Issues

Lawsuit Filed Against Massachusetts’ Ban On Corporate Political Contributions

Lawsuit says unions, corporations should be treated the same

The suit challenges legislation signed by Deval Patrick, then the state's governor, prior to last year's midterm election. / AP

A lawsuit was filed Tuesday against Massachusetts’ ban on businesses making political contributions, claiming corporations should be treated the same as unions—which are free to contribute to political action committees and candidates in the state.

"Preventing businesses from making any political contributions at all is a violation of the free speech and equal protection guarantees of the U.S. and state constitutions," said Jim Manley, attorney for the Goldwater Institute, which filed the lawsuit.

"It also directly conflicts with recent U.S. Supreme Court decisions," Manley said in a prepared statement.

The lawsuit was filed Tuesday on behalf of two Massachusetts businesses, 1A Auto Inc. and 126 Self Storage Inc., which want to take part in the political process. The defendant is the director of the state’s Office of Campaign and Political Finance.

"There is no legitimate justification for allowing unions to contribute thousands of dollars to candidates, parties, and political committees, while completely banning any contributions from businesses," the lawsuit states. "This lopsided ban on political contributions violates Plaintiffs’ rights of equal protection, free speech, and free association protected by the Massachusetts and United States constitutions."

Massachusetts passed H4366 last year, and Deval Patrick (D.), then the state’s governor, signed it into law last August prior to the November elections.

The bill bans businesses from contributions, while unions are free to directly contribute up to $15,000 to candidates, parties, and political committees. There are no disclosure requirements. Labor-directed political action committees can also contribute to candidates and parties, and even other PACS.

Business PACs are also banned from contributing.

"The reality is that the current loophole in the Massachusetts campaign finance law is patently unfair. The fact that a huge union can donate $15,000 to an individual candidate and then spend unlimited resources as independent expenditures but a small mom and pop business can't even donate a penny to a candidate doesn't pass the smell test," said State Rep. Shawn Dooley (R.) in an email.

"Campaign finance reform is about fairness and balance. Allowing one group a huge advantage over all others (including individual citizens) is not good for democracy," said Dooley.

The Massachusetts Fiscal Alliance indicated its support for Goldwater Institute’s efforts to seek equal protection in the state’s campaign finance law when contacted for comment.

"Current state campaign finance regulations don’t guarantee equal protection under the law," said Paul Craney, the group’s executive director, in an emailed statement. "As many on both sides of the aisle have noted, something is wrong when unions can donate to one candidate up to $15,000 while individuals are limited to $1,000 and businesses are forbidden to donate anything at all. Under state law, businesses are even prohibited from organizing a PAC that contributes to candidates, which are permitted at the federal level."

According to Craney, the state law creates an "uneven playing field", despite the Citizens United decision, which allows individuals, corporations, and unions the same right to make independent expenditures.

"Massachusetts law still privileges some people's constitutional rights to free expression over those of others, and this lawsuit begins the process of righting that wrong," Craney said.

Both plaintiffs in the lawsuit have connections to the Massachusetts Fiscal Alliance.

"1A Auto Inc., a family-owned auto parts retailer in Pepperell, is run by Rick Green, who is also the chairman of MassFiscal's board of directors. Mike Kane, whose Ashland business, 126 Self Storage Inc., is also part of the suit, serves on MassFiscal's board as well," according to a Massachusetts Fiscal Alliance press release.

One group opposed to Goldwater’s efforts is Massachusetts Common Cause, which claims that the lawsuit would "increase special interest influence in state politics and be a setback for democracy in the Commonwealth if it succeeds."

"We strongly oppose this effort," said Pam Wilmot, executive director of Common Cause Massachusetts, in an emailed statement. "Common Cause will seek to intervene in the case when it is possible to do so. There is too much money in politics already. Allowing corporations to donate to politicians is absolutely a step in the wrong direction."

Common Cause did acknowledge that there should be a level playing field, and that unions should be subjected to the same limits as other groups.

"The Goldwater Institute claims that state law gives unions have unfair advantage over corporations in the political realm. This is true only in one respect. Common Cause agrees with the Institute that unions should not be able to donate to $15,000 to a single candidate. Instead, they should be subject to the same $1,000 limit imposed on other groups or individuals," Wilmot said.

Massachusetts is one of seven states that ban businesses from making political contributions. Other states are Iowa, Kentucky, Minnesota, Mississippi, Montana, and West Virginia. None of the seven states ban labor unions or other special interest groups from engaging in the political process.

But according to Goldwater Institute, "more than any other state, Massachusetts’ campaign contribution restrictions are tilted in favor of unions and against businesses."

"There is room to debate many campaign finance regulations, but this is not one of them. A total ban on businesses participating in the political process—while their counterparts from the other side of the bargaining table dole out stacks of cash to their preferred candidates and committees—is unfair and unconstitutional from any perspective," said Manley.

The lawsuit is asking the Massachusetts courts to strike down the ban on business contributions to candidates, parties, and political committees, and at a minimum, apply the same campaign finance limitations to unions and businesses.

Goldwater believes that if this case is successful, it will have implications for the bans in the six other states.