Victory! Corporate Challenge to Massachusetts Contribution Ban Fails

We  celebrated a victory as the U.S. Supreme Court declined to hear this challenge to a Massachusetts state law banning corporate contributions to political candidates. Free Speech For People worked with Common Cause Massachusetts on an amicus brief in the state supreme court. The Supreme Judicial Court upheld the law. The corporations sought U.S. Supreme Court review, but the Court declined to hear the case.

This case is important for several reasons. First, the case was clearly conceived by the Goldwater Institute not just as a challenge to a Massachusetts statute, but as a vehicle to try to persuade the U.S. Supreme Court to strike down bans on contributions from corporations to candidates. Second, we succeeded in complicating the case to keep it out of the Supreme Court. And finally, looking forward, the Massachusetts court’s decision lays additional legal groundwork in an important concurring opinion.

Read more about this case in our blog post.

Key Facts

Caption  1A Auto, Inc. v. Sullivan
Court Massachusetts Supreme Judicial Court
Docket No. 18-733 (U.S. Supreme Court)
Status Victory
Plaintiffs 1A Auto, Inc. and 126 Self Storage Inc.
Defendant Michael Sullivan, Director, Office of Political and Campaign Finance


Massachusetts has prohibited business corporations from making political contributions since 1907. In 2015, two business corporations challenged this law in Massachusetts state court. A key part of the corporations’ challenge has been that, while Massachusetts law prohibits corporations from contributing to candidates at all, an administrative “interpretive bulletin” by the state Office of Campaign and Political Finance (OCPF) permits labor unions to contribute up to $15,000 per year to a single candidate.

In 2015, the trial court rejected the corporations’ claims. Free Speech For People wrote about the trial court decision in this case, then known as 1A Auto Inc. v. Sullivan. Despite a blistering rebuke by the lower court ruling that the corporate challenge “flies in the face of years of U.S. Supreme Court and U.S. Court of Appeals jurisprudence upholding such a ban” on corporate contributions, the plaintiffs and their counsel, the Arizona-based Goldwater Institute, pressed on as part of a national strategy to weaken state protections against expanding money in politics, and appealed to the Massachusetts Supreme Judicial Court.

Free Speech For People, working closely with Common Cause, filed a “friend of the court” brief emphasizing that in this case, there is simply no reason to reach the constitutional claims raised by the plaintiffs. But the basis for that difference is not the law itself, which provides no such $15,000 limit. Under the law itself, a labor union could (like any other organization) establish a political committee that can receive up to $500 from each donor and then contribute, at most, $500 to each candidate. The $15,000 “limit” is not in the law, but rather an exemption created through an “interpretive bulletin” issued by the OCPF, the agency that administers the law. And the interpretive bulletin is incompatible with the statute that the Goldwater Institute has challenged.

Common Cause and Free Speech For People urged the court to recognize this case for what it is, an administrative law challenge masquerading as a constitutional claim. As our brief argued, a dubious administrative bulletin is no basis on which to strike down a century-old corporate contribution ban. Shortly after we filed our amicus brief, the state sent a letter to the court noting that “[t]he amicus brief raises, for the first time, important concerns about the compatibility of OCPF’s Interpretive Bulletin … with the statute it interprets … [and] whether [the bulletin], as a standard or requirement of general application, should have been promulgated as a regulation.”

On March 6, 2018, the Massachusetts Supreme Judicial Court heard oral arguments. During oral argument, the state specifically cited the argument in our brief in response to a suggestion by Justice Scott Kafker that “You’ve got to defend the $15,000 difference.”

On September 6, 2018, the Supreme Judicial Court issued its opinion rejecting the corporate challenge to the contribution limits. Following U.S. Supreme Court precedent, the Supreme Judicial Court emphasized the key distinction between contributions and independent expenditures established in Buckley v. Valeo and reaffirmed by Citizens United. As the Court explained, unlike limits on independent expenditures which are reviewed under strict scrutiny, contribution limits are reviewed under a less rigorous standard because they are viewed as only a “marginal restriction” upon speech. As a result, contribution limits are upheld so long as they are “closely drawn” to match a “sufficiently important interest.” Based upon the law and the record in Massachusetts, the Court concluded that such an important interest was at stake here, explaining that “Both history and common sense have demonstrated that, when corporations make contributions to political candidates, there is a risk of corruption, both actual and perceived.”

The Court also saw through the plaintiffs’ equal protection arguments as a cynical attempt to “reframe their First Amendment challenge, to effect an end run around the Supreme Court’s well-established distinction between independent expenditure limits, which trigger strict scrutiny, and contribution limits, which do not.”

Finally, the Massachusetts court’s decision is also important for the additional groundwork laid in Justice Budd’s concurrence. In assessing whether the state has a “sufficiently important interest” in regulating corporate contributions, Justice Budd points to Article 5 of the Massachusetts Constitution which creates an agency relationship between the people and their representatives. Justice Budd goes on to explain how a system that creates a “donor class” separate and distinct from “the people” competes with Article 5’s directive that elected officials should act in the interest of their principals. This argument also expands the bounds of what constitutes “the appearance of corruption” by tying it to the strain that campaign contributions impose on the agency relationship contemplated by Article 5, and therefore implicates the very “form and character of our representative democracy itself.”

The corporate challengers petitioned the U.S. Supreme Court for certiorari review (supported by four amici curiae briefs from pro-corporate entities: the Fiscal Alliance Foundation, Pacific Legal Foundation,  Landmark Legal Foundation, and Liberty Justice Center) but the Court declined to take the case.

Meanwhile, the state Office of Campaign Finance reopened the administrative bulletin that created the $15,000 “union loophole” in the first place. We commented first on an advanced notice of proposed rulemaking and then again in response to draft regulations. While the agency’s final regulations did not go as far as we had urged, they represent a step in the right direction.

Read more about this case in our blog post.


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