End Citizens United PAC v. Fed. Election Comm'n

90 F.4th 1172

END CITIZENS UNITED PAC, Appellant v. FEDERAL ELECTION COMMISSION AND NEW REPUBLICAN PAC, Appellees

No. 22-5277

United States Court of Appeals, District of Columbia Circuit

Argued April 26, 2023

Decided January 19, 2024

Appeal from the United States District Court for the District of Columbia, (No. 1:21-cv-02128)

Kevin P. Hancock argued the cause for appellant. With him on the briefs were Adav Noti, Alexandra Copper, and Allison Walter. Molly Danahy entered an appearance.

Stuart C. McPhail and Adam J. Rappaport were on the brief for amicus curiae Citizens for Responsibility and Ethics in Washington in support of appellant.

Jason B. Torchinsky argued the cause for intervenor-appellee New Republican PAC. With him on the brief were Edward M. Wenger, Phillip M. Gordon, and Kenneth C. Daines.

Before: Pillard, Katsas, and Rao, Circuit Judges.

Opinion concurring in part and dissenting in part filed by Circuit Judge Pillard.

RAO, Circuit Judge:

This case concerns the Federal Election Commission's dismissal of two administrative complaints alleging that New Republican PAC and Senator Rick Scott violated various election laws. The Commission dismissed the first complaint on the ground of prosecutorial discretion, and it dismissed the second after concluding the record provided no "reason to believe" the alleged violation occurred. End Citizens United PAC filed suit, challenging both dismissals. The district court dismissed the suit, and we affirm. The Commission's first dismissal is unreviewable because it was based on prosecutorial discretion, and the second dismissal was not contrary to law.

I.

A.

New Republican is a "Super PAC," meaning a political action committee "that makes only independent expenditures and cannot contribute to candidates." See McCutcheon v. FEC, 572 U.S. 185, 193 n.2, 134 S.Ct. 1434, 188 L.Ed.2d 468 (2014) (plurality opinion). Rick Scott became New Republican's chairman in May 2017 and formally stepped down in December 2017. He officially declared his run for Senate in April 2018.

End Citizens United filed two administrative complaints with the Commission, alleging New Republican and Scott¹ violated several requirements of the Federal Election Campaign Act of 1971 ("FECA"). See Pub. L. No. 92-225, 86 Stat. 3 (codified as amended at 52 U.S.C. § 30101 et seq.). According to End Citizens United, before officially declaring his Senate run, Scott began informal campaign activities and used New Republican's resources to support his nascent candidacy. He also allegedly continued to exert control over New Republican into 2018—well after his chairmanship ended. He purportedly did this by fundraising for New Republican, participating in conference calls, and interacting with political allies connected to the PAC, among other things. Immediately after Scott officially declared his candidacy in April 2018, New Republican revamped its website and issued a press release to announce its "focus[ ] on the election of Rick Scott in the race for Florida United States Senate."

Based on this timeline, End Citizens United's first complaint maintained that Scott became a "candidate" in May 2017, the same month he became chairman of New Republican, and that he failed to register his campaign until nearly a year later. Complaint at 1-5, FEC Matter Under Review 7370 ("Complaint One") (Apr. 23, 2018); see also 52 U.S.C. § 30101(2) (defining "candidate"); 11 C.F.R. § 100.72(a) (outlining permissible activities and reporting requirements for individuals "determining whether . . . [to] become a candidate"). As a consequence of the alleged failure to timely register his campaign, Scott failed to make the necessary filings and reports to the FEC. See 52 U.S.C. §§ 30102-04. The complaint also alleged that New Republican unlawfully raised and spent funds while under Scott's control, because all candidate controlled entities are subject "to [FECA's] limitations, prohibitions, and reporting requirements." Id. § 30125(e)(1)(A).

The second complaint alleged unlawful coordination between Scott and New Republican. Complaint at 1-8, FEC Matter Under Review 7496 ("Complaint Two") (Sept. 14, 2018). New Republican launched two television commercials, in May and June 2018, against Scott's opponent in the Senate race. End Citizens United alleged that New Republican had impermissibly contributed to Scott's campaign by coordinating with Scott to purchase the commercials. See 52 U.S.C. § 30116(a)(7)(B)(i), (f) (specifying that, when a Super PAC makes an expenditure "in cooperation, consultation, or concert[ ] with" a candidate, that expenditure "shall be considered" an impermissible contribution even if the Super PAC never transferred funds directly to the candidate); see also 11 C.F.R. § 109.21 (defining "coordinated communication"). In support of this claim, End Citizens United emphasized that Scott had continued his involvement with New Republican for months after formally stepping down, including during the period when the advertisements were booked and paid for. Scott and New Republican denied the allegations in both complaints.

B.

After reviewing the complaints and responses, the Commission's general counsel recommended the Commission find "reason to believe" Scott and New Republican committed some of the Complaint One violations. See 11 C.F.R. § 111.7(a). With respect to the Complaint Two coordination claim, the general counsel relied on the sworn statement of Blaise Hazelwood, who took over New Republican after Scott's departure. Hazelwood stated that she had directed the advertisement placements without coordinating with Scott or his campaign. The general counsel noted that End Citizens United's complaint almost exclusively relied on the timing of the campaign commercials, inferring coordination from the fact that the commercials aired shortly after Scott stepped down from New Republican and formally announced his candidacy. Aside from this "mere temporal relationship," however, the general counsel concluded there was "no information available suggesting" coordination had occurred. The general counsel recommended the Commission take no action on Complaint Two and wait to see whether the recommended investigation into Complaint One uncovered facts that would provide reason to believe New Republican had unlawfully coordinated with Scott.

Under FECA, the Commission will begin an investigation only if four commissioners determine there is "reason to believe" a violation has occurred. 52 U.S.C. § 30109(a)(2). "[A]n affirmative vote of four commissioners is required for the agency to initiate enforcement proceedings." Citizens for Resp. & Ethics in Wash. v. FEC ("New Models"), 993 F.3d 880, 883 (D.C. Cir. 2021); see 52 U.S.C. § 30109(a)(2). A split vote of the six commissioners means no investigation may go forward. See Combat Veterans for Cong. PAC v. FEC, 795 F.3d 151, 153 (D.C. Cir. 2015). Here, three commissioners voted to find reason to believe the violations had occurred, and the other three voted to dismiss both complaints. Lacking the four votes necessary to begin an investigation, the Commission voted five to one to close the file and dismiss the complaints.

The three commissioners voting against enforcement, the so-called controlling commissioners, issued a Statement of Reasons.² Statement of Reasons of Vice Chair Allen Dickerson and Commissioners Sean J. Cooksey and James E. "Trey" Trainor III, FEC Matters Under Review 7370 and 7496 ("Statement of Reasons") (July 21, 2021). With respect to Complaint One, they offered legal and evidentiary grounds for dismissal. They also explicitly "invoked . . . prosecutorial discretion pursuant to Heckler v. Chaney," concluding it would be unwise to "authoriz[e] an expensive and resource-consuming investigation while the Commission is . . . working through a substantial backlog of cases." Id. at 10 (citing Heckler v. Chaney, 470 U.S. 821, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985)). As to Complaint Two, the controlling commissioners offered two independent reasons for dismissal. First, they suggested the coordination allegation could not go forward without "a threshold finding" that Scott or New Republican had violated FECA's campaign registration, filing, reporting, or spending requirements, as alleged in Complaint One. Id. at 2 n.2. Second, they incorporated by reference the general counsel's evidentiary analysis, agreeing the record did not support a reason to believe coordination had occurred. Id. at 5 n.25.

End Citizens United filed suit in 2021, challenging the Commission's dismissals as "contrary to law." See 52 U.S.C. § 30109(a)(8)(C). The Commission did not defend its dismissals in district court. After allowing New Republican to intervene as a defendant, the district court granted summary judgment in New Republican's favor. End Citizens United PAC v. FEC, No. 21-2128, 2022 WL 4289654, at *1 (D.D.C. Sept. 16, 2022). The district court concluded the Commission's dismissal of the first complaint was unreviewable because that dismissal was based in part on prosecutorial discretion. Id. at *5 (citing New Models, 993 F.3d at 889). And it concluded the Commission's dismissal of the second complaint was reviewable but not contrary to law. Id. at *6-7. End Citizens United timely appealed. Our review is de novo. Citizens for Resp. & Ethics in Wash. v. FEC ("Commission on Hope"), 892 F.3d 434, 440 (D.C. Cir. 2018).

II.

End Citizens United argues the dismissal of Complaint One was contrary to law because the controlling commissioners erroneously interpreted FECA to require a showing of Scott's "subjective intent" to become a candidate. And, it argues, the Complaint Two dismissal was also contrary to law because the controlling commissioners applied FECA to the facts in an arbitrary and irrational way.

FECA allows a court to "declare that the dismissal of [a] complaint . . . is contrary to law." 52 U.S.C. § 30109(a)(8)(C). Under our precedents, a dismissal is "contrary to law" if "(1) the FEC...