Indiana Supreme Court rules state law limits corporate contributions to super PACs

  • Comments
  • Print
Indiana Supreme Court chambers.

Indiana election law’s silence on corporate contributions to independent-expenditure political action committees means such contributions are prohibited or otherwise limited, a split Indiana Supreme Court has ruled in answering a certified question from the 7th Circuit Court of Appeals.

The case involves Indiana Right to Life Victory Fund, which wants to operate as an independent-expenditure PAC — commonly called a super PAC — in Indiana but fears the state’s election laws won’t allow it to accept donations from corporations, or that there would be a cap on how much those corporations could donate.

The fund and a private company, Sarkes Tarzian Inc., went to federal court seeking to prevent Indiana from enforcing its campaign finance laws to limit or ban corporate contributions to super PACs.

The Indiana Southern District Court found the fund did not allege a credible threat and dismissed the lawsuit for lack of standing.

On appeal, the 7th Circuit ruled the state’s high court is the only body that can definitively construe Indiana election laws and certified a question to the court: “Does the Indiana Election Code — in particular, §§ 3-9-2-3 to -6 — prohibit or otherwise limit corporate contributions to PACs or other entities that engage in independent campaign-related expenditures?”

Writing for the majority, Justice Derek Molter said the answer to that question is yes.

Indiana Chief Justice Loretta Rush concurred along with Justices Mark Massa and Geoffrey Slaughter.

Justice Christopher Goff dissented with a separate opinion.

The disputed section of state law regulates corporate campaign contributions, but both parties agreed the relevant statutes don’t say anything about contributions to super PACs.

The plaintiffs took that silence to mean contributions to super PACs for independent expenditures are prohibited, while defendants — including Indiana Secretary of State Diego Morales and the Indiana Election Commission — argued the Legislature’s silence means the contributions are permitted.

Election officials have also said they have no intent to enforce the laws in the way the plaintiffs are claiming and that doing so would be a violation of the First Amendment.

Justices heard oral arguments earlier in September.

The majority agreed with the plaintiffs’ view of how to interpret the legislative silence.

At issue is a $10,000 contribution Sarkes Tarzian wants to make to the victory fund.

State law permits a corporation to “‘make a contribution to aid in the … election or defeat of a candidate,’ as well as the success or defeat of political parties and public questions, Ind. Code § 3‐9‐2‐3(a), but only to the extent authorized by sections 4, 5, and 6 of Title 3 (Elections), Article 9 (Campaigns), Chapter 2 (Campaign Contributions),” the opinion says.

Sarkes Tarzian’s contribution would only be legal under Indiana law, the opinion says, if it were authorized by sections 4, 5 and 6.

Section 4 doesn’t mention contributions to PACs, but Section 5 does, saying corporations like Sarkes Tarzian “may make a contribution to a political action committee” so long as the contribution (a) “is designated for disbursement to a specific candidate or committee listed under section 4 of this chapter,” and (b) does not exceed section 4’s dollar limits.

The contribution Sarkes Tarzian wants to make would violate section 5, the opinion says.

Section 6 provides exceptions to the restrictions, but both parties agreed none of the exceptions apply.

“Because section 3 only permits corporate contributions that sections 4, 5, or 6 authorize, and those sections do not authorize Sarkes Tarzian’s contribution to the Victory Fund, the Indiana Code prohibits the contribution,” the opinion says.

The majority also ruled that election officials failed to identify any statutory ambiguity that could reasonably permit an interpretation that authorizes the contribution Sarkes Tarzian would like to make.

Election officials argued there are some features of the relevant statutes that make them ambiguous, including that state law doesn’t distinguish between “expenditures” and “independent expenditures.”

The majority disagreed.

“That argument is circular,” the opinion says. “The question is whether the statutory silence about ‘independent expenditures’ means corporations can contribute to independent‐expenditure‐only PACs. It is no answer to repeat back the premise of the question, which is that the Indiana Code is silent about independent expenditures.”

Finally, the majority ruled the court can’t revise unambiguous statutes through judicial interpretation to avoid a constitutional defect. To do so would amount to rewriting the statute, the opinion says.

PACs have evolved over the last 35 years, the opinion says, including with the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission, 558 U.S. 310 (2010), which held that the First Amendment forbids the government from restricting corporate contributions for independent expenditures.

“So it is no doubt time for the General Assembly to again update its statutes to account for this change in constitutional law,” the opinion says. “But we cannot provide a shortcut through judicial interpretation of unambiguous statutes.”

The majority also added: “We are mindful that the parties expect this holding will lead the federal courts to enjoin the election officials’ enforcement of those statutes as applied to contributions like the one Sarkes Tarzian wishes to make to the Victory Fund. But we must leave it to the General Assembly to update its statutes to remedy any such constitutional defect, as statutory revision is beyond our authority.”

The case is Indiana Right to Life Victory Fund and Sarkes Tarzian, Inc. v. Diego Morales, et al., 23S‐CQ‐108.

In a dissenting opinion, Goff said he would answer “no” to the certified question by “inferring what the legislature most likely intends the Indiana Election Code to mean in the aftermath of Citizens United.”

The challenged part of state law was enacted in 1986, with only minor amendments since 2010, Goff wrote.

He noted the Indiana Supreme Court has adopted a predominantly textualist approach for statutory interpretation.

“Here,” Goff wrote, “two primary considerations make it especially appropriate to do more than mechanically interpret the text: the historical context in which the case arises and this Court’s role in Indiana’s system of government.”

All parties agree that the First Amendment prohibits limitations on corporate contributions to super PACs, he wrote.

“And it has been clear for well over a decade that, should an Indiana official seek to enforce such a restriction, they would likely subject themselves to civil damages, including attorney’s fees, for violating the aggrieved corporation’s federally protected rights,” Goff wrote, citing Wisconsin Right to Life State PAC v. Barland, 664 F.3d 139, 154 (7th Cir. 2011).

He continued: “In giving an answer to this request, we must consider our own Court’s responsibilities. I see our duty as broader than merely to expound the meaning of texts. We represent one of three branches of government in a state that is itself bound into a wider national union.”

Conflict is “needless” in this case, Goff wrote, because “we can supply a workable remedy for an entirely hypothetical constitutional violation.”

“Given the historical context, a focus on the plain statutory text leads us not towards but away from understanding the legislature’s intent and policy and frustrates our aim of bringing consistency and predictability to the law,” he wrote. “Ultimately, I don’t believe that we have to throw a wrench into Indiana’s campaign-finance system.”

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

5 thoughts on “Indiana Supreme Court rules state law limits corporate contributions to super PACs

  1. IS there a bill number before either of those choices? Something suggesting a higher priority? Or will they revert to a more dignified approach, and make it a higher number like 2 or 3?

    1. I don’t believe there is; I believe the signal sent with either number is that it’s the highest priority of each legislative body.

      Heck, wouldn’t surprise me if they decide to amend the constitution to make it even harder to take that sweet flow of cash away from them.

  2. Corporations should not be considered “people” nor should money equal speech. The wealthy and these organizations already have disproportionate influence in politics and governance. It’s ridiculous and destructive to democracy that the United States and States cannot reign this spending in, particularly all the hidden money and manipulation of information.