Transcript

IN THE SUPREME COURT OF THE UNITED STATES

FEDERAL ELECTION COMMISSION, ET AL. Petitioners v. NATIONAL RIGHT TO WORK COMMITTEE, ET AL

No. 81-1506

November 1, 1982

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:44 a.m.

APPEARANCES:

CHARLES N. STEELE, ESQ., General Counsel, F.E.C., Washington, D.C.; on behalf of the Petitioners.

RICHARD H. MANSFIELD, III, ESQ., Washington, D.C.; on behalf of the Respondents.

PROCEEDINGS

CHIEF JUSTICE BURGER: We will hear arguments next in Federal Election Commission against the National Right to Work Committee. Mr. Steele, I think you may proceed whenever you're ready.

ORAL ARGUMENT OF CHARLES N. STEELE, ESQ. ON BEHALF OF THE PETITIONERS

MR. STEELE: Mr. Chief Justice, and may it please the Court:

This case involves the scope and effect of the provisions of the statute which regulates the participation of corporations and labor organizations in the financing of federal election campaigns.

The case was brought by the Federal Election Commission against the National Right to Work Corporation saying that it had violated the prohibitions on the use of general corporate treasury funds. The facts are largely uncontested. They were found by the district court below; none of them were reversed as erroneous by the court of appeals.

The district court found that the -- under Virginia law, corporations are offered a choice as to whether they wish to become membership corporations or non-membership corporations. Virginia law specifically provides that the articles of incorporation must set forth that fact, whether you are a member -- if you are a non-membership organization it sets that forth, and if you are a membership organization that you're not.

The National Right to Work Committee organized itself under these laws, set itself forth in its charter and in its bylaws and in its formal papers as being an organization that had no members. It's not a membership organization.

The corporation was also organized under 501(c)(4) of the Internal Revenue Code as an educational organization involved in combatting what it refers to compulsory unionism.

The district court also found that with regard to this organization that its basic method of receiving funds was to rent mailing lists, obtain mailing lists. From these mailing lists they would send out large mailings. These mailings included several items. The first item would be an article about compulsory unionism and the viewpoints on it.

Included therein was -- again, the record is full of examples of these, and in summarizing them, there are some differences. But the basic format was that there would be an article on the effects of unionism, compulsory unionism, frequently reprinted from a magazine. With it would be a questionnaire asking questions of the people to whom these mailings went as to whether they agreed with various questions about the effect of these laws, various right to work laws, of various labor laws that were pending in front of the Congress, and there would be a request or a donation, or sometimes called a gift or a contribution to support the mailing out of these materials, to support in the fight against these particular bills, and would seek funds.

Also, frequently there would be a request to engage in what is called legislative action in the record. Legislative action is taken as a term defined therein to send in comments to legislators, and there would often be appeals for that kind of mailings to legislators.

There was no -- as the district court found, there was no reference in any of these materials to membership in the organization, no setting forth of any requirements for membership, no invitation to join in membership; solely, the request for funds.

There were also several other factors that the district court looked at. It looked at the fact that there was nothing set forth as to how these people would terminate their so-called membership. In this case, the court set forth the determination was something that was solely determined by the National Right to Work Committee.

The court of appeals disturbed none of these findings. In fact, the court of appeals' interpretation and what the Commission believes to be a very important statutory issue was based on the findings, but went to the scope and effect of the basic prohibitions. And that scope and effect involve the question of statutory interpretation. It's clear that the court of appeals, in its interpretation, felt that interpretation was illuminated certainly by constitutional considerations, which it certainly is, but basically was a question of the scope of the statutory history.

To review that statutory history, I would note first that under the Federal Election Campaign Act there are two forms, two basic provisions. One, Provision 441b, which was the former U.S. 610, governs corporations and labor organizations. There are other general provisions first enacted in 1971 governing political committees as a whole and their operation.

And as we have noted in our brief, we think that this structure was reviewed by this Court in the California Medical Association case two terms ago, and that basically, what was set forth there is that Congress, in attempting to legislate for the purpose of controlling the effect on the electoral process, is entitled to make certain kinds of judgments.

The basic judgment that Congress made long, long ago was that corporations -- and then in 1947 labor organizations -- presented a different case; a special case, a greater danger to the electoral process. Consequently, the initial actions of the Congress in 1907 were to ban totally contributions by corporations.

Through a process which I know this Court is familiar with and which, as a matter of history, would take me a long time to recite, there was an expansion of that. In 1947 Congress, feeling that the definition of contributions had allowed certain expenditures to be made which were, for all practical purposes, the same as contributions, broadened the definition to include expenditures.

But basically, corporations and labor organizations were regulated by a statute which prohibited them generally from making expenditures that would reach outside of them, to affect the general public, to affect the general electorals, but were -- under the decisions of this Court and of the Congress in amending the statute -- were permitted to make expenditures for communications to their members. And most prominently, first by interpretation of this Court and then effectively enacted in 1971 by the Congress, were allowed to establish, maintain and pay for the solicitations to a separate segregated fund, and those solicitations were limited to its members.

In effect, what the statute controls is the use of the corporation's funds or the labor organization's funds.

Finally, in 1976, in relation to this case, there was an amendment known as the Allen Amendment. When the Congress convened to act on the statute after this Court's decision in Buckley versus Valeo, it inserted several provisions with regard to then 610. As this Court probably knows, it moved it from the criminal sections of 18 USC to the Title II and turned it to a civil statute.

But with regard to this case, they enacted a provision which said that for a membership corporation, the statute if read to bar it from soliciting its members would prohibit it from dealing with those people who basically make up the corporation. Consequently, Senator Allen proposed and Senator Cannon, who was managing the bill on behalf of the proponents of the bill, agreed that amendment really corrected a basic deficiency in the statute. I don't know if deficiency is too strong a word, but basically, without that amendment, it was a clarifying amendment to make it clear that for those people who were the members of the corporation, that they would be allowed to do the same solicitation as they would to shareholders.

As we have set forth in our brief, we think that the legislative history of that shows that the purpose of Congress there was to deal with members for a membership corporation in much the same way that it had dealt with shareholders for a stock corporation or for members in unions, as the specialized case of membership organizations that the Congress has legislated specially for them.

Senator Allen, who was the proponent, spoke of it in those terms; spoke of it as supplying a deficiency, as remedying an omission in the bill that would otherwise not make it clear.

The question, then, on which the court of appeals disagreed with the district court and the Commission, was the interpretation of that term, of the membership organization which is incorporated. It said that the scope and effect of that must be to allow a corporation to solicit anyone who has expressed through various means a political affinity with the goals of the organization.

The court of appeals' opinion rested on the feeling that there would be interference with associational rights if such solicitations were not allowed. As we have indicated in our brief, we consider that the focus of the statute is not on the solicitation but is on the flow of corporation money.

The National Right to Work Committee here, having established a separate, segregated fund, is permitted under the statute to pay for all of the costs involved in that fund. Those involve all of the costs of establishing and maintaining, setting it up, incorporating if it is incorporated. If it's not, the articles for it. All of those matters.

QUESTION: Mr. Steele, I take it from your brief that it's 441b(4)(C), is it, that contains the exemption that was construed by the court of appeals?

MR. STEELE: Yes, it is.

QUESTION: What is the precise operative language of 441b that would prevent these people from doing what they seek to do if it weren't for the 441b(b)(4)(C)?

MR. STEELE: Again, the structure of the statute is that 441b, the prohibition is contained in 441b(a). When you said the citation you said b -- there's a double b there. It's 441b(b)(4)(C). The prohibition is set forth in 441b(a).

QUESTION: Well, which line or which clause of (a) sets forth the prohibition against what these people are trying to do?

MR. STEELE: The prohibition is that of making a contribution or expenditure in connection with any federal election. That has been -- within the provisions of b(b), what has been exempted from that broad original provision --

QUESTION: Okay. But I don't want to get to the example. You say that in seeking to solicit money from these people that are circularizing, they are, what, accepting a contribution for an election?

MR. STEELE: The corporation is making an expenditure; it is expending the corporate funds for the purpose of the solicitation. In other words, that the prohibition is against using that money, that corporate treasury money, to make an expenditure to go forth and seek contributions which would come directly to the corporation. It can set up a political fund which can do that, but --

QUESTION: So that now the complaint is the expenditure of this membership corporation or a membership corporation's assets to undertake the solicitation.

MR. STEELE: The solicitation is permitted in the exceptions if it is two member, so the question revolves around the question of whether they are members or not. But yes, that is -- the prohibition is against the expenditure by a corporation of funds to solicit the general public, in effect.

QUESTION: And the exception to that prohibition applies only if the solicitation is of members.

MR. STEELE: Yes. So that the critical question in the court of appeals' decision was what is the definition of members as intended by Congress. And what purpose does that serve. They felt that there was no valid purpose there. Again, the underlying purpose served by that is the use of the corporation's funds for large-scale use in federal elections. The structure has been designed in that fashion.

I would note, as I started to, that there is a separate regulatory scheme for political committees overall, which this Court considered in the California Medical Association case, which limits anyone else to a contribution stated in dollar terms of $5000 to a political action committee.

QUESTION: Mr. Steele, is this the precise language in 441b(a) or for any corporation, whatever, or any labor organization, to make a contribution or expenditure in connection with any election at which a presidential and vice -- and if not, what is?

MR. STEELE: That is the operative language. As I say, that operative language was clearly interpreted throughout the history of the statute as prohibiting the expenditures out to the general public. In the CIO case, this Court was faced with the question of whether that statute could be read or should be read to prohibit expenditures that were made for the purpose of communicating with, in that case, the members of a labor organization, but by parallel, with the stockholders of a stock corporation.

So that phrase, by that interpretation and by this Court's interpretation also in Pipefitters, is clearly meant not to allow a corporation to make those kind of expenditures out to the general public; to solicit broadly for purposes either to get in funds to give to candidates, or to make expenditures that would tout them on radio or whatever.

QUESTION: Mr. Steele, I suppose there could be less restrictive ways of addressing the problem. Congress could, for instance, just prohibit the expenditure by the corporation of no more than X number of dollars for the purpose, could it not, rather than prohibiting any solicitation of its supporters?

MR. STEELE: I think that could be done. I think the question would be somewhat -- is that less restrictive or more restrictive, because if you had a dollar amount that might not reflect the size of the corporation. So I think that Congress, in dealing with that question, dealt with it in somewhat different terms, but basically dealt specifically with the expenditures by the corporation for those kinds of expenses.

QUESTION: Well, they could have left the statute the way it was, before 76.

MR. STEELE: They could have. Before 76, -- I mean, in 76 what they felt was -- at least with regard --

QUESTION: That corporations should be able to spend some of its money for solicitation, subject to some limitation.

MR. STEELE: But that solicitation was only for its --

QUESTION: Yes.

MR. STEELE: Its shareholders. I agree Congress could have left the statute as it was.

CHIEF JUSTICE BURGER: We'll resume there are 1:00 o'clock. And would you, at least for me, address the Bellotti case at that time.

(Whereupon, at 12:00 p.m., the oral argument in the above-entitled matter was recessed for lunch, to reconvene at 1:00 p.m. the same day.)

AFTERNOON SESSION

1:00 p.m.

CHIEF JUSTICE BURGER: Mr. Steele, you may continue.

ORAL ARGUMENT OF CHARLES N. STEELE, ESQ. ON BEHALF OF THE PETITIONERS -- Continued

MR. STEELE: If I might pick up where I left off before the lunch break and take advantage of the Chief Justice's invitation to discuss the Bellotti case, I would like to note first that what is here is a case in which there is not challenged the basic prohibition of 441b on corporate expenditures.

The National Right to Work Committee, as a corporation, admits and agrees that it comes under that provision and indeed, takes the benefits of that provision, the ability under that provision to provide for the support of a committee. They do not challenge the overall prohibition. What they challenge is the interpretation of the subsection.

I might -- I'm not sure, Mr. Justice Rehnquist, whether my response to you was as helpful as it might have been in discussing --

QUESTION: I can't answer that now.

(Laughter.)

MR. STEELE: Well, in discussing the prohibitions of the statute, I alluded to the overall provision in 441b(a). In 441b(4), it starts off with repeating the basic prohibition which is at issue here in the subsection. That's at page 59a of the Petition for Writ of Certiorari. But 4(a) says except as provided in subparagraphs b, c and d, it shall be unlawful for a corporation, or its separate, segregated fund, to spend monies to solicit contributions to people other than stockholders' employees.

QUESTION: It seemed to me that 441b(4)(i) was a good deal closer to a precise proscription than the more -- what I thought was the more general language in 441b(a).

MR. STEELE: I think that's correct, and that is really what is at issue in this case, and that's why I think by dwelling only on the broad prohibition. You have here the specific prohibition on a corporation or its separate, segregated fund, from soliciting contributions to such a fund from persons other than. (C) is the one that is specifically at issue here, because it says except for b, c and d -- and c is the one that goes to membership --

QUESTION: Do you think Congress intended to do other than have a paraphrase in subsection (4) of the more general language in 441b? Do you think Congress meant to tighten up that language in subsection (4)?

MR. STEELE: I think not. I think that what they did in 1976 was to expand on the class of people that could be solicited, but the language in (4) was itself just spelling out rather than changing anything. In other words, what they spelled out was what the exceptions to the broad prohibition were. And as Justice White said, I think in 1976, what they did was to expand the class for a new -- for membership corporations to allow them to solicit members. But the prohibition I think was basically the same as it had been prior to that.

In any event, with regard to the Bellotti case, I think that there are several distinctions. I think, as I started to say, most notably not challenged here is the overall prohibition. They agree that they come under the prohibition. And in effect, this is almost a case that is like a mirror image of the California Medical Association case where they asserted the right to solicit throughout, broadly through the general public; also asserted the right that a political committee would have to give to many political committees. But argued to this Court that they should also be allowed to take advantage of the provisions in 441b which allow for administrative support.

This is somewhat the mirror image. This is a case in which they are arguing that they should be allowed the restriction, which is the restriction to the class, while still taking advantage of that portion of the statute which allows them to spend the corporate treasury funds to support that fund. So that you have a situation where they really don't really contend that the overall statute is unconstitutional. They contend, for constitutional reasons, that the congressional exception must be broadly construed to allow them to solicit anyone who has a similar political philosophy, in the phrasing of the court of appeals.

QUESTION: Well, you certainly don't need to get to the constitutional considerations to pose the issue of what does a membership mean.

MR. STEELE: No, you certainly do not.

QUESTION: And would you be here arguing if they had -- I think you probably would, but would you be here arguing if the corporation had said that anybody who -- in their initial solicitations they said anybody who gives us $5.00 is a member.

MR. STEELE: I don't know whether they would have challenged that. But --

QUESTION: Well, suppose they, in their initial circulation, said anybody who gives us $5.00 is a member. And then they wanted to solicited everybody who had given them $5.00. Solicit them for political contributions.

MR. STEELE: No, I think --

QUESTION: Now, there is a definite intra-organization definition of membership.

MR. STEELE: No, certainly in that sense, if they had an externalized offering --

QUESTION: You wouldn't be here, right?

MR. STEELE: I don't think we would be here if they had what we would consider a genuine membership structure. But here, --

QUESTION: Now, they didn't say that when they initially solicited it, but everybody who gave them anything, they sent a membership card to. So why not -- de facto, at least, didn't they have a policy of making everybody who gave them any money a member?

MR. STEELE: I don't think that they did because --

QUESTION: What do you mean? Do you challenge the fact that they sent them a membership card?

MR. STEELE: They sent them a piece of paper at the end of the year at the end on the renewal saying we want you to renew your membership.

QUESTION: Well, nevertheless, they recognized them as members.

MR. STEELE: But when they solicited them, they never told them that they were soliciting them for membership.

QUESTION: That may be so. But they suddenly discovered that people who gave them -- we suddenly discover we were members. So this is a policy of the organization.

MR. STEELE: A policy of the organization I think is a strong statement of it. They have then decided to solicit people who --

QUESTION: So if they put a little footnote to their initial solicitation, by the way, anybody who gives us money is a member. Just about eight or nine words. That would have made all the difference in the world.

MR. STEELE: I think that the Commission in its opinions has said that you have, at the very least, to have that. If you are within a state law you have to be organized as a membership fund --

QUESTION: Well, would you have to have anymore or not?

MR. STEELE: In the Commission's view, you would have to have a voluntary acceptance of that. In other words, that you would have to have --

QUESTION: Well, a voluntary acceptance in the sense that if you have that footnote and the guy sends in his money, he has accepted membership.

MR. STEELE: That you not only have to have that -- and in a knowing sense, that people know that. And the reason I quibble with that is whether a footnote at the bottom said this makes you a member, as opposed to an invitation, we would like you to join as a member, would raise questions in my mind as to whether the membership was a voluntary, knowing decision. Because the entire premise of the Commission's regulations is that there are requirements for membership and that those be made known to those people that come forward.

I would add that in addition to that, the Commission feels that there has to be some measure of rights and obligations coming to the members. That what Congress was here seeking and what the history of the amendment in 1976 says, is that it was a parallel to the shareholder and member definitions for unions and corporations, and that you have some form of fiduciary relationship; something comparable to the fiduciary relationship there. That you have some kind of --

QUESTION: You don't suggest that it was illegal under state law for the corporation to treat these people as members.

MR. STEELE: Not if they organized themselves as a membership corporation.

QUESTION: Well, that isn't my question. So I take it you say that they -- was it consistent with state law or not, to treat these contributors as members?

MR. STEELE: They don't have members under state law. It would be consistent in the sense that --

QUESTION: All right. So it is illegal for them to treat anybody as a member.

MR. STEELE: Well, they would have to give them notice of annual meeting. They would have to give them, under the Virginia law, they would have to give them the rights of members in a membership organization --

QUESTION: So your answer to my question is under the state law they were not permitted to treat these people as members.

MR. STEELE: Not without constituting themselves a membership organization, which carries with it certain obligations to its members.

QUESTION: And they didn't.

MR. STEELE: And they did not.

QUESTION: Mr. Steele, I wonder how confident you are of that answer. Where I practiced -- and I have understood it's a fairly doctrine in the States -- they have the doctrine of de facto corporations. A bona fide attempt to incorporate, a certain amount of formalities complied with, and the state would treat you as a corporation. Do you know that Virginia would not have treated these people as a corporation on the basis of what they actually did?

MR. STEELE: No, I do not. What I was saying is that under Virginia law, if you have members, you have obligations to them. And where --

QUESTION: And are you saying you're also obligated to say that you are a membership organization?

MR. STEELE: That's the third requirement. The articles of incorporation have to say, one, your name; two, your purpose; three, whether you're a membership corporation, and if you're not a membership corporation state that; four, if you are a membership corporation, state that and what classes of membership you will have. And there are certain other requirements that flow from Virginia law; most prominently, notice --

QUESTION: And what did these articles provide?

MR. STEELE: These articles provided that they were not a membership organization.

QUESTION: Mr. Steele, if your restriction as to membership is agreed to, then I guess we get to the constitutional question, do we?

MR. STEELE: Certainly, the court of appeals seemed to have constitutional questions underlying it that --

QUESTION: But isn't there a constitutional question here on the premise of your interpretation of membership?

MR. STEELE: Well, I think it's really a question of -- I mean, the constitutional question in the sense that if Congress did make that limitation, is there something that prohibits that.

QUESTION: Well, what's the governmental interest in that limitation?

MR. STEELE: Well, the governmental interest I think, once again, is in distinguishing between the overall statute where you have a prohibition on corporations with the exceptions in between, that there's an underlying governmental purpose there of controlling the corporation's expenditures, the amounts.

QUESTION: How does this membership restriction further those interests?

MR. STEELE: It furthers it in the same way that -- it's a quid pro quo. It furthers it in the same way that the restriction to shareholders with regard to a stock corporation furthers that law. It allows the corporation, which Congress wishes to control in a certain way, to communicate with those people that make it up, in the terms of the legislation, that make up the corporation. So it's a parallel and it serves the same restriction. It deals with the financing by the corporate body or by the labor organization.

QUESTION: No less restrictive way of doing it than this?

MR. STEELE: Well, in regard to Justice O'Connor's question, it might be less restrictive if Congress said no corporation shall send more than $5000 in soliciting anyone, and put them under that restriction that was the one in Calpak. But again, I think that Congress has made a balancing here between two types of restrictions, and less restrictive seems to be a conclusion in that sense. They have balanced here the two interests.

QUESTION: Mr. Steele, if we have to reach the constitutional issue, which I would suppose we would if we accept your definition of membership, wouldn't resolving that question almost resolve the constitutionality of the pre-1976 situation with respect to membership corporations?

MR. STEELE: I would think it might. I'm not sure I follow. If you reach the constitutional question, the argument would be, it seems to me, that the Constitution --

QUESTION: If you say -- and then the question is well, how does this restriction serve the purposes of the statute, answering those questions could easily resolve the constitutionality of the general restriction with respect to membership corporations.

MR. STEELE: I suppose in that sense that it's implicated here. On the other hand, they don't challenge it because they are -- in other words, if there was an overall prohibition on them but they don't challenge --

QUESTION: If that's the case, then, if you would sustain the general prohibition with respect to membership, wouldn't you necessarily have to sustain this one?

MR. STEELE: In that sense, yes, it is implicated I would reserve the rest of my time for rebuttal.

CHIEF JUSTICE BURGER: Mr. Mansfield.

ORAL ARGUMENT OF RICHARD H. MANSFIELD, III, ESQ. ON BEHALF OF THE RESPONDENT

MR. MANSFIELD: Mr. Chief Justice, and may it please the Court:

The whole FEC argument in this case is based upon one premise and one assumption, an assumption which only this Court now at this stage has realized and made the FEC answer, and that is: almost every argument that it makes states that the individuals that the National Right to Work Committee solicited in 1976 for contributions to its PAC were not its members. Never has the FEC looked into and defined what a member is for the terms of the Act.

The Act itself, the statute itself and the regulations promulgated under the statute --

QUESTION: They certainly have taken the position that these people are not members.

MR. MANSFIELD: They do.

QUESTION: So they defined it to that extent.

MR. MANSFIELD: Only to the extent where on the public record the Federal Election Commission has stated it knows what a membership corporation is.

QUESTION: They claim to know that these people are not members, but in that extent, it's defined.

MR. MANSFIELD: To that extent it is defined.

QUESTION: Why don't we talk about whether that's defensible or not?

MR. MANSFIELD: Well, it is not defensible for numerous reasons. The first of which is that the statute, on its face, allows corporations without capital stock -- not membership organization, but capital organizations without capital stock -- to solicit its members. The regulation promulgated by the Federal Election Commission seems to adopt the definition of a member of the organization itself, except that it does not allow the membership to be premised solely upon contribution to the separate, segregated fund.

Never has the FEC been able to precisely define what a member is. However, this Court has sanctioned the use of an analysis between or of the relationship between, or nexus between, the organization and the participant in determining membership status. The court of appeals concluded --

QUESTION: You say this Court has sanctioned it. In what case?

MR. MANSFIELD: That's in the Hunt versus Washington State Apple Advertising Commission case.

QUESTION: That really didn't involved federal election controls.

MR. MANSFIELD: Not at all. That case was a case in which the Court was asked to determine whether or not the Washington State Commission had standing before a federal court to prosecute the claims of its members against another state, and this Court said that in order to determine whether or not this was a traditional membership organization, whether it was the type of organization which the prior cases had allowed standing, that the Court would look below the organizing documents, below the fact that this was a state organization and look into the nexus between the individuals and the --

QUESTION: But our organizational standing cases have frequently dealt with just groups of people or associations that didn't attempt to have corporate status. And I would think perhaps when you're talking about a member of an organization like that you might mean one thing; when you're talking about a member of a corporation, of a non-profit corporation with members, you might be talking about something quite different.

MR. MANSFIELD: I believe that the analysis holds, though. The analysis that this Court has sanctioned, looking beyond the formal organization into the nexus. I mean after all, the question here is what did the statute mean, what does the Federal Election Campaign Act mean when it says corporations without capital stock can solicit their members.

QUESTION: I can hardly believe that Congress meant to incorporate the definition that this Court used in Hunt versus Washington State Apple Commission when it was enacting the Federal Campaign Contribution Act.

MR. MANSFIELD: Not at all, but the question faced by those individuals such as the National Right to Work Committee when they are faced with how do they comply with the statute is when they're deciding what is a member. They have to look to this Court's prior guidance as to --

QUESTION: I would think before they looked even to this Court's prior guidance they might figure out what they were incorporating under, under the laws of Virginia, and if they get a status that says it has no members, I would think they might feel they were in trouble.

MR. MANSFIELD: Well, there are two answers to that. The first is that as the court of appeals held, the state definition of member is not likely to reflect the First Amendment rights that are involved in an interpretation of the Federal Election Campaign Act. For example, --

QUESTION: But wait a minute. Isn't Congress rather apt, when it talks about a corporation and a corporation without member -- a not for profit corporation without members in view of the long history of federal refusal to participate in general incorporation, isn't it apt to be referring to state laws?

MR. MANSFIELD: Not in this case, and I would say not in this case because two reasons. First of all, the Federal Election Commission in interpreting the Act, some months after they filed the complaint against the National Right to Work Committee, the question was posed to the Federal Election Commission: is it, in your opinion, Federal Election Commission, necessary only for us to become -- to change our articles, to amend our articles of incorporation and become a membership organization? The question was posed. And the answer was, we don't know. It is not enough for you to change your membership, change your articles, and become a membership organization. That is not what Congress meant.

QUESTION: Your client made that inquiry of the Commission?

MR. MANSFIELD: Yes. And the Commission, as the court of appeals stated, barricaded itself behind that articles of incorporation. The offer was made, and the FEC says that's not enough. So we don't know -- at least, according to the FEC --

QUESTION: What is it now? Is it a membership corporation or not?

MR. MANSFIELD: It is, for the purposes of state law, it is a corporation without members.

QUESTION: Now, will you answer my question. Is it a membership corporation or not?

MR. MANSFIELD: Undoubtedly, it is a membership corporation.

QUESTION: Do you have a membership list?

MR. MANSFIELD: There is a membership list.

QUESTION: Is it in the record anyplace?

MR. MANSFIELD: It is not in the record.

QUESTION: Do they hold regular meetings of the membership?

MR. MANSFIELD: There are not regular meetings of the membership.

QUESTION: Do you know of any other membership corporation that doesn't hold annual meetings?

MR. MANSFIELD: That's the issue in the case with respect to the organization documents, Mr. Justice Marshall.

QUESTION: My final question is where did you raise your constitutional point? When?

MR. MANSFIELD: The constitutional point in this case is that the FEC, the statute --

QUESTION: Not is. When. Was it raised in the district --

MR. MANSFIELD: This case came up through the courts as follows. The National Right to Work Committee filed an action against the Federal Election Commission; some months later, the FEC filed an action against the National Right to Work Committee. The cases were consolidated and came up through the courts of appeals that way.

At the original --

QUESTION: And as of that, I haven't found out yet where the constitutional part --

MR. MANSFIELD: At the district court.

QUESTION: Did you raise it?

MR. MANSFIELD: We raised the constitutional issue.

QUESTION: Can you point to it?

MR. MANSFIELD: It is in the complaint, in the original --

QUESTION: That's good enough. I'll find it.

MR. MANSFIELD: To just finish my answer with respect to the organization documents, the FEC, the Federal Election Commission's interpretation of congressional intent is that regardless of whether or not you're a membership organization under state law, that's enough.

Our position in this case is that --

QUESTION: That might apply to another case, but here the organization was not a membership organization.

MR. MANSFIELD: It was not a membership organization.

QUESTION: And certainly, one of the positions of the Commission is if you're not a membership organization under the state law, you're not a membership --

MR. MANSFIELD: But there's never been a substantial reason in First Amendment terms why an organization must have this threshold criteria. There's never been a --

QUESTION: You're talking as if we're construing the assumption on a kind of a common law basis -- there's no substantial reason in First Amendment terms. The question is what did Congress mean.

MR. MANSFIELD: Congress -- there is nothing in the record at all, nothing in the legislative history that Congress dealt with the question of what is a member. It's clear --

QUESTION: Then you look at -- if there's nothing in the legislative history I suppose you could look at the statute.

MR. MANSFIELD: Indeed. And the statute says membership organizations, some other organizations, and corporations without capital stock can solicit their members. The statute doesn't say membership corporations. Or corporations with members. The Congress left it, we believe, purposefully vague in order to get all of the efficacy organizations such as the National Right to Work Committee, regardless of whether organizationally they had members or not.

QUESTION: Well, if there's nothing in the legislative history and only that language to support it, do we have any basis for speculating as to why Congress left it rather open ended?

MR. MANSFIELD: We have nothing from the record as to speculation. However, --

QUESTION: But you say, I guess, the First Amendment would limit the discretion of the Commission to say what a membership organization is.

MR. MANSFIELD: Yes. If the Commission's position is correct, and if the prohibition on membership, the strict restrictions on membership of the Commission are adopted, then one must say that it's clear that these restrictions infringe upon the rights of the association, the rights of the members of the National Right to Work Committee.

QUESTION: If the only restriction of the Commission was that you should be a membership organization under state law, and if you aren't you don't solicit anybody --

MR. MANSFIELD: If that were the case, then this case never would have been before this Court.

QUESTION: Why?

MR. MANSFIELD: Because long ago at the conciliation period, the National Right to Work Committee offered to amend its articles of incorporation, and this vas refused. The Federal Election Commission said that's not -- whatever the nexus is between individuals and an organization to make them members, that is not it.

QUESTION: Mr. Mansfield, you give the impression that you have done almost the same thing as if you had gone and converted your Virginia charter to a corporation with members. But it doesn't seem to me you have. I think it's one thing to make that sort of an offer in conciliation proceedings. Perhaps it fleshes out the position of the agency. But I don't think that puts you in the same position as if you had gone ahead and said I don't care what the FEC says; as a matter of prudent advice to my client, I'm going to at least give him this much to go on under the statutory definition.

MR. MANSFIELD: That's true. But there are reasons -- the reason why the committee, I presume, was not, at that time, I presume, organized as a membership organization under Virginia articles of incorporation is because it's an advocacy organization. It's not a trade association, it's not a professional association --

QUESTION: It also puts a lot of restrictions on what the managers can do.

MR. MANSFIELD: Absolutely.

QUESTION: And he'd have to hold annual meetings and a lot of other meetings you would have had to hold.

QUESTION: And elections for the board of directors.

MR. MANSFIELD: Right. But it's an advocacy organization. It's an organization by its charter organized and operated for one purposes, and only one purpose. Unlike the trade and professional associations, it provides no services to its members, it has not conventions.

QUESTION: May I ask you a question? What would happen with the assets of the entity if it were to dissolve and liquidate? Who would get the money?

MR. MANSFIELD: It is a Section 501(c)(4) organization. The assets would be given to an organization that carries on similar purposes.

QUESTION: There's no provision for distributing among the directors or anything like that?

MR. MANSFIELD: No, sir.

QUESTION: That would be the case even if there were members.

MR. MANSFIELD: And if there were members, I suppose it would --

QUESTION: Well, would it go to members or would it go --

MR. MANSFIELD: It would not go to members; it would go to the same sort of organization.

QUESTION: Mr. Mansfield, if we were to determine that indeed, the FEC is right and your organization did not have members, and furthermore, that you were right in arguing that the provision of Section 441b(b)(a) is unconstitutional, then would the restrictions in Section 441(a) still prohibit your company from giving more than $5000 to this committee that it formed?

MR. MANSFIELD: Of course, we don't hold that it is not our position --

QUESTION: Is that what would happen?

MR. MANSFIELD: It is not our position that the statute itself is unconstitutional.

QUESTION: It isn't? That's interesting.

MR. MANSFIELD: Not the general prohibition. We're saying that what we are attacking is 441b(b)(4)(C), and we're not attacking the statute nor the regulation, unless the interpretation of the Federal Election Commission --

QUESTION: Yes, that was my assumption. If that were upheld, then your argument is that some portion of the statute is unconstitutional. As I understand it.

MR. MANSFIELD: To the extent that it infringes upon the rights of the members of the National Right to Work Committee to associate through political contributions in the political sphere, that is true.

QUESTION: Precisely what section is it that you're contending would be unconstitutional?

MR. MANSFIELD: Section 441b(b)(4)(C) is the section that's --

QUESTION: The one starts out, "This paragraph shall..." But that's an exemption.

MR. MANSFIELD: Yes, that's an exemption. But to the extent that it differentiates, if it cuts off the associational rights of the members of the National Right to Work Committee, then the statute doesn't reflect the -- certainly doesn't reflect the congressional intent.

QUESTION: I suppose then the question is would Congress -- if you're correct that the (C) perhaps is "under-inclusive" or whatever the lingo is, I suppose then the question would be whether Congress would have preferred the statute without any exception or with one as broad as you propose. And I suppose with no exception it really doesn't help you much to say it's under-inclusive.

MR. MANSFIELD: No -- if there were no exceptions, we would be in the same position as everyone else. Our rights would not be infringed upon differently.

QUESTION: A factual question that maybe isn't too important. Do I understand you've spent over a million dollars in your solicitation efforts since 76?

MR. MANSFIELD: That's a very good question because the Federal Election Commission in its brief failed to distinguish between two types of solicitations. The National Right to Work Committee finds its members through mass solicitation. It rents lists or does whatever it needs to get at individuals, to find the names of individuals it believes -- that believe in its philosophy and who are willing to take an active part in promulgating its philosophy.

To the extent that in 1976 -- actually, the figures in the record are from 1977 I believe -- at least eight million solicitation letters were sent. However, these were solicitations not for political candidates, but rather, for membership. The National Right to Work Committee was looking for members.

QUESTION: Well, you never said that in your solicitation -- we would like you to become a member.

MR. MANSFIELD: The solicitations are as follows. Generally speaking, in their --

QUESTION: They never mentioned membership.

MR. MANSFIELD: They all speak of joining with. They ask whether or not the individual believes in the philosophy of the organization, and it's not an ask; it's you check the blank. And second, it says, please join with us. So these are individuals who -- the members are individuals that have agreed with and joined with --

QUESTION: Well, the people who contribute are people -- yes.

MR. MANSFIELD: Well, the people who contributed are additionally, active members. There are two types of members in the organization. And only the active members are the ones who were solicited under Section 441b.

QUESTION: But there's nothing that defines members in your bylaws or in your articles or anything.

MR. MANSFIELD: Nothing in the bylaws.

QUESTION: So these are just telling us that that's the way you treat --

MR. MANSFIELD: The individuals refer to themselves as members. In fact, 11 depositions were taken at the district court stage in this case. All of the 11 were members who had contributed to the solicitation for the ERCC. Of those 11, all but 3 knew that -- all of them knew what the philosophy of the National Right to Work Committee was, and believed in it. All but 3, 3 out of 11, believed they were members, knew they were members. They were unequivocal that they were members.

QUESTION: How did they knew that?

MR. MANSFIELD: They knew that because the rights and obligations, as Mr. Steele calls them, of the committee -- once you become a member, the committee sends you regularly and routinely information.

QUESTION: I know that. But how did they even know that they became a member?

MR. MANSFIELD: They knew because the solicitation -- the membership solicitation. They sent the thing back.

QUESTION: They suddenly, after they gave money they suddenly got some distributions that said they were a member.

MR. MANSFIELD: Yes.

QUESTION: Or treated them as a member.

MR. MANSFIELD: Yes, they got a membership card. All active members who are really at issue here have membership cards. They received a membership card. They sent something back, they sent their questionnaire back, they said I want to joint, I want to help you; they got a membership card.

QUESTION: Do you suppose the state, the attorney general, could have closed you down if he said I understand you're sending out membership cards, and yet you've filed with the Secretary of State that you're not a membership organization.

MR. MANSFIELD: For the purposes of state law, members, under the statute, have certain rights. If you're going to give people that right, then you have to cal them members. For example, voting. If you want people to vote, --

QUESTION: Well, take it the other way. If you're going to call them members you have to treat them like members, under state law.

MR. MANSFIELD: Under state law, if you call them in your charter. The reason that the committee does not have members, or at least didn't at that time, is because it's an advocacy organization. And the key to an advocacy organization is the efficient use of contributed funds.

The National Right to Work Committee has one goal, and its goal is to educate the public and advocate voluntary unionism.

QUESTION: Let me go back to my million dollar question. Does the record show how much of that came from corporate supporters?

MR. MANSFIELD: The National Right to Work Committee has, the Committee itself has, both corporate and noncorporate members. As to how much of the dues are contributed by either, it's not on the record. I don't know.

QUESTION: Is there a membership list maintained somewhere in the central office?

MR. MANSFIELD: There is a membership list maintained because the Committee actively and constantly communicates with its members by mail. There's quite a -- as a matter of fact, there's 1.25 million members.

QUESTION: How long do you stay a member if you've given $10 one year and

MR. MANSFIELD: You get your member --

QUESTION: -- some association wants to solicit them for political contributions two years later, and yet there's never been any intervening contributions.

MR. MANSFIELD: On the factual --

QUESTION: Is there some rule about it?

MR. MANSFIELD: Yes, there is, as a matter of fact on the records. An active member, when one joins the organization, he is -- he becomes an active member.

QUESTION: When he gives some money?

MR. MANSFIELD: When he gives some money.

QUESTION: Yes.

MR. MANSFIELD: He becomes an active member. He gets his active membership card back. He knows he's an active member. One year later he's sent a dues bill because the organization calls these voluntary dues, and he's sent a bill.

QUESTION: What does he send them for? Do they send a bill in the amount of his previous contribution?

MR. MANSFIELD: Yes. Now these --

QUESTION: So there's no standard membership fee?

MR. MANSFIELD: There is no standard membership fee.

QUESTION: If you give a million dollars one year, you get billed for a million dollars the next year?

MR. MANSFIELD: Well, whatever you can afford, because --

(Laughter.)

QUESTION: Is there any way for us to rule with you without at the same time admitting that we are knowingly ignoring the laws of the State of the Commonwealth of Virginia?

MR. MANSFIELD: Yes, there is. The -- the laws of --

QUESTION: Please tell me.

MR. MANSFIELD: The laws of the State of the Commonwealth of Virginia deal only with the rights of the members, if they are members, or the individuals of the organization.

QUESTION: But you just said you have a membership list.

MR. MANSFIELD: We have a membership list but they don't accord these individuals the rights that they would be accorded under the law of Virginia if they were to lose accorded --

QUESTION: Or to use your phrase, they're second-class members. Is that what you're saying?

MR. MANSFIELD: We have members who are --

QUESTION: Second class.

MR. MANSFIELD: They are not second class. We --

QUESTION: Well, they are not first class.

(Laughter.)

MR. MANSFIELD: We would like to -- we would like to believe that they're all first-class members. The only rights of membership that they don't have are the rights to vote and --

QUESTION: Which are guaranteed by the laws of Virginia; right?

MR. MANSFIELD: Only if you declare yourself as a membership organization.

QUESTION: Well, do they have any rights at all? What right does a member have?

QUESTION: To give money.

(Laughter.)

QUESTION: The right to give money. I see.

MR. MANSFIELD: No. As an advocacy organization, the National Right --

QUESTION: No, I am serious in my question.

MR. MANSFIELD: Yes.

QUESTION: Does a member of your organization, either supporting or active, have any rights at all by virtue of his membership?

MR. MANSFIELD: He has the right to receive the materials and he's asked to -- to take the action in support of the philosophy.

QUESTION: That's true of both the supporting and the active members; right?

MR. MANSFIELD: Yes.

QUESTION: Why is it that you say that only -- the only issue before us is the active members? It seems to me you have an equally strong case for both --

MR. MANSFIELD: Well --

QUESTION: -- under the regulation and under the statute.

MR. MANSFIELD: In 1976 the case arose by the fact that the National Right to Work Committee made solicitations. In the face of an unknown law, it chose only to solicit active members who had -- who had contributed that year.

QUESTION: But if you are right in your position, you would also have the right to solicit the others, too; wouldn't you? And if not, why not?

MR. MANSFIELD: Well, depending upon the --

QUESTION: Because they're all members, under your definition of membership.

MR. MANSFIELD: It is our position that all members of the organization, of the Committee, are members.

QUESTION: And have an equal right under it --

MR. MANSFIELD: And have an equal --

QUESTION: -- to be solicited?

MR. MANSFIELD: Right. Right. Because they've joined the organization, they've joined the organization affirmatively to --

QUESTION: Right.

MR. MANSFIELD: -- they believe in the philosophy and they've taken an affirmative step to further that philosophy.

QUESTION: So that the issue before us applies equally to the supporting members and the active members --

MR. MANSFIELD: The issue --

QUESTION: -- I mean the legal ramifications of what we are asked to decide in this case.

MR. MANSFIELD: We would like this Court to decide on the broad basis. However, it's possible for the -- for us to win the case if this Court held that one of the parts of the nexus between an individual and the organization in order to be a member must be some financial contribution. We don't believe --

QUESTION: We have to rewrite the regulation or the statute to do that.

MR. MANSFIELD: Excuse me?

QUESTION: We have to rewrite the regulation or the statute to draw that distinction, it seems to me.

MR. MANSFIELD: No, we don't have to write -- rewrite any -- either one, because the statute simply says, membership -- membership --

QUESTION: Right. And the regulation says, people who currently satisfy the requirements of membership of the organization.

MR. MANSFIELD: In the organization --

QUESTION: And they're all required to satisfy that.

MR. MANSFIELD: Yes.

QUESTION: So they're all members.

MR. MANSFIELD: Well, all of the members of the National Right to Work Committee are members for that --

QUESTION: That's right.

MR. MANSFIELD: -- for that.

QUESTION: Now, this membership list, is it in the record?

MR. MANSFIELD: The membership list is not in the record. The membership list has always been kept confidential by the organization as -- on -- as the membership list in the NAACP v. Alabama was kept confidential because it is an advocacy organization.

QUESTION: Does Virginia allow or permit the membership list to remain confidential?

MR. MANSFIELD: It -- it does unless the membership, unless it is a membership organization, at which time individuals would have -- members might have the right to view the membership list.

QUESTION: For your information, the membership list of NAACP is controlled by the State of New York, not Alabama.

QUESTION: That's right.

MR. MANSFIELD: In NAACP v. Alabama, however --

QUESTION: It was the same way there. It was the New York members who --

MR. MANSFIELD: Yes, sir, but the State --

QUESTION: And it still is.

MR. MANSFIELD: The State tried to get those members made as a condition precedent for the --

QUESTION: If there wasn't, he could have gotten the list in New York. Anybody could have.

MR. MANSFIELD: Yes. But this will foretell that the State couldn't compel that membership list --

QUESTION: You know more about it than I do. Go right ahead.

QUESTION: Mr. Mansfield, if you prevail, will the limitations on corporate political action committees differ from those on those committees that are set up by individuals?

MR. MANSFIELD: No. Actually, there are the three different types. The FEC refers to the CMA case, the California Medical Association case, which is an independent multi-candidate political committee. It --that case, in that case they registered as such, and then came to this Court asking for more rights. But what they did is they registered as such.

That, in a case like that, they can solicit the whole general public, but no individuals, no unassociated corporation, for example, can give more than $5,000 towards those solicitations.

QUESTION: Does that same limitation apply to the corporate --

MR. MANSFIELD: It doesn't --

QUESTION: -- collection?

MR. MANSFIELD: It does not. Under 441(b) corporations, including corporations without capital stock, can in essence underwrite the solicitation expenses, but as a trade-off, instead of being able to solicit the general public, they can only solicit certain defined --

QUESTION: Well, does that perhaps suggest an equal protection problem lurking behind this?

MR. MANSFIELD: We would hope that this Court would not have to go that far to find that. But I believe that the Court has held in the California Medical Association that Congress had the right to -- to look at the -- the -- the threat; the threat being that the corporate warchest, for example, the ability of a corporation to use its general treasury funds. If a corporation could use the general treasury funds to solicit the world, then the Congress felt there is a balancing that this would be unfair. So it instead says it can use corporate funds but only to solicit its members or people with a nexus between the organization, the corporation.

QUESTION: Do you think Med Cal then suggests that these classifications between individual and corporate committees would be -- would not run afoul of the equal protection?

MR. MANSFIELD: I am sorry, I couldn't hear the first part.

QUESTION: I say, are you suggesting that Med Cal has said anything to indicate that these classifications would pass muster under the -- under an equal attack?

MR. MANSFIELD: Not directly.

QUESTION: No one suggests that your initial mailing to the public is by any means violates any law.

MR. MANSFIELD: No, not at all.

QUESTION: And so you're free to solicit for membership, as you would like to have it interpreted --

MR. MANSFIELD: Yes.

QUESTION: -- the public generally. The restriction would say that you're not supposed to use the money raised for that kind of a solicitation to finance political solicitations with such funds --

MR. MANSFIELD: With the exception that you can use -- you can use that money to -- to finance political solicitation only if that solicitation goes to your members.

QUESTION: Yes.

MR. MANSFIELD: And, of course, it's our position that these individuals is a more than sufficient nexus between these individuals to be our members.

QUESTION: But you don't -- you don't -- if you didn't claim to be a membership organization, you wouldn't be in here challenging the general restriction on forming these groups.

MR. MANSFIELD: No, because we would then be in the same position, I suppose, as the California Medical Association was.

QUESTION: Yes.

QUESTION: Now, absent knowledge of membership, are there some practical problems lurking here? This case has come up through a United States District Judge and then through seven, eight, or nine Court of Appeal Judges and then here. What about some other requirements of knowing whether judges are disqualified? Suppose the wives of all those judges who dealt with it were members had contributed to this organization, would they be disqualified?

(Pause.)

QUESTION: In other words, in your briefs and the briefs coming here, unlike those in some of the corporate cases, we don't have a list of members. We couldn't have with as many members as you -- as you state that you have. Does that present a practical problem, the nondisclosure of members?

(Pause.)

QUESTION: Well, how are judges going to know whether they're disqualified under other statutes?

MR. MANSFIELD: Well, because this is an advocacy organization, Mr. Chief Justice, and not an economic organization. The -- the key to the National Right to Work Committee is people who join it wish to contribute in order to promote a philosophy. It would be the same, for example, I suppose as a church or any other type of --

QUESTION: Let's make it a little bit closer. Suppose it developed that all these judges were members of this organization in the sense that they had sent $5 or $10 every year. Would they be disqualified?

MR. MANSFIELD: Only if they believed -- since it's not an economic relationship, it's a philosophic relationship, I would believe that they would not be disqualified unless they believed that it would somehow prevent them from reaching an equitable decision under the law.

QUESTION: Well, but isn't it even a little harder than that? Am I not correct in understanding that the rights that you seek to vindicate in this litigation are the rights of your members, the rights to receive and to participate in the political process in the manner that you support?

MR. MANSFIELD: Yes.

QUESTION: Then would it not be true that any individual, such as the Chief Justice suggested, who without perhaps realizing it is a member under your definition, he is in effect a party to this litigation?

QUESTION: Or at least he would appear to some people to have some interest. The perception is the important thing under the statute.

QUESTION: It is sort of a class action, in a way.

MR. MANSFIELD: I hadn't thought of it in those terms precisely, but I suppose that there is justification in that.

QUESTION: Very well. Do you have anything further, Mr. Steele?

MR. STEELE: No, Your Honor, unless there are further questions.

CHIEF JUSTICE BURGER: Very well. Thank you, gentlemen.

The case is submitted.

(Whereupon, at 1:46 p.m., the case in the above-entitled matter was submitted.)