By Allison Davis
In March of 2015, two family-owned companies headquartered in Massachusetts filed suit in state court challenging certain provisions of Massachusetts’ campaign finance laws. The provisions in question prohibit corporations and corporate PACs from contributing to candidates or political party committees, but permit labor unions and their PACs to directly contribute up to $15,000 per calendar year to candidates or parties. According to the plaintiffs’ complaint (filed as 1A Auto, Inc. v. Sullivan), this law represents a “lopsided ban” that stifles First Amendment-protected speech and associational rights for corporations. Additionally, the plaintiffs allege that the law violates the Equal Protection Clause of the Fourteenth Amendment to the Constitution by granting unions and their PACs a privilege that is forbidden to their corporate counterparts.
Although the United States Supreme Court previously held in Austin v. Michigan Chamber of Commerce that a state’s ban on independent expenditures by corporations—but not unions—did not violate the Equal Protection Clause, the “anti-distortion” rationale behind this distinction—that is, the presumption that corporate “war chests” pose a bigger threat than union spending—was expressly overruled in 2010 in Citizens United v. FEC. On the contributions side, although the Court upheld a ban on direct corporate contributions in 2003’s FEC v. Beaumont, that ban applied equally to unions and corporations, and the government failed to distinguish between the two.
At the state level, at least one court has gone one step further and directly struck down a law distinguishing between corporate and union contributions. In 2010’s Dallman v. Ritter, the law in question—an amendment to the Colorado Constitution that prohibited unions from making contributions, but allowed corporate PACs to make such contributions—was essentially the reverse of Massachusetts’ presently challenged law. That court held that the amendment abridged the plaintiff’s First Amendment right to association, as well as their Fourteenth Amendment right to equal protection, by “treating unions differently than other entities without compelling justification.” Although the court acknowledged that unions and corporations were “structurally dissimilar,” it concluded that for the purposes of regulating political speech, they were “similarly situated.” It follows that this reasoning flows both ways: if unions are the same as corporations in the campaign finance context, then indeed, corporations are the same as unions.
The Eighth Circuit, for its part, has expressed skepticism about the ability of corporations to challenge contribution restrictions that distinguish between corporate and union speech under the Fourteenth Amendment’s Equal Protection Clause. However, that same court has upheld a law that banned corporate political contributions and allowed union contributions, holding that although a corporation lacked standing to bring an Equal Protection claim, it did have standing to challenge the law under the First Amendment.
On balance, these cases demonstrate that although courts are skeptical when granting corporations standing to challenge campaign finance laws under the Equal Protection Clause, the possibility of a successful outcome for a corporation challenging such laws under the First Amendment (as alleged in the Massachusetts plaintiffs’ complaint) appears far more likely. Ultimately, the success or failure of the Massachusetts’ plaintiffs’ challenge to that state’s campaign finance law will rest upon the Constitutional claim upon which they rely—and a First Amendment challenge is far more likely to be successful than one based upon the Equal Protection Clause.