MUSIC

Hello, this is Summary Judgment, a podcast offering easy-to-understand explanations of major court cases as they are decided.  I’m Alan Mygatt-Tauber.

This week we’re discussing Lair v. Motl, a Ninth Circuit decision addressing campaign contribution limits in Montana.

The State of Montana has long had limits on the amount of money individuals and groups can contribute to political campaigns.  In 1994, the voters in Montana passed Initiative I-118, a campaign reform package that included lowering the contribution limits on individuals while raising the cap on contributions from political parties.

These limits are not static, having been amended by the legislature and indexed to inflation.  The limits apply per election, rather than per cycle, so a contributor may give up to the maximum twice, for both the primary and the general election.

The Ninth Circuit previously upheld Montana’s campaign contributions in 2003, in a case called Montana Right to Life Association v. Eddleman.  In Eddleman, the Court held that contribution limits will be upheld if 1) there is adequate evidence that the limitation furthers a sufficiently important state interest, and 2) if the limits are closely tailored to achieving those interests.  In order to determine if a limit is closely tailored, they must a) focus narrowly on the state’s interest; b) leave the contributor free to affiliate with a candidate; and c) allow the candidate to amass sufficient resources to wage an effective campaign.

In Eddleman, the Court held that the State had a valid interest in preventing corruption or the appearance of corruption, which included instances of bribery of public officials and the broader threat from politicians too compliant with the wishes of large contributors.  The Court further held that Montana’s limits were closely tailored because they affected only the top 10% of contributions, candidates were able to amass sufficient resources to wage effective campaigns, and they caused no significant difference in the amount challengers were able to raise compared to incumbents.

Shortly after Eddleman, the Supreme Court decided a case called Randall v. Sorrell, where it examined campaign finance limits.  Although no opinion received a majority, three justices identified “danger signs” that the restrictions on contributions prevent candidates from amassing the resources needed to be heard or put challengers at a disadvantage compared to incumbents. The plurality identified four such “danger signs:” 1) the limits are set per cycle rather than per election; 2) the limits apply to contributions from political parties; 3) the limits are the lowest in the Nation; and 4) they are below limits which have previously been upheld.

Additionally, the plurality looked to five sets of considerations to determine whether the statute was closely drawn: 1) whether the limits will significantly limit the amount of funding available to challengers to run a competitive campaign; 2) whether political parties must abide by the exact same limits as others; 3) whether volunteer services are considered contributions that count toward the limits; 4) whether limits are adjusted for inflation; and 5) any special justification that  might warrant a contribution limit so low or restrictive.

The challengers then brought this suit, which the Court previously reviewed.  In that initial review, the Court held that Randall did not overturn Eddleman’s general approach, but it did hold that two Supreme Court decisions, Citizens United and McCutcheon v. FCC had limited the important state interest test to preventing quid pro quo corruption of its appearance.  On remand, the district court here held that Montana did not provide sufficient evidence that contribution limits prevent quid pro quo corruption, because, while the State had demonstrated numerous attempts to obtain political favors through contributions, none were successful.  Thus, the limits did not serve the interest and were unconstitutional.  Furthermore, the District Court held that the limits were not closely drawn because they both prevented candidates from campaigning effectively and were not narrowly focused because they were expressly enacted to combat the impermissible interests of reducing influence and leveling the playing field.  Montana appealed.

The Court first looked the whether there is adequate evidence that the limits further the important state interest of preventing actual or perceived quid pro quo corruption.  A majority of the Court noted that this step of the inquiry is divorced from the amount of the limits – it is merely a question of whether limits are allowed at all.  To meet this burden, the majority held, Montana merely had to show that the risks were more than mere conjecture.  Contrary to the District Court’s holding, the State was NOT required to show any evidence of actual quid pro quo production.  The Court held that Montana satisfied this requirement here.  The plaintiffs did not dispute that Montana’s interest justified some level of contribution limit – in fact, the plaintiffs conceded that Montana’s pre-1994 limits were constitutional.  Thus, the only question for the majority was whether Montana’s limits were “closely drawn.”

The majority held that the limits satisfy the narrow focus inquiry because they targeted only the top 10% of pre-1994 contributions, those most likely to result in actual or perceived corruption.  Furthermore, the strictest limits are on direct monetary contributions to candidates.  Contributions from political parties are capped at a much higher rate.  The plaintiffs argued that Montana could accomplish its goals with higher limits, but the majority held the Supreme Court had never required such precision in upholding limits on campaign contributions.

Additionally, the Court noted that Montana’s limits are not an outlier compared to other states.  There are several other states with lower limits.  Moreover, even if they are low in an absolute sense, they are quite reasonable compared to the low cost of campaigning in the state.  Montana’s limits are proportionally larger than both the federal limits and the limits of 12 other states.

Third, Montana’s limits are reasonable compared to the size of a typical contribution in Montana.  In 2010, in a State house rate, the average individual contributed $90, while the per cycle limit was $320.  In the 2008 governor’s race, the average contribution was only $185 when the per cycle limit was $1200.  Finally, Montana’s limits are reasonably keyed to the actual evidence showing a risk of corruption in Montana.

The majority also chastised the District Court for looking to the intent of the voters in passing the Initiative.  However, the narrow focus test is a tailoring test, not a motive test.  The question is not WHY the limits were set where they were, but if they are, in actuality, narrowly focused on serving the state’s interest in combating corruption.

Turning to the question of contributors’ ability to affiliate with candidates, the Court found that the plaintiffs had effectively conceded that contributors may associate with candidates, arguing only that some contributors may wish to give MORE money.  But they can provide volunteer or other services without running afoul of the limits.

The Court then turned to the last part of Eddleman’s closely tailored test, looking to a candidate’s ability to campaign effectively.  Based on testimony from several such candidates, the Court concluded that the limits do not prevent effective campaigning.  In 85% of the cases, donors did not make the maximum contribution.  Furthermore, the big concern is that contribution limits help incumbents and hurt challengers.  But this is not a problem in Montana.  The evidence shows that incumbents and challengers have virtually identical percentages of maxed-out contributions.  Indeed, in Eddleman, the Court noted that the average gap between the total amount of money raised by incumbents and challengers in all legislative races was only $65 per race.

Three other factors of Montana elections removed the Court’s concerns on this front: first, political parties have far higher limits than individuals and PACs and parties tend to fund challengers, while PACs fund incumbents.  Second, the limits apply per election as opposed to per cycle.  Challengers are more likely to face a contested primary, so per election limits mitigate the incumbent funding advantage.  Third, incumbents are prohibited from using excess funds from one campaign in future campaigns.  So they may not build war chests, which prevents a fundraising advantage over challengers.

The majority concluded its opinion by looking at the danger signs identified by the plurality in Randall.  Unlike that case, Montana’s limits apply per election, not per cycle; the lowest limits do not apply to political parties, nor are they the lowest in the nation.  While low in an absolute sense, they are higher than the limits struck down in Randall, and higher as a percentage of the cost of campaigning than federal limits.  They do not favor either incumbents or prevents challengers from fundraising effectively.  Parties may contribute far more than individuals and PACs and may provide campaigns with paid staffers, whose wages are not counted toward the contribution limits.  Similarly, individual contributors can volunteer for campaigns as well.  Finally, the limits are adjusted for inflation.  Thus, even under the Randall plurality’s framework, the limits are constitutional.

Judge Bea authored a short dissent.  He believed that the State failed to meet the first step of Eddleman, in that it failed to articulate a valid state interest.  He noted that, absent Citizens United, this would be an easy case for reversal, and he would have joined the majority.  But Citizens United narrowed what can constitute a valid important state interest to solely eliminating or reducing quid pro quo corruption or its appearance.  Merely preventing influence on legislators is NOT a valid important interest which justifies campaign contribution limits.

In a footnote, Judge Bea questioned whether campaign contributions could EVER constitute quid pro quo corruption, since the common sense definition would limit it to purchasing an official action that violated a politician’s obligations of office.  He recognizes that the Supreme Court expanded this definition to include infusions of money into campaigns.  But there was no evidence of such in this record.

The dissent believed that the District Court evaluated the evidence properly – there was simply no evidence of exchanges of dollars for votes or other political favors.  Furthermore, while the appearance of corruption is also a valid basis for limiting contributions, there is just no evidence of any opportunity for corruption which would lead to public concerns.  Therefore, the State lacked an interest in limiting campaign contributions, and they are thus unconstitutional.

The question of whether money equals speech has been a controversy for nearly forty years.  The Supreme Court has definitively settled the issue, however.  Money is speech and like all speech, it is subject to some regulation.  The question therefore is whether Montana’s regulations meet the requirements, and in this case I agree with the majority that they do.  I think the dissent takes too radical an approach in demanding actual evidence of successful quid pro quo corruption before states are allowed to regulate money in campaigns.

Furthermore, there was ample testimony in this case from actual politicians running for office in Montana that indicates the limits have not hampered their ability to run successful campaigns.  Even the one witness who stated that the limits were harmful had successfully run and won four campaigns under the limits, thus undercutting his claims.  Therefore, it appears that the limits prevent corruption or the appearance of it, without hampering candidates from running successful campaigns or unduly privileging incumbents.  Given the fact that the limits have met both the Ninth Circuit’s test in Eddleman, and the Supreme Court’s most recent statement in Randall as to how to evaluate these limits, Montana’s voter-approved campaign limits are constitutional and should serve as a model for other states to embrace.

And that’s our show.  Thanks so much for listening.  Links to the decision and other commentary are available in the shownotes to this episode at our website, summaryjudgmentpod.com.  You can reach out by e-mail at summaryjudgmentpod@gmail.com. You can like us on Facebook.  Or you can tweet thoughts and ideas to @podcastSJ.  Please remember to rate and review the podcast.  And if you like what you heard, please recommend the podcast to a friend!  See you next time for another Summary Judgment.

MUSIC