Philip M. Stern v. Federal Election Commission
921 F.2d 299 · U.S. Court of Appeals · 1990
Facts
Philip Stern, a shareholder of General Electric Company (GE), alleged that GE violated the Federal Election Campaign Act of 1971 (FECA) through its segregated political fund, GE/PAC. Stern claimed GE/PAC made unlawful corporate expenditures for lobbying purposes instead of the sanctioned "political purposes" during the 1985-86 election cycle. He specifically objected to GE/PAC's practices of contributing to candidates facing weak or no opposition, contributing without regard to candidates' attitudes towards business, contributing to two or more candidates in the same race, making post-election contributions to winners, and supporting incumbents.
Procedural history
Stern first filed suit against GE in 1986 in federal district court in New York, which dismissed the complaint for lack of jurisdiction. In 1988, Stern filed an administrative complaint with the Federal Election Commission (FEC), which dismissed it. Stern then sought judicial review of the FEC's decision in the United States District Court for the District of Columbia, which granted the Commission's motion for judgment on the pleadings. This court affirmed the district court's decision.
Issue
Did GE/PAC's challenged expenditures, including contributions to unopposed candidates, opposing candidates, and incumbents, constitute unlawful corporate expenditures under FECA's "political purposes" clause for segregated funds?
Holding
The court affirmed the district court's decision, finding that GE/PAC's challenged practices did not violate the Federal Election Campaign Act.
Rule
Section 441b(a) of FECA prohibits corporate contributions or expenditures in connection with any election, but Section 441b(b)(2)(C) specifically excludes the establishment, administration, and solicitation of contributions to a separate segregated fund for "political purposes." The court held that even under the narrowest interpretation of "political purposes" (i.e., "in connection with an election"), the challenged practices did not violate the Act. This is because the Act and FEC regulations specifically contemplate and permit contributions to unopposed candidates, post-election contributions, contributions by multi-candidate committees to various candidates (including opposing ones), and support of incumbents, considering them legitimate campaign support.
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