Minnesota Law on Corporate Political Spending Blocked by Appeals Court

09/06/12

On Wednesday, a split 8th U.S. Circuit Court of Appeals, temporarily blocked the law regulating corporate political spending in Minnesota holding that the current law violated the U.S. Supreme Court's 2010 decision in Citizens United v. Federal Election Commission. The cited case had removed limits on the money spent by companies and unions on the support or opposition of political candidates.

Writing for the 6-5 majority, Judge William Riley wrote, “After Citizens United, it is clear Minnesota may not suppress political speech on the basis of the speaker's corporate identity.”

Currently, the Minnesota law compels corporates to create a political fund if spending more than a hundred dollars a year on political speech. Curiously, failure to comply includes pecuniary fines, as well as imprisonment up to 5 years.

The controversial law was challenged in July 2010 by two nonprofit organizations, the Minnesota Citizens Concerned for Life Inc and The Taxpayers League of Minnesota. The law was also challenged by a for-profit travel company, the Coastal Travel Enterprises. The plaintiffs claimed that the reporting requirements of the law restricted and deterred them from making political expenditures and suppressed the freedom of their political speech.

The request to block the law was earlier rejected by a federal court in Minnesota, and the rejection upheld by a three-judge panel of the 8^th Circuit in May 2011.

However, Wednesday's decision by a larger panel of the 8^th Circuit found that the law was effectively treating companies which make political expenditures in the same fashion as political action committees, which was a violation of the Supreme Court's decision in Citizens United.

In Wednesday's decision, the court refused to block that part of the law, which bans companies from making direct donations to political candidates.

Five dissenting judges disagreed with the majority and held that the voting public had a right to know from where political money is coming.

Currently, the Minnesota Attorney General's office is reviewing the ruling.

A lawyer for the plaintiffs, James Bopp, who also brought the Citizens United case, expressed that the ruling was significant in determining whether states or federal regulators could impose the bindings on political action committees upon companies and other associations.

According to Bopp, the issue is still being hotly debated across the nation, and at least six courts, which have already ruled on the issue, are evenly split.

The 8th Circuit case is Minnesota Citizens Concerned for Life Inc et al v. Swanson et al, No. 10-3126.