Patrick Rosenstiel v. Douglas Sillers, etc

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No. 95-1885
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Patrick Rosenstiel; Christopher *
Longley, *
*
Plaintiffs-Appellants,* Appeal from the United States
* District Court for the
v. * District of Minnesota.
*
Carolyn Rodriguez, in her *
capacity as Chair of the Ethical*
Practices Board, or her *
successor, *
*
Defendant-Appellee. *
_____________
Submitted: November 15, 1995
Filed: December 11, 1996
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Before HANSEN, LAY, and MURPHY, Circuit Judges.
_____________
HANSEN, Circuit Judge.
Patrick Rosenstiel and Christopher Longley appeal a final
judgment of the district court1 upholding the constitutionality of
Minnesota's campaign finance statutes. Rosenstiel and Longley seek
a declaration that several provisions of the law are
unconstitutional because they allegedly coerce a candidate into
participating in Minnesota's public campaign financing program,
thereby burdening that candidate's First Amendment rights. They
further maintain that the provisions are constitutionally infirm
1
The Honorable Richard H. Kyle, United States District Judge
for the District of Minnesota.
because they do not survive strict scrutiny. Finally, they contend
that these provisions impermissibly discriminate against
challengers. After conducting a careful review, including an
amendment to the statute which the Minnesota legislature enacted
after we heard oral arguments, we affirm.
I.
The State of Minnesota (State) has enacted a campaign
financing system which permits candidates for certain elected state
offices to receive a public subsidy in exchange for the candidate's
agreement to adhere to specified limits on campaign expenditures.
Minn. Stat. Ann. §§ 10A.25 (10)(a), 10A.322(1)(a) (West Supp.
1997). A candidate must sign an agreement to be bound to the
applicable campaign expenditure limits in order to receive the
public subsidy. Id. § 10A.322(1)(a). The participating candidate
must also independently raise a certain amount ($35,000 for
governor down to $1,500 for state representative) in contributions
in order to be eligible for the public subsidy. Id. § 10A.323. A
Minnesota taxpayer can claim a full refund of up to $50 per year
(or $100 for a couple filing jointly) for a campaign contribution
made to a publicly funded candidate; however, no refund is
permitted for a campaign contribution made to a candidate who is
not publicly funded. Id. § 290.06(23) (hereinafter referred to as
"contribution refund").2
The expenditure limitations for each public office to which
the State's campaign financing scheme applies are delineated in
2
To clarify, however, this is the total dollar amount which
may be claimed as a refund in a calendar year for a contribution
or contributions made to candidates participating in the State's
scheme. In other words, although an individual may have made
contributions to participating candidates in a calendar year
totaling $500, that individual may only claim a $50 refund for
that year.
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section 10A.25(2)(a), and range from $1,626,691 for a gubernatorial
candidate down to $20,335 for a candidate for state representative.
The amount of public subsidy available to a candidate who is
running for an office to which the State's financing scheme applies
is determined by way of formula. Id. § 10A.31(5). However, the
amount of public subsidy the candidate receives may not exceed 50
percent of the expenditure limits applicable to the office which
the candidate seeks. Id. § 10A.31(7). A candidate who has agreed
to adhere to the expenditure limits but later accepts campaign
contributions or makes campaign expenditures in excess of those
limits is subject to a civil fine of up to four times the amount by
which the contribution or expenditure exceeded the limit. Id.
§ 10A.28(1).
Prior to an amendment in April 1996, the above expenditure
limits were only applicable to a candidate if the candidate's
major-party opponent likewise agreed to be bound by the expenditure
limits. Id. § 10A.25(10) (West Supp. 1996) (repealed). Thus, when
a publicly financed candidate was opposed by a nonparticipating
major party candidate, the publicly financed candidate was no
longer required to adhere to the specified expenditure limits for
his office but was still eligible to receive the public subsidy.
Id. § 10A.25(10)(b)(i)-(ii) (West Supp. 1996) (repealed)
(hereinafter referred to as "expenditure limitation waiver").
In 1994, Appellants Rosenstiel and Longley (Appellants) were
candidates for different seats in the Minnesota House of
Representatives. Both enrolled in the State's public campaign
funding program. They later filed this action on August 19, 1994,
alleging that the expenditure limitation waiver and the
contribution refund violated their First Amendment rights. Both
claimed by way of affidavit that they believed they could privately
raise campaign funds in excess of the law's expenditure limits
which they had agreed to observe. They subsequently moved for a
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preliminary injunction, seeking to enjoin the enforcement of these
provisions. The district court denied injunctive relief but noted
that the Appellants had proffered sufficient evidence to
demonstrate that they were likely to prevail on their claim that
the contribution refund was unconstitutional.
The Appellants later moved for summary judgment. The district
court held that the expenditure limitation waiver and the
contribution refund passed constitutional muster, denied
Appellants' motion for summary judgment, and accordingly dismissed
their complaint.3 Rosenstiel and Longley appealed.4
After this case was submitted to us, an amendment passed by
the Minnesota legislature altering the operation of the expenditure
limitation waiver became effective. See Act of April 11, 1996, ch.
459 (S.F. 840), amending Minn. Stat. Ann. § 10A.25(10) (West. Supp.
1996). Under the amendment, a candidate participating in the
State's public financing of campaigns is not released from the
expenditure limitation simply by virtue of being opposed by a
3
Additionally, the district court declared unconstitutional
an additional provision the Appellants challenged, Minn. Stat.
§ 10A.25(10)(b)(iii) (West Supp. 1996). This provision provided
that when a publicly funded candidate faces a major party
candidate who does not enroll in the State's public funding
program, the publicly funded candidate also is eligible to
receive all or part of the subsidy which was set aside for his
opponent. Although the Appellants repeatedly attack the
constitutionality of this provision in their brief, the State has
not appealed the district court's ruling that this provision is
unconstitutional. Accordingly, its validity is not before us,
and we decline to discuss it further, except to observe that the
Act of April 11, 1996, repealed the provision.
4
Although neither Appellant was successful in his quest for
public office, both claim that they harbor future political
aspirations and intend to run for state office. Thus, this case
is not moot because it involves issues which are "capable of
repetition, yet evading review." Moore v. Ogilvie, 394 U.S. 814,
816 (1969) (internal quotations omitted); see also Whitton v.
City of Gladstone, 54 F.3d 1400, 1402 n.5 (8th Cir. 1995) (same).
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nonparticipating, major-party candidate. Rather, when a
participating candidate squares off against any nonparticipating
candidate, the participant is released from the expenditure limit
when the opponent receives contributions or makes expenditures
equalling 20 percent of the applicable limit prior to 10 days
before the primary election, and contributions or expenditures
equalling 50 percent of the applicable limit thereafter. Minn.
Stat. Ann. § 10A.25(10)(a)(1)-(2) (West. Supp. 1997).
The amendment thus makes several changes to the mechanics of
the expenditure limitation waiver. First, the expenditure
limitation waiver comes into play when any nonparticipating
opponent engages in the triggering event, i.e., receives
contributions or makes expenditures in excess of the specified
threshold, whereas before, the triggering act had to be done by a
nonparticipating major-party opponent. Second, and more
importantly, the triggering event itself occurs when any
nonparticipating opponent reaches the specified threshold in
campaign contributions or expenditures. Previously, the triggering
event was simply the major party opponent's decision not to
participate in the State's public campaign financing. In other
words, the amendment eschews an automatic waiver to participating
candidates at the moment their major party nonparticipating
opponent declines to enroll, in favor of a wait-and-see approach
based on actual contributions to or expenditures made by any
nonparticipating opponent.
At the direction of this court, the parties submitted letter
briefs concerning the effect, if any, the amendment had on the
issues presented in this case, and whether remand to the district
court for further proceedings was necessary. Both sides
strenuously contend that a remand is unnecessary. Concerning the
merits of the amendment, the Appellants assail its validity
primarily on the same grounds they contested the former language,
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i.e, that it coerces candidates to participate, and it is not
narrowly tailored to further a compelling governmental interest.
The State, on the other hand, contends that, even assuming the
prior expenditure limitation waiver coerced compliance, the amended
statute is not coercive because the nonparticipating candidate
solely determines whether to trigger the expenditure limitation
waiver for the publicly-financed candidate by receiving
contributions or making expenditures in excess of the applicable
threshold. Alternatively, the State maintains that, like the
former language, the amendment is narrowly tailored to serve a
compelling governmental interest.
II.
It is clear that we must review the judgment appealed from in
the light of the Minnesota statute as it now stands, not as it
stood when the judgment below was entered. Fusari v. Steinberg,
419 U.S. 379, 387 (1975); Diffenderfer v. Central Baptist Church,
404 U.S. 412, 414 (1972). Whether the amendment so changes the
nature of the dispute before us so as to make the appeal moot is a
close question.
The Supreme Court has held that where a new statute "is
sufficiently similar to the repealed [statute] that it is
permissible to say that the challenged conduct continues" the
controversy is not mooted by the change, and a federal court
continues to have jurisdiction. Northeastern Fla. Chapter v. City
of Jacksonville, 508 U.S. 656, 662 n.3 (1993). Further, if the new
statute disadvantages the complainants in the same fundamental way
the repealed statute did, the amendment does not divest the court
of the power to decide the case. Id. at 662. Here, the amendment
relates only to one subdivision of the whole larger statutory
scheme assailed by the Appellants' complaint. It repealed only one
of the five specific sections plaintiffs attacked and replaced it
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with language that still permits a waiver of the expenditure
limitations while remaining eligible for the public subsidy.
Essentially the amendment changes the triggering event necessary to
bring the spending limits waiver into play and, accordingly, the
point in the campaign when the spending limits are removed from a
participating candidate. These changes are not insignificant at
least as far as the actual operation of the statute is concerned.
On the other hand, with respect to its effect, the amended statute
still impairs the Appellants in the very same way that they claimed
the prior section did. In the Appellants' view, the amendment
broadens the coverage of the law (by applying it to any opponent of
a participating candidate rather than just a major-party opponent)
and is more, not less, coercive than the repealed subdivision.
(Appellants' Letter Br. at 2, June 14, 1996.) We believe that the
fundamental nature of the challenged statute continues unchanged.
The challenged conduct (the waiver of the spending limits)
continues to exist under the new language of § 10A.25(10). The
public subsidy and the tax refund provisions are unchanged. We do
not believe that the controversy upon which the district court
rendered its judgment is substantially different from the one
presented to us by the amended statute. Accordingly, we hold the
case is not moot.
III.
Because the Appellants' claims require us to evaluate the
constitutionality of the challenged provisions, our review is de
novo. Falls v. Nesbitt, 966 F.2d 375, 377 (8th Cir. 1992).
A.
The Appellants contend that the expenditure limitation waiver
and the contribution refund cause the State's campaign financing
system to infringe upon the First Amendment rights of the
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candidates for political offices to which the plan applies. "When
considering whether a campaign finance law unconstitutionally
infringes freedom of speech, this Court's task is to decide whether
the provision in question actually `burdens the exercise of
political speech and, if it does, whether it is narrowly tailored
to serve a compelling state interest.'" Shrink Mo. Gov't PAC v.
Maupin, 71 F.3d 1422, 1424 (8th Cir. 1995) (quoting Austin v.
Michigan Chamber of Commerce, 494 U.S. 652, 657 (1990)), cert.
denied, 116 S. Ct. 2579 (1996). Our first task, then, is to
determine whether the challenged provisions impose any burden at
all on the First Amendment rights of candidates.
In Buckley v. Valeo, 424 U.S. 1, 85-109 (1976), the Supreme
Court held that while the imposition of a mandatory limit on
campaign expenditures violated a candidate's First Amendment
rights, a voluntary system under which candidates agreed to limit
campaign expenditures in exchange for public financing of their
campaigns was constitutionally permissible. Specifically with
regard to this point the Court stated:
Congress may engage in public financing of election
campaigns and may condition acceptance of public funds on
an agreement by the candidate to abide by specified
expenditure limitations. Just as a candidate may
voluntarily limit the size of the contributions he
chooses to accept, he may decide to forgo private
fundraising and accept public funding.
Id. at 57 n.65. See also Colorado Republican Fed. Campaign Comm.
v. FEC, 116 S. Ct. 2309 (1996) (plurality opinion) (political party
independent expenditure provision inconsistent with First
Amendment).
Such a system of public financing of political campaigns was
expressly approved in Republican Nat'l Comm. v. FEC, 487 F. Supp.
280, 283-86 (S.D.N.Y.) (three-judge court), aff'd mem., 445 U.S.
955 (1980) (RNC). In RNC, the plaintiffs challenged a federal law
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which provided $20,000,000 in public funding to presidential
candidates who agreed to limit campaign expenditures to that
amount. Id. at 283. The court held that this scheme did not
burden a candidate's First Amendment rights because it simply
provided an additional option for accumulating campaign funds. Id.
at 285. "Each candidate remains free under the Fund Act, instead
of opting for public funding, to attempt through private funding to
raise more than the `$20,000,000 plus' public funding limit and to
spend any amount of funds raised by private funding, without any
ceiling." Id. at 283-84. The Court observed that each candidate
would presumably select the method for raising campaign funds that
he thought to be most advantageous. Id. at 285. Accordingly, the
court ruled that this choice-increasing framework imposed no burden
on a candidate's First Amendment rights. Id.
The Appellants contend that the State's public financing
scheme is distinguishable from that referred to in Buckley and
expressly approved in RNC. Specifically, the Appellants argue that
the expenditure limitation waiver, Minn. Stat. Ann. § 10A.25(10),
and the contribution refund, Minn. Stat. Ann. § 290.06(23), are
coercive because they create such a large disparity between the
benefits provided to publicly financed candidates and the
corresponding restrictions imposed on those candidates. Stated
otherwise, the Appellants contend that these provisions make the
public financing option so attractive that they effectively compel
candidates to enroll in the State's financing plan. This compelled
participation, continue the Appellants, is a burden on their First
Amendment rights. The State counters by arguing that the
expenditure limitation waiver and the contribution refund are
simply additional inducements provided to encourage maximum
candidate participation in its public financing of political
campaigns and that the inclusion of these inducements gives the
campaign financing plan a relative balance in terms of benefits
provided to participating candidates and the restrictions imposed
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on those candidates. Because participation is truly voluntary, the
State submits, the Appellants' argument that their First Amendment
rights are burdened is without merit. We agree with the State.
The First Circuit addressed similar arguments concerning a
Rhode Island financing scheme in Vote Choice, Inc. v. DiStefano, 4
F.3d 26 (1st Cir. 1993). In Vote Choice, in an effort to make its
public financing scheme for gubernatorial candidates more
attractive, Rhode Island permitted participating candidates, in
addition to receiving a public subsidy, to receive campaign
contributions from individuals or PACs of up to $2,000 per year,
while candidates who eschewed public financing were allowed to
receive only $1,000 per year from those donors (what the Vote
Choice court referred to as a "cap gap"). Id. at 30.5 The Vote
Choice plaintiff/candidate claimed that the cap gap caused Rhode
Island's scheme to become coercive, thereby burdening a candidate's
First Amendment rights. Like the Appellants here, the essence of
the Vote Choice plaintiff/candidate's claim was that by providing
incentives beyond a cash subsidy to publicly financed candidates,
Rhode Island's scheme was so benefit-laden that gubernatorial
candidates were really offered no alternative but to enroll. Id.
at 38.
The Vote Choice court disagreed. The court noted that there
was nothing inherently penal about the cap gap and accordingly
5
Rhode Island's scheme also possessed several other features
which are similar or identical to the State's scheme before us.
For candidates that opted for public financing, Rhode Island
matched contributions the candidate raised through private means
up to a certain specified amount. Id. at 30. Additionally, a
publicly financed candidate was permitted to exceed the
expenditure limits and retain the public subsidy if opposed by a
privately financed candidate who exceeded the expenditure limit
in either campaign contributions or expenditures. Id. at 30 n.5.
However, the Vote Choice plaintiff/candidate did not challenge
either of these aspects of Rhode Island's scheme and thus the
court did not assess their validity.
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rejected the plaintiff/candidate's contention that Rhode Island's
scheme was per se coercive because it sought to punish non-
participants rather than simply reward participants. Id. The
court then ruled that the enactment of the cap gap did not make the
incentives in Rhode Island's scheme so strong that candidates were
coerced into participating; the court noted that, with the cap gap,
the scheme achieved a relative balance between advantages afforded
to, and restrictions placed on, publicly financed candidates. Id.
at 38-39. In sum, Rhode Island created a campaign financing option
which increased a candidate's choice concerning methods for raising
campaign funds, participation in this program was truly voluntary,
and thus the plaintiff-candidate's claim of coerced participation
was without merit. Id. at 39. See also Wilkinson v. Jones, 876 F.
Supp. 916, 926-28 (W.D. Ky. 1995) (Kentucky scheme permitting
publicly financed candidate to disregard expenditure limit and
continue receiving state matching funds when privately financed
opponent exceeded that amount was not coercive and thus imposed no
burden on candidate's First Amendment rights).
We find the analysis from Vote Choice provides helpful
guidance in resolving the Appellant's claim that Minnesota's scheme
is coercive. Like the Rhode Island public financing scheme
challenged in Vote Choice, the State's scheme in this case provides
certain inducements -- the expenditure limitation waiver and the
contribution refund in addition to a public cash subsidy -- in
order to encourage maximum candidate participation. These
inducements, however, do not per se render the State's scheme
coercive because they are not inherently penal.
Further, the inclusion of these additional inducements in the
State's public financing package does not cause the package to
become so benefit-laden as to create such a large disparity between
benefits and restrictions that candidates are coerced to publicly
finance their campaigns. Rather, by including these additional
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inducements, the State's scheme achieves a relative balance between
the benefits provided to publicly financed candidates and the
restrictions the candidates must accept. The expenditure
limitation waiver, which permits a publicly financed candidate to
exceed the expenditure limits while retaining the public subsidy
when opposed by a nonparticipating candidate who has spent or
received contributions beyond the triggering amounts spelled out in
the statute is simply an attempt by the State to avert a powerful
disincentive for participation in its public financing scheme:
namely, a concern of being grossly outspent by a privately financed
opponent with no expenditure limit.
We believe the statute is not coercive because it permits the
nonparticipating candidate to raise a certain measure of funds
before triggering the expenditure limitation waiver for his
participating opponent. Rather than releasing the participating
candidate from the expenditure limits at the outset, the statute as
it now stands permits the nonparticipating candidate to control
whether and when the participating opponent will be freed from the
limits. Thus, in a sense, the amendment works in favor of, rather
than to the detriment of, the nonparticipating candidate. See
Wilkinson, 876 F. Supp. at 927 (rejecting claim of coercion to
enroll in state public financing scheme because privately-financed
candidate completely controlled the triggering event by exceeding
the threshold in campaign funds or expenditures).6 Similarly, the
6
We point out, only as an illustration of how the statute
actually works to the benefit of nonparticipants and thus cannot
be construed to "coerce" enrollment, that it is possible that
under certain circumstances the amendment could be employed to
work to the substantial disadvantage of participants. This
disadvantage arises from the temporal impediment a participating
candidate faces before he is released from the expenditure
limits; that is, he is only released when his opponent triggers
the waiver. Specifically, if a nonparticipating candidate waited
until the final days before an election to exceed the triggering
limits, and then waged an all-out campaign blitz, the publicly-
financed candidate, who is not released from the limits until his
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contribution refund, which permits a Minnesota citizen to obtain a
refund of up to a total of $50 per year for contributions made to
publicly financed candidates, is simply an additional public
subsidy provided to participating candidates. See Buckley, 424
U.S. at 107 n.146; Regan v. Taxation with Representation of
Washington, 461 U.S. 540, 544 (1983) (tax credits and deductibility
for contributions are a form of government subsidy to the entity or
activity to which the contributions are made). While the scheme's
benefit-restriction ratio is not, to borrow from the Vote Choice
court, in "perfect equipoise," see 4 F.3d at 39, we are convinced
that it achieves the rough proportionality necessary to entice, but
not coerce, candidate participation.
The Appellants argue that the legislative history underlying
the State's public financing system and a prior statement of this
court illustrate that the scheme was devised to compel candidate
participation. Specifically, Senator John Marty of Roseville,
Minnesota, a chief proponent of the public financing scheme, stated
that it was to operate "as a real heavy club," ostensibly meaning
to force candidate participation. Weber v. Heaney, 995 F.2d 872,
877 n.7 (8th Cir. 1993) (quoting Minnesota Congressional Campaign
Reform Act, 1990: Hearing on S. 577 before the Subcommittee on
Elections and Ethics, 76th Legis. (Mar. 1, 1989) (statement of
Senator Marty)). Further, in Weber, after holding that the
Minnesota Congressional Campaign Reform Act (MCCRA) was preempted
by the Federal Election Campaign Act (FECA), we examined Senator
opponent triggers the waiver, potentially would not have
sufficient time to raise enough campaign funds to effectively
counter his opponent's campaign blitz. Obviously, such a
sequence of events could be particularly harmful to the publicly-
financed candidate's chances of electoral success. In any event,
we simply offer this example to illustrate that because the
privately-financed candidate alone determines whether the
publicly-financed candidate will be permitted to exceed the
limits, it cannot seriously be argued that the State's scheme
coerces candidate participation.
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Marty's statement in a footnote, noting that it was debatable
whether participation in the State's public funding scheme was
truly voluntary. 995 F.2d 872, 877 n.7 (8th Cir. 1993).
Specifically, we stated:
We also question whether the limitations are truly
voluntary. Contributors may receive a refund from the
state when they contribute to a candidate who has agreed
to limit campaign expenditures, which will enhance that
candidate's fund raising ability. If a candidate agrees
to limit expenditures and then does not abide by the
limits, the candidate suffers substantial penalties.
Additionally, candidates who do not agree to be bound by
the spending limits are penalized because their opponents
who have agreed to the limits will still receive public
financing, but will not be bound by their agreement. The
Minnesota law is not a carrot enticing candidates to
comply; as a proponent of the bill boasted, it is "a real
heavy club." Minnesota Congressional Campaign Reform
Act, 1990: Hearing on S. 577 before the Subcommittee on
Elections and Ethics, 76th Legis. (Mar. 1, 1989)
(statement of Senator Marty).
Id. The Appellants contend that, based on the above quotation, we
are bound by principles of stare decisis to hold that the
challenged provisions here are coercive and, in any event, Senator
Marty's statement is definitive proof that the Minnesota
legislature sought to compel candidate participation.
We believe that the Appellants lean too hard on Senator
Marty's statement as well as the footnote in Weber. Significantly,
it appears that Senator Marty's statements were made in the 1990
Minnesota legislative session during debate surrounding the MCCRA,
not with respect to the provisions at issue in this case; the
Appellants have made no showing, other than a bare assertion, that
the statements were intended to apply to the provisions they
challenge here. Furthermore, an isolated statement by an
individual legislator is not a sufficient basis from which to infer
the intent of that entire legislative body: in the absence of a
showing that a more significant segment of the Minnesota
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legislature shared Senator Marty's views, we are not inclined to
conclude that his statements accurately reflect the legislative
purpose underlying the State's public financing scheme. See United
States v. O'Brien, 391 U.S. 367, 383-84 (1968) (when determining
constitutionality of a statute, it would be improper to decide its
fate "on the basis of what fewer than a handful of Congressmen said
about it.").
With respect to footnote 7 in Weber, we prefaced our comments
with "We also question . . .," clearly illustrating that our
subsequent statements were little more than observations about the
Minnesota scheme. Indeed, earlier in the same footnote we stated,
"Whether the expenditure limitations under Minnesota law are
voluntary is irrelevant when considering whether the state law is
preempted." Id. Thus, the voluntariness of the MCCRA was
tangential to the central holding of the case: that the MCCRA was
preempted by FECA. As such, these statements are obiter dicta.
Weber left to another day the detailed analysis of the First
Amendment implications of the Minnesota scheme. "The district
court held that the First Amendment was not violated by the
expenditure limitations in [MCCRA]. That issue is not before us."
Id. at 876 n.6. Further, in contrast to the statute at issue in
Weber, the present statute does not permit participating candidates
to toss off the expenditure limits just because their opponent
declines to participate. It is the nonpublicly-funded opponent's
conduct in raising money or spending it in excess of the statutory
threshold amounts that triggers the limitations waiver for the
participating candidate. Weber, therefore, does not dictate a
conclusion that the provisions here are coercive and violate the
First Amendment.
In sum, the State has created a public financing scheme for
certain elected offices which is available to candidates who meet
certain threshold qualifications. This scheme presents candidates
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with an additional, optional campaign funding choice, the
participation in which is voluntary. Under this choice-increasing
framework, candidates will presumably select the option that they
feel is most advantageous to their candidacy. Given this backdrop,
it appears to us that the State's scheme promotes, rather than
detracts from, cherished First Amendment values. See Vote Choice,
4 F.3d at 39; see Wilkinson, 876 F. Supp. at 926-28. See also RNC,
487 F. Supp. at 285. Accordingly, we reject the Appellants' claim
that the challenged provisions create a coercive public financing
scheme that burdens a candidate's First Amendment rights.7
B.
Our conclusion that the challenged provisions do not burden a
candidate's First Amendment rights is a sufficient basis on which
to affirm the judgment of the district court. However, even if we
assume that the State's scheme does burden a candidate's First
Amendment rights to some degree, the scheme generally, and the
challenged provisions specifically, are still constitutionally
7
We also disagree with the Appellants' argument that in
order to make participation in a public funding scheme truly
voluntary, the governmental entity must provide more funding to
the publicly funded candidate than the candidate could raise
through private means. Aside from the fact that it would be an
exercise in pure speculation to determine the amount a given
candidate for a particular office could raise in a campaign, the
public financing cases have imposed no such requirement. Cf.
RNC, 487 F. Supp. at 285 (rejecting argument that public
financing scheme was coercive because it offered more public
funds than the candidate claimed he could privately raise). This
claim is also undermined by evidence in the record illustrating
that the average publicly financed campaign for a state senate or
house of representatives seat spends only approximately 2/3 of
the amount permitted by the applicable expenditure limit. Thus,
most publicly financed candidates do not make campaign
expenditures which even approach the applicable expenditure
limits. We accordingly decline to further address this somewhat
unorthodox argument.
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permissible because they survive strict scrutiny; that is, they are
narrowly drawn to serve a compelling governmental interest.8
A campaign finance law which burdens protected speech will be
upheld if the governmental entity can show that it furthers a
compelling governmental interest and is narrowly drawn to serve
that interest. Shrink Mo., 71 F.3d at 1426; see also RNC, 487 F.
Supp. at 285 ("Where compelling governmental interests exist,
Congress' power to place reasonable conditions upon expenditures of
public funds, even where they affect the exercise of First
Amendment rights, has been recognized."). In this case, the State
seeks to promote a reduction in the possibility for corruption that
may arise from large campaign contributions and a diminution in the
time candidates spend raising campaign contributions, thereby
increasing the time available for discussion of the issues and
campaigning. It is well settled that these governmental interests
are compelling. See Shrink Mo., 71 F.3d at 1426 ("the state's
interest in reducing corruption and its related concerns constitute
a compelling state interest"); RNC, 487 F. Supp. at 285 (curbing
possibility of corruption from large campaign contributions and
reducing candidate time spent raising campaign funds are compelling
interests); see also Carver, 72 F.3d at 638 (8th Cir. 1995) (noting
that Buckley held that limiting the reality or perception of
corruption due to large campaign contributions was compelling
interest). Indeed, given the importance of these interests, the
8
The State contends that we should apply the intermediate
level of scrutiny articulated in United States v. O'Brien, 391
U.S. 367, 377 (1968), rather than strict scrutiny, to the refund
provision. Seizing upon an excerpt from Buckley, the State
contends that the Supreme Court indicated that a lower level of
scrutiny applies in evaluating governmental regulations involving
campaign contributions. (See State's Br. at 40.) However, we
recently held, after carefully reviewing Buckley, that strict
scrutiny is the appropriate standard for analyzing regulations of
campaign contributions. Carver v. Nixon, 72 F.3d 633, 637-38
(8th Cir. 1995), cert. denied, 116 S. Ct. 2579 (1996).
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State has a compelling interest in stimulating candidate
participation in its public financing scheme. Vote Choice, 4 F.3d
at 39; see also Wilkinson, 876 F. Supp. at 928 ("Kentucky has a
compelling interest in encouraging candidates to accept public
financing and its accompanying limitations which are designed to
promote political dialogue among the candidates and combat
corruption by reducing candidates' reliance on fundraising
efforts.").
Thus, the constitutional validity of the State's scheme turns
on whether the challenged provisions are narrowly tailored to serve
these interests. We believe that each of the challenged provisions
satisfies this test. Initially, we observe that the State's basic
public financing program of providing a public subsidy in exchange
for the candidate's agreement to abide by expenditure limits is
consistent with campaign financing plans which courts have long
held satisfy strict scrutiny. See RNC, 487 F. Supp. at 285-87;
Vote Choice, 4 F.3d at 39-40.
The expenditure limitation waiver also satisfies strict
scrutiny. As we noted above, this provision removes the
disincentive a candidate may have to participate in the public
financing system because of the candidate's fear of being grossly
outspent by a well-financed, privately funded opponent. Absent
such a safeguard, the State could reasonably believe that far fewer
candidates would enroll in its campaign financing program, with its
binding limitation on campaign expenditures, because of the
candidates' concerns of placing their candidacy at an
insurmountable disadvantage.9 The State simply sought to alleviate
9
This is especially true in a system like Minnesota's, in
which the publicly financed candidate will receive a public
subsidy of no more than 50 percent of the expenditure limits.
Thus, the candidates, even if publicly funded, still have certain
private fund raising needs.
-18-
this concern by permitting the candidate who enrolled in public
financing to disregard the expenditure limits if his opponent does
not limit campaign spending. Finally, by allowing the publicly
financed candidate to retain the public subsidy, the State simply
seeks to reward those who agreed to limit campaign expenditures and
do so until their opponent has received or spent private money
equal to what the maximum direct state subsidy is. Accordingly, we
have little difficulty concluding that the expenditure limitations
waiver is narrowly tailored to serve the State's interests. See
Wilkinson, 876 F. Supp. at 928 (holding similar provision narrowly
tailored to serve compelling governmental interest). See also Vote
Choice, 4 F.3d at 39 (holding cap gap, which increased likelihood
of participation in public funding scheme, narrowly tailored to
serve compelling governmental interest).
We likewise conclude that the contribution refund is narrowly
tailored to serve the State's interests. As we noted above, it is
in substance a public subsidy provided to the participating
candidate, the amount of which is directly related to the measure
of popular support enjoyed by that candidate. Such a system has
previously been upheld. See Bang v. Chase, 442 F. Supp. 758, 766
Indeed, the Appellants seem to have acknowledged as much in
their memorandum in support of their motion for summary judgment,
where they stated that the expenditure limitation waiver
might be seen as simply an attempt to protect those who
agree to limits. If the limits stayed on no matter
what level of spending the opponent engaged in, those
who agreed to limits would be at a severe competitive
disadvantage in those cases. Candidates who agreed to
limit spending would soon be eliminated by the
equivalent of natural selection. The legislature could
reasonably have concluded that both of these features
were essential to give the new system of spending
limits a fair chance to succeed.
(Appellants' Addend. at 32 (quoting Appellants' mem. in supp. of
mot. for summ. j. at 9).)
-19-
(D. Minn. 1977) (three-judge court) (holding valid a Minnesota tax
checkoff system for political party which tied amount of subsidy to
measure of popular support), aff'd, 436 U.S. 941 (1978). The State
reasonably could conclude that this additional form of public
subsidy will encourage candidate participation because candidates
will believe that they will be able to draw campaign contributions
from a broader array of the citizenry when citizens are informed
that they may obtain a refund of up to $50 for contributions made
to participating candidates. Again, this is especially important
in a financing scheme like the State's, where the candidates must
raise at least 50 percent of their campaign funding from private
donors. Thus, even with the direct public subsidy, the
participating candidate will have significant fundraising needs.10
The Appellants contend that the contribution refund is not
narrowly tailored because it is not provided on a neutral basis,
that is, only contributions made to publicly financed candidates
are refundable. The Appellants misapprehend the nature and purpose
of a campaign financing scheme. "The state need not be completely
neutral on the matter of public financing of elections." Vote
Choice, 4 F.3d at 39. Fundamentally, a public financing scheme is
designed to afford a participating candidate certain benefits in
exchange for that candidate's agreement to abide by certain
restrictions. That the candidate's nonparticipating opponent is
not afforded the same benefits misses the point: If the benefits,
here the contribution refund, were conferred upon all candidates,
participating and nonparticipating, there would be no incentive to
participate, and the State's goals of decreasing the chances of
10
The district court determined that the contribution refund
was constitutionally permissible as applied to candidates as well
as contributors. Neither of the Appellants has made any showing
or argument that their First Amendment rights as campaign
contributors have been adversely impacted because of the refund
provision. Accordingly, we confine our analysis to the effect
upon the Appellants' rights as political candidates.
-20-
corruption and freeing up more of the candidates' time for
campaigning would be frustrated. Thus, any favoritism enjoyed by
the publicly financed candidate through the contribution refund
subsidy is simply a permissible byproduct of the campaign financing
process. See RNC, 487 F. Supp. at 285 ("If a candidate were
permitted, in addition to receipt of public funds, to raise and
expend unlimited private funds, the purpose of public financing
would be defeated.").11
The Appellants contend that the contribution refund is not
necessary to achieve additional candidate participation, citing Day
v. Holahan, 34 F.3d 1356 (8th Cir. 1994), cert. denied, 115 S. Ct.
936 (1995), where we held that Minnesota's independent expenditure
provision was not narrowly tailored for that very reason.12 The
independent expenditure provision assailed in Day, however, bore a
strikingly different pedigree than the contribution refund at issue
here. In Day, Minnesota sought to justify the independent
expenditure provision on the basis that it was designed to
encourage candidate participation in the public financing scheme.
Id. at 1361. We rejected this argument as specious because the
purported interest, "no matter how compelling in the abstract, is
not legitimate" since candidate participation in the public
11
We also reject the Appellants' claim that the language of
the refund receipt form puts the State's imprimatur on publicly
funded candidates. The receipt merely informs the contributor in
innocuous language that the candidate has agreed to abide by
certain campaign expenditure limits and that the contributor may
obtain a refund on any contribution to that candidate.
12
The independent expenditure provision at issue in Day
operated to increase the expenditure limit for a publicly
financed candidate in an amount expended by a political committee
or political fund either advocating the candidate's defeat or in
support of the candidate's opponent. For example, assuming
candidate X is publicly funded and he is opposed by candidate Y,
when a political committee or fund expends $1000 in support of Y
or in opposition to X, candidate X's expenditure limits increase
by $1,000.
-21-
financing scheme was approaching 100 percent when the challenged
provision was enacted. Id.; see also id. ("One hardly could be
faulted for concluding that this `compelling' state interest was
contrived for the purposes of this litigation.").
By contrast, the contribution refund at issue here, or a
functional equivalent tax credit, has been part of the State's
public campaign financing plan from almost its inception. The
State enacted its present public financing program in 1976 and in
1978 created a tax credit for contributions made to participating
candidates. The tax credit became the present tax refund in 1991,
and with the exception of a three-year hiatus (1987-1990), the tax
credit/refund has been in effect since 1978. The State submits,
and the Appellants have presented no evidence to the contrary, that
this concept has played an integral role in attaining the almost
100 percent candidate participation in its program. Thus, the
circumstances surrounding the enactment of the contribution refund
make Day inapposite.
In sum, we conclude that the expenditure limitation waiver and
the contribution refund are each tailored in a sufficiently narrow
manner to serve the compelling government interests the State has
identified. Therefore, even if the challenged provisions somehow
burden the Appellants' First Amendment rights, the provisions pass
constitutional muster.
IV.
Finally, the Appellants contend that the campaign provisions
at issue unfairly discriminate against challengers because, all
other things being equal, an incumbent has greater name recognition
and fundraising capability than a challenger. Although the
constitutional basis upon which Appellants' rest this contention is
-22-
not entirely clear, in essence it seems to be that the provisions
are biased in favor of an incumbent because they fail to place a
challenger on an equal footing with the incumbent and are thereby
coercive with respect to challengers.
The Appellants contend that the present statute is designed to
make it more difficult for a challenger to mount a credible
campaign against an incumbent, thus claiming that the Minnesota
legislature intended to discriminate against challengers. As
support for this argument, they focus on the change in the statute
which permits any nonparticipating opponent to trigger the waiver
for a participating candidate, in contrast to the prior expenditure
waiver wherein only a major-party candidate could trigger the
waiver. The Appellants contend that by eliminating this loophole,
the State has eliminated the only realistic method by which a
challenger can run a credible campaign: by running as a
nonparticipating, privately-financed, independent candidate.
Before the statute was amended, an independent challenger, i.e.,
one not a major-party candidate, could raise an unlimited amount of
money and make an unlimited amount of campaign expenditures, and
his publicly-financed incumbent opponent would still be bound to
the expenditure limits.
The Appellants offer the comments of a long-time incumbent
member of the Minnesota House of Representatives as support for
their argument that, by enacting the 1996 amendment, the Minnesota
legislature sought to discriminate against challengers. This
legislator stated her belief that the amendment was necessary to
correct a circumstance that she had personally encountered in her
previous election campaign: her independent, privately-financed,
non-major-party opponent was able to spend an unlimited amount on
the campaign while, because of the major-party clause, she was
still bound by the expenditure limits applicable to her office as
a publicly financed candidate. This legislator went on to state
-23-
that she was a member of the conference committee that sponsored
the previous expenditure limitation waiver and that it was not the
intent of the sponsors of the previous bill to create the situation
she encountered in her campaign; therefore, she argued that the
amendment should be adopted to make the triggering act applicable
to all candidates. The Appellants argue that this illustrates the
invidious anti-challenger intent behind the enactment of the
amendment. There are, however, numerous flaws in the argument.
First, as we noted above, we are not inclined to impute the
statements of an individual legislator concerning the purpose
underlying a particular piece of legislation to the entire
legislative body. Second, even if we were, these statements do not
illustrate that the members of the Minnesota legislature sought, by
enacting the amendment, to make it difficult for a challenger to
mount a credible challenge. The amendment simply eliminated a
loophole in the expenditure limitation waiver, the effect of which
the prior legislature did not envision. It is, quite simply,
nothing more than a curative act. A statute which makes its
requirements applicable to all candidates, regardless of party
affiliation, can hardly be deemed discriminatory. We cannot
identify any discriminatory purpose in this legislator's
statements, or in the Minnesota legislature in general, as the
reason for the enactment of the 1996 amendment.
As the RNC court aptly observed, in every race for elected
office one candidate possesses certain advantages over his
opponent, regardless of whether the campaigns are publicly or
privately funded, and that it is inconsistent with the purposes
underlying a public campaign financing program to attempt to
eliminate this discrepancy. 487 F. Supp. at 285-87. Further, the
Appellants have presented no persuasive evidence that the Minnesota
legislature was motivated by a discriminatory purpose against
challengers when it enacted these provisions, which on their face
-24-
apply evenhandedly to all candidates for a particular public
office. See Buckley, 424 U.S. at 31 ("Absent record evidence of
invidious discrimination against challengers as a class, a court
should generally be hesitant to invalidate legislation which on its
face imposes evenhanded restrictions.").
Finally, the Appellants fail to acknowledge the ways that the
State's program actually operates to the benefit of challengers,
rather than to their detriment. For instance, in a situation where
the challenger enrolls in the State's financing system, an
incumbent opponent, who the Appellants aver possesses greater name
recognition and fundraising ability, is confronted with the choice
of whether to enroll in the State's public financing plan or opt
for private funding for the campaign. If the incumbent enrolls in
the State's public financing plan, then he is bound by the State's
expenditure limits and his alleged advantage in fundraising
capacity is diminished significantly.13 On the other hand, if the
incumbent opted in favor of private funding, the publicly financed
challenger would be permitted to disregard the expenditure limits
and retain the public subsidy once the privately funded incumbent
exceeded the triggering levels in either contributions or
expenditures. In either situation, significant benefits accrue to
the challenger. Moreover, for the challenger who actually
possesses no name recognition or fundraising ability, enrollment in
the State's plan can be particularly advantageous: Assuming he
meets the threshold requirements to be eligible for public funding,
the unknown candidate receives a public subsidy simply for agreeing
to limit expenditures. See Buckley, 424 U.S. at 107-08
("candidates with lesser fundraising abilities will gain
substantial benefits from matching funds. In addition, one
13
The incumbent's alleged advantage would not be reduced to
a complete nullity because publicly financed candidates must
still raise at least 50 percent of their campaign funding through
private means.
-25-
eligibility requirement for matching funds is acceptance of an
expenditure ceiling, and candidates with little fundraising ability
will be able to increase their spending relative to candidates
capable of raising large amounts in private funds."). Finally, the
State's program provides an additional benefit for first-time
candidates; such a candidate is permitted to exceed the specified
expenditure limits by 10 percent, presumably to permit the
candidate to attempt to close any name recognition gap enjoyed by
the incumbent. See Minn. Stat. Ann. § 10A.25(2)(c).
Thus, the State's plan cannot in any manner be construed to
impermissibly discriminate against challengers.14
In sum, we believe that the amended statute does not burden a
candidate's First Amendment rights. Even if it does burden the
candidate's Free Speech rights, it survives strict scrutiny, and it
does not impermissibly discriminate against challengers.
14
We also decline to consider the Appellants' argument that
Service Employees Int'l Union v. Fair Political Practices Comm'n,
955 F.2d 1312 (9th Cir.), cert. denied, 505 U.S. 1230 (1992),
counsels in favor of a conclusion that the State's scheme favors
incumbents. At issue in Service Employees was a California
contribution limit that was keyed to fiscal years, rather than an
entire election cycle. Id. at 1314-15. The Service Employees
court held that such a limitation impermissibly favored
incumbents because they were able to receive campaign
contributions up to the limits each year in the election cycle,
whereas challengers, whom the court suggested typically do not
decide to run for office until the year of the election, would
only be able to collect contributions for one year. Id. at 1316-
21. The Appellants point out that the State in this case
similarly calculates its contribution limits on a calendar year,
rather than election cycle, basis. However, the Appellants have
challenged this element of the State's financing scheme for the
first time on appeal. Neither their complaint nor the parties or
the district court below mentioned this issue. Thus, this
particular argument has been waived. See United States v. One
Parcel of Property, 959 F.2d 101, 104 (8th Cir. 1992) (argument
not raised in the district court is waived).
-26-
V.
We have examined the remaining issues and subissues raised by
the Appellants and have determined that they lack merit. For the
reasons enumerated above, we affirm the judgment of the district
court.
Lay, Circuit Judge, dissenting:
I respectfully dissent.
As the majority recognizes, while this appeal was pending,
Minnesota amended a key provision of its campaign finance laws.
Prior to the 1996 amendment, the spending limits waiver for
publicly financed candidates took effect when that candidate's
major party opponent failed to agree by September 1 of an election
year to abide by the state's "voluntary" spending limits. See
Minn. Stat. §§ 10A.25(10)(b)(i), 10A.322(1)(b) (1994). The 1996
amendment waives the spending limit for a publicly financed
candidate if any of her privately financed opponents--major or
minor party--has raised or spent more than twenty percent of the
spending limit as of ten days before the primary, or more than
fifty percent of the spending limit thereafter. See 1996 Minn.
Sess. Law Serv. Ch. 459 (S.F. 840), § 2 (West 1996) (amending Minn.
Stat. § 10A.25(10)). Notwithstanding this amendment, the
plaintiffs still seek prospective injunctive relief as to Minn.
Stat. § 10A.25(10)(b) (1994), which no longer exists. It has been
repealed. As such, that part of the case is moot. Although both
parties argue we can decide this appeal notwithstanding this change
in law, this court's subject matter jurisdiction and the exercise
of judicial power cannot be controlled by the desires of the
parties. See Insurance Corp. of Ireland v. Compagnie Des Bauxites
De Guinee, 456 U.S. 694, 702 (1982) ("[N]o action of the parties
can confer subject matter jurisdiction upon a federal court.").
-27-
As the majority recognizes, this court "must review the
District Court's judgment in light of presently existing [state]
law, not the law in effect at the time that judgment was rendered."
Fusari v. Steinberg, 419 U.S. 379, 387 (1975); Diffenderfer v.
Central Baptist Church, 404 U.S. 412, 414 (1972) (per curiam).
The majority recognizes that the only basis upon which this
court should afford review at this time is to allow a challenge to
the legality of the state's ongoing attempt to allegedly chill, by
whatever means, plaintiff's freedom of speech as represented by the
1996 amendment. Nonetheless, in my judgment, deciding this issue
prior to a review by the district court offends jurisprudential
principles. At the very best, this court should remand this case
to the district court to allow the plaintiffs to amend their
complaint and make whatever challenge to the new law they wish to
make. See id. at 415.
The Supreme Court has held that a federal court is not
deprived of its power when a governmental entity enacts a new law
that "disadvantages [the plaintiffs] in the same fundamental way"
as the prior law challenged in the complaint. Northeastern Florida
Chapter v. City of Jacksonville, 508 U.S. 656, 662 (1993). In such
a case, the plaintiff's injury is redressable by "a judicial decree
directing the [governmental entity] to discontinue its [challenged]
program[.]" See id. at 666 n.5. Such a rule is necessary to
prevent a governmental defendant from rendering a case moot "by
repealing the challenged statute and replacing it with one that
differs only in some insignificant respect." Id. at 662. On the
other hand, if a law is "changed substantially," such that the
"challenged conduct" by the governmental entity is not likely to
reoccur, then the case is moot. Id. at 662 n.3.15
15
In Northeastern Florida Chapter, the Court held the case
was not mooted by the City of Jacksonville's enactment of an
amended minority set-aside ordinance. The Court reasoned that
-28-
Whether this court should review the current campaign finance
scheme (as opposed to the now repealed statute) presents a close
question of justiciability. It is my view that the 1996 amendment
does not fundamentally alter the burdens on speech arising from the
spending limits waiver and the contribution refund. See id. at
662. Further, the amendment appears to be sufficiently clear such
that we are not left to speculate as to how the new law will
operate in practice. Cf. Fusari, 419 U.S. at 388-89 (expressing
uncertainty as to how state will implement amended welfare benefits
law enacted in response to lower court decision striking law down
as violating due process).
On the other hand, the 1996 amendment has potential
constitutional significance, see, e.g., Wilkinson v. Jones, 876 F.
Supp. 916, 927 (W.D. Ky. 1995) (finding constitutional significance
in the manner in which spending limits waiver is triggered), and
thus the amendment cannot be readily characterized as an
"insignificant" change in law. See Northeastern Florida Chapter,
508 U.S. at 662. Moreover, as indicated, under the new amendment
it is not readily apparent what specific judicial relief the
plaintiffs could obtain since the law they challenged in their
although "[t]he new ordinance may disadvantage [the plaintiffs]
to a lesser degree than the old one, . . . insofar as it accords
preferential treatment to black- and female-owned contractors--
and, in particular, insofar as its 'Sheltered Market Plan' is a
'set aside' by another name--it disadvantages them in the same
fundamental way." Id. at 662. The Court recognized that the
amended city ordinance applied only to African-Americans and
females, rather than seven minority groups, and provided
flexibility in the manner of preferential treatment on any given
city project. Id. at 661. The Court emphasized that one of the
programs, the Sheltered Market Plan, was essentially the same as
the law challenged in the complaint. Unlike the prior version of
the law, the amended ordinance also contained a ten-year sunset
provision and identified several present effects of past
discrimination which justified the affirmative action in favor of
African-Americans and females. See id. at 674 (O'Connor, J.,
dissenting). The majority concluded such changes were
insignificant; the dissent disagreed.
-29-
complaint can no longer be enjoined.16 In light of these factors,
I believe the proper course would be to vacate the district court's
judgment and remand the case to the district court for further
proceedings. Even if this course is not required by the
constitutional limitations on this court's jurisdiction, I favor
such a course as a matter of judicial discretion. See Northeastern
Florida Chapter, 508 U.S. at 677 (O'Connor, J., dissenting). The
district court's analysis of the new law would undoubtedly help to
evaluate the constitutional issues before us.17 Nonetheless, the
16
In their amended complaint, the plaintiffs asked for a
declaration that several provisions of Minnesota's campaign
finance laws, including Minn. Stat. § 10A.25(10)(b) ("subdivision
10(b)"), are unconstitutional. J.A. 42. The plaintiffs also
sought an injunction against the enforcement of "the
unconstitutional sections of Minnesota's public campaign
financing system" and "such other and further relief as this
court shall deem just and equitable." Id. In light of the 1996
amendment, enjoining subdivision 10(b) would no longer make sense
because that section now provides for notification of publicly
financed opponents when a privately financed candidate exceeds
certain minimal spending or fundraising thresholds. The
substance of old subdivision 10(b) is now codified, as
substantially amended, in the new subdivision 10(a) of § 10A.25.
See Minn. Sess. Law Serv. Ch. 459 (S.F. 840), § 2 (West 1996).
It is unclear what the proper relief in this case would be if the
state laws were found to be unconstitutional, although some form
of meaningful relief could probably be found. See In re
Swedeland Dev. Group, Inc., 16 F.3d 552, 560 (3d Cir. 1994) (en
banc) ("[W]hen a court can fashion 'some form of meaningful
relief,' even if it only partially redresses the grievances of
the prevailing party, the appeal is not moot.") (quoting Church
of Scientology v. United States, 506 U.S. 9, 12 (1992)).
Following the Court's suggestion in Northeastern Florida Chapter,
508 U.S. at 666 n.5, perhaps an injunction against the state's
"program" of campaign finance would be proper relief for the
plaintiffs. In any event, I would leave this determination to
the district court in the first instance. See note 16, infra.
17
In their letter brief to this court, the plaintiffs argue
the amendments make the law more coercive than the prior version
of the law because it applies to all privately financed
candidates, not just major party candidates who are privately
financed. The state has not had an opportunity to respond to
this claim and, on the current record, such a claim is difficult
to evaluate. Cf. Fusari, 419 U.S. at 385-866, 387 n.12
-30-
majority exercises jurisdiction and upholds the amended Minnesota
campaign finance laws. I respectfully disagree with this ruling
and thus dissent as well on the merits.
Burdens on Speech
In Buckley v. Valeo, 424 U.S. 1 (1976) (per curiam), the
Supreme Court made it clear that limits on expenditures in election
campaigns are generally unconstitutional because they suppress
communication "'at the core of our electoral process and of the
First Amendment freedoms.'" Id. at 39 (quoting Williams v. Rhodes,
393 U.S. 23, 32 (1968)). The Court found the First Amendment
broadly protects political speech to assure the "'unfettered
interchange of ideas for the bringing about of political and social
changes desired by the people[,]'" id. at 14 (quoting Roth v.
United States, 354 U.S. 476, 484 (1957)), and that such protection
extends even to what some see as excessive campaign spending. As
Buckley stated some twenty years ago, "[t]here is nothing
invidious, improper, or unhealthy in permitting [campaign] funds to
be spent to carry the candidate's message to the electorate." Id.
at 56.
A restriction on the amount of money a person or
group can spend on political communication during a
campaign necessarily reduces the quantity of expression
by restricting the number of issues discussed, the depth
of their exploration, and the size of the audience
reached. This is because virtually every means of
communicating ideas in today's mass society requires the
expenditure of money. The distribution of the humblest
handbill or leaflet entails printing, paper, and
circulation costs. Speeches and rallies generally
necessitate hiring a hall and publicizing the event. The
electorate's increasing dependence on television, radio,
and other mass media for news and information has made
(reviewing the legislative history and purpose of the amended
statute and noting that the Court's review was "largely
unassisted by counsel").
-31-
these expensive modes of communication indispensable
instruments of effective political speech.
Id. at 19 (footnote omitted). In light of the constitutional
protection afforded campaign speech, the Court held that
controlling campaign costs was not a legitimate governmental
interest.
The First Amendment denies government the power to
determine that spending to promote one's political views
is wasteful, excessive, or unwise. In the free society
ordained by our Constitution it is not the government,
but the people--individually as citizens and candidates
and collectively as associations and political
committees--who must retain control over the quantity and
range of debate on public issues in a political campaign.
Id. at 57.
In upholding the Minnesota campaign finance scheme the
majority, with all due respect, fails to evaluate properly these
fundamental constitutional principles involved in this case.
The state distinguishes Buckley by arguing that if the state
provides a public subsidy, which is voluntarily accepted, then
Buckley does not control. As Buckley points out,
Congress may engage in public financing of election
campaigns and may condition acceptance of public funds on
an agreement by the candidate to abide by specified
expenditure limitations. Just as a candidate may
voluntarily limit the size of the contributions he
chooses to accept, he may decide to forgo private
fundraising and accept public funding.
Id. at 57 n.65 (emphasis added).
-32-
The difficulty we face here is that under Minnesota's campaign
finance law, once a publicly financed candidate has chosen to
accept the limits, she is provided a spending limits waiver, if her
opponent chooses to exercise her constitutional right to forgo
public financing and exceed the statutorily imposed limit.18 In the
majority's view, the enjoyment of public subsidies (including the
contribution refund) and a waiver of the spending limits by a
publicly financed candidate is nothing more than an inducement by
the state "to avert a powerful disincentive for participation in
its public financing scheme: namely, a concern of being grossly
outspent by a privately financed opponent with no expenditure
limit." Ante at 12.
I respectfully submit such an analysis is irrelevant in
evaluating the concerns of whether the non-public financed
candidate's First Amendment rights are chilled. This case is not
about the publicly financed candidate's free speech rights. It is
not a matter of balancing benefits with restrictions. Nor is it a
question of speech restricted by time, place or manner. The issue
is whether a candidate who faces a choice not to limit her full
access to political speech will be any worse off in choosing to do
so. When a candidate voluntarily abandons all the benefits of
public subsidies (including the contribution refund) to exercise
her constitutional right, it is a voluntary choice.19 When such a
18
The spending limits waiver was adopted in 1988. Prior to
1988, publicly financed candidates were bound by the spending
limits to which they agreed, regardless of their opponent's
actions. See, e.g., Minn. Stat. § 10A.25(10) (1986). The pre-
1988 law was thus consistent with the public financing of
Presidential campaigns upheld in Buckley, 424 U.S. at 85-108, and
Republican Nat'l Comm. v. FEC, 487 F. Supp. 280, 283-86
(S.D.N.Y.) (three-judge court), aff'd mem., 445 U.S. 955 (1980)
("RNC").
19
See RNC, 487 F. Supp. at 283-84 ("Each candidate remains
free under the Fund Act, instead of opting for public funding, to
attempt through private funding to raise more than the
-33-
choice is made, however, Minnesota's campaign finance scheme adds
disincentives which make a privately financed candidate worse off
than she otherwise would be.20 Her publicly financed opponent, who
has chosen to receive a public subsidy, can now keep the public
subsidy, obtain the benefit of the contribution refund for all past
and future contributions, and spend without limit.21
With all due respect to the majority's interpretation, it
seems plain that Minnesota's current campaign financing scheme,
including the spending limits waiver and the retention of the
public subsidy, as well as the contribution refund,22 directly
'$20,000,000 plus' public funding limit and to spend any amount
of funds raised by private funding, without any ceiling."); cf.
Buckley, 424 U.S. at 99 ("[S]ince any major-party candidate
accepting public financing of a campaign voluntarily assents to a
spending ceiling, other candidates will be able to spend more in
relation to the major-party candidates."); id. at 101 ("Plainly,
campaigns can be successfully carried out by means other than
public financing; they have been up to this date, and this avenue
is still open to all candidates.").
20
To urge that such disincentives are not per se "coercive
because they are not inherently penal" is meaningless rhetoric.
See ante at 11. The disincentives are invoked as a means to
influence directly a candidate's choice (to keep the candidate in
line within the spending limit). To call such coercive conduct
by any other name does not diminish the effect upon the
candidate's choice. The issue is whether a candidate's decision
to exercise her constitutional right to free speech has been
chilled. When the opponent's spending limit is automatically
removed, the opponent's public subsidy retained, and more tax
benefits to the opponent's contributors become available, it
seems ineluctable to me that the candidate's right has been
chilled.
21
The law even allows the absurd situation where a candidate
can wait until her opponent has made a choice to exercise
unlimited speech, then agree to the spending limit and receive
the public subsidy, but then exceed the limit without penalty and
keep the subsidy. In such circumstances, the publicly financed
candidate's spending limit is illusory from the outset.
22
The contribution refund was adopted in 1991. From 1978 to
1987, however, Minnesota provided a tax credit to contributors
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chills the exercise of a privately financed candidate's
constitutional right to unfettered political speech.
This court has on two prior occasions recognized the
penalizing nature of related provisions of Minnesota's campaign
finance laws. First, in Weber v. Heaney, 995 F.2d 872 (8th Cir.
1993), which found similar provisions in Minnesota's congressional
campaign finance laws preempted, this court stated that "candidates
who do not agree to be bound by the spending limits are penalized
because their opponents who have agreed to the limits will still
receive public financing, but will not be bound to their
agreement." Id. at 877 n.7.23
Second, in Day v. Holahan, 34 F.3d 1356, 1359-62 (8th Cir.
1994), cert. denied, 115 S. Ct. 936 (1995), this court struck down
a Minnesota law which allowed a publicly financed candidate to
exceed her spending limit by the amount of "independent
expenditures"24 against her and receive an additional direct public
subsidy. In Day, the court reasoned that this provision burdened
speech because:
The knowledge that a candidate who one does not want to
be elected will have her spending limits increased and
will receive a public subsidy equal to half the amount of
the independent expenditure, as a direct result of that
for contributions up to a certain level, which was substantially
similar to the current contribution refund system.
23
Although this statement may be dicta, as the majority
finds, the opinion, written by Judge Magill in which Judge Fagg
and Judge Hansen joined, accurately characterizes the penalizing
nature of Minnesota's campaign financing scheme.
24
An independent expenditure was defined as "an expenditure
expressly advocating the election or defeat of a clearly
identified candidate" by an individual, political committee or
political fund which had expended more than $100 on such
expenditures. See Day, 34 F.3d at 1359 (citations omitted).
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independent expenditure, chills the free exercise of that
protected speech.
Id. at 1360. Although there is no additional direct public subsidy
in this case,25 the public subsidy involved in the contribution
25
In Wilkinson, which upheld a spending limits waiver
against a motion for a preliminary injunction, the district court
distinguished Day in part on the basis that additional public
subsidies available to a publicly financed candidate facing a
privately financed opponent in Kentucky were not "automatic" but
"may only be obtained when additional private contributions are
raised." 876 F. Supp. at 927. I do not think this distinction
is of constitutional significance in this case when the
additional private contributions are subsidized, thus enhancing
the publicly financed candidate's fundraising ability.
Wilkinson also distinguished Day on the basis that the
spending limit waiver took effect when the first dollar of an
independent expenditure was made, whereas under Kentucky's
campaign financing scheme the spending limits waiver did not
occur until a privately financed gubernatorial candidate actually
raised or spent in excess of $1.8 million, which provided "a
significant amount of unconstrained speech on the issues" before
the spending limits waiver came into play. Id. Such a
distinction is not applicable in this case. The spending limits
waiver here takes effect when the privately financed candidate
exceeds minimal spending or fundraising thresholds: 20 percent
of the spending limit ten days prior to the primary election or
50 percent of the spending limit thereafter. See 1996 Minn.
Sess. Law Serv. Ch. 459 (S.F. 840), § 2 (West 1996). In light
of the $21,576 spending limit for state representative candidates
in this case, J.A. 21, these minimal thresholds for triggering
the spending limits waiver do not provide for as significant an
amount of unconstrained speech on the issues as the $1.8 million
available in Wilkinson. Cf. Buckley, 424 U.S. at 20 n.20 (noting
that full-page advertisement in metropolitan newspaper in 1975
cost $6,971.04).
Wilkinson further distinguished Day on the basis that a
spending limits waiver coupled with additional public subsidies
chills an independent organization's free speech but not a
candidate's. Specifically, Wilkinson suggested that in Day, an
independent organization did not have any choice about whether to
act in a manner that would enhance the campaign of the candidate
whom it was trying to defeat, whereas in Wilkinson the decision
rested "within the privately-financed candidate's complete
control" by that candidate's ultimate actions in raising and
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refund clearly "enhance[s] [the publicly financed] candidate's fund
raising ability." See Weber, 995 F.2d at 877 n.7. Furthermore,
the indirect public subsidies through the contribution refund are
potentially unlimited, and thus may have a greater chilling effect
than the limited additional subsidy at issue in Day. Finally, the
spending limits in this case will not only be "increased" in an
amount equal to one half of the opposing expenditures, as in Day,
but will be wholly removed. Thus, the burdens imposed on the core
political speech of privately financed candidates in this case are
greater than, or at least substantially similar to, the burdens
spending money in excess of $1.8 million. See 876 F. Supp. at
927. Such distinctions are not valid in this case.
First, the privately financed candidate has no genuine
control over whether to help her opponent's campaign, because she
triggers her opponent's spending limits waiver by exceeding
minimal spending or fundraising thresholds. A competitive
privately financed candidate would almost certainly need to
exceed the minimal thresholds in order to avoid being
substantially outspent by the publicly financed candidate. The
record does not show any successful privately financed candidates
who have spent less than the thresholds. In 1992, average
spending by all candidates, publicly and privately financed,
exceeded the thresholds that now trigger the spending limits
waiver. See J.A. 22. In these circumstances, it is hard to say
that the privately financed candidate in Minnesota retains
"complete control" over the spending limits waiver. In
Wilkinson, by contrast, the privately financed candidates had no
fear of being outspent because she retained genuine control until
she actually spent or raised in excess of $1.8 million, i.e., the
spending limit applicable to publicly financed candidates.
Second, there is no basis for holding that the provisions at
issue here will chill an independent organization's free speech
but not a candidate's. A candidate's interest in speaking is in
winning the election in which she is running; her speech will
clearly be chilled if, by speaking, she advances the campaign of
her opponent. An organization making an independent expenditure,
by contrast, may be more willing to risk helping an opponent to
some extent by engaging in political speech in order to educate
the public and otherwise to advance the organization's larger
purposes. Thus, if there is any difference between the chilling
effect on the two, the burden on a candidate's speech is greater.
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imposed on independent organizations in Day, and cannot adequately
be distinguished. In accord with Weber and Day, I find Minnesota's
campaign finance scheme burdens a candidate's free speech rights by
chilling her decision to increase her political speech by exceeding
the spending limits.
Avoiding the fundamental principles of Buckley and the
decisions of our court, the majority seeks refuge in the First
Circuit opinion in Vote Choice, Inc. v. DiStefano, 4 F.3d 26 (1st
Cir. 1993), which upheld a "cap gap" between publicly financed
candidates, who may receive up to $2,000 per campaign contribution,
and those who choose private financing, who may only receive up to
$1,000 per donor. Id. at 37-40. The First Circuit found the
scheme constitutional since it offered a relative balance between
the benefits given to, and the restrictions placed on, publicly
financed candidates.26 Even under this "rough proportionality"
approach, id. at 39, the Minnesota campaign finance scheme must
fall. A scheme which wholly releases a publicly financed candidate
from the only restriction she must accept to receive public
financing in the first place is not roughly proportional.27
26
Vote Choice found the "cap gap" was not "impermissibly
coercive" in part because the $2,000 limit was not contingent on
the opponent's decision to rely on private funding, see 4 F.3d at
38, 37 n.13, and neither gubernatorial candidate had accepted
public funding, which showed that the "cap gap" incentive was not
coercive, id. at 39 n.14. The incentives to publicly financed
candidates here are contingent on their opponents' decision. The
record also does not show any races in which all candidates were
privately financed. Thus, important factors in Vote Choice which
tended to show the cap gap was not coercive are not present in
this case.
27
Vote Choice, as the majority concedes, did not decide the
very issue submitted here, that is, whether a candidate could
waive the expenditure limits and retain a public subsidy if
opposed by a privately financed candidate. Vote Choice did note,
however, that Rhode Island's law provides a spending limits
waiver for publicly financed candidates in certain circumstances.
4 F.3d at 30 n.5. This provision of Rhode Island's law, which
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Compelling State Interest
I also respectfully disagree with the majority's conclusion
that the state has shown its law is narrowly tailored to a
compelling state interest.
The majority identifies the following state interests that are
served by the spending limits waiver: (1) reduce the possibility
of corruption, (2) diminish the need for fundraising, (3) allow
more time for discussing issues, (4) stimulate participation in the
public finance scheme, (5) protect candidates who agree to the
limits from being substantially outspent by their opponents, and
(6) reward candidates who initially agree to limit spending but are
nonetheless subsequently released from the limits.
The state's interests in guarding against corruption, reducing
the need for fundraising, and allowing more time for discussing
issues--which are the classic justifications for campaign finance
laws, see Buckley, 424 U.S. at 91; RNC, 487 F. Supp. at 284--are
not directly served by the spending limits waiver in any
substantial way. In fact, the waiver, by allowing a candidate to
raise unlimited private funds, defeats the purposes of the public
subsidy because the candidate, once released from the spending
limits, is likely to devote more time to fundraising and may
was not challenged in Vote Choice, provides no support for the
majority's holding in this case. Rhode Island's law provides
that a publicly financed candidate may exceed the spending limits
only when and to the extent that the privately financed candidate
exceeds the limits. Id. Further, no additional public subsidies
are available to a publicly financed candidate above the $750,000
direct matching funds from the state. See id. at 30. Under
Minnesota's law, by contrast, from the moment the general
election campaign begins, if a publicly financed candidate faces
a privately financed opponent who has spent or raised money in
excess of the minimum thresholds, she may raise and spend
unlimited funds all of which could potentially come from
subsidized individual contributions.
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develop "unhealthy obligations" to those additional individuals who
donate. See id. at 285 ("If a candidate were permitted, in
addition to receipt of public funds, to raise and expend unlimited
private funds, the purpose of public financing would be
defeated.").
It is only in an indirect sense that the waiver might support
the state's goals of guarding against corruption, reducing the need
for fundraising, and allowing more time for discussing issues. The
state's theory is, if the spending limits waiver encourages more
people to agree to abide by the limits, or forces them to do so,
the waiver reduces the need for private fundraising and the
potential for corruption. Thus, the state's real interest in the
spending limits waiver is to free candidates from fundraising and
reduce the possibility of corruption by stimulating participation
in its campaign finance program.28
Whether stimulating participation in a state's public campaign
financing scheme is a compelling state interest in any circumstance
is an open question in this circuit. See Day, 34 F.3d at 1361.
Assuming, but not agreeing, that stimulating participation in the
public finance program is a legitimate state interest, I
nonetheless find that under the facts and circumstances of this
case, the state's interest in stimulating participation is not a
compelling one, and the spending limits waiver and contribution
28
The other interests--protecting candidates from being
substantially outspent and rewarding candidates who initially
agree to the limits--are means of stimulating participation in
the state's campaign finance program. If the state wanted to
reward people who were positively inclined toward spending
limits, on that basis alone, in such circumstances the spending
limits waiver would constitute impermissible viewpoint
discrimination. Moreover, the fact that the state penalizes
those who breach the spending limit, absent a waiver, shows the
state has no independent interest in a candidate's initial
agreement to those limits.
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refund are not narrowly tailored to serve that interest. It is
settled at least in this circuit that stimulating participation is
not a compelling state interest if it is not necessary to actually
stimulate such participation. Id. Since 1976, candidate
participation rates in Minnesota's public finance program have been
as follows:
1976 92%
1986 77%
1978 87%
1988 89%
1980 66%
1990 93%
1982 90%
1992 95%
1984 78%
1994 92%
J.A. 22. The contribution refund (or its tax credit predecessor in
effect from 1978 to 1987) did not exist in 1976, 1988, or 1990,
when the participation rates were 92, 89, and 93 percent,
respectively.29 Before the enactment of the spending limits waiver,
participation rates were uniformly above 66 percent and were 92
percent in 1976 and 90 percent in 1982. This record belies the
state's claim that the provisions challenged here are necessary to
achieve substantial participation in the state's public financing
scheme.
The spending limits waiver and contribution refund are also
not narrowly tailored to achieve the state's interest with minimal
29
The majority errs in its reasoning that because the tax
refund or tax credit is long-standing, and the plaintiffs have
not shown otherwise, the tax refund "has played an integral role
in attaining the almost 100 percent candidate participation in
its scheme." Ante at 22. As I have stated, in 1976, before the
enactment of the tax credit, the participation rate was 92
percent, and during the three-year hiatus (1987-1990), the
participation rates were 89 percent in 1988 and 93 percent in
1990. J.A. 22.
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burden on a privately financed candidate's free speech rights. If
the state is concerned that publicly financed candidates are "at an
insurmountable disadvantage" against privately financed candidates
in the absence of these provisions, ante at 18, it seems plain that
the state's spending limits are too low. With a limit of $21,576
for candidates for state representative, J.A. 21, a candidate may
reasonably feel endangered by the prospect of her opponent spending
tens of thousands of dollars more in an aggressive advertising and
direct mail campaign. The constitutionally proper means to
stimulate participation is not to burden the privately financed
candidate's speech, however, but rather to provide the publicly
financed candidate with the opportunity for more speech through
higher subsidies or higher spending limits, or both. See RNC, 487
F. Supp. at 285 (noting that candidates "will opt for public
funding only if, in the candidate's view, it will enhance the
candidate's powers of communication and association"); cf.
Wilkinson, 876 F. Supp. at 927 (finding that the $1.8 million
raised or spent in a gubernatorial campaign in Kentucky before a
publicly-funded opponent's spending limit is waived provides "a
significant amount of unconstrained speech").
Furthermore, the state could overcome the "insurmountable
disadvantage" in a manner with less chilling effect on the free
speech rights of privately financed candidates by providing only a
partial spending limits waiver or by deferring the waiver of the
spending limits until the privately financed candidate has actually
exceeded the spending limit. Cf. Vote Choice, 4 F.3d at 30 n.5
(noting that Rhode Island's spending limits waiver, which was not
challenged in that case, takes effect only when and to the extent
that the privately financed candidate exceeds the limits).
Likewise, the contribution refund would stimulate participation and
yet have a less chilling effect on a privately financed candidate's
speech if there were limits on the amount of indirect public
subsidies a candidate could receive through such a program.
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Conclusion
The district court declared unconstitutional a provision of
Minnesota's campaign finance laws which allowed a publicly financed
candidate to receive her privately financed opponent's share of
available public funding. See Minn. Stat. § 10A.25(10)(b)(iii)
(1994). The state did not appeal this ruling, and in 1996 the
legislature repealed this provision. See 1996 Minn. Sess. Law
Serv. Ch. 459 (S.F. 840), § 2 (West 1996). I would now also find
Minnesota's spending limits waiver for publicly financed candidates
unconstitutional. This waiver clearly chills the core political
free speech rights of privately financed candidates for state
representative, and does so without adequate justification for the
burdens imposed on such speech. Furthermore, in light of the
spending limits waiver, I would also find the contribution refund
unconstitutional because it provides potentially unlimited public
support for a public financed candidate and thereby coerces a
candidate's choice as to whether to accept or decline the public
financing of her campaign.30
For the reasons stated, I dissent.
30
Under my view of the merits, I would remand this case to
the district court to determine how to enjoin the enforcement of
the contribution refund and the spending limits waiver under the
1996 amendment, see note 2, supra, and to determine if other
provisions of the state's campaign finance law can remain. This
is not to say that those provisions that allow candidates to
receive a public subsidy in exchange for a binding agreement to
adhere to specified limits standing alone cannot remain. As I
have pointed out, if a candidate voluntarily chooses to accept a
public subsidy in exchange for an agreement to adhere to
specified limits, there is nothing unconstitutional about such a
provision as long as it does not serve to chill the voluntary
choice of the opposing candidate to decline public financing and
exceed the spending limits. See Buckley, 424 U.S. at 57 n.65.
Nonetheless, I would have the district court determine in the
first instance how the spending limits waiver and contribution
refund can be enjoined, and whether they are severable from the
remaining provisions of Minnesota's campaign finance act.
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A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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