Kennedy, et al. v. Gardner, et al. CV-98-608-M 09/30/99 P UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Richard E. Kennedy, Eric Carlson, and Lander Associates, Inc., Plaintiffs

v. Civil No. 98-608-M

William M. Gardner, New Hampshire Secretary of State; Philip T, McLaughlin, New Hampshire Attorney General; and Governor Jeanne Shaheen, Defendants

O R D E R

Plaintiffs, Richard Kennedy and two potential contributors

to his political campaign, bring this action pursuant to

, seeking declaratory and injunctive relief. They

claim that two separate campaign financing restrictions created

by New Hampshire Revised Statutes Annotated ("RSA") 664:4 violate

the First Amendment and are, therefore, unconstitutional.

Specifically, plaintiffs challenge the provisions of New

Hampshire's campaign finance law that: (1) prohibit all political

contributions by (or on behalf of) corporations; and (2) limit

political contributions from individuals and political committees

to $1,000, unless a candidate agrees to limit his or her campaign

expenditures in accordance with RSA 664:5-b, in which case such

contributions are permitted up to $5,000. Standard of Review

Summary judgment is appropriate when the record reveals "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). When ruling upon a party's motion for summary judgment,

the court must "view the entire record in the light most

hospitable to the party opposing summary judgment, indulging all

reasonable inferences in that party's favor." Griqqs-Rvan v.

Smith,

(1st Cir. 1990).

The parties agree that there are no genuine issues of

material fact and their dispute - the constitutionality of the

challenged statutory provisions - may be resolved as a matter of

law .

Background

A. Historical Facts.

Kennedy, a citizen of New Hampshire, successfully campaigned

for election to the New Hampshire legislature in 1998. He did

not agree to limit his campaign expenditures or those

expenditures made on his behalf. Conseguently, individuals and

political committees wishing to contribute to Kennedy's campaign were prohibited by statute from giving more than $1,000.

However, other candidates, those who agreed to limit their

overall campaign expenditures in accordance with RSA 664:5-a,

were permitted by law to accept up to $5,000 from each individual

or political committee wanting to make a contribution.

During the course of Kennedy's campaign, plaintiff Eric

Carlson attempted to contribute $1,500. Realizing that such a

contribution would violate the $1,000 limit imposed by RSA 664:4

V, Kennedy placed Carlson's contribution into an escrow account

and did not spend those funds during his campaign.

New Hampshire's campaign finance law also provides that

corporations shall not make any campaign contributions to

candidates, political committees, or political parties. See RSA

664:4 I. Conseguently, when plaintiff Lander Associates

attempted to contribute $250 to Kennedy's campaign, Kennedy

realized that the contribution violated New Hampshire's campaign

finance law. As he had with the contribution made by Carlson,

Kennedy placed those funds into escrow and did not use them

during his campaign.

3 B. The Challenged Statutory Provision.

Plaintiffs claim that the provisions of New Hampshire's

campaign finance law imposing a $1,000 limit on individual

contributions to candidates who have refused to voluntarily limit

their overall campaign expenditures, while permitting individual

contributions of up to $5,000 to candidates who agree to such

spending limits, "unduly burdens and penalizes those candidates

who refuse to sacrifice their First Amendment right to unfettered

campaign expenditures." Plaintiffs' memorandum (document no. 9)

at 6. Plaintiffs also challenge those provisions of New

Hampshire's campaign finance law that preclude corporations from

contributing to candidates, political committees, and political

parties.

The challenged aspects of the statute provide as follows:

Prohibited Political Contributions. No contribution, whether tangible or intangible, shall be made to a candidate, a political committee, or political party, or in behalf of a candidate or political committee or political party, directly or indirectly, for the purpose of promoting the success or defeat of any candidate or political party at any state primary or general election:

I. By any corporation, or by any officer, director, executive, agent or employee acting in

4 behalf of such corporation, or by any organization representing or affiliated with one or more corporations or by any officer, director, executive, agent or employee acting in behalf of such organization. •k -k -k

V. By any person (1) if in excess of $5,000 in value, except for contributions made by a candidate in behalf of his own candidacy, or if in excess of $1,000 in value by any person or by any political committee to a candidate or a political committee working on behalf of a candidate who does not voluntarily agree to limit his campaign expenditures and those expenditures made on his behalf as provided in RSA 664:5-a . . . .

RSA 664:4 I and V (emphasis supplied).

As to the statute's apparent ban on all corporate political

contributions, plaintiffs say it unconstitutionally restricts

their freedom of speech guaranteed by the First Amendment.

Similarly, insofar as New Hampshire's statutory scheme creates a

so-called "cap gap" between maximum individual contributions that

can be made to candidates who agree to limit their campaign

spending (i.e., a $5,000 cap on contributions) and those which

can be made to candidates who have not agreed to such spending

limits (i.e., a $1000 cap), plaintiffs claim that it too

5 impermissibly restricts their protected "political speech," in

violation of the First Amendment.

Discussion

A. Limitations of Corporate Political Contributions.

Notwithstanding the seemingly unambiguous ban on all

corporate political contributions imposed by RSA 664:4 I,

defendants claim that the statute "has not been interpreted or

enforced by the defendants as prohibiting corporations from

establishing segregated funds to make political contributions

and, in fact, the defendants do not prohibit such contributions."

Defendants' memorandum at 10. To support their largely

undeveloped argument, defendants ambiguously point to RSA 664:3,

which governs the registration of "political committees." By

citing that statute, defendants seem to implicitly suggest that

corporations may make contributions to political candidates,

political committees, and political parties provided they

establish (or are themselves) registered "political committees."

That argument, however, is flawed.

6 Not only does RSA 664:4 I expressly prohibit corporations

from making any contributions to political candidates, it also

prohibits them from contributing, either directly or indirectly,

to political committees. So, while plaintiff Lander Associates

could, conceivably, have created and then registered a political

committee in the State of New Hampshire, it could not thereafter

contribute to that committee. See RSA 664:4 ("No contribution .

. . shall be made to a candidate, a political committee, or

political party . . . by any corporation.") (emphasis supplied).

Thus, notwithstanding defendants' implicit argument to the

contrary, there is no lawful means by which Lander Associates

could make any political contributions to candidates, political

parties, or political committees in New Hampshire.1

1 Of course, one might argue that Lander Associates could simply comply with the provisions of RSA 664:3, register itself as a political committee, pay the reguisite fees, and make the reguisite filings and disclosures concerning its officers. However, defendants have not advanced that argument and, therefore, they have not provided any justification for the imposition of such impairments upon the First Amendment rights of corporate entities such as Lander Associates (i.e., some evidence that the statute is "narrowly tailored" to advance a "compelling state interest").

Suffice it to say that defendants do not proffer such a strained construction and for good reason. That reading is inconsistent with the plain import and unambiguous language of RSA 664:4 I: no corporation shall, either directly or indirectly.

7 In an effort to save the challenged aspects of RSA 664:4 I,

defendants argue that, notwithstanding the unambiguous statutory

language to the contrary. New Hampshire's campaign finance law

does not prohibit corporations from making political

contributions, provided they are made from "segregated accounts"

rather than from general operating accounts. Plainly, defendants

hope to draw the challenged statutory provisions within the ambit

of holdings in cases such as Federal Election Com'n. v. Mass.

Citizens for Life, Inc.,

(1986) and Austin v.

Michigan Chamber of Commerce,

(1990), in which the

Supreme Court upheld the validity of state statutes reguiring

that all corporate political contributions come from segregated

accounts. In this case, however, the plain language of RSA

664:4 I does not lend itself to defendants' reading. In fact,

defendants have failed to point to any provision of New

Hampshire's campaign finance law that speaks to a corporation's

ability to make political contributions from so-called segregated

accounts. Thus, unlike the Michigan statute at issue in Austin,

RSA 644:4 I does not "exempt[] from [its] general prohibition

contribute to a candidate or political committee.

8 against corporate political spending any expenditure made from a

segregated fund." Austin,

.2

Conseguently, the guestion becomes whether an outright

statutory ban on political contributions by corporate entities

(other than registered "political committees") can withstand

constitutional scrutiny. And, in light of existing Supreme Court

precedent, the court is constrained to conclude that RSA 664:4 I

exceeds constitutionally permissible bounds. As the Supreme

Court observed in Austin:

2 The only reference the court has found in the record to so-called "segregated funds" appears on registration papers filed with the Secretary of State by The Limited, Inc. Political Action Committee, Inc. In its registration papers, that political committee represented that it would "serve as a separate segregated fund for certain employees of The Limited, Inc." See Exhibit 3 to plaintiffs' memorandum (document no. 10). Based upon those papers, it would appear that The Limited, Inc. has formed a distinct corporate entity to serve as a political committee in the State of New Hampshire. How, or even whether, defendants permit The Limited, Inc. to contribute to that political committee is unclear, particularly in light of the express prohibition against corporate contributions to political committees set forth in RSA 664:4 I. Of course, the fact that defendants may not be enforcing, or selectively enforcing, the statute as written in no way undermines plaintiffs' constitutional challenge to that statute. See, e.g., N.H. Right to Life Political Action Com, v. Gardner,

(1st Cir. 1996).

9 [T]he use of funds to support a political candidate is "speech"; independent campaign expenditures constitute political expression at the core of our electoral process and of the First Amendment freedoms. The mere fact that the [plaintiff] is a corporation does not remove its speech from the ambit of the First Amendment.

Austin,

(citations and internal quotation marks

omitted).

So, to survive plaintiffs' constitutional challenge, the

statutory ban on corporate contributions imposed by RSA 664:4 I

must advance a compelling state interest. See FEC v. Mass.

Citizens for Life, Inc.,

(1986); Buckley v.

Valeo,

(1976) (per curiam) . Defendants have

failed to identify any compelling state interest. They have

merely directed the court to the New Hampshire Legislature's

Declaration of Purpose relative to the campaign finance law,

which provides, in pertinent part:

The state has a compelling interest in encouraging potential candidates to run for office and in having those races be competitive to ensure greater and more effective representation of the people of the state of New Hampshire. Reasonable political campaign budgets allow a candidate to spend thousands of hours meeting with individuals rather than thousands of hours meeting the ever increasing demand for campaign funding.

10 •k -k -k

Unimpeded access to the ballot is crucial to the realization of the constitutional guarantee of a representative form of government. The philosophical basis for democracy is the egual opportunity to participate. Greater participation increases effective representation, preserving the political power guaranteed to the people by the constitution. Expenditure limitations will allow greater ballot access, freer competition of ideas through individual speech and interaction, and more competitive campaigns.

N.H. Laws, Chapter 212 (SB 178), section 212:1 (Exhibit 1 to

defendants' memorandum). While the New Hampshire legislature has

certainly identified significant state interests and values

relating to the electoral process, defendants have failed to link

the advancement of those goals to the State's outright ban on

corporate political speech in the form of campaign contributions.

For example, defendants have failed to allege (much less

demonstrate) that the State's interests identified by the

legislature could not be met by imposing on corporations

reasonable contribution limitations (as is done with

individuals), rather than an outright ban. See, e.g.. Federal

Election Comm'n v. Mass. Citizens for Life, Inc.,

(1986) ("Where at all possible, government must curtail

speech only to the degree necessary to meet the particular

11 problem at hand, and must avoid infringing on speech that does

not pose the danger that has prompted regulation.").

To be sure, states may constitutionally impose reasonable

and measured limitations upon the source and amount of political

contributions made by corporations. See, e.g., Austin,

; Mass. Citizens for Life,

. However,

those limitations must be justified by, and narrowly tailored to

advance, a compelling state interest. Defendants have failed to

demonstrate that the complete ban on corporate political

contributions imposed by RSA 664:4 I meets that demanding test,

nor is it likely that they ever could. Accordingly, RSA 664:4 I,

like its statutory counterpart, RSA 664:5 V (limiting independent

political expenditures by political committees to $1,000), fails

to survive constitutional scrutiny. See N.H. Right to Life

Political Action Comm, v. Gardner,

(1st Cir. 1996)

(concluding that the $1,000 limit imposed on independent

expenditures by political committees by RSA 664:5 V "severely

restricts political speech" and holding that "the First Amendment

does not tolerate such drastic limitations of protected political

advocacy."). C f . Citizens Against Rent Control v. Berkeley, 454

(1981) ("In First National Bank of Boston v.

Bellotti,

(1978), we held that a state could not

prohibit corporations any more than it could preclude individuals

from making contributions or expenditures advocating views on

ballot measures.").

B. The Constitutionality of the So-Called "Cap Gap"

RSA 664:4 V creates an incentive for candidates to

participate in New Hampshire's voluntary campaign expenditure

limits program. If a candidate pledges to adhere to set limits,

the statutory cap on individual contributions to his or her

campaign is raised from $1,000 to $5,000. If a candidate elects

not to be bound by the expenditure limits, individual

contributions to his or her campaign cannot, by statute, exceed

$1,000 - a campaign contribution cap previously upheld by the

Supreme Court. See Buckley v. Valeo,

.3

3 The Supreme Court recently granted a petition for certiorari in Shrink Missouri Government PAC v. Adams,

(8th Cir. 1998). In that case, the Eighth Circuit concluded that, "After inflation, limits of $1,075 [to candidates for governor] . . . cannot compare with the $1,000 limit approved in Buckley twenty-two years ago. . . . In today's dollars, the [challenged statute] appear[s] likely to have a severe impact on political dialogue by preventing many candidates for public office from amassing the resources necessary for effective

13 Plaintiffs' thrust is that the so-called statutory "cap gap"

unduly burdens and penalizes those candidates who refuse to

voluntarily limit their campaign spending. In support of their

position, plaintiffs rely, at least in part, on this court's

recent decision in Kennedy v. Gardner, No. 96-574-B (D.N.H. June

5, 1998) (Barbadoro, C.J.) ("Kennedy I"). In Kennedy I,

plaintiff challenged those aspects of RSA ch. 655 which provided

that a candidate for state or federal office who was unwilling to

adhere to the State's voluntary campaign expenditure limits must

file a specified number of primary petitions and pay a filing fee

when declaring his or her candidacy. Candidates who agreed to

limit their campaign expenditures, however, were not so burdened.

The court concluded that the added burdens imposed on candidates

who chose not to adhere to the campaign expenditure limits were

impermissibly coercive and insufficiently related to the goal

advocacy."

(citations and internal guotation marks omitted). While predicting Supreme Court decisions is more a conjurer's art than a science, still, it is conceivable, that the Supreme Court may revisit the constitutionality of the $1,000 cap on contributions to candidates for public office. As the law currently stands, however, such caps are, generally speaking, permissible. And, plaintiffs do not challenge the $1,000 limit as unconstitutional by reason of economic erosion or the effects of inflation.

14 sought to be achieved by the statutory scheme - encouraging

candidates to agree to limit campaign expenditures.

[The challenged statutory provisions here] differ from the statutory schemes at issue in Buckley and Vote Choice both because the state has chosen a coercive means to achieve adherence to its spending cap and because the condition those laws impose on gaining access to the ballot - limiting the constitutional right to make campaign expenditures - bears no reasonable relationship to any legitimate reason for controlling ballot access.

Rather than choosing to encourage compliance with a spending cap by providing incentives such as public financing or free television time. New Hampshire has opted to penalize non-complying candidates by making it more difficult for them to gain access to the ballot.

Kennedy I, slip op. at 10-11.

In this case, however, the challenged provisions of New

Hampshire's campaign finance laws are more like those at issue in

Vote Choice. Here, the State has chosen to furnish candidates

with an incentive to limit their campaign expenditures, rather

than impose added burdens on those who will not: those who agree,

are permitted to accept contributions of up to $5,000 from

individual contributors. If candidates elect not to voluntarily

limit their expenditures, they remain subject to a

15 constitutionally permissible $1,000 cap on individual

contributions.

Plaintiffs do not challenge the constitutionality of the

$1,000 cap on individual contributions to candidates who elect

not to limit their campaign expenditures. Instead, they argue

that by relaxing that cap by a factor of five for those

candidates who agree to limit total campaign expenditures, the

statutory scheme unconstitutionally penalizes those who refuse to

compromise their First Amendment right to spend as much as they

see fit on their campaign. As the Court of Appeals observed,

however, such an argument, at least in the context of this case,

is largely semantic. Whether one views the relaxed $5,000 cap as

a "benefit" to participating candidates or as a "penalty" to

those who elect not to participate depends largely upon one's

vantage point.

[Plaintiff] attempts to distinguish the public financing cases on the ground that they involve the propriety of conferring benefits in contrast to imposing penalties. She is fishing in an empty pond. For one thing, the distinction that [plaintiff] struggles to draw between denying the carrot and striking with the stick is, in many contexts, more semantic than substantive. This case illustrates the point. The guestion whether Rhode Island's system of

16 public financing imposes a penalty on non-complying candidates or, instead, confers a benefit on those who do comply is a non-issue, roughly comparable to bickering over whether a glass is half full or half empty. After all, there is nothing inherently penal about a $1,000 contribution cap.

Vote Choice, 4 F.3d at 38. In the end, the court reasoned that

Rhode Island's relaxed contribution cap for complying candidates

was more correctly viewed as a "premium" earned by candidates who

voluntarily limited campaign expenditures, rather than a penalty

imposed upon those who did not.

Thus, unlike Kennedy I, which involved statutory provisions

that imposed additional burdens upon candidates who chose not to

limit their campaign expenditures, the statutory scheme at issue

in Vote Choice merely conferred benefits on those candidates who

agreed to voluntarily limit the exercise of their First Amendment

freedoms. So it is in this case. The only "burden" imposed upon

candidates who elect not to limit campaign expenditures is the

$1,000 cap on individual contributions. That cap is plainly

constitutional under existing Supreme Court precedent (and

plaintiffs do not argue otherwise).

17 The challenged statutory provisions simply offer to

candidates who voluntarily agree to limit campaign expenditures

the benefit of a relaxed cap on individual contributions. That

benefit is the quid pro quo for accepting the potential electoral

disadvantages of restricted spending. And, when benefit and

burden are considered together, the choice offered is not so

disproportionate or one-sided as to amount to an

unconstitutionally coercive "stick," in effect compelling

candidates to "voluntarily" agree to spending limits and, in the

process, relinguish their First Amendment rights. The choice is

a fair one - an easier time raising funds but a fixed spending

limit, on the one hand, or a more difficult time raising funds

but unlimited ability to spend, on the other.

Plaintiffs have failed to demonstrate that the $4,000 "cap

gap, standing alone, unconstitutionally infringes upon their

First Amendment rights. As noted by the court of appeals for

this circuit:

[W]e have difficulty believing that a statutory framework which merely presents candidates with a voluntary alternative to an otherwise applicable, assuredly constitutional, financing option imposes any burden on First Amendment rights. In choosing between

18 the [campaign finance options created by the statute] a candidate will presumably select the option which enhances his or her powers of communication and association. Thus, it seems likely that the challenged statute furthers, rather than smothers. First Amendment values.

Vote Choice, 4 F.3d at 39. See also Rosenstiel v. Rodriquez,

(8th Cir. 1996) ("This [statutory] scheme

presents candidates with an additional, optional campaign funding

choice, the participation in which is voluntary. Under this

choice-increasing framework, candidates will presumably select

the option that they feel is most advantageous to their

candidacy. Given this backdrop, it appears to us that the

State's scheme promotes, rather than detracts from, cherished

First Amendment values."), cert. denied,

(1997).

Plaintiffs also invoke the decision in Wilkinson v. Jones,

(W.D. Ky. 1995), as support for the proposition

that a 5 to 1 differential in spending caps is inherently

unconstitutional. That reliance is, however, misplaced. The

Wilkinson court considered a statutory scheme that imposed $500

and $100 contribution caps, respectively, on candidates. Despite

the superficial similarity of the "cap gap" ratios in this case

19 and Wilkinson (i.e., 5:1), there are substantive differences

between the statute at issue here and the Kentucky statute

addressed in Wilkinson. The most notable distinction is that the

Kentucky statute established a base-line cap at only $100.

Addressing the constitutionality of that cap, the Wilkinson court

concluded that it (unlike the $1,000 cap sanctioned in Buckley

and at issue in this case) was so low as to "constitute a

penalty" imposed upon candidates who elected not to participate

in the state's publically financed campaign program. Wilkinson,

. Accordingly, the court properly concluded

that the statute amounted to an unconstitutional infringement

upon the plaintiffs' First Amendment rights. In this case,

however, the $1,000 cap imposed upon individual contributions is

not so low as to constitute an unconstitutional penalty, nor do

plaintiffs even claim that it is.

Next, the Wilkinson court noted that while the disparity

between contributions to participating and non-participating

candidates appeared to be 5 to 1, it was more correctly viewed as

being 15 to 1: "In actual application, the impact of the

disparity is 15 to 1 since the publicly-financed candidate

20 receives two publicly-funded dollars for each dollar he or she

raises." Wilkinson,

. Thus, the court's

conclusion that the "incentive, or 'carrot, ' offered to publicly-

financed candidates in this instance is, in practical

application, a 'stick' used upon privately-financed candidates,"

is not one readily transferrable to the claims raised by

plaintiffs here. In short, Wilkinson does not stand for the

proposition that a 5 to 1 disparity in maximum allowable

individual campaign contributions is an unconstitutionally

coercive means by which to induce candidates to voluntarily

comply with campaign spending limits.

Here, RSA 664:4 V does not impermissibly coerce or penalize

candidates. And, as in Vote Choice, the court concludes that the

challenged statutory scheme does not unconstitutionally burden

plaintiffs' First Amendment rights. Instead, it "achieves a

rough proportionality" between the advantages available to

complying candidates (i.e., increased contribution cap) and the

disadvantages such candidates must accept (i.e., fixed spending

limits). "Put another way, the state exacts a fair price from

complying candidates in exchange for receipt of the challenged

21 benefit" and "neither penalizes certain classes of office-seekers

nor coerces candidates into surrendering their First Amendment

rights." Id.4

Given the foregoing, the court concludes that the so-called

"cap gap" created by RSA 664:4 V does not impermissibly burden

4 To be sure, the statutory scheme at issue in Vote Choice differs significantly from that involved in this case. There, candidates who voluntarily elected to limit campaign spending also agreed to other restrictions upon their First Amendment rights, including a pledge to limit the amounts which they would raise during their campaigns. In exchange for the relinguishment of those substantial rights, the State of Rhode Island offered a correspondingly substantial package of benefits (e.g., a higher cap on individual contributions, free television access, and matching funds up to $75, 000) . New Hampshire's statutory scheme exacts fewer concessions from candidates who agree to adhere to campaign spending limits: they relinguish only their right to spend unlimited amounts on their campaigns (so, for example, it does not appear that they must agree to limit the total amount of money that they might raise in connection with their campaigns). Accordingly, the State has offered those candidates comparatively fewer benefits than those offered under the Rhode Island statute: candidates participating in the spending cap program receive only the ability to raise more money (i.e., $5,000) from individual contributors. Despite the differences in these statutory schemes, however, they share a fundamental similarity: the package of benefits offered to participating candidates is of roughly comparable value to the disadvantages they accept. This rough proportionality between what is given up and what is received necessarily means that candidates who elect to participate in the State's voluntary spending cap program receive no gualitative advantage over those who choose not to participate.

22 plaintiffs' exercise of political speech and survives

constitutional scrutiny.

Conclusion

New Hampshire's campaign finance law does not permit

corporations (other than those specifically registered with the

Secretary of State as "political committees" and subject to the

restrictions imposed upon political committees) to contribute to

candidates for public office, political parties, or political

committees. While there may, arguably, be unmarked statutory

paths on which a corporation might successfully navigate around

the law's outright ban on corporate donations to political

candidates and political committees, even defendants appear

hesitant (or unable) to describe in any detail the route

interested corporations should follow to avoid prosecution under

the statute. The unambiguous ban on corporate political

contributions imposed by RSA 664:4 I presents a very real

imposition on corporate political contributions and corporate

rights to free speech guaranteed by the First Amendment.

23 Defendants' implicit and undeveloped suggestion that

corporations can creatively avoid prosecution for violations of

Chapter 664: (1) because there are means by which they might

circumvent the unambiguous ban on corporate political

contributions imposed by RSA 664:4 I; or (2) because the Attorney

General chooses not to enforce the statute as written, does

little to either undermine plaintiffs' standing to challenge RSA

664:4 I or save that statute from its fatal constitutional

defect. See generally N.H. Right to Life,

("the

danger of this statute is, in large measure, one of self­

censorship . . . a harm that can be realized even without an

actual prosecution.") (citations and internal guotation marks

omitted). The absolute ban on corporate political speech

established by RSA 664:4 I is unconstitutional.

The statutory provisions which create the so-called "cap

gap" between candidates who agree to campaign spending limits and

those who do not, however, survive plaintiffs' constitutional

challenge. The State of New Hampshire has a legitimate interest

in encouraging candidates for public office to limit the amounts

spent on campaigns. The statutory scheme enacted to promote that

24 goal, at least insofar as it creates a "cap gap" between

participating and non-participating candidates, does not

unconstitutionally restrict First Amendment rights.

For the foregoing reasons, defendants' motion to dismiss

(document no. 4) is denied. Plaintiffs' motion for summary

judgment (document no. 9) is granted in part and denied in part.

The ban on all corporate political contributions imposed by RSA

664:4 I is overly restrictive and unconstitutionally infringes

plaintiffs' First Amendment rights. The "cap gap" created by RSA

664:4 V, however, does not unconstitutionally burden plaintiffs'

political speech and, therefore, survives their constitutional

challenge. The Clerk of the Court shall enter judgment in

accordance with this order and close the case.

SO ORDERED.

Steven J. McAuliffe United States District Judge

September 30, 1999

cc: Alfred J. T. Rubega, Esg. William C. Knowles, Esg. Senior Ass't. A.G. Martin P. Honigberg

25