U.S. Supreme Court Favors Corporate Free Speech Rights Over Campaign Finance Reforms . . . This Time Around

Last summer, the U.S. Supreme Court narrowly upheld a federal district court decision that ruled unconstitutional a federal law that prevented a not-for-profit 501(c)(4) organization from broadcasting certain advertisements in the months leading up to the 2004 primary and general elections. The court’s 5–4 opinion did not overrule a section of the Bipartisan Campaign Reform Act of 2002 (BCRA) outright, however, but let stand the lower court’s decision that the law, as applied to the speech in this particular case, violated First Amendment free speech protections.

While First Amendment advocates might cheer this decision protecting political speech, supporters of campaign finance reform have surely mourned, as the court’s decision takes teeth out of the BCRA, the most recent of many attempts to enact comprehensive campaign finance reform in the United States. (See "Timeline of Federal Campaign Finance Law.") Although this decision, Federal Election Commission v. Wisconsin Right to Life, Inc., leaves many questions unanswered, its effects will almost certainly be noticed in the 2008 federal election cycle. First, expect more so-called "issue ads" to air in the months leading up to the November election. And second, because the Supreme Court based its decision on an "as-applied" analysis of free speech protection—an analysis that is itself divergent and contradictory—expect more litigation involving this statute, and expect challenges to state laws that restrict campaign speech.

Facts of the Case

Wisconsin Right to Life, Inc. (WRTL) is an organization that operates through several structures to promote a "pro-life" social ideology. WRTL has a tax-exempt 501(c)(4) "general fund" that accepts corporate contributions, two 501(c)(3) tax-exempt education funds, and both state and federal Political Action Committees (PACs).

WRTL, using its 501(c)(4) general funds, commenced an advertising campaign on July 26, 2004, that urged listeners and viewers to contact both of Wisconsin’s senators, Herb Kohl and Russ Feingold. Both are Democrats; both are "pro-choice." The series of ads, which identified both senators by name, asked listeners/viewers to contact both men and urge them to stop filibustering Senate approval of President George Bush’s judicial nominees. Senator Feingold was running for re-election at the time. Although there were no filibuster votes contemplated in the Senate at the time, both Kohl and Feingold served on the Senate Judiciary Committee that considered judicial nominees.

WRTL was concerned that its radio ads would be challenged as a violation of federal election law, particularly BCRA Section 203, and filed a lawsuit on July 28, 2004, against the Federal Election Commission (FEC). Under the BCRA (also known as the McCain-Feingold law), corporations and labor unions are prohibited from financing "electioneering communications" that air during a period of time leading up to the primary and general elections. The law bans broadcast, cable or satellite communication that refers to a clearly identified federal candidate, airs within 30 days of a primary election or 60 days of a general election, and targets the relevant electorate.

WRTL planned to run its ads throughout August—within the BCRA-mandated, 30-day pre-primary blackout period. The organization sought declaratory and injunctive relief, arguing that free speech rights under the First Amendment protected the three advertisements at issue.

The federal district court denied WRTL’s request for relief, and WRTL did not run the ads during the blackout period leading up to the 2004 elections. Nonetheless, WRTL appealed. In January 2006, the Supreme Court, which had only recently upheld the challenged provisions of the BCRA (McConnell v. Federal Election Commission), said the BCRA could be challenged, as WRTL wanted, on a case-by-case basis. The Supreme Court remanded the case to the district court, asking it to reconsider whether the BCRA restrictions on electioneering communications, as applied to WRTL’s ads, violated the organization’s right to free speech.

A three-member panel of district court judges was appointed. In a reversal of the lower court’s prior decision, this time a majority granted summary judgment in favor of WRTL, holding that Section 203 was unconstitutional as applied to the WRTL advertisements. The court did not consider the electoral context in which the advertisements would have run, but used five factors to identify the type of express advocacy that could be restricted under the BCRA as "electioneering communication." The lower court considered whether the advertisement:

• Described an issue that was or "likely" soon would be a "subject of legislative scrutiny";


• Referred to the prior voting record or current position of the named candidate on the
  issue in question;


• Exhorted the audience to do anything other than contact the candidate about the issue;


• Promoted, attacked, supported or opposed the named candidate; and


• Referred to an upcoming election, candidacy or party of the candidate.

Based on these factors, the court concluded that WRTL’s advertisements were issue advocacy, not express advocacy for or against a federal candidate, and therefore were protected speech. The court also noted that the ads asked the audience to contact both Wisconsin senators, not just Senator Feingold, who was up for reelection. The panel found no compelling government interest in this case to restrict the speech contained in the WRTL ads.

The FEC and others appealed.

The Supreme Court Decision

On June 25, 2007, the Supreme Court issued its 5-4 decision upholding the district court ruling that the BCRA restriction on electioneering communication was unconstitutional as it applied to the WRTL advertisements. A majority on the court agreed on two issues in addition to affirming the lower court’s final judgment:

• The court rejected the FEC’s argument that the case was moot, because the action in question—an organization’s desire to run an ad that mentioned a candidate during the pre-election blackout period—was capable of repetition, yet had evaded review.


• Because the law at issue burdens political speech, it is subject to strict scrutiny, and therefore the government has the burden of demonstrating that the law, as applied to the WRTL advertisements, furthers a compelling governmental interest and is narrowly tailored to achieve that interest.

That is where the court’s majority opinion ends, however. Chief Justice John Roberts, who wrote the principal opinion in this case, made several key points in his discussion of the substantive campaign finance/free speech issue, but he was joined only by Justice Samuel Alito:

• The government had met its burden in McConnell, which was decided in 2003, to justify the regulation of express advocacy under the BCRA, but McConnell did not create a test for future as-applied challenges.


• He strongly rejected an intent-and-effect test for determining when an ad is the functional equivalent of express advocacy, saying: "A test focused on the speaker’s intent could lead to the bizarre result that identical ads aired at the same time could be protected speech for one speaker, while leading to criminal penalties for another."


• He suggested that the inquiry must focus on the substance of the communication. In this case, the WRTL’s ads could be interpreted as something other than an appeal to vote for or against a specific federal candidate, and therefore were not the functional equivalent of express advocacy.


• He noted that the WRTL ads: 1) focused on a specific legislative issue; 2) urged the public to take action regarding that issue; and 3) lacked "indicia of express advocacy" because they did not mention "an election, candidacy, political party, or challenger . . . and [took no] position on a candidate’s character, qualifications, or fitness for office."


• The government’s interest in preventing corruption, recognized as recently as McConnell, did not justify application of the restrictions to the WRTL advertisements in this case.


• Because WRTL’s ads were deemed not to be express advocacy or its functional equivalent, and because there was no compelling governmental interest to justify the burden on WRTL’s speech, BCRA Section 203 was unconstitutional as applied to these ads.

Justice Antonin Scalia, who was joined by Justices Anthony Kennedy and Clarence Thomas, wrote that he believed the court’s previous decision in McConnell, which upheld Section 203 as a facially valid law, should be overturned. Scalia also opined that the five-factor test used by the lower court is unconstitutionally vague—and that any functional equivalent test for express advocacy, attempting to distinguish it from issue advocacy, would be unconstitutionally vague.

A dissenting opinion, drafted by Justice David Souter and joined by Justices John Paul Stevens, Ruth Bader Ginsburg and Stephen Breyer, concludes that the principal opinion effectively does overturn McConnell.

Discussion

In his concurring opinion in this case, Justice Scalia quotes from McConnell, which said, "what separates issue advocacy from political advocacy is a line in the sand drawn on a windy day." Lawmakers have struggled for more than a century to curb campaign speech by entities such as corporations and labor unions, which can aggregate large amounts of money in an attempt to favorably influence elections. (See sidebar.)

The Wisconsin Right to Life decision increases uncertainty about how the BCRA’s restrictions on electioneering by corporations and unions should be applied in the future. On the one hand, it does not declare the ban to be an unconstitutional suppression of free speech—although three members of the five-member majority that affirmed the judgment would have done so. Rather, the WRTL decision allows "as applied," case-by-case challenges to evaluate whether specific ads constitute electioneering and therefore may be banned prior to elections, or whether they are constitutionally protected issue advocacy. One practical result of this decision is that more ads will likely be challenged, with this section of the BCRA at issue, in coming years. That is particularly likely in light of the close 5–4 decision, which divided the court neatly along its known ideological lines: Five conservatives supported the right of a conservative organization to criticize the position of two liberal senators. We will have to wait for a subsequent challenge, to ads promoting a different ideology, to see whether any one of those five who were inclined to protect free speech in this case shifts position.

In addition, the WRTL decision provides little guidance about how to analyze whether any given ad represents the "functional equivalent" of express advocacy. Because only three members of the court wanted to strike the electioneering ban, it therefore remains good law. Thus, the McConnell decision is not overtly overruled, but this decision nearly does so. Only Justice Scalia concurred with the test articulated by Chief Justice Roberts in the principal opinion, which establishes a functional equivalent test for express advocacy that essentially requires the use of "magic words": Courts should declare an ad to be "the functional equivalent of express advocacy," the chief justice wrote, "only if the ad is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate." And only a slim majority affirmed the lower court judgment, based on the "language within the four corners" of the ads and not their context, to find that the ads were neither express advocacy nor its functional equivalent, and therefore were not regulated by the BCRA, even though three members of the court considered the five factors used by the lower court to be unconstitutionally vague.

Conclusion

This WRTL case portends two trends in the not-so-distant future. Expect, yes, even more wink, wink "issue advertising," which does not support or oppose a candidate but merely discusses issues and asks viewers, listeners or readers to contact incumbents in the months leading up to the 2008 federal elections. And more ads will obviously require more spending on this type of campaign effort. Now that the Supreme Court has shown that it currently, albeit ever so slightly, favors political speech over campaign finance restrictions on speech, expect numerous challenges to state laws designed to exert control over campaign financing.

This court decision opens the door to primarily negative ads targeted at incumbents. Expect organizations to craft attack ads so they focus on an issue that is not necessarily impending but is reasonably current. And expect those ads to air primarily in locations with races involving an incumbent they oppose.

Because the WRTL case was closely decided and limits its holding narrowly to the instant facts, there is only minimal guidance to be drawn by organizations interested in undertaking issue advocacy during the upcoming election. Furthermore, because this decision favors free speech in lieu of restricting corporate and union electioneering, expect challenges to state-enacted laws that regulate corporate and union speech.

Timeline of Federal Campaign Finance Law

The following timeline traces Congress’s struggle for more than a century to impose campaign finance reforms demanded by a cynical and suspicious public.

1868: Naval Appropriations Act. Considered the first federal campaign finance law. This law banned "patronage" assessments collected from naval yard employees by political parties.

1883: Pendleton Civil Service Act. Prohibited political parties from raising funds through patronage assessments on federal employees.

1907: Tillman Act. Prohibited corporations and national banks from making campaign contributions to federal candidates.

1910: Publicity Act/Federal Corrupt Practices Act. First federal law to establish spending limits by political parties (but not candidates) and require disclosure of receipts and disbursements involving general congressional elections.

1911: Amendments to Tillman Act and Publicity Act. Spending limits were included for Senate elections, and primary elections were added to disclosure and spending limits.

1925: Federal Corrupt Practices Act (FCPA). Established expenditure caps for all federal candidates and required quarterly itemized contribution and expenditure reports.

1939: Hatch Act. Banned political activity by and solicitation of political donations from federal employees. Regulated primary elections and limited contributions and expenditures in congressional elections. Imposed caps on individual employee contributions to political parties and candidates, and an aggregate limit on individual contributions to parties and candidates.

1943: Smith-Connelly Act/War Labor Disputes Act of 1943. Prohibited labor unions from donating to federal candidates in general elections during World War II.

1947: Taft-Hartley Act of 1947. Made permanent the ban on the use of labor union treasury funds for federal general campaigns and expanded campaign finance restrictions on corporations and labor unions to include any indirect expenditures on behalf of federal candidates (e.g., buying ads instead of giving funds to a candidate).

1971: Federal Election Campaign Act (FECA) (and 1974 amendments). Limited the amount of money a candidate could give to his or her own campaign and placed limits on the amount a candidate could spend on television advertising. Also required candidates, PACs and all party committees to file reports on a quarterly basis.

Further amendments in 1974 increased reporting requirements, tightened political contribution limits to candidates and parties, imposed overall spending limits by candidates, limited party spending on behalf of candidates, and created the Federal Election Commission, the first agency responsible for administering and enforcing federal campaign finance laws.

1972: Pipefitters v. United States. Confirmed that the Taft-Hartley Act did not prevent union members from donating voluntarily to PACs.

1976: Buckley v. Valeo. Found FECA’s contribution limits and disclosure and recordkeeping requirements constitutional, but concluded that independent expenditures by persons could not be restricted, nor could expenditures by candidates using personal funds.

1978: First Nat’l Bank of Boston v. Bellotti. Concluded that corporations do have some free speech rights—struck a state law prohibiting corporations from referendum-related spending.

1986: FEC v. Mass. Citizens for Life. To avoid being unconstitutionally vague, only corporate and union expenditures on "express advocacy" are prohibited . . . the so-called "magic words" test. Also concluded that certain incorporated organizations that did not "engage in business activities" or accept corporate/union donations were not the target of FECA restrictions.

1990: Austin v. Mich. Chamber of Commerce. Upheld state statute making it a felony for corporations to use treasury funds for independent expenditures on express election advocacy—a compelling government interest existed.

2000: Bipartisan Campaign Reform Act (BCRA or "McCain-Feingold" bill). Prohibited "soft money" contributions by corporations and labor unions to national political parties and indexed individual contribution limits. Prohibited "electioneering communications" at issue in Wisconsin Right to Life v. FEC. Prohibited political parties and candidates from "coordination" to direct corporate contributions, narrowing what constitutes an independent expenditure.

2003: McConnell v. FEC. Upheld the electioneering ban for both express advocacy and its "functional equivalent."