Citizens United allowed unlimited expenditures by independent advocacy groups, including corporations and unions, in elections. It did not address the issue of whether corporations could make direct contributions to political campaigns. Federal election law includes a flat ban on direct campaign contributions by corporate entities. In 2003, that ban appeared to be upheld in FEC v. Beaumont which found the ban constitutional for a non-profit advocacy corporation.
Yesterday, Federal District Court Judge James Cacheris , Eastern Virginia District, found that, in light of Citizens United, the Beaumont decision needed to be limited to its facts and the ban on corporate campaign contributions should apply only to non-profit advocacy corporations. Based on the logic of Citizens United, Judge Cacheris determined that Beaumont did not apply to for-profit corporations and that direct campaign contributions by for-profit corporations were constitutionally protected. U. S. v. Danielczyk .
Because direct campaign contributions were not an issue in Citizens United, the Supreme Court did not address whether Beaumont should be overruled. Judge Cacheris recognized that Beaumont remains good law. However, because Citizens United was a game changing decision, he declined to apply the Beaumont ruling to include for-profit corporations. In discussing the Beaumont decision he referred to its logic as “gravely wounded” by Citizens United. Instead of relying on the Beaumont decision, he relied on the rationale of Citizens United that the government cannot restrict political speech based on the speaker’s corporate identity.
The government argued that the ban on direct corporate campaign contributions prevented individuals from setting up corporate entities and funneling campaign contributions through them to avoid the $2500 contribution limit. Judge Cacheris found that the law already prohibited such activity and did not consider this a valid argument for the ban on direct corporate contributions. It is illegal make a contribution “in the name of another person.”
Reading the case, this is probably the weakest point of his opinion. There would be many creative ways to circumvent the prohibition by generating cash through “business transactions”, rather than personal capital, and using the business transaction cash for the campaign contribution. Of course, this could be cleaned up through subsequent legislation.
Despite the one minor weakness in Judge Cacheris’s logic, his ruling makes sense. If you accept that Citizen’s United is the law of the land, and it is whether you like it or not, the impact of a case like Beaumont is severely weakened. In such a circumstance, it is legally justifiable to strictly limit the Beaumont ruling to its unique facts and rely on the logic of Citizens United for new cases that do not precisely fit the fact pattern of Beaumont. By that logic, finding that a ban on corporate campaign contributions is unconstitutional makes perfect sense.
The Eighth Circuit has reached a different conclusion and applied Beaumont to for-profit corporations. The issue could well reach the Supreme Court in the next couple of years.
[Note: Judge Cacheris’s decision is a re-ruling. He had previously ruled the same way, but the government failed to raise the Beaumont case in its argument. Judge Cacheris allowed rehearing to consider the impact of the Beaumont case. He couches his ruling in terms of it only applying to the particular facts of this case, but the rationale underpinning the ruling is broad based.]