Texans for Free Enterprise v. Texas Ethics Commission

Case: 13-50014 Document: 00512408562 Page: 1 Date Filed: 10/16/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 16, 2013
No. 13-50014
Lyle W. Cayce
Clerk
TEXANS FOR FREE ENTERPRISE,
Plaintiff–Appellee,
versus
TEXAS ETHICS COMMISSION;
DAVID A. REISMAN, in His Official Capacity as
Executive Director of the Texas Ethics Commission,
Defendants–Appellants.
Appeal from the United States District Court
for the Western District of Texas
Before SMITH, DENNIS, and HIGGINSON, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Texans for Free Enterprise (“TFE”) is a political committee formed and
incorporated to advocate for candidates in Texas elections. According to its
bylaws and a letter it sent to the Texas Ethics Commission, TFE acts exclusively
as a “direct campaign expenditure only committee,” meaning that it does not
Case: 13-50014 Document: 00512408562 Page: 2 Date Filed: 10/16/2013
No. 13-50014
make any contributions to candidates or their official committees. Rather, it
spends funds only to support its own speech in favor of or against candidates. To
engage in that advocacy, it solicits contributions from individuals and corpora-
tions.
The Texas Election Code prohibits corporations from “mak[ing] a[n unau-
thorized] political contribution.” TEX. ELEC. CODE § 253.094(a). The inverse is
also prohibited: An individual “may not knowingly accept a political contribu-
tion the person knows to have been made in violation of this chapter.” Id.
§ 253.003(b). A “[p]olitical contribution” includes campaign contributions, which
are defined as “a direct or indirect transfer of money, goods, services, or any
other thing of value” made to a candidate or political committee “in connection
with a campaign for elective office.” Id. § 251.001(2), (3), (5) (emphasis added).
The ban on contributions applies regardless of whether the political committee
uses that money to make contributions to candidates or makes only direct cam-
paign expenditures.
Fearing that its acceptance of funds from corporations would violate Texas
law, TFE sued the Texas Ethics Commission and its Executive Director (jointly,
“the Commission”) seeking an injunction and a declaration that the relevant
portions of the Election Code violate the First Amendment as applied to TFE. In
December 2012, despite the 2012 elections’ having been concluded, the district
court preliminarily enjoined the enforcement of §§ 253.094(a) and 253.003(b)
against TFE, and the Commission appealed the injunction. Because the chal-
lenged provisions conflict with the First Amendment as applied to TFE, and
because the equities are otherwise in favor of preliminary injunctive relief, we
affirm.
I.
A preliminary injunction is an “extraordinary remedy” that should be
2
Case: 13-50014 Document: 00512408562 Page: 3 Date Filed: 10/16/2013
No. 13-50014
granted only if the movant establishes
(1) a substantial likelihood of success on the merits, (2) a substantial
threat of irreparable injury if the injunction is not issued, (3) that
the threatened injury if the injunction is denied outweighs any
harm that will result if the injunction is granted, and (4) that the
grant of an injunction will not disserve the public interest.
Byrum v. Landreth, 566 F.3d 442, 445 (5th Cir. 2009) (quoting Speaks v. Kruse,
445 F.3d 396, 399–400 (5th Cir. 2006)). We review a preliminary injunction for
abuse of discretion, reviewing findings of fact for clear error and conclusions of
law de novo. Janvey v. Alguire, 647 F.3d 585, 595 (5th Cir. 2011).
II.
We first consider whether TFE has shown a “substantial likelihood of suc-
cess on the merits.” TFE argues that the Texas Election Code violates its right
to free speech by prohibiting it from accepting funds from corporations. Texas
contends that contributions to political committees are not protected under per-
tinent Supreme Court caselaw and that TFE is therefore unlikely to succeed on
the merits.
A.
In Citizens United v. Federal Election Commission (“FEC”), 558 U.S. 310(2010), the Court addressed a ban on “independent expenditures” by corpora-
tions. A corporation, Citizens United, produced a political film on then-Senator
Hillary Clinton, who was running for President. Under then-applicable federal
law, corporations were prohibited from making independent expenditures (viz.,
those not approved by or coordinated with a candidate) that advocated for or
against a candidate. Id. at 319. Citizens United challenged the prohibition,
which the Court ultimately held to be inconsistent with the First Amendment.
Id. at 361.
3
Case: 13-50014 Document: 00512408562 Page: 4 Date Filed: 10/16/2013
No. 13-50014
The Court emphasized that the only relevant governmental interest in
restricting political speech is to avoid corruption or the appearance thereof. See
id. at 365 (overruling Austin v. Mich. Chamber of Commerce, 494 U.S. 652, 660
(1990), which had found a compelling government interest in preventing corpora-
tions from “unfairly influenc[ing] elections”). “[I]ndependent expenditures,
including those made by corporations, do not give rise to corruption or the
appearance of corruption” because spending without “prearrangement and co-
ordination” with a candidate “alleviates the danger that expenditures will be
given a quid pro quo for improper commitments from the candidate.” Id. at 357
(citing Buckley v. Valeo, 424 U.S. 1, 47 (1976)). Hence, the Court held unconsti-
tutional the bans on independent expenditures by corporations.
Instead of banning Citizens United from producing its movie, the Texas
code provisions would instead have forbidden Citizens United from giving money
to another political group so that that group would produce and distribute the
film. And the statute would have prohibited Citizens United from accepting
donations from other corporations so that Citizens United could produce the film
during the election season. This case, then, is one step removed from the facts
of Citizens United, and we must decide the latter’s applicability.
We tread a well-worn path. The Seventh,1 Ninth,2 and District of Colum-
1
See Wis. Right to Life State Political Action Comm. v. Barland, 664 F.3d 139, 153, 155
(7th Cir. 2011) (holding unconstitutional Wisconsin’s $10,000 aggregate annual contribution
limit as applied to organizations that engage only in independent expenditures for political
speech, after noting that “[t]he threat of quid pro quo corruption does not arise when indepen-
dent groups spend money on political speech”).
2
See Long Beach Area Chamber of Commerce v. City of Long Beach, 603 F.3d 684, 696
(9th Cir. 2010) (stating that“the need for contribution limitations to combat corruption or the
appearance thereof tends to decrease as the link between the candidate and the regulated
entity becomes more attenuated”), abrogated in part on other grounds, Farris v. Seabrook, 677
F.3d 858, 865 (9th Cir. 2012); Thalheimer v. City of San Diego, 645 F.3d 1109, 1117–21 (9th
Cir. 2011).
4
Case: 13-50014 Document: 00512408562 Page: 5 Date Filed: 10/16/2013
No. 13-50014
bia Circuits3 have considered and held unconstitutional bans or limits on corpor-
ate contributions to independent political committees. Indeed, every federal
court that has considered the implications of Citizens United on independent
groups like TFE has been in agreement: There is no difference in principleSSat
least where the only asserted state interest is in preventing apparent or actual
corruptionSSbetween banning an organization such as TFE from engaging in
advocacy and banning it from seeking funds to engage in that advocacy (or in
giving funds to other organizations to allow them to engage in advocacy on its
behalf).4
We adopt the reasoning of our sister courts and hold that the challenged
law is incompatible with the First Amendment. Like the other circuits, we are
necessarily agnostic as to whether the strict scrutiny of Citizens United or the
intermediate scrutiny of McConnell v. FEC, 540 U.S. 93, 134–35 (2003), applies.
Though no doubt our reasoning would suggest that this case is—in principle—
indistinguishable from Citizens United,5 our judgment would be the same under
either standard, so we do not need to announce the appropriate test. See, e.g.,
SpeechNow.org, 599 F.3d at 696.
3
See SpeechNow.org v. FEC, 599 F.3d 686, 694-95 (D.C. Cir. 2010) (en banc) (“In light
of the Court’s holding as a matter of law that independent expenditures do not corrupt or cre-
ate the appearance of quid pro quo corruption, contributions to groups that make only inde-
pendent expenditures also cannot corrupt or create the appearance of corruption[,]” and so
“government has no anti-corruption interest in limiting contributions to an independent expen-
diture group.”).
4
See also Vt. Right to Life Comm., Inc. v. Sorrell, 875 F. Supp. 2d 376, 404 (D. Vt.
2012); Mich. Chamber of Commerce v. Land, 725 F. Supp. 2d 665, 697 (W.D. Mich. 2010);
Republican Party of N.M. v. King, 850 F. Supp. 2d 1206, 1215 (D.N.M. 2012).
5
See J. Robert Abraham, Saving Buckley: Creating A Stable Campaign Finance Frame-
work, 110 COLUM. L. REV. 1078, 1121–22 (2010) (arguing that strict scrutiny is the appropriate
standard of review for donations to independent political advocacy groups).
5
Case: 13-50014 Document: 00512408562 Page: 6 Date Filed: 10/16/2013
No. 13-50014
B.
The Commission urges that these circuits are mistaken in light of Califor-
nia Medical Association v. FEC, 453 U.S. 182, 201 (1981) (“Cal-Med”), in which
a four-Justice plurality opined that contribution limitations on multi-candidate
political committees are like contribution limits to a candidate’s official cam-
paign committee and are therefore permissible. Cal-Med is not helpful to the
Commission, however.
First, and most importantly, Cal-Med is immediately distinguishable on
its facts. It involved contributions to multi-candidate political action committees
(“PACs”) that, by definition, had to make direct monetary contributions to five
or more federal candidates. Thus, Cal-Med did not involve the kind of indepen-
dent expenditures that TFE wishes to make. Secondly, Cal-Med is only a plural-
ity opinion. Justice Blackmun, the fifth member of the majority, would have
held (had the facts presented themselves) that contributions to political commit-
tees that made only independent expenditures could not be limited.6
The Commission argues that corporations have plenty of other opportuni-
ties for speech—they may speak themselves or create their own independent
6
Cal-Med, 453 U.S. at 203 (Blackmun, J., concurring) (“I stress, however, that this
analysis suggests that a different result would follow if § 441a(a)(1)(C) were applied to con-
tributions to a political committee established for the purpose of making independent expendi-
tures, rather than contributions to candidates.”). Contra Emily’s List v. FEC, 581 F.3d 1, 25
(D.C. Cir. 2009) (Brown, J., concurring) (concluding that Justice Blackmun’s concurrence in
Cal-Med would allow limits on contributions to political committees). Judge Brown’s concur-
rence, however, does not appear to be an accurate restatement of the law in the D.C. Circuit
in the wake of SpeechNow.org.
The Commission directs our attention to Judge Michael’s dissent in N.C. Right to Life,
Inc. v. Leake, 525 F.3d 274, 332 (4th Cir. 2008), in which he contended that Justice Blackmun’s
concurrence coupled with the four-member plurality meant that contribution limitations on
independent committees are permissible. That view is unpersuasive. Judge Michael’s dissent
relies, in part, on interests apart from the anti-corruption interest identified as the only per-
missible governmental interest in Citizens United. That is understandable, though, because
the dissent was issued before the Citizens United Court struck down the relevant parts of
McConnell and Austin on which Judge Michael had relied.
6
Case: 13-50014 Document: 00512408562 Page: 7 Date Filed: 10/16/2013
No. 13-50014
PACs. The Supreme Court, however, has expressly rejected that line of reason-
ing, see Citizens United, 558 U.S. at 337, as do we.
III.
For the reasons we have explained, TFE has shown a likelihood of success
on the merits, but that is only a necessary, not a sufficient, condition for a pre-
liminary injunction. It must have also demonstrated that there is a substantial
threat of irreparable injury outweighing the harms of granting the preliminary
injunction and that the grant will not disserve the public interest.
The Commission contends there was no such showing because TFE’s pri-
mary concern was being able to collect contributions and make expenditures
during the 2012 election season, which has since passed. We have repeatedly
held, however, that “[t]he ‘loss of First Amendment freedoms for even minimal
periods of time constitutes irreparable injury justifying the grant of a prelimi-
nary injunction.’”7 TFE’s ability to speak is undoubtedly limited when it cannot
raise money to pay for speech. Consistent with our precedents, then, TFE has
established irreparable harm.
The Commission is not able to articulate the harm it will suffer if enjoined
from enforcing the relevant code provisions. It notes the same vague, unsup-
ported anti-corruption grounds, which we have already explained to be without
merit. To the contrary, “injunctions protecting First Amendment freedoms are
always in the public interest.” Christian Legal Soc’y v. Walker, 453 F.3d 853,
859 (7th Cir. 2006).
Because TFE is likely to succeed on the merits, and because the manifest
7
Palmer ex rel. Palmer v. Waxahachie Indep. Sch. Dist., 579 F.3d 502, 506 (5th Cir.
2009) (quoting Deerfield Med. Ctr. v. City of Deerfield Beach, 661 F.2d 328, 338 (Former 5th
Cir. Nov. 1981)); see also Elrod v. Burns, 427 U.S. 347, 373 (1976) (“The loss of First Amend-
ment freedoms, for even minimal periods of time, unquestionably constitutes irreparable
injury.”).
7
Case: 13-50014 Document: 00512408562 Page: 8 Date Filed: 10/16/2013
No. 13-50014
equities weigh in favor of equitable relief, the district court did not abuse its dis-
cretion by issuing a preliminary injunction. The order granting the injunction
is AFFIRMED.
8