There are two things that are important in politics.
The first is money, and I can’t remember the second.
Senator Mark Hanna
The U.S. Supreme Court in 2010 dramatically changed the campaign finance law by ruling that the First Amendment prohibits the government from restricting independent expenditures by for-profit corporations or non-profit corporations to influence political campaigns. Citizens United v. FEC, 558 U.S. 3110 (2010).
Citizens United was a non-profit organization that produced a film highly critical of Hillary Clinton. It wanted to advertise the movie on television broadcasts in 2008, at a time that Clinton was running for President. §203 of the McCain-Feingold Act (“BCRA”) was enacted in 2002. BCRA defined an “electioneering communication” as any broadcast, cable or satellite communication that mentioned a candidate within 60 days of a general election or 30 days of a primary election. The U.S. Supreme Court held that corporations have First Amendment rights and that §203 was an infringement on the right of corporations (for-profit and non-profit) to make indirect contributions. The Court did not address whether the First Amendment nullified federal law which prohibited direct contributions to candidates or political funds. The Court noted that because the First Amendment does not distinguish between media and other corporations, the BCRA restrictions improperly allowed Congress to suppress political speech in newspapers, books, television, and blogs. The Court also argued that the First Amendment protects associations of individuals in addition to individual speakers, and further that the First Amendment does not allow prohibitions of speech based on the identity of the speaker. Corporations, as associations of individuals, therefore have free speech rights under the First Amendment.
The Court found that BCRA §§201 and 311, provisions requiring disclosure of the funder, were valid as applied to the movie advertisements and to the movie itself. The Court ruled for the disclosure of the sources of campaign contributions, saying that transparency would allow citizens to determine the motive of the corporation and whether the contributions corrupted the elected officials.
Four Justices dissented. Writing for the minority, Justice Stevens noted that legal entities are creatures of the government are not "We the People" for whom our Constitution was established. Therefore, he argued, they should not be given speech protections under the First Amendment. The First Amendment, he argued, protects individual self-expression, self-realization and the communication of ideas. He emphasized that corporate spending is the "furthest from the core of political expression" protected by the Constitution. He argued that corporate spending on politics should be viewed as a business transaction designed by the officers for no purpose other than profit-making. Stevens called corporate spending "more transactional than ideological". He criticized the majority opinion for undermining the integrity of elected institutions across the nation and that large independent expenditures present the same dangers as quid pro quo arrangements. Finally, he argued that the credibility of elections is undermined because such indirect expenditures promote the “appearance of corruption.”
Stevens concluded his dissent with a sardonic comment: “At bottom, the Court's opinion is thus a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self-government since the founding, and who have fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt. It is a strange time to repudiate that common sense. While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics.”
Citizens United v. Federal Election Commission, 130 S. Ct. 876 (2010)
After Citizens United, Minnesota responded to the Court’s directive: it promptly changed its law to permit corporate independent expenditures, while simultaneously ensuring that these expenditures were made with the transparency called for in Citizens United.
In reaction to Citizens United, Minnesota enacted a new law in 2010 to permit corporate independent expenditures. The new law was challenged by James Bopp, Jr., the attorney behind the Citizens United case, as part of a nationwide effort to disrupt state election laws on the eve of the November 2010 election. The plaintiffs MCCL and The Taxpayers League claimed that Minnesota’s disclosure requirements violated their First Amendment free speech rights.
Plaintiffs also claimed that Minnesota’s ban on direct corporate contributions was no longer constitutional.
The Plaintiffs moved for a preliminary injunction to prohibit enforcement of the new laws. They argued that organizations that make indirect expenditures should not have to disclose the individuals who are funding the organizations. They also wanted the court to expand the Citizens United ruling and permit organizations to make direct expenditures to campaigns.
As Attorney General, Lori Swanson argued that the constitutional rights of the plaintiff corporations are not the only constitutional interests at stake. She argued that voters need to be able to make informed decisions about political candidates and messages and, to that end, voters have a right to know who is speaking about a candidate. In addition, she argued that shareholders have a right to hold corporations responsible for political expenditures.
As important, Swanson, noting that the government has an interest in avoiding any appearance of corruption, argued that transparency is a disinfectant of corruption. She pointed out that data regarding the parties who finance an organization is necessary to enforce other election laws. She also pointed out that disclosure requirements were de minimus, meaning that the corporation only had to file a report at certain benchmark dates during the election year.
On September 20, 2010, the District Court denied Plaintiffs’ motion for a preliminary injunction, and concluded that they were unlikely to succeed on the merits of the case as it relates to the above issues. The District Court found that Minnesota law – by freely permitting corporate independent expenditures; providing for the disclosure of those expenditures; and retaining limits on corporate contributions in order to combat corruption and the appearance of corruption –was constitutional and comported with Supreme Court precedent, including Citizens United.
MCCL v. Swanson, 741 F. Supp.2d 1115 (2010)
The plaintiffs appealed the case to the Eighth Circuit of Appeals. The plaintiffs challenged the Minnesota statutes on the basis that Citizens United rendered such requirements unconstitutional.
A three-judge panel affirmed the District Court in a 2 – 1 split decision. MCCL v. Swanson, 640 F.3d. 304 (8th Cir. 2011).
The Plaintiffs again appealed the matter, asking for the entire Eighth Circuit to re-hear the argument en banc. On September 5, 2012, the Eighth Circuit, in a 6 to 5 decision, affirmed the district court’s decision which upheld the Minnesota statute prohibiting direct corporate contributions and reporting and disclosure requirements regarding corporations that make expenditures during the period of time in which a report is required. The Eighth Circuit decided that that a corporation need not file a report if no contributions were made during the reporting period.
The Court of Appeals decision is a victory for the State of Minnesota even though the reporting requirement is limited to corporations that don’t make an expenditure during a particular reporting period. The Eighth Circuit decision has an interesting outcome in that five judges (in the dissent) viewed reporting as an enhancement of transparency while six judges (the majority opinion) viewed financial reporting as impermissibly burdensome (as it relates to periods with no activity).
Minnesota Citizens Concerned for Life et. al. v. Swanson, et.al.
692 F. 3d. 864 (2012)