Court Rules Federal Ban On Corporate Contributions Is Unconstitutional

James Madison Center for Free Speech
1 South 6th Street
Terre Haute, IN 47807-3510
www.jamesmadisoncenter.org

PRESS RELEASE
Wednesday, June 8, 2011
Contact: James Bopp, Jr.
Phone 812-232-2434; Fax 812-235-3685; jboppjr@aol.com

Court Rules Federal Ban On Corporate Contributions Is Unconstitutional

A federal court in Virginia issued a ruling yesterday upholding its earlier decision that the federal ban on direct corporate contributions to candidates violates the First Amendment. The James Madison Center for Free Speech filed a brief with the court urging this result.

Under federal law, corporations may not use their own money to make contributions to candidates. Instead, they must form PACs if they want to make contributions. But PACs are not allowed to use their connected corporation’s general fund money for their contributions. Instead, PACs are only allowed to raise money from the employees and certain officers of the corporation. This means that while those who work for the corporation may donate to fund contributions (i.e., political speech) on the corporation’s behalf, the corporation itself is not allowed to make its own contributions.

The James Madison Center for Free Speech has long argued that, because corporations are associations of citizens, they have First Amendment rights because the citizens have rights. Further, because the First Amendment protects speech and association, corporate speech and association should be protected, too. James Bopp, Jr., the General Counsel for the Madison Center, explains that “the First Amendment protects speech no matter who the speaker is.”

Two weeks ago, a federal court in Virginia declared that the law banning corporate contributions was unconstitutional. The court ruled that the logic of a recent Supreme Court case known as Citizens United required it to find the ban unconstitutional. It explained that Citizens United says that corporate speakers and human speakers must be treated the same. Since humans are allowed to “speak” by making contributions, the court said that corporate speakers must also be allowed to do so. The court ruled the federal ban unconstitutional. However, a few days later the court asked the parties to submit additional briefing addressing whether it ought to reconsider its decision in light of another Supreme Court case called Beaumont, which upheld the federal ban on contributions as it applied to nonprofit advocacy corporations. Simply put, the court had not addressed Beaumont in its decision, and so asked the parties to tell it whether it should or not.

The Madison Center then filed its brief, urging the court not to reconsider its decision, for two reasons. First, Beaumont ruled that when there are generally applicable contribution limits or bans, the Government does not have to exempt advocacy corporations. Beaumont did not consider, however, whether the ban itself was constitutional. Second, the case that is directly “on point,” and so controlling, is Citizens United. Because the court based its decision on Citizens United, its decision that the federal corporate contribution ban is unconstitutional was sound. The Madison Center therefore urged the court to not reconsider its decision, but rather let stand its decision declaring that the federal ban on corporate contributions is unconstitutional.

Yesterday the court issued its decision and agreed with the Madison Center’s position.

Mr. Bopp said, “This is a victory for free speech and the First Amendment. Now citizens who associate together and choose to incorporate will not lose their speech rights in the process.”

The case is United States v. Danielczyk, No. 1:11cr85 (E.D. Vir. May 26, 2011). The Madison Center’s brief, and the court’s decision, may be viewed at http://www.jamesmadisoncenter.org/cases/06-02-2011/465/.

James Bopp, Jr. has a national federal and state election law practice. He is General Counsel for the James Madison Center for Free Speech and former Co-Chairman of the Election Law Subcommittee of the Federalist Society.