Posted February 16, 2007 by Tara Malloy

The Way From San Jose: Contribution Limits in the Ninth Circuit

The repercussions of a case pending in the Ninth Circuit concerning San Jose’s contribution limits are likely to be felt not only in municipalities across California, but nationwide.   The case centers on the question of whether contribution limits can be imposed on political committees making only independent expenditures. 

The Campaign Legal Center filed an amicus brief this week with the Ninth Circuit Court of Appeals in the case San Jose Silicon Valley Chamber of Commerce Political Action Committee, et al. v. City of San Jose, et al., No. 06-17001, to defend the city’s municipal ordinance, which limits contributions to political committees making independent expenditures in local elections.  Although it is well-settled that contributions to committees making direct contributions to candidates can be constitutionally limited, federal courts have differed over whether contributions to committees making only independent expenditures can likewise be limited.  As the Legal  Center argues in its brief, the recent Supreme Court decision in McConnell v. FEC has ended this dispute, and makes clear that the latter type of committee is not exempt from campaign finance laws.  Political committees making independent expenditures pose the same threat of political corruption as committees making direct contributions to candidates.

San Jose’s campaign finance statute sets a $250 limit on contributions to “independent committees” which make contributions or expenditures “in aid of and/or opposition to” candidates in San Jose elections.  In enacting this statute in 1993, San Jose joined a host of California municipalities which had passed similar contribution limits in an effort to prevent big-money donors from circumventing campaign finance regulations by funneling unlimited funds into committees for “independent” election-related spending.  San Diego, Oakland, Anaheim, Huntington Beach and Long Beach are just a few of the cities that have passed such limits.  All of these cities, however, have come under legal attack in recent years from various special interest groups claiming that the contributions limits infringe upon their constitutional rights.

In July of 2006, two political committees associated with the San Jose Chamber of Commerce challenged San Jose’s contribution limit in the district court of the Northern District of California, asserting that the limit violated the First and Fourteenth Amendments.  The Chamber of Commerce committees had used “over-the-limit” contributions to finance at least six different mailings, criticizing Cindy Chavez, a candidate for Mayor, weeks before the 2006 municipal election.  Although these mailings did not expressly advocate the defeat of Ms. Chavez, the San Jose Elections Commission found the Chamber of Commerce committees in violation of the contribution limit.  The committees in turn sued the City.  In their summary judgment motion, the committees argued that the court should treat San Jose’s contribution limit as an expenditure limit due to its incidental effect on their expenditures, and subject the limit to strict scrutiny review.  The committees further asserted that the burden the contribution limit imposed upon their First Amendment rights of speech and association was not justified by an important state interest.  The district court agreed with the Chamber of Commerce committees, and held that San Jose’s contribution limit violated the First Amendment, and in addition, was unconstitutionally vague.  San Jose appealed to the Ninth Circuit Court of Appeals.

The Legal  Center’s amicus brief argues that the district court’s decision was in error and misconstrued federal campaign finance case law.  The Legal Center highlighted that the district court’s conclusion that San Jose’s contribution limit functioned as a “dual limit on contributions and expenditures” upended long-standing Supreme Court precedent, which clearly distinguishes between contribution restrictions and expenditure restrictions for the purposes of determining the correct level of judicial review.  Only expenditure limits are subject to strict scrutiny, whereas contribution limits are held to a less rigorous review.  That a contribution limit indirectly reduces the funds available to a political committee for independent spending does not transform the contribution limit into an expenditure limit; nor does it warrant strict scrutiny.

The Legal Center also pointed out that the McConnell decision upheld the “soft money” provisions of the Bipartisan Campaign Reform Act, which imposed federal limits on contributions to national and state parties, even if the party committees engaged in independent, non-coordinated activities.  The McConnell decision thus confirmed that the state’s interest in preventing corruption supports limits not only on direct contributions to candidates, but also on contributions to political committees making independent expenditures.  The Supreme Court recognized that large contributions to political committees, even if used for independent purposes, threaten the integrity of the political system, because they allow contributors to gain access and influence over candidates. 

The pending San Jose case will affect not only the validity of California’s various municipal contribution limits on independent committees, but also the broader debate about the regulation of independent spending on the national level.  For these reasons, the Legal Center’s amicus urges the reversal of the district court’s incorrect and short-sighted decision to allow committees making independent expenditures to flout campaign finance laws and serve as conduits for big-money donors.