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Appeals court upholds Joyce ruling — Corporations can create PACs, but not donate directly to them

Appeals court upholds Joyce ruling — Corporations can create PACs, but not donate directly to them

April 10th, 2019 by Bob Watson in Local News

Missouri corporations may not make direct contributions to their own political action committees, a three-judge panel of the state’s Western District appeals court ruled Tuesday.

The 12-page ruling upheld a similar April 24, 2018, ruling by Cole County Presiding Circuit Judge Pat Joyce in the Missouri Chamber of Commerce and Industry’s lawsuit against the Missouri Ethics Commission.

That lawsuit challenged the Ethics Commission’s interpretation of voters’ intent, after more than two-thirds of the people who voted in November 2016 added the “Missouri Campaign Contribution Reform Initiative” to the state’s Constitution.

That amendment, known on the ballot that year as Amendment 2, began with a statement that: “The people of the state of Missouri hereby find and declare that excessive campaign contributions to political candidates create the potential for corruption and the appearance of corruption; that large campaign contributions made to influence election outcomes allow wealthy individuals, corporations and special interest groups to exercise a disproportionate level of influence over the political process …”

After the MEC issued two opinions saying the new language allowed corporations to form their own political action committees, or PACs — but not to contribute money directly to those PACs — the state chamber asked the Cole County Circuit Court to rule that corporations could make such donations.

After Tuesday’s ruling, the chamber said in a news release: “A ruling from the state’s Western District Court of Appeals continues a confusing situation for Missouri businesses — they can set up their own political action committees, but cannot fund them.”

Both Joyce and Judge Karen King Mitchell, who wrote the appeals court’s opinion for the three-judge panel — ruled there should be no confusion at all.

Both rulings pointed to the amendment’s language: “It shall be unlawful for a corporation or labor organization to make contributions to a campaign committee, candidate committee, exploratory committee, political party committee or a political party …”

That same section of the new amendment had only one exception, both courts ruled — “That a corporation or labor organization may establish a continuing committee which may accept contributions or dues from members, officers, directors, employees or security holders.”

Both courts noted the list of donors to the corporation-created PAC does not include the corporation, itself.

Mitchell wrote in the appeals court ruling: “The plain and ordinary meaning of the language of Amendment 2 in its entirety does in fact prohibit contributions from a corporation to its connected PAC when the corporation is acting as a connected organization.”

Voters overwhelmingly passed the proposed amendment. Of the 2,708,886 total votes cast on the question, 69.95 percent — or 1,894,870 voters — voted “yes.” Only 814,016 voters — or 30.05 percent — voted against the proposal.

The appeals court also found the voter-approved amendment “provides that ‘a corporation may establish a continuing committee which may accept contributions … from (a corporation’s) members, officers, directors, employees or security holders.’ …

“There is nothing in Amendment 2 that prohibits a connected PAC from making contributions to committees associated with candidates or political parties. Thus, a connected PAC may make various election-related contributions that its sponsoring corporate connected organization may not.”

In the Tuesday afternoon news release, Dan Mehan, state Chamber of Commerce president and chief executive officer, said: “Businesses have every right to participate in our state’s political process. But to do so, they need clear, rational rules to follow — they don’t have this in Missouri right now.”

Mehan said the appeals court’s “ruling is a step backward in our state and shields this set of needlessly confusing regulations. We will continue to explore all our options to ensure business advocates are not uniquely hindered in their work to support positive political change.”

Procedurally, the state chamber first must ask the appeals court for a rehearing or for the court to transfer the case to the Supreme Court.

If the appeals court rejects those requests, the chamber then can file its own appeal directly with the seven-judge high court.

But, while the appeals court must take all cases filed with it, the Supreme Court has the power to choose which cases it hears — so there’s no guarantee the high court will decide to hear arguments in the case.