Massachusetts Upholds Corporate Campaign Contribution Limits in ‘Union Loophole’ Case
November 26, 2018
By: Jared Mullen
Earlier this month, Massachusetts’s highest court rejected a challenge to the Commonwealth’s longtime ban on corporate campaign contributions. First enacted in 1907, G. L. c. 55, § 8 prohibits corporations, partnerships, and LLCs from contributing directly to political campaigns or political action committees. At the same time, unions, non-profit organizations, and trade associations may directly contribute up to $15,000 to political campaigns in the commonwealth, while individuals may contribute up to $1,000. Corporations may still contribute to Super PAC’s, which do not coordinate with political campaigns, as well as make independent political expenditures of their own.
Although many states prohibit corporate campaign contributions, Massachusetts is one of only six to prohibit corporate contributions while permitting contributions from unions. Critics have called the system a ‘union loophole’ and argued that the different rules for corporate and union interests give union-backed candidates an unfair advantage in elections. Supporters of the law view it as a critical limitation on the influence of money in politics.
In a civil suit filed against the Massachusetts Office of Campaign and Political Finance (OCPF), plaintiffs 1A Auto Inc. and 126 Self Storage Inc. sought declaratory and injunctive relief, arguing in part that § 8 was an unconstitutional violation of their First Amendment right to free speech. The plaintiffs advanced two key points in support of this argument. First, they argued that the law “does not advance a sufficiently important interest because the OCPF . . . failed to demonstrate that the ban . . . is necessary to prevent quid pro corruption or the appearance of quid pro quo corruption.” Second, they argued that, by permitting union contributions while excluding corporate ones, § 8 is under-inclusive viewpoint discrimination.”
In a 7-0 decision, the Supreme Judicial Court rejected the plaintiff’s claims. Addressing their first claim, Chief Justice Ralph Gatts noted that it was unreasonable to expect the OCPF to be able to demonstrate evidence of corporate contributions causing quid pro quo corruption, given that the ban had been in place for over a century. He went on to state that the court “need not insist on evidence of actual corruption when the government also has an important interest in preventing the appearance of corruption.” Concluding that “[b]oth history and common sense have demonstrated that, when corporations make contributions to political candidates, there is a risk of corruption, both actual and perceived.”
In response to plaintiff’s viewpoint discrimination claim, Chief Justice Gatts stated that § 8 cannot be under-inclusive unless it is shown that the law is a “mere pretext” to silence corporate political speech and pointed out that “[t]here is nothing in the record suggesting that the Legislature acted with this impermissible intent.” He concluded that § 8 is not discriminatory toward a particular viewpoint simply because it did not cover every instance of corruption or the appearance of corruption.
In a concurring opinion, Justice Scott Kafker criticized the court’s analysis of the plaintiff’s viewpoint discrimination argument, writing that “[t]he difficult issue is differential treatment, when corruption, or the risk of corruption, stems from multiple sources, but only one of which is regulated.”
Justice Kafker noted that the primary Supreme Court precedent addressing the differential treatment of corporations in campaign finance, Austin v. Michigan Chamber of Commerce, was overturned by the Court’s subsequent, controversial opinion in Citizens United v. Federal Election Commission. In Austin, the Court held that “significant state-conferred advantages of the corporate structure” justified treating corporations differently than other organizations in the campaign finance context, at least for independent expenditures. However, after Citizens United, which rejected such a distinction for laws regulating independent expenditures, it remains unclear whether differential treatment can be justified on those grounds in the context of direct campaign contributions. Justice Kafker ultimately concluded that restrictions on direct contributions remain constitutional given the Supreme Court’s silence on the matter and concurred in the judgement.
The Attorney representing the plaintiffs in the case, Jim Manley of the Goldwater Institute stated that he expects his clients will request the Supreme Court to hear the case. If they decide to go forward, they will file a cert petition for the beginning of December 2018.