or the property is found within the

United States in order that proper service may be

made thereon.

Williams argues that this provision applies on its

face to FEC suits to impose civil penalties.

FEC argues that § 2462 is not applicable to suits to

impose penalties; that by its terms it applies only to

suits to enforce penalties that have previously been

imposed. We disagree.

We have previously held that “enforcement” in-

cludes “assessment.” United States v. Walsh, 8 F.3d

659, 662-63 (9th Cir.1993), cert. denied, 511 U.S. 1081,

114 S.Ct. 1830, 128 L.Ed.2d 459 (1994). In Walsh, the

government brought an action for civil penalties and

injunctive relief under 42 U.S.C. § 7413, the Clean Air

Act. The Clean Air Act gives the government the

option of issuing administrative penalty orders or

bringing a civil action. The government did the latter

in Walsh. The relevant statutory provision states:

The Administrator [shall or may, depending on

the violator] commence a civil action for a

permanent or temporary injunction, or to assess

and recover a civil penalty .. .

42 U.S.C. § 74138(b) (emphasis added). We held in

Walsh:

Walsh contends that the action of the United

States is an action for money damages brought by

the United States and founded on a tort, so that

the three-year tort statute of limitations applies,

28 U.S.C. § 2415(b). Walsh is in error. The gov-

ernment’s action does not sound in tort but is for

the enforcement of a civil penalty. The appropri-

ate statute is the five-year statute of limitations.

28 U.S.C. § 2462.

Walsh, 8 F.3d at 662 (emphasis added). It is the law of

this circuit that, for the purposes of § 2462, “enforce-

ment” comprises “assessment.” See also 3M Co.

(Minnesota Mining and Mfg.) v. Browner, 17 F.3d

1458 (D.C.Cir.1994) (discussing the drafting history

of § 2462 and concluding that “enforcement” com-

prises “imposition”).

Two recent cases from the District of the Dis-

trict of Columbia also hold that actions for civil penal-

ties under FECA are subject to § 2462’s limitations

period. FEC v. National Republican Senatorial

Committee, 877 F.Supp. 15 (D.D.C.1995); FEC v. Na-

tional Right to Work Committee, Inc., 916 F.Supp. 10

(D.D.C.1996). These cases specifically hold that §

2462 applies to FEC actions for the assessment of

civil penalties, and that the limitations period begins

to run at the time the alleged offense is committed.

We hold that § 2462 applies to FEC actions for the

assessment or imposition of civil penalties under

FECA.

PEC argues that § 2462 does not apply to actions

for injunctive relief. This assertion runs directly

contrary to the Supreme Court’s holding in Cope v.

Anderson, 331 U.S. 461, 464, 67 S.Ct. 1840, 1341, 91

L.Ed. 1602 (1947). Cope holds that “equity will with-

hold its relief in such a case where the applicable

statute of limitations would bar the concurrent legal

remedy.” In other words, because the claim for in-

junctive relief is connected to the claim for legal

relief, the statute of limitations applies to both.

FEC next argues that the running of the statute of

limitations was tolled during the time that Williams

allegedly fraudulently concealed his illegal payments.

FEC cites In re United Insurance Management,

Inc., 14 F.3d 1380, 1884 (9th Cir.1994). FEC also

argues that the related “discovery rule” applies,

citing No. Calif. Retail Clerks Unions v. Jumbo

Markets, Inc., 906 F.2d 1371, 1372 (9th Cir.1990).

Neither of these cases involves § 2462’s limitations

period.

In 8M Co., 17 F.3d at 1460-1463, the D.C. Circuit

specifically rejected the application of the discovery

rule to the running of limitations periods under

§ 2462. 3M Co. states:

[W]e hold that an action, suit or proceeding to

assess or impose a civil penalty must be com-

menced within five years of the date of the viola-

tion giving rise to the penalty. We reject the

discovery of violation rule [respondent] advocates

as unworkable; outside the language of the

statute; inconsistent with judicial interpreta-

tions of § 2462; unsupported by the discovery of

injury rule adopted in non-enforcement, remedial

cases; and incompatible with the functions served

by a statute of limitations in penalty cases.

17 F.3d at 1462-1463. We agree.

3M Co. is silent on the application of the doctrine of

equitable tolling for fraudulent concealment. The

doctrine of equitable tolling provides that “where a

plaintiff has been injured by fraud and remains in

ignorance of it without any fault or want of diligence

or care on his part, the bar of the statute does not

begin to run until the fraud is discovered. .. .”

Holmberg v. Armbrecht, 327 U.S. 392, 397, 66 S.Ct.

582, 585, 90 L.Ed. 743 (1946) (internal quotations

omitted). “This equitable doctrine is read into every

federal statute of limitation.” Jd . We have found only

two cases that have addressed the application of equi-

table tolling to § 2462’s limitations period. United

States v. Core Laboratories, Inc., 759 F.2d 480, 484

(5th Cir.1985); United States v. Firestone Tire &

Rubber Co., 518 F.Supp. 1021, 1036 (N.D.Ohio 1981).

Both cases applied equitable tolling to s 2462's limita-

tions period. We are compelled by Holmberg to agree;

section 2462 is subject to equitable tolling.

To establish that equitable tolling applies, a plain-

tiff must prove the following elements: fraudulent

conduct by the defendant resulting in concealment of

the operative facts, failure of the plaintiff to discover

the operative facts that are the basis of its cause of

action within the limitations period, and due diligence

by the plaintiff until discovery of those facts. See,

e.g., King & King Enterprises v. Champlin Petro-

leum Co., 657 F.2d 1147, 1154 (10th Cir.1981), cert.

denied, 454 U.S. 1164, 102 S.Ct. 1038, 71 L.Ed.2d 320

(1982); Dayco Corp. v. Goodyear Tire & Rubber Co.,

523 F.2d 389, 394 (6th Cir.1975).

These elements are not met in this case. FECA's

campaign finance reporting requirements are, as a

matter of law, sufficient to give FEC “notice of facts

that, if investigated, would indicate the elements of a

cause of action.” Calvin W. Corman, Limitation of

Actions § 9.7.1 (1991) (citing United Klans of Amer-

ica v. McGovern, 621 F.2d 152 (5th Cir.1980); Jablon

v. Dean Witter & Co., 614 F.2d 677 (9th Cir.1980)).

FECA specifies that a political committee must file

reports that disclose “the identification of each .. .

person . . . who makes acontribution . . . in excess

of $200.” 2 U.S.C. § 434(b)(3). The term “identifica-

tion” means “in the case of any individual, the name,

mailing address, and the occupation of such individual,

as well as the name of his or her employer.” 2 U.S.C.

§ 431(13)(A). The 22 contributions in this case came

from employees and friends of Williams. There is no

allegation that the 22 contributions by Williams’ em-

ployees and friends were not listed in the campaign

reports, or otherwise contained false information.

FEC is specifically empowered to conduct investiga-

tions expeditiously, 2 U.S.C. § 437d(a)(9). The reports

required by FECA provide sufficient information to

FEC that through a duly diligent exercise of its

investigatory power, it could have discovered the

operative facts giving rise to this suit.

Neither the discovery rule nor equitable tolling for

fraudulent concealment tolls the running of the

limitations period in this case.

Finally, FEC argues that the pendency of adminis-

trative proceedings tolled the statute of limitations

for the duration of the administrative proceedings,

citing Sierra Club v. Chevron, U.S.A., Inc., 834 F.2d

1517, 1523 (9th Cir.1987). Because it makes no differ-

ence to our conclusion in this case, we do not address

the application of Sierra Club.

Aggregating all of FECA’s mandatory time periods

for notice (35 days total) and conciliation (30-90 days),

see 2 U.S.C. § 437g(a), and tolling the running of the

statute of limitations for all these time periods,

FEC’s action would still not be timely. The limita-

tions period commenced at the latest on January 31,

1988, and the five-year period expired on January 31,

1993. The maximum 125 days of statutorily mandated

time for notice and conciliation in FECA would not

render timely FEC’s action, which was filed on

October 19, 1993. We make no holding as to whether

any of these FECA-mandated time periods fall within

the rationale of Sierra Club.

Ill

Because we conclude that FEC’s suit was untimely

and should have been dismissed, we do not address the

remaining issues raised by the parties.

REVERSED.

FLETCHER, Circuit Judge, dissenting:

The majority correctly determines that the equita-

ble tolling doctrine applies to 28 U.S.C. § 2462. How-

ever, I cannot agree with the majority’s conclusion

that the doctrine does not apply to toll the running of

the statute in this case.

To support its conclusion that the statute of limita-

tions began to run as soon as the violation occurred,

the majority relies on 3M Co. v. Browner, 17 F.3d

1453 (D.C.Cir.1994), a decision that is neither the law

of our circuit nor directly on point, nor does it deal

with the statute involved in this case. In 3M Co., the

D.C. Circuit held that a plaintiffs failure to discover

a violation of the law in question should not toll the

statute of limitations. 17 F.3d at 1463. But in holding

that the discovery rule should not apply to § 2462, the

3M Co. court had no occasion to consider the “vener-

able principle” of equitable tolling. Lampf, Pleva,

Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S.

350, 360-62, 111 S.Ct. 2773, 2781, 115 L.Ed2d 321

(1991). 3M Co. simply does not address the situation

we face here, in which the very nature of the offense

at issue—making a political contribution in the name

of another person in order to exceed the $1,000 limit

10a

on contributions—involves using deceptive methods

to conceal violations of the campaign-finance laws. It

seems only logical that the discovery rule apply when

the defendant’s deception in the course of committing

a violation prevents discovery of that violation.

Equitable tolling prevents a defendant from fraudu-

lently depriving a plaintiff of the opportunity to bring

a cause of action due to the running of the statute of

limitations. “{WJhere a plaintiff has been injured by

fraud and ‘remains in ignorance of it without any fault

or want of diligence or care on his part, the bar of the

statute does not begin to run until the fraud is discov-

ered, though there be no special circumstances or

efforts on the part of the party committing the fraud

to conceal it from the knowledge of the other party.’

“Holmberg v. Armbrecht, 327 U.S. 392, 397, 66 S.Ct.

582, 585, 90 L.Ed. 743 (1946) (quoting Bailey v. Glover,

88 U.S. (21 Wall.) 342, 348, 22 L.Ed. 636 (1874)). Equi-

table tolling is proper in this case: “without any fault

or want of diligence or care”, the FEC did not dis-

cover Williams’s fraud until the complaint against

him was made to the FEC in September 1988. The

running of the statute should be tolled at least until

that time.

Equitable tolling requires both that the defendant

engage in fraudulent conduct resulting in conceal-

ment of the operative facts giving rise to the violation

and that the plaintiff fail to discover the violation

within the limitations period despite due diligence.

See King & King Enterprises v. Champlin Petro-

leum Co., 657 F.2d 1147, 1154 (10th Cir.1981), cert.

denied, 454 U.S. 1164, 102 S.Ct. 1038, 71 L.Ed.2d 320

(1982); see also In re United Ins. Management, Inc.,

14 F.3d 1380, 13885 (9th Cir.1994) (discussing plain-

tiffs duty to diligently investigate potential cause of

lla

action). The majority states that the FEC “should

have discovered the operative facts giving rise to this

suit” merely because the names of the 22 persons in

whose names Williams made contributions were listed

in the campaign reports. Yet nothing before us indi-

cates that the FEC had any reason to suspect Wil-

liams’s involvement in those contributions until it

received Richard Hooton’s complaint. The majority

in effect imposes a duty on the FEC to investigate

every report, even though nothing on its face indi-

cates illegal activity, or else risk being barred by the

statute of limitations when a violation comes to light.

Here, the very information contained in the report

was used to lull the FEC into believing that no single

contributor gave more than the $1,000 limit. I con-

clude that the earliest date on which the statute of

limitations could have commenced running in this

case was September 12, 1988, the date of Hooton’s

complaint.

Moreover, upon receiving Hooton’s complaint, the

FEC promptly notified Williams and began investigat-

ing whether Williams had in fact violated FECA. The

FEC did not find reason to believe that Williams had

violated FECA until September 13, 1989, and did not

find probable cause to support its suspicions until

some time later. There is no indication that the FEC

was less than diligent in investigating Williams’ al-

leged violations.

This court faced a similar situation in UA Local

343 v. Nor-Cal Plumbing, Inc., 48 F.3d 1465 (9th

Cir.1994), cert. denied, —- U.S. ——, 116 S.Ct. 297,

133 L.Ed.2d 203 (1995). There, the National Labor Re-

lations Board failed to file suit against the defendant

within California’s four-year statute of limitations

for breach of contract. The NLRB argued that the

12a

statute was equitably tolled because even though it

had reason to suspect the defendant of illegal conduct

as early as 1980 and repeatedly sought information

from him, it did not have sufficient evidence to sup-

port a complaint until the limitations period had run.

See id. at 1474-75. The court agreed: “Where a plain-

tiff suspects the truth but investigates unsuccess-

fully, fraudulent concealment will toll the statute.”

Id. at 1475.

The majority’s refusal to apply equitable tolling

here raises distressing policy concerns. If the

statute of limitations is not equitably tolled in pen-

alty proceedings involving the kind of violation that

was committed in this case, the result will be a per-

verse reward for violators of the campaign-finance

laws: those who are most clever in deceiving the FEC

and concealing their illegal contributions will be the

least likely to be prosecuted successfully, since their

violations will take the longest time to come to light.

Finally, I disagree with the majority’s refusal to

apply the principles of Sierra Club v. Chevron,

U.S.A., Inc., 834. F.2d 1517 (9th Cir.1987), in de-

termining the timeliness of the FEC’s action. The

FEC received Hooton’s administrative complaint on

September 12, 1988, and filed suit on October 19, 1993.

Running the five-year statute of limitations from the

filing of Hooton’s complaint with the FEC puts the

FEC’s filing of the suit 37 days after the running of

the statute. Application of Sierra Club, however,

would toll the statute during those periods in which

the agency must follow mandatory notice and con-

ciliation procedures. FECA provides a range of 65-125

days for such procedures. The FEC was involved in

conciliation efforts with Williams from May 24, 1993,

to July 20, 1993. Thus, Sierra Club strongly sug-

13a

gests that the complaint was timely even without

applying equitable tolling.

Furthermore, the rationale of Sierra Club high-

lights the inappropriateness of reliance on 3M Co.

Because the FEC must follow statutorily mandated

administrative procedures before it may bring a civil

action, running the statute of limitations from the

date of the violation would gravely limit the FEC’s

ability to fulfill its statutory mandate. Applying the

3M Co. “date of the violation” rule to this case contra-

venes both the language and the legislative history of

FECA. The Act’s enforcement provisions are tied to

the receipt of an administrative complaint. They

require that the FEC, after receiving an administra-

tive complaint, notify the alleged violator and provide

him or her with opportunity to respond. 2 U.S.C.

§ 487g(a)(1). Only after determining that it has rea-

son to believe that the person named in the complaint

has violated the Act may the FEC undertake a full

investigation of the alleged violation. Jd. § 437g(a)(2).

If it finds probable cause to believe that the person

violated the Act, the FEC must engage in conciliation

efforts. Id. § 437g(a)(4)(A). T he FEC may initiate a

civil action against the alleged violator only after

conciiiation efforts have failed. Id. § 437g(a)(5)(D).

Congress adopted the notice and conciliation re-

quirements of § 437g in order to encourage informal

resolution of apparent FECA violations. Congress

intended the FEC to bring civil actions only “where

its informal methods of obtaining compliance fail to

correct violations.” Joint Explanatory Statement,

Conf. Rep. No. 1237, 98d Cong., 2d Sess. (1974), re-

printed in 1974 U.S.C.C.A.N. 5618, 5662. The statute

of limitations should be tolled while the FEC fulfills

l4a

its statutory obligation to resolve informally an

alleged FECA violation.

I would affirm the District Court’s grant of

summary judgment to the FEC. I therefore dissent.

15a

APPENDIX B

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

No. CV 93-6321-ER (BX)

FEDERAL ELECTION COMMISSION,

PLAINTIFF

Vv.

LarRRY R. WILLIAMS,

DEFENDANT

ORDER RE: CROSS-MOTIONS

FOR SUMMARY JUDGEMENT

(Filed: Jan. 31, 1995]

The parties cross-Motions for Summary Judge-

ment came before the Honorable Edward Rafeedie on

January 26, 1995. The parties stipulated to waive oral

argument on these motions, which Stipulation was

approved by the Court.

The Court, having considered the Motions, the op-

posing and reply papers, and all other matters pre-

sented to the Court, HEREBY ORDERS, as follows:

1. The Defendants’s Motion for Summary Judge-

ment is DENIED and the Plaintiffs Motion for Sum-

mary Judgement is GRANTED, for the reasons

stated below:

l6a

a) The Court does not believe the presence

of ex officio members on the Commission makes

the Commission’s actions constitutionally infirm

under the separation of power doctrine. Under

the reasoning of Buckley v. Valeo, 96 S. Ct. 612

(1976), the 2 ex officio members do not hold an

“Office Under the United States” and therefore

there is no violation of Art. I, § 6, cl. 2 of the

Constitution—which prohibits members of either

the House or the Senate from holding such

an Office. Moreover, the Court believes that the

presence of those members on the Commission

does not violate separation of powers principles,

because they were entrusted with an advisory

role—and could not vote on Commission action.

Although the Court is cognizant of the D.C. Cir-

cuit’s decision in FEC v. NRA Political Victory

Fund, 6 F.3d 821 (D.C. Cir. 1993), cert. dismissed

(Dec. 1994), the Ninth Circuit’s decision in Lear

Siegler, Inc. v. Lehman, 842 F.2d 1102 (9th Cir.

1977) compels a different result. Because the ex

officio members do not vote, it does not appear

Congress sought to usurp an executive function.

Thus, the focus of the separation of powers in-

quiry must shift to whether their presence on the

Commission “impermissibly undermines” the

executive branch’s role. Commodities Futures

Trading Commission v. Schor, 106 S. Ct. 3245,

3261 (1986). Quite simply, it does not appear that

this is the case.

b) Further, even if it were, the de facto author-

ity doctrine would permit the Commission’s acts

to stand. The Supreme Court implemented this

doctrine with respect to an earlier version of the

17a

Act in Buckley, and there appears to be no reason

to depart from its reasoning. As a result, even if

the Commission’s actions were constitutionally

defective, the de facto doctrine would permit them

to stand.

ec) The Court does not believe that the Act’s

provisions are unconstitutionally vague. The

Court believes that the statutory provisions are

not so vague that “the ordinary person exercising

ordinary person common sense [could not] suffi-

ciently understand and comply with” them. U.S.

Civil Serv. Comm’n v. Nat’l Ass’n of letter Car-

riers, 413 U.S. 548 (1978).

d) Nor does the Court find merit in Defen-

dant’s position that because the Commission did

not seek an estimation of its claims in Bankruptcy

Court, it has waived its right to enforce a civil

penalty or is estopped from doing so. There seems

to be no dispute that the penalties would be would

be non-dischargeable in Defendant’s bankruptcy.

Thus, this situation seems analogous to In re

Hanna 872 F.2d 829 (8th Cir. 1988), in which the

Eighth Circuit held that postpetition interest on a

non-dischargeable tax debt was collectible, despite

the failure to have the amount estimated by the

bankruptcy court.

e) Finally, the Court is not persuaded that

Defendant has suffered prejudice as a result of an

excessive delay in the prosecution of this action.

f) With respect to the issue of whether Defen-

dant’s conduct violated the Act, the underlying

facts are not disputed: Defendant purchased 40

18a

Super Bowl tickets, for $100 each or a total of

$4,000, from the Philadelphia Eagles and made

them available to a campaign committee for Jack

Kemp’s 1988 presidential campaign. The tickets

were to be used as part of a promotion to obtain

contributions: in return for a $1000 contribution, a

contributor would receive a free ticket.

Similarly, there is no dispute that Defendant

either advanced or reimbursed $1,000 to 22 in-

dividuals who made $1,000 contributions to the

Kemp campaign.

Yinally, there appears to be no dispute that

Defendant contributed $1,694 on his own behalf to

the Kemp campaign.

g) The Act prohibits both making contribu-

tions in another person’s name and individual con-

tributions in excess of $1,000. 2 U.S.C. §§ 441a(a)

(1)(A), 441f. It appears clear to the Court that

Defendant’s conduct in either advancing or

reimbursing the $1,000 to the 22 individuals

violates the prohibition of making contributions—

including loans, advances or gifts for the purpose

of influencing an election—in another person’s

name. This constitutes a violation of 2 U.S.C.

§ 441f, in that Defendant made 22 contributions

totalling $22,000 in the names of others to the

Jack Kemp for President Committee and Victory

‘88.

19a

Similarly, by virtue of the fact his total

contributions-through his own and _ others’

names—total $27, 694,’ it is clear that Defendant

contributed $26,694 in excess of the statutory

limit, of $1,000.

Further, there is no doubt Defendant knew of

the Act’s prohibitions. This is sufficient to estab-

lish willfulness under the Act, because a defen-

dant’s belief that he did not violate the Act is not a

defense. Defendant’s citation to Cheek v. United

States, 498 U.S. 192 (1991) is inapposite because

that case dealt with criminal penalties for tax

evasion. More to the point is Davis v. United

States, 961 F.2d 867, 871 (9th Cir. 1992), which held

that in a civil context, wilfulness is a voluntary,

conscious and intentional act and that bad faith

need not be proven.

2. Accordingly, the Court believes civil penalties

under 2 U.S.C. § 437g(a)(6)(C) should be imposed in

the amount of $10,000.00. In addition, the Court en-

joins Defendant from similar violations of the Act for

' Defendant Williams apparently does not dispute the fact

that he made actual and in-kind contributions totalling $5,694

(the $4,000 for the tickets, plus $1,694 of other contributions):

added to the $22,000, his total contributions were $27,694.

The Court notes that even if the $1,000 advances/ reimburse-

ments to the 22 individuals did not constitute a violation of 2

U.S.C. § 441f, the $22,000 would still be included with respect

to the excess contributions made in Defendant’s own name. If

the transactions were viewed as re-sales—i.e., that Defendant’s

purchased a ticket worth $1,000 from each individual—Defen-

dant’s contribution of the tickets to the campaign committees

should be valued at fair market value, which based on the re-

sale to Defendant, would be a least $1,000.

20a

a period of 10 years form the date of this Order, based

on Defendant’s continuing belief he committed no

wrong-doing.

IT IS SO ORDERED

IT IS FURTHER ORDERED that the Clerk of

the Court shall serve, by United States mail, copies of

this Order on counsel for the parties in this matter.

Dated: January 31, 1995

/s) EDWARD RAFEEDIE

EDWARD RAFEEDIE_

United States District

Court Judge

2la

APPENDIX C

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

No. CV 93-6321-ER (BX)

FEDERAL ELECTION COMMISSION,

PLAINTIFF

Vv.

LARRY R. ‘WILLIAMS,

DEFENDANT

ORDER RE: MAY 17, 1994

RULING ON MOTION TO DISMISS

[Filed: Oct. 27, 1994]

Plaintiff Federal Election Commission’s (the

“Commission”) motion to clarify came before the

Honorable Edward Rafeedie on October 24, 1994.

The Court, having considered the moving papers

and all other matters presented to the Court,

HEREBY ORDERS, as follows:

1. That Plaintiff’s motion to clarify is GRANTED;

and

2. That, as ordered by the Court on May 17, 1994,

“unless [the parties] receive[d] a written order to

the contrary,” the Court stood by its tentative ruling

to DENY the defendant’s motion for the reasons

stated in open court.

22a

IT IS SO ORDERED

IT IS FURTHER ORDERED that the Clerk of

the Court shall serve, by United States mail, copies of

this Order on counsel for the parties in this matter.

Dated: October 27, 1994

/s)’ EDWARD RAFEEDIE

EDWARD RAFEEDIE

23a

APPENDIX D

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Case No. CV 93-6321-ER

FEDERAL ELECTION COMMISSION, PLAINTIFF

LARRY R. WILLIAMS, DEFENDANT

REPORTER’S TRANSCRIPT OF PROCEEDINGS

[1]

HONORABLE EDWARD RAFEEDIE,

JUDGE PRESIDING

APPEARANCES:

For the Plaintiff:

For the Defendant:

FRANIA MONARSKI

Federal Election Office

of General Counsel

999 E Street, N.W.

Washington, D.C. 20463

W. JAMES KNOWLES

790 West 3000 South

Heber City, Utah 84032

24a

Official Court Reporter: MARY TUCKER,

CSR 9308

429-D U.S. Courthouse

312 North Spring Street

Los Angeles, Calif. 90012

213/687-0530 [2]

25a

[3]

LOS ANGELES, CALIFORNIA; TUESDAY,

MAY 17, 1994

(10:00 A.M.)

THE CLERK: Civil 93-6321, Federal Election

Commission v. Larry R. Williams.

Counsel, please state your names for the record.

MS. MONARSKI: Good morning, your Honor.

Frania Monarski representing the Federal Election

Commission.

MR. KNOWLES: Good morning, sir. I am James

Knowles representing Larry Williams.

THE COURT: Yes.

This is a motion by the defendant to dismiss this

action brought by the Federal Election Commission

on the grounds that the statute of limitations has run.

The court has read and considered all of the papers

that have been submitted in this matter, and tenta-

tively conclude as follows: The defendant asserts that

this suit is time-barred by the statute of limitations

and 28 United States Code, section 2462. But the

court finds that that section is not applicable to civil

suits brought by the FEC under section 437(G) of the

Federal Election and Campaign Act.

The FECA contains no time limit for civil actions,

instead adopting procedural requirements before a

civil action may be brought. The existence of a three-

year time limit for criminal action suggests that this

omission was [4] not a mistake or an oversight, but

that congress intended no time limit on FECA civil

actions.

In making this determination, the court relies on

the case of Occidental Life Insurance v. EEOC, from

the Supreme Court in 1977. In that case, although it

26a

dealt with analyzing the Equal Opportunity Act, the

Supreme Court has held that there is not time limit

on the EEOC suits that are brought under title vii.

Like the EEOC, the FECA requires that if the

commission does find probable cause to believe the

charges, it must attempt to resolve the matter

through informal method of conference or concilia-

tion, 2 United States Code, section 487(G)(A), 4(A)1.

Only if these informal methods fail can the commis-

sion bring suit in a Federal District Court.

The administrative requirements of notice and in-

formal resolution supply adequate protection to the

defendant. Accordingly, the absence of the statute of

limitations in the FECA should be interpreted as an

intention to put no time limits on the FEC’s ability

[5] to bring suit in a district court. And the catchall

statute of limitations of 2462 does not apply.

In this case, a defendant has been given all the

notice required by the FECA and he has not alleged

any prejudice from the delay by the FEC. Therefore,

the FEC suit is not barred by the statute of limita-

tions and the court would deny the motion to dismiss.

MR. KNOWLES: Your Honor, you indicated a

tentative conclusion. Does that mean I may respond?

THE COURT: You may.

MR. KNOWLES: Thank you, your Honor.

I would like to call the court’s attention to the

great divergence of fact and law applicable in the Occi-

dental case, the EEOC matter.

First of all, that type of a case, sir, is a case involv-

ing the vindication of a personal right, not a sovereign

right. That’s the first difference.

In our case, it is the FEC attempting to vindicate

what it conceives to be a violation of the sovereign

27a

position of the government relative to what they call

corrupt election campaign activities.

The second very significant difference is this,

Sir: In the Occidental EEOC case you do not an

enforcement proceeding. You have a damage proceed-

ing to vindicate that individual. It would never had

fallen under [6] 28 section 2462 for that very simple

reason. It’s not the type of case which would fall in

there.

Incidentally, your Honor, I should point out, that in

the Occidental case, even if the statute did apply, if I

recall my case correctly, it was brought well within

the five-year period from the event complained of.

The Occidental case is different in all area from the

case before the court today. The reference to preju-

dice, you honor, I cited the Baldwin case in my reply

brief, which pointed out that absence of prejudice is

merely a factor to be considered in a tolling situation,

when you have a tolling situation. When the tolling

situation otherwise appears to decide whether you

will toll. We do not have a tolling situation.

The mere fact that the Federal Election, the Act,

made references to a criminal penalty would not abro-

gate the application of the enforcement statute.

THE COURT: You are asking us to read into a

statute of limitations where congress did not include

one, Why would we do that?

MR. KNOWLES: _ Because of the language of the

statute itself, your Honor. The language which I

quoted verbatim in my original motion, clearly

states—it starts out “except as otherwise provided by

act of congress,” “except as otherwise provided.”

Those are the very first [7] words of the statute under

which I have brought this motion.

28a

The reply that I have submitted to your Honor indi-

cated that there is no otherwise provided by act of

congress. Therefore, by its expressed language, this

statute applies, because this is an action or a suit for

the enforcement of a civil fine. It couldn’t be more

clearly stated.

THE COURT: It is not an action or suit for

enforcement of a civil claim.

MR. KNOWLES: No. It is an action for a civil

fine, penalty, or forfeiture. That is what this action

today is. That is the very language of the statute of

limitations which I read to your Honor. It says that is

the five-year application which we are seeking.

1 am not at a loss to imagine where it would apply

otherwise except in that. The very first point that

counsel for the FEC raises: well, this isn’t really an

action, this is just an assessment. Well, your Honor,

the act —

THE COURT: What is the relief that’s sought?

MR. KNOWLES: The relief that is sought is the

relief that is authorized by the Federal Election Act.

It’s the relief to have an order for a civil penalty.

There is nothing in there that authorizes the court to

[8] access a civil penalty, which is the way the prayer

is worded. The language is to order a civil penalty.

Nothing could be more specifically applicable as I read

the plain language of both the federal election code

provisions and this statue. This is a civil penalty

action. This is a request for an order to impose a civil

penalty.

THE COURT: §Isn’t that what the other case, the

EEOC case was?

MR. KNOWLES: _ No, sir.

THE COURT: That was the agency suing, not

the individual.

29a

MR. KNOWLES: The agency was bringing that

action to vindicate the right of the individual and was

not seeking a penalty. It was a damage action, sir. It

would never fall under this statue.

I submit, sir, that because of that great difference,

the individual right versus the sovereign right, and

the penalty versus the damage, that is not applicable

to this type of an action, and it falls squarely under

that. I respectfully submit that that is the appropri-

ate view.

THE COURT: Why shouldn’t you be held to the

statute? Why didn’t you file it sooner than you did?

MS. MONARSKI: Well, your Honor, I think the

EEOC case does apply here because the same analysis

apples. [9] The purpose of the statute of limitations is

to assure fairness to the defendant and make sure

that he has notice of the charges.

THE COURT: Well, the purpose of the statute of

limitations to is avoid state claims.

MS. MONARSKI: Yes, your Honor.

THE COURT: That’s the basic purpose. This is

a state claim. This conduct occurred in 1988.

MS. MONARSKI: Yes, your Honor. But we

didn’t know about it until the complaint was filed with

us and then the commission—

THe COURT: When was that?

MS. MONARSKI: The complaint was filed in

September of ‘88, and in September of ‘88 —

THE COURT: Well, even that’s over five years.

MS. MONARSKI: Yes, your Honor, but the com-

mission initially had to make a decision whether to

investigate the complaint.

THE COURT: You brought it to the attention of

the defendant.

30a

MS. MONARSKI: Yes. In September of 1988,

your Honor, we brought it to the attention of the

defendant. We notified him and we also provided him

with a copy of the complaint and an opportunity to

respond to the complaint.

THE COURT: What happened after that?

[10]

MS. MONARSKI: Then the commission looked at

the information. And in September of 1989 found rea-

son to believe that a violation had occurred and insti-

tuted an investigation.

THE COURT: And when was that culminated?

MS. MONARSKI: That was culminated in March

of 1993.

THE COURT: Was there any effort to resolve

this with the defendant.

S. MONARSKI: Yes, your Honor.

In March of 1998, the general counsel of the com-

mission notified the defendant that he was going to

recommend probable cause to believe that the defen-

dant violated the Federal Election Campaign Act.

Provided the defendant with a copy of a brief on a legal

and factual analysis of the case and provided the

defendant with an opportunity to respond.

After that time, the general counsel—after the

defendant responded, the general counsel submitted a

report to the commission; and on May 18, the commis-

sion found probable cause to believe —

THE COURT: May 18 of what year?

MS. MONARSKI: — 1998.

THE COURT: 1993?

MS. MONARSKI: Yes.

3la

[11]

THE COURT: When was the report submitted?

MS. MONARSKI: Sometime between March ‘93

and May of 1993.

The Commission’s investigation occurred between

when it made it’s reason to believe findings in

September of 1989 through 1993.

THE COURT: It took four years to investigate

this claim?

MS. MONARSKI: Yes, your Honor.

It involved a reimbursement scheme. It involved 22

other individuals.

THE COURT: I understand what it involved.

Well, the Court is going to stand by its tentative

ruling unless you receive written order to the con-

trary. I will reconsider the matter.

MS. MONARSKI: Your Honor, will we get a copy

of your tentative ruling?

THE COURT: Yes.

MS. MONARSKI: There is one more administra-

tive question, your Honor. We filed a status report in

April of—just recently. And we were not in touch

with the defendant and at that point. He has now sub-

mitted a joint status report to us. But you have al-

ready filed an order setting a discovery schedule. And

I wanted to know whether we still need to file a joint

status report.

[12]

THE COURT: If the order scheduling the case

has already been filed, there is no need to.

MR. KNOWLES: _I prepared and sent to counsel

a form of joint status report after I heard from her

secretary indicating that was preferred over the

unilateral ex parte report, your Honor.

THE COURT: Yes. Okay. Well, that’s fine.

32a

MR. KNOWLES: Your Honor, this matter is a

dispositive matter.

THE COURT: Ifthe matter is dismissed you can

forget about the rest of it.

MR. KNOWLES: _ Yes, your Honor.

THE COURT: You will know very shortly.

MR. KNOWLES: Thank you, your Honor. I ap-

preciate it.

MS. MONARSKI: I just have one more question,

your Honor. Can the Commission begin it’s discovery

nrior to receiving—

THE COURT: I would suggest that you not do

so. You are going to receive it very soon.

MS. MONARSKI: Thank you very much, your

Honor.

MR. KNOWLES: Thank you, your Honor.

(Proceedings adjourned.)

[13]

* *£ Ke K K *

I, Mary Tucker, CSR, do hereby certify that the

foregoing transcript is true and correct.

/si/ MARY TUCKER 11-17-94

MARY TUCKER, CSR DATE

33a

APPENDIX E

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Case No. CV 93-6321-ER(BX)

FEDERAL ELECTION COMMISSION

Vv.

LARRY R. WILLIAMS

- [May 17, 1994]

CIVIL MINUTES - GENERAL

MOTION DEFENDANT FOR

DISMISSAL OF ACTION

HONORABLE EDWARD RAFEEDIE

MARY TUCKER

Courtroom Clerk Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFFS:

Frania Monarski

ATTORNEYS PRESENT FOR DEFENDANTS:

W. James Knowles

The Court having read and considered all pleadings

submitted and having heard statement of counsel,

motion defendant for dismissal of action is denied.

Initials of Deputy Clerk__

Minutes Form 11

Civil - Gen

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.