#17 of Genova Burns’ Anniversary Countdown of the Most Influential Cases, Events and Laws in New Jersey

Campaign finance and campaign finance reform have been consistent, hot button topics in local, state and federal elections for decades. In recent prominent elections, campaign finance laws and potential reforms have been highly scrutinized. In fact, as the 2020 Presidential Election approaches, it seems like one cannot turn on the news today without a hearing a story involving campaign finance law.

Citizens United v. Federal Election Commission was a landmark U.S. Constitutional Law, campaign finance, and corporate law case dealing with regulation of political campaign spending by organizations. The United States Supreme Court ruled 5–4, in January of 2010, that the free speech clause of the First Amendment to the Constitution “prohibits the government from restricting independent expenditures for communications by nonprofit corporations, for-profit corporations, labor unions, and other associations.”

“The United States Supreme Court is very protective, and rightly so, of our basic rights as Americans. In this case, the Court made the decision to treat corporations as persons with First Amendment Rights and ruled that to restrict corporations, associations and non-profits from making independent expenditures in federal elections was in clear contradiction to the right of free speech” said Rebecca Moll Freed, Partner and Chair of the Corporate Political Activities Group at Genova Burns. “While the decision remains highly controversial in many respects, it has set significant legal precedent around the country. The decision makes it clear that although corporations (and other entities) have the right to engage in independent spending, that right does not eclipse disclosure and disclaimer obligations.”

CASE SUMMARY:

In 2010, in the case of Citizens United vs. Federal Election Commission (FEC), the Supreme Court of the United States (SCOTUS) ruled that political spending is a form of free speech protected under the First Amendment. The controversial 5-4 decision allows corporations and labor unions to spend unlimited amounts of money to support political candidates, provided they are independent of those candidate campaigns.

In 2002, Congress passed the Bipartisan Campaign Reform Act (BCRA), widely known as the McCain-Feingold Act. A key provision of the BCRA barred corporations or labor unions from using organizational funds to support “electioneering communications” or radio, TV or satellite broadcasts that directly addressed a federal candidate within 60 days of a general election and 30 days prior to a primary.

In 2008, Citizens United, a conservative non-profit, filed for an injunction against the Federal Election Commission (FEC) in U.S. District Court to prevent the BCRA from being applied to its documentary, Hillary: The Movie. The organization hoped that the film, which strongly criticized then New York Senator and Democratic presidential candidate Hillary Clinton, could be broadcast and advertised before the 2008 primary. Citizens United believed that Section 203 of the BCRA violated the First Amendment right to free speech both in its context, as it applied to their movie, and that other BCRA provisions regarding funding and sponsor disclosure were also unconstitutional.

SCOTUS Decision

The U.S. District Court ruled against Citizens United on all counts, citing the decision by SCOTUS in McConnell vs. FEC (2003), an earlier challenge to campaign finance regulation. That ruling upheld the constitutionality of the BCRA on its merits and content. The District Court also held that the Citizen United movie amounted to “express advocacy or its functional equivalent,” as outlined in the SCOTUS decision in Federal Election Commission vs. Wisconsin Right to Life, Inc. (2003). In the end, the District Court felt the film attempted to inform voters that Clinton was unfit for the Presidency and upheld the applicability of the BRCA and Section 203.

SCOTUS agreed to review the lower court’s decision and heard the first oral arguments in the case in March 2009. While initially the Court expected to rule on narrower grounds related to the film itself, it soon asked both parties to file additional briefs addressing whether it should reconsider all or part of two previous verdicts cited by the District Court.

After the case was argued, SCOTUS handed down its 5-4 decision, which overruled its earlier verdicts regarding the constitutionality of the BCRA’s Section 203. The majority opinion, written by Justice Kennedy, maintained that the First Amendment protects the right to free speech, even if the speaker is actually a corporation or other organization. The decision removed the restriction on on corporate funding of independent expenditures, but upheld the long-standing federal ban on corporate contributions in connection with federal elections. In the dissenting opinion, written by Justice Stevens argued that the right of free speech was reserved for “individual Americans, not corporations,” and was concerned that the court’s ruling would “undermine the integrity of elected institutions across the Nation.”

In its decision, the Supreme Court endorsed the idea that contributing to a political campaign should be disclosed to the public in order to prevent corruption. The Court indicated that the public should be able to easily inform itself about corporate-funded political advertising and identify whether the candidates were beholden to corporate interests.

In the years since SCOTUS rendered its decision on Citizens United vs. FEC, millions upon millions of dollars have been spent independently in connection with local, state and national elections. Although, in the wake of Citizens United vs. FEC, many thought corporations would become more directly engaged in the political process, in the almost ten years since SCOTUS issued its decision, it seems that most independent spending is done through independent expenditure only committees (a/k/a “Super PACs”) and 501(c)(4) social welfare organizations.