Wednesday, June 16, 2010

Giving is not as Good as Receiving: Statutory Interpretation and Campaign Finance

Suppose that I give a friend of mine, we'll call him Amigo, $100 and he gives the money to someone else, let's call her Ami, who "gave" the money to Ami, me or Amigo?  When is it sensible to say that I gave the money to Ami and when is it sensible to say that even though the money came from me, Amigo gave the money to Ami? These are the questions that are at issue in the campaign finance case of U.S. v. O'Donnell.

The United States prosecuted Mr. Pierce O'Donnell for violation of 2 U.S.C. section 441f.  This section provides:

No person shall make a contribution in the name of another person
or knowingly permit his name to be used to effect such a
contribution, and no person shall knowingly accept a contribution
made by one person in the name of another person.
Mr. Pierce supposedly directed 13 of his friends and family members to make contributions to the John Edwards campaign in their own names.  They contributed a total of $26,000.  Mr. Pierce allegedly advanced some of them the money and others he promised to reimburse.  Mr. Pierce moved to dismiss the indictment on the ground that he did not "make a contribution in the name of another person" as required by the statute.  The contribution was made by the other people in their own name, though the funds either came from him or would ultimately come from him. The District Court agreed with Mr. Pierce, but a panel from the United States Court of Appeals for the Ninth Circuit unanimously overturned the district court's decision.

This is an interesting case for someone who just this past term taught both campaign finance and statutory interpretation.  I think this question is harder than the Court of Appeals thought that it was. Don't be surprised if the Supreme Court takes this up and reverses.

The Court of Appeals reasoned that the first clause of 441f ("no person shall make a contribution in the name of another person") covers two instances.  It covers an instance where someone makes a contribution in the name of another.  For example if I made a contribution to Ami in the name of Amigo, I would be covered by the statute.  This is called "false name name contributions."  Under this interpretation, Mr. Pierce would not be covered by the statute.  But the Court argued that the statute also covers another instance, where the individual who makes the contribution received the funds from someone else.  Under this interpretation, for example, I would still be covered by the statute if the money comes from me even though the contribution is made by Amigo to Ami.  This is called "straw donor contributions."

In a key passage, the Court writes:
In ordinary usage, when Friend B delivers a gift that was provided by Friend A, we say that it was Friend A who gave that gift.  In the context of gifts, the word 'giving' connotes the idea of providing from one's own resources rather than simply conveying, and thus we refer to the original source rather than the intermediary.  Section 441f must be understood on this same common sense level.
 The first problem is that the work of the Court's analysis is done more by its choice of language than by its reasoning.  Specifically, the bulk of the work is done by the word "delivers" and the contextual valence that it implies. That word connotes that the gift was conveyed on behalf of someone one.  In my hypothetical above, if I promised Ami a gift and I ask Amigo to "deliver" that gift, we cannot say that the gift came from Amigo, at least not in the ordinary sense of the phrase.  The word deliver carries contextual valence; it implies that the person who brings the gift is not the source of the gift, but rather a messenger.  In this case, to use the word begs the very question that we are trying to answer, which is how do we determine whether the source of the gift is Friend A or Friend B.

Second, it is unclear that the Court is right about the narrow connotations of the word "giving."  Suppose that my friend Amigo says to me, "I'd really like to give Ami $100.00 but I don't have the money."  Suppose I give him $100.00, which he then gives to Ami.  Is the contribution from him or is it from me?  Or suppose that I say to Amigo, "I'll give you the $100.00 to give to Ami after I get paid by my Employer." Under the Court's "giving connotes the idea of providing from one's own resources" rationale, is the contribution from Employer, Amigo, or me?  Or suppose I say to Amigo "I'd really like to give Ami $100.00 but she won't take more money from me." Suppose Amigo responds "I'll give her $100.00 provided you reimburse me."  If Amigo gives Ami $100.00 who "gave" her the money, Amigo or me?  If I reimburse Amigo later, after he's given Ami the money, does that change the analysis?

Consider one problem with the Court's construction.  Suppose a friend pays me back money that he owes me or even gives me money for my birthday.  Suppose that I take the money and I use it to make a campaign contribution, did I make the contribution or did my friend?

There is no doubt in my mind that Mr. O'Donnell was trying to evade the reporting and contribution limits of the campaign finance laws, if the allegations by the government are true.  However, the statute he is alleged to have violated does not cover his actions, at least no without considerable stretch.  At the end of the day, I think Mr. O'Donnell had the better of the argument.  The statute says that "no person shall make a contribution in the name of another person . . ." The natural construction of the statute is that  "No A shall make a contribution in the name of B."  This would mean that O'Donnell could not send contributions to a federal campaign but put his friends'/family's name on the check.

The Court read the statute to say "no person shall give money to another for the purpose of making a contribution."  The natural construction of that statute would be "No A shall give to B so that B will make a contribution."  If this is what 2 USC 441f had said, the Court would be right, but unfortunately, that's not what it says. Perhaps that's what it should say, but it doesn't.

1 comment:

  1. It might help to review the Congressional Record, and investigate concurrent legislative history. Consider an instance in which a CEO encourages all VPs and principal officers to donate to candidate Y. The company brass responds generously; the VP of governmental affairs' executive assistant has a special envelope for each of the 35 checks, which brass leave at the ex-as' workstation. The CEO learns much later, very close to the impending election, that the brass donations total was nearly five-fold as generous as anticipated during the CEO's original pep talk encouraging contributions. After the election takes place, still enjoying the glow of the political activism the pep talk generated, and quite appreciative that candidate Y actually won at the ballot box, the CEO announces in board executive session that company funds will be disbursed to the most generous givers.

    ?Does the company file an amended campaign expenditure form? ?Or hope the watchdog agency fails to register the fact those 35 individual checks all originated from the brass at that company, and that the company at year's-end reimbursed 26 of the altruistic brass who gave the largest donations to candidate Y?

    ?Is the watchdog agency leader in the same political party as the CEO of the company?