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In Pursuit of Undue Influence
In Pursuit of Undue Influence:
Government Efforts to Justify Regulation
of Corporate Political Speech Since Bellotti
Robert L. Kerr
60 Hamilton Road
Chapel Hill NC 27514-4030
(919) 933-9297
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Ph.D. Student
The University of North Carolina at Chapel Hill
Submitted to:
Law Division
Association for Education in Journalism and Mass Communication
Annual Convention
August 5-8, 2001
ABSTRACT
In Pursuit of Undue Influence:
Government Efforts to Justify Regulation
of Corporate Political Speech Since Bellotti
Robert L. Kerr
Ph.D. Student
The University of North Carolina at Chapel Hill
[log in to unmask]
This study examines government efforts to establish compelling justification for regulating corporate political speech, which received constitutional protection in the 1978 First National Bank of Boston v. Bellotti decision. Courts have since rejected many government efforts to regulate corporate political speech, but have accepted narrowly drawn efforts to prevent quid pro quo corruption and to ensure that wealth amassed through the corporate form in the economic marketplace not be used to unfairly influence the political marketplace.
The Supreme Court first established a constitutional right for business corporations to engage in political speech in its landmark 1978 First National Bank of Boston v. Bellotti [1] ruling. In that ruling, it left open the possibility that a compelling government interest in regulation of corporate political speech could be justified by providing evidence of a threat to democratic processes. In doing so, it remapped the playing field for the historical tug-of-war waged between corporations and governments over the parameters of corporate political activity.
The Bellotti decision represented the culmination of a 16-year struggle between the legislature and corporate interests in Massachusetts. Corporate spending to influence the vote on referendum questions had been prohibited since 1907, with amendments between then and 1943 modifying the statute to allow such spending only if corporate interests were "materially" affected by the referendum questions. [2]
In 1962, the Massachusetts legislature first proposed a referendum to amend the state's constitutional provision forbidding graduated income-tax rates. Corporate interests were allowed to spend in the campaign that defeated the referendum, after a favorable Massachusetts Supreme Judicial Court interpretation of the statute that prohibited corporations from spending to influence voters on referenda not materially affecting the corporation. [3] A similar tax referendum was defeated in 1966, but when another was proposed in 1972, the legislature amended the statute on corporate spending so that the referendum would not be deemed to materially affect any corporation. Corporate interests again successfully challenged the statute in state courts and were allowed to spend in the campaign that defeated the referendum. [4]
When still another referendum to permit graduated income-tax rates was proposed for 1976, the legislature tightened the statute on corporate spending further and provided stiffer fines and jail sentences for its violation. [5] This time, the corporate plaintiffs' [6] challenge was unanimously rejected by the Massachusetts high court and corporations were not allowed to spend in the referendum campaign. [7] The referendum was rejected by voters, but the corporations' appeal went on to the U.S. Supreme Court, which reversed in a 5-4 decision marked by disagreement between majority and minority on almost every aspect of the case.
The majority held that speech concerning the issues in a referendum on a state constitutional amendment is the type of speech indispensable to decisionmaking in a democracy, even when the speech comes from a corporation rather than an individual; that the inherent worth of the speech in terms of its capacity for informing the public does not depend upon the identity of the source, whether corporation, association, union, or individual; and that speech that is otherwise within the protection of the First Amendment does not lose that protection because its source is a corporation that cannot prove, to the satisfaction of a court, a material effect on its business or property. [8]
The State of Massachusetts had argued that the wealth and power of corporations might drown out other points of view in political debate. The Court's majority opinion stated that if the argument had been supported by evidence that "corporate advocacy threatened imminently to undermine democratic processes . . . these arguments would merit our consideration. . . . But there has been no showing" of such evidence. [9] However, Justice White in dissent strongly endorsed that argument by the state and contended the majority ignored evidence in support of corporate influence on democratic processes. White cited examples of disproportionate corporate spending in the defeat of referenda, including the one that would have allowed a graduated income-tax amendment to the Massachusetts Constitution in 1972. [10] The majority pointed out that the referendum on the graduated income-tax amendment was solidly defeated in 1976, even though corporations were prohibited from spending to influence in the referendum that year. [11]
Thus, failure to convincingly argue corporate influence on democratic processes was in part responsible for the government's inability to persuade the majority that the government had a compelling interest in regulating corporate speech in Bellotti. At the time of the 1978 decision, efforts to regulate corporate political activity were on the books in the Federal Corrupt Practices Act [12] and in the statutes of 31 states. [13] Many had been on the books for decades, demonstrating a considerable desire on the part of state legislatures for such regulation. White found it "inexplicable . . . for the Court to substitute its judgment . . . where the expertise of legislators is at its peak and that of judges is at its very lowest." [14]
Although subsequent decisions have influenced the application of Bellotti in the two decades since the decision, it is considered the "Magna Carta" [15] of corporate speech doctrine. Since 1978, the subject of providing First Amendment protection for corporate political speech - media messages by corporations that are designed to affect social climate or political outcomes has been an issue of considerable debate. [16] Both federal and state governments have continued efforts to regulate the influence of corporate activity on democratic processes. Therefore, the purpose of this paper is to determine how governments in the two decades since Bellotti have sought to establish compelling justification for regulating corporate political speech.
Literature Review
The split on the Bellotti Court reflected the continuing societal debate over the influence of corporate activity on democratic processes. The broad issues under contention have been characterized as an attempt to resolve a core philosophical conflict between liberal democratic ideology and organizational values, [17] or between individual freedom of expression and social utility. [18] Rome and Roberts characterized the conflict as one between the belief that corporate expression differs from individual expression to such an extent that it should receive lesser or no First Amendment protection, and the belief that "protection of every species of expression . . . not only is protection of the right of the speaker but . . . is at least in part, for the benefit of listeners or recipients." [19] The philosophical debate over such underlying values continues while the legal issue of First Amendment rights for corporate political speech remains "volatile." [20]
Many scholars writing in the first few years after the decision was handed down predicted Bellotti would greatly restrict state regulation of corporate spending to influence referenda voting. "It will be difficult to draft a state statute whose burden would be held a reasonable one," Fox forecast. [21] Hart and Shore foresaw corporations of all sorts becoming "even more involved in electoral politics." [22] Baker predicted that Bellotti would seriously undermine the citizens' influence on democracy because corporate speech is dictated by profit-maximizing mandates of the market, not the human values of individuals. [23]
The Bellotti decision was interpreted historically as a departure from the Supreme Court's post-New Deal constitutional jurisprudence, which promoted equality in democratic processes, and a return to the pre-1937 "economic due process" era, strengthening the civil rights of corporations and weakening the voice of individuals in American democracy. [24] Prentice argued, however, that Bellotti "clearly allows, and even invited, government regulation of corporate electoral activity when that activity is based upon solid evidence that the target activity would lead to corruption or the appearance of it." [25]
A decade after the Bellotti decision, Garrison argued it had been substantially modified by three related 1980s decisions: Federal Election Committee v. National Right to Work Committee, in which a legislative restriction on solicitation of contributors to corporate political funds was upheld; [26] Federal Election Committee v. National Conservative Political Action Committee, in which the court reinforced a distinction of lesser rights for corporations than for individuals; [27] and Federal Election Committee v. Massachusetts Citizens for Life, in which the Court established a separate class of ideological corporations not subject to the same level of corporate speech regulation as other corporations. [28] Garrison contended those three decisions signaled a greater likelihood of carefully tailored, content-neutral regulations on corporate political spending being deemed constitutional, without the state providing a showing of imminent danger to democratic processes. [29]
Mayer characterized Bellotti as part of a larger and successful corporate effort to establish a "Corporation's Bill of Rights" as a response to the increased government regulation that began in the 1960s, asserting, "Political speech, as a means of . . . thwarting novel forms of regulation, has assumed increasing urgency for corporations." [30] According to this view, Bellotti is part of a corporate First Amendment package of rights that includes Virginia Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., which provided First Amendment protection for commercial speech; [31] Central Hudson Gas & Electric Corp. v. Public Utilities Commission, which established a balancing test for protecting commercial speech; [32] and Pacific Gas & Electric Co. v. Public Utilities Commission, which upheld the right of corporations not to be associated with speech they oppose. [33]
Scholars in the 1990s debated the extent to which Bellotti was narrowed by Austin v. Michigan Chamber of Commerce, in which the Supreme Court found constitutional a Michigan statute prohibiting corporations from spending money from their treasuries on behalf of a candidate in an election. [34] Lassman deemed Austin beneficial because "the dangers of unrestrained corporate spending are real, and the legislatures should be permitted to take appropriate action to mitigate that danger." [35] However, Winkler argued: "Due to doctrinal shifts [of MCFL and Austin], it is unclear whether and to what extent states can now regulate corporate speech." [36] Ramler condemned the decision, reasoning that restricting corporate freedom of speech would decrease "the amount of information upon which voters may rely to make intelligent decisions about the officials who will represent them in government." [37] Schofield predicted that Austin would make the First Amendment protection granted to corporate political speech by Bellotti "very easy to circumvent for a state that wishes to regulate 'free' political speech," and contended that Austin "may have weakened other fundamental rights that are currently protected by the 'compelling state interest' requirement." [38] Geary criticized Austin's definition of corruption as too broad. [39]
Other scholars have sharply judged corporate influence to be a continuing threat to democratic processes. Carey described the three great political developments of this century as the growth of democracy, the growth of corporate power, and the growth of corporate propaganda to protect corporate power against democracy. [40] Bailey asserted that the "individual rights and privileges of the First Amendment have largely been interpreted away" by the Supreme Court in Bellotti and related decisions. [41] Greenwood dismissed corporate speech as antithetical to the basic principles of democracy and deserving of no constitutional protection. [42] Friedman and May took a similar position, arguing: "First, corporations are constituted out of human individuals whose speech is already protected. . . . Second, the potential for vast corporate wealth creates the empirical possibility that corporations can overwhelm individuals in the arena of expression. Third, corporations are not entities with either a moral or constitutional prima facie entitlement to the legal protection of their expression." [43]
Weissman asserted recently that it is now the norm for corporations to engage in massive campaign spending on all initiatives and referenda that may affect corporate interests. [44] Research has shown a correlation between corporate spending and the outcomes of elections, although the outcomes may be affected by other variables. Mastro, Costlow, and Sanchez documented the dramatic defeat of three Colorado initiatives that appeared headed for certain voter approval before the inflow of heavy corporate spending in opposition. [45] Similar findings in other initiative studies have been reported by Easley, [46] Lagasee, [47] and Shockley. [48]
Among scholarship embracing corporate political speech as a force for good, Epstein argued that corporations "should be placed on a legal parity with other social interests" because the corporation "contributes to the maintenance of pluralistic democracy in America rather than endangers it." [49] Wolfson contended, "Virtually all of political speech is a dialogue involving economic self-interest." [50] Sethi argued that individuals will be made aware by alternate sources if a corporation's actions are incongruent with its messages. [51] Sunstein asserted there is "a large social interest in hearing what corporations have to say about public issues," emphasizing that "no one is forced to believe what the corporations claim." [52]
Butler and Ribstein made the case that "corporate power may, in fact, better represent voter support than the groups that would gain from a reallocation of power" because "corporate speech must conform at least generally with the views of a cross-section of the community" or risk alienating shareholders, consumers, employees, and other publics critical to the success of the organization. [53] Redish and Wasserman asserted that constitutional protection for corporate political speech actually fulfills First Amendment values because "the corporate form performs an important democratic function in facilitating the personal self-realization of the individuals who have made the voluntary choice to make use of it," and "corporate speech may serve a vital role in checking potential government excesses." [54]
Critical themes that run through the literature on corporate political speech highlight the debate over whether such speech undermines or advances democratic processes and over the degree of difficulty that Bellotti and related decisions present for federal and state governments in their efforts to regulate corporate political speech. Although the questions are certainly interrelated, it is the latter issue that is the specific concern of this study.
Research Questions, Method, and Limitations
It is relevant for a democratic society seeking to resolve the legal and social implications of corporate influence on electoral and governance processes to clarify how the courts are assessing governmental efforts to justify regulation of corporate political speech. As the review of the literature has shown, there has been no recent comprehensive analysis of how governments have sought to assert compelling interests for regulating corporate political speech in the wake of Bellotti. The purpose of this study is to provide that analysis through the framework of these research questions:
ù How have governments in the two decades since Bellotti sought to establish compelling justifications for regulating corporate speech?
ù What arguments have been more successful?
ù What arguments have been less successful?
Critical analysis of corporate political speech case law was employed in seeking to answer these questions. Potentially relevant cases were identified through searches of Shepard's United States Citations and the LEXIS databases of U.S. Supreme Court, federal appellate court, and federal district court decisions since Bellotti, and state high court decisions over the past 10 years. [55] Then all such cases in which government regulation of corporate political speech was at issue were analyzed according to the criteria of the research questions.
Many of these cases also addressed other issues, such as campaign finance matters not specifically implicating corporate involvement. Such issues were not examined in this study. The focus was maintained on government efforts to assert compelling justifications for regulation of corporate political speech. Nevertheless, campaign finance and corporate speech have increasingly become intertwined because of the U.S. Supreme Court's ruling in Buckley v. Valeo that money is speech: "A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today's mass society requires the expenditure of money" [56] It is also important to note that the cases discussed that involved campaign finance regulations are considered corporate speech cases because they involved First Amendment issues relevant to corporate speech. Thus, these cases are distinguished from campaign finance cases decided on other constitutional issues.
U.S. Supreme Court Case Analysis
This section details government efforts to assert compelling justification for regulation of corporate political speech before the U.S. Supreme Court. Most such efforts have failed. However, governments have succeeded in a few key cases in which they demonstrated justification for carefully drawn efforts to prevent quid pro quo corruption and to ensure that wealth amassed through the special advantages of the corporate form in the economic marketplace not be used to unfairly influence the political marketplace.
In Central Hudson Gas & Electric Corp. v. Public Utilities Commission, In June 1980, the Supreme Court ruled 8-1 that the New York State Public Service Commission's ban on promotion of electrical energy by utility companies was unconstitutional. [57] Commercial speech issues were critical in the Court's resolution of the legal questions involved, [58] however the ramifications of the case went well beyond "speech which does 'no more than propose a commercial transaction,' " [59] At issue was the urgent political debate over how the United States should address the energy crisis spawned by demands for oil exceeding available supplies in the 1970s and early 1980s. Justice John Paul Stevens argued in his concurring opinion on the decision that the Public Service Commission ban suppressed corporate political speech beyond commercial speech, because the banned promotional advertising could address questions under debate by political leaders. [60] The government asserted energy conservation as the greatest of its compelling interests and argued that the speech banned was significantly different from the pure commercial speech extended protection by Virginia Pharmacy. [61] The government also asserted electrical rate stability as a compelling interest, contending that promotion of electrical usage would increase demand for expensive new generating plants, which would lead to rate increases. [62]
The Court ruled that even though the ban advanced the government's interest in conserving energy, it was more extensive than necessary. The Court said the government had failed to show it was unable to utilize a more limited regulation to protect its interest in conservation. Citing Bellotti as precedent, Justice Lewis Powell wrote, "To the extent that the Commission's order suppresses speech that in no way impairs the State's interest in energy conservation, the Commission's order violates the First and Fourteenth Amendments and must be invalidated." The Court also held that the government's interest in rate stability was substantial but too tenuous and speculative to justify the ban. [63]
In Consolidated Edison Co. of New York v. Public Service Commission of New York, also in 1980, the Court struck down as an infringement of free speech an order of the New York Public Service Commission that prohibited public utility companies from discussing controversial issues of public policy in inserts with monthly utility bills. [64] The Court based its decision in part on the Bellotti holding that "[t] he inherent worth of the speech in terms of its capacity for informing the public does not depend upon the identity of its source, whether corporation, association, union, or individual." [65] The government had contended the ban was justified by four compelling state interests: assuring that the limited space in bill inserts was used for utility-service related purposes; preventing ratepayers from becoming a captive audience for utility management's views; assuring that ratepayers were not required to subsidize the dissemination of views with which they might disagree; and preventing the bill insert from being established as a public forum and lessening its usefulness of the insert for providing utility-service related information. [66]
Justice Powell wrote in the majority opinion for the 7-2 decision that the Commission had banned political messages on the basis that it could determine what material was useful to consumers and what was not, thereby making the ban content-based. [67] On the government's "captive audience" assertion, the Court held that bill recipients were free to discard inserts without reading them, noting "[e]ven if there were a compelling state interest in protecting consumers against overly intrusive bill inserts, it is possible that the State could achieve its goal simply by requiring Consolidated Edison to stop sending bill inserts to the homes of objecting customers," Regarding the "limited space" interest, the Court said that billing envelopes could not be considered limited space the way that broadcast frequencies are, because envelopes are not a "scarce, publicly owned resource. . . broadcasting on a single frequency." The Court also dismissed the government's asserted interest in sparing ratepayers from subsidizing the dissemination of views with which they may not agree, concluding, "There is no basis on this record to assume that the Commission could not exclude the cost of these bill inserts from the utility's rate base." On the government's "public forum" interest, the Court noted, "Consolidated Edison has not asked to use the offices of the Commission as a forum from which to promulgate its views. Rather, it seeks merely to utilize its own billing envelopes to promulgate its views on controversial issues of public policy." [68]
In Citizens Against Rent Control v. City of Berkeley in 1981, the Court held unconstitutional a Berkeley, Cal., ordinance [69] placing a limitation of $250 on contributions to committees formed by individuals or corporations to influence referendum measures submitted to a popular vote. [70] The decision reversed a California Supreme Court decision that concluded the ordinance furthered compelling governmental interests because it ensured that special interest groups could not corrupt the initiative process by spending large amounts to support or oppose a referendum. Such corruption, the state court found, could weaken voter confidence in democratic processes. [71] The U.S. Supreme Court rejected that reasoning, however, relying on Bellotti's assertion that the risk of such corruption is not present in referenda because they are held on issues rather than individuals, and the former cannot be corrupted by political debt as the latter may. [72] That reasoning derived from Buckley's assertion of "quid pro quo" corruption: "To the extent that large contributions are given to secure political quid pro quo's from current and potential office holders, the integrity of our system of representative democracy is undermined." [73]
In Federal Election Commission v. National Right to Work Committee in 1982, the Court unanimously upheld a section [74] of the Federal Election Campaign Act of 1971 that prohibited corporations or labor unions from soliciting contributions for separate segregated funds except from members of the organization. The decision described the regulation as the culmination of a "careful legislative adjustment of the federal electoral laws . . . to prevent both actual and apparent corruption . . . [reflecting] a legislative judgment that the special characteristics of the corporate structure require particularly careful regulation." [75] The decision signaled the direction for future government efforts in regulating corporate political speech.
The government argued a compelling interest in ensuring that the "substantial aggregations of wealth" accumulated through the special legal protections granted the corporate form [76] not be converted into political "war chests," the deployment of which could incur political debts from candidates in elections, as the Court had said in United States v. United Auto Workers. [77] The government maintained that Congress had acted to prevent corporations from using their general treasury funds to influence federal elections "only after it became aware of widespread abuses that were thought to present imminent danger of corruption to the federal election process, resulting in a decline of public confidence in the integrity of elected officials and the fair operation of government." [78] It was asserted that this had been repeatedly recognized by the Court in UAW, Buckley, [79] and Bellotti as "a governmental interest of the highest order." [80] The government also argued the interest of protecting individuals who may have paid money into a corporation for purposes other than the support of candidates from having that money used to support political candidates to whom they may be opposed, citing the precedent of United States v. Congress of Industrial Organizations. [81] The government contended it must safeguard each individual's First Amendment interest in making "a personal decision about the political options he or she will support." [82]
The Court agreed that the interests Congress had sought to protect in that legislation were compelling enough to outweigh the First Amendment rights of association asserted by NRWC. Citing California Medical Association. v. Federal Election Committee, [83] and Bellotti, Justice William Rehnquist said in the majority opinion, "The governmental interest in preventing both actual corruption and the appearance of corruption of elected representatives has long been recognized and there is no reason why it may not in this case be accomplished by treating unions, corporations and similar organizations differently from individuals," [84]
In Federal Election Commission v. National Conservative Political Action Committee in 1985, the Court distinguished campaign expenditure limits on political action committees from regulation of corporate political activity. [85] The decision ruled unconstitutional a section of the Presidential Election Campaign Fund Act that made it a criminal offense for an independent political committee to expend more than $1,000 to further the election of a presidential candidate who had elected to accept public financing. [86] The Court also distinguished its decision in NCPAC from its NRWC decision:
The groups and associations in question, designed expressly to participate in political debate, are quite different from the traditional corporations organized for economic gain. . . . While in NRWC we held that the compelling governmental interest in preventing corruption supported the restriction of the influence of political war chests funneled through the corporate form, in the present cases we do not believe that a similar finding is supportable. . . . The effort to link either corruption or the appearance of corruption to independent expenditures by PACs, whether large or small, simply does not pass this standard of review. Even assuming that Congress could fairly conclude that large-scale PACs have a sufficient tendency to corrupt, the overbreadth of 9012(f) in these cases is so great that the section may not be upheld." [87]
During the trial of this case in the U.S. District Court, the government had attempted to establish a compelling interest in addressing actual corruption or the appearance of corruption by asserting evidence of high-level appointments in the Reagan administration of persons connected with the PACs and through newspaper articles and polls purportedly showing a public perception of corruption. The district court found the evidence did not establish corruption of candidates or public perception of corruption of candidates. [88] The U.S. Supreme Court agreed "that the evidence falls far short of being adequate for this purpose." [89]
In Pacific Gas & Electric Co. v. Public Utilities Commission of California in 1986, the Court unanimously found unconstitutional an order by the Utilities Commission that required the utility corporation to include messages from a consumer group in the "extra space" of its billing envelopes because it compelled the utility to associate with messages with which it did not agree. [90]
The government had argued that the regulation was distinguished from those struck down in Bellotti and Consolidated Edison because the Commission had placed "no cognizable restriction on protected affirmative speech." Therefore, the government contended, no compelling justification was actually required because the Commission's order was a permissible time, place, manner restriction with no content regulation. [91]
On the basis of that reasoning, the government asserted it need meet only the lesser standard of a significant interest in the regulation, which it asserted as maximizing both consumer participation in Commission proceedings and understanding of energy-related issues - goals intended to enhance the Commission's fulfillment of its California constitutional and statutory duty to regulate public utilities in the public interest. The government maintained the "extra space" order would advance better consumer understanding of regulatory issues and provide the Commission with fuller information upon which to make its decisions, while contributing to the furthering of free speech by exposing ratepayers to a variety of views other than PG&E's . [92]
The Supreme Court found the regulation impermissibly burdened the utility's free-speech rights by requiring it to associate with speech with which it might not agree. In the majority opinion, Justice Powell wrote that the critical considerations relevant to Pacific from Bellotti and Consolidated Edison were that "the State sought to abridge speech that the First Amendment is designed to protect, and that such prohibitions limited the range of information and ideas to which the public is exposed." [93] The Court held the Commission's order was not content neutral but discriminated on the basis of the viewpoints of the selected speakers. [94] Regarding the state's asserted interest in furthering fair and effective utility regulation, the Court said it might be compelling but the government could serve that interest through other means that did not violate the utility's First Amendment rights. Concerning the government's asserted interest in promoting speech by making a variety of views available to appellant's customers, the Court said "the means chosen to advance variety tend to inhibit expression of appellant's views in order to promote [the consumer group's]. Our cases establish that the State cannot advance some points of view by burdening the expression of others." The Court cited Bellotti and Valeo in support of that holding. [95]
In Federal Election Commission v. Massachusetts Citizens for Life, Inc. the same year, the Court found that the section [96] of the Federal Election Campaign Act prohibiting corporations from using treasury funds to make expenditures in connection with elections was unconstitutional when applied to a class of ideological corporations it defined in the 5-4 decision. [97] In asserting its compelling interest, the government had emphasized the Court's support in FEC v. NRWC four years earlier for preventing corruption through the influence of political war chests funneled through the corporate form as a governmental interest of the highest order. "MCFL's corporate structure carries the same potential for influencing elections as NRWC's since both are nonprofit, issue-oriented corporations," the government argued. [98] The government also asserted the compelling interest accepted in NRWC of protecting individuals who have paid money into a corporation for purposes other than political activity. The third compelling interest asserted was the regulations requirement of public disclosure of the sources of federal campaign financing, which the government said reflected Congress's desire to insure that voters are fully informed and that publicity deters corruption and undue influence. This was achieved, the government argued, in the least intrusive way by requiring such corporate campaign spending to be done through separate segregated funds, the absence of which would "open the way to the use of such corporations as a vehicle through which any corporation or union would be able to transform unlimited amounts of its treasury funds into political expenditures, while keeping the actual source of the financing secret." [99]
The Court agreed that government-created advantages can enable corporations to use "resources amassed in the economic marketplace" to obtain "an unfair advantage in the political marketplace. . . . The resources in the treasury of a business corporation . . . are not an indication of popular support for the corporation's political ideas. They reflect instead the economically motivated decisions of investors and customers. . . . These resources may make a corporation a formidable political presence, even though the power of the corporation may be no reflection of the power of its ideas." [100] However, the Court ruled the regulation's restriction of independent expenditures was unconstitutional as applied to corporations like MCFL that were formed to disseminate political ideas rather than amass capital and thus should not be subject to the concern underlying regulation of political activity by business corporations. [101] In its decision, the Court established a three-part test to distinguish ideological corporations like MCFL from business corporations. [102]
The Court's NRWC and MCFL holdings provided the decisive basis for the government's assertion of compelling justification in the Supreme Court's most recent corporate speech case, Austin v. Michigan State Chamber of Commerce. In the landmark 1990 decision, the Court found constitutional a section [103] of the Michigan Campaign Finance Act that prohibited corporations, (excluding media corporations) from using general treasury funds for independent expenditures in connection with state candidate elections. [104]
The government emphasized key points from the NRWC and MCFL decisions to make its case of compelling justification. The government asserted that the regulation served the two interests that the Court had held compelling in NRWC: (1) Ensuring that aggregations of money amassed by the special advantages of the corporate form not be converted to potentially corrupting political war chests and (2) protecting individuals who pay money into a corporation for purposes other than political activity from having their money used in support of candidates whom they may not support. [105] The brief also asserted that the regulation served a third interest for limitations on corporate expenditures that was deemed compelling by the Court in MCFL: To prevent organizations that accept contributions from business corporations from serving as conduits for corporate spending that threatens the political marketplace.
The government argued that the Michigan Chamber of Commerce did not qualify for MCFL's exemption for ideological corporations [106] and that the Michigan regulation on corporate expenditures was distinguished from the landmark rulings on expenditures in Buckley and Bellotti. Although Buckley struck down a limit on independent expenditures by individuals and political committees, [107] the government asserted that in that case the Court did not consider the constitutionality of a ban on independent expenditures as applied only to corporations. [108] Concerning Bellotti, the government argued that although it struck down a complete prohibition against corporate expenditures in referendum issues, [109] the Court did not consider the validity of regulations such as Michigan's that restricted corporate expenditures to segregated funds in candidate elections. [110]
Justice Thurgood Marshall wrote in the majority opinion that "Michigan identified as a serious danger the significant possibility that corporate political expenditures will undermine the integrity of the political process, and it has implemented a narrowly tailored solution to that problem." The Court found the government's asserted interests compelling, holding that requiring corporations to make campaign expenditures through separate funds solicited expressly for political purposes reduced the threat that "huge corporate treasuries amassed with the aid of favorable state laws will be used to influence unfairly the outcome of elections." The Court also rejected the Michigan Chamber's argument that it should qualify for exemption from the regulation as an ideological corporation under the MCFL test. [111]
The Court noted its Bellotti assertion that a legislature might demonstrate a danger of real or apparent corruption posed by campaign candidate expenditures by corporations, and added that the quid pro quo corruption required by Buckley to establish compelling interest was not required to justify the Michigan restriction on independent expenditures: "Michigan's regulation aims at a different type of corruption in the political arena: the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public's support for the corporation's political ideas. . . . It ensures that expenditures reflect actual public support for the political ideas espoused by corporations." Thus, reasoning that "corporate wealth can unfairly influence elections when it is deployed in the form of independent expenditures, just as it can when it assumes the guise of political contributions," the court held that the government had articulated a sufficiently compelling justification for restricting independent expenditures by corporations. [112]
In summary, the Supreme Court has rejected many government efforts to assert compelling justification for regulation of corporate political speech, but has accepted narrowly drawn efforts to prevent quid pro quo corruption and to ensure that wealth amassed through the special advantages of the corporate form in the economic marketplace not be used to unfairly influence the political marketplace. The latter concern encompasses the Court's acceptance of the interest in protecting individuals who have paid money into a corporation for purposes other than political activity. The interests that the Court has found compelling were emphasized in the Austin case, in which the government carefully calibrated its arguments to justify regulations that were distinguished from both Bellotti (which did not consider the restricting of corporate expenditures to segregated funds in candidate elections) and from Buckley (which did not consider a ban on independent expenditures as applied only to corporations). In Austin, the government relied critically upon precedents from NRWC and MCFL in making its case for compelling justification.
Lower Court Case Analysis
In determining whether regulation of corporate political speech is justified by compelling interest, lower courts' application of the precedents of the Supreme Court has reflected the narrow parameters within which such efforts must be framed in order to succeed. A government must meet one of the standards of quid pro quo corruption or unfair deployment of corporate wealth in order to establish a compelling interest. Some lower courts have expressed questions as to how Austin could affect interpretations of Bellotti, particularly regarding limits on corporate political speech related to referendum issues. However, no regulation of corporate political speech in referenda has been upheld.
In Vote Choice, Inc. v. Di Stefano in 1992, the U.S. District Court for Rhode Island applied Bellotti in ruling that it was unconstitutional for a Rhode Island statute [113] to prohibit corporate expenditures made to influence the outcome of a referendum. While noting it considered Bellotti to control the question in the case before it at that time, the court questioned whether Austin might "eventually emasculate or overrule Bellotti" on corporate political speech intended to influence referenda. [114]
In Associated Industries of Massachusetts v. Attorney General in 1994, the Supreme Judicial Court of Massachusetts determined that the state attorney general properly certified an initiative petition proposing to require corporations to solicit funds and make contributions and expenditures in referenda campaigns only through separate segregated funds. [115] In reaching its decision, the court relied on the constitutionality of the certification under Massachusetts' freedom of speech law, rather than federal law, stating that the precedent of a 1946 Massachusetts case was controlling on questions of whether an initiative proposal should be submitted to voters. [116] Asserting ambiguity in the Bellotti precedent in light of the later decisions in Austin and MCFL, however, the Massachusetts court observed that it was reasonable for the attorney general to look to those decisions "to argue that the Court has departed from the reasoning" of Bellotti. [117] The court asserted, "The likely position of the Supreme Court of the United States on the significant constitutional issue before us is not clear. . . . We regard ourselves as fortunate that we need not attempt to resolve the uncertainty of the constitutionality of the proposed law under the First Amendment." [118]
The Massachusetts court noted that although neither Austin nor MCFL was decided on the question of referenda, the Bellotti Court had left open the possibility that if there had been showing in that referendum case of "record or legislative findings that corporate advocacy threatened imminently to undermine democratic processes . . . these arguments would merit our consideration." [119] The Massachusetts court suggested that in light of that assertion and the more recent corporate speech cases, "[t]here may be a compelling State interest in a restriction on the use of corporate funds on ballot questions." [120] The Massachusetts court cautioned that although the limited record provided regarding the certification question did not present the showing of findings for which the Bellotti Court called, "it does not mean that such an interest does not exist or could not be shown on a full record." [121]
In Day v. Hayes in 1994, the U.S. District Court for Minnesota upheld that state's regulations [122] of corporate contributions and expenditures in a challenge brought by two non-profit corporations and several individuals. [123] The court ruled the regulation correctly applied the stipulations of Bellotti concerning protection of corporate speech on referendum issues, of MCFL concerning exemptions for ideological non-profit corporations, and of Austin concerning independent expenditures by corporations. [124] The court ruled that the government had a compelling interest in regulating corporate expenditures to avoid the risk of quid pro quo corruption in the political appointment process. The court held that the available legislative record showed the intent of the enacting legislature was to reduce the potential for corruption and the appearance of corruption in the political processes due to the influence of large financial contributions. The court ruled that that legislation represented an effort to restore and maintain citizens' confidence in their government rather than to suppress the First Amendment rights of the plaintiffs. [125]
In Toledo Area AFL-CIO Council v. Pizza in 1995, the U.S. District Court for the Northern District of Ohio upheld sections of that state's newly enacted regulation [126] of political contributions by corporations against a challenge that the statutes targeted labor organizations. [127] In doing so, the court noted that the Ohio regulation was similar to the regulation upheld in Austin, in which the government had targeted "the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public's support for the corporations' political ideas" and had "articulated a sufficiently compelling rationale to support its restriction on independent expenditures by corporations." [128] Therefore, the Toledo court found a compelling justification for the Ohio regulation, reasoning, "While similar articulation is not apparent in Ohio due both to the wording of the statute and the lack of legislative history, this Court assumes that the Ohio legislators considered the same issues . . . in adopting similar restrictions." [129]
In Clifton v. Federal Election Commission in 1997, the U.S. Court of Appeals for the First Circuit declared invalid portions of an FEC regulation that prohibited corporations and unions from expressly advocating the election or defeat of particular identified candidates. The regulation also stipulated that even without such advocacy "the decision on content and the distribution of voting records shall not be coordinated with any candidate, group of candidates or political party." [130] The First Circuit majority concluded it could decide the case without addressing constitutional issues of corporate speech law, instead reaching its decision on the narrower basis of vagueness in the statutory language. [131] However, in a remarkable, exhaustive dissent twice as long as the majority opinion, Senior Circuit Justice Hugh Bownes argued that the case should have been decided on the basis of the compelling governmental interest in preventing corruption and corporate domination of the political process as established in Austin. [132] After reviewing Supreme Court case law on corporate political speech (and more broadly campaign finance law), Bownes concluded, "[T]he Court's jurisprudence on campaign finance is evolving, especially with respect to the use of corporate wealth in candidate elections. The Court now recognizes that the corrosive and distorting effect of big money to influence elections is a legitimate governmental concern." [133] Nevertheless, the U.S. Supreme Court denied certiorari. [134]
In Montana Chamber of Commerce v. Argenbright in 1998, the U.S. District Court for Montana struck down an initiative approved by Montana voters in 1996 and made law [135] in 1997 that prohibited corporate speech on referendum issues unless financed by segregated funds. [136] At trial, the government's evidence in support of its compelling interest in the regulation included representatives of citizens' groups who testified that their efforts were overwhelmed by corporate opposition, polling data showing that Montana citizens considered corporate spending in referendum campaigns excessive, and expert analysis of contribution patterns and corporate media messages. [137] Plaintiffs countered with testimony by corporate officials that the regulation had chilled corporate speech, as well as expert testimony that corporate influence was a minor factor in deciding referendum campaigns and that voter participation in Montana exceeded national averages in various measures. [138]
In his decision, Judge Charles C. Lovell dismissed the government's case in support of its compelling interest in the regulation as "meager anecdotal evidence" while characterizing the plaintiff's evidence as "enlightening" and "credible and persuasive." [139] On the basis of that finding, the court concluded:
The State has failed to show that corporate contributions or expenditures in ballot initiative campaigns have had any adverse effect on the integrity of Montana's political process. Specifically, the State has failed to produce evidence that would support a judicial finding that corporate wealth has dominated citizen voices to the detriment of the ballot initiative process. . . . The popular sentiment among Montana voters may be that there is too much corporate money influencing ballot issue campaigns and also that it is exceedingly difficult for ordinary citizens to participate successfully in some ballot issue campaigns. However, the law of the United States is that political speech is protected by the First Amendment, and this rule of law benefits all Montanans. [140]
In affirming that decision, the Ninth Circuit U.S. Court of Appeals focused its opinion on the question of whether Austin provided precedent for requiring corporate political expenditures in referendum issues to be made through separate segregated funds. The appeals court concluded that it did not and that Bellotti's rejection of government regulation of corporate speech related to referendum issues remained the controlling authority on the question. "Even if Austin may plausibly be read as undermining Bellotti, this is for the Supreme Court, not us, to say," the court said. [141]
In State of Alaska v. Alaska Civil Liberties Union in 1999, the Supreme Court of Alaska found constitutional most of the provisions of that state's campaign finance regulation, including a ban [142] on contributions by corporations, labor unions, and other entities meeting the three-part test MCFL test. [143] The government's evidence in support of its compelling interest in the regulation included "a study commissioned by the state senate; fifteen affidavits, including affidavits from former Governors Steve Cowper, Jay Hammond, and Walter Hickel, and former house member David Finkelstein; news clippings; Alaska Public Offices Commission (APOC) reports; and campaign disclosure records." The plaintiff provided no factual evidence and only three affidavits to challenge the government's interest in the regulation. [144] The court found the state's evidence "confirmed the disproportionate influence" of corporations, but noted that regulation of corporate political activity reflects "concern not about use of the corporate form per se, but about the potential for unfair deployment of wealth for political purposes." [145]
In that 1999 decision, the Alaska court detailed a history of campaign finance jurisprudence and offered a summary of its reading of that case law as it stood at the time of the decision. In doing so, it also arguably provided a useful synopsis of the state of corporate political speech law:
These cases leave us with a jurisprudence based on the threat of corruption and the appearance of corruption, and dependent on case-specific analysis. Speech relating to ballot initiatives (where quid pro quo corruption is not a significant danger) is entirely protected. In campaigns for political office, individual speech is protected to the extent it is independent and poses no danger of quid pro quo arrangements; contributions and coordinated expenditures are subject to regulation. Corporations that meet special nonbusiness criteria (as per MCFL) pose no danger of corruption, and have rights similar to those of individuals. But corporations that do not meet those criteria are - given the threat of corruption their state-created advantages pose - completely subject to regulation. [146]
Conclusions
Analysis of court opinions involving corporate political speech indicates that the case law evolving from Bellotti has not ended government regulation of corporate political speech but certainly has made it more complex. The courts have ruled unconstitutional many government efforts at such regulation. However, governments that have carefully designed their regulation of corporate political activity to fit within the dictates of Bellotti and related decisions have had regulations upheld.
Over the two decades since Bellotti, governments have unsuccessfully sought to assert compelling justification for a range of interests that have included:
ù energy conservation (if, as Justice Stevens did, one considers Central Hudson not only a commercial speech case but also a corporate speech case);
ù to avoid forcing corporate views on a captive audience;
ù to allocate limited resources in the public interest;
ù to ensure that the public does not subsidize the cost of corporate speech;
ù to prevent special interest groups from corrupting the initiative process by spending large amounts to support or oppose a referendum measure;
ù to further effective utility ratemaking proceedings;
ù to promote speech by making a variety of views available to consumers;
ù and to prevent corporate money from influencing referendum campaigns.
Governments have successfully asserted compelling justification for only two interests. However, they are far-reaching:
ù to prevent quid pro quo corruption;
ù and to ensure that wealth amassed through the special advantages of the corporate form in the economic marketplace not be used to unfairly influence the political marketplace.
Governments have been most consistently unsuccessful when attempting to regulate corporate speech relating to referendum issues and when seeking to regulate expenditures by ideological or non-business corporations. Governments have been most often successful when targeting quid pro quo corruption and "the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public's support for the corporations' political ideas" [147] Models for governments seeking to regulate corporate political speech are offered by the campaign-finance regulations of Michigan, Minnesota, Ohio, and Alaska, which were tailored to meet the restrictions set forth in Bellotti and related decisions.
Court decisions over the years since Bellotti have shown that governments may still regulate corporate political speech, but the parameters within which they may do so constitutionally are very narrow. A strong aversion has been established to any content regulation of corporate political speech and to any regulation of corporate political speech related to referendum issues. And unless governments can make a compelling case establishing that any regulation of corporate political speech addresses some form of real or apparent corruption, the regulation is virtually guaranteed to be found unconstitutional.
However, it must be recognized that it is unlikely that this area of law is settled. As discussed, several lower courts have suggested that uncertainty remaining in the interpretation of corporate speech case law may need to be addressed by the Supreme Court. Also, in their various opinions on a 2000 case involving state limits on contributions to political candidates, five current Supreme Court justices expressed interest in reassessing the Buckley standards. [148] Such a reassessment could have significant repercussions for corporate speech jurisprudence. It also should be noted that only two justices from the Bellotti Court (Chief Justice Rehnquist, who dissented, and Justice Stevens, who voted with the majority) remain on the bench. Further, Rehnquist and Stevens are the only two justices remaining from the Austin majority, while all three dissenting Justices (Antonin Scalia, Anthony Kennedy, and Sandra Day O'Connor) in that case continue on the Court.
Thus, in their efforts to regulate corporate speech, governments would do well to learn from the teachings of past decisions, but to remain attentive for new lessons from future courts.
[1] 1. 435 U.S. 765 (1978).
[2] 2. See id. at 767-769. The history of the Massachusetts corporate spending statute and the legislature's efforts to amend the state constitution to allow graduated income taxes is detailed.
[3] 3. Lustwerk v. Lytron, Inc., 183 N.E.2d 871 (Mass 1962). The Court held that the graduated income-tax referendum did materially affect corporations in Massachusetts. The suit was brought by Ferdinand Lustwerk, a stockholder and director of Lytron, a Cambridge, Mass., corporation. Lustwerk contended it was a violation of state law for Lytron to spend $500 in the campaign against the proposed amendment. Lustwerk's fellow directors had outvoted him 3-1 on the campaign spending decision.
[4] 4. First Nat'l Bank of Boston v. Att'y. Gen., 290 N.E.2d 526 (Mass 1972).
[5] 5. 1973 Mass. Acts ch. 348.
[6]
6. The corporate plaintiffs were First National Bank of Boston, New England Merchants National Bank, the Gillette Co., Digital Equipment Corp., and Wyman-Gordon Co.
[7]
7. First Nat'l Bank of Boston v. Att'y. Gen., 359 N.E.2d 1262 (Mass 1977).
[8] 8. 435 U.S. 765, 776-777, 784 (1978).
[9] 9. Id. at 789.
[10] 10. Id. at 811. (White, J. dissenting).
[11] 11. Id. at 790.
[12] 12. 2 U. S. C. 441b (1971).
[13] 13. Library of Congress, Analysis of Federal and State Campaign Finance Laws - Summaries, prepared for Federal Election Commission (1977).
[14] 14. 435 U.S. at 804. In support of that assertion, White cited Leventhal, Courts and Political Thickets, 77 Colum. L. Rev. 345 (1977).
[15] footnote 15. Norman Dorson & Joel Gora, Free Speech, Property, and the Burger Court: Old Values, New Balances, 1982 Sup. Ct. Rev. 195, 212.
[16]
16. Corporate speech is contrasted with commercial speech, in which corporations promote sales of products or services, and which was granted a lesser degree of constitutional protection in Va. St. Bd. of Pharm. v. Va. Citizens Consumer Council, 425 U.S. 748 (1976).
[17] 17. Note, The Corporation and the Constitution: Economic Due Process and Corporate Speech, 90 Yale L.J. 1833, 1857 (1981).
[18] 18. William Bailey, Corporate/Commercial Speech and the Marketplace First Amendment: Whose Right Was It Anyway? 61:2 Southern Comm. J. 122 (1995).
[19] 19. Edwin P. Rome & William H. Roberts, Corporate and Commercial Free Speech: First Amendment Protection of Expression in Business at vii (1985).
[20] 20. Aditi Gowri, Speech and Spending: Corporate Political Speech Rights Under the First Amendment, 17 J. Bus. Ethics 1835 (1998).
[21]
21. Francis H. Fox, Corporate Political Speech: The Effect of First National Bank v. Bellotti Upon Statutory Limitations on Corporate Referendum Spending, 29 Case W. Res. L. Rev. 808, 809 (1979).
[22] 22. Gary Hart & William Shore, Corporate Spending on State and Local Referendums: First National Bank of Boston v. Bellotti, 67 Ky. L.J. 75,101 (1978-79).
[23] 23. C. Edwin Baker, Realizing Self-Realization: Corporate Political Expenditures and Redish's The Value of Free Speech, 130 U. Pa. L. Rev. 646, 653 (1982).
[24] 24. Note, supra note 17, at 1834.
[25] 25. Robert A. Prentice, Consolidated Edison and Bellotti: First Amendment Protection of Corporate Political Speech, 16 Tulsa L.J. 599, 656 (1981).
[26] 26. 459 U.S. 197 (1982).
[27] 27. 470 U.S. 480 (1985).
[28] 28. 479 U.S. 238 (1986).
[29] 29. Michael J. Garrison, Corporate Political Speech, Campaign Spending, and First Amendment Doctrine, 27 Am. Bus. L.J. 163, 201 (1989).
[30]
30. Carl J. Mayer, Personalizing the Impersonal: Corporations and the Bill of Rights, 41 Hastings L.J. 577, 601, 610-617, 664-665 (1990).
[31] 31. 425 U.S. 748 (1976).
[32] 32. 447 U.S. 557 (1980).
[33] 33. 475 U.S. 1 (1986).
[34] footnote 34. 494 U.S. 652 (1990).
[35] 35. Prescott M. Lassman, Breaching the Fortress Walls: Corporate Political Speech and Austin v. Michigan Chamber of Commerce, 78 Va. L. Rev. 759, 792 (1992).
[36] 36. Adam Winkler, Beyond Bellotti, 32 Loy. L.A. L. Rev. 133 (1998).
[37] 37. Douglas M. Ramler, Austin v. Michigan Chamber of Commerce: The Supreme Court Takes a "Less Speech, Sounds Great" Approach to Corporate Political Expression, 43 Fed. Com. L.J. 419, 421 (1991).
[38] 38. Michael Schofield, Muzzling Corporations: The Court Giveth and the Court Taketh Away a Corporation's "Fundamental Right" to Free Political Speech in Austin v. Michigan Chamber of Commerce, 52 La. L. Rev. 253, 255 (1991).
[39]
39. Sean T. Geary, Austin v. Michigan Chamber of Commerce: Freedom of Expression Issues Implicated by the Government Regulation of Corporate Political Expenditures in Candidate Elections, 72 B.U. L. Rev. 825 (1992).
[40]
40. Alex Carey, Taking the Risk Out of Democracy: Corporate Propaganda versus Freedom and Liberty 18 (1997).
[41] 41. Bailey, supra note 18, at 122.
[42] 42. Daniel J.H. Greenwood, Essential Speech: Why Corporate Speech is Not Free, 83 Iowa L. Rev. 995, 1068 (1998).
[43]
43. Marilyn Friedman and Larry May, Corporate Rights to Free Speech, Bus. and Prof. Ethics J., Fall-Winter 1986, at 5, 19-20.
[44] 44. Robert Weissman, First Amendment Follies: Expanding Corporate Speech Rights, 19 Multinational Monitor 15 (May 1998).
[45]
45. Randy M. Mastro, Deborah C. Costlow, & Heidi P. Sanchez, Taking the Initiative: Corporate Control of the Referendum Process Through Media Spending and What to Do About It, 32 Fed. Comm. L.J. 315 (1980).
[46]
46. Allen K. Easley, Buying Back the First Amendment: Regulation of Disproportionate Corporate Spending in Ballot Issue Campaigns, 17 Ga. L. Rev. 675 (1983).
[47] 47. David R. Lagasee, Undue Influence: Corporate Political Speech, Power and the Initiative Process, 61 Brooklyn L. Rev. 1347 (1995).
[48] 48. John S. Shockley, Direct Democracy, Campaign Finance, and the Courts: Can Corruption, Undue Influence, and Declining Voter Confidence Be Found? 39 U. Miami L. Rev. 377 (1985).
[49] 49. Edwin M. Epstein, The Corporation in American Politics 7, 16, 324 (1969).
[50] 50. Nicholas Wolfson, Corporate First Amendment Rights and the SEC 157 (1990).
[51] 51. S. Prakash Sethi, Advocacy Advertising and Large Corporations: Social Conflict, Big Business Image, the News Media, and Public Policy 328 (1977).
[52] 52. Cass R. Sunstein, Democracy and the Problem of Free Speech 235-236 (1993).
[53] 53. Henry N. Butler and Larry E. Ribstein, The Corporation and the Constitution 74-75 (1995).
[54] footnote 54. Martin H. Redish & Howard M. Wasserman, What's Good for General Motors: Corporate Speech and the Theory of Free Expression, 66 Geo. Wash. L. Rev. 235, 235-240 (1998).
[55] 55. The more recent state decisions were considered sufficient to represent application of current corporate speech precedent at that level.
[56] 56. 424 U.S. 1, 19 (1976). The Court struck down the limits on political expenditures by individuals in the Federal Election Campaign Act, 2 U. S. C. 431 (1971), but upheld the constitutionality of its contribution limits. The Court held that contributions could be limited because they do not constitute a form of direct expression, but that expenditures could not be limited because they constitute direct speech.
[57]
57. 447 U.S. 557 (1980).
[58] 58. Id. at 566. In the decision, the Court established a four-part balancing test for protecting commercial speech: "At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest."
[59]
59. The Court's characterization of commercial speech in Va. St. Bd. of Pharm. v. Va. Citizens Consumer Council, 425 U.S. 748, 762 (1976), quoting Pitt. Press Co. v. Hum. Rel. Comm'n., 413 U.S. 376, 385 (1973).
[60] 60. 447 U.S. at 580-581.
[61] 61. Brief for Appellee at 10-19, Cent. Hudson v. Pub. Serv. Comm'n., 447 U.S. 557 (1980) (No. 79-565).
[62] 62. Id. at 19-29.
[63] 63. 447 U.S. at 569-570.
[64] 64. 447 U.S. 530 (1980).
[65] footnote 65. 435 U.S. 765, 777 (1978).
[66] 66. Brief for Appellee at 6, 8, Consol. Edison v. Pub. Serv. Comm'n., 447 U.S. 530 (1980) (No. 79-134).
[67] 67. 447 U.S. 530 at 533-534, 537.
[68] 68. Id. at 539-540, 542, 543.
[69] 69. Berkeley, Cal., Ordinance 4700-N.S. 602 (1974).
[70] 70. 454 U.S. 290 (1981).
[71] 71. Id. at 293.
[72] 72. Id. at 298.
[73] 73. 424 U.S. 1, 40 (1976).
[74] 74. 2 U. S. C. 441b (1971).
[75] 75. 459 U.S. 197. 210-211 (1982).
[76]
76. See U.S. v. Morton Salt Co., 338 U.S. 632, 652 (1950), in which the Court said corporations "are endowed with public attributes [special advantages such as limited liability, perpetual life, and special tax treatment that enhance the accumulation of capital]. They have a collective impact upon society, from which they derive the privilege of acting as artificial entities."
[77] 77. 352 U.S. 567, 579 (1957).
[78] 78. Brief for Appellant at 17-18, FEC v. Nat'l. Right to Work Comm., 459 U.S. 197 (1982) (No. 81-1506).
[79] 79. See 424 U.S. 1, 47 (1976). The Court defined corruption as "a subversion of the political process. Elected officials are influenced to act contrary to their obligations of office by the prospect of financial gain to themselves or infusions of money into their campaigns."
[80] 80. Brief for Appellant at 17-18, FEC v. NRWC.
[81] 81. 335 U.S. 106, 113 (1948).
[82] 82. Brief for Appellant at 18-19, FEC v. NRWC.
[83] footnote 83. 435 U.S. 182 (1981).
[84] 84. 459 U.S. 197, 210-211 (1982).
[85] 85. 470 U.S. 480 (1985).
[86] 86. 26 U. S. C. 9012(f) (1971).
[87] 87. 470 U.S. at 500-501.
[88] 88. Democratic Party v. Nat'l Conservative Pol. Action Comm., 578 F. Supp. 797, 830 (E.D. Pa. 1983).
[89] 89. 470 U.S. at 500.
[90] 90. 475 U.S. 1 (1986).
[91] 91. Brief for Appellee at 7-9, 19-20, 26-27, 31-34, Pac. Gas & Electric v. P.U.C., 475 U.S. 1 (1986) (No. 84-1044).
[92] 92. Id. at 17-19.
[93] 93. 475 U.S. at 1, 9.
[94] 94. Id. at 12-13.
[95] 95. Id. at 19-20.
[96] 96. 2 U. S. C. 441b (1971).
[97] 97. 479 U.S. 238 (1986).
[98] 98. Brief for Appellant at 28-31, FEC v. Mass. Citizens for Life, 479 U.S. 238 (1986) (No. 85-701).
[99] footnote 99. Id. at 31-36.
[100] 100. 479 U.S. 238 at 257-258.
[101] 101. Id. at 259, 263.
[102] 102. Id. at 263-264. Summarizing the test, the Court said: "In particular, MCFL has three features essential to our holding that it may not constitutionally be bound by 441b's restriction on independent spending. First, it was formed for the express purpose of promoting political ideas, and cannot engage in business activities. If political fundraising events are expressly denominated as requests for contributions that will be used for political purposes, including direct expenditures, these events cannot be considered business activities. This ensures that political resources reflect political support. Second, it has no shareholders or other persons affiliated so as to have a claim on its assets or earnings. This ensures that persons connected with the organization will have no economic disincentive for disassociating with it if they disagree with its political activity. Third, MCFL was not established by a business corporation or a labor union, and it is its policy not to accept contributions from such entities. This prevents such corporations from serving as conduits for the type of direct spending that creates a threat to the political marketplace."
[103] 103. 1976 Mich. Pub. Acts 54(1).
[104] 104. 494 U.S. 652 (1990).
[105] 105. Brief for Appellant at 19-24, 28-34, Austin v. Mich. St. Chamber of Comm., 494 U.S. 652 (1990) (No. 88-1569).
[106] 106. Id. at 37-43, 48-49.
[107] 107. See 424 U.S. 1, 47 (1976). The Court found a fundamental constitutional difference between money spent to advertise views independently of a candidate's campaign and money contributed to the candidate: "Unlike contributions, such independent expenditures may well provide little assistance to the candidate's campaign and indeed may prove counterproductive. The absence of prearrangement and coordination of an expenditure with the candidate or his agent not only undermines the value of the expenditure to the candidate, but also alleviates the danger that expenditures will be given as a quid pro quo for improper commitments from the candidate."
[108] 108. Brief for Appellant at 36, Austin v. Mich. Chamber.
[109] 109. See Buckley, 424 U.S. 1 at 40, 47. The Court said, "To the extent that large contributions are given to secure political quid pro quo's from current and potential office holders, the integrity of our system of representative democracy is undermined. . . . The hallmark of corruption is the financial quid pro quo: dollars for political favors." See Bellotti, 435 U.S. 765, 790 (1978). The Court held that the risk of such corruption is not present in referendum campaigns because they are held on issues rather than individuals, and the former cannot be corrupted by political debt as the latter may.
[110] 110. Reply Brief for Appellant at 1-2, Austin v. Mich. Chamber.
[111] 111. 494 U.S. 652 at 668-669.
[112] footnote 112. 494 U.S. at 659-660.
[113] 113. R.I.G.L. 17-25-10.1(j).
[114] 114. 814 F. Supp. 186, 190-191 (D. R.I. 1992)
[115] 115. 636 N.E.2d 220 (Mass. 1994). The initiative was placed on the November 1994 ballot and was rejected by voters in a campaign marked by heavy corporate spending in opposition to the initiative. See Business Wallets Were Wide Open, Boston Globe, Jan. 21, 1995 at 30.
[116] 116. Bowe v. Secretary of the Commw., 69 N.E.2d 115 (Mass. 1946), quoted in 636 N.E.2d. at 224.
[117] 117. 636 N.E.2d at 224.
[118] 118. Id. at 224-225.
[119] 119. See 435 U.S. 765, 789 (1978), quoted in 636 N.E.2d. at 227.
[120] 120. 636 N.E.2d. at 227.
[121] 121. Id. at 227.
[122] 122. Minn. Stat. 211B.15 (Supp. 1994).
[123] 123. 863 F. Supp. 940 (D. Minn. 1994)
[124] 124. Id. at 955-957.
[125] 125. Id. at 943, 951-952, 955.
[126] 126. Ohio S. B. 8, 3517 & 3599.03.
[127] 127. 898 F. Supp. 554 (N.D. Ohio 1995)
[128] 128. 494 U.S. 652, 660 (1990).
[129] 129. 898 F. Supp. at 560.
[130] 130. 11 C.F.R. 114.4(c) (1996).
[131] 131. 114 F.3d 1309 (1st Cir. 1997)
[132] 132. Id. at 1317. (Bownes, H., dissenting).
[133] 133. Id. at 1324.
[134] 134. Clifton v. FEC, 114 F.3d 1309 (1st Cir. 1997), cert. denied sub nom, FEC v. Maine Right to Life, 118 S. Ct. 52 (Oct. 6, 1997) (No. 96-1818).
[135] 135. Mont. Code Ann. 13-35-236.
[136] 136. 28 F. Supp. 2d. 593 (D. Mont. 1998)
[137] 137. Id. at 597-598.
[138] 138. Id. at 595-597.
[139] 139. Id. at 595-600.
[140] 140. Id. at 600.
[141] 141. 226 F.3d 1049, 1055-1058 (9th Cir. 2000)
[142] 142. Alaska Stat. 15.13.074(f).
[143] 143. 978 P.2d 597 (Alaska 1999).
[144] 144. Id. at 600.
[145] footnote 145. Id. at 609-611.
[146] 146. Id. at 606-607.
[147] 147. 494 U.S. at 660.
[148] 148. In Nixon v. Shrink, 528 U.S. 377, 404-421 (2000), Justices Stephen Breyer and Ruth Bader Ginsburg suggested Buckley might pose an obstacle to campaign-finance reform; Justice Anthony Kennedy argued that Buckley should be overruled because it distorts political speech; and Justices Clarence Thomas and Antonin Scalia argued that Buckley should be overruled because of insufficient justification for limiting contributions to candidates.