Transcript

IN THE SUPREME COURT OF THE UNITED STATES

FEDERAL ELECTION COMMISSION, Appellant, v. MASSACHUSETTS CITIZENS FOR LIFE, INC.

No. 85-701

October 7, 1986

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 2:00 o'clock a.m.

APPEARANCES:

CHARLES N. STEELE, ESQ., Washington, D.C.; on behalf of Appellant.

FRANCIS H. FOX, ESQ., Boston, Mass.; on behalf of Appellee.

PROCEEDINGS

CHIEF JUSTICE REHNQUIST: You may proceed when you're ready, Mr. Steele.

ORAL ARGUMENT OF CHARLES N. STEELE, ESQ. ON BEHALF OF APPELLANT

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

This case comes forward on appeal from the United States Court of Appeals for the First Circuit, holding unconstitutional a statute of the United States as applied to nonprofit ideological corporations. The statute in question, that was held unconstitutional, is the provision of the federal code regulating the means by which corporations and labor organizations participate in federal elections.

The court found the statute unconstitutional because it requires that all expenditures in connection with a federal election be made from fund explicitly and voluntarily given for that purpose, kept separate from all other funds of these organizations, and publicly reported.

The facts of the case are fairly straightforward. The corporation in question is the Massachusetts Citizens for Life, a non-membership corporation under Massachusetts law whose central purpose is to foster respect for human life and to defend the right to human life, all human beings, born and unborn.

It has carried out its purposes by raising funds and contributions which it uses to further its purposes through dissemination of information, education, and legislation. It does this in large part through a newsletter which it distributes.

QUESTION: It is now a membership corporation, am I correct about that? At the time the events at issue here occurred it was not, but it now is?

MR. STEELE: Yes. The record seems to reflect that from the discussions. After 1978 it became a membership corporation, apparently.

The Massachusetts Citizens for Life in 1978, September of 1978, before the Massachusetts primary, distributed an election flyer, labeled a special election edition flyer, which proclaimed that it had in it everything you need to vote pro-life, set forth the MCFL's positions on several issues, indicated the positions in relationship to some 400 candidates, all federal candidates and state candidates, urged the recipients to vote pro-life, depicted some of them with pictures, those who supported the pro-life position.

The question before this Court is whether Congress can require that the funds used for such advocacy can be separate -- can be required to be separate and segregated from the funds which consist only of voluntary contributions.

The court below concluded that the statute in question restricted the simplest method by which Massachusetts Citizens for Life could achieve its advocacy. It said that there was a burden on the rights of speech and association because of the requirement of establishing the separate segregated fund.

Before going on to the reasoning of the court, I would like to note explicitly three things that it did not decide:

It did not decide that the statute prohibited the speech in question, but only that it burdened it;

It did not decide that the statute prohibited the distribution of voting records, nor even that the statute required that voting records be distributed through the mechanism of a separate, segregated fund;

And it did not prohibit this organization or any other similar organization from distributing in a newsletter to its members voting records which advocated the election and the defeat of candidates.

What it did hold was that Congress cannot for express advocacy in elections require that any material that is disseminated to the general public, not distributed in the way that a message ordinarily is by an organization, can be required to be from a separately segregated fund, from a fund which apprises everyone that the contributions to it will be used in connection with specific federal elections --

QUESTION: I take it it's the organization that apprises the people, not the fund?

MR. STEELE: Yes, the organization in making the solicitations -- those can be done by the organization, would be done by the organization, and they would be the ones that apprised them of that.

There are three policies underlying the Act which we think that the court's decision goes against. First of all, if the court's decision stands the disclosure aspects of the Act are substantially undercut. Again, there are really three purposes put forward by the statute. One of them is the disclosure.

It has been argued here that the section in question, Section 441(b), whose antecedent goes back to the Federal Corrupt Practices Act, is not a disclosure statute. It does, however, specifically set forth that the corporations' and labor organizations' separate segregated funds are political committees and subjects them therefore to the same requirements that all political committees are required under the Federal Election Campaign Act regarding disclosure.

And if the court's decision were to stand, that disclosure of where money is spent and where it comes from would be considerably lessened.

The second policy --

QUESTION: Could Congress require that the publisher of a newspaper along with every edition of the newspaper list all the stockholders of the newspaper?

MR. STEELE: I think Congress felt that it would not do that and, in light of the First Amendment, did not do that, and there was an explicit statutory exception.

QUESTION: But suppose it changed its mind? Would a requirement like that be constitutional?

MR. STEELE: I think that would be a very difficult requirement to uphold.

QUESTION: Why is that different from this?

MR. STEELE: Because here the purposes of the organization are -- again, I think one of the questions here would be, if the purpose of this organization had been to distribute newsletters by subscription and so forth and that was its regular business, that there would be that question there.

This, however, seems to us crosses over the line from the operation of a newspaper in that sense to pure election advocacy, and that in that sense the Congress is balancing there between two different issues, one of those issues being whether election advocacy in the sense of urging the election or defeat of particular individuals can be financed directly from a corporation's funds.

They did not prohibit that speech. They merely said that that should be done through a separate, segregated fund and prescribed the methods for having that fund operated and required the public disclosure. But again, that is not a prohibition of that.

Now, whether the same disclosure for a newspaper -- again, I think that there would be a substantial question there, but I think that it could be argued that disclosure of the sources of a newspaper's funding was constitutionally permissible so long as it involved no particular restriction on what the newspaper would do.

Laws of general application, going back to the Grosjean case and other cases of that applied to newspapers, would be, could be upheld. But I don't think that question is here before the Court, certainly not on the basis of the Court of Appeals' decision, because the Court of Appeals' decision explicitly found that this was not the operation of Massachusetts Citizens for Life's newsletter.

QUESTION: To print the list of their advertisements, political advertisements, and what they cost?

MR. STEELE: The federal election campaign statute does require, on ads placed, where the source of that is. That is not a direct requirement on the newspaper, but I think that there is the possibility, again, that such a statute could be upheld as a disclosure statute as long as it did not limit the newspaper's right to publish those.

QUESTION: But if an ordinary organization, say the Jim Brown Patriotic Society, publishes a list of voting records of all of the Congressmen, that's barred?

MR. STEELE: We do not think that is barred and we do not contend that that is barred. We have cited in our brief --

QUESTION: And the difference is?

MR. STEELE: There's two differences. One is that -- I took the hypothetical as not being a corporation. Assuming that the hypothetical related to a corporation, the Commission has explicitly set forth that if voting records were published in a non-partisan fashion it would not consider those to be in connection with a federal election.

The question here, as the court below found, is not the publication of such voting records, but voting records explicitly combined with express advocacy.

QUESTION: But the voting records themselves is okay?

MR. STEELE: Yes, assuming by that, as the Commission has set forth in its regulations, that they were non-partisan.

In effect, I think what is centrally at issue here with regard to this case is what we see as essentially a purpose of Congress in establishing a prophylactic rule with regard to particular types of organizations -- corporations and labor organizations.

QUESTION: Well, is it all that clear that Congress intended to sweep in all non-profit corporations, even if they derive no funds at all from business corporations or unions?

MR. STEELE: I think it is that clear, Justice O'Connor. We have set forth at some length, particularly in our reply brief, the origins of this statute going backwards in time. And of course, as we've said, we think the fact that it is an 80 year old statute which has been passed back and forth through Congress many times gives some weight to it.

But if you go back to the '47 debates which we have set forth, we think that the debates there and the eventual results, and indeed the legislative hearings that led up to that statute, make it quite clear that the sponsors of that Act, particularly Senator Taft, were focusing on this question of all corporations.

We have set forth in footnotes to our briefs several organizations with which the 1946 hearings had been concerned, which were quite clearly non-profit ideological organizations in that sense. Senator Taft in discussing the legislation on the floor of the Senate was asked numerous questions. A large number of those were set out in this Court's decision in United States versus CIO.

A number of those clearly relate to organizations. He spoke, as we've noted, of churches that were incorporated, that would have no right to spend the money of their members in that fashion. And they were drawing, in that sense, and Senator Taft was drawing in the discussions a very precise line relating to the existence or not or whether it was a corporation or a labor organization within the meaning of the statute.

QUESTION: Mr. Steele, it's clear -- or maybe it isn't clear. Could the Commission -- could the Congress constitutionally require an individual who wants to make such a distribution to register and publicly disclose his or her identity and the amount of money that this cost, and so forth?

MR. STEELE: I think it is clear, in the sense that that question was -- it was resolved again by the Congress after this Court's decision in Buckley versus Valeo. There is different disclosure required, but that the statute requires the disclosure of independent expenditures by individuals under a separate section of the statute, 434(c) That is not the one here at issue, but that individuals are required to disclose under the statute independent expenditures that they make exprelly advocating the election or defeat of candidates.

QUESTION: Does this apply to membership corporations, too? Non-profit membership corporations?

MR. STEELE: The statute in question, 2 U.S.C. 441(b), does apply to non-profit membership corporations in our view, and we think --

QUESTION: Is this one a non-profit membership corporation?

MR. STEELE: It is organized under that section of the Massachusetts law.

QUESTION: So then it is.

MR. STEELE: Yes.

QUESTION: There's no -- you're not saying that they don't follow the law?

MR. STEELE: No. My phrasing was meant to say that I think that the question of their tax status -- I'm less clear of their tax status under the federal laws. But we have no quarrel with the fact that they are a non-profit corporation.

QUESTION: Mr. Steele, I think you said earlier that the -- is it 441(b) has its source in the old Corrupt Practices Acts?

MR. STEELE: Yes.

QUESTION: Some 80 years ago or something?

MR. STEELE: 1907 was the first passage of it, yes.

QUESTION: That's 80 years ago, believe me.

MR. STEELE: Yes, it is.

QUESTION: The corruption which provoked that statute at the time, is it the sort of thing that's ordinarily even associated with non-profit corporations?

MR. STEELE: I think that at the time it was passed that was certainly so. Of course, the corporate structure then was considerably different. As I said in response to Justice O'Connor, I think it clear when Congress reconsidered the statute as it did in 1947 when it added labor organizations that it envisaged that.

And I think that it was clear again in 1971, when the statute was re-amended in light of this Court's decisions in the CIO case and the UAW case, that Mr. Hansen, who introduced the bill there, was saying that the purpose of that bill was to codify the pre-existing understanding of the law; and that it had been clear throughout that period, I think, that Congress was seeking a rule that dealt -- used the term "corporations."

The term in the statute is "any corporation whatever."

QUESTION: Well, even assuming that's what the statute says and that it may embrace non-profit corporations, I suppose the First Amendment question is whether it can be constitutional as applied to a non-profit corporation like this, isn't that right?

MR. STEELE: I think that is the question, and that was the question --

QUESTION: Well, that's why I wondered. Certainly the kind of corrupt practices which gave us the Corrupt Practices Act, is it or isn't it the case, are not usually associated with non-profit corporations?

I mean, non-profit corporations don't have these accumulations of wealth that were the seed for for the problem.

MR. STEELE: Well, some of them do not. This is quite a small one, but I think that in the context again of the federal revenue code, one finds non-profit corporations, particularly the ones that are not merely 503(c)(3)'s, but (c)(4)'s, that do have substantial accumulations of money.

Of course, they are not, in the sense of having -- they have not derived that capital from the way that the traditional business corporation --

QUESTION: Well, do you recognize that the First Amendment problem is rather more difficult as addressed to a non-profit corporation than it is to a profit corporation?

MR. STEELE: Well, I think that the concern that this Court should have about that I certainly understand and concede. What I think that the Congress has here done has set forth a rule which is meant not to inquire into every single transaction or the nature of every particular type of corporation that's involved.

Indeed, I think one of the difficulties, one of the outplays from if the Court of Appeals' decision were to stand, is that it seems to say in effect that the Commission not only has the power, but the responsibility, for deciding and inquiring into whether a particular corporation is ideological, whether it is therefore one that has particular beliefs.

And I see that as being a substantially difficult test as opposed to a quite neutral, quite defined by other laws test, such as Congress put forth with the use of the terms "corporation" and "labor organizations."

QUESTION: Mr. Steele, do I detect from one of your earlier comments that you think Congress may have shifted gears to a certain extent in 1947 from 1907 when it brought in unions, I guess many of which are certainly not supposed to be in business to make money?

MR. STEELE: No, I think it did shift gears then in deciding, certainly in deciding that labor organizations, because of their role in the economic process and because of the way they had been treated under the federal statutes regarding labor relations, posed a similar difficulty; that you had there, particularly you had members who would be joining them for reasons other than supporting particular political candidates; and that one of the thrusts of the statute that came forward in '47 and then even more strongly in '71 was that in seeking money for these funds, that people had to be apprised of the political nature of the fund and had to be allowed to realize that, in the paradigm situation of the labor organization which requires membership, that they were not required to give to these funds.

QUESTION: But sweeping in the union, they also brought in a little neighborhood membership club --

MR. STEELE: I think that --

QUESTION: -- in Podunk, Mississippi.

MR. STEELE: I think that the --

QUESTION: Now, that will not wreck the United States.

MR. STEELE: I think that the decision with regard to membership corporations was really not made in 1971. It was made by Congress in 1976, quite explicitly with regard to membership corporations.

Again, there are many of them that are small, but they are ones which have come under the corporate statutes of the states and the United States.

QUESTION: But most of them are small.

MR. STEELE: There are --

QUESTION: Any book you look at, you'll find that.

MR. STEELE: I think that many of them are small. I think there is no doubt about that. But think that, again, that in making the balance I would urge you to focus on the fact that this does not prohibit those corporations from engaging in this kind of conduct.

It says merely that the contributions that it uses for that cannot be assumed to have been given to the organization for its general purposes, cannot be assumed to have been given for the purposes of supporting political candidates and doing direct political advocacy.

But it does allow them to gather those funds.

QUESTION: But don't you agree that there are a lot of people that think that to urge people to vote is non-partisan?

MR. STEELE: I think that is true. I think that the statute regarding corporations made a decision with regard to that which explicitly protected the right to do partisan vote registration within the membership organization.

And the Commission's regulations again, in the same places that I was speaking of in regard to the voting records, have set forth methods for voter registration and get out the vote drives so that they will be conducted in a non-partisan fashion.

I do think that the Congress has had over the years a very legitimate concern that registration and get out the vote can be partisan and can be manipulated in a partisan fashion.

QUESTION: Mr. Steele, what is the threat of corruption that's involved here, even from regular business corporations? You're not talking about business corporations getting together money and giving it to a candidate, or even expending the money in the way that the candidate directs.

These are independent expenditures. If there's any connection with the candidate, if they say, you know, in exchange for our doing this would you vote this way, I assume that that would make it a connected expenditure.

MR. STEELE: That would make it a coordinated expenditure.

QUESTION: So there is none of that involved. What risk of corruption is there in any corporation, profit or non-profit, choosing to support one side or another in a political campaign?

MR. STEELE: I think that the danger the Congress feared was that you could get large expenditures where the sources would be known, where the help would be known, and even though there was no overt cooperation before that a rule that would allow those kinds of expenditures would result in the same kind of indebtedness; that even without prior coordination, that it thought that a prophylactic rule saying that expenditures would result in the same thing -- again, the Taft-Hartley Act was where that question was first debated very strongly with regard to the expenditures, when they put in expenditures, because of the Congressional feeling that expenditures serve much of the same kind of role as contributions.

And as we have noted in our brief, those were not said to be or alleged to be or said necessary to be in any of this Court's decisions ones that were coordinated; that the feeling was that expenditures themselves would result in the same kind of debt. The same kind of problem was potentially there.

QUESTION: There's something wrong with that? There is something wrong with a political candidate not making any commitment to people that work hard for that candidate?

MR. STEELE: I think that the judgment of Congress over a long period of time, particularly with regard to corporations, has been, yes, there is that very strong danger there.

QUESTION: Oh, I understand there's the danger, but I wouldn't describe that as corruption. I would describe that as the normal workings of the political process, that candidates who get elected tend to favor the interests of those who worked hard for their election.

If that's corruption, we're in a lot of trouble.

MR. STEELE: Well, I think that the Congressional judgment is that it's not merely the working hard, that it is the relationship of the money that increases that indebtedness, and that there is in their mind a very similar relationship there between the actual contribution under control and the expenditure of money for the same purposes.

And indeed, that was the purpose of the '47 legislation, was to reach that. And they were very clear, and I think that in regard to that that in this case, in canvasing the CIO and the UAW cases, recognized there that those were not alleged to be coordinated expenditures, but that those were expenditures that came within the meaning of the Act, and upheld in the UAW case the indictment there.

QUESTION: Mr. Steele, earlier in your argument you suggested there were three policies that you relied on particularly. One was disclosure, another was the avoidance of corruption, as I understand. But I don't think you've told us what the third was.

MR. STEELE: Well, really I think that all three, the three that I was going to mention, come under I think the general heading of corruption, because I think what Congress was saying was that the voluntariness, the individual choice which is protected in the statute, was clearly an important policy; in other words, that the statute, 441(b), makes it clear that in soliciting contributions to these funds that they have to apprise them of the fact that they are going to be used for political purposes, "political purposes" there meaning explicit election-related purposes.

And the third, the third purpose which I have touched on, but not in that direct sense, was the very choice that Congress was making, I think, that in effect that it was a prophylactic rule, that it would use a term such as "corporations" and not seek -- a very neutral term, as I say -- and not seek to have an individualized ascertainment of whether or not there was corruption in a particular transaction, would not seek to decide whether a particular corporation was threatening to the process, but would do it in a form of a classification that was as neutral as possible. And it seems to me that was a very important Congressional purpose.

I would like to reserve the rest of my time for rebuttal.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Steele.

We'll hear from you next, Mr. Fox.

ORAL ARGUMENT OF FRANCIS H. FOX, ESQ. ON BEHALF OF APPELLEE

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

Mass Citizens for Life is a non-profit ideological grassroots corporation, raising money by means of individual donations, garage sales, cake sales, and the like, devoting itself to the purposes of advancing life of the born and unborn as it sees those purposes through legislative, lobbying, political, ideological means, across a spectrum of activities relating to fetal research, euthanasia, abortion.

Mass Citizens for Life has never accepted any business money. Mass Citizens for Life has never made a contribution to a candidate --

QUESTION: Mr. Fox, has it accepted any labor union money?

MR. FOX: No labor union money, no business money.

QUESTION: That isn't critical to your argument, is it?

MR. FOX: Depending upon what substantial evil this statute is designed to curb, if one of them is the accumulation of money from the commercial world that might flow into the political process, I'm only mentioning that they have never accepted business money, this particular corporation.

QUESTION: Supposing a similar organization in a different state did accept money from business corporations. Would it have a lesser claim than you do to First Amendment protection?

MR. FOX: Yes, Your Honor, I think it would have a lesser claim, but nonetheless one that would carry the day with respect to this particular message, which says: Vote, and here are the 492 candidates that are up for office, and here are their positions.

QUESTION: Do you think the First Amendment would permit the Government to pass a law requiring disclosure of whether or not there were business corporations contributing to the organization?

MR FOX: I think that that would be a legitimate exercise on the part of the Government. If disclosure in and of itself is a good, and I think that up to a point it is, so that people should know whether the business community or the medical community or some other group is behind a particular candidate or against one, I think then that a statute could be passed saying that any charitable corporation or ideological corporation wishing to engage in independent expenditures should reveal all business money or all labor money it has been fortunate enough to get in the last year.

That is not this statute.

QUESTION: But do you object to disclosure for your expenditures?

MR. FOX: Well, we think that it is unduly burdensome with respect to an ideological corporation whose purposes may be controversial.

QUESTION: So you don't need to file and say, I have spent this much trying to get these people elected?

MR. FOX: Oh, if Your Honor please, any independent expenditure does have to be disclosed.

QUESTION: And you don't object to that?

MR. FOX: Oh, no. Oh, no.

QUESTION: I didn't think so.

MR. FOX: If it's more than $250, anyone who makes an independent expenditure must disclose it.

QUESTION: Including your corporation?

MR. FOX: Yes, if this Court were to rule that we may make them at all.

QUESTION: I understand.

QUESTION: You object to disclosing, however, the sources of the $250? You object to having to disclose where you got the money that you expended in that fashion?

MR. FOX: Well, if -- we're talking about a hypothetical statute. If there were a statute that wanted to ferret out business money and if --

QUESTION: Well, isn't that this statute? Doesn't this statute required the separate fund that is set up for this purpose -- don't the sources of that income have to be disclosed?

MR. FOX: If a political committee were to file its disclosure, it must disclose any contributions that it has received over $200.

QUESTION: Well, I thought that was -- I thought that that was one of your major objections here, that the effect of this scheme is to require your organization with respect to any money that it wants to use for political activity to disclose the names of its contributors, some of whom might want to remain anonymous.

MR. FOX That's correct, Your Honor. The basic way that my brother argues that that could be done by a corporation is to set up a separate, segregated fund. The way the FEC interprets this statute, Mass Citizens for Life cannot out of its corporate till make any expenditure, direct, indirect, what have you.

QUESTION: That's right. But you could set up a PAC.

MR. FOX: And he says if we set up a PAC, then that PAC would have to disclose, again only up to $200. But there is a burdensome requirement with respect to the PAC. Amazingly detailed books must be kept and, most importantly, the membership of that PAC is the only -- the membership of the parent organization are the only people to whom a PAC may go to solicit contributions.

So that if you have an organization such as Mass Citizens for Life, which has 80 to 100 chapters throughout the state, and a chapter meeting occurs on a Wednesday in November and 30 people show up, you may not solicit a contribution for your PAC from those people unless you are clear that back at the headquarters that person's name appears as a member on some file card.

If you say, well, I'll take your membership fee now and then you may give to the PAC, that's dangerous. You may be implicitly soliciting to the PAC when you ask him to join.

The 30 people who show up the next month may be different from the 30 people who show up this month. Are they members, are they not members? May you within the law solicit a contribution to your PAC? I think it would be dangerous.

Now, these are burdensome requirements, and the disclosure that is required is of course burdensome. Every nickel that is spent for paperclips or anything else must be disclosed. Names and addresses, though only up to $200, must be disclosed.

QUESTION: Over $200.

MR. FOX: Over $200, yes, I'm sorry.

QUESTION: Mr. Fox, the way you describe those requirements, it seems to me you really have to strain to say they are burdensome. I can see how they would be a nuisance and you have to devote some of your money, some of your time to complying with those.

But they're certainly not insuperable, are they?

MR. FOX: No, but I think that without a compelling purpose and one served by the narrowest means available, there shouldn't be any burdens placed on the ability of organizations of individuals to make such a message as was made in this case.

QUESTION: That's because in your submission the First Amendment protects you.

MR. FOX: Yes, Your Honor.

QUESTION: But in connection with expenditures in connection with elections, we have sustained a lot of things that we wouldn't sustain if it were just on someone's right to communicate on a street corner about something.

MR. FOX: The cases that this Court has addressed itself to in this field, the NCPAC, National Right to Work, and all the others, dealt with contributions to candidates. It has been perceived by this Court that contributions, where there is a contribution to a candidate and perhaps a debt is created that is going to be paid back out of the public trust when that candidate gets elected, that has the propensity for corruption.

Eqally, this Court has held that totally, thoroughly independent expenditures trigger no such concern, because of the lack of control which that candidate has. He cannot control the spending, and this Court in Buckley has actually recognized that such spending might be counterproductive to that candidate.

So we have a situation of independent expenditures, according to the rulings of this Court, that do not implicate corruption. And in that respect, the imposition of any burden -- and there are substantial burdens, not insurmountable, I'll agree, but substantial burdens -- are unjustified.

The organization --

QUESTION: Mr. Fox -- I don't want to interrupt in the middle of an answer, but I did have a concern I wanted you to address if you would.

Mr. Steele made the point that, with respect to organizations of an ideological character such as the one you represent, receive a great many contributions which perhaps one cannot safely assume would be made for an electoral purpose.

They might be very sympathetic with the organization, but not necessarily with the use of the funds to elect candidates. They like the lobbying, they like the research, and all the rest. And that one of the purposes the Government seeks to avoid is the danger that people will be supporting, who might be Democrats who agree with most of the objectives of your organization, but would not want to support Republicans, say.

Could you address that concern.

MR. FOX: Yes, Your Honor. If protection of minority interests is raised as a justification for this statute, I would say, number one, there is nothing in the record here that would indicate any hint of opposition to spreading voting records concerning where the candidates are on this issue about which the organization exists.

Number two, the minority interests are not well protected by a statute which says you may not spend any of the joint money, none of the money from your till, for any purpose, lest some minority interest in that statute take offense.

QUESTION: (Inaudible) served by forcing your organization to set up a separate fund, and then you solicit and people know exactly what they're paying for.

MR. FOX: Not very well, Your Honor.

QUESTION: Well, better than this.

MR. FOX: I'm not sure that is so at all, Your Honor.

QUESTION: Why?

MR. FOX: The separate segregated fund, as the FEC argues, could spend for the administration of the PAC, for the solicitation for the PAC, for the setting up of the PAC.

QUESTION: That may be so.

MR. FOX: They would dip into the --

QUESTION: But what about the money you raise?

MR. FOX: The money that you raise would be controlled by the officers of the organization.

QUESTION: Through the PAC. Then what do you tell the -- what does the separate fund say? We're going to use your money for what?

MR. FOX: It doesn't say. Please contribute to our PAC if you are in line with our goals.

QUESTION: At least you know it's going to be used for political purposes.

MR. FOX: Yes, you will know that.

QUESTION: But you may not know at all that the corporation's general revenues or general funds are going to be used for political purposes.

MR. FOX: Well, if Your Honor please --

QUESTION: Isn't that right?

MR. FOX: You won't know either way what candidates are going to be favored.

QUESTION: I know, but at least you'll know in a separate PAC you're going to be operating in the political field.

MR. FOX: Yes, that's correct. You will have some more pointed view. But the general till may be used to support the PAC, the offices of the corporation may pick what candidates will be favored and what will not.

And there comes a point where, if you are in an organization, a corporation or a labor organization or what have you, you have to trust the leaders of that organization to make decisions compatible with your desires or you leave.

It is not necessary to set up an absolute prohibition for the use of treasury funds to spend on printing a message.

With respect to the --

QUESTION: Mr. Fox, just so we're clear about the message here, what you said before led me to believe you were going to assert that the message here is just get out and vote. I didn't read it that way. It was really get out and vote pro-life, and here are the records of people on the basis of who's pro-life and who is not.

MR. FOX: That is correct, Your Honor.

QUESTION: So it was not just get out and vote, but vote our way and here's something to help you do that.

MR. FOX: The message here, the basic and overwhelming significant of the message, was the gathering together of the positions of 492 candidates, and then that was to be distributed. That message could be used by a pro-choice person equally with a pro-life, to know where the candidates line up. You have the information right here that will assist you.

The message also said this is not to be an endorsement of any candidate. There were --

QUESTION: Well, it's nice to say that, but when you also say vote pro-life doesn't that rather contradict that?

MR. FOX: I don't say that it would take a psychiatrist to figure out which side of issue the authors of his message were on, Your Honor.

QUESTION: Thank you.

(Laughter.)

MR. FOX: There is no doubt what their subjective hopes would be. But many of the races had people who where equally bad or equally good on both sides, and it just served up the information. Some of the pictures here, there would be a Republican and a Democrat for Senator. And it does not expressly say you must vote for Smith, please. It says vote pro-life.

QUESTION: But the only pictures are those of the candidates that are pro-life, isn't that right? The others don't get their pictures in?

MR. FOX: I'm not sure about Tip O'Neil, Your Honor. His picture is --

(Laughter.)

MR. FOX: His picture is prominently displayed, and no one really knows.

QUESTION: Well, the Court of Appeals said that only pro-life candidates had their pictures.

QUESTION: And the rule for which you contend, or the holding of the lower court, would apply even if the publication expressly said we endorse X, Y, and Z, wouldn't it, please vote for Mister So-and-so?

MR. FOX: Yes, Your Honor.

QUESTION: And that's what you're arguing you have a right.

And is it not also true -- and I'm not saying this makes your position stronger or weaker. But it's not just your organization that's at stake here, but there are a whole range of organizations, I supposed churches and the National Rifle Association, a lot of trade associations, there are all sorts of groups who would be covered by the rule for which you contend?

MR. FOX: The briefs have set forth various positions here, varying constitutional interpretations which would exclude or include various organizations depending upon what this Court were to believe was the evil that was to be combatted.

If the evil is corruption, then independent expenditures do not trigger corruption and one would think that any organization, a business organization, an ideological organization, or any other organization, could make independent expenditures.

QUESTION: Well, what if the evil is the one I tried to describe rather clumsily a little bit ago, that you want to be sure the contributors don't just feel they want to contribute to a general cause, but want to know whether they're contributing to an election campaign?

What if that's all you're interested in? Doesn't that cut across all these organizations, including yours?

MR. FOX: Well, that interest this Court has stated in Cort v. Ash is but a secondary concern, if at all, of this statute. It is not well served, and there could be some kind of a requirement that there be an 80 percent vote of all members. There could be less restrictive methods than to say the corporate till is off limits for the payment of printing costs for this message.

There could be less restrictive means of securing that particular goal. That is not really the goal of this statute. The goal here has been articulated by this Court to be the avoidance of the fact or the appearance of corruption in many cases. That is what has been held to be the evil that Congress was trying to come to grips with.

QUESTION: We have also mentioned the concern that Justice Stevens has.

MR. FOX: That's correct, Your Honor. It was mentioned as a secondary concern and it is there. But it is not well served by this statute.

On this record, there is absolutely not a shred of evidence that anyone of the members of this organization would have any problem with the position taken by this organization in distributing voting records.

And the Court in the First National Bank versus Bellotti case mentioned it on the record in that case that there has been no indication of a minority problem. In every case that comes along, no one seems to see that there is any indication that minority interests are not being well represented.

But if that were the goal, a better statute could be drafted.

The newsletters themselves have been published from 1973 to 1978, and they're all in a separate appendix here, every one of them. That's the relevant time frame. We have also filed with the Court one each of the originals of these newsletters, and here is the special election edition that gives rise to this lawsuit. It covers 492 candidates with their positions. It looks like a newspaper.

QUESTION: How is the position expressed, for or against, or what?

MR. FOX: It has a Y and an N or NR. It's a box score. The Y is a position on one of the three questions that aligns itself with the pro-life view as they saw it here, and the N is no and NR is no response. Gathered from Congressional voting records for incumbents and questionnaires for non-incumbents.

QUESTION: Vote him up or vote him down on the one issue?

MR. FOX: If there is a single message perhaps, it would be make pro-life be the one issue that you should address yourself to, not elect Smith or don't elect Jones. Here's the information on which you may live up to your principles.

The newsletter was started as the most important activity of this organization, and has been published since its first one in 1973, maybe four to eight times a years as funds would allow. Whenever there was as election year, the organization would come out with a special election edition, gathering the votes as it did here, or the statements of position.

As to the constitutional arguments, Section 441 implicates freedom of expression, freedom of association, and freedom of the press: freedom of expression because speech concerning the qualification of candidates or elected officials goes to the heart of the First Amendment's concerns and supports an enlightened electorate; freedom of association because the ability of like-minded individuals to gather together and communicate to the outside world, enhancing the weak voices of the members, goes to the heart of the American way of life and American history, especially where the message concerns those who would be our leaders.

Freedom of the press is implicated because that cherished freedom applies to the humblest handbills handed out on a corner by Tom Payne equally with the slick products of our modern dailies. Freedom of the press is not a captive of the media conglomerates.

The first Circuit has held that, although the statute applies, overruling three reasons that the district court found the statute should not be deemed to apply, still the statute was unconstitutional. And legislation which implicates those three concerns to the extend that I have articulated will only be allowed to impose restrictions if they serve the most evil and survive strict scrutiny from this Court, and indeed serve that substantial evil in the least restrictive manner.

Now, with respect to corruption, the Court, as I have indicated, has implicated -- has said, has held loudly, that contributions do give rise to that propensity because the candidate my repay out of the public trust, but independent expenditures do not.

Now, if this Court were to recognize another purpose to be served, a compelling purpose that will allow quantitative restrictions on speech -- that is what this is, a quantitative restriction on speech by a quantitative restriction on money.

If this Court were to find that the requirement of keeping business money out of elections were, despite the previous holdings of this Court, a compelling purpose, it can be served by statutes less restrictive than this, because this statute prohibits Mass Citizens for Life from spending $9800 here to distribute voting records of 492 candidates by means of a newsletter, although they never had any business money in their till and they never made a contribution to any candidate or a coodinated expenditure in their whole existence.

A statute could be articulated that would try to keep out business money by disclosure. If you want to make an independent expenditure, Mr. Charitable Corporation, tell us all your business money and so on. Lesser restrictive, but still intrusive, methods could be devised.

But these blanket prohibitions that prohibit the independent expenditure of this organization that never had any business money cannot be justified.

Now, the disclosure that the FEC says is to be served here justifies this intrusion into the heart of the First Amendment on the grounds of disclosure. I'll say three things on that:

One, Section 441(b) is not a disclosure statute; two, there is disclosure already required in the statutes; three, further disclosure more burdensome and intrusive is not warranted.

First, Section 441(b) as interpreted by the FEC is not a disclosure statute. It is an absolute prohibition. It must rise or fall depending upon whether an absolute prohibition is warranted under these circumstances.

Section 441(b) does not say: You corporations spend what you want, only disclose what you're about. Section 441(b) says: You people have chosen a tainted form in which to conduct your activities; the assets that you accumulate from your day to day activities are poison; they must be walled off from the political process, even in the form of independent expenditures.

Section 441(b) says, as the FEC points out: If you wish to set up a committee, and if that committee then solicits special contributions from your members, not from people who may be sympathetically inclined but from people whose names appear in your card index, then you may use that money for independent expenditures, but you may not use your corporate till do pay for your message, your political message, no matter how modest the amount.

This cannot be squared with freedom of association.

The second point --

QUESTION: Well, where does your corporate till come from, Mr. Fox, other than from the contributions of members?

MR. FOX: Garage sales, dances. They're all individual contributions or --

QUESTION: But aren't those individuals who contribute members?

MR. FOX: Well, this case pointed out some very weak bookkeeping records on the part of this organization. The organization claimed 50,000 members, the organization had 6,000 dues-paying members. The articles of organization in the state house said we have no members.

"Members" was a loose concept with these people. But with all these hundred chapters throughout the towns and people coming and going, contributions would be made and so on. And they considered them members, but they weren't in some official sense.

QUESTION: Your charter does not provide for members?

MR. FOX: It did not provide for members. It said "none" in that.

QUESTION: Who elects the officers and directors?

MR. FOX: Well, at that time the officers -- there were maybe 25 of them, or a board of directors -- would elect themselves, and people would come on and replace them. It was very loose. It has been tightened up since the FEC brought this lawsuit.

But I want to make the point on disclosure that anyone who makes any independent expenditure for $250 or more must disclose it. That purposes is already served. If this organization were allowed to make such independent expenditures, they would have to reveal that they make the expenditures.

But the purpose of keeping business money out of the electoral process is not served by this statute because of its underinclusive impact. A business organization, a partnership, an association, limited partnerships, a joint venture, need not have any limit on the amount of money that it can spend independently, no limit.

True, it must disclose if it spends more than $250. And if any contribution in furtherance of an independent expenditure is received, that must be disclosed, as must anyone who makes a disclosure making an independent expenditure.

But these entities that are out in the business world making literally millions and millions and millions of dollars from commerce may spend in an unlimited amount, as long as the major purpose does not become the election of candidates, in which case they transform themselves into a political committee.

So there is no purpose to be served by allowing an organization making $30 million a year to spend unlimited amounts and not allowing an ideological incorporated organization from spending anything, if your purpose is to keep business money out of the electoral processes.

One further statutory point. There is an exemption under the general definition of expenditure for newspapers and periodical publications. Those terms are not defined in the statute or in the regs. I think that this Court should conclude that Congress did not mean to squelch a publication like this when it granted that exemption. It would be a non-constitutional way to affirm the Court of Appeals.

In conclusion on this matter, when one considers all the election law cases that this Court has had in the last 40 years -- UAW, CIO, the Pipefitters in the seventies, NCPAC, National Right to Work -- this case involving a $9800 expenditure to publish a newsletter containing 492 candidates' positions, $20 apiece, constitutes the most insignificant, the most puny threat of any case that has come before this Court.

But when you consider the fundamental principles that bind us together -- freedom of association, that ability of individual of like minds to gather together and enhance their weak, faint voices; freedom of the press; freedom of speech -- this perhaps is the most significant of all.

The idea that even now, in the last two decades of the twentieth century, an organization like Mass Citizens must stand before this bar and justify having produced a newsletter containing voting records is appalling.

The basic problem with the FEC's case is it was brought 200 years too late.

Thank you.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Fox.

Mr. Steele, do you have anything more? You have about six minutes.

MR. STEELE: If there are no questions from the Court, I would conclude my argument.

(Whereupon, at 2:54 p.m., argument in the above-entitled matter was submitted.)