Lair et al v. Motl et al

Filing 90

ORDER granting in part and denying in part Plts' 75 Motion for Summary Judgment: 1. MCA 13-35-225(3)(a) is unconstitutionally vague; 2. MCA 13-37-131 is unconstitutionally vague; and 3. MCA 13-35-227 is unconstitutional to the extent it p rohibits a corporation from making a contribution to a political committee that the committee than uses for independent expenditures in support of or opposition to a candidate. The dfts are PERMANENTLY ENJOINED from enforcing each of these three pro visions. Plts' motion is DENIED in all other respects. The Court further grants in part and denies in part Dfts' 78 Motion for Partial Summary Judgment: MCA 13-35-227 is constitutional to the extent it prohibits a corporation from mak ing direct or indirect contributions to candidates or political parties. Dfts' motion is denied in all other respects. It is further ordered the 2/24/12 preliminary injunction 66 is dissolved. It is further ordered that this order and permanent injunction is the final judgment as to the issues addressed herein. Let this judgment enter. The balance of plts' claims shall be resolved by bench trial. Signed by Judge Charles C. Lovell on 5/16/2012. (DED, )

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MONTANA

HELENA DIVISION

DOUG LAIR, STEVE DOGIAKOS,
AMERICAN TRADITION
PARTNERSHIP, AMERICAN
TRADITION PARTNERSHIP PAC,
MONTANA RIGHT TO LIFE
ASSOCIATION PAC, SWEET GRASS
COUNCIL FOR COMMUNITY
INTEGRITY, LAKE COUNTY
REPUBLICAN CENTRAL
COMMITTEE, BEAVERHEAD
COUNTY REPUBLICAN CENTRAL
COMMITTEE, JAKE OIL LLC, JL
OIL LLC, CHAMPION PAINTING INC,
and JOHN MILANOVICH,

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CV 12-12-H-CCL

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ORDER and

PERMANENT

INmNCTION

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Plaintiffs,
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vs.
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JAMES MURRY, in his official capacity )
as Commissioner of Political Practices;
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STEVE BULLOCK, in his official capacity )
as Attorney General ofthe State of
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Montana; and LEO GALLAGHER, in his )
official capacity as Lewis and Clark
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County Attorney;
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Defendants.
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1

The plaintiffs filed this lawsuit, challenging several of Montana's campaign
finance and election laws. The plaintiffs also moved for a preliminary injunction,
which the Court granted in part and denied in part. The parties then agreed that
some of the plaintiffs' claims could be resolved by summary judgment and some
would require further factual development and a bench trial. Both parties moved
for summary judgment in light ofthis stipulation.
The Court held a hearing on the motions for summary judgment on May 12,
2012. Noel Johnson and John Bloomquist appeared for the plaintiffs. Michael
Black and Andrew Huff appeared for the defendants. Having heard the arguments
and examined the briefs, the Court grants the motions in part and denies them in
part. In particular, the Court permanently enjoins Montana's vote-reporting
requirement, political-civil libel statute, and ban on corporate contributions to
political committees that the committees use for independent expenditures. The
Court, however, concludes that Montana's ban on direct and indirect corporate
contributions to candidates and political parties is constitutional.
This order and permanent injlmction is the [mal judgment on these matters.
The balance of the plaintiffs' claims shall be resolved by bench trial.
BACKGROUND

The plaintiffs are individuals, corporations, political committees,
2

associations, and political parties that have expressed a desire to take actions that
would violate several of Montana's campaign finance and election laws:
•

Montana Code Annotated § 13-35-225(3Xa), which requires
authors of political election materials to disclose another
candidate's voting record;

•

Montana Code Annotated § 13-37-131, which makes it
unlawful for a person to misrepresent a candidate's public
voting record or any other matter relevant to the issues of the
campaign with knowledge that the assertion is false or with a
reckless disregard of whether it is false;

•

Montana Code Annotated § 13-37-216(1), (5), which limits
contributions that individuals and political committees may
make to candidates;

•

Montana Code Annotated § 13-37-216(3), (5), which imposes
an aggregate contribution limit on all political parties; and

•

Montana Code Annotated § 13-35-227, which prevents corporations
from making contributions or expenditures in connection with a
candidate or a political committee that supports or opposes a
candidate or political party.

The plaintiffs argue that each of these statutory provisions violates the First
Amendment of the United States Constitution.
As the Court previously concluded, the plaintiffs have standing to pursue
their claims. (See doc. 66 at 6-7); Wongv. Bush, 542 F.3d 732, 736 (2008)
(holding that, in the first amendment context, "'[I]t is sufficient for standing
purposes that the plaintiff intends to engage in a course of conduct arguably
3

affected with a constitutional interest and there is a credible threat that the
challenged provision will be invoked against the plaintiff. '" (quoting LSO, Ltd. v.

Stroh, 205 F.3d 1146, 1154-55 (9th Cir. 2000».
On February 24,2012, the Court issued a preliminary inunction enjoining
the enforcement of the vote-reporting requirement (Section 13-35-225(3Xa» and
the political civil libel statute (Section § 13-37-131). The Court, however, did not
enjoin enforcement of the contribution limits in Section 13-37-216(1), (3), (5) or
the ban on corporate contributions and expenditures in Section 13-37-227.
In a scheduling order issued after the preliminary injunction order, and by
agreement of the parties, the Court ordered that it will hold a bench trial to
adjudicate the plaintiffs' claims regarding the contribution limits in Section
13-37-216(1), (3), (5). That trial is scheduled for September 12,2012. The Court
and the parties agreed that all other matters can be adjudicated by summary
judgment.
Both parties then moved for summary judgment, presenting four questions:
1.

Is the vote-reporting requirement (Section 13-35-225(3)(a»
constitutional?

2.

Is the political-civil libel statute (Section § 13-37-131)

constitutional?

3.

May governments ban direct or indirect corporate contributions
4

to candidates and political parties (Section 13-37-221)?
4.

May governments prevent corporations from making
contributions to political committees that use the contributions
for independent expenditures in support of a candidate or
political party (Section 13-31-221)?
SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate only ifthere are no genuine issues of
material fact and the moving party is entitled to judgment as a matter of law. Fed.
R. Civ. P. 56; Anderson v. Liberty Lobby, Inc., 411 U.s. 242,247 (1986). Here,
there are no factual disputes precluding summary judgment. The only questions
before the Court are questions oflaw, making summary judgment the appropriate
vehicle for resolving these issues. See IDK, Inc. v. Clark Co., 836 F.2d \\85, 1189
(9th Cir.l988).
ANALYSIS

The Court grants summary judgment in favor of the plaintiffs in three
respects: The vote-reporting requirement, the political civil libel statute, and the
prohibition of corporate contributions to political committees that the committees
then use for independent expenditures are all unconstitutional under the First
Amendment. The Court, however, grants summary judgment in favor ofthe
defendants on one of the plaintiffs' claims: Governments may constitutionally

5

prohibit corporations from making direct or indirect contributions to candidates
and political parties.

I.

Section 13-35-225(3)(a): vote-reporting requirement
The plaintiffs move for summary judgment on their claim that the vote-

reporting requirement in Section 13-35-225(3)(a) is unconstitutional under the
First Amendment. They argue the statute is unconstitutionally vague, overbroad,
and fails strict scrutiny review. The Court agrees that the statute is
unconstitutionally vague and therefore grants the plaintiffs' motion as to this
claim.
The vote-reporting requirement in Section 13-35-225(3)(a) provides:
Printed election material described in subsection (1) that includes
information about another candidate's voting record must include:
(i) a reference to the particular vote or votes upon which the information
is based;

(ii) a disclosure of contrasting votes known to have been made by the
candidate on the same issue if closely related in time; and
(iii) a statement, signed as provided in subsection (3)(b), that to the best
of the signer's knowledge, the statements made about the other
candidate's voting record are accurate and true.
The Court concludes that the statute is unconstitutionally vague for the same
reasons that it enjoined the statute in its preliminary injunction order. None of the

6

parties provided any reasons in their summary judgment briefing for why that
initial conclusion should be disturbed. For the sake of convenience, the Court
presents below its discussion from the preliminary injunction order.
A statute is unconstitutionally vague if it "fails to clearly mark the boundary
between permissible and impermissible speech ...." Buckley v. Valeo, 424 U.S. 1,
41 (1976).
Statutes that are insufficiently clear are void for three reasons: "( 1) to
avoid punishing people for behavior that they could not have known was
illegal; (2) to avoid subjective enforcement of the laws based on
'arbitrary and discriminatory enforcement' by government officers; and
(3) to avoid any chilling effect on the exercise of First Amendment
freedoms."

Humanitarian Law Project v.

u.s.

Treas. Dept., 578 F.3d 1133, 1146 (9th Cir.

2009)(quoting Foti v. City ofMenlo Park, 146 F.3d 629, 638 (9th Cir. 1998».
Stated differently, "A statute must be sufficiently clear so as to allow persons of
'ordinary intelligence a reasonable opportunity to know what is prohibited.'" Foti,
146 F.3d at 638 (quoting Gnryned v. City ofRocliford, 408 U.S. 104, 108 (1972»;

see also Humanitarian Law Project, 578 F.3d at 1146.
Here, the problematic portion of Section 13-35-225(3)(a) is subsection (ii).1
Under that subsection, when printed election material includes information about a

This is not to say that other subsections are inviolate under theories other
than vagueness. As explained below, the Court need not address other subsections
or other theories.
1

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candidate's voting record, the material must also include "a disclosure of
contrasting votes known to have been made by the candidate on the same issue if
closely related in time." Mont. Code Ann. § 13-3S-22S(3)(a)(ii).
As the plaintiffs discuss, the phrase "closely related in time" is not defined
anywhere in Montana's statutes or regulations, and a candidate could not possibly
know to what "closely related in time" refers. The defendants argue that "closely
related in time" simply refers to votes that occur in the same legislative session as
the votes discussed in the printed election material. That is one possibility, but are
there others?
Could the phrase "closely related in time" also include the previous
legislative session? Yes, possibly. A candidate's vote on a particular tax issue in
2009 could be construed as "closely related in time" to a vote on the same tax
issue in 2011 (the following legislative session). But someone else might construe
it differently to mean, as the defendants suggest, the same legislative session. And
that is the point-the statute utterly "fails to clearly mark the boundary between
permissible and impermissible speech." Buckley, 424 U.S. at 41. As such, it is
unconstitutionally vague. Id.
Similarly, the phrase "the same issue" is unconstitutionally vague. Suppose,
for example, that the Montana Legislature is addressing the question of campaign
financing and that a state senator votes to raise the contribution limit for

8

individuals and political committees in gubernatorial races from $500 to $1,000.
But suppose also that the same senator votes to lower that limit for political parties
from $18,000 to $13,000. Do the two votes involve "the same issue" under Section
13-35-225(3)(a)(ii)? Maybe. Broadly defined, both votes concern campaign
financing for gubernatorial races. But, narrowly defined, they are different--one
concerns individuals and political committees and the other concerns political
parties. The question of sameness, then is a question of scale. At one level the
issues are the same, but, at another, they are not. As such, "persons of ordinary
intelligence" do not have "a reasonable opportunity to know what is prohibited"
by the phrase "the same issue." See Foti, 146 F.3d at 638. The phrase "the same
issue" is therefore unconstitutionally vague. Id.
At the summary judgment hearing, the defendants conceded that the
unconstitutional portions of Section 13-35-225(3)(a) cannot be severed. The
Court agrees. For the reasons discussed in Randall v. Sorrell, 548 U.S. 230, 262
(2006), the Court does not sever the unconstitutional portion of the statute.
Severing the provision would leave gaps in the statute and would require the Court
to predict or foresee how the legislature might respond to the unconstitutional
portions of the statute. Id. By not severing the provision, the legislature will be
"free to rewrite [the statute] in light of the constitutional difficulties" that the
Court has found. Id.
9

Since the Court grants summary judgment in favor of the plaintiffs on
account of the statute's unconstitutional vagueness, the Court need not address the
remaining bases upon which the statute might be unconstitutional. See Camreta v.

Greene, 131 S. Ct. 2020, 2031 (2011 ) (observing that courts should "avoid
reaching constitutional questions in advance ofthe necessity of deciding them."
(citations and internal quotation marks omitted).

II.

Section 13-37-131: political civil libel
The plaintiffs also move for summary judgment on their claim that the

political civil libel statute-Section 13-37-131-is unconstitutional under the
First Amendment. The Court agrees that the statute is unconstitutionally vague and
grants summary judgment in favor of the plaintiffs as to this claim.
The political civil libel statute makes it unlawful for a person to
"misrepresent" a candidate's "public voting record or any other matter that is
relevant to the issues ofthe campaign with knowledge that the assertion is false or
with a reckless disregard of whether or not the assertion is false.,,2 Like the vote­

2

Section 13-37-131 provides:

(1) It is unlawful for a person to misrepresent a candidate's public
voting record or any other matter that is relevant to the issues of the
campaign with knowledge that the assertion is false or with a reckless
disregard of whether or not the assertion is false.

(2) It is unlawful for a person to misrepresent to a candidate another
candidate's public voting record or any other matter that is relevant to
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reporting requirement above, the Court concludes the statute is unconstitutionally
vague for the same reasons discussed in its preliminary injunction order.
The problematic phrase is: "or any other matter relevant to the issues of the
campaign.,,3 There is simply no way for a person or an organization to know with
certainty whether an issue is "relevant" to a candidate's campaign. The plaintiffs
poignantly ask whether this statute is "restricted to statements about the
candidates' prior and current government service? Or does it also include
statements about such things as candidates' academic backgrounds? Their
spouses? Their current or past employment? Their spending habits?"
The plaintiffs' questions are well taken. A person of "ordinary intelligence"

the issues ofthe campaign with knowledge that the assertion is false or
with a reckless disregard of whether or not the assertion is false.
(3) For the purposes of this section, the public voting record of a
candidate who was previously a member of the legislature includes a
vote of that candidate recorded in committee minutes or in journals of
the senate or the house of representatives. Failure of a person to verify
a public voting record is evidence of the person's reckless disregard if
the statement made by the person or the information provided to the
candidate is false.
(4) A person violating subsection (1) or (2) is liable in a civil action
brought by the commissioner or county attorney pursuant to 13-37-124
for an amount up to $1,000. An action pursuant to this section is subject
to the provisions of 13-37-129 and 13-37-130.
Again, this is not to say that other portions ofthe statute are inviolate
under theories other than vagueness. As explained below, the Court need not
address other subsections or other theories.
3

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would not have "a reasonable opportunity to know what is prohibited" under the
statute. Foti, 146 F.3d at 638. The defendants counter that the statute is not vague
because the speaker's speech detennines the relevancy. In other words, if a person
says something about a candidate, then that makes the speech "relevant to the
issues of the campaign." Not so. If the defendants were correct, then the statute
would be unconstitutionally overbroad. Suppose, for example, that Candidate A
says that Candidate B has blue eyes when, in fact, she has brown eyes. Is that
statement "relevant to the issues of the campaign"? Under the defendants' theory,
yes. But, as we are often reminded during elections, not everything that is said
during a campaign is truly "relevant to the issues of the campaign." Moreover,
relevancy is in the eye of the beholder-what is relevant to one voter might not be
relevant to another.
Since there is no way to know what constitutes a matter "relevant to the
issues of the campaign," Section 13-37-131 "fails to clearly mark the boundary
between permissible and impermissible speech ...." Buckley, 424 U.S. at 41. As
such, it is unconstitutionally vague. [d.
The plaintiffs argue that, unlike the vague portion of the vote-reporting
requirement, the vague portion ofthe political civil libel statute can be severed.
The Court disagrees. Severing the unconstitutional portions of the statute would
require the Court to pluck words from the statute that the State Legislature
12

apparently concluded were essential to the statute's meaning. Of some note, the
statute does not contain a severability clause. See Bd. o/Natural Resources o/St.

o/Wash. v. Brown, 992 F.2d 937, 948 (9th Cir. 1993) (noting that the absence ofa
severability clause '''does suggest an intent to have all components operate
together or not at all.'" (quoting In re Reyes, 910 F.2d 611, 613 (9th Cir. 1990)).
For the reasons given in Randall, the Court does not sever the unconstitutional
portion of the statute. Severing the provision would leave gaps in the statute and
would require the Court to predict or foresee how the legislature might respond to
the unconstitutional portions of the statute. Id. By not severing the provision, the
legislature will be "free to rewrite [the statute] in light of the constitutional
difficulties" that the Court has found. Id.
Since the Court grants summary judgment in favor of the plaintiffs on
account of the statute's unconstitutional vagueness, the Court need not address the
remaining bases upon which the statute might be unconstitutional. See Camreta,
131 S. Ct. at 2031 (observing that courts should "avoid reaching constitutional
questions in advance of the necessity of deciding them." (citations and internal
quotation marks omitted)).

III. Section 13-35-227: corporate contributions to political committees for
independent expenditures
Montana Code Annotated § 13-35-227 prevents corporations from making

13

"expenditure[s] in connection with a candidate or a political committee that
supports or opposes a candidate or a political party.,,4 This includes money that a
corporation gives to a political committee that the committee then uses for
independent expenditures. The plaintiffs argue that this ban violates the First
Amendment, and the Court agrees.
Montana's Administrative Rules defmes an "independent expenditure" as:
an expenditure for communications expressly advocating the success or
defeat of a candidate or ballot issue which is not made with the
cooperation or prior consent ofor in consultation with, or at the request
or suggestion of, a candidate or political committee or an agent of a
candidate or political committee.
Admin. R. Mont. 44.10.323(3); see also Long Beach Area Chamber a/Commerce

4

Section 13-35-227 provides:

(1) A corporation may not make a contribution or an expenditure in
connection with a candidate or a political committee that supports or
opposes a candidate or a political party.

(2) A person, candidate, or political committee may not accept or receive
a corporate contribution described in subsection (I).
(3) This section does not prohibit the establishment or administration of
a separate, segregated fund to be used for making political contributions
or expenditures if the fund consists only of voluntary contributions
solicited from an individual who is a shareholder, employee, or member
of the corporation.
(4) A person who violates this section is subject to the civil penalty
provisions of 13-37-128.

14

v. City ofLong Beach, 603 F.3d 684,695 (9th Cir. 2010) ("'By definition, an
independent expenditure is political speech presented to the electorate that is not
coordinated with a candidate.''' (quoting Citizens United, 130 S. Ct. at 910».
Independent expenditures stand in contrast to "coordinated expenditures,"
which the Administrative Rules define as "expenditure[s) made in cooperation
with, consultation with, at the request or suggestion of, or the prior consent of a
candidate or political committee or an agent of a candidate or political committee."
Admin. R. Mont. 44.10.323(4). Coordinated expenditures are functionally
equivalent to contributions. See id; FEC v. Colo. Republican Fed. Campaign
Comm. (Colorado JI), 533 U.S. 431,443 (2001 ) (citing Buckley, 424 U.S. at

46-47).
In Citizens United, the U.S. Supreme Court held, in sweeping language, that
governments cannot ban corporate independent expenditures. Despite that
decision, the Montana Supreme Court upheld Montana's ban on corporate
independent expenditures in Western Tradition Partnership, Inc. v. Attorney
General ofthe State ofMontana, 271 PJd 1 (Mont. 2011). American Tradition

Partnership,S the lead plaintiff in that case, applied to the U.S. Supreme Court for a
stay of the Montana Supreme Court's decision, pending its petition for a writ of
, Western Tradition Partnership changed its name to American Tradition
Partnership after it filed its lawsuit in Montana but before it filed its petition for a
writ of certiorari with the U.S. Supreme Court.
15

certiorari. See Am. Tradition Partn., Inc., No. 11-1179. The U.S. Supreme Court
granted the application, ordering the stay, and American Tradition Partnership
filed its petition for a writ of certiorari on March 26, 2012. That petition remains
pending as of the date of this order.
The question in this case is slightly different than the question presented in

Citizens United and Western Tradition Partnership (as well as the certiorari
petition in American Tradition Partnership). In those cases, the question was and
is whether governments may prohibit corporations from making independent
expenditures. Here, though, the question is whether governments may prevent
corporations from giving money to political committees so that the committees can
use that money for independent expenditures. As explained below, the questions
are inextricably linked, but they are nonetheless distinct.
This Court initially concluded in its preliminary injunction order that the
U.S. Supreme Court's stay in American Tradition Partnership makes the
plaintiff's claim moot because the stay prevents the State of Montana from
enforcing Section 13-35-227's ban on corporate independent expenditures. That
statement is correct, to an extent. The stay does, indeed, prevent the State from
enforcing Section 13-35-227's ban on corporate independent expenditures. But
the stay does not reach the corporate remittance at issue here because the
remittance is not an independent expenditure; rather, it must be construed as a
16

contribution.
When a corporation gives money to a political committee for the purpose of
making an independent expenditure, the corporation must necessarily consult,
cooperate, and coordinate with the committee when making that transfer. See
Admin. R. Mont. 44.10.323(3), (4). Moreover, the transfer requires the political
committee's "prior consent" because the political committee must accept the
remittance in order to use it for independent expenditures. Id. Rather than an
independent expenditure, then, the remittance is a coordinated expenditure and
functionally equivalent to a contribution. ld.; see also Thalheimer, 645 F.3d at
1120-21 (observing that when a corporation gives money to a political committee
for use as an independent expenditure, the corporation has made a contribution);
Long Beach, 603 F.3d at 696-99 (same); SpeechNow.org v. FEC, 599 F.3d 686,
694-95 (D.C. Cir. 2010) (same).
Even though this type of corporate contribution is not an independent
expenditure, its legality is fundamentally dependent on the legality of independent
expenditures. See Thalheimer, 645 F.3d at 1117-21; Long Beach, 603 F.3d at
691-99. In both Thalheimer and Long Beach, the Ninth Circuit invalidated
restrictions on contributions to political committees that the committees use for
independent expenditures. It did so precisely and solely because the Supreme
Court, in Citizens United, held that governments cannot restrict or ban corporate
17

independent expenditures. Thalheimer, 645 F.3d at 1119-21; Long Beach, 603
F.3d at 698-99; see also Yamada v. Weaver, 2012 WL 983559 at *14-*15 (D.
Hawaii March 21, 2012) (applying Thalheimer and Long Beach and invalidating a
statute that placed limitations on contributions to organizations that engage in only
independent expenditures). The D.C. Circuit similarly held that, in light of
Citizens United, "[I]ndependent expenditures do not corrupt or create the
appearance of quid pro quo corruption," and, thus, "contributions to groups that
make only independent expenditures also cannot corrupt or create the appearance
of corruption." SpeechNow.org, 599 F.3d at 694-95.

In summary, since, under Citizens United, governments cannot restrict
independent expenditures made by organizations, governments cannot ban
corporate contributions to political committees that the committees then use for
independent expenditures. Those contributions "can only lead to independent
expenditures," which, under Citizens United, governments cannot restrict.
Yamada, 2012 WL 983559 at *15.
Given the inextricable link between Citizens United and the question before
this Court, the defendants argue that the Court should stay its resolution of this
question, pending the U.S. Supreme Court's decision in American Tradition
Partnership, where the U.S. Supreme Court could revisit Citizens United. Courts
have the inherent power to stay proceedings pending a decision by the U.S.

18

Supreme Court in another case. See Landis v. N. Am. Co., 299 U.S. 248, 254-55
(1936). In doing so, courts must be mindful of four factors:
(1) stays should not be indefinite in nature and should not be granted

unless it appears likely the other proceeding will be concluded within a
reasonable time;
(2) courts more appropriately enter stay orders where a party seeks only
damages, does not allege continuing harm, and does not seek injunctive
or declaratory relief since a stay would result only in delay in monetary
recovery;
(3) stays may be appropriate if resolution of issues in the other
proceeding would assist in resolving the proceeding sought to be stayed;
and
(4) stays may be appropriate for courts' docket efficiency and fairness
to the parties pending resolution of independent proceedings that bear
upon the case.
McCollough v. Minn. Laws. Mut.lns. Co., 2010 WL441533 at *4 (collecting
Ninth Circuit cases).
The balance of these four factors weighs heavily against granting a stay.
First, any stay would necessarily be indefinite because the Court cannot predict
when the U.S. Supreme Court will resolve American Tradition Partnership.
Second, this is not a claim for damages. The plaintiffs allege a continuing harm
and seek injunctive relief. Third, a stay would not be fair to the plaintiffs because
it would leave this question unresolved on the eve of the upcoming election.
The U.S. Supreme Court's decision in American Tradition Partnership
might very well assist the Court in resolving the plaintiffs' claims here. Then
19

again, it might not. Regardless, the balance of factors weighs against granting a
stay, particularly in light of the clear direction from Thalheimer and Long Beach.
Under those cases, governments cannot prohibit a corporation from making a
contribution to a political committee that the committee then uses for independent
expenditures.
The Court therefore grants summary judgment in favor of the plaintiffs on
this claim. Section 13-35-227(1) is unconstitutional to the extent that it prohibits
corporations from making contributions to political committees that use those
contributions for independent expenditures. As a corollary, Section 13-35-227(2)
is also unconstitutional to the extent that it prevents political committees from
receiving those contributions.

IV. Section 13-35-227: direct and indirect corporate contributions to
candidates or political parties
Finally, the defendants move for summary judgment on the plaintiffs' claim
that Section 13-35-227'8 ban on corporate contributions to candidates or political
parties is unconstitutional. The Court grants summary judgment in favor of the
defendants on this issue.
Montana's ban on corporate contributions to candidates and political parties
dates back to the era ofthe "Copper Kings"-when the State's political economy
was significantly driven by corporate power in mining and other industries. See W.
Tradition Partn., 271 P.3d at 230-35. As the Montana Supreme Court explained,

20

these corporate interests drove Montana politics. 1d. W.A. Clark, for example, a
product of the Butte mining boom, won his U.S. Senate seat through bribery. 1d. at
231. And, in the interest of satisfying the Anaconda Company (a mining
company), the Montana Legislature passed a law that allowed the Company to
avoid having to litigate cases in front of Butte judges (who themselves had been
bribed by the Company's opponent). 1d. at 231. Other examples of corruption
during that time period abound. See e.g. id. at 230-35.
The landscape, though, has undeniably changed markedly over the
intervening decades.
Then, comparatively, corporations were few and large. Today, in Montana,
they are many and smaller. They may include for example our doctor, lawyer,
dentist, architect, engineer, accountant, other professionals, farms, ranches,
agribusinesses, restaurants, plumbers, etc. Many family farms and businesses are
incorporated, and the corporation is no stranger to main street Montana.
Whether for liability protection, taxation benefits, or other reasons of
convenience, the typical corporation in Montana today is more likely to be a small
closely held family company than a large industrial corporation.
This transition focuses on the fact that the corporation itself is not the
villain. Rather, the concern is any entity, amassing large aggregations of wealth
combined with unscrupulous spending and corrupt control.
21

•
This realization raises the question of whether the typical small
corporation-Leo family or professional business, farm etc., for example-should
be permitted to use their moneys to support or oppose candidates or political
parties they believe support or threaten their well-being, as the case may be.
In Montana, corporations have the first amendment right to spend their
money and participate in ballot elections. See Mont, Chamber ofCommerce V.
Argenbright, 226 F.3d 1049 (9th Cir. 2000). Not so as to contributions to

candidates and political parties.
Because of controlling law supporting the constitutionality of this ban the
question becomes one of policy for the Legislature rather than this Court.
The U.S. Supreme Court held in FEC v. Beaumont, 539 U.S. 146
(2003), that a state may generally ban direct corporate contributions. See also
Thalheimer, 645 F.3d at 1124-25 (discussing Beaumont). Such bans, among other

things, "'preven[t] corruption or the appearance of corruption.'" Beaumont, 539
U.S. at 154 (quoting FEC V. Natl. Conservative Political Action Comm., 470 U.S.
480,496-97 (1985)). Unlike bans on independent expenditures, "[B]ans on
political contributions have been treated as merely 'marginal' speech restrictions
subject to relatively complaisant review under the First Amendment, because
contributions lie closer to the edges than to the core of political expression." Id. at
161 (quoting Colorado II, 533 U.S. at 440).
22

The Ninth Circuit has made clear that Beaumont is still good law in the
wake of the U.S. Supreme Court's decision in Citizens United. See Thalheimer,
645 F.3d at 1124-25. Here, then, Section 13-35-227'8 ban on direct corporate
contributions to candidates and political parties is constitutional under Thalheimer
and Beaumont.
Direct contributions aside, a state may also prevent a corporation from
making an indirect contribution to a candidate or political party through the use of
a conduit--e.g., contributing money to a political committee that then contributes
that money to a candidate or political party. See Beaumont, 539 U.S. at 160;
Buckley, 424 U.S. at 23 n.24 (observing that "funds provided to a candidate or
political party ... either directly or indirectly through an intermediary constitute a
contribution" to that candidate or political party). Allowing corporations to
contribute money to political committees that, in tum, contribute the money
directly to candidates or political parties would be an express circumvention of a
state's ban on corporate contributions to candidates or political parties. Even after
Citizens United, states may avail their anti-circumvention interest by restricting
contributions. See Thalheimer, 645 F.3d at 1124-25, ("[TJhere is nothing in the
explicit holdings or broad reasoning of Citizens United that invalidates the anti­
circumvention interest in the context of limitations on direct candidate
contributi ons. ").
23

•

In an analogous situation, the Southern District of California, on remand
from the Ninth Circuit in Thalheimer, explained:
[T]o prevent circumvention of contribution limits by individual donors,
when a committee that otherwise makes independent expenditures
decides to make contributions directly to a candidate or a party, the
[government] may enforce the ... contribution limit. See [Emily's List
v. FEC, 581 F.3d 1, 11-12 (D.C. CiI. 2009)]. Stated another way: an
independent expenditure committee that makes expenditures to support
a candidate "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 individual
contribution limits by its donors, that its contributions to parties or
candidates come from a hard-money account" subject to the source and
amount limitations in [the statute]. See id."

Thalheimer v. City ofSan Diego, 2012 WL 177414 at *12 (S.D. Cal. Jan. 2012).
The same reasoning applies here. While Montana may not ban corporate
contributions to political committees that are used for independent expenditures, it
may ban-and has banned through Section 13-35-227-corporate contributions
to political committees that are used for direct contributions to candidates or
political parties. As the Southern District of California explained, this distinction
does not mean that corporations or political committees in Montana have forfeited
their first amendment rights. Instead, they must simply ensure that independent
expenditures and contributions are accounted for separately.
CONCLUSION

The Court grants summary judgment in favor of the plaintiffs on three of

24

their claims. Montana's vote-reporting requirement, the political civil libel statute,
and the prohibition of corporate contributions to political committees that the
committees then use for independent expenditures are all unconstitutional under
the First Amendment. The Court, however, grants summary judgment in favor of
the defendants on one of the plaintiffs' claims-Montana may constitutionally
prohibit corporations from making direct or indirect contributions to candidates
and political parties.
IT IS ORDERED that the plaintiffs' motion for partial summary judgment
(doc. 75) and the defendants' motion for partial summary judgment (doc. 78) are
GRANTED IN PART and DENIED IN PART.
The Court GRANTS the plaintiffs' motion for summary judgment in the
following respects:
1.

MontanaCodeAnnotated§ 13-35-225(3Xa) is unconstitutionally
vague.

2.

Montana Code Annotated § 13-37-131 is unconstitutionally
vague.

3.

Montana Code Annotated § 13-35-227 is unconstitutional to the
extent that it prohibits a corporation from making a contribution
to a political committee that the committee then uses for
independent expenditures in support of or opposition to a
candidate or a political party.

The defendants are PERMANENTLY ENJOINED from enforcing each ofthese
three provisions. The plaintiffs' motion is DENIED in all other respects.
25

.',

r·

The Court GRANTS the defendants' motion for summary judgment in the
following respect: Montana Code Annotated § 13-35-227 is constitutional to the
extent that it prohibits a corporation from making direct or indirect contributions
to candidates or political parties. The defendants' motion is DENIED in all other
respects.
IT IS FURTHER ORDERED that the February 24, 2012 preliminary
injunction (doc. 66) is DISSOLVED.
IT IS FURTHER ORDERED that this order and permanent injunction is the
final judgment as to the issues addressed herein. Let this judgment enter. The
balance of the plaintiffs' claims shall be resolved by bench trial.
Dated this

a

day of May 2012.

o Cjt> A.M •

26