End Citizens United PAC v. FEC ( 2023 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 10, 2023 Decided June 9, 2023
No. 22-5176
END CITIZENS UNITED PAC,
APPELLANT
v.
FEDERAL ELECTION COMMISSION,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:21-cv-01665)
Kevin P. Hancock argued the cause for appellant. With
him on the briefs was Adav Noti.
David W. Casazza, appointed by the court, argued the
cause for amicus curiae in support of the judgment below.
With him on the brief was Jacob T. Spencer, appointed by the
court.
Before: WILKINS, Circuit Judge, and ROGERS and TATEL,
Senior Circuit Judges.
2
Opinion for the Court filed by Senior Circuit Judge
ROGERS.
ROGERS, Senior Circuit Judge: This appeal arises from the
denial of a motion for a default judgment. End Citizens United
(“ECU”) sued the Federal Election Commission alleging the
Commission unlawfully dismissed its administrative
complaint. Although the Commission failed to enter an
appearance or otherwise defend the lawsuit, the district court
denied ECU’s motion based on the Commission’s after-the-
fact explanation for its dismissal. The issue on appeal is
whether the district court erred by relying on the non-
contemporaneous explanation in light of well-established
circuit precedent requiring the Commission to provide a timely
explanation of its reason for dismissing an administrative
complaint. Guided as well by Supreme Court precedent, the
court reverses the district court’s judgment and remands the
case to it with instructions to return the case to the Commission.
I.
Under the Federal Election Campaign Act, 52 U.S.C.
§ 30101 et seq., the Federal Election Commission is directed to
enforce the statutory restrictions on the sources and amounts of
contributions made “for the purpose of influencing any election
for Federal office,” id. § 30101(8)(A)(i); see id. § 30106(b)(1).
Generally, the Act “seeks to remedy any actual or perceived
corruption of the political process.” FEC v. Akins, 524 U.S. 11,
14 (1998). The Commission itself is composed of six voting
members, no more than three of whom may be “affiliated” with
the same political party. 52 U.S.C. §§ 30106(a)(1), (a)(2)(A);
FEC v. NRA Pol. Victory Fund, 6 F.3d 821, 826–28 (D.C. Cir.
1993). The Commission may investigate potential violations
on its own initiative or in response to an administrative
complaint by any person who “believes” that a statutory
3
violation has occurred. 52 U.S.C. §§ 30107(a), 30109(a). If
at least four Commissioners determine there is “reason to
believe” the allegations, then the Commission “shall” conduct
an investigation, id. § 30109(a)(2), which may result in a
negotiated settlement, a criminal referral, or a civil
enforcement action, id. §§ 30109(a)(4)–(6). In the absence of
four votes to proceed, the Commission may dismiss the
administrative complaint and close the file. See, e.g.,
Campaign Legal Ctr. v. FEC, 31 F.4th 781, 785 (D.C. Cir.
2022). The Commissioners who vote against proceeding “must
issue a Statement of Reasons to serve as the basis for judicial
review.” Id.“Any party aggrieved by” the Commission’s dismissal of
a complaint may seek judicial review within 60 days.
52 U.S.C. § 30109(a)(8)(A)–(B). A court “may declare that the
dismissal of the complaint . . . is contrary to law,” id.§ 30109(a)(8)(C), if the Commission relied on “an
impermissible interpretation of the Act,” or the dismissal was
otherwise “arbitrary or capricious, or an abuse of discretion,”
Orloski v. FEC, 795 F.2d 156, 161 (D.C. Cir. 1986). Upon a
judicial determination that the dismissal was improper, the
Commission has 30 days “to conform with such declaration,”
failing which the complainant may file a citizen suit to “remedy
the violation involved in the original complaint.” 52 U.S.C.
§ 30109(a)(8)(C).
According to the complaint, ECU is a political action
committee that supports candidates aligned with its mission of
“get[ting] big money out of politics,” and it supported President
Biden in the 2020 presidential race. Compl. ¶¶ 12–14. On May
9, 2019, ECU filed an administrative complaint with the
Commission alleging that former President Trump’s 2020
campaign committee solicited and directed funds to America
First Action, a “super PAC,” without regard to statutory source
4
prohibitions and contribution limits, in violation of 52 U.S.C.
§ 30125(e). Compl. ¶¶ 2, 4. The Commission’s Office of
General Counsel recommended that the Commission find
“reason to believe” the allegation that the Trump campaign
committee unlawfully “solicit[ed] soft money contributions” to
America First Action. Id. ¶ 5 (citing First General Counsel’s
Report, MURs 7340/7609, at 29 (Nov. 24, 2020)). On April
20, 2021, with one Commissioner recused, the Commission
deadlocked 3-2 on a vote to find “reason to believe” the soft-
money solicitation allegation against the Trump campaign
committee, with Vice Chair Dickerson and Commissioner
Cooksey opposed. Certification in MURs 7340/7609, Exec.
Sess. April 20, 2021, at 1–2 (May 5, 2021). The Commission
voted unanimously to “[c]lose the file” and dismissed ECU’s
administrative complaint. Id. Exec. Sess. April 22, 2021, at 2.
On June 21, 2021, ECU sued the Commission, alleging
that its failure to find “reason to believe” and its dismissal of
the administrative complaint without providing an explanation
were arbitrary, capricious, and contrary to law. Compl. ¶¶ 37–
39; 52 U.S.C. § 30109(a)(8)(A). Two months after the
dismissal of the administrative complaint and four days after
ECU filed its lawsuit, Dickerson and Cooksey issued a
statement they had voted “pursuant to [thei]r prosecutorial
discretion” against finding “reason to believe” the soft-money
solicitation allegation. Statement of Reasons of Vice Chair
Allen Dickerson and Commissioner Sean J. Cooksey, MURs
7340/7609, at 4 (June 25, 2021) (“Dickerson/Cooksey
statement”). When the Commission failed to enter an
appearance or otherwise defend the lawsuit, the clerk of the
district court entered default against the Commission.
The district court denied ECU’s motion for a default
judgment, pursuant to Federal Rule of Civil Procedure
55(b)(2), premised on a lack of authority to “second guess” the
5
explanation in the Dickerson/Cooksey statement. End Citizens
United PAC v. FEC, No. 1:21-cv-01665, 2022 WL 1136062, at
*2 (D.D.C. Apr. 18, 2022). Acknowledging that the statement
was “belated” and that “post hoc rationalizations for agency
action” are not given “credence,” id. at *2–3, the district court
concluded that the statement was exempt from the “general”
prohibition on post hoc rationalizations because it was written
by the “very decisionmakers responsible for the agency action”
and was “the only explanation these Commissioners have ever
offered for their decision,” id. at *2. The court found “no
reason to ignore the explanation it already ha[d] before it” as it
“would have remanded the case to give the Commission . . . an
opportunity” to explain the basis of the dismissal had they
“remained silent.” Id. at *2 (internal quotation marks omitted).
Treating the Dickerson/Cooksey statement as the
Commission’s reason for dismissing ECU’s administrative
complaint, the court ruled that the dismissal was nonreviewable
because “the Commissioners who voted against enforcement
invoked prosecutorial discretion” and dismissed the case. Id.at *2–3.
II.
ECU appeals, contending that the Commission acted
“contrary to law” in dismissing its complaint in the absence of
the timely explanation required by circuit law and that this
violation is not cured by the Dickerson/Cooksey statement that
was an impermissible post hoc rationalization. Appellant’s Br.
20, 35. This court appointed Amicus Curiae to present
arguments in support of the district court judgment, End
Citizens United PAC v. FEC, No. 22-5176 (D.C. Cir. Nov. 1,
2022), and expresses appreciation for Amicus’s assistance.
6
This court reviews the district court’s decision whether to
issue a default judgment for “abuse of discretion.” Fraenkel v.
Islamic Republic of Iran, 892 F.3d 348, 356 (D.C. Cir. 2018).
“‘A district court would necessarily abuse its discretion if it
based its ruling on’ an error of law.” Id. (quoting Cooter &
Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990)).
In Democratic Congressional Campaign Committee v.
FEC (DCCC), 831 F.2d 1131 (D.C. Cir 1987), the court held
that the Commission’s dismissal of an administrative
complaint “due to a deadlock” is subject to judicial review
under the Federal Election Campaign Act, id. at 1132–33.
There, the Commission deadlocked 3-2 on finding reason to
believe and dismissed the complaint over the contrary
recommendation of its General Counsel. Id. This court held
that the dismissal was amenable to judicial review under the
“contrary to law” standard of 52 U.S.C. § 30109(a)(8)(A), and
expressly rejected the Commission’s argument that Heckler v.
Chaney, 470 U.S. 821 (1985), “immunized” deadlock
dismissals from review “because they are simply exercises of
prosecutorial discretion,” DCCC, 831 F.2d at 1133–34; see
also Akins, 524 U.S. at 26. To enable a reviewing court to
“intelligently determine whether the Commission is acting
contrary to law,” this court concluded that the Commissioners
finding no reason to believe the allegations needed “to state
their reasons why.” DCCC, 831 F.2d at 1132 (internal
quotation marks omitted).
The following year in Common Cause v. FEC, 842 F.2d
436 (D.C. Cir. 1988), the court reaffirmed the reviewability of
a deadlock dismissal and the need for a statement of reasons to
“allow meaningful judicial review of the Commission’s
decision not to proceed,” id. at 449. The court explained that
a statement issued “at the time when a deadlock vote results in
. . . dismissal” serves three “important statutory policies” of
7
§ 30109: (1) it “allow[s] meaningful judicial review of the
Commission’s decision not to proceed” and guards against the
risk that “similarly situated parties may not be treated
evenhandedly”; (2) it “contributes to reasoned decisionmaking
by the agency” by “ensur[ing] reflection and creat[ing] an
opportunity for self-correction”; and (3) it “enhance[s] the
predictability of Commission decisions for future litigants.” Id.
The court has continued to emphasize the “control[ling]”
principles of DCCC and Common Cause. FEC v. Nat’l
Republican Senatorial Comm., 966 F.2d 1471, 1476 (D.C. Cir.
1992); see Chamber of Com. v. FEC, 69 F.3d 600, 603 (D.C.
Cir. 1995); Citizens for Resp. & Ethics in Washington v. FEC
(Commission on Hope), 892 F.3d 434, 437–38 (D.C. Cir.
2018); Campaign Legal Ctr. v. FEC, 952 F.3d 352, 356 (D.C.
Cir. 2020); Citizens for Resp. & Ethics in Washington v. FEC
(New Models), 993 F.3d 880, 883 n.3 (D.C. Cir. 2021);
Campaign Legal Ctr. v. FEC, 31 F.4th 781, 785 (D.C. Cir.
2022).
As summarized in Commission on Hope, regardless
whether the Commission’s deadlock and dismissal results from
a purported exercise of prosecutorial discretion, the
Commission is bound by two “propositions of circuit law”:
[I]f the Commission fails to muster four votes in favor
of initiating an enforcement proceeding, the
Commissioners who voted against taking that action
should issue a statement explaining their votes[] . . .
[and] for purposes of judicial review, the statement or
statements of those naysayers — the so-called
“controlling Commissioners” — will be treated as if
they were expressing the Commission’s rationale for
dismissal.
892 F.3d at 437–38 (citing Common Cause, 842 F.2d at 449).
Here, Dickerson and Cooksey were the “controlling
8
Commissioners” on the dismissal of ECU’s administrative
complaint: they voted not to find “reason to believe” the soft-
money solicitation allegation and thereby against “initiating an
enforcement proceeding” contrary to the General Counsel’s
recommendation. Id. at 437. As the controlling
Commissioners, they were obligated to issue a
contemporaneous statement “explaining their votes,” which the
court would treat as the Commission’s reason for the dismissal.
Id. at 437, 438 n.5.
Amicus suggests that the Commission met its obligation
under Common Cause. First, Amicus characterizes the
Commission’s unsuccessful 2-3 vote of April 22, 2021, to
“[d]ismiss under Heckler” viewed “by itself” as all the
explanation that is required. Amicus Br. 27. Because Heckler
recognized that “an agency’s decision not to prosecute or
enforce . . . is a decision generally committed to an agency’s
absolute discretion,” 470 U.S. at 831, Amicus maintains that
no “reference to the [Dickerson/Cooksey] Statement” is
necessary, Amicus Br. 27. “As with other actions taken by the
Commission, dismissal of a matter requires the vote of at least
four Commissioners.” Statement of Policy on Commission
Action in Initial Stage of Enforcement Process, 72 Fed. Reg.
12,545, 12,545–46 (Mar. 16, 2007); see 52 U.S.C. § 30106(c).
Here, before the Commission’s unanimous vote to “close the
file,” several other votes also failed to get the requisite four
votes for the Commission to act, and there is no suggestion that
those votes impart the Commission’s reason for the dismissal
of the soft-money solicitation allegation, Amicus Br. 27–29.
The basis for the dismissal “must be measured by what the
Commission did, not by what it might have done.” SEC v.
Chenery Corp., 318 U.S. 80, 93–94 (1943). So to determine
whether the Commission exercised its prosecutorial discretion
under Heckler in effecting a deadlock dismissal, the court looks
9
not to the label given to one or more of its failed votes but rather
to the statement of reasons of the controlling Commissioners.
See, e.g., Comm’n on Hope, 892 F.3d at 438; New Models, 993
F.3d at 883. The failed Heckler vote is not itself a substitute
for a statement explaining “why [ECU’s] complaint was
dismissed in spite of the [the Commission’s] General Counsel’s
contrary recommendation.” DCCC, 831 F.2d at 1135.
Second, Amicus maintains that although the
Dickerson/Cooksey statement was issued after the
commencement of the underlying litigation and the expiration
of the statutory deadline to challenge the dismissal, 52 U.S.C.
§ 30109(a)(8), it is properly before the court as an explanation
of the controlling Commissioners’ votes. But this is in tension
with Common Cause’s requirement that the controlling
Commissioners’ explanation be issued “at the time when a
deadlock vote results in an order of dismissal.” 842 F.2d at
449. The Commission “cannot sua sponte update the
administrative record when an action is pending in court.”
Comm’n on Hope, 892 F.3d at 438 n.5. This is consonant with
the Supreme Court’s emphasis on the “‘foundational principle
of administrative law’ that judicial review of agency action is
limited to ‘the grounds that the agency invoked when it took
the action.’” DHS v. Regents of the Univ. of Cal., 140 S. Ct.
1891, 1907 (2020) (quoting Michigan v. EPA, 576 U.S. 743,
758 (2015)); see Chenery, 318 U.S. at 94–95. Because the
Dickerson/Cooksey statement is “the only explanation these
Commissioners have ever offered for their decision,” End
Citizens United, 2022 WL 1136062, at *2, it is neither an
elaboration of nor a supplement to a contemporaneously issued
“initial explanation,” Regents, 140 S. Ct. at 1908; see Citizens
to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 419 (1971);
Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490, 539
(1981). Amicus fails to identify any authority accepting a
failed vote as an initial explanation upon which the
10
Commission may later elaborate consistent with the prohibition
on post hoc rationalizations.
Amicus maintains that the non-contemporaneous
statement is exempt from the post hoc prohibition because
Dickerson and Cooksey were the “proper decisionmakers.”
Amicus Br. 35; see Regents, 140 S. Ct. at 1934 (Kavanaugh, J.,
dissenting) (quoting Alpharma, Inc. v. Leavitt, 460 F.3d 1, 6
(D.C. Cir. 2006)). In Alpharma, 460 F.3d 1, this court did
consider whether the agency’s after-the-fact explanation
originated from a “proper decisionmaker,” id. at 7 (alterations
and internal quotation marks omitted). But the agency had
provided an “amplified articulation” of its prior “conclusory”
statement in an effort to “compl[y] with the terms of [the
court’s] remand” for “further explanation.” Id. at 5–6. Here,
the two controlling Commissioners did not proffer an initial
explanation in the administrative record that could be later
“amplified” by the Dickerson/Cooksey statement. Nor was
their non-contemporaneous statement a response to a judicial
order for further explanation; the Commission has failed to
enter an appearance at any stage of this litigation. This court
has made clear that the “limited exception” permitting an
agency to supplement its initial explanation “may not be
employed to offer post-hoc rationalizations where no
rationalization exists.” AT & T Info. Sys., Inc. v. Gen. Servs.
Admin., 810 F.2d 1233, 1236 (D.C. Cir. 1987) (citing Camp v.
Pitts, 411 U.S. 138, 142–143 (1973); Overton Park, 401 U.S.
at 420)).
The Court in Regents held the statement of the agency
head was an “impermissible post hoc rationalization” on a
matter that no one disputed fell within her discretion to decide.
Regents, 140 S. Ct. at 1909. As the Chief Justice explained:
[W]e refer to this as a prohibition on post hoc
rationalizations, not advocate rationalizations,
11
because the problem is the timing, not the speaker.
The functional reasons for requiring
contemporaneous explanations apply with equal force
regardless whether post hoc justifications are raised in
court by those appearing on behalf of the agency or by
agency officials themselves.
Id.Furthermore, the reasoning in Regents undercuts Amicus’s
fallback position that reversing the district court’s judgment
would be “pointless” because Dickerson and Cooksey’s
prosecutorial discretion reason would prevail on remand.
Amicus Br. 20, 40. Observing that “[p]rocedural requirements
can often seem such,” the Court rejected that as a reason to
disregard the post hoc prohibition because its observance
“serve[d] important values of administrative law.” Regents,
140 S. Ct. at 1909. “Considering only contemporaneous
explanations for agency action,” the Court explained,
“promotes ‘agency accountability’ by ensuring that parties and
the public can respond fully and in a timely manner to an
agency’s exercise of authority”; it “also instills confidence that
the reasons given are not simply ‘convenient litigating
positions’”; and it advances “the orderly functioning of the
process of review.” Id. (alteration omitted) (quoting Bowen v.
Am. Hosp. Ass’n, 476 U.S. 610, 643 (1986); Christopher v.
SmithKline Beecham Corp., 567 U.S. 142, 155 (2012);
Chenery, 318 U.S. at 94).
No less are “important values of administrative law,” id.,reflected in the Federal Election Campaign Act’s “statutory
policies,” Common Cause, 842 F.2d at 449, and they counsel
that when the Commission dismisses a complaint as an exercise
of prosecutorial discretion, it timely say so. The Commission’s
failure to provide a contemporaneous explanation for its
dismissal of ECU’s administrative complaint hindered
12
“meaningful judicial review,” id., because the presumptive
subject of judicial review emerged only after ECU filed this
lawsuit and so forced ECU to “chase a moving target,” Regents,
140 S. Ct. at 1909; see Akins, 524 U.S. at 25–26; 52 U.S.C. §
30109(a)(8). Amicus does not suggest that the non-
contemporaneous statement “contributes to reasoned
decisionmaking” by the Commission or provides “an
opportunity for self-correction” in any meaningful sense.
Common Cause, 842 F.2d at 449; see also Orloski, 795 F.2d at
161; Regents, 140 S. Ct. at 1909. It hardly “instills confidence
that the reasons given are not simply convenient litigating
positions” for the Commission to withhold the basis of its
decision unless and until a lawsuit is filed and thereafter invoke
prosecutorial discretion when its silence is challenged. Id.(internal quotation marks omitted); see Dep’t of Com. v. New
York, 139 S. Ct. 2551, 2575–76 (2019). Amicus has not
pointed to a single case in which the court has sustained over
the complainant’s challenge a statement of reasons belatedly
filed in derogation of Common Cause’s principles. Amicus Br.
at 23–24. So proceeding not only cuts off “agency
accountability” by keeping the complainant and interested
members of the public in the dark, Regents, 140 S. Ct. at 1909(quoting Bowen, 476 U.S. at 643), it also tends to diminish
“predictability . . . for future litigants,” Common Cause, 842
F.2d at 449. The district court summarily dismissed these
considerations, apparently understanding the Common Cause
line of authority to require the Commission to offer a
contemporaneous explanation of its decision only for some
deadlock dismissals. End Citizens United, 2022 WL 1136062,
at *2–3. None of the cited cases, id. at *3, sanction selective
compliance.
The Supreme Court determined that remand was
appropriate in Regents notwithstanding the agency’s
representation that there was “no basis for concluding that [its]
13
position might change,” Reply Br. for Pet’rs, 2019 WL
5589031, at *7, and that the matter would be considered by the
“same agency personnel” on remand, Regents, 140 S. Ct. at
1934 (Kavanaugh, J., dissenting). Here the Commission has
not defended its decision in court, much less the reasoning in
the Dickerson/Cooksey statement. Moreover, the
Commission’s composition has apparently changed since its
dismissal of ECU’s administrative complaint, so that different
“agency personnel” would consider the matter on remand. Oral
Arg. Recording 14:30-15:25 (Mar. 10, 2023, Appellant’s
Counsel). In any event, the Supreme Court has contemplated
that “a reviewing court . . . will set aside” Commission action
taken contrary to law and “remand the case,” even though the
Commission might later “reach the same result exercising its
discretionary powers lawfully.” Akins, 524 U.S. at 25 (citing
Chenery, 318 U.S. 80).
Accordingly, the court reverses the district court’s
judgment and remands the case with instructions to remand to
the Commission for further action.