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Companies, groups can spend to affect MN elections without disclosure, appeals court rules

For at least the remaining 60 days of the current election cycle, corporations and organizations will be able to spend freely and secretly to influence the outcome of Minnesota political races, including ballot questions proposing constitutional amendments, according to  a federal court decision [PDF].

In a decision that is likely to have a lasting and major impact on campaign finance regulation here, the U.S. Eighth Circuit Court of Appeals Wednesday ruled that the anti-abortion group Minnesota Citizens Concerned for Life and two other plaintiffs, including a for-profit company, do not need to establish separate political entities to spend money on elections and do not need to disclose their spending.

Sen. John Marty

“They got it exactly backwards,” said Sen. John Marty (DFL-Roseville), a longtime advocate for stricter regulation. “They’ve already taken the meat off the bones. Now they’re taking the crumbs, too.”

(Separately, the U.S. Supreme Court noted on its electronic docket that its members will consider whether to take up Prop 8 and two other same-sex marriage related cases at the Sept. 24 conference where they will begin the process of selecting cases to accept for the next term.)

The Eighth Circuit’s 6-5 decision left intact the portion of the 2010 Minnesota law barring direct contributions to candidates or political parties by corporations and organizations, citing a clear line drawn by the U.S. Supreme Court between the two types of spending.

“What this does do is it strikes down the remaining restrictions on independent expenditures,” said David Schultz, a professor at the Hamline University School of Business and an expert on campaign finance law.

David Schultz

“If Target wants to drop its entire corporate treasury to defeat, say, someone in the Legislature,” he added, “they can do so without having to establish a political fund or political committee or having to disclose that they were spending all that money to influence a state election.”

Technically, the appellate panel sent the case back to a state court for rehearing, reasoning that the portion of the law mandating disclosure was “most likely unconstitutional.” In practice, the opinion renders the law unenforceable unless the defendant, Minnesota Attorney General Lori Swanson, appeals and wins.

(Target being the most obvious example, albeit one that probably will tread more carefully, having sparked a public outcry by giving a $150,000 donation to an independent expenditure group working to defeat GOP candidate Tom Emmer’s gubernatorial rivals.)

‘Onerous’ impediments to political discourse

The Minnesota law requiring corporations and groups to set up a political committee or PAC and report on its activities creates “onerous” impediments to political discourse, Eighth Circuit Chief Judge William Jay Riley wrote.

Citing language from prior cases, the circuit court judges ruled Wednesday, “Independent expenditures are indisputably political speech, and any restrictions on those expenditures strike ‘at the core of our electoral process and of the First Amendment freedoms.’ And ‘protection of political speech is the very stuff of the First Amendment,’ ” the circuit court judges ruled Wednesday.

“Because political ‘speech is an essential mechanism of democracy,’ ‘the means to hold officials accountable to the people,’ ‘a precondition of enlightened self-government and a necessary means to protect it,’ ‘political speech must prevail against laws that would suppress it, whether by design or inadvertence,’” they concluded.

The judges relied heavily in their reasoning on the U.S. Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission. In that case, the court ruled 5-4 that political spending is a form of free speech protected by the U.S. constitution and corporations, labor unions and other groups have the same First Amendment rights as individuals.

Still can’t donate directly to candidates or parties

The groups still cannot donate directly to candidates or parties but can freely engage in so-called independent expenditures — political spending on ads or other communications intended to influence the outcome of an election.

Minnesota lawmakers quickly modified the state’s laws in response to Citizens United. And the agency charged with enforcement, the Board of Campaign Finance and Public Disclosure, has struggled to respond to the many questions left unanswered.

Most recently, the board has rejected a series of complaints asserting that groups working to insert a ban on same-sex marriage into the state constitution are flaunting the 2010 disclosure requirements. Wednesday’s decision cements what opponents of the ballot question have long feared would be the result of the local rulings: Minnesotans will go to the polls in November without knowing who financed the campaigns backing the proposed amendment.

Independent expenditures have increased in importance in recent years as corporations and other groups stymied by the ban on direct gifts to candidates have poured unprecedented amounts of money into campaigns to defeat a particular candidate or influence the perception of a constitutional question.

The resulting massive infusions of political money trouble clean-campaign advocates everywhere, but are particularly problematic in Minnesota. The state’s relatively low limits on campaign donations from individuals to candidates make it hard to combat the negative ad blitzes independent expenditures typically underwrite.

Minnesota Citizens Concerned for Life (MCCL) is a good example of a group for whom the approach has been a boon, Marty noted. Recent MCCL ads for state-level races don’t have to even mention abortion, which may be a dicey campaign issue for a pro-life candidate. They can simply smear his or her opponent on any grounds they believe will be effective.

Voters won’t know who is behind ads

Now, with the identity of the party paying for the ads off the table, voters won’t know who has a stake in the race and why, he and Schultz agreed.

“Had this decision come down two years ago, we wouldn’t have discovered Target’s donation to the organization that supported Emmer,” Schultz said. “I can give $30 million, $20 million, and not have to disclose it.”

MCCL and its co-plaintiffs, the Taxpayers League of Minnesota and the travel agency Coastal Travel Enterprises were represented by James Bopp Jr., the conservative Indiana attorney who brought Citizens United’s suit. Bopp has described himself as on a quest to “dismantle the entire regulatory scheme that is called campaign finance law.”

He has also represented the anti-gay-marriage groups that had fought disclosure of their sources of funding, the National Organization for Marriage, and its state sister group, Minnesota for Marriage.

A year ago, those two groups and the other members of the vote-yes organization Minnesota for Marriage, the Minnesota Catholic Conference and the Minnesota Family Council, complained to the state board, with Bopp’s help. Their argument on the local level: The disclosure law put “a bullseye squarely on the forehead of every NOM donor, supporter and member if disclosed.”

“This newly concocted disclosure and regulatory scheme is unlawful, is not constitutionally sound, threatens NOM members, donors and supporters with personal injury and harm,” the group charged, echoing claims rejected by courts in other states that disclosure would subject supporters of traditional marriage to violence and harassment by gay-rights supporters.

Minority differed on interpretation of Citizens United

The dissent in Wednesday’s appellate decision took issue with the majority’s interpretation of Citizens United, which many have criticized as overly broadly written and vague. The high court did not intend to do away with public disclosure, which it saw as the natural counterbalance to unchecked spending, the minority argued.

“That would be Swanson’s avenue for appeal,” Schultz noted. The odds of such an appeal succeeding are thought to be slim; the high court has already declined once to revisit Citizens United. “I don’t see many options.”

Nor did the court leave the Legislature many clear avenues for amending the law again. Marty plans to introduce a bill in the next legislative session calling for an amendment to the U.S. Constitution among other things stripping corporations of their status as persons and thus Citizens United of its rationale.

But it, too, faces astronomical odds.

“It’s a hugely difficult challenge, but democracy is worth it,” he said. “There’s no way the founders would look at what we have now and call it a democracy. Money now buys elections.”

Comments (12)

  1. Submitted by Dennis Tester on 09/06/2012 - 12:05 pm.

    Holy crap!

    Who knew we still had constitutionalists on the bench?! This nation isn’t dead yet.

  2. Submitted by Daniel Olson on 09/06/2012 - 01:28 pm.

    We must have different Constitutions Dennis…

    Where does it say in the constitution that corporations can anonymously spend unlimited money to influence elections? If money is speech, wouldn’t we know who the “speaker” is?

    • Submitted by Dennis Tester on 09/06/2012 - 10:13 pm.

      More importantly

      where does it say they can’t? The purpose of the Constitution is to define the role and limits of government. If the Founders wanted government to be able to limit political speech, they would have written the First Amendment to say so.

      • Submitted by Daniel Olson on 09/07/2012 - 12:59 pm.

        Yep, but the Constitution doesn’t prevent laws against bribery

        They didn’t write the Constitution to limit political speech, but bribing politicians is not political speech, it’s corruption. Any corporation is free to say what they want. Chick-Fil-A can say they oppose gay marriage, General Mills can say they support it. They have to deal with any fall-out, but that’s there right to speak their corporate minds. What isn’t protected speech is donating gobs of money to a candidate or running ads on their behalf. Money buys political access, which allows the wealthy to use the political system to their advantage, and funnel more wealth their way. The cycle is self-reinforcing and leaves most of us stuck in an economy rigged to the benefit of the plutocrats without the open deomocracy neccesary to correct the situation. I believe the founding fathers (except for Hamilton maybe) would be appalled how the First Amendment has been twisted to allow wholesale political corruption.

    • Submitted by Virginia Martin on 09/06/2012 - 10:44 pm.

      corporations are people

      Please point out where in the constitution it says corporations are people.
      And show us where is the definition of “personhood” as the joining of sperm and egg.

      • Submitted by Mike Worcester on 09/07/2012 - 02:55 pm.

        Five People Said So

        In the world that is the workings of the SCOTUS, corporations are people because five justices said so. Do I like that fact? Not particularly. Can we change that? Absolutely. Elections have consequences, including judicial appointments.

  3. Submitted by David Frenkel on 09/06/2012 - 04:13 pm.

    Money and corruption

    Money has already corrupted the US political system. The ABC News show Nightline did a piece last night on how both parties are influenced and corrupted by money. Do you think the billion dollar lobbying industry in DC has no impact?

  4. Submitted by Connie Sullivan on 09/06/2012 - 05:11 pm.

    These guys are afraid. They’re afraid of the people. The people don’t have the money to oppose what these anonymous bullies do, but they do have the cumulative power of the purse (i.e., boycotts and negative word-of-mouth) and the power of the vote. These corporations are afraid that the people will discover who is trying to benefit from getting people to vote against their own interests, and against the facts.

    • Submitted by Dennis Tester on 09/06/2012 - 10:17 pm.


      these corporations are afraid of morons throwing bricks through their windows because some of “the people” lack the intellectual and psychological maturity to function in a democracy where they won’t always get their way.

    • Submitted by Daniel Olson on 09/07/2012 - 01:04 pm.

      Power of the purse can only take us so far.

      Consumer power can be a good tool, but is mostly limited to pressuring retail companies such as Target. Just try to boycott Cargill or Goldman Sachs. We need enforceable laws to take back democracy. Purchasing power is a valuable tool, but can only take us so far.

  5. Submitted by Tom Christensen on 09/07/2012 - 08:44 am.

    The assult on the power of the citizen continues

    The Supreme Courts Citizens United decision is the worst decision they have ever made. Essentially it turns a one voter, one vote system into a one voter, two vote system for some. Which vote has the most influence, the money vote or the November vote? Rocket science is not required to come to a conclusion.

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