On January 21, 2010, the Supreme Court issued a ruling in Citizens United v. Federal Election Commission overruling an earlier decision, Austin v. Michigan State Chamber of Commerce (Austin), that allowed prohibitions on independent expenditures by corporations. The Court also overruled the part of McConnell v. Federal Election Commission that held that corporations could be banned from making electioneering communications. The Court upheld the reporting and disclaimer requirements for independent expenditures and electioneering communications. The Court’s ruling did not affect the ban on corporate contributions.
The Federal Election Campaign Act ("the Act") prohibits corporations and labor unions from using their general treasury funds to make electioneering communications or for speech that expressly advocates the election or defeat of a federal candidate. 2 U.S.C. §441b. An electioneering communication is generally defined as "any broadcast, cable or satellite communication" that is "publicly distributed" and refers to a clearly identified federal candidate and is made within 30 days of a primary or 60 days of a general election. 2 U.S.C. §434(f)(3)(A) and 11 CFR 100.29(a)(2).
In January 2008, Citizens United, a non-profit corporation, released a film about then-Senator Hillary Clinton, who was a candidate in the Democratic Party’s 2008 Presidential primary elections. Citizens United wanted to pay cable companies to make the film available for free through video-on-demand, which allows digital cable subscribers to select programming from various menus, including movies. Citizens United planned to make the film available within 30 days of the 2008 primary elections, but feared that the film would be covered by the Act’s ban on corporate-funded electioneering communications that are the functional equivalent of express advocacy, thus subjecting the corporation to civil and criminal penalties. Citizens United sought declaratory and injunctive relief against the Commission in the U.S. District Court for the District of Columbia, arguing that the ban on corporate electioneering communications at 2 U.S.C. §441b was unconstitutional as applied to the film and that disclosure and disclaimer requirements were unconstitutional as applied to the film and the three ads for the movie. The District Court denied Citizens United a preliminary injunction and granted the Commission’s motion for summary judgment. The Supreme Court noted probable jurisdiction in the case.
Supreme Court decision
The Supreme Court found that resolving the question of whether the ban in §441b specifically applied to the film based on the narrow grounds put forth by Citizens United would have the overall effect of chilling political speech central to the First Amendment. Instead, the Court found that, in exercise of its judicial responsibility, it was required to consider the facial validity of the Act’s ban on corporate expenditures and reconsider the continuing effect of the type of speech prohibition which the Court previously upheld in Austin.
The Court noted that §441b’s prohibition on corporate independent expenditures and electioneering communications is a ban on speech and "political speech must prevail against laws that would suppress it, whether by design or inadvertence." Accordingly, laws that burden political speech are subject to "strict scrutiny," which requires the government to prove that the restriction furthers a compelling interest and is narrowly tailored to achieve that interest. According to the Court, prior to Austin there was a line of precedent forbidding speech restrictions based on a speaker’s corporate identity, and after Austin there was a line permitting them. In reconsidering Austin, the Court found that the justifications that supported the restrictions on corporate expenditures are not compelling.
The Court in Austin identified a compelling governmental interest in limiting political speech by corporations by preventing "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." However, in the current case the Court found that Austin’s "antidistortion" rationale "interferes with the 'open marketplace of ideas' protected by the First Amendment." According to the Court, "[a]ll speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech, and the First Amendment protects the resulting speech." The Court held that the First Amendment "prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech." The Court further held that "the rule that political speech cannot be limited based on a speaker’s wealth is a necessary consequence of the premise that the First Amendment generally prohibits the suppression of political speech based on the speaker’s identity."
The Court also rejected an anticorruption rationale as a means of banning independent corporate political speech. In Buckley v. Valeo, the Court found the anti corruption interest to be sufficiently important to allow limits on contributions, but did not extend that reasoning to overall expenditure limits because there was less of a danger that expenditures would be given as a quid pro quo for commitments from that candidate. The Court ultimately held in this case that the anti corruption interest is not sufficient to displace the speech in question from Citizens United and that "independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption."
The Court furthermore disagreed that corporate independent expenditures can be limited because of an interest in protecting dissenting shareholders from being compelled to fund corporate political speech. The Court held that such disagreements may be corrected by shareholders through the procedures of corporate democracy.
Finally, Citizens United also challenged the Act’s disclaimer and disclosure provisions as applied to the film and three ads for the movie. Under the Act, televised electioneering communications must include a disclaimer stating responsibility for the content of the ad. 2 U.S.C. §441d(d)(2). Also, any person who spends more than $10,000 on electioneering communications within a calendar year must file a disclosure statement with the Commission identifying the person making the expenditure, the amount of the expenditure, the election to which the communication was directed and the names of certain contributors. 2 U.S.C. §434(f)(2). The Court held that, although disclaimer and disclosure requirements may burden the ability to speak, they impose no ceiling on campaign activities and do not prevent anyone from speaking. As a result, the disclaimer and disclosure requirements are constitutional as applied to both the broadcast of the film and the ads promoting the film itself, since the ads qualify as electioneering communications.
- Supreme Court Opinion (01/21/2010)
- Transcript from Oral Argument (09/09/2009)
- Audio file from Oral Argument (09/09/2009)
District court complaint
On December 13, 2007, Citizens United, a nonprofit membership corporation, filed a complaint in the U.S. District Court for the District of Columbia challenging the constitutionality of the statutory provisions governing disclaimers on, and disclosure and funding of, certain "electioneering communications" (ECs).
Citizens United is a nonprofit membership organization registered with the IRS under 26 U.S.C. §501(c)(4). One of Citizens United’s activities is the production and distribution of political films. Citizens United has produced a film entitled "Hillary: The Movie" about Senator Hillary Clinton. Citizens United intends to broadcast television ads promoting "Hillary: The Movie" and wishes to make the film available in theaters, through DVD sales and via home viewing through cable video-on-demand systems.
Citizens United asserts that, since the ads are not subject to the EC corporate funding restriction, it is unconstitutional to require disclosure of the donors who paid for the advertisements or disclaimers on the advertisements. Citizens United also claims that the film itself is constitutionally exempt from the corporate funding restriction under Wisconsin Right to Life v. FEC (WRTL II).
Citizens United asks the court to declare the EC disclosure and disclaimer requirements unconstitutional as applied to Citizens United’s ads and all electioneering communications now permitted by WRTL II. Additionally, the plaintiff requests that the corporate and union EC funding restriction be declared unconstitutional both on its face and as applied to plaintiff’s movie. Citizens United seeks preliminary and permanent injunctions preventing the Commission from enforcing each of these provisions. The plaintiffs also request costs and attorneys fees and any other appropriate relief.
Preliminary injunction decision
On January 15, 2008, the District Court denied Citizens United’s motion for a preliminary injunction, in which Citizens United requested that the court prevent the FEC from enforcing its electioneering communications provisions.
The district court denied Citizens United’s motion for a preliminary injunction. In order for a court to grant the plaintiff a preliminary injunction, the plaintiff must show 1) that it is likely that the plaintiff will have success when the case is decided on the merits; 2) that the plaintiff will suffer irreparable injury if the injunction is not granted; 3) that an injunction would not substantially injure other parties; and 4) that the injunction would benefit the public interest.
With regard to its claims about the movie itself, the court found that Citizens United had little chance of success on the merits because the movie is susceptible of no reasonable interpretation other than as an appeal to vote against Senator Clinton. Thus, the court held that the movie is the functional equivalent of express advocacy and not entitled to exemption from the ban on corporate funding of electioneering communications.
Regarding the proposed ads, Citizens United argued that the EC disclosure and disclaimer requirements were unconstitutional because the Supreme Court in WRTL so narrowed the constitutionally permissible scope of "electioneering communication" that only communications that are not "susceptible of [a] reasonable interpretation other than as an appeal to vote for or against a specific candidate" can be regulated by Congress. The district court, however, held that the Supreme Court in McConnell v. FEC had found the disclosure requirements constitutional as to all electioneering communications, and WRTL did not disturb this holding because the "only issue in [WRTL] was whether speech that did not constitute the functional equivalent of express advocacy could be banned during the relevant pre-election period." Thus, the district court held that Citizens United had not established the probability that it will prevail on the merits of its arguments against the electioneering communication disclosure and disclaimer provisions.
Given that Citizens United did not show that it was likely to win its arguments on the merits, the district court did not find that the harms Citizens United claimed it would suffer under the disclaimer and disclosure requirements warranted preliminary relief. The court also found that enjoining the enforcement of the electioneering communication provisions at issue would not serve the public interest "in view of the Supreme Court’s determination that the provisions assist the public in making informed decisions, limit the coercive effect of corporate speech, and assist the FEC in enforcing contribution limits." The court denied Citizens United’s request for a preliminary injunction with regard to the reporting and disclaimer provisions.
Source: FEC Record — February 2010; February 2008