Conway for Senate v. Federal Election Commission

Filing 21

MEMORANDUM OPINION by Senior Judge Charles R. Simpson, III on 8/19/2013; re 15 MOTION for Summary Judgment filed by Conway for Senate, 16 MOTION for Summary Judgment filed by Federal Election Commission ; a separate order will be entered in accordance with this opinion. cc:counsel (TLB)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE

CONWAY FOR SENATE

PLAINTIFF

v.

CIVIL ACTION NO. 3:12-CV-244-S

FEDERAL ELECTION COMMISSION

DEFENDANT

MEMORANDUM OPINION

Plaintiff Conway for Senate, the principal campaign committee for Jack Conway in his 2010
campaign for United States Senate, brought this action to challenge a civil monetary penalty
assessed against it by Defendant Federal Election Commission (“FEC”) for failing to file a required
report. The parties have cross-moved for summary judgment (DNs 15 and 16). For the reasons stated
herein, the FEC’s motion for summary judgment will be granted.
I.
Pursuant to the Federal Election Campaign Act (“FECA”), a principal campaign committee
for a candidate for the Senate must periodically file various reports, including quarterly reports. 2
U.S.C. § 434(a)(2)(iii). Those quarterly reports are due by the 15th day of the month following the
calendar quarter, except that the report for the period ending December 31st (the “year-end report”)
must be filed by January 31st of the following year. Id. To file a report, a campaign committee for
a senatorial candidate is required to send it to the Secretary of the Senate, who receives the reports
as custodian for the FEC. 2 U.S.C. § 432(g)(1). The Secretary of the Senate must then forward a
copy of the report to the FEC within 2 working days. 2 U.S.C. § 432(g)(2).

If a campaign committee fails to timely file reports, the FEC may assess civil penalties
against the campaign committee. 2 U.S.C. § 437g(a)(4)(C)(i)(II). FEC regulations set forth a
schedule of penalties that takes into account whether the report was not filed or was merely late, how
late the report was, the dollar amount of activity in the report, and whether the report was one that
is deemed “election sensitive.” 11 C.F.R. § 111.43(a)-(c). FEC regulations also detail that reports
that are not election sensitive are deemed late if filed after their due dates but within thirty days of
the due dates; after that, the reports are considered to be not filed. 11 C.F.R. 111.43(e)(1).
II.
In December of 2010, the FEC sent a notice to Conway for Senate stating that its year-end
report was due on January 31, 2011. On January 25, 2011, Conway for Senate sent an envelope
containing various reports via FedEx Priority Overnight to the Senate Office of Public Records.
According to Conway for Senate, the year-end report was one of the reports in that envelope. The
FEC, however, states that it did not receive the year-end report in that envelope.
On February 17, 2011, the FEC sent a notice to R. Wayne Stratton, Conway for Senate’s
Treasurer, stating that the year-end report had not been filed. On March 10, 2011, Stratton sent a
letter to the Senate Office of Public Records protesting that the campaign committee had sent a copy
of the year-end report in the January 25, 2011 FedEx shipment. Stratton included with the letter a
copy of the year-end report.1
In a March 30, 2011 memorandum, the FEC’s staff recommended that the FEC find “reason
to believe” that a civil penalty of $4,950 should be imposed upon Conway for Senate for having not
1

Conway for Senate explains that the three-week difference between when the FEC sent the
notice of non-filing and when Stratton responded was caused by the fact that the FEC’s notice was
sent to a P.O. box that the campaign committee had stopped using. Conway for Senate states that
Stratton received the FEC’s notice at his office on March 10, 2011, and responded immediately.
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filed the year-end report.2 The FEC unanimously approved that recommendation on April 1, 2011.
On April 4, 2011, the FEC sent Stratton a letter informing him of the reason-to-believe finding,
explaining the basis for the imposition of the civil penalty, and explaining how Conway for Senate
could challenge the penalty.
By letter dated May 4, 2011, Conway for Senate challenged the imposition of the penalty.
Attached to the letter was an affidavit from Lynn-Marie Johnson, a receptionist at Stratton’s
accounting firm, stating that she had placed the year-end report, along with other items, in the
January 25, 2011 FedEx shipment.
Dayna Brown, a Reviewing Officer in the FEC’s Office of Administrative Review,
acknowledged receipt of the challenge. Brown contacted the Superintendent of the Office of Public
Records of the Senate and asked that the Office of Public Records to review its records to determine
whether it had received Conway for Senate’s 2010 year-end report in January of 2011. The
Superintendent of the Office of Public Records responded to Brown via letter. The letter stated that
the Office of Public Records had reviewed “the original documents and the original Fedex envelope
shipped on January 25, 2011.” The letter continued, “As reflected in our public database, the original
documents confirmed that our office received 5 separate reports in the Fedex envelope shipped on
January 25, 2011.” After identifying the five reports that had been received, the letter stated that the
Office of Public Records did not receive the 2010 year-end report in that January 25, 2011 envelope.
On June 29, 2011, Brown completed a preliminary recommendation that the FEC make a
final determination that Conway violated 2 U.S.C. § 434(a) and assess a civil penalty of § 4,950. In

2

The FEC noted that it received a copy of the report on March 10, 2011. However, as that
report was received more than 30 days after the January 31 due date, the report was deemed not
filed. See 11 C.F.R. 111.43(e)(1).
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her recommendation, Brown noted the results of her correspondence with the Superintendent of the
Office of Public Records. Brown further noted that a written record of a telephone call between
Stratton and an FEC Analyst indicated that Stratton had told the FEC Analyst that the year-end
report was sent on January 25, 2011, but separately from the other documents – a statement that was
inconsistent with Johnson’s statement in her affidavit that she placed the year-end report in the same
FedEx envelope as the other documents received by the FEC.
Brown mailed a copy of her preliminary recommendation to Stratton. In turn, Stratton
submitted a letter responding to Brown’s recommendation. In his letter, Stratton denied ever having
stated that the year-end report was sent separately from the other Conway for Senate reports that the
FEC had received. Stratton further sought to describe the campaign committee’s report preparation
process. He noted that campaign employee Nick Braden prepared the reports and e-mailed them to
Stratton and a law firm for review. Braden then made any necessary corrections and e-mailed
finalized copies to Stratton for Stratton’s signature. Then, Paula Pasley, the Office Administrator
at Stratton’s accounting firm, printed the reports from Braden’s e-mail and assembled them for
Stratton’s signature. As evidence of that process, Stratton attached to his letter various pieces of
evidence. In particular, he attached an e-mail dated January 24, 2011 from Braden to Stratton and
Pasley that indicated that the “Q4 report” was in a file attached to the e-mail. Stratton also attached
an affidavit of Pasley stating that Braden had e-mailed her several reports, including the 2010 fourth
quarter report, which she printed out, had Stratton review, and then turned over to Johnson for
mailing. Pasley’s affidavit also stated that she had spoken to Raymond Davis of the Office of Public
Records, who had indicated that it was “possible” that the Senate Sergeant-at-Arms, who was
responsible for opening the envelope sent by Conway for Senate and then forwarding it to the Office

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of Public Records, had failed to put the year-end report back in the envelope before he forwarded
it. Finally, Stratton attached to his letter a copy of the previously-submitted affidavit of Johnson in
which she stated that she had placed multiple reports, including the year-end report, in a FedEx
envelope that was mailed on January 25, 2011 and delivered the following day.
On March 28, 2012, after having reviewed Stratton’s letter, Brown issued a final
recommendation to the FEC. Brown essentially credited the Office of Public Records’ letter stating
that it did not receive the year-end report in the January 25, 2011 mailing. Brown also addressed
Pasley’s suggestion that the Senate Sergeant-at-Arms might have lost the report. Brown stated that
she had spoken with Davis, the Office of Public Records employee to whom Pasley had spoken.
Davis told Brown that after he spoke with Conway for Senate staff, he contacted the Senate
Sergeant-at-Arms. The Sergeant-at-Arms stated that, “as is their process,” all documents that were
in Conway for Senate’s envelope had been forwarded to the Office of Public Records.
On April 9, 2012, the FEC, with one member not voting, unanimously adopted Brown’s
recommendation and assessed a civil penalty of $4,950. Conway for Senate then filed this suit. The
parties have now cross-moved for summary judgment, both relying on the administrative record.
III.
A.
To prevail on a motion for summary judgment, the movant must show that “there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
FED. R. CIV. P. 56(a). A genuine issue of material fact arises when there is sufficient evidence on
which a jury could reasonably find for the non-moving party. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 252 (1985). The disputed issue need not be resolved conclusively in favor of the non-

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moving party, but that party must present sufficient probative evidence which makes it necessary
to resolve the parties’ differing versions of the dispute at trial. First Nat’l Bank of Ariz. v. Cities
Serv. Co., 391 U.S. 253, 288-289 (1968). Finally, the evidence must be construed in the light most
favorable to the non-moving party. Summers v. Leis, 368 F.3d 881, 885 (6th Cir. 2004).
B.
There is no dispute between the parties that the correct standard of judicial review of this
action is that set out section 706 of the Administrative Procedure Act. Of relevance to Conway for
Senate’s arguments here, a reviewing court may overturn an agency action if it is “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with the law.” 5 U.S.C. §
706(2)(A). “An agency decision is arbitrary and capricious if the agency fails to examine relevant
evidence or articulate a satisfactory explanation for the decision.” Bangura v. Hansen, 434 F.3d 487,
502 (6th Cir. 2006). However, a reviewing court may not create a rational basis for the agency action
that the agency did not itself proffer. Id.
Here, the court cannot conclude that Conway for Senate has shown the FEC’s action to be
arbitrary and capricious. The only real dispute between the parties is whether Conway for Senate
included the year-end report in the FedEx package of reports it mailed on January 25, 2011. In
finding that the year-end report was not included in that package, the FEC essentially credited the
letter from the Superintendent of the Office of Public Records. That letter confirmed that the Office
of Public Records had conducted a review of its records, including examining the “original Fedex
envelope shipped on January 25, 2011” and the “original documents” therein. That review revealed,
consistent with the Office of Public Records’ database, that there were five documents in the
envelope, but none of them were the year-end report. Given that the Office of Public Records

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undertook a review of the original documents it received and determined that the year-end report
was not one of them, the FEC’s determination, based on that review, that Conway for Senate did not
include the year-end report in the mailing was not “arbitrary” or “capricious.”
The evidence submitted by Conway for Senate does not compel a finding that the FEC acted
arbitrarily or capriciously. Brown, the FEC’s Reviewing Officer, acknowledged in her
recommendations each piece of evidence submitted by Conway for Senate. Thus, it cannot be said
that the agency failed to examine relevant evidence. Instead, the agency simply concluded that the
evidence that the year-end report was not in the January 25 FedEx package was stronger than
Conway for Senate’s evidence that it was. Nor can that factual determination be considered arbitrary
and capricious. Simply put, the evidence submitted by Conway for Senate was not compelling
enough for the court to reach a conclusion that the FEC’s determination was arbitrary and
capricious. Conway for Senate itself states that this case is “a proverbial he-said, he-said” (Pl’s Resp.
to Def’s. Mot. for Summ. J. and Reply in Support of Pl’s. Mot. for Summ. J., DN 18, at 5) where
both parties’ factual arguments are equally plausible (see id. at 6). This court does not review the
FEC’s determination to see whether it could just as plausibly have made another determination; it
reviews only for whether the FEC acted arbitrarily and capriciously in making its determination.
Where an agency gives consideration to all relevant evidence and then makes one of two equally
plausible factual determinations, the agency has not acted arbitrarily or capriciously.
Conway for Senate likens this case to Greenwood for Congress, Inc. v. Federal Election
Commission, 2003 WL 22096125 (E.D.Pa. Aug. 15, 2003). In Greenwood, a campaign committee
had sent a package to the FEC. 2003 WL 22096125, at *1. Inside was a cover letter stating that a
hard copy of a report and a zip disk with an electronic copy were enclosed within the package. Id.

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However, according to the FEC, only the hard copy of the report was in the package, not the zip
disk. Id. The FEC notified the campaign committee that an electronic copy was not included in the
package. Id. The campaign committee sent another electronic copy, which arrived at the FEC eight
days after it was due. Id. The FEC subsequently determined that the campaign committee had failed
to timely file the report and assessed a fine. Id. at *2.
The campaign committee administratively challenged the FEC’s determination. Greenwood,
2003 WL 22096125, at *2. During the ensuing administrative review, the campaign committee
submitted the following evidence: it had weighed the various items it submitted to the FEC. Id.
Including the zip disk, the items would have weighed approximately 2 1/8 pounds, while the items
weighed only 1 7/8 pounds without the zip disk. Id. The air bill for the package received by the FEC,
which had been completed by campaign staff, indicated a weight of 2.20 pounds. Id. FedEx listed
the weight of the package as 3 pounds, which, because FedEx rounded up to the next pound,
indicated that the package was between 2 and 3 pounds. Id. Based on that evidence, the campaign
committee argued that the FEC contained a zip disk. Id. However, the FEC rejected that evidence,
determined that it did not receive the zip disk, and assessed the penalty. Id. The campaign committee
challenged the penalty in the district court. Id.
The district court found that the FEC’s determination was arbitrary and capricious.
Greenwood, 2003 WL 22096125, at *3-*4. In doing so, the district court stated that the record
contained nothing to suggest that the FEC made any effort to determine whether the disk was in the
package; the FEC simply noted the electronic report was not uploaded into their system until eight
days past the due date. Id. at *3. Thus, stated the district court, it was only the FEC’s “belief in the
infallibility of their procedures and employees” that supported the FEC’s conclusion that the disk

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was not included in the initial package. Id. In contrast to the lack of evidence supporting the FEC’s
conclusion, the district court noted that the FEC “disregarded relevant, albeit circumstantial,
evidence presented by” the campaign committee, namely that the campaign committee had weighed
the various items it believed were in the FedEx package received by the FEC, and the weights
indicated that the zip disk was included in the package. Id.
While there are some superficial similarities between this case and Greenwood, the
differences doom Conway for Senate’s arguments. First, the evidence submitted to the FEC by
Conway for Senate was much weaker than that submitted to the FEC in Greenwood. The weight
evidence in Greenwood was particularly strong evidence, unconnected to the vagaries of memory
or preconceived notions of whether or not an item was placed in a package. Moreover, the weight
evidence was subject to an easily replicable test, but the FEC made no attempt to repeat the test or
explain why the results were not valid. See Greenwood, 2003 WL 22096125, at *3. Here, in contrast
to those easily verifiable weight tests, the evidence submitted by Conway for Senate consisted of
nothing more than statements by various campaign staff members stating that they had prepared the
year-end report and placed it in an envelope. As noted above, even Conway for Senate recognizes
that its evidence created nothing more than a “he-said, he-said” question for the FEC to decide.
Additionally, while the district court in Greenwood focused on the FEC’s lack of evidence
and failure to investigate the evidence that was submitted to it by the campaign in that case, here the
FEC took reasonable steps to verify that it did not receive the report. It inquired of the Office of
Public Records as to the receipt of the report, causing the Office of Public Records to examine the
original envelope and documents it received. Further, when Conway for Senate speculated, based
on Pasley’s conversation with Raymond Davis, that the Senate Sergeant-at-Arms may have lost the

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report, Brown called Davis to speak with him. Notably, Davis had apparently taken it upon himself
to contact the Senate Sergeant-at-Arms after he spoke with campaign staff members about the
possibility that the Sergeant-at-Arms lost the report, and the Sergeant-at-Arms had reassured him
that all documents it received had been forwarded to the Office of Public Records. Simply put, it
cannot be said that the FEC failed to investigate here in the same manner it did in Greenwood.
Conway for Senate also argues that the FEC’s determination was arbitrary and capricious
because it “fail[ed] to follow its own regulatory guidelines regarding the ‘best efforts’ defense.” The
best efforts defense is set forth in 2 U.S.C. § 432(i):
When the treasurer of a political committee shows that best efforts have been used
to obtain, maintain, and submit the information required by this Act for the political
committee, any report or any records of such committee shall be considered in
compliance with this Act.
FEC Regulations state that a campaign committee opposing a finding by the FEC that there was
reason to believe the respondent failed to comply with the FECA may argue, inter alia, that:
The respondent used best efforts to file in a timely manner in that:
(i) The respondent was prevented from filing in a timely manner by reasonably
unforeseen circumstances that were beyond the control of the respondent; and
(ii) The respondent filed no later than 24 hours after the end of these circumstances.
11 C.F.R. § 111.35(b)(3).
However, in its submissions to the FEC during the administrative review process, Conway
for Senate never cited the “best efforts” provision or made any argument sounding in the “best
efforts” standard detailed in the FEC’s regulation. Thus, Conway for Senate waived the argument.
Wilson Air Center, LLC v. F.A.A., 372 F.3d 807, 813 (6th Cir. 2004) (“[I]t is inappropriate for courts
reviewing agency decisions to consider arguments not raised before the administrative agency

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involved.”). Simply put, it would be unfair for this court to consider whether the FEC properly
considered a defense that Conway for Senate never argued was applicable.3
IV.
Because the FEC’s decision was not arbitrary or capricious, the court will grant FEC’s
summary judgment motion and dismiss this action with prejudice. A separate order will be entered
in accordance with this opinion.

August 19, 2013

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3

Even if the court were to consider Conway for Senate’s “best efforts” argument, it would
find it meritless. Initially, the court notes that Conway for Senate has consistently taken the position
that, as a factual matter, it actually filed the report, not that it was prevented from doing so by
something beyond its control. Thus, the “best efforts” provision would appear to be inapplicable in
this case. The closest Conway for Senate comes to arguing that something beyond its control
prevented it from filing the year-end report is its speculation that the Senate Sergeant-at-Arms lost
the year-end report. However, that argument ignores that the FEC made a factual determination –
which, as detailed in the main text, was not arbitrary and capricious – that the Senate Sergeant-atArms did not lose the report, but instead Conway for Senate failed to include the year-end report in
the January 25, 2011 mailing. Given that the FEC determined, in essence, that it was Conway for
Senate’s negligence that caused the year-end report to not be filed, Conway for Senate can not make
the factual showing necessary for the “best efforts” defense. See 11 C.F.R. § 111.35(b)(3), (d)(1)
(negligence of campaign is not a circumstance in which the best efforts defense may apply).
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