Corporate Accountability

Pro-Business Ruling Likely in High Court Campaign Finance Case

A majority of the U.S. Supreme Court appeared poised Wednesday to reverse or limit a line of precedents with roots — some more than a century old — that has allowed the government to ban corporate and union expenditures in election campaigns.


After an extraordinary 90 minutes of oral argument in Citizens United v. Federal Election Commission, it seemed likely that the Court, swayed by arguments in favor of First Amendment rights for corporations, was ready to embark on a new course that critics say could unleash a flood of corporate wealth into elections that are already awash in more regulated kinds of campaign spending.


The argument marked the first working session of the Court with new Justice Sonia Sotomayor on the bench. She seemed at home, not hesitating to join the questioning. Her questions seemed aimed at a ruling that would avoid a sweeping constitutional judgment until a fuller record on the issue is developed. Before the argument, she was counted as a likely supporter of the expenditure ban contained in the McCain-Feingold law at issue in the case, and nothing she said Wednesday countered that prediction.


Also making her debut at the podium was Solicitor General Elena Kagan, who argued against toppling precedents that have permitted government to stem corruption and protect shareholders from being misrepresented when their corporations join in election campaigns. But Justice Samuel Alito Jr. suggested there was no evidence for her corruption argument, noting that a majority of states allow independent expenditures by corporations without being overwhelmed by corruption. And Chief Justice John Roberts Jr. called her shareholder-protection argument “extraordinarily paternalistic.”


In the face of comments like these, as her argument continued, Kagan appeared almost to be negotiating with the justices for narrower ways of deciding the case that would represent less of a defeat for the government’s position. Afterward, Harvard Law School professor Laurence Tribe, a former teacher and colleague of Kagan’s at Harvard who was in the audience, said she had done “an admirable job” in defending campaign regulation, but added, “I don’t think a majority appeared to be convinced.”


Four justices — Roberts, Alito, Antonin Scalia and Anthony Kennedy — seemed ready to vote against the Federal Election Commission, which enforces the regulations. A fifth justice, Clarence Thomas, asked no questions, as is his custom, but he has been critical of the precedents in the past and is counted as a sure vote against most forms of campaign regulation. After the argument, advocates of campaign regulation made dire predictions if their side loses.


“Since the dawn of the Republic, the Court has recognized that corporations are artificial entities that enjoy unique advantages and must therefore be subject to greater government oversight,” said Doug Kendall of the Constitutional Accountability Center. “If the Court turns its back on this constitutional text and history, it will blatantly disregard the will of the people and unleash corporate influence on elections.”


But opponents of campaign regulations were celebrating that the bans on expenditures might soon end. “Based on today’s argument, free speech advocates can be optimistic for a broad vindication of First Amendment rights,” said Steve Simpson, a lawyer for the libertarian Institute for Justice. “Under the First Amendment, the government has no business deciding which speakers gain admittance to the marketplace of ideas.”


Kennedy, who often plays a swing-vote role, spoke repeatedly of “an ongoing chill” on the speech of corporations and other alleged harms caused by the McCain-Feingold law that bans independent corporate spending on campaigns. Roberts also seemed hostile to government arguments, asserting that the protection of First Amendment rights should not be placed in the hands of “FEC bureaucrats.”

As Roberts’ comment indicated, former Solicitor General Theodore Olson appeared to have gained the upper hand with his argument that corporations are entitled to the same protection under the First Amendment as individuals when it comes to participating in elections. Olson, a partner at Gibson, Dunn & Crutcher, was arguing on behalf of Citizens United, a nonprofit corporation that was thwarted by the ban in distributing a documentary hostile to then-presidential candidate Hillary Clinton before the 2008 election. After the case was first argued in March, the Court ordered the dispute re-argued on a broader question of whether the Court’s precedents on the issue in Austin v. Michigan Chamber of Commerce and McConnell v. FEC should be overturned.


Olson stressed that speech about elections is “at the very core of the First Amendment,” requiring the government to meet a “heavy burden” to justify restrictions. A vast majority of corporations are small or have single owners, he added, making the ban on all corporate expenditures too broad to combat any possible goal of preventing corruption.


When Justice Stephen Breyer, a defender of most campaign regulation, asked whether the Court should second-guess the determination of Congress that the restrictions were necessary, Olson quickly replied, “You must always second-guess Congress when the First Amendment is in play.”


Floyd Abrams of Cahill Gordon & Reindel in New York, a leading First Amendment lawyer, also argued against the regulation, telling the justices they would be doing “good, only good,” by ruling broadly.


Then it was Kagan’s turn. Significantly, she told the Court that “the government’s answer has changed” on whether the McCain-Feingold law would allow a book published by a corporation to be banned. During the March arguments Deputy Solicitor General Malcolm Stewart had acknowledged that books could violate the law under some circumstances — an admission that appeared to shock some justices. Kagan told the Court that the justices’ reaction caused her to re-examine the situation “very carefully,” and she said the part of the law at issue would not apply to books — and furthermore that there has never been en enforcement action against a book. Stewart was seated with Kagan at the counsel’s table.


Seth Waxman of Wilmer Cutler Pickering Hale and Dorr was the final advocate, arguing on behalf of the congressional backers of the McCain-Feingold law. He urged the Court to proceed slowly and use another case, with a more fully developed record, to examine the momentous issues before the Court.


The Citizens United case began last year as a dispute over “Hillary: The Movie.” At issue was whether the movie, as well as advertising for and video-on-demand transmission of the movie, amounted to campaign communications that cannot be funded directly by money from a corporate treasury. Citizens United, which produced the movie, is a nonprofit corporation that received direct corporate funding for the film project.


The FEC ruled that the documentary was a form of express advocacy that was covered by the ban on electioneering communications funded by corporations.


Citizens United challenged that determination to a three-judge panel in Washington, but the panel ruled in favor of the FEC, setting the stage for Supreme Court review.


In the initial brief to the high court, James Bopp Jr., the original lawyer for Citizens United, made no mention of the Austin precedent. But once the Court took up the case last November, Olson took over for Bopp and argued thatAustin should be overturned. The government’s brief argued that the issue of overturning Austin was “not properly before the Court” because it had not been dealt with fully in the court below, and occupied only two pages of Citizens United’s brief.


Kagan’s appearance at the Court also answered a question that has been a matter of debate within her office and among commentators ever since she became the first female solicitor general in the nation’s history: whether she would wear the morning coat with tails that male SGs have worn for generations.


Kagan did not wear a morning coat to Wednesday’s argument, instead sporting a businesslike black pantsuit with an open-collared white blouse. As she said in an interview with The National Law Journal in May, the decision whether or not to break with tradition was “complicated” but the Court had signaled to her that the decision was hers to make. Some traditionalists argued in favor of the special garb, which they say underscores the unique status of the solicitor general before the Court. Some but not all female assistants and deputies in the SG’s office, as well as the Court’s marshal Pamela Talkin and women in the Court clerk’s office wear morning coats specially tailored for women.


This article can be found in its original form here.