Federal Election Commission v. Craig for U.S. Senate , 816 F.3d 829 ( 2016 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 7, 2015 Decided March 4, 2016
No. 14-5297
FEDERAL ELECTION COMMISSION,
APPELLEE
v.
CRAIG FOR U.S. SENATE AND LARRY E. CRAIG,
INDIVIDUALLY, AND IN HIS OFFICIAL CAPACITY AS TREASURER
OF CRAIG FOR U.S. SENATE,
APPELLANTS
Appeal from the United States District Court
for the District of Columbia
(No. 1:12-cv-00958)
Andrew D. Herman argued the cause for appellants. With
him on the briefs were Aiysha S. Hussain and Stanley M. Brand.
Kevin P. Hancock, Attorney, Federal Election Commission,
argued the cause for appellee. With him on the brief were Kevin
Deeley, Acting Associate General Counsel, Harry J. Summers,
Assistant General Counsel, and Robert W. Bonham III, Senior
Attorney.
Before: GARLAND, Chief Judge, GRIFFITH, Circuit Judge,
and SENTELLE, Senior Circuit Judge.
2
Opinion for the Court filed by Chief Judge GARLAND.
GARLAND, Chief Judge: The Federal Election Commission
alleges that former Senator Larry E. Craig, his campaign
committee, and the committee’s Treasurer converted campaign
funds to the Senator’s personal use in violation of the Federal
Election Campaign Act. That conversion occurred, the
Commission contends, when the appellants spent campaign
funds to pay legal fees the Senator incurred in connection with
efforts to withdraw his guilty plea to a criminal charge of
disorderly conduct. The district court granted summary
judgment on the Commission’s complaint and ordered Senator
Craig to disgorge $197,535 to the U.S. Treasury and pay a civil
penalty of $45,000. We affirm the court’s grant of summary
judgment and its remedial orders.
I
Larry E. Craig represented Idaho in the United States Senate
from 1991 to 2009. On June 11, 2007, he was flying from Idaho
to Washington, D.C., with a stop for a connecting flight at the
Minneapolis-St. Paul International Airport. During that stop, a
police officer arrested the Senator in the airport bathroom on
charges of disorderly conduct and interference with privacy. On
August 1, Craig signed and mailed the Minnesota state
authorities a plea agreement, pursuant to which he pled guilty to
a criminal misdemeanor charge of disorderly conduct and paid
a fine and costs totaling $575.
The details of Senator Craig’s arrest and plea soon became
public. On Monday, August 27, Roll Call, a newspaper that
covers the United States Congress, obtained the June 11 arrest
report and published an article headlined, “Craig Arrested,
Pleads Guilty Following Incident in Airport Restroom.” J.A.
225-26. Within a day, Senators and a congressional watchdog
3
group were urging the Senate Select Committee on Ethics (the
Senate Ethics Committee) to investigate. At the request of the
Senate Republican leadership, Senator Craig stepped down from
his committee leadership positions. On August 30, in response
to questions about the arrest, the airport police released an
audiotape of Craig’s interview with the arresting officer.
Two days later, on September 1, the Senator announced that
he would resign from the Senate effective September 30. On
September 5, his attorneys submitted a letter to the Senate Ethics
Committee arguing that the arrest fell outside the Committee’s
jurisdiction because the arrest was for “purely personal conduct
unrelated to the performance of official Senate duties.” Letter
from Brand Law Group to Hon. Barbara Boxer, Chairwoman,
Senate Ethics Comm. (Sept. 5, 2007) (J.A. 179).
The following Monday, September 10, Senator Craig filed
a motion with the Minnesota state trial court to withdraw his
guilty plea. The court denied the motion on October 4. That
same day, the Senator announced that he had reconsidered his
plan to resign. He said he would serve the remaining fifteen
months of his Senate term, which he did, retiring from the
Senate in January 2009.
Also on October 4, the Senator’s attorneys advised him that
“it is clear that [Federal Election Commission] advisory
opinions authorize full payment with campaign funds for legal
representation in all matters before the Senate Ethics
Committee.” Letter from Brand Law Group to Hon. Larry E.
Craig (Oct. 4, 2007) (J.A. 155). They further “conclude[d] that
all expenses incurred for . . . legal representation in Minnesota
state court are . . . fully payable with campaign funds,” but
warned that there were “no directly applicable [Commission]
opinions” addressing that issue. Id.
4
A few weeks later, on October 29, Senator Craig’s
campaign committee, Craig for U.S. Senate (the Craig
Committee), made the first in a series of payments to attorneys
for legal costs arising from the Senator’s efforts to withdraw his
guilty plea. Those payments would continue while the Senator
appealed the decision of the Minnesota trial court. The
Minnesota appellate court would ultimately reject that appeal in
December 2008.
In February 2008, the Senate Ethics Committee issued a
“Public Letter of Admonition” to Senator Craig. Among other
things, the letter warned that the costs associated with the
Senator’s efforts to withdraw his plea “may not be deemed to
have been incurred in connection with your official duties, either
by the Committee or by the Federal Election Commission.”
Letter from Senate Ethics Comm. to Hon. Larry E. Craig (Feb.
13, 2008) (J.A. 236).
In November 2008, the Federal Election Commission (FEC)
received an administrative complaint alleging that Senator Craig
had unlawfully spent campaign funds on legal fees related to his
arrest and conviction. On the basis of the Senator’s response
and the then-available information, the Commission identified
three categories of campaign disbursements at issue: for legal
fees incurred in connection with the Senate Ethics Committee’s
inquiry, for public relations fees incurred in responding to press
inquiries, and for legal fees incurred in connection with the
Senator’s attempt to withdraw his guilty plea. The FEC
determined that disbursements in the first two categories were
permissible, but it found “reason to believe” that Craig’s use of
campaign funds to pay legal expenses in connection with the
attempt to withdraw the guilty plea “constitute[d] impermissible
use . . . in violation of” the Federal Election Campaign Act
(FECA). Reason to Believe Finding, Factual and Legal
Analysis, In re Larry E. Craig, Matter Under Review 6128, at
5
11 (J.A. 73); see id. at 8-13 (J.A. 70-75); see also 52 U.S.C.
§ 30109(a)(2) (regarding “reason to believe” findings).
After conducting an investigation, the Commission voted
5-0 (with one Commissioner recused) to find “probable cause to
believe” that Senator Craig, the Craig Committee, and Kaye L.
O’Riordan as Treasurer had violated FECA. See 52 U.S.C.
§ 30109(a)(4) (regarding “probable cause to believe” findings).
Thereafter, the FEC attempted to correct the violation through
the informal conciliation process prescribed by the statute. Id.§ 30109(a)(4)(A)(i). Unable to secure an acceptable conciliation
agreement, the Commission voted 5-0 (again, with one
Commissioner recused) to authorize the current litigation. See
FEC Compl. ¶¶ 28-30 (J.A. 59-60).
FECA provides that, “[i]f the Commission is unable to
correct or prevent any violation of this Act” by informal
conciliation, “the Commission may, upon an affirmative vote of
4 of its members, institute a civil action for relief” in United
States district court. 52 U.S.C. § 30109(a)(6)(A). On June 11,
2012, the Commission filed this lawsuit against defendants
Craig, the Craig Committee, and then-Treasurer O’Riordan.
After O’Riordan resigned as Treasurer, Senator Craig assumed
the position. He has since been substituted for O’Riordan as a
defendant in that official capacity as well.
The FEC’s complaint charged that the defendants violated
FECA, 52 U.S.C. § 30114(b), by disbursing more than $200,000
in campaign contributions to the Sutherland, Asbill & Brennan
and Kelly & Jacobson law firms to pay for legal expenses
incurred in connection with efforts to withdraw Senator Craig’s
guilty plea. The FEC sought declaratory and injunctive relief,
disgorgement by Senator Craig of all improper disbursements,
and the assessment of civil penalties.
6
The defendants filed a motion to dismiss, which the district
court denied. FEC v. Craig for U.S. Senate, 933 F. Supp. 2d
111 (D.D.C. 2013). The following year, the court granted the
FEC’s motion for summary judgment, holding that the
defendants had violated FECA’s ban on converting campaign
funds to personal use. FEC v. Craig for U.S. Senate, 70 F.
Supp. 3d 82 (D.D.C. 2014). The defendants’ -- now
appellants’ -- first challenge is to this holding, which we review
in Parts II and III.
The district court also ordered Senator Craig to disgorge the
value of the improperly spent funds to the U.S. Treasury. The
court fixed the amount of such funds at $197,535. In addition,
it imposed a civil penalty of $45,000. The appellants challenge
both the disgorgement and the civil penalty orders. We address
those challenges in Part IV.
II
The district court held that, by using campaign contributions
to fund the legal battle to withdraw the Senator’s guilty plea,
Senator Craig and the Craig Committee violated 52 U.S.C.
§ 30114(b). We review the district court’s grant of summary
judgment de novo. Gentiva Healthcare Corp. v. Sebelius, 723
F.3d 292, 295 (D.C. Cir. 2013). Summary judgment is
appropriate if “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
FECA contains a list of “[p]ermitted uses” for campaign
contributions. 52 U.S.C. § 30114(a). As relevant here, such
uses include payments for “ordinary and necessary expenses
incurred in connection with duties of the individual as a holder
7
of Federal office,” id. § 30114(a)(2), and expenditures “for any
other lawful purpose unless prohibited by subsection (b) of this
section,” id. § 30114(a)(6).
The district court first held that the appellants’ expenditures
were not permitted under § 30114(a)(2) because “legal expenses
incurred in withdrawing a plea to personal criminal conduct . . .
could not be characterized as ordinary and necessary expenses
in connection with Senator Craig’s duties as an officeholder.”
Craig for U.S. Senate, 70 F. Supp. 3d at 88 (internal quotation
marks omitted). The court then held that the expenditures were
also impermissible under § 30114(a)(6) because the use of
campaign contributions to cover such legal expenses is
prohibited by § 30114(b). Appellants challenge only the latter
holding. See Reply Br. 3, 5. Our inquiry is therefore limited to
whether Senator Craig’s use of campaign contributions
constituted a “prohibited use” under § 30114(b).
Section 30114(b)(1) prohibits “conver[sion]” of campaign
contributions to “personal use.” Section 30114(b)(2) provides
that contributions are “converted to personal use if . . . used to
fulfill any commitment, obligation, or expense of a person that
would exist irrespective of the candidate’s election campaign or
individual’s duties as a holder of Federal office.” 52 U.S.C.
§ 30114(b)(2) (emphasis added). Whether Senator Craig’s legal
expenses to withdraw his plea were expenses that would exist
“irrespective” of his election campaign or official duties is the
central question in this case.
B
The “irrespective definition” of personal use first made its
appearance in a 1995 regulation that the FEC promulgated
pursuant to notice and comment under FECA. At the time,
FECA barred “personal use” of campaign contributions but did
8
not define the term. See 2 U.S.C. § 439a (1994).1 Nor was the
term defined in the FEC’s pre-1995 regulations.
The 1995 regulation adopted the following definition:
Personal use means any use of funds in a campaign
account of a present or former candidate to fulfill a
commitment, obligation or expense of any person that
would exist irrespective of the candidate’s campaign or
duties as a Federal officeholder.
11 C.F.R. § 113.1(g) (emphasis added). The regulation went on,
in subsection (g)(1)(i), to provide that “personal use includes but
is not limited to the use of funds in a campaign account for”
such items as clothing, tuition payments, and mortgage
payments. Id. § 113.1(g)(1)(i). Finally, in subsection (g)(1)(ii),
the regulation stated:
The Commission will determine, on a case by case
basis, whether other uses of funds in a campaign
account fulfill a commitment, obligation or expense
that would exist irrespective of the candidate’s
campaign or duties as a Federal officeholder, and
therefore are personal use. Examples of such other
uses include: (A) Legal expenses; (B) Meal expenses;
(C) Travel expenses . . . ; and (D) Vehicle
expenses . . . .
Id.§ 113.1(g)(1)(ii) (emphasis added).
1
FECA was moved from Title 2 of the U.S. Code to Title 52 in
September 2014.
9
Together with the 1995 regulation, the FEC published an
Explanation and Justification that described the “irrespective
definition” as follows:
If campaign funds are used for a financial obligation
that is caused by campaign activity or the activities of
an officeholder, that use is not personal use. However,
if the obligation would exist even in the absence of the
candidacy or even if the officeholder were not in
office, then the use of funds for that obligation
generally would be personal use.
Expenditures; Reports by Political Committees; Personal Use
of Campaign Funds, 60 Fed. Reg. 7862, 7863-64 (Feb. 9, 1995).
The FEC explained that the specific expenses listed in
subsection (g)(1)(i) “would exist irrespective of the candidate’s
campaign or duties as a Federal officeholder. Therefore, the
Commission regards them as inherently personal and subject to
the personal use ban.” Id. at 7864. The rule, it said, “treats the
use of campaign funds for these expenses as per se personal
use.” Id. The Commission recognized, however, that “some
expenses that do raise personal use issues cannot be
characterized as either personal or campaign related in the
majority of situations, so they cannot be addressed in a per se
list.” Id. at 7867. Those kinds of expenses were covered by
subsection (g)(1)(ii). Under that subsection, the FEC said, it
would apply the irrespective definition on a case-by-case basis.
Id.The FEC listed legal expenses under subsection (g)(1)(ii) as
one of the items that required consideration on a case-by-case
basis. The Commission could not include them in the per se
personal use category, it explained, because it could foresee
several kinds of legal expenses that would not exist in the
absence of a campaign or an officeholder’s duties: for example,
10
expenses that arise from complying with election laws,
employing campaign staff, or contracting with campaign
vendors. Id. at 7868. The Commission made clear, however,
that “legal expenses will not be treated as though they are
campaign or officeholder related merely because the underlying
legal proceedings have some impact on the campaign or the
officeholder’s status. Thus, legal expenses associated with a
divorce or charges of driving under the influence of alcohol will
be treated as personal, rather than campaign or officeholder
related.” Id.Thereafter, between 1995 and 2002, the FEC addressed the
issue of legal expenses in its advisory opinions.2 Those opinions
developed what might be described as an “allegations standard”
for determining whether legal expenses are personal. The FEC
concluded that legal expenses incurred in litigation involving
allegations “arising directly from campaign activity” are not
personal, and campaign funds could be used to pay them. FEC
Advisory Opinion 1995-23 (Shays), 1995 WL 437686, at *1
(July 20, 1995) (regarding expenses to defend a civil suit
charging that Representative Shays had unlawfully taken down
his opponent’s campaign signs). By contrast, the use of
campaign contributions for legal expenses “incurred to . . .
present a legal defense to[] possible liabilities or violations of
law that are unrelated to [a] campaign or officeholder status”
2
Under 52 U.S.C. § 30108, any person, candidate, or campaign
committee may submit a written request for an FEC opinion regarding
the application of FECA or an FEC rule or regulation to a “specific
transaction or activity.” Id. § 30108(a)(1). An advisory opinion
provides a safe harbor for “any person involved in the specific
transaction or activity with respect to which such advisory opinion is
rendered,” as well as for “any person involved in any specific
transaction or activity which is indistinguishable in all its material
aspects” from that addressed in the opinion. Id. § 30108(c).
11
would constitute the conversion of contributions for personal
use. FEC Advisory Opinion 1996-24 (Cooley), 1996 WL
419823, at *3-4 (June 27, 1996) (regarding legal expenses for
responding to a possible Department of Veterans Affairs finding
that Representative Cooley’s wife had improperly received
Veterans benefits).
In 2002, Congress expressly adopted the FEC’s irrespective
definition of personal use and added it to FECA. See Bipartisan
Campaign Reform Act of 2002, Pub. L. No. 107-155, § 301, 116
Stat. 81, 95 (codified at 2 U.S.C. § 439a and recodified at 52
U.S.C. § 30114). It also codified certain of the per se personal
use items that the FEC had listed in 11 C.F.R. § 113.1(g)(1)(i)
and added others of its own. See 52 U.S.C. § 30114(b)(2).3 It
did not, however, codify or otherwise mention the language of
11 C.F.R. § 113.1(g)(1)(ii) relating to case-by-case
consideration of other disbursements, such as legal expenses.
That regulatory provision, as set out above, has not changed
since 1995.4
3
Under 52 U.S.C. § 30114(b)(2), campaign funds are “converted
to personal use if . . . used to fulfill any commitment, obligation, or
expense of a person that would exist irrespective of the candidate’s
election campaign or individual’s duties as a holder of Federal office,
including -- (A) a home mortgage, rent, or utility payment; (B) a
clothing purchase; (C) a noncampaign-related automobile expense;
(D) a country club membership; (E) a vacation or other
noncampaign-related trip; (F) a household food item; (G) a tuition
payment; (H) admission to a sporting event, concert, theater, or other
form of entertainment not associated with an election campaign; and
(I) dues, fees, and other payments to a health club or recreational
facility.”
4
Appellants note that, in a colloquy on the Senate floor between
Senators Lieberman and Feingold, Senator Feingold stated that, “while
the provision is intended to codify the FEC’s current regulations on
12
In advisory opinions issued since 2002, the FEC has
continued to apply the allegations standard for legal expenses
that it established in its earlier opinions. In its 2003 Treffinger
Advisory Opinion, for example, the FEC confirmed that in
implementing the irrespective definition, it had “previously
concluded that legal expenses in defense of allegations relating
directly to the candidate’s campaign activities or status as a
Federal officeholder may be paid for with campaign funds,” but
that “[t]he use of campaign funds to pay for [a candidate’s]
defense against allegations that are not directly related to his
campaign activity would be a conversion to personal use.” FEC
Advisory Opinion 2003-17 (Treffinger), 2003 WL 21894954, at
*3 (July 25, 2003). Applying this standard, the FEC concluded
that James Treffinger could use campaign funds to defend
against counts of a criminal indictment “comprised of
allegations of false [financial] reports made to the Commission”
during his campaign for the U.S. Senate, but that he could not
use them to defend against counts charging him with having
defrauded a New Jersey county when he served as county
executive. Id. at *4-5.
Similarly, in its Cunningham Advisory Opinion, the
Commission found that Representative Cunningham could use
campaign funds to pay legal expenses “associated with a grand
jury investigation involving allegations . . . that [he] obtained
the use of campaign funds for personal expenses, we do not intend to
codify any advisory opinion or other current interpretation of those
regulations.” 148 Cong. Rec. S2143 (Mar. 20, 2002). Whatever the
weight of such a statement, our opinion does not rely on an
assumption that Congress codified pre-2002 advisory opinions or
interpretations. As discussed below, in this case we need only defer
to those opinions to the extent of “their power to persuade,” Skidmore
v. Swift & Co., 323 U.S. 134, 140 (1944). We defer to post-2002
advisory opinions on the same basis.
13
benefits . . . from [a defense contractor] because of his status as
a U.S. Representative.” FEC Advisory Opinion 2005-11
(Cunningham), 2005 WL 2470825, at *3 (Sept. 26, 2005). It
cautioned, however, that “the use of campaign funds to pay
for . . . representation in legal proceedings regarding any
allegations that are not related to his campaign activity or duties
as a Federal officeholder would constitute an impermissible
personal use.” Id.There is no doubt, then, that the allegations standard is the
standard the FEC has long and repeatedly applied to discern
prohibited personal use of campaign funds to pay legal
expenses.5
5
See, e.g., FEC Advisory Opinion 2009-20 (Visclosky), 2009
WL 2850351, at *1 (Aug. 28, 2009) (concluding that “the Committee
may use campaign funds to pay legal fees and expenses incurred by
Representative Visclosky’s current and former congressional staff in
connection with the Federal investigation of Representative
Visclosky[] and other legal proceedings . . . because the allegations
relate to Representative Visclosky’s campaign and duties as a Federal
officeholder,” but that “[t]he use of campaign funds to pay for any
such employee’s representation in legal proceedings regarding
allegations that are not related to Representative Visclosky’s campaign
activity or duties as a Federal officeholder . . . would constitute an
impermissible personal use”); FEC Advisory Opinion 2006-35
(Kolbe), 2007 WL 419188, at *2-3 (Jan. 26, 2007) (explaining that
legal expenses “incurred in legal proceedings involving allegations
concerning the candidate’s campaign activities or duties as a Federal
officeholder” were permissible but that contributions could not be
used for legal expenses incurred in connection with “other
allegations . . . that do not concern the candidate’s campaign activities
or duties as a Federal officeholder”); see also FEC Advisory Opinion
2011-07 (Fleischmann), 2011 WL 2163318, at *2-3 (May 26, 2011);
FEC Advisory Opinion 2009-12 (Coleman), 2009 WL 1904617, at *4-
6 (June 26, 2009); FEC Advisory Opinion 2009-10 (Visclosky), 2009
WL 1811018, at *3 (June 18, 2009).
14
C
In the case now before us, the FEC’s rationale for
concluding that Senator Craig’s legal expenditures constituted
“personal use” was set out in the analysis that accompanied the
Commission’s “reason to believe” finding. Quoting the 1995
Explanation and Justification, the analysis noted that “[l]egal
fees and expenses . . . ‘will not be treated as though they are
campaign or officeholder related merely because the underlying
proceedings have some impact on the campaign or
officeholder’s status.’” Reason to Believe Finding at 7 (J.A. 69)
(quoting 60 Fed. Reg. at 7868). For example, “‘legal expenses
associated with a divorce or charge of driving while under the
influence of alcohol will be treated as personal, rather than
campaign or officeholder related.’” Id. (quoting 60 Fed. Reg. at
7868). The underlying standard, the FEC said, is reflected in “a
long line of Advisory Opinions” in which “the Commission has
determined that legal fees and expenses incurred for
representation in legal proceedings regarding any allegations
that are not related to campaign activities or duties as a Federal
officeholder would constitute an impermissible personal use of
campaign funds.” Id. at 9-10 (J.A. 71-72) (citing FEC Advisory
Opinion 2005-11 (Cunningham), 2005 WL 2470825 (Sept. 26,
2005); FEC Advisory Opinion 1996-24 (Cooley), 1996 WL
419823 (June 27, 1996); FEC Advisory Opinion 2003-17
(Treffinger), 2003 WL 21894954 (July 25, 2003)).
The FEC found that application of the allegations standard
to Senator Craig’s expenditures was straightforward. “The
campaign funds disbursed by Craig to [his attorneys] to overturn
the conviction” on the charge of disorderly conduct, the FEC
said, were “similar to ‘legal expenses associated with a divorce
or charge of driving while under the influence of alcohol.’” Id.
at 11 (J.A. 73) (quoting 60 Fed. Reg. at 7868). Those, the FEC
said, were expenses that “would exist irrespective of the status
15
of the individual as a candidate or officeholder, and so would
not be a permissible use of campaign funds . . . even if the arrest
and conviction impacted his status as a Federal officeholder.”
Id. Accordingly, the FEC concluded, the use of campaign funds
to pay such expenses constituted a conversion to personal use in
violation of § 30114(b).
D
It is always appropriate to accord an agency’s interpretation
of its organic statute at least a measure of deference proportional
to the “‘thoroughness evident in its consideration, the validity of
its reasoning, its consistency with earlier and later
pronouncements, and all those factors which give it power to
persuade.’” United States v. Mead Corp., 533 U.S. 218, 228
(2001) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140
(1944)); see, e.g., Gonzales v. Oregon, 546 U.S. 243, 268-69
(2006). Those considerations apply here. Proceeding in this
“old-fashioned way,” Miller v. Clinton, 687 F.3d 1332, 1342 &
n.11 (D.C. Cir. 2012), we are persuaded that the FEC’s is the
better reading of the statute.6
First, the FEC’s focus on the allegations of the legal
proceedings fits well with the irrespective definition embodied
in the statutory language. Examining the allegations is a natural
way to determine whether expenditures in response to such
6
This circuit has held that FEC advisory opinions, like those
cited in the Craig “reason to believe” analysis, qualify for the level of
deference required by Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837,
843 (1984). See FEC v. Nat’l Rifle Ass’n. of Am., 254 F.3d 173, 185-
86 (D.C. Cir. 2001). The appellants do not dispute the point. See
Craig Br. 29-30. Under Chevron, we would defer to an agency’s
reasonable interpretation of ambiguous statutory language. But we do
not need to accord that level of deference to resolve this case.
16
allegations “would exist irrespective of the candidate’s election
campaign or individual’s duties as a holder of Federal office.”
52 U.S.C. § 30114(b)(2). Allegations that are “related to
campaign activities or duties as a Federal officeholder”
necessarily would not exist if there were no campaign or if the
individual had no official duties. Allegations that are not
related, by contrast, generally would exist irrespective of a
campaign or official duties. We use the word “generally” in the
previous sentence because there is a possible exception for
unrelated allegations that a complainant levels against a
candidate or officeholder because of the target’s campaign or
official duties. We address that “alleger’s motive exception” in
Part III.A.3 below.
Second, the allegations standard evidences the kind of
thoroughness of consideration and consistency of application
that warrants deference. As the history recounted in Part II.B
reflects, the FEC is correct in saying that the allegations
standard is reflected in “a long line of Advisory Opinions” that
declare that spending campaign funds on “legal fees and
expenses incurred for representation in legal proceedings
regarding any allegations that are not related to campaign
activities or duties as a Federal officeholder would constitute an
impermissible personal use of campaign funds.” Reason to
Believe Finding at 9 (J.A. 71).
Finally, we agree with the FEC that applying the allegations
standard to Senator Craig’s case is straightforward. The
allegations that gave rise to his guilty plea were the
misdemeanor charges for disorderly conduct and interference
with privacy that the State of Minnesota filed against him.
Because those allegations did not concern the Senator’s
campaign activities or official duties, the legal fees he expended
trying to withdraw his plea constituted “personal use.” To put
the analysis squarely in the terms of the statute: the appellants’
17
expenditures to withdraw Senator Craig’s guilty plea would
have existed irrespective of his reelection campaign or
Senatorial duties because the charges that prompted those
expenditures did not relate to that campaign or those duties.
Accordingly, the appellants violated 52 U.S.C. § 30114(b) when
they used campaign committee funds to pay for the legal fees
incurred in pursuing withdrawal of the plea.
III
Needless to say, the appellants disagree that the legal
expenditures at issue here constituted personal use of campaign
funds. They do not dispute that the criminal allegations to
which Senator Craig pled guilty related only to his personal
conduct.7 But they reject application of an allegations standard
to determine whether the legal expenses the Senator incurred
would have existed irrespective of his campaign activities or
official duties. A proper application of the irrespective
definition, they maintain, would give greater attention to “the
circumstances giving rise to the expenditures.” Craig Br. 28.
Had Craig “not been a sitting U.S. Senator at the time,” they
argue, “the Minnesota incident and plea would not have been a
national media event.” Id. “Nor would the publication of such
a plea have normally engendered immediate professional
repercussions -- including congressional investigations and loss
of professional stature and authority -- for a private individual.”
Id. Those “events reasonably relate to a campaign or official
7
See Oral Arg. Recording 18:50-57 (acknowledgment by Senator
Craig’s counsel that the conduct that led to the Senator’s arrest “was
purely personal”); Letter from Brand Law Group to Hon. Barbara
Boxer (Sept. 5, 2007) (J.A. 179) (statement by Senator Craig’s
attorneys that his arrest was for “purely personal conduct unrelated to
the performance of official Senate duties”).
18
duties,” they conclude, and hence “cement[] the connection
between the expenditures and his federal office.” Id. at 29.
In order to take those circumstances into account, the
appellants urge us to apply one of three alternative standards,
any one of which they believe does a better job of giving content
to the statutory irrespective definition than does the allegations
standard. We reject their urging, concluding that the FEC’s
allegations standard offers the better interpretation of the
statutory definition of personal use in the context of legal
expenses.
A
In their briefs, the appellants’ principal contention is that
the FEC itself does not customarily apply an allegations
standard, but rather “applies a ‘reasonableness’ standard to
evaluate whether expenses were incurred ‘irrespective’ of
campaign or official obligations.” Craig Br. 6. “A principled
personal use analysis,” they maintain, “must examine whether
the relevant events reasonably relate to a campaign or official
duties.” Id. at 29 (emphasis added). In their view, “Senator
Craig’s legal expenses are reasonably related to his position
because, absent the publication of his plea and the resulting
media coverage, Senator Craig would never have filed an appeal
of that plea.” Id. at 21.
1. In support of their claim that the FEC has historically
applied such a “reasonableness standard,” the appellants take
three steps. First, they point to the following statement from the
1995 Explanation and Justification: “[C]andidates have wide
discretion over the use of campaign funds. If the candidate can
reasonably show that the expenses at issue resulted from
campaign or officeholder activities, the Commission will not
consider the use to be personal use.” Craig Br. 6 (quoting 60
19
Fed. Reg. at 7867 (emphasis added by appellants)); see id. at 26.
Second, substituting their own words for portions of this
statement, the appellants say it means that, “‘[i]f the candidate
can reasonably show that expenses at issue’ pertain to
officeholder duties, ‘the Commission will not consider them to
be personal use.’” Id. at 26 (quoting 60 Fed. Reg. at 7867)
(principal insertion italicized). Finally, with a further
substitution, appellants maintain that all that is required is that
“Senator Craig’s legal expenses were reasonably related to his
duties.” Id. at 27 (internal quotation marks omitted) (insertion
italicized).
In response, the FEC protests that it does not apply a
reasonableness standard in deciding whether the expenditure of
campaign contributions was for personal use. Rather, the
statement the appellants quote from the Explanation and
Justification merely reflects the evidentiary burden -- a
reasonable showing -- required to establish that the use was not
personal. That burden, however, does not alter the underlying
statutory definition of personal use. The appellants “ha[ve]
simply . . . conflat[ed] an officeholder’s evidentiary burden with
the actual legal standard.” FEC Br. 24.
Careful attention to the three steps of the appellants’
argument makes clear that the FEC is correct. The first step, the
text of the Explanation and Justification itself, supports the
FEC’s position that “reasonably show” merely describes a
standard of proof: the candidate must “reasonably show that the
expenses at issue resulted from campaign or officeholder
activities.” 60 Fed. Reg. at 7867. At the same time, the text’s
“resulted from” language reflects the causal nature of the
irrespective definition.8 The appellants’ second step, however,
8
See also 60 Fed. Reg. at 7863-64 (“If campaign funds are used
for a financial obligation that is caused by campaign activity or the
20
substitutes “pertain[s] to” for the FEC’s “resulted from,” thus
eliminating the causal requirement. Finally, the appellants’ last
step completes the transformation, changing “reasonably show”
to “reasonably related to,” thus converting a standard of proof
of causation into a non-causal relationship standard.9 In short,
the appellants’ proffered standard is inconsistent with both the
1995 Explanation and Justification and the statutory text, both
of which contemplate a causal relationship between expenses
and campaigns or official duties.
2. The appellants also maintain that there is support for
their proposed reasonableness standard in § 113.1(g)(1)(ii) of
the FEC’s personal use regulation. As discussed above, that
provision states that “[t]he Commission will determine, on a
case-by-case basis,” whether expenses that are not on the per se
personal list -- including legal (and, e.g., travel) expenses --
“would exist irrespective of the candidate’s campaign or duties
as a Federal officeholder, and therefore are personal use.” 11
C.F.R. § 113.1(g)(1)(ii); see id. § 113.1(g)(1)(ii)(A), (C). The
appellants insist this must mean that the FEC will decide the
nature of each legal expense through “a case-by-case analysis of
[the] candidate’s or official’s rationale,” Reply Br. 1, and that
the FEC erred by “categorically” treating “all legal expenditures
stemming from personal conduct” as expenditures for personal
use, Craig Br. 25.
activities of an officeholder, that use is not personal use.” (emphasis
added)).
9
While the allegations standard discussed in Part II.B above does
invoke the term “relate[d] to,” it does so in a different relational
context. The allegations standard allows use of campaign funds for
expenses resulting from allegations related to a campaign or
officeholder duties -- thus maintaining the causal relationship in the
statutory definition that appellants’ proposed alternative would
discard.
21
But that is not what “case-by-case” must mean. Nothing in
that adjectival phrase precludes the Commission from
delineating personal and nonpersonal categories of legal
expenses in the common law tradition -- as individual cases
come to its attention in the form of complaints or requests for
advisory opinions. In this sense, case-by-case merely means
that the FEC does not regard all categories of legal (or travel)
expenses as per se personal -- as it does all categories of home
mortgage and clothing expenditures -- but rather that it will
decide which categories are personal when presented with actual
cases.
And that is precisely how the Commission has treated the
issue in its advisory opinions. For example, in 1995 the FEC
advised that family travel to participate in campaign activities is
not personal; family vacation travel, however, is. See FEC
Advisory Opinion 1995-20 (Roemer), 1995 WL 437687, at *2
(June 30, 1995).10 Similarly, twenty years of advisory opinions
have concluded that legal expenditures made in response to
charges of campaign or official misconduct are not personal;
expenditures to rebut allegations of personal misconduct are.
See supra Part II.B (describing and citing those advisory
opinions).
3. The appellants further maintain that their
“reasonableness” (more accurately, their “reasonably related”)
standard is reflected in three kinds of FEC advisory opinions, all
of which have “acknowledged that members of Congress are
subject to heightened public and media scrutiny.” Craig Br. 7.
10
When Congress amended FECA in 2002 to include a definition
of personal use, it codified this categorization. See 52 U.S.C.
§ 30114(b)(2)(E) (including, in the list of per se personal uses, the use
of campaign contributions for “a vacation or other noncampaign-
related trip”).
22
“Senator Craig’s use of campaign funds for legal expenses,”
they say, “is analogous to the expenditures sanctioned by the
FEC in” those cases. Id. at 29. We disagree.
We begin with the Miller Advisory Opinion. See FEC
Advisory Opinion 2013-11 (Miller), 2013 WL 6022101 (Oct.
31, 2013). There, the FEC approved a Senate candidate’s
expenditure of campaign funds to oppose a state court lawsuit
brought by media outlets seeking access to personnel records
from the candidate’s previous job as a municipal employee.
Although the opinion did not mention any allegations regarding
campaign activities, it did note that the plaintiffs “asserted in
their civil complaints that the disclosure of these records was
necessary for the Alaska electorate to be able to fully, fairly, and
timely consider matters relevant to Mr. Miller’s candidacy” for
the U.S. Senate. Id. at *3 (internal quotation marks omitted).
That made clear, the FEC said, that the lawsuit “was directly and
explicitly related to Miller’s candidacy and would not have
existed irrespective of his campaign.” Id. This wording may
suggest that the FEC contemplates an “alleger’s motive
exception” to the allegations standard for litigation expenses,
although the Miller Advisory Opinion appears to be the only one
to suggest such a possibility.11
11
The appellants contend that the Vitter Advisory Opinion is a
second opinion of the same kind. See FEC Advisory Opinion 2008-07
(Vitter), 2008 WL 4265321, at *3 (Sept. 9, 2008). But the relevant
section of that opinion says nothing more than that “[t]he Commission
could not approve a response by the required four affirmative votes
with regard to” Senator Vitter’s request to use campaign funds to pay
for legal expenses incurred in an effort to quash subpoenas for
information related to the Senator’s alleged personal conduct. Id. at
*2, *4. The appellants nonetheless maintain that a draft opinion by
FEC staff shows that some commissioners would have allowed
Senator Vitter to use campaign contributions for such legal expenses
because the issuer of the subpoena had singled him out due to his
23
We need not pass on the validity of such an exception
today. The appellants do not contend that Minnesota brought
the disorderly conduct charge against Senator Craig because of
his official position. See Oral Arg. Recording 10:05-13
(agreeing that the Senator was not “targeted” for arrest). To the
contrary, the arresting officer did not even know that Craig was
a Senator until after the arrest, when Craig showed the officer
his business card and asked, “[w]hat do you think of that?”
Police Narrative (June 11, 2007) (J.A. 204).
The appellants also proffer, as analogous, FEC advisory
opinions that authorize the use of campaign contributions to
respond to media inquiries. The FEC has permitted such
expenditures even when the inquiries do not relate to campaigns
or officeholder duties.12 In the Kerrey Advisory Opinion, for
example, the FEC authorized the use of campaign funds to
respond to media inquiries regarding former Senator Robert
Kerrey’s activities during the Vietnam War because those
inquiries “would not have occurred if Mr. Kerrey had not been
a prominent Senator and prominent Federal candidate” for
President. FEC Advisory Opinion 2001-09 (Kerrey), 2001 WL
844352, at *4 (July 17, 2001). Similarly, the Hilliard Advisory
Opinion explained:
status as a Senator. Craig Br. 10 (citing Draft FEC Advisory Opinion
2008-07 (Vitter), Doc. No. 08-20-A (Aug. 20, 2008)). But there is no
evidence that any of the commissioners adopted the reasoning
reflected in the draft, and the final opinion makes clear that the FEC
could not reach a conclusion on the matter.
12
See, e.g., FEC Advisory Opinion 2008-07 (Vitter), 2008 WL
4265321, at *4 & n.2 (Sept. 9, 2008); FEC Advisory Opinion 2001-09
(Kerrey), 2001 WL 844352, at *3-4 (July 17, 2001); FEC Advisory
Opinion 1998-1 (Hilliard), 1998 WL 108618, at *4 (Feb. 27, 1998).
24
The Commission [has] recognized . . . that the
activities of candidates and officeholders may receive
heightened scrutiny and attention in the news media
because of their status as candidates and officeholders.
It [has] stated that the obvious need for a candidate to
respond to allegations that result from this elevated
scrutiny would not exist irrespective of the candidate’s
campaign or officeholder status.
FEC Advisory Opinion 1998-1 (Hilliard), 1998 WL 108618, at
*4 (Feb. 27, 1998) (emphasis added) (citations omitted).
The media advisory opinions may suggest a kind of
“inquirer’s motive exception” for responding to press
inquiries -- analogous to the “alleger’s motive exception”
suggested by the Miller Advisory Opinion. But again, we need
not pass on the validity of such an exception because the FEC
did not charge the appellants with violating FECA by using
campaign funds to respond to press inquiries regarding Senator
Craig’s guilty plea. See FEC Compl. ¶¶ 26, 33 (J.A. 59-60).
Thus, whatever room there may be for applying an inquirer’s
motive exception in some cases, the application of such an
exception is not relevant here.
Finally, the appellants argue that their proposed
reasonableness standard is consistent with FEC advisory
opinions that authorize the use of campaign contributions to pay
legal expenses incurred in connection with Senate Ethics
Committee investigations. As with media inquiries, the FEC has
authorized the use of campaign contributions in such
circumstances, even for investigations involving Senators’
purely personal conduct.13 But the FEC did not need any kind
13
See, e.g., FEC Advisory Opinion 2008-07 (Vitter), 2008 WL
4265321, at *3 (Sept. 9, 2008); FEC Advisory Opinion 2006-35
25
of interpretive standard to help it apply FECA’s irrespective
definition to those situations. Because the Senate Ethics
Committee has jurisdiction only over individuals who are
Senators (or congressional officers or employees), a Senator’s
legal expenses in such an investigation could not have existed
irrespective of his official duties -- regardless of whether the
conduct at issue was personal or official. Consistent with this
understanding, the FEC did not object to the appellants’
expenditures for responding to the Ethics Committee inquiry in
this case. See FEC Compl. ¶ 26 (J.A. 59).
B
The appellants’ opening brief hints, if cryptically, at a
second alternative standard that they believe justifies the use of
campaign funds to pay Senator Craig’s legal expenses: “the
impetus for expending committee funds.” Craig Br. 25. Their
reply brief expands on this alternative, contending that some
advisory opinions have “assessed an individual’s motivation
for . . . committee expenditures” and permitted them if the
individual’s -- that is, the candidate’s or officeholder’s --
motives related to his campaign or duties. Reply Br. 12.
This alternative might be described as yet another motive
exception to the allegations standard. But unlike the possible
motive exceptions discussed in Part III.A, this exception would
not look to the motive of the person who made the allegations or
press inquiries, but rather to the motive of the candidate or
officeholder who spent the campaign funds to respond to those
allegations or inquiries. As applied to the facts of this case, the
appellants’ argument is that Craig’s “decis[ion] to challenge
(Kolbe), 2007 WL 419188, at *2 (Jan. 26, 2007); FEC Advisory
Opinion 1998-1 (Hilliard), 1998 WL 108618, at *5 (Feb. 27, 1998).
26
[his] plea” was part of “an effort to remain in office and make
his reelection viable.” Reply Br. 16. In that sense, they suggest,
the legal expenses would not have existed irrespective of his
office.
There is no support for such an “officeholder’s motive
standard” in any of the advisory opinions that the appellants cite.
Those opinions are the same ones that we discussed in Part
III.A, and that, as we have already explained, at most provide
some support for taking into account the motive of the
officeholder’s accuser or inquirer. None of them focus on the
officeholder’s motive for spending money to answer those
accusations or inquiries.
More important, a standard that looks to the officeholder’s
motive is inconsistent with the statutory scheme. As we have
noted, 52 U.S.C. § 30114(b)(2) contains a specific list of
expenses that Congress regarded as existing irrespective of a
candidate’s campaign or an officeholder’s duties, including
home mortgage payments, clothing purchases, and tuition
payments. Id. § 30114(b)(2)(A), (B), (G); see supra note 3.
Yet, if an officeholder’s motive to “make his reelection viable,”
Reply Br. 16, were relevant to the statutory analysis, it is hard to
see why Congress would have placed those kinds of
expenditures off limits. Surely there are members of Congress
who regard owning homes in their districts, improving the
quality of their clothing, or obtaining advanced degrees as
necessary to increase their electoral chances. Because
Congress’ examples leave no room for consideration of a
candidate’s motive, neither does the general ban. Cf. Samantar
v. Yousuf, 130 S. Ct. 2278, 2287-88 (2010); Cal. Indep. Sys.
Operator Corp. v. FERC, 372 F.3d 395, 400 (D.C. Cir. 2004).
An officeholder’s motive standard is also inconsistent with
the FEC’s 1995 Explanation and Justification, which listed two
27
paradigmatic examples of legal expenses that “will be treated as
personal, rather than campaign or officeholder related”: “legal
expenses associated with a divorce or charges of driving under
the influence of alcohol.” 60 Fed. Reg. at 7868. Subsequent
advisory opinions have repeatedly cited those examples.14 Yet
surely a Senator could regard a defense against messy divorce
or DUI allegations as no less necessary to “an effort to remain
in office and make his reelection viable” than Senator Craig’s
attempt to withdraw his guilty plea. Indeed, it is hard to imagine
any kind of criminal (or even controversial civil) matter for
which such a claim could not be made. In short, grafting an
officeholder’s motive standard onto the statutory definition of
personal use would swallow the definition whole, rendering
nonpersonal virtually any use of campaign funds for legal
expenses. And that plainly could not have been Congress’ intent
in drafting § 30114(b)(2).15
14
See, e.g., FEC Advisory Opinion 2013-11 (Miller), 2013 WL
6022101, at *3 (Oct. 31, 2013); FEC Advisory Opinion 2011-07
(Fleischmann), 2011 WL 2163318, at *2 (May 26, 2011); FEC
Advisory Opinion 2009-12 (Coleman), 2009 WL 1904617, at *4 (June
26, 2009); FEC Advisory Opinion 2008-07 (Vitter), 2008 WL
4265321, at *3 (Sept. 9, 2008).
15
The appellants repeatedly emphasize that Senator Craig did not
appeal his plea until after it was publicized. But their suggestion that
this makes his expenditures different from those he might have made
had he challenged the plea before the charges became public is
unpersuasive. Given the level of media scrutiny of public officials,
any legal allegation of personal wrongdoing will rarely remain secret
for long, rendering the line the appellants have attempted to draw
ephemeral. In any event, the appellants’ rationale for drawing a line
at the publication of the Senator’s plea ultimately rests on the
Senator’s motive for seeking its withdrawal: his “hop[e] that he could
seek election in Idaho for an additional six-year term in the United
States Senate.” Reply Br. 16 (internal quotation marks omitted). For
28
C
Finally, the appellants’ reply brief hints at yet a third
standard: “an elected official’s status [may] prompt[] increased
legal costs for what would normally be a personal matter,”
which could “justif[y] paying for those increased costs with
campaign committee funds.” Reply Br. 18 (emphasis added).
At oral argument, this hint became the appellants’ principal
proposed standard, which they christened the “delta standard”:
an officeholder or candidate, they argued, should be able to use
campaign funds to pay the difference (the delta) between the
amount the candidate or officeholder actually spent on legal
expenses and the amount a reasonable person without that status
would have spent. In the appellants’ view, because “no
reasonable person” would have spent nearly $200,000 to attack
a misdemeanor plea, those expenditures by the Craig Committee
did not constitute personal use. See Oral Arg. Recording 7:00-
12, 13:06-17.
As our precedents make clear, a party cannot preserve an
appellate issue by hinting at it in a reply brief and pressing it at
oral argument.16 Accordingly, the appellants have forfeited their
challenge to the district court’s judgment on the basis of their
proposed delta standard.
the reasons stated above, we conclude that such an officeholder’s
motive standard is unwarranted.
16
See, e.g., Ark Las Vegas Rest. Corp. v. NLRB, 334 F.3d 99, 108
n.4 (D.C. Cir. 2003); Corson & Gruman Co. v. NLRB, 899 F.2d 47, 50
n.4 (D.C. Cir. 1990); see also Republic of Argentina v. NML Capital,
Ltd., 134 S. Ct. 2250, 2255 n.2 (2014) (“We will not revive a forfeited
argument simply because the petitioner gestures toward it in its reply
brief.”).
29
Even if it were not forfeited, however, the proposed delta
standard would be unwarranted. There is no support for it in
any FEC advisory opinion.17 Nor is it workable. We struggle to
imagine how the Commission or a court could calculate the
“delta” between what a particular member of Congress spent on
a given legal expense and what a “reasonable” non-member
would have found sufficient.18
More important, like the officeholder’s motive standard
discussed in Part III.B (of which the delta standard is really only
a marginal cost variant), the delta standard is inconsistent with
the statutory scheme. If Congress had intended the application
of a delta standard, it is hard to see why it would have wholly
barred the use of campaign funds for expenses like home
mortgages and clothing purchases. 52 U.S.C. § 30114(b)(2)(A),
(B). Surely some members of Congress buy two homes as a
consequence of their position -- one in Washington and one in
their district -- when a reasonable member of the general public
17
The appellants claim to derive the delta standard from a draft
advisory opinion in the Vitter matter. As we have noted, there is no
evidence that any individual commissioner embraced that draft’s
reasoning, and the Commission itself did not adopt the draft. See
supra note 11. Because the draft opinion does not represent the views
of the Commission, the appellants acknowledge that it does not
warrant any deference from this court. Oral Arg. Recording 16:22-31.
18
We asked at oral argument, for example, how a court could
determine what a “reasonable” non-member would spend to resist a
divorce he or she did not want. The appellants’ only response was that
the FEC would have to conduct a “case-by-case” analysis. Oral Arg.
Recording 17:50-56.
30
would not. And surely some members spend more on their
clothing than would an ordinary citizen.19
Similarly, a delta standard is inconsistent with the two
paradigmatic examples of personal legal expenses for which no
campaign funds may be spent: “legal expenses associated with
a divorce or charges of driving under the influence of alcohol.”
60 Fed. Reg. at 7868. Once again, surely there are officeholders
who would spend more than an ordinary person to defend such
cases, which might well destroy a political career but not one in
the private sector. And because there is no principled way to
distinguish divorce or DUI cases from most other litigation
(including misdemeanor disorderly conduct cases), a delta
standard would not only swallow those examples but would
authorize the payment of at least partial expenses in virtually
any litigation involving personal conduct.
In sum, even were it not forfeited, we would reject the
appellants’ proposed delta standard as both unworkable and
inconsistent with the statutory and regulatory schemes.
D
For the foregoing reasons, we conclude that the FEC’s
allegations standard -- and not the appellants’ proposed
“reasonableness,” “officeholder’s motive,” or “delta”
standard -- offers the better interpretation of the statutory
definition of personal use. And because the criminal allegations
19
We also note that the appellants’ focus on whether the “elected
official’s status has increased the costs relating to a personal matter,”
Reply Br. 18 (emphasis added), appears inconsistent with the statute,
which focuses on the “individual’s duties as a holder of Federal
office,” 52 U.S.C. § 30114(b)(2) (emphasis added). We acknowledge,
however, that the FEC frequently uses the terms interchangeably.
31
against Senator Craig were not related to his campaign activity
or official duties, we conclude that the appellants’ use of
campaign funds to pay the expenses of fighting those allegations
violated 52 U.S.C. § 30114(b).20
IV
FECA grants district courts broad authority to fashion
remedies for violations of the statute. “[U]pon a proper showing
that the person involved has committed, or is about to
commit . . . , a violation of [the] Act,” FECA authorizes the
court to “grant a permanent or temporary injunction, restraining
order, or other order, including a civil penalty which does not
exceed the greater of $5,000 or an amount equal to any
contribution or expenditure involved in such violation.” 52
U.S.C. § 30109(a)(6)(b). In this case, the district court ordered
Senator Craig to disgorge to the U.S. Treasury the full amount
of funds converted to personal use (amounting, by the court’s
calculation, to $197,535). It further ordered him to pay a
$45,000 civil penalty.
The appellants challenge both the disgorgement and the
civil penalty orders. We review both orders for abuse of
discretion. See SEC v. Whittemore, 659 F.3d 1, 9 (D.C. Cir.
2011); AFL-CIO v. FEC, 628 F.2d 97, 100 (D.C. Cir. 1980). We
will find that the district court abused its discretion only “if it
did not apply the correct legal standard . . . or if it
misapprehended the underlying substantive law.” Kickapoo
Tribe of Indians v. Babbitt, 43 F.3d 1491, 1496 (D.C. Cir. 1995).
20
In the district court, the appellants argued that Senator Craig’s
legal expenses were related to his officeholder duties because he was
on official travel back to Washington at the time of his arrest. The
district court rejected that argument, Craig for U.S. Senate, 933 F.
Supp. 2d at 118, and the appellants do not renew it on appeal.
32
We address the disgorgement order in Part IV.A and the civil
penalty order in Part IV.B.
A
The district court determined that a “disgorgement order
[wa]s necessary to avoid the unjust enrichment of Senator Craig,
and to ‘deprive the wrongdoer of his ill-gotten gain.’” Craig for
U.S. Senate, 70 F. Supp. 3d at 97 (quoting SEC v. Bilzerian, 29
F.3d 689, 697 (D.C. Cir. 1994)). It ordered the Senator to
disgorge the funds he unlawfully converted to personal use and
directed that he pay them to the Treasury, rather than to the
Craig Committee, explaining that “the Craig Committee [wa]s
essentially defunct” and had become “little more than an alter-
ego for Senator Craig himself.” Id. at 101.21 Moreover, the
court said, were the Craig Committee to receive the disgorged
funds, then “sole[] responsib[ility] for the proper disposition of
the funds” would be placed in the hands of the same person who
had misused them in the first place, since by that time Senator
Craig had appointed himself Treasurer (and sole staff member)
of the Craig Committee. Id.
The appellants do not dispute the district court’s authority
to order the remedy of disgorgement. Oral Arg. Recording
19:24-35. Instead, they challenge the court’s specific order on
a number of grounds, all ultimately resting on the fact that the
court ordered disgorgement to the Treasury rather than to the
Craig Committee. Id. Their challenges are not persuasive.
21
The court noted that “Senator Craig has no plans to run for
office again[;] he is the Committee’s only staff member[;] . . . [and]
the Craig Committee has essentially no money.” Craig for U.S.
Senate, 70 F. Supp. 3d at 101.
33
First, the appellants insist that the court’s order “does not
actually effect disgorgement because it fails to return the funds
to the committee.” Craig Br. 33. “Disgorgement,” they
contend, “is an equitable remedy that aims to restore the status
quo,” and directing the money to the Treasury rather than
returning it to the Committee does not achieve that aim. Craig
Br. 21. But as this court has said before, “[t]he primary purpose
of disgorgement is not to refund others for losses suffered but
rather ‘to deprive the wrongdoer of his ill-gotten gain.’”
Bilzerian, 29 F.3d at 697 (emphasis added) (quoting SEC v.
Blatt, 583 F.2d 1325, 1335 (5th Cir. 1978)). Following that
principle, courts of appeals have often affirmed the propriety of
directing disgorged funds to the U.S. Treasury. See, e.g., United
States v. Cavanagh, 445 F.3d 105, 117 (2d Cir. 2006) (“Upon
awarding disgorgement, a district court may exercise its
discretion to direct the money toward victim compensation or to
the United States Treasury.”).22 Moreover, FECA does not even
speak of “disgorgement” orders, but rather of “other” orders,
which would give the district court some leeway even if there
were not substantial precedent for directing disgorgement to the
Treasury.
Second, the appellants contend that the order “functions as
a penalty rather than disgorgement.” Craig Br. 32
(capitalization omitted). In directing payment to the Treasury,
they argue, “the order seeks to punish Senator Craig for his
conduct by preventing him from using these funds for a
permissible purpose.” Id. at 33; see id. at 32-33 (citing SEC v.
First City Fin. Corp., 890 F.2d 1215, 1231 (D.C. Cir. 1989)
(stating that “disgorgement may not be used punitively”)). But
22
See also, e.g., Official Comm. of Unsecured Creditors of
WorldCom, Inc. v. SEC, 467 F.3d 73, 81 (2d Cir. 2006); SEC v.
Fischbach Corp., 133 F.3d 170, 175-76 (2d Cir. 1997); FTC v. Febre,
128 F.3d 530, 537 (7th Cir. 1997).
34
as we have just noted, it is not uncommon for remedial
disgorgement orders to direct funds to the Treasury. Moreover,
the district court’s rationale made clear that its intention was not
punitive: the court did not direct the funds to the Treasury to
punish Senator Craig, but rather to ensure that they were not
returned to the person who had misused them.
Third, the appellants argue that the FEC’s customary
practice, in the context of administrative conciliation agreements
to resolve personal use violations, is to require disgorgement of
funds to campaign committees. See Craig Br. 38-39. Although
this accurately describes the conciliation agreements cited by the
appellants, the FEC explains that those cases involved refunds
to committees with treasurers who had not themselves spent
campaign funds for their personal use, as well as committees
that “could have spent refunded amounts on later campaigns.”
FEC Br. 38-39. And in any event, the resolution of matters
under the FECA subsection that authorizes the Commission to
“attempt . . . to correct or prevent such violation[s] by informal
methods of conference, conciliation, and persuasion,” 52 U.S.C.
§ 30109(a)(4)(A)(i), does not constrain a district court acting
pursuant to § 30109(a)(6)(B).
Finally, the appellants assert that, by sending the disgorged
funds to the Treasury, the district court violated the First
Amendment rights of Senator Craig, the Craig Committee, and
the Committee’s donors. The only cases they cite in support are
Buckley v. Valeo, 424 U.S. 1 (1976), and McCutcheon v. FEC,
134 S. Ct. 1434 (2014), which stand for the propositions that
campaign contributions can constitute protected speech and that
restrictions on such contributions can violate the First
Amendment under certain circumstances. But the disgorgement
order is not a campaign finance restriction, and it does not limit
donors’ campaign contributions. The court’s order does no
more than enforce the obligation of a campaign committee to
35
follow laws that are unrelated to the restriction of free
expression. A campaign committee that violates occupational
safety or wage and hour laws can be required to pay for such
wrongdoing, notwithstanding that the payment ultimately comes
from campaign contributions. If the contributors’ original intent
has thereby been thwarted, they have the campaign committee --
not the court -- to blame.
We therefore conclude that the district court did not abuse
its discretion in ordering Senator Craig to disgorge $197,535 to
the U.S. Treasury.
B
The district court further determined “that a penalty over
and above the disgorgement is also appropriate given the
seriousness of the violation here.” Craig for U.S. Senate, 70 F.
Supp. 3d at 97. It ordered Senator Craig to pay a $45,000 civil
penalty -- roughly $155,000 less than the statutory maximum
(the amount of the unlawful expenditure) and $25,000 less than
the amount requested by the FEC. Noting that “[t]he assessment
of [a] civil penalt[y] is discretionary,” the appellants maintain
that the district court should not have assessed a penalty at all.
Craig Br. 42 (internal quotation marks omitted). They offer four
reasons. Again, none is persuasive.
First, the appellants maintain that “disgorging $197,535
would constitute a harsh penalty in itself.” Id. As we have
explained, however, the disgorgement order did not punish
Senator Craig, but rather deprived him of his improper gains.
Indeed, as the district court noted, imposing a lower civil penalty
would “threaten[] to become something equivalent to interest on
a loan payment for the immediate use of campaign funds.”
Craig for U.S. Senate, 70 F. Supp. 3d at 100 (quoting Hr’g Tr.
at 16). And assessing no penalty at all would have been
36
equivalent to giving Senator Craig the benefit of an interest-free
loan.
Second, the appellants note that Senator Craig suffered
“severe professional and personal consequences” as a result of
his arrest for disorderly conduct. Craig Br. 42. That is no doubt
true, but those were not the consequences of any liability
flowing from his FECA violation. The court did not abuse its
discretion in concluding that a penalty for that violation was in
order.
Third, the appellants argue that “the personal use standards
developed by the FEC are ambiguous at best,” and that it was
“unreasonable to punish Senator Craig for failing to accurately
discern the appropriate standards.” Id. at 43. As we discussed
in Part II, however, the FEC has applied the allegations standard
to determine personal use for two decades, and there is no
dispute that the criminal allegations leveled against the Senator
had no relation to his campaign or official duties.23 Moreover,
if the appellants had any lingering doubts regarding the
appropriate standard, the statute gave them the right to request
an advisory opinion “with respect to [the] specific
transaction[s].” 52 U.S.C. § 30108(a)(1); see supra note 2.
Instead, as the district court noted, the appellants “decided to
forego what would have been a significant demonstration of
good faith and declined to request an advisory opinion from the
FEC.” Craig for U.S. Senate, 70 F. Supp. 3d at 99.
23
See Craig for U.S. Senate, 70 F. Supp. 3d at 88-89 (finding that
the defendants “disregard[ed] clear admonitory language in the
advisory opinion on which they relied most heavily” (internal
quotation marks omitted) (citing FEC Advisory Opinion 2006-35
(Kolbe), 2007 WL 419188 (Jan. 26, 2007))).
37
Finally, the appellants complain that “the defendant’s state
of mind is a key consideration” in evaluating whether a civil
penalty is warranted, and that in this case Senator Craig “relied
in good faith on the advice of counsel and would not have made
the committee expenditure had he not received authorization
from counsel.” Craig Br. 43-44. But the district court did take
the defendants’ “reli[ance] on the advice of counsel” into
consideration, Craig for U.S. Senate, 70 F. Supp. 3d at 99,
notwithstanding an interrogatory answer that expressly waived
such reliance, First Set of Interrogs. at No. 5 (J.A. 166).24 The
court’s conclusion that such reliance did not outweigh the other
factors that counseled imposition of a penalty, Craig for U.S.
Senate, 70 F. Supp. 3d at 99, did not constitute an abuse of
discretion.
V
For the foregoing reasons, we conclude that the district
court did not err in finding that the appellants unlawfully
converted campaign contributions to personal use by spending
them on Senator Craig’s effort to withdraw his guilty plea. Nor
did the court abuse its discretion by ordering the Senator to
disgorge $197,535 to the United States Treasury and pay a civil
penalty of $45,000. Accordingly, the judgment and remedial
orders of the district court are
Affirmed.
24
See First Set of Interrogs. at No. 5 (J.A. 166) (stating, in
response to a query as to whether reliance on advice of counsel
“should be a factor in the Court’s decision regarding remedies in this
case,” that the “Defendants do not claim reliance upon advice of
counsel”).