Opinion
IP 01-0897-C B/S.
October 28, 2002
ENTRY GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS' CROSS-MOTION FOR SUMMARY JUDGMENT
Plaintiffs Robert W. Rock for Congress and Jeremiah T. Cunningham, as treasurer, challenge Defendant Federal Election Commission's determination that Plaintiffs violated the Federal Election Campaign Act of 1971, 2 U.S.C. § 431-455, by failing to file a campaign finance disclosure report within the time required by statute. Defendant has moved for summary judgment in its favor, arguing that Plaintiffs have failed to prove that Defendant's decision was arbitrary and capricious. Plaintiffs filed a Cross-Motion for Summary Judgment, alleging that the civil penalty assessed by Defendant is excessive and unwarranted. For the reasons set forth below, we GRANT Defendant's Motion for Summary Judgment and DENY Plaintiffs' Cross-Motion for Summary Judgment.
Factual Background
Robert W. Rock, an Indiana resident, was a candidate for election to the United States House of Representatives from the Second District of Indiana in November 2000. (Certified Admin. R. ("AR") Tab 1, at 2; Pls.'s Resp. to Def.'s Material Facts ¶ 1). Plaintiff Robert W. Rock for Congress ("Committee") is a political committee within the meaning of 2 U.S.C. § 431(4) and was the principal campaign committee for Robert W. Rock's congressional campaign within the meaning of 2 U.S.C. § 431(5). (AR Tab 1, at 2; Pls.'s Resp. to Def.'s Material Facts ¶ 2.) Plaintiff Jeremiah T. Cunningham ("Cunningham"), an Indiana resident, is treasurer of the Committee. (Compl. ¶¶ 4-5.) Defendant Federal Election Commission ("FEC") is an independent agency of the United States government with exclusive jurisdiction over the administration, interpretation, and civil enforcement of the Federal Election Campaign Act of 1971 ("the Act"). One of the FEC's enforcement responsibilities is to assess civil money penalties for certain violations of the Act's reporting provisions. (See Compl. ¶ 7; 2 U.S.C. § 437g(a)(4)(C).)
On May 19, 2000, the Committee filed an amended Statement of Organization with the FEC naming Cunningham as its treasurer and listing 34 West Eighth Street, Anderson, Indiana 46016 as the Committee's mailing address. (AR Tab 1; Pls.'s Resp. to Def.'s Material Facts ¶ 3.) The FEC sent notices dated October 2, 2000, to the principal campaign committees of all candidates seeking election to the United States House of Representatives in the 2000 general election, including Robert W. Rock for Congress and its treasurer, to remind them of the December 7, 2000 due date for the 30 day Post-General Election Report required under 2 U.S.C. § 434(a)(2)(A)(ii) and 11 C.F.R. § 104.5(a)(1)(ii). (AR Tab 2; Pls.'s Resp. to Def.'s Material Facts ¶ 4). The October 2, 2000 notice also noted that committee treasurers "are responsible for both the timeliness and accuracy of all reports," and that they "may be subject to enforcement action if reports are inaccurate or not filed on time." (AR Tab 2, at 2; Pls.'s Resp. to Def.'s Material Facts ¶ 5.) In addition, the notice stated that:
Beginning with the July 2000 reports, the Federal Election Commission
implemented a new administrative fine program. Under this program, political committees that fail to file their reports (including 48-hour notices) on time may be subject to administrative penalties ranging from $125 to $16,000 (or more for repeat late- and non-filers).
(AR Tab 2, at 2; Pls.'s Resp. to Def.'s Material Facts ¶ 5.)
The FEC again sent notice, dated November 13, 2000, to all principal campaign committees of congressional candidates who participated in the 2000 general election to remind them to file a Post-General Election report as required. The notices stated in part that "[r]eports sent by registered or certified mail must be postmarked by the mailing date (December 7, 2000); otherwise, they must be received by the filing date (December 7, 2000)." (AR Tab 3; Pls.'s Resp. to Def.'s Material Facts ¶ 6.)
On December 12, 2000, the Committee mailed a submission, the contents of which are disputed, to the FEC; the FEC received this submission on December 18, 2002. (Def.'s Resp. to Pls.'s Add'l Material Facts ¶ 1-2.) Four days later, on December 22, 2000, the FEC sent a letter to the Committee, notifying it that the FEC had not yet received the Committee's Post-General Election Report, and warning it that "the failure to timely file this report may result in civil money penalties . . ." (AR Tab 4; Pls.'s Resp. to Def.'s Material Facts ¶ 7.) A 2000 Post-General Election report for the Robert W. Rock for Congress committee was sent to the FEC by registered/certified mail, postmarked on February 1, 2001, and received by the FEC's Public Records Office on February 6, 2001. (AR Tab 5; Pls.'s Resp. to Def.'s Material Facts ¶ 8.)
On March 20, 2001, the FEC found reason to believe that the Committee and its treasurer had failed to file its 2000 Post-General Election Report on time. (AR Tab 7, at 7, 10; Pls.'s Resp. to Def.'s Material Facts ¶ 10.) In challenging the validity of this finding, Plaintiffs dispute whether the copy of the 2000 Post-General Election report postmarked February 1, 2002, was the first or the second copy of the report sent to the FEC by the Committee. The Plaintiffs do not dispute, however, that the FEC treated it as the first copy. Therefore, the FEC found that the Committee had filed its Post-General Election Report more than thirty days after its due date and should be considered a non-filer under its Administrative Fines regulations. ( 11 C.F.R. § 111.43(e)(1); AR Tab 6, at 2, 13; Pls.'s Resp. to Def.'s Material Facts ¶ 11.)
Following its procedures for assessing administrative fines, the FEC made a preliminary determination that the Committee owed a civil money penalty of $4500, based on the schedule of penalties at 11 C.F.R. § 111.43. (AR Tab 7, at 10; AR Tab 6, at 1-4, 13; Pls.'s Resp. to Def.'s Material Facts ¶ 12.) On March 26, 2001, and pursuant to 11 C.F.R. § 111.32, the FEC sent the Committee and its treasurer a letter, at the Committee's address of record, notifying the Committee of its determination, and informing the Committee that it had forty days to challenge the FEC's reason to believe finding. (AR Tab 8, at 2; Pls.'s Resp. to Def.'s Material Facts ¶ 13.) A signed certified mail receipt indicates that the letter was received by the Committee on March 27, 2001. (AR Tab 9; Pls.'s Resp. to Def.'s Material Facts ¶ 14.)
On May 22, 2001, the FEC voted unanimously to make a final determination that Robert W. Rock for Congress and Jeremiah T. Cunningham, its treasurer, violated 2 U.S.C. § 434(a), and to assess a civil money penalty of $4500. (AR Tab 11, at 6, 8; AR Tab 10, at 1-2, 17; Pls.'s Resp. to Def.'s Material Facts ¶ 16.) Pursuant to 11 C.F.R. § 111.40(a), the FEC notified the Committee and its treasurer of its decision by letter dated May 24, 2001. (AR Tab 12; Pls.'s Resp. to Def.'s Material Facts ¶ 17.) This letter, like the preliminary determination notification, was mailed to the Committee's address of record. (AR Tab 12; AR Tab 8; Pls.'s Resp. to Def.'s Material Facts ¶ 18.)
On June 22, 2001, Plaintiffs filed their petition for judicial review of the FEC's final determination under 2 U.S.C. § 437g(a)(4)(C)(iii).
Standard of Review Summary Judgment
In the usual case, summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party on the particular issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Eiland v. Trinity Hosp., 150 F.3d 747, 750 (7th Cir. 1998).
In a case involving judicial review of agency action, however, summary judgment is simply the procedural vehicle for asking the court to decide, on the basis of the administrative record, the legal question of whether an agency reasonably could have found the facts as it did. Hunger v. Leininger, 15 F.3d 664, 669 (7th Cir. 1994); see also Sierra Club v. Dombeck, 161 F. Supp.2d 1052, 1064 (D. Ariz. 2001). As a result, the movant's burden of proof on his motion for summary judgment is similar to his ultimate burden on the merits. Tex. Comm. on Natural Res. v. Van Winkle, 197 F. Supp.2d 586, 595 (N.D.Tex. 2002).
Agency Action
Under the standard of review set forth in the Administrative Procedure Act, a district court is required to set aside an agency action that it finds to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Although this standard of review is a narrow, highly deferential one, our inquiry still must be thorough and probing. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415-16 (1971). We must assure ourselves that the agency "examine[d] the relevant data and articulate[d] a satisfactory explanation for its action, including a 'rational connection between the facts found and the choice made.'" Bagdonas v. Dep't. of Treasury, 93 F.3d 422, 426 (7th Cir. 1996) (quoting Burlington Truck Lines, Inc. v. U.S., 371 U.S. 156, 168 (1962)). Agency action is considered valid as long as it appears from the administrative record that the decision was supported by a "rational basis." Bagdonas, 93 F.3d at 425. The "party challenging agency action must bear the burden of establishing [that] the agency acted in an arbitrary or capricious manner." Hoosier Envt'l Council, Inc. v. U.S. Army Corps of Eng'rs, 105 F. Supp.2d 953, 1010 (S.D.Ind. 2000) (citation omitted).
Legal Analysis
The question before us on summary judgment is whether the FEC's determination that the Committee failed to file its 2000 Post-General Election report more than thirty days late is arbitrary and capricious. In support of its motion for summary judgment, Defendant FEC argues that the Committee has waived on judicial review any argument that it did not make before the agency. We must agree. "Simple fairness to those who are engaged in the tasks of administration, and to litigants, requires as a general rule that courts should not topple over administrative decisions unless the administrative body not only has erred but has erred against objection made at the time appropriate under its practice." U.S. v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952). Thus, any objections not made before the administrative agency are subsequently waived before the courts. Ester v. Principi, 250 F.3d 1068, 1072 (7th Cir. 2001).
In addition, FEC regulations specifically state that a political committee's "failure to raise an argument in a timely fashion during the administrative process shall be deemed a waiver of the [committee's] right to present such argument in a petition to the district court under 2 U.S.C. § 437g." 11 C.F.R. § 111.38. Congress gave the FEC broad rulemaking authority: 2 U.S.C. § 437d(a)(8) authorizes the FEC ". . . to make, amend, and repeal such rules as are necessary to carry out the provisions of this Act;" and 2 U.S.C. § 437c(b)(1) states that the FEC "shall administer, seek to obtain compliance with, and formulate policy with respect to, this Act . . . and shall have exclusive jurisdiction with respect to the civil enforcement of such provisions." Under the standard of review set forth in Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984), if the authorizing statute is silent or ambiguous with respect to the specific issue addressed by the regulation, a court must inquire as to whether the agency regulation is a reasonable and permissible construction of the statute. Illinois E.P.A. v. U.S.E.P.A., 947 F.2d 283, 289 (7th Cir. 1991). As the agency's regulation is in keeping with prevailing authority, we conclude that it is a reasonable and permissible construction of the statute.
The Plaintiffs in this case failed to raise any objection before the FEC, and therefore, are precluded from arguing any objection before this court. Moreover, they do not explain why they failed to contest the penalty before the FEC, which would have preserved their right to judicial review. Plaintiffs hint that they did not have notice of the FEC's proceedings because Cunningham, the Committee's treasurer responsible for the timeliness and accuracy of all reports, changed employment. They do not assert that the FEC's reason to believe notification letter was inadequate in any respect; they assert only that the notice sent by the FEC did not reach Cunningham, specifically.
Notice of the FEC's reason to believe finding and its final penalty determination was sent to the address of record for the Committee, as stated on the Committee's Statement of Organization. The address of record of the Committee is also the address of record of Robert W. Rock, the candidate and attorney for Cunningham and the Committee. Title 2 U.S.C. § 433(c) requires the Committee to report any change in the information in its Statement of Organization to the FEC within 10 days. Neither the Committee nor Cunningham, however, notified the FEC of a change of address. As the FEC points out, mailing a document to a person's last known address constitutes constitutionally adequate notice. See, e.g., Fed.R.Civ.P. 5(b)(2)(B); Dusenbery v. U.S., 122 S.Ct. 694, 700-01 (2002). In addition, it is undisputed that the notice was received by someone at the Committee's address of record, if not by Cunningham. Therefore, we find that the notice given to and received by the Committee was adequate and that Plaintiffs were not deprived of either administrative review under 2 U.S.C. § 437g(a)(4)(C)(ii) or judicial review under 2 U.S.C. § 437g(a)(4)(C)(iii).
The remaining issue to be decided as a matter of law is whether the administrative record provided the FEC with a rational basis for its penalty determination. We hold that it did. A copy of the Committee's Post-General Election Report, which was required to be filed by December 7, 2000, was not received by the FEC until February 6, 2001. (AR Tab 5, at 3.) The administrative record contains no other copy of the report, including the copy allegedly sent to the FEC by the Committee in December 2000. Because the report was received by the FEC more than thirty days after the statutory deadline, the Committee was considered a non-filer under 11 C.F.R. § 111.43(e)(1). The schedule of penalties in the regulations provided that the civil money penalty applicable in these circumstances was $4500. (AR Tab 6, at 1-4, 13; AR Tab 7, at 10.)
Plaintiffs contest neither the calculation of the $4500 penalty authorized by the regulations nor the validity of the regulations themselves. Instead, Plaintiffs argue that the FEC's penalty determination is arbitrary and capricious because it failed to consider all the relevant factors in the record. Plaintiffs ask us to exercise equitable discretion to reduce the civil penalty from the amount provided in the regulations and to recalculate the penalty on the basis of the amount of cash in the Committee's account and the fact that the report had been filed by the time of the FEC's final penalty determination in March 2001. These factors, however, are outside the scope of our review.
Plaintiffs make a cursory allegation that the FEC has construed its administrative fine regulations to take precedence over the statute that provides for judicial review. A closer reading of Plaintiffs' argument reveals a general challenge to the deferential standard of review by which courts evaluate agency action. Such standard of review is well established under 5 U.S.C. § 706(2)(A), however, and we see no reason to revisit it in this case.
The Act explicitly enumerates the factors that may be taken into consideration when calculating a proposed civil money penalty: the amount of the violation involved, the existence of previous violations by the person, and such other factors as the FEC considers appropriate. 2 U.S.C. § 437g(a)(4)(C)(i)(II) (emphasis added). Such language delegates to the FEC, and only the FEC, the power to determine what additional factors may be taken into consideration in the calculation of a civil penalty. That the FEC, in its discretion, chooses not consider the Committee's current ability to pay any penalty assessed is not for us to second guess. In addition, the FEC has determined that, for the purpose of penalty assessment, any report filed more than thirty days late will be considered "not filed," regardless of whether or not the FEC ultimately receives the report. 11 C.F.R. § 111.43. Therefore, Plaintiffs request to consider as good faith their filing of the report after the thirty day deadline has no legal basis. See also Friends for Houghton v. FEC, No. 01-6444, slip. op. at 12, n. 4 (W.D.N.Y. July 23, 2002) (finding the "average person's understanding" of the term "not filed" to be "irrelevant in this case, since the term 'not filed' is defined by 11 C.F.R. § 111.43 to mean something different").
Defendant argues in the alternative that even if Plaintiffs had preserved for judicial review any objections to the FEC's finding, they present no evidence that the Committee's 2000 Post-General Election report was received less than thirty days late. Under the Administrative Procedure Act, the party challenging agency action bears the burden of proving it to be arbitrary and capricious. Sierra Club v. Marita, 46 F.3d 606, 619 (7th Cir. 1995). Plaintiffs offer Cunningham's affidavit to show that the FEC received the Committee's Post-General Election report less than 30 days late, on December 18, 2000, and was in possession of the report when it made the allegedly erroneous penalty determination. Cunningham's affidavit, however, was not sworn until August 3, 2002. Therefore, it was not part of the administrative record at the time the FEC made its penalty determination in March of 2001. "The Supreme Court has repeatedly made clear that, when reviewing the decision of an administrative agency, a court may only consider the evidence that was before the agency." Harris v. Mut. of Omaha Cos., 992 F.2d 706, 713 (7th Cir. 1993) (quoting Camp v. Pitts, 411 U.S. 138, 142 (1973)). Thus, we may not consider Cunningham's affidavit in our review of the FEC's action.
In addition, Plaintiffs offer a copy of a certified mail receipt as evidence that the FEC received a submission from the Committee on December 18, 2000. Although the receipt does not indicate the contents of the submission, Plaintiffs contend that the submission contained their Post-General Election Report. Handwriting on the copy of the certified mail receipt, which was received along with the Committee's report on February 6, 2001, reads, "You should have received these back in December." (AR Tab 5.) However, Plaintiffs offer no evidence to dispute the FEC's showing that the receipt was for the submission of an entirely different report, an amendment to the Committee's 2000 October Quarterly Report. As well, Plaintiffs offer no response to the FEC's showing that a search of its records did not reveal any copies of the Committee's 2000 Post-General Election report received prior to its February 2001 submission. As Plaintiffs have failed to provide evidence that the FEC received the report prior to February 2001, there is no basis for rejecting the FEC's determination that the report was not filed on time.
For the reasons stated above, we GRANT Defendant FEC's motion for summary judgment and DENY Plaintiffs' cross-motion for summary judgment.
Conclusion
Defendant Federal Election Commission has moved for summary judgment, arguing that Plaintiffs have failed to prove that Defendant's decision to assess Plaintiffs a civil penalty for violating the federal election laws was arbitrary and capricious. Plaintiffs filed a Cross-Motion for Summary Judgment, alleging that the civil penalty assessed by Defendant is excessive and unwarranted. For the reasons set forth above, we find that 1) Plaintiffs waived before the court any arguments that they did not make before the agency, and 2) Defendant's penalty determination was not arbitrary and capricious. Therefore, we GRANT Defendant's Motion for Summary Judgment and DENY Plaintiffs' Cross-Motion for Summary Judgment.
It is so ORDERED this ___ day of October 2002.