Austin v. Michigan Chamber of Commerce

The Michigan Chamber of Commerce opposed Section 54(1) of the Michigan Campaign Finance Act which did not allow the use of "corporate treasury funds for independent expenditures in support of or in opposition to any candidate in elections for state office." The chamber wanted to pay for a newspaper advertisement to support their choice for a candidate for Michigan's House of Representatives from the general treasury funds instead of from an independent fund that was "designated solely for political purposes." The Michigan Chamber of Commerce filed suit in federal district court against "state officials for declaratory and injunctive relief against enforcement of the statute," claiming that Section 54(1) was in violation of the First and Fourteenth Amendments to the Constitution. The federal district court found that the section was constitutional. However that decision was reversed by the court of appeals, holding that Section 54(1) was in violation of the First Amendment

because (1) the chamber was a "nontraditional" corporation formed for essentially ideological purposes and to disseminate economic and political ideas, (2) the chamber's expenditures did not pose the threat or appearance of corruption, and (3) there was thus no compelling state interest that justified the infringement of the chamber's freedom of speech.

The U.S. Supreme Court reversed the decision of the court of appeals. It held that Section 54(1) did not violate the First Amendment. Justice Marshall, who delivered the opinion of the Court, wrote that the statute was "supported by a compelling governmental interest in preventing political corruption" by limiting the corporation to the use of a special independent fund raised entirely for political purposes instead of using general treasury funds, which may have "little or no correlation to the public's support for a corporation's political ideas." The Supreme Court also felt that the statute was narrowly tailored to that end, and that the Michigan Chamber of Commerce did not merit exemption "from the statute's restrictions as a voluntary political association." While the chamber of commerce claimed that the statute was "over inclusive for First Amendment purposes" because it included closely held corporations, the Supreme Court did not agree. The chamber also claimed the statute was "under inclusive" because it did not include unincorporated labor unions, but the Court found that "the state's decision to regulate only corporations was precisely tailored to serve the compelling state interest of eliminating from the political process the corrosive effects of political `war chests' amassed with the aid of the legal advantages given to corporations."

The Supreme Court also considered the matter of whether the statute was a burden to the chamber's "freedom of expression," as was found by the Supreme Court in Federal Election Commission v. Massachusetts Citizens for Life, Inc. (1986). The Supreme Court did find that in this case, the statute was indeed a burden, and "must be justified by a compelling State interest," that interest being to regulate "political expenditures to avoid corruption or the appearance of corruption" (Federal Election Commission v. National Conservative Political Action Committee [1985]).

The Supreme Court then had to decide if the statute was in violation of the Equal Protection Clause of the Fourteenth Amendment. Because the Court found that the statute was "narrowly tailored to serve a compelling state interest," Section 54(1) did "pass muster under the Equal Protection Clause." Even though, as the Chamber argued, media corporations are exempt from the statute, it is justified due to the "unique role that the press plays" in providing information of "newsworthy events" to the public. The Supreme Court determined that the Michigan Campaign Finance Act did not violate the Equal Protection Clause, but rather "reduces the threat that huge corporate treasuries amassed with the aid of favorable state laws will be used to influence unfairly the outcome of elections." Because the Supreme Court found that the Michigan Chamber of Commerce should not be made exempt from the Michigan Campaign Finance Act, the Court reversed the decision of the court of appeals.

Dissenting Opinions

Justices Scalia and Kennedy each filed dissenting opinions. Justice Scalia expressed his opinion that just because corporations are sometimes given "special advantages" by state laws and can have large treasuries, they should not be required "to forfeit their First Amendment rights," and that the statute was not sufficiently narrow in its construction. Justice Kennedy, who was joined by Justices O'Connor and Scalia, expressed a dissenting opinion because he felt that the statute was in violation of the First Amendment as it constituted a "censorship of speech." He felt that the act "prohibits corporations from speaking on a particular subject, the subject of candidate elections," and "discriminates on the basis of the speaker's identity," so that "the State censors what a particular segment of the political community might say with regard to candidates who stand for election." Thus, the Court's finding resulted in a decision "wholly at odds with the guarantees of the First Amendment" (Meyer v. Grant, [1988] Buckley v. Valeo, [1976]). Kennedy agreed with Scalia that the act was not narrow enough and believed that "the Act does not meet our standards for laws that burden fundamental rights."

Impact

The case of Austin v. Michigan Chamber of Commerce has been cited in six U.S. Supreme Court cases and 11 Circuit Court cases, as of 1998. The role of the government in establishing limitations, policies, and restrictions on political campaign contributions, fundraising, and donations is constantly being evaluated. The many important issues involved here, such as freedom of speech and press, will surely continue to be contested in the courts of our country.

Related Cases

• Police Department of Chicago v. Mosely, 408 U.S. 92 (1972).
• Buckley v. Valeo, 424 U.S. 1 (1976).
• FEC v. National Conservative Political Action Committee, 470 U.S. 480 (1985).
• FEC v. Massachusetts Citizens for Life, Inc., 479 U.S. 238 (1986).
• Meyer v. Grant, 486 U.S. 414 (1988).