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Corren v. Condos

United States Court of Appeals, Second Circuit

July 31, 2018

Dean Corren, Marjorie Power, Vermont Progressive Party, Richard Kemp, Steven Hingtgen, Plaintiffs-Appellants,
James C. Condos, Vermont Secretary of State, in his official capacity, Thomas J. Donovan, Jr., Vermont Attorney General, in his official capacity, Defendants-Appellees. David Zuckerman, Senator, Intervenor-Plaintiff-Appellant,

          Argued: January 17, 2018

         Appellants, former and prospective candidates for public office in Vermont and a political party, brought this action asserting that Vermont's public election financing system, which allows candidates to receive grants of public funds if they abide by certain limitations, violates the First Amendment rights of candidates, their supporters, and political parties. The provisions that appellants challenge prohibit publicly financed candidates from accepting contributions or making expenditures beyond the amount of the grants and announcing their candidacies or raising or expending substantial funds before a certain date. The district court (Sessions, J.) dismissed all of appellants' claims for failure to state a claim and denied their motion for attorney's fees. We hold that, because candidates may freely choose either to accept public campaign funds and the limitations thereon or to engage in unlimited private fundraising, those limitations do not violate First Amendment rights. In addition, appellants are not entitled to a fee award because they cannot be considered prevailing parties. Accordingly, the judgment of the district court is AFFIRMED.

          John L. Franco, Jr., Law Office of John L. Franco, Jr., Burlington, VT, for Plaintiffs-Appellants and Intervenor-Plaintiff-Appellant.

          Eve Jacobs-Carnahan, Assistant Attorney General (Megan J. Shafritz, Assistant Attorney General, on the brief), Montpelier, VT, for Defendants-Appellees.

          Before: Katzmann, Chief Judge, Kearse and Pooler, Circuit Judges.

          Katzmann, Chief Judge

         This appeal requires us to decide whether Vermont's campaign finance law, Vt. Stat. Ann. tit. 17, §§ 2901 et seq., which imposes additional restrictions on candidates who choose to receive public campaign finance grants, violates the First Amendment of the United States Constitution.

         Appellants are several former and prospective candidates for Vermont Lieutenant Governor, as well as the Vermont Progressive Party. They brought this action under 42 U.S.C. § 1983, asserting that provisions of Vermont's "Public Financing Option," Vt. Stat. Ann. tit. 17, §§ 2981-2986 (the "Option"), violate the First Amendment and seeking declaratory and injunctive relief. In particular, appellants challenged provisions that prohibit publicly financed candidates ("PFCs") from (1) accepting more than a specified amount of campaign contributions, which are defined to include (with some exceptions) expenditures made by political parties in coordination with those candidates; (2) expending funds beyond the total amount of the public grants; and (3) announcing their candidacies or raising or expending more than a specified amount of funds before February 15 of an election year.

         The district court (Sessions, J.) dismissed all of appellants' claims for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and denied appellants' motion for reconsideration and for attorney's fees under 42 U.S.C. § 1988(b). Appellants mainly argue on appeal that the district court erred in upholding the challenged restrictions because those restrictions unfairly and unjustifiably burden the speech and associational rights of PFCs, their supporters, and political parties. However, because a candidate may freely choose whether to accept public funds and the conditions thereon in lieu of unlimited private fundraising, and presumably will make that choice only if she believes that doing so will expand her powers of speech and association, she cannot complain that those conditions burden her rights. Nor can the candidate's supporters and any political party with which she is affiliated complain that the limitations resulting from the candidate's voluntary choice burden their own rights. Thus, appellants' constitutional claims were properly dismissed. In addition, the district court correctly concluded that appellants were not prevailing parties eligible to receive attorney's fees. We therefore AFFIRM the judgment of the district court.


         I. Vermont's Campaign Finance Law

         In 1997, in an effort to lessen the influence of money in politics, the State of Vermont enacted a stringent campaign finance law. See An Act Relating to Public Financing of Election Campaigns, Disclosure Requirements and Limits on Campaign Contributions and Expenditures, 1997 Vt. Acts & Resolves 490 (codified at Vt. Stat. Ann. tit. 17, §§ 2801 et seq.) (repealed 2014) ("Act 64"). Act 64 imposed caps on the total expenditures that each candidate could make during an election cycle, as well as tight limits on the amount of contributions that a candidate could accept from a single individual or organization. See id. at 497-99. It also established a system of public election financing. See id. at 491-95. Yet Act 64's regime was short-lived: in 2006, the Supreme Court invalidated much of the law, holding that its limits on expenditures and contributions were unconstitutionally restrictive. Randall v. Sorrell, 548 U.S. 230, 236 (2006) (plurality opinion). Randall did not, however, pass upon the validity of the public financing system. Id. at 239.

         In 2014, Vermont repealed Act 64 and enacted a revised campaign finance law, see An Act Relating to Campaign Finance Law, 2014 Vt. Acts & Resolves 1 (codified at Vt. Stat. Ann. tit. 17, §§ 2901 et seq.) ("Act 90" or "the Act"), which loosened some of the restrictions that the Supreme Court held unconstitutional in Randall. The Act wholly dispenses with across-the-board limits on the total expenditures that candidates can make during an election cycle, whereas it still imposes limits, albeit less stringent ones, on the amounts of contributions that a candidate may accept from particular sources. See Vt. Stat. Ann. tit. 17, § 2941. For example, a candidate for lieutenant governor "shall not accept contributions totaling more than" $4000 from an individual or an organization that is not a political party. Id. § 2941(a)(3)(A); see id. § 2901(16).

         Act 90 defines a "contribution" as any payment, loan, or gift that is made "for the purpose of influencing an election, advocating a position on a public question, or supporting or opposing one or more candidates in any election." Id. § 2901(4). Also treated as contributions are "related campaign expenditure[s]," which are expenditures made by third parties in coordination with a candidate or her committee that promote the election of the candidate or the defeat of the candidate's rivals. Id. § 2944(a)-(b). However, the Act exempts from the definition of contribution a series of items and activities. Id. § 2901(4)(A)-(M). These exemptions include, inter alia, "the use of a political party's offices, telephones, computers, and similar equipment," id. § 2901(4)(F), lists of registered voters maintained by a party, id. § 2901(4)(H), party-sponsored campaign events for three or more candidates, id. § 2901(4)(L), and general get- out-the-vote efforts, id. § 2901(4)(M). The legislative findings contained in the Act explain that "[e]xempting certain activities of political parties from the definition of what constitutes a contribution is important so as to not overly burden collective political activity" and to "protect the right to associate in a political party," as those exempted activities "are part of a party's traditional role in assisting candidates to run for office." 2014 Vt. Acts & Resolves 2.

         In addition, contributions from political parties to candidates are exempted from Act 90's contribution limitations; simply put, candidates "may accept unlimited contributions from a political party." Vt. Stat. Ann. tit. 17, § 2941(a)(1)(B), (a)(2)(B), (a)(3)(B). Act 90's findings explain that political parties' "important" and "historic" role in campaigns distinguishes them from political committees and makes it "appropriate to limit contributions from political committees without imposing the same limits on political parties." 2014 Vt. Acts & Resolves 2.

         Act 90's "Public Financing Option" (the "Option"), which was carried over in substantially similar form from Act 64, offers public funding to qualifying candidates running for governor or lieutenant governor, and it imposes an additional set of restrictions on candidates who accept that offer. See Vt. Stat. Ann. tit. 17, §§ 2981-2986. To qualify for public financing, a candidate must obtain a certain value and number of "qualifying contributions" during the "Vermont campaign finance qualification period," id. § 2984(a), which spans from February 15 of an election year until the fourth Thursday after the first Monday in May of that year, id. §§ 2356, 2981(4). For example, a candidate for lieutenant governor must raise "a total amount of no less than $17, 500.00 collected from no fewer than 750 qualified individual contributors making a contribution of no more than $50.00 each." Id. § 2984(a)(2). Once a candidate qualifies for public financing, she receives grants for the primary and general election periods. Id. § 2985(a)(1). A candidate for lieutenant governor receives "$50, 000.00 in a primary election period," less the amount of qualifying contributions the candidate collected, and "$150, 000.00 in a general election period." Id. § 2985(b)(2).

         Along with those grants come additional restrictions, which are set out in Section 2983, entitled "Vermont campaign finance grants; conditions." Section 2983(a) limits when a PFC may announce her candidacy or begin significant fundraising:

A person shall not be eligible for Vermont campaign finance grants if, prior to February 15 of the general election year during any two-year general election cycle, he or she becomes a candidate by announcing that he or she seeks an elected position as Governor or Lieutenant Governor or by accepting contributions totaling $2, 000.00 or more or by making expenditures totaling $2, 000.00 or more.

Section 2983(b)(1) limits PFCs' ability to accept private contributions and make expenditures:

A candidate who accepts Vermont campaign finance grants shall[] not solicit, accept, or expend any contributions except qualifying contributions, Vermont campaign finance grants, and contributions authorized under section 2985 of this chapter, which contributions may be solicited, accepted, or expended only in accordance with the provisions of this subchapter . . . .

         In effect, the Option caps a PFC's campaign funding at the amount of the public grants. Finally, Section 2903(b) provides that any PFC who exceeds Section 2983(b)(1)'s limits is obligated to repay public funds and is also subject to the penalties imposed for any violation of the Act.

         II. Factual and Procedural History

         The facts giving rise to the instant case, as alleged in appellants' pleadings, are as follows. In 2014, appellant Dean Corren unsuccessfully ran for Lieutenant Governor of Vermont as the nominee of both the Vermont Progressive Party ("VPP") and the Vermont Democratic Party ("VDP"). During his campaign, Corren qualified for and opted to receive public campaign funds for the primary and general election periods.

         On October 24, 2014, the VDP disseminated an email blast that expressed support for Corren's candidacy and identified ways for recipients to support Corren and other candidates on the VDP ticket. Roughly a week later, William Sorrell, then the Attorney General of Vermont, served on Corren's campaign a "notice of alleged violation," which stated that the email blast constituted an in- kind contribution that Corren, as a PFC, could not accept under the terms of the Option. Corren disputed that the email constituted a contribution under Section 2901(4) but offered to settle the matter by paying for the estimated value of the email blast out of his campaign funds. Sorrell rejected this offer, countered with a demand of $72, 000 in forfeited public campaign funds and fines, and threatened to pursue an enforcement action if Corren did not meet that demand.

         Unable to reach an agreement, Corren brought an action under 42 U.S.C. § 1983 against Sorrell in his official capacity on March 20, 2015, seeking a declaratory judgment that the email blast was not an in-kind contribution and that certain provisions of Vermont's campaign finance law were unconstitutional. Vermont then filed an enforcement action against Corren in state court on March 25, 2015, alleging that Corren unlawfully received and failed to report an in-kind contribution in the form of the email blast.

         In May 2015, Corren amended his complaint to join appellants Steven Hingtgen, Richard Kemp, and Marjorie Power, as well as the VPP, as plaintiffs in the action. Hingtgen, Kemp, and Power are former VPP candidates for lieutenant governor and regular donors to VPP candidates. Those plaintiffs then filed a Second Amended Complaint ("SAC"). Count I of the SAC alleged that Section 2983(b)(1)'s restrictions on the contributions that PFCs may accept and the funds they may expend impose an unconstitutional burden on rights of speech and association. Count II alleged that Section 2944(c), which subjects certain party expenditures to restrictions on contributions, imposes a similar burden and is impermissibly ambiguous. Count III sought a declaration that the email blast, as well as any political party activities that are enumerated in Section 2901(4), do not constitute in-kind contributions. And Count IV alleged that Section 2903(b)'s refund requirement is unconstitutional as well.

         In late 2015, appellant David Zuckerman, a Vermont State Senator who intended to run for lieutenant governor in 2016 as a PFC but worried that restrictions on PFCs would put him at a disadvantage relative to privately financed candidates, intervened in the action. Count I of Zuckerman's intervenor complaint sought a declaration that Section 2983(a)'s requirement that PFCs refrain from announcing their candidacies or raising or expending a certain amount of money before a prescribed date is unconstitutional. Count II, like Count I of the SAC, challenged Section 2983(b)(1)'s contribution and expenditure limitations.

         Vermont moved to dismiss the SAC, arguing that the district court must abstain, pursuant to Younger v. Harris, 401 U.S. 37 (1971), from deciding Corren's claims to the extent they called into question the ongoing state enforcement proceedings against him, and that all of the plaintiffs lacked standing. The district court granted in part and denied in part the motion, concluding that it was required to "abstain from hearing Corren's challenges to Vermont's campaign finance law insofar as those challenges relate to the enforcement action currently pending against him in state court," including whether the email blast could be regulated as an in-kind contribution, but that it could consider his other challenges. App. 81. The district court also dismissed Count IV of the SAC because Section 2903(b)'s refund provision, which that Count challenged, had since been amended.

         Vermont then moved to dismiss the SAC and Zuckerman's complaint for failure to state a claim. In a March 9, 2016 Opinion and Order, the district court granted the motion and dismissed all of appellants' claims under Federal Rule of Civil Procedure 12(b)(6). In the course of rejecting appellants' constitutional challenges, the district court construed Section 2901(4)'s exemptions from the definition of contribution to apply to related campaign expenditures, and it held that this statutory construction headed off possible constitutional problems by permitting political parties to make such exempted expenditures in support of PFCs. The district court dismissed the case but did so "without prejudice to re- filing in the event that the state courts offer an interpretation of the statute that is inconsistent with this Opinion and Order." App. 114.

         Following entry of judgment, appellants moved for reconsideration, primarily based on a litigation position that Vermont took in the state enforcement action. The district court denied reconsideration, noting that it had abstained from deciding matters at issue in the state proceeding. At the same time, the court denied appellants' motion for fees under 42 ...

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