The United States Supreme Court has changed the landscape of corporate, and likely labor union, spending in election campaigns with its 5-4 decision in Citizens United v. Federal Election Commission. The divided court struck down limits on corporate political spending just in time to impact the 2010 election season.

Based on this decision by the Supreme Court, corporations and labor organizations:

  • Can buy media time or space to directly advocate for or against a specific candidate in a federal election; but
  • Cannot contribute directly to the campaigns of federal candidates.

While this decision increases corporate and union ability to participate in election campaigns, key restrictions remain in place. Thus, any corporation or labor organization interested in using its own funds to engage in political advocacy should review FEC regulations requiring disclaimers and disclosure.

About the Case

The Court's ruling declares that key portions of the McCain-Feingold campaign finance act violate the First Amendment by restricting corporations from funding independent political messages in general and in the run-up to elections. The McCain-Feingold law had attempted to rein in independent campaign spending by corporations and unions for advertisements that advocate for or against a candidate. The appeal filed by Citizens United involved its claimed First Amendment right to distribute on a cable system via video-on-demand a movie it had produced called Hillary: The Movie. This movie was a 90-minute documentary that was highly critical of then-Senator Hillary Clinton and questioned her qualifications to become President of the United States. Citizens United was willing to pay $1.2 million to the cable company in order to make Hillary: The Movie freely available for viewing by the company's 34.5 million subscribers. The Court determined that this movie amounted to express political advocacy against Senator Clinton. However, as Justice Anthony Kennedy wrote for the majority in upholding Citizens United's right to use corporate funds to publicly disseminate its movie, "The government may regulate corporate political speech through disclaimer and disclosure requirements, but it may not suppress that speech altogether."

The Limits Addressed in the Citizens United Decision

The Citizens United decision involved two related limits that Congress placed on the expenditures of corporations and labor organizations in connection with federal elections. First, except for certain limited exceptions, Congress prohibited corporations and labor organizations from making an independent expenditure - meaning, an expenditure that is not coordinated with the campaign of a federal candidate but promotes the election or defeat of a particular candidate. Second, Congress prohibited any corporation or labor organization from making an electioneering communication, which is a communication that refers to a clearly identified federal candidate and is publicly and widely distributed by television stations, radio stations, cable television systems or satellite systems within thirty days of a primary or sixty days of a general election. A federal district court determined that Citizens United's plan to make Hillary: The Movie available through video-on-demand within thirty days of the 2008 primary elections violated the ban on electioneering communications.

However, the Supreme Court determined that the absolute bans on independent expenditures and on electioneering communications ran afoul of the First Amendment. As Justice Kennedy wrote, "it is inherent in the nature of the political process that voters must be free to obtain information from diverse sources in order to determine how to cast their votes." Although limits on direct contributions to political campaigns may be justified by the governmental interest in ensuring against the reality or appearance of quid pro quo corruption, no compelling justification exists to support a ban on independent expenditures by corporations or labor organizations. Thus, the Court struck down this ban.

Citizens United also sought to avoid the application to it of federal disclaimer and disclosure provisions, but the Supreme Court determined that these served a valid purpose of promoting transparency and were not unlawful. As a result, when a corporation or labor organization uses its own funds to independently place a television or radio advertisement that advocates for or against a federal candidate, the advertisement must include a disclaimer stating that it "is responsible for the content of this advertisement." As the Court noted, this will, at the very least, avoid confusion by making clear that the advertisement is not funded by a candidate or political party. In addition, corporations or labor organizations which spend more than $10,000 on electioneering communications within a calendar year must file a disclosure statement with the Federal Elections Commission. In a nod to modern communications, the Court observed that the Internet now can be used to provide prompt disclosure of expenditures, which "enables the electorate to make informed decisions and give proper weight to different speakers and messages."

How This Ruling Impacts Ohio Campaign Finance Laws

Notably, although the Citizens United decision involved federal expenditures, its reasoning should apply equally to Ohio's existing ban on corporations and labor organization expenditures in support of or opposition to any state candidate. The Supreme Court expressly overruled one of its earlier decisions upholding a Michigan law prohibiting corporate independent expenditures that supported or opposed any candidate for state office. Thus, the Ohio General Assembly will have to rewrite Section 3599.03 of the Ohio Revised Code to bring it into conformance with the First Amendment. This can be done by eliminating the ban on independent expenditures but retaining the ban on campaign contributions.

Ohio law currently allows corporations and labor organizations to make expenditures in support of or opposition to ballot issues, and this language can be expanded to include independent expenditures in support of or opposition to state candidates.