Today a unanimous Second Circuit panel issued an 84-page opinion in Vermont Right to Life, Inc. v. Sorrell. Most of the opinion is devoted tor rejecting a number of arguments raised against Vermont disclosure rules applied to independent groups. This is quite consistent with the rulings of other courts since Citizens United: most disclosure challenges have failed.
But the most interesting part of the decision comes in the last 22 pages or so. As I understand it, Vermont Right to Life had two committees, one which made only independent expenditures (what we would now generally call a Super PAC) and another which made contributions to candidates. The Second Circuit agreed that if there were just the Super PAC, it would be unconstitutional to limit contributions to the group (following the Citizens United-SpeechNow line of cases). But VRTL did not dispute that the two different groups were “enmeshed” with one another, and the Second Circuit held that the overlap between the two groups provided a basis for limiting contributions to both of them. A separate bank account is not enough according to the Second Circuit, although it seems to be enough in other circuits (CORRECTION: the Carey v. FEC case from a federal D.C. court [this post originally mistakenly said Carey was a D.C. Circuit case]). This sets up a Circuit split and the potential for either en banc review in the Second Circuit or Supreme Court review.
Here is the relevant language about enmeshment beginning on page 68:
Although some courts have held that the creation of separate bank accounts is by itself sufficient to treat the entity as an independent‐expenditure‐only group, see, e.g.,Emily’s List v. Fed. Election Comm’n, 581 F.3d 1, 12 (D.C. Cir. 2009),21 we do not believe that is 1 enough to ensure there is a lack of ““prearrangement and coordination.” A separate bank account may be relevant, but it does not prevent coordinated expenditures – whereby funds are spent in coordination with the candidate. See Stop This Insanity, Inc. Emp. Leadership Fund v. Fed. Election Comm’n, 902 F. Supp. 2d 23, 43 (D.D.C. 2012). Nor is it enough to merely state in organizational documents that a group is an independent‐expenditure‐only group. Some actual organizational separation between the groups must exist to assure that the expenditures are in fact uncoordinated. We therefore decline to adopt the reasoning of the Fourth Circuit in NCRL III. There, the Fourth Circuit rejected North Carolina’s argument that NCRL‐FIPE (a similar organization to VRLC‐FIPE) was “not actually an independent expenditure committee because it [was] ‘closely intertwined’” with NCRL and NCRL‐PAC, two organizations (similar to VRLC and VRLC‐PC) that did not limit their activities to independent expenditures. NCRL III, 525 F.3d at 294 n.8. The Fourth Circuit concluded based only on NCRL‐FIPE’s organizational documents that the group was “independent as a matter of law.”22 Id. We do not agree that organizational documents alone satisfy the anti‐corruption concern with coordinated expenditures that may justify contribution limits.
There is little guidance from other courts on examining coordination of expenditures, but we conclude that, at a minimum, there must be some organizational separation to lessen the risks of coordinated expenditures. Separate bank accounts and organizational documents do not ensure that “information  will only be used for independent expenditures.” Catholic Leadership Coal. of Tex. v. Reisman, No. A‐12‐CA‐566‐SS, 2013 WL 2404066, at *177 (W.D. Tex. May 30, 2013) (emphasis added) (“The informational wall [that plaintiff] asserts it can raise to keep its independent expenditure activities entirely separate from its direct campaign contribution activities is thin at best. This triggers the precise dangers of corruption, and the appearance of corruption, which motivated the Court in Buckley to uphold the challenged contribution limits.”). As discussed below, whether a group is functionally distinct from a non‐independent‐expenditure‐only entity may depend on factors such as the overlap of staff and resources, the lack of financial independence, the coordination of activities, and the flow of information between the entities.