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05/19/81 Federal Election v. Machinists Non-Partisan

May 19, 1981




Before TAMM and WALD, Circuit Judges and HAROLD H. GREENE,* United States District Judge for the District of Columbia.


Certiorari Denied October 13, 1981.

Appeal from the United States District Court for the District of Columbia (D.C. Misc. No. 79-0291)



See 102 S. Ct. 397. The Machinists Non-Partisan Political League appeals from a district court order which enforced a subpoena issued to MNPL by the Federal Election Commission ("FEC" or "Commission"). The subpoena was part of an FEC investigation into the activities of nine so-called "draft-Kennedy" organizations which operated during the first ten months of 1979. We hold that FEC's subpoena exceeded the Commission's subject matter jurisdiction, and therefore vacate the enforcement order. I. FACTS AND PROCEEDINGS BELOW

MNPL is the political arm of the International Association of Machinists , and is registered as a "multi-candidate political committee" under the Federal Election Campaign Act, 2 U.S.C. § 431 et seq. .1 MNPL and the IAM had supported the election of Jimmy Carter in 1976, but thereafter became disenchanted with various of his policies deemed antithetical to the interests of the IAM membership.2 By February, 1979 MNPL had begun encouraging and assisting the formation of "draft-Kennedy" groups in several states including Iowa, Illinois and Florida all engaged in promoting the acceptance of presidential candidacy by Senator Edward Kennedy. Between May, 1979 and November 7, 1979 when Senator Kennedy formally announced his candidacy for President, MNPL gave, by its own admission, approximately $30,000 to "draft-Kennedy" groups in seven states. Brief for MNPL at 7-8.3

On October 4, 1979 the FEC received a complaint from the Carter-Mondale Presidential Committee, Inc., alleging that nine "draft-Kennedy" organizations were in violation of certain provisions of FECA. Specifically, the complaint alleged (1) that the "draft-Kennedy" groups were "political committee(s)" as that term is defined by FECA, 2 U.S.C. § 431(d); (2) that the nine named draft committees were affiliated within the meaning of 2 U.S.C. § 441a(a)(5), 11 C.F.R. 110.3(a)(1)(ii), and therefore all were subject to a single $5,000 contribution limitation, 2 U.S.C. § 441a(a)(1), (a)(2); and (3) that MNPL had exceeded this contribution limitation, thereby violating 2 U.S.C. § 441a(a)(2). The complaint expressly declined to take any position on whether Senator Kennedy had become a "candidate" for purposes of the Act, Complaint at 11, and acknowledged that Kennedy had formally disavowed the various "draft-Kennedy" organizations, id. at 27.

Based on this complaint, FEC notified MNPL on October 19, 1979, that it had "found reason to believe" that

by contributing, in the aggregate, in excess of $5,000 in a calendar year to the Florida for Kennedy Committee, New Hampshire Democrats for Change, Committee for Alternatives to Democratic Presidential Candidate, and Illinois Citizens for Kennedy, MNPL may have violated 2 U.S.C. 441a(a)(2). The Commission has determined that these four committees, among others, may be affiliated within the meaning of the Act and the Commission's regulations and that, if affiliated, contributions to them must be aggregated for purposes of the limitations set forth in 2 U.S.C. § 441a(a)(2).

Letter from William C. Oldaker, General Counsel, FEC, to Howard F. Dow, Secretary-Treasurer, MNPL (October 19, 1979).

On November 2, 1979, the Carter-Mondale Presidential Committee submitted an amendment to its complaint asking that

Senator Kennedy be found to be a candidate under 2 U.S.C. § 431(b)(2) as of no later than September 1, 1979; ... and that all contributions made by ... multi-candidate political committees in excess of $5,000 to the Florida, New Hampshire and any other affiliated draft-Kennedy committees on or after September 1, 1979, be found in violation of the limitations of 2 U.S.C. § 441a(a) ....

Amended Complaint at 3. Significantly, both the original complaint and the amended complaint focused exclusively on the nine respondents' "draft-Kennedy" activities, not on any other political, candidate-support activities in which they may have engaged.4

On November 5, 1979, the Commission issued a sweeping subpoena to MNPL, ordering production of, inter alia, all documents and materials relating to communications between MNPL and other "draft-Kennedy" groups. The Commission's subpoena further demanded

All documents and materials (including but not limited to minutes, notes, memoranda, or records of telephone conversations) relating to meetings, discussions, correspondence, or other internal communications whereby the MNPL or any of its committees or sub-units determined to support or oppose any individual in any way for nomination or election to the office of President in 1980.

Joint Appendix (hereinafter "J.A.") at 4-7. MNPL was also ordered to provide a list of every official, employee, staff member, and volunteer of the organization, along with their respective telephone numbers. The Commission made no attempt to limit its subpoena to the period after September 1, during which the amended complaint alleged that Senator Kennedy was a candidate for President, or to material relevant to the alleged support of Senator Kennedy's candidacy. In fact the subpoena nowhere even refers to Senator Kennedy or his alleged candidacy, except in listing the official names of the "draft-Kennedy" groups.

Following denial by the Commission of MNPL's motion to quash the subpoena for lack of jurisdiction, the FEC filed a petition in district court to enforce its subpoena. At a hearing on the Commission's petition on January 28, 1980, the parties fully argued the issue of the Commission's subject matter jurisdiction over draft committees. In ordering MNPL to comply with the Commission's subpoena, see J.A. at 13-17, the court held that a subpoena enforcement proceeding is not the proper forum for deciding the issue of the Commission's alleged lack of jurisdiction. Although the court twice emphasized that it was not deciding the "merits" of MNPL's jurisdictional argument, the court did specifically find that the "guidelines of enforceability" found in United States v. Morton Salt Co., 338 U.S. 632, 70 S. Ct. 357, 94 L. Ed. 401 (1950), were satisfied.

he requirements to be met are first that the inquiry must be made within the authority of the agency. I don't think there is any question but what this inquiry is within the authority of the Federal Elections (sic) Commission. It was just this type of matter that caused Congress to set the whole machinery in motion when it enacted the statute.

J.A. at 13-14.

The district court's order enforcing the Commission's subpoena raises two issues.5 First, we must decide if, before enforcing this particular subpoena, the district court first should have determined whether subject matter jurisdiction existed for the Commission's investigation. We answer that question affirmatively. Accordingly, we must also examine the district court's finding that the investigation of these draft committees was without "any question ... within the authority of the Federal Elections (sic) Commission." J.A. at 13. We find, contrary to the district court, that the Commission lacks subject matter jurisdiction over the draft group activities it sought to investigate through this subpoena. II. STANDARDS FOR JUDICIAL ENFORCEMENT OF THIS FEC SUBPOENA

FECA declares that federal courts "may, ... in case of refusal to obey a subpoena or order of the Commission ..., issue an order requiring compliance " 2 U.S.C. § 437d(b). This grant of permissive authority is similar to other statutes which also provide that courts "may" enforce administrative subpoenas.6 Where the concerns of the subpoena-issuing agency are of a corporate or commercial character, the Supreme Court has made it abundantly clear that courts should deny enforcement only where there is "too much indefiniteness or breadth" in the items requested, or where the inquiry is not one which the requesting agency is lawfully authorized to make. See Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 208-09, 66 S. Ct. 494, 505-506, 90 L. Ed. 614 (1946). As the Court has pointed out,

(w)hile they may and should have protection from unlawful demands made in the name of public investigation, corporations can claim no equality with individuals in the enjoyment of a right to privacy. They are endowed with public attributes. They have a collective impact upon society, from which they derive the privilege of acting as artificial entities. The Federal Government allows them the privilege of engaging in interstate commerce. Favors from government often carry with them an enhanced measure of regulation. Even if one were to regard the request for information in this case as caused by nothing more than official curiosity, nevertheless law-enforcing agencies have a legitimate right to satisfy themselves that corporate behavior is consistent with the law and the public interest.

Of course a governmental investigation into corporate matters may be of such a sweeping nature and so unrelated to the matter properly under inquiry as to exceed the investigatory power. But it is sufficient if the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant.

United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S. Ct. 357, 368-369, 94 L. Ed. 401 (1950) (citations omitted) (emphasis supplied).

The Morton Salt rule has been applied by this court repeatedly in business contexts to limit the scope of issues which may be litigated in a subpoena enforcement proceeding. In so doing we have repeatedly shown our awareness that the " "very backbone of an administrative agency's effectiveness in carrying out the congressionally mandated duties of industry regulation is the rapid exercise of the power to investigate ....' " FTC v. Texaco, Inc., 180 U.S. App. D.C. 390, 555 F.2d 862, 872 (D.C.Cir.) (en banc), cert. denied, 431 U.S. 974, 97 S. Ct. 2940, 53 L. Ed. 2d 1072 (1977) (quoting FMC v. Port of Seattle, 521 F.2d 431, 433 (9th Cir. 1975)). Usually, scrutiny under the Morton Salt standard results in routine subpoena enforcement when the information sought falls within the purview of the regulatory agency's authority. See, e. g., FTC v. Carter, 205 U.S. App. D.C. 73, 636 F.2d 781, 785-87 (D.C.Cir.1980) (applying Morton Salt standard, and "concluding that the Commission has sufficient statutory authority to conduct the investigation it has ordered and that the investigation is related to congressionally prescribed duties of the Commission"); FTC v. Owens-Corning Fiberglas Corp., 200 U.S. App. D.C. 102, 626 F.2d 966, 974 (D.C.Cir.1980); FTC v. Anderson, 203 U.S. App. D.C. 159, 631 F.2d 741, 745 (D.C.Cir.1979); SEC v. Arthur Young & Co., 190 U.S. App. D.C. 37, 584 F.2d 1018, 1023-24, 1032-33 (D.C.Cir.1978), cert. denied, 439 U.S. 1071, 99 S. Ct. 841, 59 L. Ed. 2d 37 (1979); Appeal of FTC Line of Business Report Litigation, 193 U.S. App. D.C. 300, 595 F.2d 685, 702-03 (D.C.Cir.), cert. denied, 439 U.S. 958, 99 S. Ct. 362, 58 L. Ed. 2d 351 (1978) (all cases where Morton Salt rule was applied in corporate or commercial contexts). See also CAB v. Deutsche Lufthansa Aktiengesellschaft, 192 U.S. ...

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