Citizens United v. Federal Election Commission (08-205), Hemi Group, LLC v. City of New York (08-969) and Briscoe v. Virginia (07-11191)

February 1, 2010 Supreme Court Update

Greetings, Court fans!

When a decision gets mentioned in the State of the Union Address and prompts calls for a constitutional amendment, you know it's a biggie. So, this Update will bring you additional details on Citizens United v. Federal Election Commission (08-205) and will also cover the two decisions released this week: Hemi Group, LLC v. City of New York (08-969), regarding RICO's causation requirement; and Briscoe v. Virginia (07-11191), a criminal decision regarding the right to cross examine analysts involved in preparing reports used at trial.

Those who have heard enough about Citizens United can jump down to the next case; those who are not yet satiated, read on: Citizens United is a conservative non-profit advocacy corporation, funding overwhelming by individuals, but receiving some funds from corporations. Prior to the 2008 election, it created a feature length "documentary" critical of then-candidate Hillary Clinton called Hillary: The Movie. Citizens United wanted to make Hillary available via free video-on-demand ("VOD") within 30 days of the primary election and to run TV advertisements for Hillary (all of which included a short, and in the Court's view "pejorative" statement about Clinton). 2 U.S.C. § 441b has long prohibited corporations and unions from using general treasury funds to make independent advertising expenditures that "expressly advocate" the election or defeat of a candidate. Due to a concern that corporations and unions were circumventing the "express advocacy" requirement via creative issue ads, Congress enacted the Bipartisan Campaign Reform Act of 2002 ("BCRA"), which amended § 441b to also prohibit corporate and union "electioneering communications," defined as "any broadcast, cable, or satellite communication" that "refers to a clearly identified candidate for Federal office" and is made within 30 days of a primary or 60 days of a general election. Federal Election Commission ("FEC") regulations further restricted "electioneering communications" to those that are "publicly distributed," which, in the case of a primary campaign, requires that the communication "can be received by 50,000 or more people in a State where a primary election . . . is being held. . . ." (The Court previously upheld the BCRA's limits on electioneering communications to the extent that they were "functionally equivalent" to express advocacy in McConnell v. FEC, 540 U.S. 93 (2003), but found the limits unconstitutional beyond those boundaries in FEC v. Wisconsin Right to Life, Inc., 551 U.S. 449 (2007) ("WRTL").) Thus, under § 441b, as amended by the BCRA, corporations and unions cannot use general treasury funds for "express advocacy" or "electioneering communications" that are functionally equivalent to express advocacy. They can, however, create separately segregated funds (known as political action committees or "PACs") for these purposes, which are funded exclusively by donations from stockholders or employees of a corporation, or by members of a union.

In December 2007, concerned that Hillary and its accompanying adds would be deemed prohibited, Citizens United sought declaratory and injunctive relief against the FEC. Citizens United argued that the BCRA's limits on electioneering communications were unconstitutional as applied to Hillary because the movie wasn't the functional equivalent of express advocacy and because the BCRA couldn't constitutionally apply to a nonprofit corporation funded overwhelmingly by individuals. Citizens United also claimed that BCRA's disclaimer and disclosure requirements, BCRA §§ 201 and 311, were unconstitution as applied. Citizens United initially asserted a facial challenge to the electioneering restriction as well, but it voluntarily dismissed that claim in the district court. Before the Court, Citizens United also raised a new statutory interpretation argument – that Hillary did not constitute an "electioneering communication" within the meaning of the BCRA.

The Court rejected each of these narrow grounds for decision in turn. Turning first to the statutory arguments, the Court found that Hillary was an "electioneering communication" because a VOD download of Hillary would constitute a "cable communication" for purposes of the BCRA and Hillary would qualify as being "publicly distributed" – notwithstanding that it would be downloaded one person at a time – because FEC regulations indicated that public distribution was measured by the number of cable subscribers in the relevant area. Next, the Court quickly dispatched the various as-applied constitutional challenges. As essentially "a feature-length negative advertisement that urges viewers to vote against Senator Clinton," Hillary did not fall within WRTL's limitation of the BCRA because it was the functional equivalent of express advocacy. (Strike one for the as-applied challenges.) And the Court would not create a constitutional carve-out for VOD based of its unique characteristics, which Citizens United argued were less likely to distort the political process, because of the ongoing line-drawing that such distinctions based on evolving technology would entail. "The interpretive process itself would create an inevitable, pervasive, and serious risk of chilling protected speech pending the drawing of fine distinctions . . . ." (Strike two.) The Court also would not carve-out from the BCRA's reach speech by non-profit corporations funded overwhelmingly by individual donations, notwithstanding that the Court had previously concluded that a carve-out was required where only individual donors were involved. This carve-out would be unprincipled, allowing for-profit corporations to make contributions to various non-profit corporations to circumvent the BCRA's requirements and once again, would require too much line drawing. "We decline to adopt an interpretation that requires intricate case-by-case determinations to verify whether political speech is banned, especially if we are convinced that, in the end, this corporation has a constitutional right to speak. . . ." (Strike three.)

The as-applied challenges were out. But Citizens United certainly wasn't, notwithstanding that it had affirmatively abandoned its broader challenge below. The Court – which had sua sponte asked for briefing on whether it should overrule McConnell, and the decades old decision, Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), which had permitted certain restrictions on corporate political speech – took up the facial challenge, overturned McConnell and Austin, struck down the BCRA's limits on electioneering communications as well as § 441b's narrower restrictions on direct advocacy . . . and implicitly did away with the numerous state laws with similar direct expenditure restrictions in the process. At this point, the majority's analysis was very simple. Corporations and unions are covered by the First Amendment (see long line of case), and the First Amendment does not permit banning speech based merely on the identity of the speaker. Bans on direct expenditures for speech on the most important political topics of the day – i.e., who will be elected – simply cannot withstand strict scrutiny. Unlike direct contributions to candidates, where there is a real risk of a perception of corruption, allowing corporations and unions to engage in speech simply does not raise the same risks of quid pro quo bribery. Though direct advertising may create an appearance of access or influence, "the appearance of influence or access . . . will not cause the electorate to lose faith in our democracy." (I'm guessing this line will not be forgotten.) The Court also found insufficient the Government's interest in protecting corporate shareholders who do not agree with the corporation's message, but are nonetheless required to foot the bill. The majority reasoned that this couldn't have been Congress's reason for the ban on electioneering communications because that concern would exist even outside the narrow time frame addressed by the BCRA and would not apply to non-profit corporations that have only one shareholder. The Court also explained why stare decisis was not a barrier, marching through decades of decisions in an effort to show (persuasively or not will be in the eye of the beholder) that McDonnell and Austin were poorly reasoned outliers, not worthy of adherence.

The Chief, joined by Justice Alito issued a concurring opinion to say that they really do believe in the principles of stare decisis and going into greater detail as to why it was okay to cast aside the "aberrational" Austin and McConnell decisions. Famous for saying that "[i]f it is not necessary to decide more, it is necessary not to decide more," the Chief also felt compelled to say that here, it was necessary to say more: "we cannot embrace a narrow ground of decision simply because it is narrow; it must also be right." Justice Scalia also penned a concurrence to respond to the dissent's historical arguments about the founders' understanding of the scope of the First Amendment. In his view, there was no reliable historical evidence other than what the founders actually wrote – an Amendment "written in terms of ‘speech,' not speakers" and the fact that the founders clearly contemplated that the amendment would cover media entities, regardless of their form.

Justice Stevens, joined by Breyer, Ginsburg and Sotomayor, authored a passionate and exhaustive 90-page dissent. First, Stevens pointed out that § 441b was not a "ban" on speech, but a targeted restriction on communications that were the functional equivalent of express advocacy during the period directly before an election. And corporations and unions could still engage in even this speech if they formed a PAC. This was not "censorship," but more similar to a time, place and manner restriction. Second, while corporations and unions have some First Amendment rights, they are not human beings and drawing distinctions based on their unique status is fully appropriate. The framers, who understood "speech" in a much more limited way – i.e., as the spoken word – probably never envisioned its application to corporations at all, particularly given their skepticism about the corrupting influence of corporate wealth. Third, the government had multiple compelling interests warranting these limited restrictions on corporate and union speech. The dissent fundamentally disagreed with the majority's conclusion that the appearance of corruption caused by direction contributions and direct advertising was different in kind: "[T]he difference between selling a vote and selling access is a matter of degree, not kind. . . . Corruption operates along a spectrum." The dissent also would find a compelling interest in protecting dissenting shareholders and union members from being compelled to fund speech that may fundamentally oppose their own political views. The antidistortion principle also supported restrictions on corporate speech because the unique characteristics of corporations (e.g., perpetual existence and limited liability), which allow them to amass and spend enormous wealth, would permit corporations to drown out the voices of flesh and blood human beings – who are the core concern of the First Amendment. Of course, the dissent also took issue with the Court's decision to consider a facial challenge that Citizens United had abandoned below. The dissent also didn't view Austin and McConnell as outliers, but as wholly consistent with prior decisions and the fact that laws similar to § 441b had been on the books for a century. Finally, the dissent argued that principles of judicial restraint should have caused the majority to decide this case on as-applied basis, if it felt that the restrictions were unconstitutional as applied to Citizens United (a non-profit advocacy corporation funded overwhelmingly by individuals) and Hillary (a feature movie to be shown via VOD). There was no reason here, to create a blanket rule that would apply even to the biggest, commercially oriented, for-profit companies.

In the only (nearly) uncontroversial part of the decision, eight members of the Court agreed that the disclaimer and disclosure provisions of the BCRA were constitutional because the government had a "sufficiently important interest" in providing the electorate with information about the sources of election-related spending. Justice Thomas was the lone dissenter on this point, as he felt that such regulations chilled speech due to the possibility of threats and harassment of the speakers.

Next, in Hemi Group, LLC v. City of New York, Chief Justice Roberts tried to set a higher bar for alleging proximate cause in civil RICO cases, but came up a partial vote short. This case stemmed from New York City's long-running effort to collect taxes on cigarettes purchased from on-line retailers. The City imposes a tax on the purchase of cigarettes but, for Commerce Clause reasons, cannot compel out-of-state retailers to collect and remit the tax. The federal Jenkins Act does require retailers to file reports with New York State listing the name, address, and quantity of cigarettes purchased by state residents; the City then uses that information to demand payment of taxes from City residents. The Hemi Group did not submit the required reports – in fact, it advertised its cigarettes as "tax free." The City sued Hemi under RICO, which provides a private cause of action to "[a]ny person injured in his business or property by reason of" a pattern of racketeering activity. The City alleged, and Roberts assumed for purposes of this case, that Hemi's repeated failure to submit Jenkins Act reports constituted mail and wire fraud, predicate acts under RICO. The City further alleged that it was injured in the form of lost tax revenue.

The Court, led by the Chief, joined by Justices Scalia, Thomas, and Alito, and joined in part by Justice Ginsburg, held that the City could not pursue a case under RICO. The Chief's opinion focused on RICO's requirement that the plaintiff's injury be "by reason of" the racketeering activity, which he likened to the common law requirement to show proximate cause. In the Chief's view, proximate cause in the RICO context required "some direct relation between the injury asserted and the injurious conduct alleged." The Chief found that the City's theory of causation did not meet RICO's direct causation requirement because there were multiple steps between Hemi's failure to submit reports to the state and the City's inability to collect taxes. Moreover, the conduct directly responsible for the City's harm (purchasers' failure to pay taxes) was distinct from the conduct giving rise to the fraud (Hemi's failure to submit reports to the State).

Justice Ginsburg wrote separately to join in the Court's opinion only to the extent it was consistent with the views she expressed, and "without subscribing to the broader range of the Court's proximate cause analysis." (It is very unusual for a concurrence to be so vague as to what portions of the decision are joined, but it is clear that Ginsburg did not join in the main thrust of the Chief's proximate cause analysis, leaving just a plurality on that point.) In her view, the City could not state a RICO claim based on Jenkins Act violations, which provides for "quite limited remedies." Justice Ginsburg rejected what she saw as the City's attempt to use RICO and its treble damages provision to make an end-run around the City's inability to compel Hemi to pay or collect taxes directly. Justice Breyer, joined by Justices Stevens and Kennedy, dissented. They would have held that the City satisfied RICO's proximate cause requirement by alleging that its injuries were reasonably foreseeable, and indeed, intended by Hemi. Justice Sotomayor, who was on the Second Circuit panel below, did not take part in this case.

Briscoe v. Virginia was a follow-up to last term's decision in Melendez-Diaz v. Massachusetts, where the Court held 5-4 that a defendant's Sixth Amendment right to confront witnesses against him bars the admission of forensic analysis evidence against him unless he is given the opportunity to demand that the analyst be produced at trial. The decision was criticized as imposing unnecessary burdens on forensic analysts and prosecutors. When the Court granted cert in Briscoe, a very similar case, it was widely speculated that new Justice Sotomayor might provide the fifth vote to overturn or limit Melendez-Diaz (as outgoing Justice Souter had been in the majority). The question presented in Briscoe was whether a Virginia statute that permitted the prosecution to introduce an analyst's report without calling the analyst to testify, as long as the defendant was given the opportunity to call the analyst himself as an adverse witness, satisfied the Sixth Amendment. The Virginia Supreme Court upheld the statute. Somewhat surprisingly, the Court summarily vacated the Virginia Supreme Court's judgment and remanded the case for further proceedings consistent with Melendez-Diaz, providing no explanation for its decision. Even more surprisingly, given the vigorous dissent in Melendez-Diaz, no justices dissented from this decision.

Finally, the Court declined to review a petition for cert by the former Panamanian dictator Manuel Noriega, who has been serving a sentence for drug trafficking and other offenses in Miami, Florida. Noriega filed a habeas petition, arguing that the United States violated his rights as a POW under the Geneva Conventions when it agreed to extradite him to France so he could face criminal charges there upon his release from U.S. custody. The Government argued, and the Eleventh Circuit agreed, that Noreiga's claims were barred by Sec. 5 of the Military Commissions Act of 2006, which provides that "[n]o person may invoke the Geneva Conventions or any protocols thereto in any habeas corpus or other civil action or proceeding." The Court denied cert, but its decision prompted a dissent from Justice Thomas, joined by Justice Scalia. In their view, Noriega's case provided a good opportunity to decide the constitutionality of Sec. 5, a critical issue in a number of post-9/11 detainee cases making their way through the courts, while "insulated from the pressures of the moment" and "uncomplicated by classified information or issues relating to extraterritorial detention." The case might also have allowed the Court to reach other questions of importance for the detainee cases, including whether the Geneva Conventions are self-executing and judicially enforceable, whether federal courts may classify noncitizen detainees as POWs, and whether the Conventions require the U.S. to immediately repatriate detainees entitled to release from U.S. custody. But, to Justice Thomas' chagrin, it looks like we'll have to wait for the Court to decide these issues as they arise in the detainee cases.

This is probably it until February 22nd. Until then, enjoy the recess!


From the Appellate and Complex Legal Issues Practice Group at Wiggin and Dana
For more information, contact Kim Rinehart or any other member of the Practice Group at 203-498-4400