Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 1 of 14 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) BUSH-CHENEY 04, INC. ) ) Plaintiff, ) ) No. 04:CV-01612 (EGS) v. ) ) FEDERAL ELECTION COMMISSION, ) ) Defendant. ) ) JOINT LOCAL RULE 16 STATUS REPORT Pursuant to Local Rule 16.3 and this Court s Order of November 16, 2004, the parties jointly submit this Status Report: 1. Statement of the case. (a) Plaintiff s Position. Plaintiff Bush-Cheney 04, Inc. ( BC 04 ) brings this case under the Administrative Procedure Act ( APA ), 5 U.S.C. 551-706, and challenges what plaintiff contends is the failure of the Federal Election Commission to take legally sufficient action to define the term political committee, 2 U.S.C. 431(4), as that term is used in the Federal Election Campaign Act, 88 Stat. 1263, and particularly as that term applies to groups organized under section 527 of the Internal Revenue Code, 26 U.S.C. 527. The Complaint alleges that the FEC s failure to issue such regulations (1) is arbitrary and capricious, and an abuse of discretion, in violation of 5 U.S.C. 706(a)(2), (2) constitutes agency action unlawfully withheld, in violation of 5 U.S.C. 706(1), and (3) is unsupported by any rational basis, in violation of 5 U.S.C. 706(2)(D).
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 2 of 14 (b) Defendant s Position. The Commission s position is that plaintiff lacks standing, that the issues presented in this case are not ripe for judicial resolution, and that the Commission s actions in the rulemaking proceeding at issue were within the Commission s statutory authority and were not arbitrary or capricious. 2. Submission of the Administrative Record. The administrative record in the rulemaking is very large, including more than 100,000 comments. The FEC proposes that it submit the administrative record in electronic format on compact disk on the same date that the plaintiff s motion for summary judgment is due. 1 BC 04 does not object to this proposal. 3. Proposals regarding Case Management. BC 04 will file a First Amended Complaint on February 8, 2005. The FEC s amended answer will be due on February 25, 2004. The parties agree that there are no material factual disputes in this case, that this case can be resolved on cross motions for summary judgment, and that a trial will therefore be unnecessary. The parties, however, disagree about how motion practice in this case should proceed. The principal disagreement concerns whether briefing should be postponed until after the D.C. Circuit issues its decision in another case involving the Commission, scheduled for argument in May 2005, that is likely to control some of the 1 This proposal is consistent with the procedure followed in Shays v. FEC, 337 F. Supp. 2d 28 (D.D.C. 2004) ( Shays I ), appeal filed, No. 04-5352 (D.C. Cir. Sept. 30, 2004), where the administrative record was filed in electronic format on the day summary judgment motions were due. See Order in Shays v. FEC, No. 02-CV-1984 (CKK) (Jan. 8, 2004), as modified by Order (Jan. 29, 2004) (requiring filing of record as soon as possible, but no later than February 27, 2004). 2
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 3 of 14 threshold jurisdictional issues in this case, and whether briefing should be conducted concurrently or sequentially. (a) BC 04 s proposal. Plaintiff s Complaint presents identical issues to those raised in Shays v. Federal Election Commission, No. 04-CV-01597 (EGS). BC 04 submits therefore that this case should proceed with an identical briefing schedule to that case. Permitting this case to proceed on a similar schedule will allow the plaintiffs in the two cases, as well as the Federal Election Commission, to more efficiently brief the issues in the case and to avoid duplicative arguments. It will also promote judicial efficiency by allowing the Court to resolve joint issues in the context of a single motion. For the Commission to avoid briefing and reaching the merits in these cases, it would have to prevail on its standing defenses in both Shays and the present case. Because the Commission has in related litigation proven unsuccessful in its standing defense, these cases may be resolved most expeditiously by having a single and coordinated round of briefing in both cases. BC 04 further submits that these cases should be handled in the same fashion as the briefing in a very similar case recently decided by Judge Kollar-Kotelly, brought by the same plaintiffs in Shays, that challenged FEC regulations issued under the newly enacted Bipartisan Campaign Reform Act (BCRA). See Shays v. FEC, 340 F.Supp.2d 39 (D.D.C. 2004), appeal pending No. 04-5352 (D.C. Cir.) (Shays I). In that case, as here, the FEC proposed to file a motion to dismiss on standing and ripeness grounds prior to briefing the merits on cross motions for summary judgment. Plaintiffs alternatively proposed that the FEC s threshold defenses should be briefed as part of comprehensive cross motions for summary judgment. 3
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 4 of 14 In a Scheduling Order issued on January 7, 2004, Judge Kollar-Kotelly adopted plaintiffs proposal in the interest of expediting the resolution of this case. Shays I, supra, Order of Jan. 7, 2004 at 2. Accordingly, the parties filed two rounds of briefing: simultaneous cross motions for summary judgment and then simultaneous oppositions, with the Commission s standing and ripeness defenses briefed as part of those motions. BC 04 submits that the same procedure should be adopted in this case and in Shays, and that the Commission s standing defense should be considered in conjunction with briefing on the merits, for three reasons: (1) The action challenged here the Commission s failure to issue regulations requiring section 527 groups to register as federal political committees resulted in such groups spending over $200 million of soft money (i.e., funds that do not comply with the contribution limits, source prohibitions and reporting requirements of federal law) to influence the 2004 federal elections. In the continued absence of Commission action, more of the same is threatened for future elections. There is accordingly a substantial public interest in reaching and resolving the merits of these claims at the earliest possible time, and certainly before the 2006 campaign begins in earnest early next year. Comprehensive cross motions for summary judgment offer the best means for putting this case in a posture that permits the Court to decide the merits sooner rather than later, as the 2006 election approaches. (2) Comprehensive cross motions are a far more efficient procedure for the Court to resolve the matter, given the overlap between the standing issues and the merits. The standing issues are best considered in the context of a full analysis of the FEC s failure to issue regulations, how the underlying law operates, how the proposed regulations would 4
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 5 of 14 have operated, and how the rules, if adopted, would have affected the flow of money into federal elections. Although the Commission contends that Steel Company v. Citizens for a Better Environment, 523 U.S. 83, 94 (1998), requires the Court to address jurisdiction before the merits, the question here is not how the Court will decide the case, but whether the interests of judicial economy and the expeditious disposition of this case are better served by having these intertwined issues briefed concurrently, rather than sequentially. Nothing in that briefing schedule would require the Court to depart from Steel Company. (3) In considering the issue, it is worth emphasizing that the Commission is unlikely to prevail on its standing defenses. The Commission has raised similar objections in past litigation against the Shays plaintiffs, and this Court has rejected these arguments at every turn. Judge Kollar-Kotelly thoroughly analyzed and twice rejected in Shays I, calling the Commission s position fundamentally meritless, Shays v. FEC, 340 F. Supp. 2d 39, 45 (D.D.C. 2004) (on motion for stay pending appeal), fundamentally unavailing, id. at 46, and based on arguments that contradict time-honored precedent and run afoul of well-established jurisprudential tests. Id.; see also Shays I, 337 F. Supp. 2d at 38-47 (on cross motions for summary judgment) (rejecting FEC s standing defense). Similarly, the three-judge district court in McConnell v. FEC, 251 F. Supp. 2d 176 (D.D.C. 2003), unanimously held that Representatives Shays and Meehan had standing to defend BCRA from constitutional challenge. See id. (Order of May 3, 2002) (granting motion to intervene). The same analysis leads to the conclusion that the plaintiffs in both this case and in Shays likewise have standing to challenge the Commission s failure to issue regulations that would have blocked the illegal flow of soft money into federal elections, a failure that undermined the intent and effectiveness of 5
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 6 of 14 both the pre-existing Federal Election Campaign Act (FECA) and the amendments made to it by BCRA. Accordingly, BC 04 proposes that the parties file simultaneous cross motions for summary judgment on June 1, 2005, and simultaneous opposition memoranda on July 1, 2005. Oral argument on the motions can be scheduled thereafter at the Court s convenience. (b). Defendant s proposal. In addition to the standing issues presented in Shays v. FEC, No. 04-CV-1597 (EGS) (D.D.C. filed Sept. 14, 2004) ( Shays II ), this action presents additional standing issues unique to this case. Unlike Representatives Shays and Meehan, who are individual members of Congress who may run for reelection in the future, the sole plaintiff in this case is not an individual, but the publicly financed principal campaign committee of President Bush for the 2004 general election. President Bush is constitutionally ineligible to run for president again in the future. Accordingly, this plaintiff cannot be injured by any political activities by 527 groups in future elections, and has no continuing stake in how such groups are regulated in future elections. The Commission is preparing a motion to dismiss on these standing grounds, which are not at issue in Shays I or Shays II, to be filed in the near future. With that exception, the Commission does not propose separate briefing on the remaining jurisdictional issues (i.e., those common to both Shays II and this case) and the merits. The Commission only requests that briefing on the remaining standing issues and the merits be deferred until the court of appeals renders its decision in Shays I, which the 6
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 7 of 14 court is considering on an expedited basis. Whenever briefing occurs, the Commission requests staggered mo tions for summary judgment, rather than simultaneous crossmotions. 1. This case raises substantial threshold jurisdictional questions regarding ripeness and plaintiff s standing to litigate over the Commission s decision not to adopt regulations that would have regulated the activities of parties other than the plaintiff itself. These jurisdictional questions are substantially similar to those in Shays I, which involves a similar challenge to the Commission s decisions not to enact regulations to restrict activities of parties other than plaintiff more strictly. As in Shays I, the plaintiff in this case relies primarily upon the general public interest in the regulation of campaign financing, but has failed to identify any individual injury to itself from the activities of any of the 527 groups plaintiff wants the Commission to regulate differently. While a joint status report is not the appropriate place to brief the standing and ripeness issues, it should be apparent from the lengthy analysis of those issues in Shays I, 337 F.Supp.2d at 38-50, that these issues are complex and not easily resolved. Although plaintiff apparently believes its view will prevail in the court of appeals, the Commission does not, and this would hardly be the first time a district court s decision on a complex standing or ripeness issue is reversed. The D.C. Circuit has scheduled expedited appellate review in Shays I, with oral argument scheduled for May 12, 2005, and it is likely that the appellate decision will largely control the disposition of the jurisdictional issues before this court. The plaintiff characterize standing as a defense raised by the Commission, but in fact these jurisdictional issues are an indispensable part of the plaintiffs case. 7
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 8 of 14 Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (emphasis added). Moreover, it is settled law that a court cannot proceed to consider the merits of a case until it resolves such threshold jurisdictional questions. See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94 (1998). In these circumstances, it would serve the interest in judicial economy, and avoid unnecessary duplication of effort by counsel, to postpone briefing in this case until after the D.C. Circuit issues its decision in Shays I, which will likely control the threshold jurisdictional issues in this case. If the D.C. Circuit finds jurisdiction lacking in Shays I, this case will probably have to be dismissed on the same grounds without any briefing of the merits; if the D.C. Circuit affirms the district court s jurisdictional rulings in Shays I, it is likely there will be no need to brief or address those jurisdictional issues further in this case. If briefing is conducted in this case before the D.C. Circuit acts, however, the parties would undoubtedly have to file another rounds of briefs addressing the D.C. Circuit s decision. Indeed, since Shays I involves a challenge to the Commission s failure to adopt more stringent regulations of certain campaign finance activities, its analysis of the merits and the standard of review of the Commission s regulatory actions in such a setting would undoubtedly require supplemental briefing on the merits here as well. It is well settled that a district court has broad discretion to stay its proceedings to promote the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. Bledsoe v. Crowley, 849 F.2d 639, 645 (D.C. Cir. 1988). In fact, in Shays I, the district court held the case in abeyance, on the Commission s motion, until after the Supreme Court decided McConnell v. FEC, 8
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 9 of 14 540 U.S. 93 (2003), a decision that was expected to have a substantial impact on the issues before that court. See Shays v. FEC, No. 02-CV-1984 (CKK) (Memorandum Opinion of Sept. 29, 2003). The briefing schedule in that case did not begin until almost 16 months after the complaint was initially filed, much longer than the postponement proposed by the Commission here is likely to last. In sum, since this Court cannot address the merits of this case without resolving the threshold jurisdictional questions, and the D.C. Circuit is already proceeding to address those issues on an expedited basis in a decision that will likely control in this case, the Commission submits that postponing briefing in this case until after the D.C. Circuit acts would best serve the interest of the court in the efficient administration of justice. 2. The Commission also proposes that, whenever this case is briefed, the parties file staggered, rather than simultaneous, motions for summary judgment. This is a suit for judicial review of an agency rulemaking and therefore it is the plaintiffs who must define the exact ways in which they believe the Commission s decision is flawed. If plaintiff files the opening brief, the Commission will be able to respond precisely to its articulated arguments for reversal, whereas simultaneous briefing would require the Commission to address general issues based upon a guess about what arguments plaintiff actually will make. The Commission believes the Court would be better served by briefs that respond directly to each other, rather than simultaneous briefs that are necessarily less focused upon the precise points that turn out to be at issue. Moreover, to enable each party to reply to its opponent s response to its arguments, simultaneous briefing would require each party to file three briefs (opening, response and reply), whereas staggered 9
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 10 of 14 briefing would only require two briefs from each party (plaintiff s opening brief, defendant s opening brief/response, plaintiff s response/reply and defendant s reply). Thus, under staggered briefing, the court has to review only four briefs, rather than the six that would be needed under simultaneous briefing if each party is to have a fair chance to reply. Staggered briefing, we believe, is the most widely used approach to cases of this type, and is the uniform approach of the Supreme Court and all of the federal courts of appeal in reviewing a lower tribunal s decision on a record compiled below, as this court will be doing in this case. The Commission therefore proposes that plaintiff file the opening motion and brief; that the Commission s cross-motion and opposition be due forty-five (45) days thereafter; that plaintiff file its opposition and reply thirty (30) days thereafter; and that the Commission file its reply thirty (30) days thereafter. As stated above, the Commission believes that the date of plaintiff s opening brief should be determined after the D.C. Circuit s decision in Shays I, but we propose that this staggered briefing schedule be used regardless of when the opening brief is scheduled. 4. Local Rule 16.3 matters. The parties set forth the topics listed in LCv.R 16.3, and their joint responses: (1) Whether the case is likely to be disposed of by dispositive motion; and whether, if a dispositive motion has already been filed, the parties should recommend to the court that discovery or other matters should await a decision on the motion. As discussed above, the parties agree that this case can be resolved by cross motions for summary judgment although, as also discussed above, the parties differ on how such motion practice should be handled. No dispositive motion has yet been filed. 10
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 11 of 14 (2) The date by which any other parties shall be joined or the pleadings amended, and whether some or all the factual and legal issues can be agreed upon or narrowed. As discussed above, plaintiff will file a First Amended Complaint on February 8, 2005, and the FEC s Answer will be due to be filed on February 25, 2005. No further amended pleadings are contemplated. No other parties are to be joined. The parties do not believe that factual or legal issues can be agreed upon or narrowed. (3) Whether the case should be assigned to a magistrate judge for all purposes, including trial. The parties agree that the case should not be assigned to a magistrate judge. (4) Whether there is a realistic possibility of settling the case. The parties agree that there is no possibility of settling the case. (5) Whether the case could benefit from the Court's alternative dispute resolution (ADR) procedures (or some other form of ADR); what related steps should be taken to facilitate such ADR; and whether counsel have discussed ADR and their response to this provision with their clients. In assessing the above, counsel shall consider: (i) the client's goals in bringing or defending the litigation; (ii) whether settlement talks have already occurred and, if so, why they did not produce an agreement (iii) the point during the litigation when ADR would be most appropriate, with special consideration given to: (aa) whether ADR should take place after the informal exchange or production through discovery of specific items of information; and (bb) whether ADR should take place before or after the judicial resolution of key legal issues; (iv) whether the parties would benefit from a neutral evaluation of their case, which could include suggestions regarding the focus of discovery, the legal merits of the claim, an assessment of damages and/or the potential settlement value of the case; and (v) whether cost savings or any other practical advantages would flow from a stay of discovery or of other pre-trial proceedings while an ADR process is pending. 11
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 12 of 14 The parties agree that the case would not benefit from ADR procedures. (6) Whether the case can be resolved by summary judgment or motion to dismiss; dates for filing dispositive motions and/or cross-motions, oppositions, and replies; and proposed dates for a decision on the motions. As discussed above, the parties agree that the case can be resolved on the papers. The separate proposals of the parties for how to schedule the briefing are set forth above. (7) Whether the parties should stipulate to dispense with the initial disclosures required by Rule 26(a)(1), F.R.Civ.P., and if not, what if any changes should be made in the scope, form or timing of those disclosures. This is an action for judicial review on an administrative record, and is exempt from the initial disclosure requirements. Local Rule 16(b)(1). (8) The anticipated extent of discovery, how long discovery should take, what limits should be placed on discovery; whether a protective order is appropriate; and a date for the completion of all discovery, including answers to interrogatories, document production, requests for admissions, and depositions. The parties agree that there will be no discovery in the case. (9) Whether the requirement of exchange of expert witness reports and information pursuant to Rule 26(a)(2), F.R.Civ.P., should be modified, and whether and when depositions of experts should occur. The parties agree that there will be no expert witnesses in the case. (10) In class actions, appropriate procedures for dealing with Rule 23 proceedings, including the need for discovery and the timing thereof, dates for filing a Rule 23 motion, and opposition and reply, and for oral argument and/or an evidentiary hearing on the motion and a proposed date for decision. This case is not a class action. (11) Whether the trial and/or discovery should be bifurcated or managed in phases, and a specific proposal for such bifurcation. The parties agree that this case should not be bifurcated. 12
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 13 of 14 (12) The date for the pretrial conference (understanding that a trial will take place 30 to 60 days thereafter). The parties agree that the scheduling of a pretrial conference should be deferred until resolution of the cross motions for summary judgment. (13) Whether the Court should set a firm trial date at the first scheduling conference or should provide that a trial date will be set at the pretrial conference from 30 to 60 days after that conference. The parties agree that the scheduling of a trial date should be deferred until resolution of the cross motions for summary judgment. (14) Such other matters that the parties believe may be appropriate for inclusion in a scheduling order. None. Respectfully submitted, FOR PLAINTIFF BUSH-CHENEY 04, INC. FOR DEFENDANT FEDERAL ELECTION COMMISSION /s/ Jay P. Lefkowitz (DC 449280) Steven A. Engel (DC 484789) KIRKLAND & ELLIS LLP 655 15th Street, N.W., Suite 1200 Washington, D.C. 20005 (202) 879-5000 Thomas J. Josefiak BUSH-CHENEY '04, INC. PO Box 10648 Arlington, VA 22210 January 21, 2005 /s/ Lawrence H. Norton General Counsel /s/ Richard B. Bader Associate General Counsel (D.C. Bar # 911073) /s/ Colleen T. Sealander Assistant General Counsel /s/ Robert W. Bonham III Senior Attorney (D.C. Bar # 397859) FEDERAL ELECTION COMMISSION 13
Case 1:04-cv-01612-EGS Document 9 Filed 01/21/2005 Page 14 of 14 999 E Street, N.W. Washington, D.C. 20463 (202) 694-1650 January 21, 2005 14