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US Supreme Court Denies Appeal Petition in 126 Self Storage Campaign-Finance Lawsuit

May 21, 2019

10 Min Read
US Supreme Court Denies Appeal Petition in 126 Self Storage Campaign-Finance Lawsuit

Update 5/21/19 – The U.S. Supreme Court yesterday denied the Goldwater Institute’s petition for justices to hear the political-contribution case involving 126 Self Storage and 1A Auto. The court refused the request without comment, according to the source.

The move effectively upholds the Massachusetts law. Because the case will not be heard, questions regarding the imbalance of restrictions on political contributions between for-profit businesses and nonprofits/unions could persist. In its ruling last year, the Massachusetts SJC didn’t resolve the discrepancy, saying the rules applying to nonprofit and union contributions were unclear, the source reported.

12/13/18 – As expected, the Goldwater Institute has petitioned the U.S. Supreme Court to hear the political-contribution case involving 126 Self Storage and 1A Auto. In its filing, the institute characterizes the restriction against businesses as an “unfair double standard” that provides an advantage to unions and labor groups, according to the source.

“These entities are not subject to any disclosure requirements or contribution limits as long as their contributions and independent expenditures in a given year do not exceed $15,000 or 10 percent of their revenues,” the petition states.

As a result, the Massachusetts law “violates the First Amendment’s guarantees of freedom of speech and freedom of association, the Fourteenth Amendment’s guarantee of equal protection of law, and analogous provisions of the Massachusetts Constitution,” the institute argued.

“For too long, Massachusetts and other states have used campaign-finance rules to tilt the political playing field to favor some groups and ideas over others. And, unfortunately, courts have mostly let them get away with it,” senior attorney Jacob Huebert said in a press release. “We’re asking the Supreme Court to take this case to end this unfairness and make sure states respect everyone’s equal right to participate in politics.”

It’s not clear when the Supreme Court will decide whether to hear the case.

9/10/18 – The Massachusetts SJC unanimously upheld the state’s ban on corporate donations to political candidates yesterday, ruling against 126 Self Storage and 1A Auto. In the court’s opinion, the ban against corporate contributions doesn’t violate free speech and helps prevent "a serious threat of quid pro quo corruption," Gants wrote, noting that in the last 10 years, several Massachusetts politicians had been convicted of bribery-related crimes intended to benefit businesses.

"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," Gants wrote in a 32-page decision.

Kane indicated 126 could appeal to try to escalate the case to the U.S. Supreme Court. “You can't treat people differently just because someone thinks that's the way it should be," Kane said during a conference call with reporters. "You have to treat us all the same. Corporations, businesses and unions aren't all that different. We all have officers and boards of directors and employees, or represent employees, etc. There's not that big a difference."

Manley said he would discuss the outcome with the plaintiffs but was willing to appeal to the nation’s highest court. "The same rules should apply all across the board, to both sides of the bargaining table; and what the SJC said today was that the U.S. Constitution and the Massachusetts Constitution allows the state to discriminate against groups based on their viewpoints and ban certain viewpoints from contributing to candidates," he told a source. "That, we think is unconstitutional. We think the U.S. Supreme Court has actually said the opposite, has said that that is unconstitutional, and it's my hope that the U.S. Supreme Court will weigh in and change the outcome in this case."

Though there was no dissenting opinion, justice Scott Kafker cast some doubt on the decision in a written, concurring opinion. "It is difficult to discern whether the basis for the statute's differential treatment of business corporations rests on grounds considered legitimate, illegitimate or a combination of both," Kafker wrote.

If the plaintiffs decide to appeal the decision, they would file before the end of the year, Manley said.

3/7/18 – The SJC heard opening arguments yesterday from both sides of the political-contribution case involving 126 Self Storage and 1A Auto. Arguing on behalf of the companies, Manley told the court they believe corporations should be on equal footing with other entities to align with federal law, according to the source.

“I’m going to try to understand the world you’re asking us to create in Massachusetts,” Chief Justice Ralph Gants said during the hearing. “Under the law as you would have us apply it, a corporation, whether it be 126 [Self Storage] or GE or Raytheon, could essentially contribute to a PAC, which is devoted to a single candidate.”

Justice Scott Kafker asked assistant attorney general Julia Kobick how the corporate-contribution ban keeps corruption out of politics, noting that unions have acted dishonestly in the past. “We’ve got a history of bad guys on both sides. We have the old Teamster stuff from the Jimmy Hoffa era. We’ve got bad corporate behavior,” Kafker said. “Do we have a record that we’re going to be able to say: ‘Well, there’s more fear of corruption on the corporate side than there is on the union side?’”

Though Kobick conceded that “there is unquestionably a record,” she argued the ban had fulfilled its intent. “The commonwealth’s bar on corporate contributions remains as constitutionally sound as when the legislature enacted it 100 years ago to address the risk of quid pro quo corruption and its appearance,” Kobick said.

The SJC is simultaneously listening to arguments in a separate but related case on whether the state’s requirement that most voters be registered 20 days prior to an election is constitutional, the source reported.

1/4/18 – The Massachusetts Supreme Judicial Court (SJC) is scheduled to hear oral arguments in March on the provision that allows unions to contribute to state political candidates but bars businesses from making political donations. The union allowance is 15 times the limit for individual contributions, according to the source.

Though superior court judge Paul Wilson ruled in favor of the Office of Campaign and Political Fairness in April, 126 Self Storage and 1A Auto appealed the decision in August and motioned to have the state supreme court review the case. Wilson said that, in his opinion, the distinction between labor and corporate political contributions “serves the anti-corruption interest,” which the state uses to justify the law. The state didn’t oppose the motion for SJC review, the source reported.

"There is no legitimate justification for allowing unions and non-profits to contribute thousands of dollars to candidates, parties and political committees, while completely banning any contributions from businesses," the plaintiffs wrote in their August brief.

The state is expected to issue a brief on Feb. 5.

8/6/15 – Suffolk County Superior Court Judge Linda Giles heard arguments on Aug. 4 requesting an injunction to stop the state from enforcing the ban, which has existed since 1907. The judge hasn’t ruled yet, according to the source. "This is about fairness and equality," Manley said. The Goldwater Institute recently filed a similar suit in Kentucky.

Assistant Attorney General William Porter argued that issuing an injunction would have serious consequences. "The statute has been on the books for 108 years. It's a well-established campaign-finance scheme that seeks to protect the integrity of elections. Virtually overnight, it would be thrown into disarray,” he said in court.

The state’s ban, which is similar to one that exists in federal law and 20 other states, has been upheld by court precedent, according to Sullivan, who was represented by Attorney General Maura Healey's office. In a brief, Sullivan's lawyers argued an injunction, "would upset a long-established campaign finance system designed to ensure fair elections and, further, would allow unlimited corporate contributions in contravention of a decades-old prohibition."

After the hearing, Kane reiterated that he simply wants the same rights as unions. "My little company supposedly has more influence than the [American Federation of Labor and Congress of Industrial Organizations] or the Teamsters? It’s ludicrous,” Kane told the source. Out-of-state unions have more influence in the state than he does, he added.

Under current campaign-finance law, businesses aren’t permitted to contribute directly to candidates, while unions can donate up to $15,000 to a candidate. Businesses also can’t establish and fund political-action committees that donate to candidates, while unions can, the source reported.

2/25/15 – A Massachusetts self-storage operator and auto-parts retailer are suing the state’s campaign-finance agency over a provision that allows unions to contribute up to $15,000 but bars businesses from making political donations. The Goldwater Institute, a conservative think tank based in Arizona, filed the suit on Tuesday in Suffolk Superior Court on behalf of 126 Self Storage Inc. in Ashland, Mass., and 1A Auto Inc. in Pepperell, Mass.

The lawsuit names Michael Sullivan, who heads the Office of Campaign and Political Finance, as defendant. In its filing, the Goldwater Institute argues that “businesses and unions are functionally equivalent organizations.”

“There is no legitimate justification for allowing unions to contribute thousands of dollars to candidates, parties and political committees, while completely banning any contributions from businesses,” the lawsuit states. “This lopsided ban on political contributions violates Plaintiffs’ rights of equal protection, free speech, and free association protected by the Massachusetts and United States constitutions.”

The plaintiff businesses are connected to the Massachusetts Fiscal Alliance (MFA), a nonprofit conservative public-policy advocacy group. Rick Green, president of 1A Auto, is chairman, and Michael Kane, owner of 126 Self Storage, serves as clerk and director of the group, according to “The Lowell Sun.”

Kane typically supports fiscally conservative candidates but became frustrated with the individual donation limit of $1,000, he told the source. He wasn’t aware there were different donation limitations for businesses and unions until he was working at the MFA, he said.

“I don’t have the same voice, the same horse in the race, as my friends in the unions,” Kane told the “Boston Herald.” “It’s really about fairness and equity. We’re not asking for anything more.”

Steven Tolman, president of the Massachusetts AFL-CIO, believes businesses have enough influence in elections without the donation provision. “It’s shocking that a right-wing funded group would want to come up in Massachusetts and challenge or try to make an argument that corporations don’t have enough political juice,” Tolman told the source. “It’s absolutely outrageous.”

Massachusetts is one of seven states that allow union donations but prohibit business contributions, according to Goldwater attorney James Manley.

New Sources:
Bloomberg, U.S. Supreme Court Rejects Bid to Let Businesses Donate to Candidates
U.S. Supreme Court, 1A Auto v. Sullivan, 18-733

Previous Sources: 
WND, Special Speech Rights Given Unions Facing Supreme Court Challenge
Goldwater Institute, Goldwater Asks U.S. Supreme Court to Level Campaign-Finance Playing Field
The Salem News, Court Upholds State Ban on Campaign Contributions From Corporations
Mass Live, SJC Upholds Massachusetts' Ban on Corporate Campaign Contributions
Boston Herald, SJC Hears Arguments on Voter Registration, Campaign Donations
Boston Herald, Bay State Sued Over Campaign Finance Law
MASS Live, 2 Businesses Fight State Ban on Campaign Contributions 
The Boston Globe, Group to Sue Campaign Finance Office Over Union Contributions
The Lowell Sun, Conservative Advocacy Group Sues State Over Campaign Law
Wicked Local Ashland, Think Tank Sues Mass. on Behalf of Ashland Small Business
Worcester Business Journal, Corporate Campaign Donations Case Heads to SJC

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