Just as the 2012 political races are heating up and taking shape, Judge James Cacheris of the District Court for the Eastern District of Virginia expanded the reach of Citizens United v. FEC, 130 U.S. 876 (2010), by rendering unconstitutional limits on corporate contributions to federal candidates. In the opinion, filed May 26, 2011, Judge Cacheris dismissed one of seven charges filed against Virginia businessmen William P. Danielczyk, Jr. and Eugene R. Biagi (together “Defendants”).

Mr. Danielczyk, Chairman of Galen Capital Group, LLC, and Galen Capital Corporation (together “Galen”) and Mr. Biagi, an executive at Galen, are accused of illegally soliciting and reimbursing contributions to Hillary Clinton’s 2006 Senate Campaign and 2008 Presidential Campaign. Specifically, federal prosecutors contend that Mr. Danielczyk and Mr. Biagi subverted federal campaign contribution limits by soliciting employees of their financial firm to make campaign donations to two fund-raisers hosted by Mr. Danielczyk and then reimbursing the employees with company money. According to the Wall Street Journal, Mr. Danielczyk and approximately a dozen of his employees and their spouses, some of whom were Republicans, allegedly gave about $100,000 to Mrs. Clinton’s 2008 Presidential Campaign alone.

Federal prosecutors argued the Defendants’ actions violated, among other laws, section 441b(a) of the Federal Election Campaign Act (FECA), which bans direct corporate contributions to campaigns for federal office. Alternatively, Defendants maintained that under Citizens United, such a ban violated the First Amendment and thus the count should be dismissed.  In Citizens United, the Supreme Court found another provision of the FECA, the independent expenditure ban, was unconstitutional as the Court held there was no distinction between an individual and a corporation with respect to political speech and thus the First Amendment did not allow political speech restrictions based on a speaker’s corporate identity.

Ruling that the logic employed in Citizens United was “inescapable” in the case before it, the Danielczyk court reasoned if an individual can make direct contributions within FECA’s limits, a corporation cannot be banned from doing the same.

Nevertheless, the trajectory of the Danielczyk decision seems uncertain. The Danielczyk court acknowledged that the U.S. District Court for the District of Minnesota disagreed with this outcome in Minnesota Citizens Concerned for Life, Inc. v. Swanson, 741 F. Supp. 2d 1115 (D. Minn. 2010), where that court found the Citizens United holding was limited to corporate independent expenditures and was not a repudiation of the limitation on direct contributions to candidates. The case has already been criticized for ignoring another Supreme Court decision, Federal Election Commission v. Beaumont, 539 U.S. 146 (2003), which upheld the ban on direct corporation contributions to federal candidates and was not specifically overturned in Citizens United. Furthermore, on Tuesday, May 31, 2011, Judge Cacheris ordered prosecutors and defense lawyers to submit additional briefs by Wednesday, June 1, 2011 on whether he should reconsider his ruling. A hearing is scheduled for Friday, June 3, 2011.