Federal Appeals Court Upholds New York City Pay-to-Play Rules

Through its recent decision in Ognibene v. Parkes, the Second Circuit Court of Appeals has rejected a constitutional challenge of New York City’s political contribution limits on “lobbyists” and others having business dealings with the City (a/k/a the “pay-to-play” rules), finding that such limits do not violate First Amendment free speech rights.

 In 2007, the New York City Council adopted Local Law Number 34, which amended the City Campaign Finance Law to severely limit contributions from people having “business dealings with the City,” including “lobbyists.” The term “business dealings with the City&rd quo; is broadly defined to cover contracts with the City, concessions and franchises, and the acquisition of disposition of real property, among other activities.   As well as limiting the amount of contributions, the amendments to the Campaign Finance Law made such contributions ineligible for matching funds through the City’s publicly funded campaign finance program. And, the amendments extended the existing ban on corporate contributions to City candidates to contributions from LLCs, LLPs, and partnerships. 

Queens Republican and former lieutenant governor candidate Tom Ognibene, Democratic State Senator Martin Dilan, and the New York State Conservative Party, among others, sued the New York City Campaign Finance Board and City officials, challenging the “pay-to-play” restrictions as unduly burdening protected political speech and violating the equal protection clause of the Fourteenth Amendment; citing the U.S. Supreme Court’s landmark decision in Citizens United v. Federal Election Commission, 130 S. Ct. 876 (2010). Citizens United held that the government could not ban corporations and unions from expenditures to advocate for the election or defeat of a candidate.  

 

In the Ognibene suit, the U.S. District Court for the Southern District of New York found for the Campaign Finance Board and granted their motion for summary judgment, dually holding that the ‘doing business’ contribution limits served the important government interest of preventing actual and apparent corruption, and were narrowly drawn. The District Court also upheld the prohibition on matching funds and the extension of the contribution ban to various business entities.

In its Opinion issued on December 21, 2011, the Second Circuit Court of Appeals affirmed the district court, holding that the ‘doing business’ restrictions are an indirect constraint on protected speech, subject to the more lenient burden that the government demonstrate that the restrictions are justified by a legitimate state interest. 

 

“Contributions to candidates for City office from persons with a particularly direct financial interest in these officials’ policy decisions pose a heightened risk of actual and apparent corruption, and merit heightened government regulation,” Judge Paul A. Crotty wrote in the main opinion.  

The Second Circuit found that the restrictions served the City’s anti-corruption interest and were “closely drawn” to address that interest; distinguishing the contribution limits in the New York City Campaign Finance Law from the “expenditure” restrictions in Citizens United.

 

Despite this unanimous ruling from a three-judge panel of the Second Circuit, it may only be a matter of time before an appeal is lodged with the U.S. Supreme Court. Stay tuned to this blog moving forward for additional coverage…..  

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