Alabama Democratic Conference, The et al v. Strange et al
MEMORANDUM OPINION. Signed by Magistrate Judge John E Ott on 7/31/2015. (KAM, )
2015 Aug-03 AM 09:48
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
LUTHER STRANGE, in his
official capacity as Attorney
General of Alabama, et al.,
Case No.: 5:11-cv-02449-JEO
Alabama’s Fair Campaign Practices Act (“FCPA”) prohibits a political
action committee (“PAC”) from making contributions, expenditures, or transfers
of funds to another PAC, except that a PAC that is not a “principal campaign
committee” may make contributions, expenditures, or transfers of funds to a
principal campaign committee. ALA. CODE § 17-5-15(b). This law was enacted in
response to concerns that donors were concealing their contributions to candidates
by “laundering” those contributions through multiple PACs before the donation
finally arrived with a candidate. The broad language of the statute prohibits all
contributions, expenditures, and transfers of funds between PACs, except as noted
above, including those from one PAC to a second PAC where the money is to be
used solely for “independent expenditures.” The Alabama Democratic Conference
(“the ADC”) asserts the prohibition on its ability to receive contributions to be
used solely for independent expenditures violates the PAC’s First Amendment
rights. At the outset, the court notes that the ADC does not challenge ALA. CODE
§ 17-5-15(b) on its face, but rather brings an as applied challenge. (Doc. 1 at ¶¶
PROCEDURAL HISTORY AND FINDINGS OF FACT
On July 6, 2011, the ADC, a PAC under Alabama law, and five of its
members (collectively “the ADC” or “Plaintiffs”) sued the Alabama Attorney
General and two District Attorneys (collectively “the State” or “Defendants”) to
enjoin the enforcement of ALA. CODE § 17-5-15(b), the so-called PAC-to-PAC
transfer ban, because it violates the ADC’s First Amendment rights and § 2 of the
Voting Rights Act, 52 U.S.C. § 10301 (previously codified at 42 U.S.C. § 1973.
(Doc. 1). The State moved to dismiss the case (doc. 7) and the ADC moved for
partial summary judgment (doc. 9). The undersigned granted the ADC’s motion
for partial summary judgment as to the First Amendment claim and granted the
State’s motion to dismiss the Voting Rights Act claim. (Doc. 24). The State
appealed the grant of summary judgment as to the First Amendment claim and the
Eleventh Circuit Court of Appeals reversed. (Doc. 34).
On remand, the ADC filed a “Second Motion for Preliminary Injunction”
(Doc. 43) and the State filed a “Motion for Summary Judgment and Evidentiary
Submission.” (Doc. 44). Prior to the filing of these motions, the court, together
with the parties, determined that the best way to address the pending issues was to
combine the Motion for Preliminary Injunction with a final adjudication on the
merits. (Doc. 38).1 The parties declined the opportunity to present live testimony
to the court on these matters, and instead agreed to rely on the evidence submitted
with their respective motions. The motions were fully briefed and are now
properly under submission before the court.
As previously noted, the court is prepared to proceed to a final adjudication
of the matter on the merits. As such, both Plaintiffs’ Motion for Preliminary
Injunction and Defendants’ Motion for Summary Judgment are due to be denied.
The court will consider the evidence and arguments offered in its final
adjudication of the merits.2
Because the court is proceeding to a final adjudication on the merits, Plaintiffs’ Second
Motion for Preliminary Injunction is moot.
The central question in this case is whether the PAC-to-PAC transfer ban is closely
drawn to serve a sufficiently important state interest. Crucial to that determination is whether
“the establishment of separate bank accounts by ADC, a hybrid independent expenditure and
campaign contribution organization, eliminates all corruption concerns.” Alabama Democratic
Conference v. Broussard, 541 F. App’x 931, 936 (11th Cir. 2013). The Eleventh Circuit held
FINDINGS OF FACT3
The Alabama Fair Campaign Practices Act
Alabama’s political campaigns are governed by Alabama’s Fair Campaign
Practices Act. See ALA. CODE §§ 17-5-1, et seq. The FCPA requires disclosure of
certain information, but, for the most part, does not contain any limits on the
amount of money that an individual, business, or political organization can
contribute directly to the campaign of a candidate for office.4 Under the FCPA, it
that this is a question of fact. Id. As such, summary judgment is inappropriate.
This section comprises the undersigned’s findings of fact. However, the court notes that
the evidence presented by the parties is largely undisputed. (Docs. 45 at 61-77, 46, and 49).
Where a fact offered by one party is either admitted or undisputed by the other party, and is also
supported by the evidence, the court will cite directly to the numbered fact offered by that party.
Where the fact is one that was initially offered by the Plaintiffs, the court will use the citation
(PAF No. X), with X standing for the numbered paragraph used by Plaintiffs in their statement of
facts, which is located at docket number 46. Where the fact is one initially offered by
Defendants, the court will use the citation (DAF No. X), with X standing for the numbered
paragraph used by Defendants in their statement of facts, which is located at docket number 45.
Before continuing, the court notes that Plaintiffs nominally dispute the vast majority of
Defendants’ undisputed facts. (Doc. 46 at ¶ 37) (“The statements alleged in ... Defendants’
Numbered Statements of Undisputed Facts relate to the period before the development of a
searchable database and have no relevance to the operation of the new system and the
exponentially greater transparency it has created.). This statement does not contest the accuracy
of the facts offered by Defendant, but rather contests their relevancy. Because Plaintiffs do not
contest the accuracy of the facts, or provide contrary evidence, the court will consider these facts
admitted. Finally, the court will explicitly note when it is resolving a disputed fact.
While not relevant here, ALA. CODE § 17-5-14(c) prohibits utilities regulated by the
Public Service Commission from contributing to a candidate running for a position on the Public
unlawful for any person, acting for himself or herself or on behalf of
any entity, to make a contribution in the name of another person or
entity, or knowingly permit his or her name, or the entity’s name, to
be used to effect such a contribution made by one person or entity in
the name of another person or entity, or for any candidate, principal
campaign committee, or political action committee to knowingly
accept a contribution made by one person or entity in the name of
another person or entity.
ALA. CODE § 17-5-15(a).
Prior to 2010, the appearance in Alabama was that donors were attempting
to conceal donations to candidates and other groups by laundering said donations
through multiple PACs. (Doc. 7-4). This was allegedly accomplished when a
donor made a contribution to one PAC, which in turn made a contribution to
another PAC, which then made a contribution to yet another PAC and so on, such
that by the time the money was delivered to a candidate there was no way to
effectively trace the contribution from the original donor to the ultimate recipient.5
At this juncture, the court would like to note that neither party submitted definitive proof
that any donor actually did this with the intent to evade the disclosure requirements. The State
submitted an indictment alleging that bribery was facilitated by transactions such as these. (Doc.
45 at ¶¶ 41-53). However, an indictment does not constitute proof. While most of the
defendants to that indictment were found not guilty (DAF No. 53), Ronald Gilley pleaded guilty.
In doing so he signed a Factual Basis for Plea that admitted that he “attempted to conceal the true
nature, source, and control of the payments made to members of the Alabama Legislature in
return for favorable votes ... by engaging in financial transactions and disguising illicit payments
through political action committees and using conduit contributors, and other means.” United
States v. Gilley, No. 2:10-cr-00186-MHT-WC, Doc. 986 at ¶ 24 (M.D. Ala. April 22, 2011).
This admission does not provide enough detail to definitively say he was admitting to funneling
money through multiple PACs in the manner noted above. That being said, there is ample
evidence in the record by way of numerous newspaper articles and other testimony, especially
from Ashley Newman, to support the finding that, at the very least, the public perception prior to
(DAF No. 2). Because there are no limits on the number of PACs any one person
can create in Alabama, a single campaign operative could control all of the PACs
in a contribution chain and carry out a scheme to conceal the source of a campaign
contribution by simply moving money from one PAC to another. (DAF No. 4;
PAF No. 9).6
In order to stop this from occurring, the Alabama Legislature amended the
FCPA in 2010 to prohibit PACs7 and tax exempt political organizations8 from
making a contribution, expenditure, or any other transfer of funds to any other
PAC or tax exempt political organization. ALA. CODE § 17-5-15(b). The parties,
and at times the court, call this provision the PAC-to-PAC transfer ban. That
2010 was that donors were laundering money through PACs for the purpose of concealing their
In their admitted fact, Defendants cite testimony stating that a campaign operative could
accomplish this by moving credits from one of the PACs he controlled to a different PAC. (DAF
No. 4). Plaintiffs point out that pursuant to ALA. CODE § 17-5-6, except for expenditures that are
less than one hundred dollars, all expenditures must be made with a check from the PAC’s
checking account. (PAF No. 9). Plaintiffs’ point is well taken. However, the details of how a
political operative could legally move money between accounts is immaterial. What is relevant
is, at the time, the perception was that donors were legally moving money through PACs for the
purpose of concealing who was making the contribution and that could be made easier by the fact
one political operative could control a number of PACs.
Under the Act, a PAC is defined broadly to include “[a]ny ... group of one or more
persons ... which receives or anticipates receiving contributions and makes or anticipates making
expenditures to or on behalf of any Alabama state or local elected official, proposition, candidate,
principal campaign committee or other political action committee.” ALA. CODE § 17-5-2(a)(12).
Because the organization at the center of this case is a PAC, the court will use that term
in this opinion.
being said, the provision encompasses more than just transfers of funds: PACs are
also prohibited from making contributions or expenditures to other PACs.
The Legislature amended this provision in 2013. The relevant portion of the
FCPA that is subject to the constitutional challenge before the court now provides:
(b) It shall be unlawful for any political action committee or tax
exempt political organization under 26 U.S.C. § 527, including a
principal campaign committee, or any person authorized to make an
expenditure on behalf of such political action committee or 527
organization, to make a contribution, expenditure, or any other
transfer of funds to any other political action committee or 527
organization.... Notwithstanding the foregoing, a political action
committee that is not a principal campaign committee may make
contributions, expenditures, or other transfers of funds to a principal
In 2011 and 2013, the Alabama Legislature amended the FCPA’s disclosure
requirements for elections. First, pre-election campaign finance reports must be
filed more frequently that before. ALA. CODE § 17-5-8(a). Second, the Secretary
of State was required to establish a system of electronic filing of reports such that
said reports were made part of a searchable database. ALA. CODE § 17-5-8.1(b).
The searchable database provides the ability to search by a recipient’s name, a
contributor’s name, a contributor’s or recipient’s Zip Code, and date of
contribution. Id. Finally, any person or entity making an “electioneering
communication” must file the same type of reports as PACs file.9 ALA. CODE §
The Alabama Democratic Conference
The ADC was founded in 1960 and operates as a group advocating the
rights of black citizens. (PAF No. 18). Its basic mission is to organize and unify
the black vote. (DAF No. 57). It is a statewide organization with local chapters in
over 60 counties and approximately 3,000 members. (PAF Nos. 18, 26; DAF Nos.
55, 58). These local chapters are not separately incorporated, but are instead
internal divisions within the ADC. (DAF No. 59).
The ADC endorses candidates for many state, district, and local positions, in
both primary and general elections. (PAF No. 27). Candidates seeking the ADC’s
endorsement must appear in person to be interviewed. (PAF No. 27). County
chapters decide which candidate to endorse for county elections, and the ADC
Executive Committee decides which candidate to endorse for statewide positions.
(PAF No. 27; DAF No. 66). These endorsements are not based on whether a
candidate contributed to ADC: some candidate committees make donations to
An electioneering communication is an expenditure over one-thousand dollars for a
communication made within 120 days of an election that contains the name or image of a
candidate and is for the purpose of influencing the outcome of an election. ALA. CODE § 17-52(a)(5).
ADC and others do not. (PAF No. 28).
The ADC spends its money by, among other things, providing money to its
local chapters, funding get-out-the-vote efforts, and making contributions to
candidates. The ADC distributes a base amount of its available funds to each of
its chapters. (PAF 30). Remaining funds are distributed based on an independent
determination by the Chair of the ADC based on a variety of factors, including the
size of the county’s black population and the effectiveness of the local chapter.
(PAF Nos. 29-30; DAF Nos. 61, 67-68). In addition to distributing money to its
chapters, the ADC also covers the cost of printing yellow sample ballots indicting
which candidates the ADC endorses. (DAF No. 62). These yellow sample ballots
play a role in the ADC’s get-out-the-vote efforts, which include: distributing
yellow sample ballots, calling people to encourage them to vote, attending
churches or ministers’ meetings to promote the ADC’s message, promoting the use
of absentee ballots, running radio spots encouraging people to vote, conducting
phone bank and robocall campaigns, and paying for rides to the polls. (DAF No.
The ADC has a close working relationship with the Democratic Party within
the State of Alabama. (DAF No. 72). According to its constitution, one of the
ADC’s purposes is to “advocate and advance the cause of the Democratic Party.”
(DAF No. 75 (quoting Doc. 44-2 at 2)). The ADC focuses its activities on the
Democratic Party because it perceives the Republican Party as hostile to the
aspirations of black citizens. (PAF No. 21). The ADC actively seeks to influence
the Democratic Party. (PAF No. 20). This is shown in the minutes of ADC
Executive Committee meetings where on multiple occasions the ADC Chair
encouraged ADC members and groups to become involved in the Democratic
Party and influence the Party’s decisions. (DAF Nos. 76, 78, 80-85). For
example, in a 2007 Executive Committee meeting, ADC Chair Joe Reed noted that
“it is important for ADC members to be involved in the local Democratic
Executive Committee meetings since this group will play a very important role in
the upcoming elections.” (DAF No. 80 (quoting Doc. 44-7 at 8)). In addition,
these minutes noted at least two occasions where the Democratic Party provided
assistance to the ADC: (1) in a 2006 meeting, Reed announced that Democratic
National Committee (“DNC”) staffers would be available to assist local ADC
chapters in organizing community meetings and (2) in that same meeting, the State
Democratic Party Chair gave brief remarks. (DAF Nos. 77, 79).
That being said, the ADC endorses and actively supports certain candidates
and actively opposes others in Democratic primary elections. (PAF No. 20).
Generally, for the general election, the ADC’s yellow sample ballot recommends a
straight democratic ticket vote. (DAF No. 88). However, the ADC refuses to
endorse certain Democratic candidates in general elections and at times opposes
actions and policies of Democratic Party leaders and Democratic elected officials.
(PAF No. 23).
As of February 2014, approximately 107 out of 292 total members of the
Alabama Democratic Executive Committee10 (“ADEC”) were also members of the
ADC. (DAF No. 92). Additionally, all five of the non-vacant ADC executive
officer positions were held by members of the Alabama Democratic Executive
Committee. From 2005 through 2010, the ADC received four contributions from
the Alabama Democratic Party totaling $87,648.00. (DAF No. 96). The ADC has
not received money since then, however. (DAF No. 97).
In addition to having a relationship with the Democratic Party, the ADC
also has relationships with current and former public officeholders. As of
February 2014, three of the five non-vacant ADC executive officer positions were
held by individuals who are current or previous public office holders. (DAF No.
98). Further, the ADC’s constitution provides that the Executive Committee
includes “nine elected ex-officio members who shall be allocated as follows: three
The ADEC is the governing body of the Alabama Democratic Party. See http://
aldemocrats.org/about (last visited July 31, 2015).
members of the Alabama Legislature, three elected municipal officials, [and] three
elected county officials.” (DAF No. 99 (quoting Doc. 44-2 at 6)). The minutes
from a 2007 ADC Executive Committee meeting note that “[s]ome local
organizations are leaving it up to local elected officials to determine the agenda of
the [local ADC chapters].” (DAF No. 107 (quoting 44-7 at 5)).
Additionally, the ADC actively solicits contributions from candidates
running for public office. From 2005 to 2010, the ADC received approximately
$502,350.95 in contributions from candidates. (DAF No. 123). In 2010, three of
the four candidates for state office endorsed by ADC contributed a total of
$122,000 to the ADC. (DAF No. 125). On occasion, ADC works with or
contributes to candidates to bolster its get-out-the-vote efforts. (DAF No. 112).
From 2005 to 2010, the ADC made approximately $42,340.00 in contributions to
candidates or their committees for purposes of assisting with its get-out-the-vote
efforts. (DAF No. 124).
The ADC performed get-out-the-vote activities in support of each of the
candidates that contributed to the ADC in 2010. (DAF No. 104). Candidates give
money to the ADC “to turn the vote out to help them get elected.” (DAF No. 108
(quoting Doc. 43-4 at 31)). The minutes of a 2010 Executive Committee meeting
note that ADC Chair Reed reported that candidates “who do not help pay for [get
out the vote] will be left off the [yellow sample] ballot.” (DAF 106 (quoting Doc.
44-7 at 15)). The ADC Chair considers a candidate’s contribution to ADC’s getout-the-vote efforts as helpful to that candidate’s own campaign. (Doc. 43-4 at
31). The ADC tells candidates what its “procedure is for getting out the vote and
that they are expected to win their own elections.” (Doc. 43-4 at 57). The ADC
tells the candidate what its plans are and if “the [candidate has] something to
suggest to [the ADC], [the ADC] listens to it. And if [the ADC] likens] it, [it’ll]
do it.” (Doc. 43-4 at 57; DAF No. 117). ADC Chair Reed noted: “[One of the
things you have to be careful about is that you can’t run everybody’s campaign.
As ADC Chairman, you can’t run – once we endorse, we endorse doing our
procedure. But we can’t be everybody’s campaign manager. And oftentimes they
want that.” (Doc. 43-4 at 56).
Upon the enactment of the PAC-to-PAC transfer ban, the ADC sought to
restructure its activities in a manner consistent with those upheld by the court in
Emily’s List v. Federal Election Common, 581 F.3d 1 (D.C. Cir. 2009). (PAF No.
35). Specifically, the ADC has established two bank accounts, one to receive
contributions from individuals and businesses for the purpose of making
contributions to candidates (the Candidate Account) and the other to receive
contributions from any entity, including other PACs, for maintaining ADC
infrastructure, for get-out-the-vote efforts, and for other independent expenditures
(including contributions to other PACs for use in their get-out-the-vote efforts)
(Independent Expenditure Only Account). (Doc. 9-1 at 5; Doc. 43 at 16-17; DAF
No. 132). The Independent-Expenditure-Only Account is controlled by the same
entity or people that control the ADC’s Candidate Account. (DAF No. 133).
The First Amendment to the United States Constitution declares that
“Congress shall make no law ... abridging the freedom of speech.” U.S. CONST.
amend. I. “Speech is an essential mechanism of democracy,” the Supreme Court
has observed, “for it is the means to hold officials accountable to the people.”
Citizens United v. FEC, 558 U.S. 310, 339 (2010). The First Amendment “has its
fullest and most urgent application to speech uttered during a campaign for
political office.” Ariz. Free Enter. Club’s Freedom Club PAC v. Bennett, –– U.S.
–––, 131 S. Ct. 2806, 2817 (2011) (internal quotation marks omitted). Further, it
“is well-established that political contributions are considered to be political
speech [and are] protected by the First Amendment.” Alabama Democratic
Conference v. Broussard, 541 F. App’x 931, 932-33 (11th Cir. 2013). “Laws
restricting campaign contributions are permissible, however, if the State can
establish that they are ‘closely drawn’ to serve a ‘sufficiently important interest.’”
Id. at 933 (citing Buckley v. Vale, 424 U.S. 1, 23-25 (1976)).
“The Supreme Court has specifically held that ‘preventing corruption or the
appearance of corruption are the only legitimate and compelling government interests
thus far identified for restricting campaign finances.’ ”11 Id. (quoting FEC v. Natal
Conservative Political Action Comm., 470 U.S. 480, 496-97 (1985)). The Supreme
Court recently said the following about a state’s interest in preventing corruption:
In a series of cases over the past 40 years, we have spelled out how to
draw the constitutional line between the permissible goal of avoiding
corruption in the political process and the impermissible desire simply
to limit political speech. We have said that government regulation may
not target the general gratitude a candidate may feel toward those who
support him or his allies, or the political access such support may afford.
“Ingratiation and access ... are not corruption.” Citizens United v.
Federal Election Common, 558 U.S. 310, 360, 130 S. Ct. 876, 175 L.
Ed. 2d 753 (2010). They embody a central feature of democracy—that
constituents support candidates who share their beliefs and interests, and
candidates who are elected can be expected to be responsive to those
Both parties discuss the applicability of the State’s transparency interest in this case.
The ADC even concedes that “transparency is a legitimate and important governmental concern.”
(Doc. 43 at 31). However, this does not change the fact that preventing corruption or the
appearance thereof is the only interest that the Supreme Court has found sufficiently important.
Even if the undersigned were inclined to consider this interest based on the ADC’s concession,
the court is nonetheless bound by the Eleventh Circuit’s opinion in this case establishing that the
only sufficiently important interest is the prevention of corruption. This That And The Other Gift
And Tobacco, Inc. v. Cobb Cnty., Ga., 439 F.3d 1275, 1283 (11th Cir. 2006) (“Under the law of
the case doctrine, the findings of fact and conclusions of law by an appellate court are generally
binding in all subsequent proceedings in the same case in the trial court or on a later appeal.”).
The court does note, however, that transparency plainly is related to and furthers the
State’s interest in preventing corruption and the appearance of corruption insofar as one can only
assess whether there has been a quid pro quo exchange if one is able to identify the party making
Any regulation must instead target what we have called “quid pro quo”
corruption or its appearance. See id., at 359, 130 S. Ct. 876. That Latin
phrase captures the notion of a direct exchange of an official act for
money. See McCormick v. United States, 500 U.S. 257, 266, 111 S. Ct.
1807, 114 L. Ed. 2d 307 (1991). “The hallmark of corruption is the
financial quid pro quo: dollars for political favors.” Federal Election
Common v. National Conservative Political Action Comm., 470 U.S.
480, 497, 105 S. Ct. 1459, 84 L. Ed. 2d 455 (1985). Campaign finance
restrictions that pursue other objectives, we have explained,
impermissibly inject the Government “into the debate over who should
govern.” Bennett, supra, at ––––, 131 S. Ct., at 2826. And those who
govern should be the last people to help decide who should govern.
McCutcheon v. Fed. Election Common, ___U.S.___, 134 S. Ct. 1434, 1441-42
(2014). In other words, the only sufficiently important interest that will support the
PAC-to-PAC transfer ban is preventing quid pro quo corruption or the appearance
With that in mind, the court will first address the question of whether the
PAC-to-PAC transfer ban “sufficiently implicates the State’s anti-corruption
interest” before addressing whether the challenged statute is closely drawn to
serve that interest. Alabama Democratic Conference, 541 F. App’x at 934.
Does the PAC-to-PAC Transfer Ban as Applied to the ADC
Implicate the State’s Anti-corruption interest?
Before delving into the specifics the State’s anti-corruption interest in
banning contributions from one PAC to another PAC as it applies to ADC, the
undersigned will first set out some guideposts.
First, it is unquestionable that a state has an anti-corruption interest in
limiting contributions made to a candidate. Buckley, 424 U.S. at 29. Further,
when an expenditure is made in coordination with a candidate, it functions as a
contribution and is treated as such. See Fed. Election Common v. Colorado
Republican Fed. Campaign Comm., 533 U.S. 431, 447 (2001). Finally, in addition
to having an anti-corruption interest in limiting contributions to candidates, a state
has an anti-corruption interest in preventing the circumvention of those
contribution limits. Vermont Right to Life Comm., Inc. v. Sorrell, 758 F.3d 118,
140 n.20 (2d Cir. 2014); Catholic Leadership Coal. of Texas v. Reisman, 764 F.3d
409, 444 (5th Cir. 2014).
Second, independent expenditures do not give rise to corruption or the
appearance thereof. Citizen’s United, 558 U.S. at 357. After Citizens United, the
Court no longer perceives a
threat of quid pro quo corruption ... when independent groups spend
money on political speech. By definition, an independent expenditure
is political speech presented to the electorate that is not coordinated
with a candidate. The separation between candidates and
independent expenditure groups negates the possibility that
independent expenditures will result in the sort of quid pro quo
corruption with which [the Court’s] case law is concerned. In short,
the candidate-funding circuit is broken. Citizens United thus held as
a categorical matter that independent expenditures do not lead to, or
create the appearance of, quid pro quo corruption.
Wis. Right to Life State PAC v. Barland, 664 F.3d 139, 153 (7th Cir. 2011)
(internal citations and quotation marks omitted).
After the Supreme Court held as a matter of law that independent
expenditures do not constitute a threat of quid pro quo corruption, federal courts
around the country began invalidating laws that limited contributions to
independent expenditure only organizations. These various courts agreed that
such limits do not withstand First Amendment scrutiny. Republican Party of New
Mexico v. King, 741 F.3d 1089, 1096-97 (10th Cir. 2013); New York Progress and
Protection PAC v. Walsh, 733 F.3d 483, 487 (2d Cir. 2013); Texans for Free
Enterprise v. Texas Ethics Common, 732 F.3d 535, 537-38 (5th Cir. 2013); Wis.
Right to Life State Political Action Comm. v. Barland, 664 F.3d at 154;
Thalheimer v. City of San Diego, 645 F.3d 1109, 1121 (9th Cir. 2011); Long
Beach Area Chamber of Commerce v. City of Long Beach, 603 F.3d 684, 696 (9th
Cir. 2010); SpeechNow.org v. FEC, 599 F.3d 686, 694-96 (D.C. Cir. 2010) (en
banc); N.C. Right to Life, Inc. v. Leake, 525 F.3d 274, 292-93 (4th Cir. 2008)
(pre-Citizens United). In fact, the Second Circuit Court of Appeals observed that
“few contested legal questions are answered so consistently by so many courts and
judges.” Walsh, 733 F.3d at 488.
With the foregoing in mind, the court turns to the nature of the ADC, a PAC
that, through two separate accounts, proposes to make both direct contributions to
candidates and independent expenditures. The court will refer to these types of
political committees and other organizations that engage in both independent
expenditures and direct contributions to candidates as hybrid organizations or
hybrid PACs. The question before the court is whether the State can permissibly
restrict the ADC from receiving contributions from other PACs when those
contributions will be used exclusively for independent expenditures.
The Circuit Courts are split on how to treat limitations on contributions to
hybrid organizations when the contribution in question will solely fund
independent expenditures. The Tenth Circuit found that segregated bank accounts
for candidate contributions and independent expenditures were sufficient to
alleviate a state’s corruption concerns so long as the organization adhered to direct
contribution limits and anti-coordination laws.12 Republican Party of New
In Emily’s List, 581 F.3d 1, the District of Columbia Circuit found unconstitutional a
Federal Election Commission regulation dictating that a large percentage of certain electionrelated activities, such advertisements, get-out-the-vote efforts, and voter registration drives be
funded from a group’s hard-money account. The court stated:
A non-profit that makes expenditures to support federal candidates does not suddenly
forfeit its First Amendment rights when it decides also to make direct contributions
to parties or candidates. Rather, it simply must ensure, to avoid circumvention of
Mexico, 741 F.3d at 1101. The court found that a “hybrid PAC’s direct
contribution does not alter the uncoordinated nature of its independent
expenditures; there still must be some attendant coordination with the candidate or
political party to make corruption real or apparent.” Id.
On the other hand, the Second and Fifth Circuits have found that the fact
that an organization has separate bank accounts for independent expenditures and
candidate contributions is not enough to alleviate a state’s anti-corruption interest
on its own. In Catholic Leadership Coal. of Texas, 764 F.3d 409, the court upheld
an as-applied challenge to a law preventing a hybrid PAC from accepting an email
distribution list from a nonprofit corporation (donating the email distribution list
would have been considered a contribution). Id. at 418-19. The email list was to
be solely used in support of the PAC’s independent expenditures. Id. In
determining that the state had an anti-corruption interest in preventing the hybrid
PAC from accepting the email distribution list, the court first noted that Texas law
prohibits corporate contributions to candidates and that the ban on corporate
contributions to PACs that contribute to candidates was a valid “anticircumvention
individual contribution limits by its donors, that its contributions to parties or
candidates come from a hard-money account.
Id. at 12.
measure to prevent corporations from using a political committee to do an end-run
around Texas’s direct contribution ban.” Id. at 443. The court then reasoned that
“[e]ven if the state does not have an anti-corruption interest in limiting
contributions intended to support independent expenditures ... the state does have
an anti-corruption interest in ensuring those donations facilitate only independent
expenditures.” Id. at 443. In short, it was constitutionally permissible for Texas
to ban corporate contributions to hybrid organizations that “lack sufficient
internal controls to safeguard against the risk that the corporate contributions,
even if formally earmarked for independent expenditures, could be funneled to a
candidate.” Id. at 445.
Similarly, the Second Circuit upheld an as applied challenge limiting
contributions to an independent-expenditure-only group when that group was
enmeshed financially and organizationally with a closely related group that made
contributions to candidates. Vermont Right to Life Comm., 758 F.3d 118. The
court found that because of the lack of organizational separation between the two
groups, the fact that they had separate bank accounts was insufficient to eliminate
the risk of coordinated expenditures between candidates and the independentexpenditure-only group. Id. at 144-45.
The Eleventh Circuit has also provided guidance with how the undersigned
should proceed.13 Most importantly, it found that the fact that ADC is operating
two accounts, one for independent expenditures and another for contributions to
candidates, is not enough, on its own, to eliminate the State’s concerns about
corruption or the appearance thereof. Alabama Democratic Conference, 541 F.
App’x at 935. Specifically, the Eleventh Circuit stated that
[w]hen an organization engages in independent expenditures as well as
campaign contributions, as ADC does, its independence may be called
into question and concerns of corruption may reappear. At the very
least, the public may believe that corruption continues to exist, despite
the use of separate bank accounts, because both accounts are controlled
and can be coordinated by the same entity. Consequently, we cannot
hold as a matter of law that the State’s interest in preventing corruption
or the appearance of corruption is insufficient to justify contribution
limits on funds when the receiving organization also makes campaign
Id. The court went on note that whether the anti-corruption interest is sufficient in
light of the record in this case, and whether the transfer ban is a closely drawn
means of furthering that interest, is a mixed question of law and fact to be
determined by the undersigned.
The State offers several arguments explaining its anti-corruption interest in
As noted earlier, while the Eleventh Circuit’s earlier opinion in this matter is
unpublished, and thus does not constitute precedent in other cases, it is nevertheless the law of
this case. As such, the undersigned is bound by it. This That And The Other Gift And Tobacco,
Inc., 439 F.3d at 1283 (“Under the law of the case doctrine, the findings of fact and conclusions
of law by an appellate court are generally binding in all subsequent proceedings in the same case
in the trial court or on a later appeal.”).
prohibiting the transfer of funds between PACs. The arguments can generally be
grouped into three categories: (1) how the State’s anti-corruption interest is
implicated when one PAC makes a contribution to another PAC, even if the PACs
involved only make independent expenditures; (2) how the State’s anti-corruption
interest is implicated when one PAC is allowed to make contributions to a hybrid
PAC’s independent expenditure only account; and (3) how the State’s anticorruption interest is implicated by the nature of ADC and the way it conducts
business. Because the court finds that the nature of ADC as an organization
implicates the State’s anti-corruption interests, the undersigned will not address
the State’s broader anti-corruption arguments. Accordingly, the court will focus
on the third category of the State’s arguments.
The State makes three arguments for why the nature of ADC specifically
implicates its anti-corruption interest: (1) the lack of organization separation
between the independent expenditure only side and the candidate contribution
sides lends itself to the appearance of corruption; (2) the ADC is analogous to a
political party or political party affiliate; and (3) the ADC’s purported independent
expenditures are actually coordinated expenditures. The court will address each in
Does the ADC’s Lack Organizational Separation Between
the People that Control the Candidate Account and the
Independent Expenditure Only Account?
As previously discussed, the ADC operates two bank accounts for purposes
of keeping its funds for contributions to candidates separate from its funds to be
used for independent expenditures. It is undisputed that these two accounts are
controlled by the same entity and people. These two facts are all the court knows
about how the ADC runs these separate accounts. The ADC did not present any
evidence to indicate there is any organizational separation with respect to the two
accounts to alleviate any potential appearance of corruption. Additionally, aside
from the creation of two accounts, the ADC has not offered any evidence to
indicate that it has implemented any other internal controls to safeguard against
the risk that contributions, even if formally earmarked for independent
expenditures, could be funneled to a candidate.
Bearing in mind the finding by the Eleventh Circuit that “[a]t the very least,
the public may believe corruption continues to exist, despite the use of separate
bank accounts, because both accounts are controlled and can be coordinated by the
same entity,” Alabama Democratic Conference, 541 F. App’x at 936, the
undersigned finds that the State’s “interest in preventing quid pro quo corruption
and its appearance permits the [S]tate to insist, at the very least, that there is some
safeguard” in place to guard “against the risk that [contributions], even if formally
earmarked for independent expenditure, could be funneled to a candidate.”
Catholic Leadership Coal. of Texas, 764 F.3d at 444-45. In light of the lack
evidence of some organizational division at the ADC such to ensure “that the
independent expenditures are truly spent independent of any coordination with a
candidate,” Vermont Right to Life Comm. v. Sorrell, 758 F.3d at 145, or evidence
of any other safeguard, the court finds that the State has a valid corruption concern
with respect to the ADC. Thus, the next question to be asked is whether the PACto-PAC transfer ban is closely drawn to that sufficiently important interest.
However, before addressing that question, the court will briefly discuss the State’s
other corruption arguments as applied to the ADC.
Is the ADC is Analogous to a Political Party?
The State theorizes that because the ADC has a close relationship with
public officeholders and the Alabama Democratic Party, it should be treated as a
political party for purposes of analyzing the State’s anti-corruption interest. (Doc.
45 at 44-47); (Doc. 48 at 12-13). As explained below, this argument fails.
Before addressing the merits of this argument, the court will briefly restate
some of the relevant facts. These facts fall into two categories: (1) facts
concerning the ADC’s relationship with the Alabama Democratic Party and (2)
facts concerning the ADC’s relationship with candidates and officeholders.
While the ADC is not a formal branch of the state Democratic Party, the two
groups have a close relationship and pursue similar goals. One of the ADC’s
stated purposes is to advocate and advance the cause of the Democratic Party and
it actively seeks to influence that party. Further, a large percentage of the
members of the Alabama Democratic Executive Committee are also members of
the ADC. There is also evidence showing the Alabama Democratic Party’s
support of ADC. As of February 2014, five of the non-vacant executive officer
positions for the ADC were held by members of the Alabama Democratic
Executive Committee. In a 2006 ADC meeting, the Chair announced that the
DNC would be available to assist local ADC chapters in organizing community
meetings and the State Democratic Party Chair gave brief remarks. Between 2005
and 2010, the ADC received $87,648.00 in contributions from the Alabama
Part of what the ADC does is endorse parties for office and coordinate getout-the-vote efforts that including publishing and distributing a yellow sample
ballot highlight which candidates it endorses. Candidates often donate to the ADC
to support the get-out-the-vote efforts. The ADC tells candidates what its get-outthe-vote procedures are and will listen to any ideas the candidates may have and, if
the ADC likes the ideas, implement said ideas. With respect to officeholders, as of
February 2014, three of the five non-vacant ADC Executive Officer positions were
held by current or previous officeholders. The ADC constitution provides for nine
current officeholders to be included as ex-officio members of the ADC Executive
Committee. Finally, the minutes from a 2007 Executive Committee meeting note
there was some discussion about how some local organizations were leaving it up
to local officials to determine the agenda of the local ADC chapters.
The Supreme Court upheld contribution limits to national political parties’
“soft money” accounts, accounts that are not used to make contributions to
candidates, based on a vast amount of evidence indicating the corruptive nature of
these contributions. McConnell v. Federal Election Common, 540 U.S. 93, 143154 (2003). Specifically, the Court found that candidates and officeholders enjoy
a special relationship and unity of interest with the national political parties.14 Id.
at 145. The Court further found that the national political parties, donors, and
candidates exploited this relationship as follows:
candidates and donors alike have in fact exploited the soft-money
loophole, the former to increase their prospects of election and the
To the extent the State points to evidence of the ADC’s efforts to influence the
Alabama Democratic Party as evidence of why it should be treated like a political party, that
point is not well-taken. The relevant question concerns the ADC’s relationship to candidates and
officeholders, not the Alabama Democratic Party.
latter to create debt on the part of officeholders, with the national
parties serving as willing intermediaries. Thus, despite FECA’s hardmoney limits on direct contributions to candidates, federal
officeholders have commonly asked donors to make soft-money
donations to national and state committees solely in order to assist
federal campaigns, including the officeholder’s own.... Parties kept
tallies of the amounts of soft money raised by each officeholder, and
“the amount of money a Member of Congress raise[d] for the national
political party committees often affect[ed] the amount the committees
g[a]ve to assist the Member’s campaign.... Donors often asked that
their contributions be credited to particular candidates, and the parties
obliged, irrespective of whether the funds were hard or soft....
National party committees often teamed with individual candidates’
campaign committees to create joint fundraising committees, which
enabled the candidates to take advantage of the party’s higher
contribution limits while still allowing donors to give to their
preferred candidate.... Even when not participating directly in the
fundraising, federal officeholders were well aware of the identities of
the donors: National party committees would distribute lists of
potential or actual donors, or donors themselves would report their
generosity to officeholders....
For their part, lobbyists, CEOs, and wealthy individuals alike all
have candidly admitted donating substantial sums of soft money to
national committees not on ideological grounds, but for the express
purpose of securing influence over federal officials.
The record in the present cases is replete with similar examples of
national party committees peddling access to federal candidates and
officeholders in exchange for large soft-money donations....
So pervasive is this practice that the six national party committees
actually furnish their own menus of opportunities for access to would-be
soft-money donors, with increased prices reflecting an increased level
of access. For example, the DCCC offers a range of donor options,
starting with the $10,000–per–year Business Forum program, and going
up to the $100,000–per–year National Finance Board program. The
latter entitles the donor to bimonthly conference calls with the
Democratic House leadership and chair of the DCCC, complimentary
invitations to all DCCC fundraising events, two private dinners with the
Democratic House leadership and ranking Members, and two retreats
with the Democratic House leader and DCCC chair in Telluride,
Colorado, and Hyannisport, Massachusetts.
McConnell, 540 U.S. at 146-51 (Internal citations and quotation marks omitted)
(emphasis added). There is some question as to what extent McConnell remains
good law after Citizen’s United. See Republican Nat. Comm. v. Fed. Election
Common, 698 F. Supp. 2d 150, 159 (D.D.C.), aff’d, 561 U.S. 1040 (2010).
However, to whatever extent the limitations on contributions to a Political Party’s
soft money account are still valid under McConnell, the anti-corruption concerns
that were raised in that case do not apply to the ADC, at least not on the record
before the court. While there is some relationship between the ADC and
candidates for office and current officeholders, unlike in McConnell, there is no
evidence of the corruptive nature of those relationships. There is no evidence that
ADC is providing donors access to candidates in exchange for their donations, that
donors are donating to the ADC’s get-out-the-vote efforts for purposes of securing
access over a candidate for office, or that donors are donating to the ADC in order
to circumvent contribution limits to a candidate, because, as noted previously,
Alabama does not have limits on the amount a donor can donate to a candidate. In
McConnell there was overwhelming evidence in the record to supports the Court’s
finding of the corruptive nature of donations to a National party’s soft money
account. The evidence in this case does not rise to that level.15
Are the ADC’s Purported Independent Expenditures are
Actually Coordinated Expenditures?
Finally, the State argues that it has an anti-corruption interest as applied to
the ADC because its alleged independent expenditures are actually coordinated
with candidates. (Doc. 45 at 48-49). In short, the argument is that because the
ADC solicits contributions from candidates to fund the ADC’s get-out-the-vote
efforts, shares its get-out-the-vote procedures with candidates, and is willing to
listen to candidates’ suggestions with respect to get-out-the-vote procedures, then
To the extent the State argues that it is the ADC’s relationship with the Alabama
Democratic Party, as opposed to its relationship with candidates and officeholders, that is
corruptive, that argument is not well-taken either. There would certainly be something to
consider if the evidence supported a conclusion that the Alabama Democratic Party was
controlling the ADC. Republican Party of New Mexico v. King, 741 F.3d at 1103 (“If the
political committees are indirectly controlled by political parties, that would raise a separate
issue—coordination”). However, the evidence does not support that conclusion. The evidence
does show that the five ADC Executive Committee members are also members of the 292
member Alabama Democratic Executive Committee, that the Chair of the Alabama Democratic
Party once gave remarks at an ADC meetings, and that over a five year period, the Alabama
Democratic Party contributed over eighty-seven thousand dollars to the ADC. However, there is
no evidence that the Alabama Democratic Party was directing how those funds were used or how
ADC implemented its programs, including the get-out-the-vote program. Absent more, the
undersigned cannot say that the Alabama Democratic Party directly or indirectly controlled the
actions of the ADC.
the get-out-the-vote expenditures are necessarily coordinated with the candidates.
(Id.) As such, because limits on coordinated expenditures are constitutionally
sound, so to are the limits on the ADC’s ability to receive contributions from other
When a PAC coordinates an expenditure with a candidate, it is the
functional equivalent of making a contribution to that candidate. See Colorado
Republican Fed. Campaign Comm., 533 U.S. at 447. This is supported by the
FCPA’s definition of contribution, which reads:
a. Any of the following shall be considered a contribution:
1. A gift, subscription, loan, advance, deposit of money
or anything of value, a payment, a forgiveness of a loan,
or payment of a third party, made for the purpose of
influencing the result of an election.
2. A contract or agreement to make a gift, subscription,
loan, advance, or deposit of money or anything of value
for the purpose of influencing the result of an election.
3. Any transfer of anything of value received by a
political committee from another political committee,
political party, or other source.
4. The payment of compensation by any person for the
personal services or expenses of any other person if the
services are rendered or expenses incurred on behalf of a
candidate, political committee, or political party without
payment of full and adequate compensation by the
candidate, political committee, or political party....
ALA. CODE § 17-5-2(a)(2). As the court understands this definition, if the ADC
spends money getting out the vote on behalf of a candidate, then the value of the
get-out-the-vote effort could be considered a contribution if the candidate does not
provide payment of full and adequate compensation. ALA. CODE § 17-5-2
(a)(2)a.4. Important to this is the assumption that the candidate prearranged this
expense on his or her behalf. In the absence of prearrangement and coordination
the expenditure would not be a contribution, but would be an independent
expenditure. See Citizen’s United, 558 U.S. at 360.
The State argues that the fact ADC solicits and receives contributions from
candidates for getting out the vote demonstrates coordination, such that the value
of the get-out-the-vote efforts should be considered a contribution to a candidate.
However, this point overlooks the fact that under the FCPA’s definition of
“contribution,” an expenditure is not a contribution if the candidate provides full
and adequate compensation for the services rendered. Here, assuming for
purposes of this discussion that there is sufficient evidence that a candidate was
prearranging with the ADC such that the ADC’s get-out-the-vote efforts could be
considered to be on behalf of that particular candidate, there is not enough
evidence in the record that the undersigned can say that the candidates’
contributions did not fully and adequately compensate ADC for those efforts. In
other words, there is not enough evidence to suggest that ADC was making a
contribution to these candidates because the undersigned cannot determine
whether the ADC was fully compensated for its get-out-the-vote efforts. Because
the undersigned cannot find that the ADC was using its independent-expenditureonly account to make candidate contributions by providing a prearranged service
to the candidate without being compensated, the State has not proven it has an
anti-corruption interest because the ADC’s so-called independent expenditures are
actually coordinated candidate contributions.
Is the PAC-to-PAC Transfer Ban Closely Drawn
Having established that the State’s interest in preventing quid pro quo
corruption and its appearance permits it to insist, at the very least, that there is
some organizational separation or other safeguard in place with regard to the ADC
to guard against the risk that contributions, even if formally earmarked for
independent expenditures, could be funneled to a candidate, the question turns to
whether the PAC-to-PAC transfer ban is a closely drawn means of furthering that
Under the closely drawn standard, “[e]ven a significant interference with
protected rights of political association may be sustained if the State demonstrates
a sufficiently important interest and employs means closely drawn to avoid
unnecessary abridgement of associational freedoms.” McCutcheon, 134 S. Ct. at
1444. Clearing this hurdle “require[s] a fit that is not necessarily perfect, but
reasonable; that represents not necessarily the single best disposition but one
whose scope is in proportion to the interest served[;] ... that employs not
necessarily the least restrictive means but ... a means narrowly tailored to achieve
the desired objective.” Id. at 1456-57 (internal citation and quotation marks
In this case, the court finds that the ban on contributions, expenditures, and
transfers of funds to the ADC from other PACs is closely drawn to further the
State’s anti-corruption interest. In light of lack of evidence of organizational
separation or other safeguards to prevent contributions that are nominally for
independent expenditures ending up in the Candidate Account, the court cannot
say that a more narrowly tailored solution, such a limit on the amount another
PAC could contribute to ADC, would adequately protect the State’s interest.
Given the lack of safeguards, even a small donation could end up in the wrong
account. Further, the impact of the PAC-to-PAC transfer ban on the ADC’s
associational rights is minimal. The ADC is still able to receive unlimited
contributions from individuals; it can still make unlimited contributions to
candidates; and it can make unlimited independent expenditures. Because ALA.
CODE § 17-5-15(b) is closely drawn to serve a sufficiently important state interest,
the ADC’s as applied constitutional challenge must fail. See Catholic Leadership
Coal. of Texas, 764 F.3d at 445 (“Likewise, Texas’s complete ban on Plaintiffs’
proposed contribution is closely drawn to its anticircumvention interest insofar as
Plaintiffs have failed to provide any clear safeguard that sufficiently assures that
no part of the corporate contribution will end up being transferred to a
As noted above, Plaintiffs’ “Second Motion for Preliminary Injunction”
(doc. 43) and Defendants’ “Motion for Summary Judgment and Evidentiary
Submission” (doc. 44) are due to be denied. The court further finds on the merits
that ALA. CODE § 17-5-15(b) is constitutional as applied to the ADC. As such, a
final judgment in favor of the State will be entered.
DONE, this 31st day of July, 2015.
JOHN E. OTT
Chief United States Magistrate Judge
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