The American Interest
Policy, Politics & Culture
What the Court Did—and Why
Published on July 1, 2010

Since 1976, when the Supreme Court decided the seminal case of Buckley v. Valeo, the Justices have been locked in what both sides see as a Manichean struggle over the constitutionality of campaign finance regulation. On one side are those Justices who view the world of politics as fraught with corruption and undue access for the wealthy; they worry that voter confidence gets shaken by each new campaign finance scandal. On the other side are those Justices who see any limitation on money in politics as overt government censorship that violates the First Amendment; they fear that incumbents will squelch criticism in a replay of the Alien and Sedition Acts. Justices fight this rarified battle with jurisprudential jargon that parses levels of scrutiny, compelling interests and the appropriate tailoring of the law, but it is this fundamental difference in worldviews that really drives the Court’s debates. And as Court personnel shifts—or, less often, Justices change their minds—the Court’s doctrine swings like a pendulum, alternating between deference and skepticism toward the regulation of campaign finance.

To most Americans, the Supreme Court’s 5–4 decision in Citizens United v. Federal Election Commission this past January, which recognized a constitutional right of corporations and labor unions to spend unlimited sums in candidate elections, came as a bolt from the blue. But for those who follow the issue closely, the decision was an inevitable consequence of the retirement of perennial swing-voter Justice Sandra Day O’Connor and her replacement with the more conservative Justice Samuel Alito. The outcome of Citizens United, the Court’s most skeptical judgment ever on the constitutionality of campaign finance regulation, came just a few years after the Court’s most deferential decisions in the area.

How did we get here? What did the Court actually do in Citizens United? And what room does the Citizens United decision leave for future regulation?

The Swinging Pendulum

Though campaign finance restrictions have been on the books since 1907, Congress did not enact serious regulation until 1974, in the wake of Watergate and a number of other money-in-politics scandals. The 1974 amendments to the Federal Election Campaign Act (FECA) imposed Federal election contribution limits (limits on money given to candidates or committees), spending limits (limits on money spent on candidate elections) and a series of disclosure rules, and it allowed for voluntary public financing for presidential elections. Two years later, in Buckley v. Valeo, the Court considered the constitutionality of FECA’s major provisions.

Buckley, the product of a compromise and drafted (unusually) by a committee of Justices, established that the amounts of campaign contributions could be limited to prevent corruption or the appearance of corruption. However, the Court held that limits on the spending of money could not be justified by an anti-corruption interest. They cited a supposed lack of evidence that independent spending could corrupt candidates, and they reasoned that such a restriction enacted for the purpose of “equalizing” the influence of various individuals and groups would be “wholly foreign” to the First Amendment, which the Court said ensured unfettered political discussion. The Buckley Court declared that limits on the amount of contributions only “marginally” restricted First Amendment rights and were therefore subject to lower constitutional scrutiny, while spending limits more directly limited speech and were therefore subject to strict scrutiny—a tough standard that was described by legal scholar Gerald Gunther as “strict in theory but fatal in fact.”

Since Buckley, the Court’s jurisprudence has swung back and forth as different Court majorities either showed deference toward legislative efforts to regulate campaign finances or showed hostility to such regulation on First Amendment grounds. Throughout these shifts between deference and deregulation, however, the Court had yet to formally overturn any of its campaign finance precedents—until the Citizens United case.

On contributions, Buckley upheld the Federal $1,000 individual contribution limit. But despite Buckley’s holding that restrictions on the amount of contributions entail only a marginal restriction on speech, the Court soon held, in 1981, that limits on contributions to a local ballot measure committee could not be sustained because there was no candidate to corrupt.1 Two decades after Buckley, the Court upheld a $1,075 contribution limit in Missouri state elections against a challenge that the amount was too low for challengers to mount an effective campaign, despite the fact that the $1,075 limit was worth only a fraction of the value of Buckley’s $1,000 contribution limit in Buckley’s 1976 dollars. In that 2000 case, Nixon v. Shrink Missouri Government PAC, the Court expressed a standard of review for challenges to the amount of campaign contributions that was so deferential to Congress that it was hard to see any contribution limit failing constitutional scrutiny as too low. Yet only a few years later, in 2006, after Chief Justice John Roberts and Justice Alito replaced Chief Justice William Rehnquist and Justice O’Connor, the Court, virtually ignoring but not expressly overturning Shrink Missouri, held that Vermont’s campaign contribution limits were indeed too low, and that the amounts needed to be high enough to allow for meaningful political competition.2

The Court’s crooked path of reasoning had been equally tortured on the spending side. The Court followed Buckley’s striking down of spending limits applied to individuals and candidates with a ruling in 1986, in First National Bank of Boston v. Bellotti, that stuck down limits on spending by corporations in ballot measure elections. The Court took an expansive view of corporate free speech rights but inserted an important footnote suggesting that corporate spending limits in candidate elections might be permissible to prevent corruption of candidates, a footnote in tension with Buckley’s statement that independent spending by individuals cannot corrupt candidates because of the absence of any possible quid pro quo. The Court held that nonprofit ideological corporations that do not take corporate or union money cannot be limited in spending their treasury funds in candidate elections,3 but a few years later, in 1990, the Court in Austin v. Michigan Chamber of Commerce confirmed that for-profit corporations could be so limited.4 The Austin Court held that the law was justified to prevent “the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideas.” Though the Court called this antidistortion interest one in preventing “corruption”, it really represented an embrace of the equality rationale (at least as regards corporations) that the Court had rejected in Buckley.

Then, in 2002, Congress passed the Bipartisan Campaign Reform Act, commonly known as the McCain-Feingold law, which aimed to close what some saw as major loopholes in the FECA. In one of the longest opinions in Supreme Court history, McConnell v. FEC, the Court in a 5–4 vote upheld McCain-Feingold’s major provisions. The Court reaffirmed Austin and extended its holding to unions without explaining why unions, which amass wealth in a much more egalitarian way than corporations, presented the same distortion dangers of corporations recognized in Austin. The McConnell Court said that corporations and unions could exercise their First Amendment rights through other means, such as raising money for a separate political action committee (PAC). This reaffirmation of Austin in McConnell represented the third time Justice O’Connor had switched her position on the Austin question.

Once Justice O’Connor left the Court, it did not take long for the pendulum to swing back toward deregulation. In the 2007 Federal Election Commission v. Wisconsin Right to Life (“WRTL”) case, the Court mostly eviscerated the same corporate and union limits in McCain-Feingold that it had upheld just a few years earlier in McConnell. Likely in an effort to appear moderate or minimalist, Chief Justice Roberts and Justice Alito wrote the opinion so as not to expressly overrule McConnell, leading Justice Antonin Scalia in WRTL to decry Chief Justice Roberts’s and Justice Alito’s “faux judicial restraint”, an approach Scalia says “obfuscat[ed]” the Court’s sub silentio overruling of precedent.

The Hard Swing Toward
Deregulation

Citizens United started out as a quirky case, brought by the indefatigable Jim Bopp, an anti-abortion lawyer and Republican National Committeeman who goes around the country challenging as many campaign finance and judicial conduct regulations as he can. (Disclosure: Bopp and I are currently on opposite sides of litigation challenging some of San Diego’s campaign finance laws.) It appears that Bopp brought the case to water down McCain-Feingold’s disclosure laws in the same way that WRTL (another Bopp case) watered down the Federal corporate spending limits. But the case took an unexpected turn.

Citizens United, a nonprofit ideological corporation—but one, importantly, that took some for-profit corporate funding—produced a feature-length documentary entitled Hillary: The Movie. The documentary appeared in theaters and was available to order via DVD during the 2008 primary season. Citizens United also wished to distribute the movie through a cable television “video-on-demand” service. In exchange for a $1.2 million fee, a cable television operator consortium would have made the documentary available for downloading by cable subscribers for free “on demand” as part of an “Election ’08” series. The documentary included a great deal of negative statements about Hillary Clinton, including assertions that she was a “European socialist” and was not fit to be Commander-in-Chief. Citizens United also produced some broadcast ads promoting the documentary.

The Federal Election Commission took the position that the documentary was a broadcast communication covered by McCain-Feingold, and so its “video-on-demand” cable broadcast could not be paid for with (for-profit) corporate funds. It also took the position that McCain-Feingold’s disclosure rules applied to the ads promoting the documentary. A lower court sided with the FEC on both issues, and Citizens United appealed to the Supreme Court.

There were many ways the Court could have decided the corporate spending question in Citizens United without revisiting the Austin and McConnell holdings allowing corporate spending limits. For example, the Court could have said that McCain-Feingold’s rules applicable to corporate-funded broadcasts did not apply to video-on-demand. Or it could have extended the exemption-from-spending rules for certain non-profit corporations to cover Citizens United. Certainly, the Court did not have to reach out so far as to overrule Austin and McConnell, given the usual requirements that a litigant asking for such relief first ask the lower court for it (Citizens United had abandoned the Austin claim in the lower court) and request such relief in its petition for hearing in the Supreme Court (it didn’t).

So how did Citizens United go from a quirky, unimportant case to the most publicly salient decision of the Roberts Court? It appears the trouble began in March 2009, when the Deputy Solicitor General, defending the FEC in a Supreme Court oral argument, had trouble answering hypothetical questions about whether the government had the authority to regulate campaign-related books paid for with corporate funds. The hypothetical got the attention not only of the Justices who were already on record as asking for Austin to be overruled, but also of Chief Justice Roberts and Justice Alito, who had expressed serious First Amendment concerns about campaign finance regulation in WRTL. Still, it was a surprise when, on the last day of the Supreme Court’s term last June, the Court set the case for reargument in September 2009 on the question of whether Austin (and parts of McConnell) should be overruled.

When the Court finally ruled this past January, it produced the result that supporters of campaign finance regulation both feared and expected: a 5–4 decision clearly and directly overruling Austin (and parts of McConnell) and holding that the government cannot limit independent spending by corporations or unions under either an anticorruption or an antidistortion theory. Nor, the Court said, could such limits be justified as a means of protecting the shareholders of corporations. The Court instead pointed to disclosure laws as the proper means of preventing corruption through independent spending.

As to the government’s anticorruption interest, the Court in an opinion by Justice Kennedy solidified Buckley’s fiction that large independent spending in support of a candidate (or in bashing an opponent) does not have the potential to corrupt a candidate because of the illegality of coordinating that spending with the candidate. The Court’s reliance on this fiction was especially unpersuasive given Justice Anthony Kennedy’s recent opinion, in Caperton v. A.T. Massey Coal Company, which recognized the potential for bias in a judge whose election victory was aided by a $3 million contribution to an independent group. Caperton noted that the expenditures created a “risk of actual bias” so “substantial” that due process required setting aside the elected judge’s decision in a case involving the independent group as a litigant. In Citizens United, however, Caperton was relegated to a rule about judicial recusal, and its underlying logic was tossed aside.

The Austin rationale finding an interest in counteracting the distorting effects of corporate money in politics fared even worse in Citizens United. This is hardly a surprise since the government had made a strategic decision at the second oral argument not to even defend this rationale before the Roberts Court. Solicitor General Elena Kagan, now Obama’s nominee for Supreme Court Justice, made an unsuccessful effort to explain the antidistortion interest away as a “shareholder protection” argument. On antidistortion, the Court trumpeted the loudest First Amendment refrains that it could, declaring of the decades-old provision limiting corporate spending in elections that “[t]he censorship we now confront is vast in its reach.” It similarly found the shareholder protection rationale unconstitutional. The only opening the Court seemed to leave on spending limits was a ban on spending by foreign corporations, a question the Court said it would address another day if necessary.

Beyond Citizens United

It is easy to both overstate and understate the importance of Citizens United. On the former side, the ruling, at least initially, may not change the existing campaign practices of corporations and labor unions much, if at all. That is because, since the WRTL decision, these entities already have a fair ability to engage in election-related speech, so long as they are careful to fit into the rules established in WRTL. In addition, the Court was explicit in noting that its decision did not challenge the rules barring corporate contributions to candidates, or the less-than-strict standard of review that applies to the constitutionality of contribution limits.

But it is easier to understate the importance of the case. First, it has become apparent that corporations and trade associations, such as the Chamber of Commerce, now feel as though a cloud has been lifted on their election-related activities. What was of questionable legality before is clearly legal now. Full-blown corporate involvement in Federal elections likely awaits the striking down of rules prohibiting corporations from making contributions to independent expenditure committees, so that corporations will not risk losing their customers by identifying with one side or the other in a candidate election. They will hide behind groups with innocuous names like “Americans for a Strong America” and other such anodyne labels.

Corporations may not have to wait long for such a change; indeed, campaign finance opponents expect the courts to strike down other restrictions thanks to one of the most crucial aspects of the Citizens United decision: its dicta. Dicta is language in a court opinion that is unnecessary for deciding a case but that is relied upon by lower courts in extending a case’s holding to new situations. The Citizens United opinion is full of statements about strict scrutiny and the need for courts to protect those who engage in campaign activities from overreaching by the legislature. The opinion also repudiates much of the dicta in earlier cases, such as McConnell, which had taken a broad view of what counts as “corruption” to justify upholding campaign contribution limit laws. In Citizens United, the Court flatly stated that “[i]ngratiation and access . . . are not corruption.” Already relying on this statement, the Republican National Committee is trying to get the Supreme Court to strike down McCain-Feingold’s rules barring parties from collecting six- and seven-figure “soft money” contributions from individuals, corporations and labor unions.

More cases are teed up in the lower courts. As Democrats try to make Citizens United a campaign issue and look for votes to pass the new DISCLOSE Act in response to the decision, the key question is what, if anything, the Roberts Court will tolerate. If it will not tolerate much, then it is likely that we will have to wait a decade or more for the next swing of the pendulum, once again courtesy of a change in Court personnel, before reasonable campaign finance regulations (aside from disclosure laws) will once again pass muster.



1Citizens Against Rent Control v. City of Berkeley, 454 U.S. 290, 299 (1981).
2Randall v. Sorrell, 548 U.S. 230 (2006).
3Federal Election Commission v. Massachusetts Citizens for Life, 479 U.S. 238, 241 (1986).
4Austin v. Michigan Chamber of Commerce, 494 U.S. 652, 655 (1990).

Richard L. Hasen is the William H. Hannon Distinguished Professor of Law at Loyola Law School, Los Angeles.