Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

FULANI v. BRADY

January 5, 1993

DR. LENORA B. FULANI and LENORA B. FULANI FOR PRESIDENT, Plaintiffs,
v.
NICHOLAS F. BRADY, Secretary of the Treasury, SHIRLEY D. PETERSON, Commissioner of Internal Revenue, and LEAGUE OF WOMEN VOTERS EDUCATION FUND, Defendants.



The opinion of the court was delivered by: ROBERT W. SWEET

 Sweet, D.J.

 The Defendants Nicholas F. Brady and Shirley D. Peterson (collectively, the "Federal Defendants"), joined by the Defendant League of Women Voters Education Fund (the "League"), have moved pursuant to Rule 12(b)(1) and (6), Fed. R. Civ. P., for an order dismissing the First Amended Complaint (the "Amended Complaint") of Plaintiffs Lenora B. Fulani and Lenora B. Fulani for President (collectively, "Fulani") for lack of subject matter jurisdiction or, in the alternative, for failure to state a claim upon which relief may be granted. For the reasons set forth below, the Defendants' 12(b)(1) motion is denied, but their 12(b)(6) motion is granted and the Amended Complaint is dismissed.

 The Parties

 Plaintiff Lenora B. Fulani is a self-described national political leader with a core constituency of African-American citizens. She is the chairperson of the New Alliance party and was the first woman and the first African-American to be on the ballot in each of the fifty states. Plaintiff Lenora B. Fulani for President is the political organization that ran Fulani's 1992 presidential campaign.

 Defendant Nicholas F. Brady is the Secretary of the Treasury and Defendant Shirley D. Peterson is the Commissioner of Internal Revenue.

 Defendant League of Women Voters (the "League") is a private, not-for-profit charitable trust established by the League of Women Voters of the United States ("LWVUS") in the District of Columbia in 1957 and devoted exclusively to educational purposes. *fn1"

 Prior Proceedings

 On February 7, 1992, Fulani filed the original complaint in this action, which challenges the Federal Defendants' failure to enforce the non-electioneering prohibitions of § 501(c)(3), and which named Nicholas Brady, Secretary of the Treasury, and Shirley D. Peterson, Commissioner of Internal Revenue, as defendants. Fulani filed the Amended Complaint, naming the League as a party defendant, on February 13, 1992. Fulani sought a preliminary injunction compelling the Federal Defendants to revoke the League's tax-exempt status prior to the New Hampshire Democratic presidential primary debate cosponsored by the League and the Cable News Network ("CNN") and scheduled for February 16, 1992.

  Fulani's motion for a temporary restraining order and a preliminary injunction was heard in Part I before the Honorable John E. Sprizzo. Judge Sprizzo, reading the opinion into the record from the bench, denied Fulani's motion. Fulani filed a notice of appeal of Judge Sprizzo's decision with the Second Circuit. *fn2" This Court granted the Federal Defendants' motion for a stay of discovery pending the decision of the Second Circuit. See Fulani v. Brady, No. 92 Civ. 0998 (RWS), 1992 U.S. Dist. LEXIS 7320 (S.D.N.Y. May 19, 1992). In July 1992, the Second Circuit dismissed the appeal as moot because the debate, which Fulani had sought to enjoin, had been held on February 16, 1992. See Fulani v. Brady, 972 F.2d 1329 (2d Cir. 1992).

 The Federal Defendants now move for dismissal of Fulani's Amended Complaint on the ground that either this Court does not have jurisdiction over the subject matter of this action because Fulani does not have standing to sue the League and the Federal Defendants, or that, even if Fulani does have standing, she has failed to state a claim upon which relief may be granted.

 This motion was filed by the Federal Defendants on July 7, 1992. The Court heard oral arguments and considered the motion fully submitted on September 23, 1992.

 Facts 3

 Since its founding in 1957, the League has frequently sponsored Democratic and Republican presidential primary debates, and presidential and vice-presidential general election debates. In 1984, the League sponsored four Democratic presidential primary debates, one vice-presidential general election debate, and two presidential general election debates. In 1988, the League sponsored one Republican presidential primary debate and two Democratic presidential primary debates. The purpose of the League's primary debates is to educate the nation's electorate about the issues and the positions of the candidates running in the primary election campaigns, and to stimulate voter interest and participation in the electoral process.

 Fulani ran for the presidency of the United States in 1988 as an independent and minor party candidate. In response to her exclusion from the League-sponsored presidential primary debates, Fulani filed an action against the League and moved for a temporary restraining order and preliminary injunction against the League. See Fulani v. League of Women Voters Educ. Fund, 684 F. Supp. 1185 (S.D.N.Y. 1988) ("Fulani I"). This Court denied that motion, and the Second Circuit affirmed and dismissed the action. See Fulani v. League of Women Voters Educ. Fund, 882 F.2d 621 (2d Cir. 1989) ("Fulani II").

 After being excluded from the 1988 presidential debates sponsored by the Commission on Presidential Debates ("CPD"), Fulani brought an action against the Federal Defendants and the CPD in the District Court for the District of Columbia, seeking the revocation of the CPD's tax-exempt status. The court dismissed the action, see Fulani v. Brady, 729 F. Supp. 158 (D.D.C. 1990), and a divided Court of Appeals affirmed. See Fulani v. Brady, 290 U.S. App. D.C. 205, 935 F.2d 1324 (D.C. Cir. 1991), cert. denied, 116 L. Ed. 2d 812, U.S. , 112 S. Ct. 912 (1992) (Mikva, C.J., dissenting) ("Fulani III").

 When Rev. Jackson announced that he would not seek the Democratic party nomination in 1992, Fulani entered the Democratic party race. On December 17, 1991, she filed as a candidate in the New Hampshire Democratic party primary, and her ballot access counsel gave routine notice to the FEC that she was entering a number of Democratic party nominating contests. Fulani immediately set up a fully staffed campaign and press office in Manchester, New Hampshire, and reoriented her full-time itinerary of campaign appearances to focus on that state.

 The New Hampshire Democratic party (the "State Party") planned a series of debates before live audiences among "major" candidates for the party's nomination. The most significant debates were scheduled for three Sundays -- December 19, 1991, in Nashua, January 19, 1992, in Manchester, and February 10, 1992, in Claremont. Fulani was told that she did not qualify for inclusion in the debates because she had never held statewide office.

 Fulani, however, ended up participating in the Nashua debate. At the beginning of that debate another insurgent Democrat, former Mayor of Irvine, California, Larry Agran, stood up in the audience and protested his exclusion. The moderator instructed police officers to physically eject Agran from the room. Spontaneously, members of the audience shouted protests and asked for Agran and then Fulani to be included, which they were.

 In planning for the subsequent debates, the State Party publicly stated that Fulani and Agran would not be included in any further party-sponsored debates. To avoid a repeat of the Nashua call for the insurgent candidates from the audience, the State Party moved the Manchester debate to a closed television studio, which drew the wrath of hearty protestors who picketed the studio in sub-zero weather. Rather than attempt to hold another exclusionary debate before an audience of rank and file democrats, the State Party finally decided simply to cancel the Claremont debate altogether.

 In 1992, the League agreed with the Cable News Network ("CNN") to co-sponsor one Democratic party presidential primary debate and one Republican presidential primary debate prior to the New Hampshire primary. The Democratic party debate (the "Debate") was scheduled to be held in St. Anselm on February 16, 1992, two days before the New Hampshire primary election. The events surrounding the Democratic primary debate are the focus of Fulani's complaint.

 In January 1992, Fulani's campaign inquired of the League regarding her inclusion in the Debate. In a letter dated January 16, 1992, the League provided the Fulani campaign with its "New Hampshire Democratic Presidential Primary Debate Participation Criteria" ("Selection Criteria") and gave Fulani until January 24 to demonstrate that she qualified to be included under the Selection Criteria. Fulani submitted a detailed analysis, complete with full documentation, to show that her candidacy met all of the Selection Criteria. The League responded with a pro-forma rejection dated January 23, 1992 and denied Fulani's request on the ground that she did not meet the League's Selection Criteria because she was not a "significant" candidate for the Democratic party's nomination for president.

 Fulani made a written demand on the Federal Defendants to revoke the League's tax exemption prior to the Debate, because the League acted in a partisan manner, violating the statutes proscribing the involvement of tax exempt organizations in the political arena. The Internal Revenue Service ("IRS") responded that it would not be able to inform Fulani as to what action, if any, it might take in response to her demand. She then commenced this action, and sought a preliminary injunction against the IRS, which was denied by Judge Sprizzo, sitting in Part I, on February 13, 1992, and the following day the Second Circuit denied Fulani's application for an interim stay of the Debate pending appeal. The League-sponsored Debate was held on February 16, 1992.

 Fulani contends that the harm to her caused by the certification by the United States government that her exclusion by the League was based on a nonpartisan and fair judgment that she was an insignificant candidate would have been eliminated. In Fulani's view, the IRS compounded the injury by explicitly stating in writing in a public document that it approved of the League's determination that Fulani's candidacy was insignificant.

 Fulani also alleges that she continues to be injured by the policy of the IRS by which it permits tax exempt debate sponsors to select candidates. According to Fulani, the permitted use of subjective criteria to determine participation the debates makes it impossible for an insurgent or independent candidate to know what must be accomplished in order to qualify to participate in the debates. This has a chilling effect on supporters and allies of campaigns such as hers because the candidate cannot plan to meet objectives that should ensure inclusion in the debates sponsored by IRS-certified nonpartisan voter education organizations.

 Discussion

 The League is exempt from federal income taxation pursuant to 26 U.S.C. § 501(c)(3) of the Internal Revenue Code. This section provides that a tax-exempt organization may not:

 participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

 Id. The Treasure Department regulation addressing the application of this nonpartisanship requirement provides that:

 activities which constitute participation or intervention in a political campaign on behalf of or in opposition to a candidate include, but are not limited to, the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate.

 Treas. Reg. (26 C.F.R.) 1.501(c)(3)-1(c)(3)(iii). See Rev. Rul. 67-71, 1967-1 C.B. 125 (1967).

 The regulations of the FEC, an independent federal agency, provide that nonpartisan candidate debates may be staged by (1) non-profit organizations that are exempt from federal taxation under § 501, (2) nonprofit organizations that are exempt from federal taxation under 26 U.S.C. § 501(c)(4) and that do not "endorse, support or oppose political candidates or political parties," and (3) broadcasters, bona fide newspapers, magazines and other periodical publications. 11 C.F.R. § 110.13(a). The FEC regulations leave the structure of any such debates to the discretion of the staging organization "provided that (1) such debates include at least two candidates, and (2) such debates are nonpartisan in that they do not promote or advance one candidate over another." 11 C.F.R. § 110.13(b).

 Fulani alleges that she has been directly injured by the status and actions of the League as a tax exempt organization, and as such she has standing to bring an action against the government organs responsible for certifying the League's tax-exempt status and compel them to revoke that status.

 I. Fulani Has Standing

 The Federal Defendants challenge Fulani's standing to bring this action in their motion to dismiss the Amended Complaint pursuant to Rule 12(b)(1) on the ground that this Court lacks jurisdiction over the subject matter of this action. In considering the issue of whether Fulani has standing to bring this action, it must be noted at the outset that this Court is not writing on a clean slate. In Fulani II, the Second Circuit held that Fulani did have standing to challenge the tax-exempt status of the League in her action against the League, the Secretary of the Treasury, and the Commission of Internal Revenue. At issue in that action was Fulani's exclusion from the debates sponsored by the League during the 1988 presidential campaign.

 In Fulani III, over the dissent of Chief Judge Mikva, the D.C. Circuit affirmed the trial court's dismissal of Fulani's complaint in which she challenged the tax-exempt status of the Commission for Presidential Debates. The D.C. Circuit summarized Fulani's allegations as follows:

 Fulani contends that she is injured by the fact that the CPD is engaging in a program of political misinformation, perpetuating bipartisan, rather than nonpartisan, political debates. This program . . . advocates and perpetuates a two-party system, giving the false impression that there are only two legitimate candidates for presidential office. . . . This misinformation program directly injured her by depriving her of the media coverage and political legitimacy necessary to her campaign[ and] violates § 501(c)(3)'s mandate that tax exempt organizations not engage in partisan political activities.

 Fulani III, 935 F.2d at 1324.

 The D.C. Circuit noted that third-party litigation of another's tax-exempt status is inconsistent with, if not precluded by, the statutory scheme created by Congress and rejected Fulani's assertion of "competitor standing" to challenge the CPD's tax-exempt status, see id. at 1327, *fn4" and concluded that "where a party is seeking simply to remove a third party's entitlement to a tax exemption, the exemption likely will not bear ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.