Circuit Blocks Enforcement of PAC Contribution Limits

, New York Law Journal


Republican mayoral candidate Joe Lhota campaigning in September.
Republican mayoral candidate Joe Lhota campaigning in September.

Republican mayoral hopeful Joseph Lhota could receive a huge boost in support for his campaign against Democratic rival, Bill de Blasio.

The U.S. Court of Appeals for the Second Circuit Thursday ordered a preliminary injunction blocking enforcement of New York's $150,000 limit on individual donations to independent political action committees.

The order, a reversal of a decision made last week by Southern District Judge Paul Crotty (See Profile), is a win for Republican fundraisers who claim they are ready to pour money into the fight to succeed Mayor Michael Bloomberg on Nov. 5. Lhota is trailing Democrat Bill de Blasio by a large margin, according to recent polls.

Fundraiser Crag Engle of Arent Fox in Washington D.C. had filed the lawsuit on Sept. 25 on behalf of the newly formed New York Progress and Protection PAC (NYPPP), claiming it was an "independent, expenditure-only" political committee eligible to receive contributions from individuals in excess of $150,000—the limitation set by N.Y. Election Law §§14-114(8) and 14-126.

The NYPPP submitted an affidavit from a Republican donor in Alabama, Shaun McCutcheon, who said he was ready to donate $200,000 to the committee if an injunction was issued on the basis of the NYPPP claim that the restriction violate the First Amendment.

Attorney Michael Carvin of Jones Day in Washington argued for NYPPP that the $150,000 limit violates the First and Fourteenth amendments to the U.S. Constitution as interpreted by the Supreme Court's groundbreaking decision in Citizens United v. FEC, 558 U.S. 310 (2010).

But on Oct. 17, Crotty said he would not entertain what he termed a last-minute challenge to the restriction, saying it would sow confusion and be unfair to those who have had to abide by the limit.

Crotty also said there was a real possibility that the Republican Super PAC would not meet the definition of an "independent" political action committee because it was formed to funnel money to a single candidate (NYLJ, Oct. 18).

Carvin, convinced that Crotty's decision was an outlier because 27 federal judges around the country had ruled that restrictions like the one in New York violate the Constitution, filed an emergency appeal with the Second Circuit.

On Thursday morning, Second Circuit Judges Dennis Jacobs (See Profile) and Raymond Lohier (See Profile), and Southern District Judge John Koeltl (See Profile), sitting by designation, reversed Crotty in New York Progress and Protection PAC v. Walsh, 13-3889.

What's being said

  • Ravi Batra

    Citizens United is a powerful precedent, one that president Obama took note of at his State of the Union speech and Justice Alito made his presence known.

    Folks may well hate it or love it, but it is the law. Hence, Citizens United requires the injunction that is to issue lifting the 150,000 cap.

    Result: the public square will now be a contest of the decibel caused by the aggregate of strong lungs vs. deep pockets - as they are both speech, like it or not. One could argue that money is better spent in election cycles than being “gifted” as unseen and unrecorded corruption.

    The danger, however, is the secrecy of donors to 501c4s and 527s, and if there is no monitoring of such entities to insure that the “independent” PACs are truly independent and not illegally coordinating with the campaign or candidate with a “nod and a wink."

    Dated: 10/24/13

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