The opinion of the court was delivered by: GEORGE LINDBERG, Senior District Judge
On May 30, 2003, Plaintiffs Cox for U.S. Senate Committee, Inc.
("Committee") and John H. Cox ("Cox") (collectively, "Plaintiffs") filed
their four-count complaint for declaratory and injunctive relief.
Plaintiffs' complaint, inter alia, asks this Court to: (1)
declare that the penalties set forth in 11 C.F.R. § 111.44 are
unconstitutional, (2) enjoin Defendant Federal Election Commission from
enforcing its April 30, 2003 Final Determination and its assessment of a
civil money penalty in the amount of $22,150.00, and (3) set aside
Defendant's April 30, 2003 Final Determination and vacate Defendant's
assessment of the aforementioned penalty.
Plaintiffs and Defendant have filed cross-motions for summary judgment.
Plaintiffs' motion is hereby denied and Defendant's motion is hereby
Legal Standards Summary Judgment
It is well-established that "[c]ross-motions for summary judgment are
the standard method for presenting a case to a district court for
decision on the record compiled by the administrative tribunal that the
court is reviewing." Dale M. v. Bd. of Educ. of Bradley-Bourbonnais
High Sch. Dist., 237 F.3d 813, 816 (7th Cir. 2001) (citations
omitted). This Court will grant summary judgment when "there is no
genuine issue as to any material fact and . . . the moving party
is entitled to a judgment as a matter of law." Fed.R.Civ.P.
56(c); In re Chambers, 348 F.3d 650, 654 (7th Cir. 2003) ("All
facts and inferences" are viewed in the light most favorable to each
nonmoving party. . . .") (citation omitted).
Factual and Procedural Background
Although the parties' statements of material facts are quite similar,
each statement will be presented individually so as to avoid confusion as
to whether the parties have established that summary judgment is
appropriate in this case.
I. Statement of Material Facts Supporting Plaintiffs' Motion
Cox was a candidate for election to the United States Senate in 2002,
and the Committee was the principal campaign committee supporting his
candidacy. At all relevant times, Cox served as Treasurer of the
Committee. Defendant is an independent, federal administrative agency
responsible for enforcing the Federal Election Campaign Act ("FECA") and
investigating violations of the same.
Cox's candidacy was supported primarily by Cox's personal loans to the
Committee. Cox publicly stated on several occasions that he had pledged
one million dollars of his own funds to his campaign. In actuality, he
lent in excess of one million dollars to the Committee. Cox's loans were
made over a period of one year and at no time did Cox attempt to conceal
or hide his personal contributions.
From February 28, 2002 to March 16, 2002, the Committee was required to
report any campaign contribution in excess of $1,000.00 within
forty-eight hours of the Committee's receipt of the same ("48-Hour
Reporting Period"). Cox delegated responsibility for filing reports
during the 48-Hour Reporting Period to a Committee employee, Cheryl
Warren. Two loans from
Cox to the Committee, one for $75,000.00 and another for $144,
507.47, were not reported as required by Defendant even though they were
received during the 48-Hour Reporting Period. These omissions were
inadvertent in nature and neither of the loans was extraordinary or
unusual. Moreover, both loans were subsequently reported by the Committee
in its post-election April 2002 Quarterly Report.
The $75,000.00 loan was received by the Committee in the form of a
check on March 5, 2002. Although Warren received the check from Cox, she
was uncertain as to whether the loan needed to be reported during the
48-Hour Reporting Period. Warren did not take steps to determine whether
such reporting was required and failed to bring the issue to Cox's
attention. Instead, she spent the better part of March 6, 2002 consoling
a fellow Committee employee and helping him to find temporary lodging
after his apartment had burned in a fire earlier that day.
The $144,507.47 loan was wired directly to the Committee's bank
account on March 12, 2002. The wire confirmation was mailed directly to
the Committee and never provided to Warren. As such, Warren overlooked
and, therefore, did not report the March 12, 2002 loan. Cox was unaware
than this loan was not reported within forty-eight hours of receipt by
On September 18, 2002, Defendant found reason to believe that
Plaintiffs violated 2 U.S.C. § 434(a)(6)(A)*fn1 for failing to
properly report three contributions of $1,000.00 or more that
were received during the 48-Hour Reporting Period. The three
unreported contributions totaled $224,507.47. Two of these contributions
were the above-described loans from Cox to the Committee. Based on the
schedule of civil money penalties set forth in
11 C.F.R. § 111.44*fn2 ("Schedule"), a penalty of $22,750.00
($100.00 for each non-filed contribution, plus 10% of the dollar amount
of the contributions not timely reported) was calculated.
Plaintiffs responded to Defendant's September 18, 2002 finding on
October 25, 2002, arguing, inter alia, that (1) the Committee's
failure to timely report the loans was inadvertent and (2) the Schedule
was excessive and punitive. Thereafter, Defendant's Office of
Administrative Review recommended on March 27, 2003 that a final
determination be made that Plaintiffs violated
2 U.S.C. § 434(a)(6)(A) and the civil money penalty be reduced from
$22,750.00 to $22,150.00 to reflect the two unreported Cox loans
totaling $219,507.47. The Office of Administrative Review concluded
that Plaintiffs' challenges did not fall within the list of defenses
11 C.F.R. § 111.35(b), and, therefore, the statutory penalty as calculated in
11 C.F.R. § 111.44 should be assessed.
Plaintiffs responded to the March 27, 2003 recommendation on April 10,
2003. On April 29, 2003, Defendant adopted the Office of Administrative
Review's March 27, 2003 recommendation, made a final determination that
Plaintiffs violated 2 U.S.C. § 434(a)(6)(A), and assessed a civil
money penalty of $22,150.00.
Plaintiffs filed their complaint on May 30, 2003, within 30 days of
Plaintiffs' receipt of Defendant's notice of adverse determination.
II. Statement of Material Facts Supporting Defendant's
The facts supporting Defendant's motion are nearly identical to those
discussed with respect to Plaintiffs' motion. Cox was an Illinois
candidate for the United States Senate in 2002 and the Committee was his
principal campaign committee. Cox served as Treasurer of the Committee at
all relevant times. Defendant is an independent federal agency with
exclusive jurisdiction over the administration, interpretation, and civil
enforcement of the FECA. In particular, Defendant is authorized to assess
civil money penalties for certain violations of the reporting provisions
of the FECA.
On February 11, 2002, Defendant sent a Primary Election Report Notice
to Plaintiffs which explained that campaign contributions of $1,000.00
or more received during the 48-Hour Reporting Period must be properly
reported within forty-eight hours of the Committee's receipt of the same.
The notice also emphasized that contributions of $1,000.00 or more
included personal loans from the candidate.
On March 5, 2002, Cox loaned the Committee $75,000.00 by giving a
check in that
amount to Warren. However, Warren did not determine whether the
loan needed to be reported, and, thus, it was inadvertently not reported
within forty-eight hours of its receipt. On March 12, 2002, Cox loaned
the Committee $144,507.47 by wiring the funds directly into the
Committee's bank account. Warren was not notified of this loan and,
therefore, it went similarly unreported during the 48-Hour Reporting
Period. The two unreported loans totaled $219,507.47 and both
contributions should have been reported within forty-eight hours of their
receipt by the Committee.
On September 18, 2002, Defendant found reason to believe that
Plaintiffs had violated 2 U.S.C. § 434(a)(6)(A) for failing to timely
report three contributions of $1,000.00 or more, totaling $224,507.47,
received during the 48-Hour Reporting Period. Defendant also made a
preliminary determination that the civil money penalty for these three
violations was $22,750.00 based on the Schedule. On September 19, 2002,
Defendant notified Plaintiffs of Defendant's finding and the civil money
penalty calculated at $22,750.00.
Plaintiffs submitted a response to the September 18, 2002 finding which
was received by Defendant on October 28, 2002. In summary, Plaintiffs
conceded that the March 5, 2002 and March 12, 2002 loans should have been
reported.within forty-eight hours of their receipt and that the Committee
had failed to do so. Although the two loans were not reported in a timely
fashion, Plaintiffs argued: (1) Cox had announced his intention to make
the loans prior to doing so; (2) the loans were subsequently disclosed in
the Committee's post-election April 2002 Quarterly Report; (3) both loans
were from the candidate himself; (4) the omissions were inadvertent; and
(5) a campaign staff member's apartment fire and the payment of the March
12, 2002 loan by wire transfer contributed to the oversights. However,
Plaintiffs did not contend that there were extraordinary circumstances
within the meaning of 11 C.F.R. § 111.35(b) to excuse their failure
to report the loans
in a timely fashion; instead, Plaintiffs admitted that the factual
circumstances surrounding the March 5, 2002 and March 12, 2002 loans may
not strictly constitute extraordinary circumstances that would excuse
On October 29, 2002, the matter was referred to Defendant's Office of
Administrative Review. After reviewing Defendant's initial.finding and
Plaintiffs' response, the Office of Administrative Review issued its
recommendation to Defendant on March 27, 2003. After determining that a
$5,000.00 contribution (one of the three contributions originally at
issue) from a political action committee was not made during the 48-Hour
Reporting Period, the Office of Administrative Review recommended
reducing the amount of the civil money penalty from $22,750.00 to $22,
150.00. In arriving at that sum, the Schedule was applied. However, the
Office of Administrative Review rejected the remainder of Plaintiffs'
arguments, finding that (1) Warren had previously filed reports for
contributions received during the 48-Hour Reporting Period in a prior
congressional race and was, therefore, aware that candidate loans must
also be reported, (2) a fire in the apartment of a campaign staff member
other than Warren did not constitute an extraordinary circumstance within
the meaning of 11 C.F.R. § 111.35(b), (3) Cox was both the candidate
and the Committee's Treasurer which made him personally responsible for
reporting his own loans, (4) Cox's public statement that he would
contribute money to his own campaign did not override his duty to report
the March 5, 2002 and March 12, 2002 loans during the 48-Hour Reporting
Period, and (5) reporting the contributions in the post-election April
2002 Quarterly Report was not a substitute for reporting the
contributions within forty-eight hours of receipt of the same.
Plaintiffs were notified of the Office of Administrative Review's
recommendation on March 31, 2003. On April 10, 2003, Plaintiffs responded
to the recommendation with a number
of new arguments, including constitutional challenges to the
Schedule. After receiving Plaintiffs' April 10, 2003 response, the Office
of Administrative Review made a final recommendation on April 14, 2003
that a civil money penalty of $22,150.00 should be assessed. A copy of
Plaintiffs' April 10, 2003 response was attached to the final
On April 29, 2003, Defendant adopted the Office of Administrative
Review's recommendation, made a final determination that Plaintiffs
violated 2 U.S.C. § 434(a)(6)(A), and assessed a civil money penalty
of $22,150.00. Defendant notified Plaintiffs of its final determination
and the $22,150.00 civil penalty on April 30, 2003. Plaintiffs
subsequently filed their complaint on May 30, 2003.
Legal Issues and Analysis
The parties' cross-motions for summary judgment essentially present
four disputed legal issues. In the interest of judicial economy, the
Court will address all of the parties' ...