Eighth Circuit temporarily blocks law on corporate political spending

Jessica M. Karmasek Sep. 6, 2012, 1:13pm


ST. LOUIS (Legal Newsline) - A federal appeals court said Wednesday a Minnesota law requiring that all associations make independent expenditures through an independent expenditure political fund is "most likely" unconstitutional.

The U.S. Court of Appeals for the Eighth Circuit, in an appeal from the U.S. District Court for the District of Minnesota, said the "collective burdens" associated with the state's independent expenditure law "chill" political speech.

Minnesota Citizens Concerned for Life Inc., The Taxpayers League of Minnesota and Coastal Travel Enterprises LLC sued various Minnesota state officials, challenging the constitutionality of the state's campaign finance laws.

Minnesota Citizens and Taxpayers League are nonprofit corporations and claim to be tax exempt. Coastal Travel is a for-profit Minnesota limited liability company in the travel services industry.

All three challenge certain provisions of Minnesota's campaign finance laws, claiming they violate their free speech and association rights under the First and Fourteenth amendments, as well as their equal protection rights under the Fourteenth Amendment.

Specifically, they claim Minnesota's law impermissibly violates their rights to make contributions to candidates and political parties, and independent expenditures advocating the election or defeat of a candidate.

The challenged provisions are part of the state's Campaign Finance and Public Disclosure Law and the Fair Campaign Practices Law.

Both were amended in 2010 in the wake of the U.S. Supreme Court's ruling in Citizens United v. FEC.

In that decision, the nation's high court held that corporate funding of independent political broadcasts in candidate elections cannot be limited because of the First Amendment.

Minnesota law currently prohibits corporations and limited liability companies from directly or indirectly contributing "to a major political party, organization, committee or individual to promote or defeat the candidacy of an individual for nomination, election or appointment to a political office."

Corporations and limited liability companies may, however, make an independent expenditure -- defined as "an expenditure expressly advocating the election or defeat of a clearly identified candidate" -- if the expenditure is made without the express or implied consent, authorization or cooperation of, and not in concert with or at the request or suggestion of, any candidate or any candidate's principal campaign committee or agent.

Minnesota's law basically provides two options for corporations and limited liability companies to participate in making independent expenditures. Both require compliance with certain organizational, record-keeping and reporting requirements.

In their suit, Minnesota Citizens, Taxpayers League and Coastal Travel argue the burdensome reporting requirements deterred them from making political expenditures.

In a 6-5 ruling this week, the Eighth Circuit temporarily blocked the law to the extent it requires ongoing reporting requirements from associations not otherwise qualifying as political action committees under state law -- thus reversing a decision of the district court.

"Minnesota's law hinders associations from participating in the political debate and limits their access to the citizenry and the government. The law manifestly discourages associations, particularly small associations with limited resources, from engaging in protected political speech," Chief Judge William J. Riley wrote for the majority.

"By subjecting political funds to the same regulatory burdens as PACs, Minnesota has, in effect, substantially extended the reach of PAC-like regulation to all associations that ever make independent expenditures."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

More News