Facts
- Michigan law barred most corporations from using general treasury funds to make independent expenditures supporting or opposing candidates in state elections, while permitting such spending through segregated political funds used solely for political purposes.
- The Michigan State Chamber of Commerce was a nonprofit corporation with both political and nonpolitical purposes; its general treasury was funded largely by dues, and most members were for-profit corporations.
- The Chamber sought to pay for a newspaper advertisement supporting a specific candidate for the Michigan House of Representatives using general treasury funds.
- The Chamber challenged the statute under the First and Fourteenth Amendments.
- The federal district court upheld the restriction; the Sixth Circuit reversed; the Supreme Court granted review.
Issues
- Whether Michigan’s restriction on corporate independent expenditures from general treasury funds violates the First Amendment when corporations may speak through segregated political funds.
- Whether applying the restriction to the Chamber violates the First Amendment by treating it like a business corporation rather than an ideological nonprofit.
- Whether exempting media corporations from the restriction violates the Equal Protection Clause of the Fourteenth Amendment.
Decision
- The Supreme Court reversed the Sixth Circuit and upheld the statute in a 6–3 decision.
- The Court held the restriction burdened political expression but was justified by a compelling state interest in preventing corruption and the distorting effects of corporate treasury wealth on elections.
- The Court found the law sufficiently tailored because it left corporations free to fund independent expenditures through segregated political funds financed by voluntary contributions.
- The Court rejected the Chamber’s claim to an exemption for ideological nonprofits, concluding it was closely tied to business corporations and could serve as a conduit for corporate spending barred to its members.
- The Court held the media-corporation exemption did not violate equal protection.
Legal Principles
- A state may restrict corporate independent expenditures funded by general treasuries to prevent corruption or its appearance and to address the distorting influence of corporate treasury wealth on electoral outcomes.
- Such a restriction may be constitutional when it preserves an alternative channel for speech through segregated political funds supported by voluntary contributions.
- A nonprofit corporation may be treated like a business-oriented entity for campaign-finance purposes when its membership and funding structure link it to for-profit corporations and create a risk of circumvention.
- Differential treatment of press and nonpress corporations in campaign-finance regulation can be consistent with equal protection.
Conclusion
The Court sustained Michigan’s limits on corporate treasury-funded independent expenditures as a permissible means of protecting electoral integrity while allowing corporate political speech through segregated, voluntarily funded political accounts, and it upheld the statute’s separate treatment of media corporations.