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Kurland v. New York City Campaign Finance Board

January 21, 2009


The opinion of the court was delivered by: O. Peter Sherwood, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Plaintiffs Yetta Kurland, Jo Anne Simon, Mel Gagarin and Dan Jacoby ("plaintiffs") commenced this action for declaratory and injunctive relief pursuant to CPLR § 3001 and Article 63. This case brings up for review Advisory Opinion 2008-7 ("AO") issued by the defendant New York City Campaign Finance Board ("the CFB") following the enactment on November 3, 2008, of Local Law No. 51 (2008) which extended term limits from the current two terms to three for current elected officials and allowed such officials to run for their incumbent seats in the 2009 general election. The AO was issued by the CFB to address the extraordinary impact of Local Law No. 51 on prospective candidates with reported activity in anticipation of seeking election to a higher office, who will now seek re-election to their incumbent office, and to enhance the possibility that such candidates will participate in the New York City Finance Program ("the Program"). The question before this Court is whether the AO violates the New York City Campaign Finance Act ("the Act") (Administrative Code of the City of New York["Administrative Code"] § 3-701 et seq.).

The complaint seeks in its first cause of action a declaration that the CFB's AO violates the Act. In the second cause of action, the plaintiffs essentially seek to enjoin the CFB from implementing the terms of the AO by restraining the CFB from exempting expenditures made by a candidate in furtherance of a campaign for any municipal office from 2006-2008.

The CFB cross moves for an order pursuant to CPLR §§ 2215 and 3211 (a) (7) dismissing the complaint for failure to state a cause of action.

The Court has reviewed and considered the following papers: the Order to Show Cause, the affirmation of Leo Glickman, Esq., plaintiffs' attorney, dated December 2, 2008, with exhibits "A" and "B", the notice of cross motion, dated December 15, 2008, the affidavit of Amy M. Loprest, CFB's Executive Director, sworn to on December 15, 2008, with exhibits "A" through "F", defendant's memorandum of law in opposition to the Order to Show Cause and in support of the cross motion to dismiss, and plaintiffs' reply memorandum of law in further support of the Order to Show Cause. The Court also heard oral argument on the plaintiffs' application and the defendant's cross motion. Following oral argument, the Court reserved decision. Upon due consideration of the moving and cross moving papers and the parties' arguments both on the papers and orally made to the Court, the defendant CFB's cross motion to dismiss the complaint is granted, the complaint is dismissed and the plaintiffs' motion for declaratory and injunctive relief is denied.

The Act provides for and governs the voluntary system for candidates running for any of five covered offices, namely, Mayor, Comptroller, Public Advocate, Borough President and City Council Member, to receive matching taxpayer funds in exchange for their agreement to abide by rules limiting fundraising and campaign expenditures. The Act, together with the New York City Charter, Chapter 46 ("the Charter"), created the CFB as an independent agency charged with administering the Program (Administrative Code § 3-708, Charter §1052). The Act and the Campaign Finance Board Rules ("the Rules") promulgated by the CFB pursuant to section 3-708 of the Act and section 1052 of the Charter, govern each candidate's eligibility for public funds, the auditing of each candidate's financial activity to ensure compliance with the Act and Rules, and disbursement of public funds. The primary purpose of the Program is to make candidates for municipal elective office less dependent on large contributions and to enable grassroots candidates to mount competitive campaigns. In this regard, the CFB seeks to maximize participation in the Program because all participating candidates must adhere to the same spending limits thereby creating a more level playing field for all candidates in an election.

All participants in the Program are subject to the Act's spending limits which for purposes of this proceeding fall into three categories: the limit for the three years prior to the year of the election, the primary limit and the general election limit. The limit for City Council candidates is $43,000 for the three calendar years preceding the election for which the candidate is certified as a participant in the Program, whereas the expenditure limit for the higher offices ranges from $129,000 to $290,00 (see, Administrative Code § 3-706 [2]). City Council candidates are limited to $161,000 for the primary election, and then again for the general election, whereas the expenditure limits for the primary and general election for higher covered offices range from $1,386,000 to $6,158,000 (see, Administrative Code § 3-706 [1] [a]).

The extension of term limits caused by the enactment of Local Law No. 51, created a dilemma for participating City Council members who had been running for higher office, but who wanted to change course and run for their incumbent office pursuant to Local Law No. 51.In the AO the CFB described the issue before it as follows:

As a result of [Local Law No. 51], many candidates may no longer choose to run in the 2009 election or may choose to run for a different office than that for which they have been raising and spending money. The biggest challenge is that the Board's rules presume that all contributions and spending are for a candidate's next election. At this late point in the election cycle, a substantial number of candidates have received many contributions at a higher limit than will apply if they run for a "lower office." More importantly, many candidates have spent well over the total expenditure limits for the "lower office."

The CFB then proceeded to provide candidates with guidance on how to rebut the presumptions found in the Rules in the unique circumstances before it and to permit the affected candidates to participate in the Program for the 2009 election even though they may have already raised or spent more than the expenditure limit for the lower office. In issuing the AO, the CFB believed that the options created thereby would ensure the fairest and most competitive elections for the 2009 election cycle for both incumbents and challengers alike. The AO is an attempt by the CFB to make it practical for all candidates who wish to join the Program to do so. It addresses two groups of candidates - - candidates who anticipated seeking higher office who will now seek re-election to their incumbent office in 2009 (Group 1 candidates) and candidates with reported activity who will now not run in the 2009 election, but will seek office in 2013 (Group 2 candidates).

The CFB through the AO interpreted its Rules to allow Group 1 candidates to: (1) freeze their current committee until the 2013 election cycle and restart with a new committee for the 2009 election cycle; or (2) use their current committee to run for re-election to their incumbent office in the 2009 election, return all over-the-limit contributions, and allocate all expenditures incurred prior to November 3, 2008, between the aborted 2009 campaign and the 2009 re-election campaign. In order to take advantage of one of these two options, candidates must show that they had been seeking a higher office.

The CFB also interpreted its Rules to allow Group 2 candidates to keep the committee formed for the 2009 election cycle and use it instead for the 2013 election. All expenditures incurred prior to January 12, 2010, except those associated with fundraising, will not count toward the 2013 election. Costs associated with raising those funds will count towards the spending limit for the 2013 election with a 15% flat rate assessed on the total amount of funds in the committee on January 11, 2010.

In both its moving papers and at oral argument, plaintiffs commended the CFB for attempting to encourage as many candidates as possible to join the Program, but contended that its mechanism for doing so was faulty. Plaintiffs claim that the AO suspends the portions of the Act that are intended to level the playing field between candidates. According to plaintiffs' argument, the AO is not in harmony with, but rather is contrary to the Act and Rules and has the affect of amending the Act. Specifically, plaintiffs argue that the Act addresses when expenditures for one office count toward the expenditure limit for a different office, which expenditures are exempt from the limits, and clearly provides that all non-exempt expenditures for municipal races must count toward the participating candidate's limit for the municipal race for which the candidate ultimately decides to run. They further argue that the provision of the AO permitting a candidate to freeze his or her committee and start fresh violates a 2003 amendment to the Act which prohibits a participating candidate from using an entity other than the designated committee to aid in the election covered by the candidate's certification. Plaintiffs assert that the AO places non-incumbent challengers at a disadvantage by permitting incumbents to escape the effects of the expenditure limits during the first three years of the election cycle when challengers do not share the same advantage. Plaintiffs aver that if the CFB believes that the Act ...

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