Number 10 November 6, 1980

Number 10 November 6, 1980 Charles J. Doherty, Director Office of Campaign and Political Finance Eight Beacon Street Boston, MA 02108 Dear Mr. Doherty: You have requested my opinion concerning the extent to which business corporations^ may become involved in Massachusetts political activities. In your request you have posed twenty-nine specific questions, each relating to a narrow aspect of this single issue. In this response, I have not attempted to set forth and answer those questions in the form and order you have presented them, choosing instead to address the larger issue and to allow my answers to your individual questions to be subsumed in the resulting discussion. 'l use the terra business corporation in this opinion to include all of the business entities within the statutory prohibition contained in G.L. c. 55, §8. Those entities include corporations carrying on the business of a bank, Uiist, surety, indemnity, safe deposit, insurance, railroad, street railway, telegraph, telephone, gas, electric light, heat, power, canal, aqueduct or water company, any company having the right to take land by eminent domain or to exercise franchises in public ways granted by the Commonwealth or by any county, city or town, as well as any business corporation formed under the laws of, or doing business within, the Commonwealth. P.D.12 ,,y The starting point for any discussion of corporate political activity m the Commonwealth, must be the provisions of G.L. c. ^5 §8 ^ Business corporations organized under Massachusetts law or doing business within the Commonwealth are precluded by that statute from makinu contributions' of anything of value to state or local candidates for public office or to any political committees organized on their behalf/ In spite of this seemingly clear statutory prohibition, you have informed me that numerous political committees have registered with your office and have indicated that they are connected with business corporations, thus giving rise to the inference that corporate funds are being directly or indirectly used in political campaigns. Your questions are intended to clarify the scope of the statutory ban and eliminate the attendant confusion. Confusion as to the meaning of G.L. c. 55, §8, can be traced to two recent developments. First, the United States Supreme Court recently ruled that the statute was unconstitutional as applied to corporate contributions or expendi- tures favoring or opposing ballot questions. First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978). While the dissenting opinion therein casts some doubt on the continuing viability of a ban on corporate contributions to candidates,^ the reasoning of the Court and the holding itself make it clear that G.L. c. 55, §8, still applies to candidate-related corporate expenditures. Second, federal law allows corporations to expend corporate funds to establish and administer separate, segregated accounts to be used to benetlt candidates for federal elective office. '^ 2 U.S.C. §441b. This is specifically authorized by exempting these corporate costs from the statutory definition of contribution and expenditure. 2 U.S.C. §441b (b) (2). Massachusetts provides no similar exemption, and corporate involvement in the establishment and administration of political committees to favor or oppose candidates remains an indirect corporate political expenditure prohibited by G.L. c. 55, §8. ^ Massachusetts General Laws Chapter 55. section 8, provides in pertinent part: . . . [N)o business corporation incorporated under the laws of or doing business in the commonwealth and no officer or agent acting in behalf of any corporation mentioned in this section, shall directly or indirectly give. pay. expend or contribute, or promise to give, pay, expend or contribute, any money or other valuable thing for the purpose of aiding, promoting or preventing the nomination or election of any person to public office, or aiding, promoting or antagonizing the interests of any political party, or influencing or affecting the vote on any question submiiled to the voters, other than one materially affecting any of the property, business or assets of the corporation. ^The Supreme Court has noted that there are differences of constitutional dimension between •contributions" and •expenditures" Buckler V. Valeo. 424 U.S. I, 15-23 (1976). General Laws chapter 55. section I, defines the two terms and sets forth the distmctions between them. Since G.L. c. 55, §8. flatlv interdicts both corporate contribuuons and corporate expenditures, these distinctions are of no significance here. See First National Bank of Boston v. Beltolii. 371 Mass. 773, 782-83, n II (1^771. reversed on other grounds. 435 U.S. 765 ( 1978). Accordingly, the two terms are used interchangeably in this opinion "•The statute also prohibits corporate contnbutions to committees organized to favor or oppose questions subiniticd to the voters unless those questions matenally affect the business, property or assets of the corptiralion . This pruhihition. however, was held to be an unconstitutional infnngemenl upon the right of the voters to hear the corporate viewpoint up..n important questions or public concern. First National Bank of Boston v. Bellotti. 435 U.S. 765 (1978). Thcrclore, corporations arc currcnt y Irecto expend corporate funds either directly or indirectly in ballot question campaigns and may lorm political committees for that purpoit Those committees must register with your office pursuant to G.L. c. 55, §5. 5The pnncipal dissent noted that the Courtis opinion "casts considerable doubt upon the constitutionality of legislation f»««l by some 31 States restncting corporate political activity, as well as upon the Federal Corrupt Practices Act - U^ C 5*^ jb) and suggested that statutes prohibiting corporate expenditures in the context of '-•lections to (~^l'c office were pnctK^ly extinguished and merely awaited "fonSal interment ... for another day". Ftrst National Bank of Boston v BflUmi. 435 U.S 765, 803, 821 (White, J., dissenting). SThese accounts are generally referred to as political action committees, or by the acronym PACs '-;'™^ ^'j''^^' ' f "T* for P"rp«*^ of this opimon The phrase 'political action committee' may be ol indeterminate ongin. bu "/PP^,^ '"^^;j^^-''P"^;""^~;> by 1944 %hen it was used as a term of art by the Congressional Social Committees %'";" •»^^,,'^-^P^'f^*'*"^'^:. H R. REP. No. 2093, 78th Cong., 2d Sess. (1944); S. REP No. 101. 79th Cong.. 1st Scss. (1945). It now hai a meuung fixed by federal law. 2 U.S.C. 441a (a) (4). 120 P.D. 12 Some Massachusetts corporations may assume that they may utilize the federally-recognized PAC entity as a vehicle to make contributions to candidates for state or local office. Such an assumption is erroneous. The Federal Election Campaign Act of 1971, 2 U.S.C. §431, et seq., does not purport to regulate corporate participation in campaign financing at the state or local level. See generally Cort v. Ash, All U.S. 66 (1975); 1974/75 Op. Atry. Gen., Rep. A.G. No. 69, Pub. Doc. No. 12 at 165 (1975). Instead, Massachusetts law determines how candidates for state or local office may finance their campaigns, and prohibits corporate involvement both by direct contribution and by indirect expenditure of corporate resources for the administration of political committees. While a corporation may establish a PAC for purposes of federal elections, the PAC may not contribute directly or indirectly to state or local candidates. This is not to say, however, that a multi-candidate committee^ organized in accordance with Massachusetts law, could not call itself a "political action committee". On the contrary, the prohibition contained in G.L. c. 55, §8, is one of substance, not form, and does not restrict the First Amendment-based freedom of committee members to choose a name for their committee. See Riddell v. National Democratic Party, 508 F. 2d 770, 778-79 (5th Cir., 1975). Thus, political committees organized in accordance with G.L. c. 55, §5, may utilize the appellation "political action committee" in their statement of organization, but they may not assume the legal incidents of federal PAC's. The prohibition against corporate financial involvement in the election of candidates for state and local office does not extend to individual corporate officers and employeees. The proscription contained in G.L. c. 55, §8, applies only to the activities of business corporations themselves. It does not attempt to restrict volunteered political activity by individuals associated with those corporations.* The statutes do not restrict the right of corporate employees to endorse political candidates, to solicit political contributions, or to join political committees. Such a law would restrict political association and would almost certainly violate the First and Fourteenth Amendments to the United States Constitution. See generally Cousins v. Wigoda, 419 U.S. 477, 487 (1975); Kusper v. Pontikes, 414 U.S. 51, 56-57 (1973). Any group of private citizens in this state may form political committees for any purpose regardless of their employment or financial investments. It necessarily follows from this proposition that corporate officers, including a corporation's chief executive officer, are free to endorse any candidate they choose, to discuss that candidacy during the normal course of conducting corporate business, and to solicit support, financial or otherwise, for the candidates of their choice. Corporate officers and employees may form multi-candidate committees, may comprise the entire membership of such The election laws of this Commonwealth allow various individuals to form a political committee to support candidates who are sympathetic to their views. G.L. c. 55, §5. These "multi-candidate" committees are independent of any candidate and are in certain respects similar to federal PAC's. ^State, county and municipal employees are prohibited from soliciting campaign contributions, G.L. c. 55, §13, and from contnbuting to cenain candidates for public office, G.L. c. 55, §15, although this prohibition does not extend to contnbutions to political committees. 1965 Op. Alty. Gen. Rep. AG., Pub. Doc. No. 12 at 112, 115 (1964). Certain other public officers may be precluded from seeking elective office while maintaining their public employment. See Boston Police Patrolmen's Association. Inc. v. Boston. 367 Mass. 368 (1975); O'Hare v. Commissioner of Public Safer)-. 367 Mass. 376 (1975). P.D. 12 committees, and may provide voluntary services during their non-business hours. Even as the statute does not restrict the independent political activities of corporate officers, stockholders and employees, so also does it fail to provide them any insulation from solicitations by their peers. Federal law does regulate the manner by which PAC's solicit corporate personnel and their families and the frequency of such solicitation. 2 U.S.C. §441b (b) (4) (B). See FEC AO 1977-18; AO 1976-79. Since Massachusetts law does not permit PAC's or their functional equivalent to operate at all, such protections would be supertluous. In considering the extent to which a business corporation may make goods and services available to candidates or political committees, the meaning of the phrase "anything of value," as used in G.L. c. 55, §8, is of critical importance. This phrase cannot be interpreted in isolation, but must be read in conjunction with the other components of the statutory scheme of which it is a part. Boston v. Massachusetts Bay Transportation Authority, 373 Mass. 819, 823 (1977). Of particular significance is the definition of the term "contribution" in G.L. c. 55, §1, where the word is said to include any "discount or rebate not available to other candidates for the same office and to the general public." Many of the specific questions you have posed may be answered by reference to this statutory provision. The Massachusetts statutory scheme does not prohibit corporations from selling or renting their facilities, goods and services to candidates for political office or political committees organized on their behalf. Questions arise, however, as to the remuneration that the corporations must receive in return for the goods or services provided. It is my opinion that corporations may not offer those goods or services without charge and must charge a rate such that no discount or rebate is offered to any candidate or committee which is not available to other candidates for the same office and to the general public' Accordingly, Massachusetts business corporations can allow utilization'" of their meeting rooms, their equipment, including telephones, and their office supplies, including stationery, for candidate-related political purposes only where they receive such compensation for those goods or services. A slightly more difficult question is presented when a particular fair market value cannot be ascribed to the use of corporate property. You have inquired, for instance, whether a business corporation may provide lists of its sharehold- ers or employees to candidates or committees. These lists may be things of value, see Zentner v. American Federation of Musicians of U.S. and Canada, 8The Federal ElecUons Commission, operating under analogous federal law has promulgated ^gulauonsw^^^^^^ to make available corporate fac.l.fes to cand.dates .f ^^^y^^ ^''l'^^^.^^^^;^^"^^^^^ '^^^^i consistent with norma] and and usual rental charges. II L.h K i i^.y (a) ^'^'"\"'%"'°,,. ,.,..-™,„i r,r rrhair i>n*l<-m Sec FEC advisory opinions which are illustrative of how the federal g"^"''"^' ''''^''^.f.V.Hrn^^ com,,^v olu^^^^^ FEC AO 1978-34 (reimbursement for use of corporate telephones must include charges by telephone company plus Uir maree ^n^ vie oLfficeTace iTfuriitlire); FEC A^ l97.S-9/(loan of corporate equipment such a^ .ypewn.cn. copymg c^u.pmen. and airplanes is an in-kind contribution in an amount equivalent to normal and usual rcnwl charges) -Genera. Laws Chapter 55. secUon 8 proscnbes the u. of cor^^^^^ cannot pay for sutionery or postage used by its chiet execuuve oiiicci lu cnu •;>- . f,^,,,,,,. of „ «»ocia.ion of on behif of such a cand.da.e. Similarly theprohibuion contained m which Oie corporation is a dues-paying member. The proh bition '-''''="''1'° '^"' "ii;, "/ 'T ji nuv no. do lo indirectly If a corporation cannot directly provide facilities to a candidate or commiltcc by virtue of Oie SUWK. .. nuy no. ao «. inairecuy ^trough the associations to which it belongs. 122 P.D. 12 237 F. Supp. 457, 463 (S.D.N. Y. 1965), and as such could not be provided to a candidate or political committee without appropriate remuneration." You have asked whether a corporation may allow a candidate or political committee to use its internal mail system or to implement a payroll deduction plan for employee contributions. This type of corporate involvement is contemplated by the federal statute which permits PAC's to operate, 2 U.S. C. §44 lb (b) (2), and is explicitly allowed by regulations adopted by the Federal Elections Commission. 11 CFR, §§114.1 (b) and (f); 114.11 (a). Massachusetts law contains no similar exemption from the general ban on corporate contributions and expenditures. Accordingly, corporations, may not provide internal mail or payroll deduction systems to candidates or political committees without receiving appropriate compensation in return. You have also specifically inquired, concerning the use of a corporate name, logo or trademark by a political committee. The exclusive use of corporate names and trademarks is protected by Massachusetts statutes. G.L. c. 155, §9, c. 156B, §11; c. HOB, §§12, 13. There also exists at common law the right to protect the use of a business name. Tiffany & Co. v. The Boston Club, Inc., 231 F. Supp. 836 (D. Mass. 1964). Trade names and trademarks have been held to constitute valuable property. See General Electric Co. v. Kimball Jewelers, Inc., 333 Mass. 665, 677 (1956). I am of the opinion that insofar as a corporation would enforce its right to the exclusive use of its name, trademark or logo against other entities, it grants a thing of value if it allows their use by a committee or other organization. A business corporation may allow a multi-candidate committee to use its name, trademark, or logo without compensation, only to the extent that it would not prohibit such use by any other individual or entity. The same reasoning applies to the use of corporate personnel. The statutory definition of the word "contribution" specifically includes "payment, by any person other than a candidate or political committee, or compensation for the personal services of another person which are rendered to such candidate or committee." G.L. c. 55, §1. A business corporation which requires an employee to work for the election of a candidate, while at the same time providing the employee with a salary, makes a political contribution to the candidate in violation of G.L. c. 55, §8. It is immaterial whether the employee is required to perform the political activity during normal business hours. As long as political activity is a condition of employment, it must be viewed as part of the duties of the employee for which he is compensated. A separate issue is raised by the question whether a corporate employee may volunteer his time to a political candidate during business hours. If the corporation generally allows employees to perform non-business functions during normal working hours, then the corporation could allow an employee to perform volunteer political work in a similar manner. As this policy would be considered part of the normal course of conducting business and would "not involve corporate expenditures specifically designed to influence the electoral "G.L. c. 156B. §32, governs access by stockholders to the list of names and addresses of stockholders in a corporation and the amount of stock held by each, including access "for the purpose of selling said list." P.D. 12 P3 process," First National Bank of Boston v. Bellotti, supra, 371 Mass at 789 the provisions of G.L. c. 55, §8, would not be implicated. Of course, the corporation could not prescribe particular candidates or committees for whom the employees may volunteer their services during business hours. If. however, the corporation generally prohibits its employees from performing non-business activities during normal working hours, it may not make an exception for political services rendered to a political candidate. By allowing political services to be performed by an employee during a time when the employee would normally be required to devote his attention to corporate business, the corporation would in fact be making a donation of the employee's time. Such a donation is prohibited by G.L. c. 55, §8. The prohibition against corporate expenditures does not apply to expenses incident to the publication of an internal newspaper which has editorialized in favor of a particular committee or candidate, urged that contributions be made to such a committee or candidate, or sold advertising space to a candidate or a multi-candidate committee. As the Supreme Judicial Court has authoritatively stated in construing the applicable law, "§8 does not bar such activities (as publishing a house organ or newspaper expressing political views] which are in the normal course of . . . corporate affairs and do not involve corporate expenditures specifically designed to influence the electoral process". Id. See also United States v. C.I.O.. 335 U.S. 106, 122-24 (1948) (Federal Corrupt Practices Act does not bar publication of internal corporate newspapers endorsing political proposals or candidates). Since the Supreme Judicial Court is the ultimate expositor of the meaning of Massachusetts law, see Moore v. Sims, 442 U.S. 415, 429 (1979); Smiley v. Kansas, 196 U.S. 447, 455 (1905), this narrowing construction of section 8 is controlling. In summary, I believe that Massachusetts law interdicts any corporate expenditure or contribution of anything of value specifically to promote or oppose a candidate for state, county or local political office and that the law does not allow corporations to circumvent the prohibition by forming and administering PAC's. It does not, however, restrict the First Amendment freedoms of individual corporate officers, stockholders or employees to participate in such political activities, nor does it ban corporate expenditures in the normal course of business which are incidental to the internal dissemination of political views through house organs or newspapers. Very truly yours, FRANCIS X. BELLOTTl Attorney General