The United States Supreme Court may be on the cusp of deeming unconstitutional a Michigan law prohibiting corporations from certain political speech. Lifting the current ban would allow corporations to directly participate in the political process, rather than limiting participation to political action committees (PACs), and could allow corporations to make unlimited "independent expenditures" related to certain elections.
The Supreme Court heard oral arguments last week in Citizens United v. Federal Election Commission and considered whether to overturn the corporate independent expenditure prohibition that was affirmed twenty years ago in Austin v. Michigan Chamber of Commerce. In Austin, the Supreme Court allowed the Michigan Campaign Finance Act's prohibition of certain corporate political speech. Retired Dykema partner Richard McLellan argued the Austin case in 1989 on behalf of the Michigan Chamber of Commerce, and current Dykema partner Gary Gordon represented Michigan Secretary of State Richard Austin at the Supreme Court.
In Citizens United, the Supreme Court is considering whether the Bipartisan Campaign Reform Act's prohibition of independent political expenditures during the months before an election violates the First Amendment. The case originated when Citizens United, a Virginia nonprofit corporation, created "Hillary: The Movie," a movie about then presidential candidate Hillary Clinton, and sought to advertise the release of that movie. The Federal Election Commission determined that both the movie and the advertisements for the movie were prohibited because they both are "electioneering communications" that were paid for by a corporation.
On behalf of the Michigan Chamber, Dykema submitted an amicus brief in Citizens United encouraging the Supreme Court to overturn Austin. Gary Gordon attended this week's oral arguments and is optimistic about the prospect that the Supreme Court may reverse course on the corporate independent expenditure ban. "Several justices asked questions that seem designed to elicit 'middle ground' options as alternatives to outright reversing Austin," Gordon explained, "and it appears the Court may be inclined to craft a solution that is more consistent with fundamental First Amendment principles."
Although it is impossible to predict the Court's ruling, the Court may mandate a change that will impact political expenditures permitted by certain corporations. With the Detroit mayoral election just a few months away and Michigan's gubernatorial primaries less than one year away, the changes resulting from the Supreme Court's ruling in Citizens United could drastically and immediately impact the way companies participate in the political process.
In any event, this case highlights the importance of continuing diligence by corporations in political activities, to ensure that corporate communications comply with state and federal campaign finance law and proper administration of political action committees. The Citizens United decision could be a "game changer" in terms of permitted corporate political activities.