Janvey v. Democratic Senatorial Campaign Committee, Inc., ___ F.Supp.2d ____, 2011 WL 2466156 (N.D.Tex., June 22, 2011).
United States District Court,
Ralph S. JANVEY, Plaintiff,
DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE, INC., et al., Defendants.
Civil Action No. 3:10–CV–0346–N.
June 22, 2011.
Kevin M. Sadler, Brendan A. Day, David T. Arlington, Robert I. Howell, Scott Daniel Powers, Timothy S. Durst, Baker Botts LLP, Austin, TX, for Plaintiff.
Matthew C. Acosta, Jackson Walker LLP, Robert P. Latham, Jackson Walker, Mark A. Shank, Bridget A. Blinn, Demarron A. Berkley, G. Michael Gruber, Gruber Hurst Johansen & Hail LLP, Dallas, Tx, Brian G. Svoboda, John M. Devaney, John K. Roche, Marc E. Elias, Perkins Coie LLP, Washington, DC, for Defendants.
DAVID C. GODBEY, District Judge.
*1 This Order addresses Defendants the Democratic Senatorial Campaign Committee, Inc. ("DSCC"), and the Democratic Congressional Campaign Committee, Inc.'s ("DCCC"), (collectively, the "Democratic Committees") motion to dismiss , and Defendants the National Republican Congressional Committee ("NRCC"), the National Republican Senatorial Committee ("NRSC"), and the Republican National Committee's ("RNC") (collectively, the "Republican Committees" and, together with the Democratic Committees, the "Political Committees") motion to dismiss [ 16] and motion for summary judgment [91 ], as well as the Receiver's motion for summary judgment . For the reasons that follow, the Court denies the Political Committees' motions to dismiss, denies the Republican Committees' motion for summary judgment, and grants the Receiver's motion for summary judgment.
I. ORIGINS OF THE RECEIVER'S FRAUDULENT TRANSFER CLAIMS
This dispute presents another episode related to the Securities and Exchange Commission's (the "SEC") ongoing securities fraud action against R. Allen Stanford, his associates, and various entities under Stanford's control (the "Stanford Defendants"). As part of that litigation, this Court "assume[d] exclusive jurisdiction and t[ook] possession of the" "Receivership Assets" and "Receivership Records" (collectively, the "Receivership Estate"). See Second Am. Order Appointing Receiver, July 19, 2010  (the "Receivership Order"), in SEC v. Stanford Int'l Bank, Ltd., Civil Action No. 3:09–CV–0298–N (N.D. Tex. filed Feb. 17, 2009). The Court appointed Ralph S. Janvey to serve as Receiver of the Receivership Estate and vested him with "the full power of an equity receiver under common law as well as such powers as are enumerated" in the Receivership Order. Id. at 3.
Among these enumerated powers, the Court "authorized [the Receiver] to immediately take and have complete and exclusive control, possession, and custody of the Receivership Estate and to any assets traceable to assets owned by the Receivership Estate." Id. at 4. Additionally, the Court "specifically directed and authorized [the Receiver] to ... [c]ollect, marshal, and take custody, control, and possession of all the funds, accounts, mail, and other assets of, or in the possession or under the control of, the Receivership Estate, or assets traceable to assets owned or controlled by the Receivership Estate, wherever situated," id., and to file in this Court "such actions or proceedings to impose a constructive trust, obtain possession, and/or recover judgment with respect to persons or entities who received assets or records traceable to the Receivership Estate." Id. at 5.
Pursuant to those powers, the Receiver filed this fraudulent transfer suit to recover approximately $1.6 million in contributions made by R. Allen Stanford, James Davis, and the Stanford Financial Group Company ("SFGC") to the Political Committees over a period of about eight years. The parties agree that the Stanford Defendants allocated their contributions as follows: $950,500 to the DSCC; $200,000 to the DCCC; $238,500 to the NRCC; $83,345 to the NRSC; and $128,500 to the RNC. See, e.g., Compl. at 7[ 1 ]. Nothing suggests that the Political Committees acted in bad faith. But, according to the Receiver, the Political Committees nonetheless must disgorge an amount equal to the contributions because they received Ponzi scheme proceeds without providing consideration of reasonably equivalent value in exchange. The Receiver now moves for summary judgment.
*2 The Political Committees raise two primary objections to the Receiver's claims. First, the Political Committees argue that the Receiver untimely filed this action. Because Texas courts treat the time-bar provisions of the Texas Uniform Fraudulent Transfer Act ("TUFTA"), TEX. BUS. & COM.CODE sec. 24.001, et seq. , as a statute of repose rather than a statute of limitations, the Political Committees contend that the Receiver cannot rely on equitable tolling doctrines to establish that he timely brought suit. Second, the Political Committees argue that federal campaign finance laws preempt the Receiver's claims. See Federal Election Campaign Act of 1971 ("FECA"), Pub.L. 92–225, 86 Stat. 3 (1972) (codified as amended at 2 U.S.C. sec. 431, et seq.); Bipartisan Campaign Reform Act of 2002 ("BCRA"), Pub.L. 107–155, 116 Stat. 81 (2002) (codified in scattered sections of FECA), abrogated in part by Citizens United v. FEC, 130 S.Ct. 876 (2010), and by FEC v. Wisconsin Right to Life, Inc., 551 U.S. 449 (2007). The Republican Committees move for summary judgment on these two defenses, which the Court analyzes in turn before addressing the Receiver's motion for summary judgment.
II. SUMMARY JUDGMENT STANDARDFN1
FN1. The Republican Committees' motion for summary judgment raises the same arguments presented in the Political Committees' motions to dismiss. The Court's analysis of the parties' cross-motions for summary judgment also disposes of the Political Committees' motions to dismiss.
Courts "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). In making this determination, courts must view all evidence and draw all reasonable inferences in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U .S. 654, 655 (1962). Courts, however, need not sift through the record in search of triable issues. Adams v. Travelers Indem. Co. of Conn., 465 F.3d 156, 164 (5th Cir.2006).
The moving party bears the initial burden of informing the court of the basis for its belief that there is no genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this showing, the burden shifts to the nonmovant to establish that there is a genuine issue of material fact such that a reasonable jury might return a verdict in its favor. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986). Moreover, "[c]onclusory allegations, speculation, and unsubstantiated assertions" will not suffice to satisfy the nonmovant's burden. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir.1996) (en banc). Indeed, factual controversies are resolved in favor of the nonmoving party " 'only when an actual controversy exists, that is, when both parties have submitted evidence of contradictory facts.' " Olabisiomotosho v. City of Houston, 185 F.3d 521, 525 (5th Cir.1999) (quoting McCallum Highlands, Ltd. v. Washington Capital Dus, Inc., 66 F.3d 89, 92 (5th Cir.1995)).
III. TEXAS FRAUDULENT TRANSFER LAW DOES NOT "EXTINGUISH" THIS ACTION
*3 The Court first addresses the Political Committees' argument that TUFTA's limitations provision "extinguished" the Receiver's cause of action prior to filing. In general, TUFTA operates to void certain fraudulent "transfers," which the statute defines in relevant part as "every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money." TEX. BUS. & COM.CODE sec. 24.002(12).FN2 TUFTA considers several types of transfers to be fraudulent. See id. secs. 24.005(a) (three types); 24.006 (two types). Despite some ambiguity in the Receiver's complaint, the parties agree that this dispute concerns only one type of fraudulent transfer. See, e.g., Democratic Committees' Mot. to Dismiss Br. at 5 n. 2 [19–1].
FN2. Because the parties assume that Texas law controls here, the Court will not second guess their choice.
The Receiver brings his claim under section 24.005(a)(1), which provides that a transfer "is fraudulent as to a creditor, whether the creditor's claim arose before or within a reasonable time after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation ... with actual intent to hinder, delay, or defraud any creditor of the debtor." "In determining [a debtor's] actual intent," courts may consider, "among other factors[,] ... whether ... the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred" and if "the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred." Id. sec. 24.005(b)(8) & (b)(9). Notably, TUFTA considers a debtor to be insolvent "if the sum of the debtor's debts is greater than all of the debtor's assets at a fair valuation ." Id. sec. 24.003(a).
As the Political Committees point out, TUFTA does not preserve indefinitely a plaintiff's cause of action. TUFTA "extinguish[es]" claims brought under section 24.005(a)(1) unless filed "within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant." Id. sec. 24.010(a)(1). Because the Receiver almost exclusively seeks the return of funds contributed to the Political Committees more than four years before his appointment, the parties agree that the Receiver timely filed suit only if he did so within the "discovery rule" in section 24.010(a)(1)'s second clause.FN3 Cadle Co. v. Wilson, 136 S.W.3d 345, 350 (Tex.App.-Austin 2004, no pet.) ("It is clear from the text of the statute that the legislature has chosen to preserve application of the discovery rule to some extent within the provisions of TUFTA."); Johnston v. Crook, 93 S.W.3d 263, 270 (Tex.App.-Houston [14th Dist.] 2002, pet. den.) ("[T]he [Texas] UFTA specifically acknowledges the availability of the discovery rule to cases of transfers made with actual intent to defraud.").
FN3. "The discovery rule defers the accrual of a cause of action until the plaintiff knew or, through the exercise of reasonable diligence, should have known of the facts giving rise to the cause of action." Cadle Company, 136 S.W.3d at 350 (citing Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d 732, 734 (Tex.2001); Computer Assocs. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455–56 (Tex.1996).
*4 The Political Committees contend, for a variety of reasons stemming from TUFTA's alleged status as a statute of repose,FN4 that the Receiver did not timely file. First, the Political Committees posit that, because the Receiver stands in place of the Stanford Defendants, his claims were discovered the moment the Stanford Defendants made each contribution. Under this view, the Texas legislature's intentional crafting of TUFTA as a statute of repose effectively exempts it from traditional equitable tolling doctrines that might otherwise salvage the Receiver's claims.FN5 Thus, according to the Political Committees, the Stanford Defendants' actual knowledge of their contributions' fraudulent origins extinguished the Receiver's claims well before his appointment. See, e.g., Republican Committees' Mot. to Dismiss Br. at 6–7; Democratic Committees' Mot. to Dismiss Br. at 7–8.
FN4. The Supreme Court of Texas recently distinguished statutes of repose from statutes of limitation as follows:
Statutes of repose typically provide a definitive date beyond which an action cannot be filed. Unlike traditional limitations provisions, which begin running upon accrual of a cause of action, a statute of repose runs from a specified date without regard to accrual of any cause of action. Repose then differs from limitations in that repose not only cuts off rights of action after they accrue, but can cut off rights of action before they accrue. And while statutes of limitations operate procedurally to bar the enforcement of a right, a statute of repose takes away the right altogether, creating a substantive right to be free of liability after a specified time. Thus, the purpose of a statute of repose is to provide absolute protection to certain parties from the burden of indefinite potential liability.
Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 866 (Tex.2009) (internal citations and quotation marks omitted).
FN5. Although the Supreme Court of Texas has yet to rule on the issue, see Smith v. Am. Founders Fin., Corp., 365 B.R. 647, 676 (S.D.Tex.2007), the few Texas intermediate appellate courts to expressly consider the matter view the time-bar provision as a statute of repose. See Cadle Company, 136 S.W.3d at 350; Duran v. Henderson, 71 S.W.3d 833, 838 (Tex.App.-Texarkana 2002, pet. den.) ("The drafters of the original UFTA intended that the extinguishment provision be enforced as a statute of repose rather than as a traditional waiveable statute of limitations."). Other Texas appellate courts have identified the provision as a statute of repose, but some do refer to it as a statute of limitations. The latter, however, use the term "limitations" generically to reference the period of time in which a plaintiff may bring a cause of action. See, e.g., Walker v. Anderson, 232 S.W.3d 899 (Tex.App.-Dallas 2007, no pet.) (repose); Flores v. Ontiveros, 218 S.W.3d 98 (Tex.App.-Corpus Christi 2005, pet. dism'd) (limitations), aff'd in part, rev'd in part on other grounds sub nom. Ontiveros v. Flores, 218 S.W.3d 70 (Tex.2007); Crook, 93 S.W.3d 263 (limitations).
The federal courts follow the same practice. See, e.g., In re Supplement Spot, LLC, 409 B.R. 187 (Bankr.S.D.Tex.2009) (repose); In re Moore, 379 B.R. 284 (Bankr.N.D.Tex.2007) (limitations). But, the federal courts citing the most on point Texas caselaw, Cadle Company and Duran, almost uniformly identify the provision as a statute of repose. See, e.g., American Founders, 365 B.R. 647. As explained below, the Court finds the issue irrelevant because the Political Committees first two objections depend on the (incorrect) theory that the Receiver stands only in the Stanford Defendants' shoes.
In the alternative, the Political Committees argue second that, even if TUFTA's extinguishment provision operated as a statute of limitations that allowed equitable tolling, the Receiver should have filed his complaint no later than the first anniversary of his appointment, or February 16, 2010. See Order Appointing Receiver [ 10], in SEC v. Stanford Int'l Bank, Civil Action No. 3:09–CV–0298–N. This theory holds that the Receiver, in a singularity-like moment, inherited the Stanford Defendants' actual knowledge of the contributions immediately upon his appointment. See, e.g., Republican Committees' Mot. to Dismiss Br. at 7–9; Democratic Committees' Mot. to Dismiss Br. at 8–9. Finally, the Political Committees assert that the Receiver, simply by exercising reasonable diligence, could have discovered the contributions in the three-day window between the date of his appointment and February 19, 2009, the date one year prior to the date he filed suit. See, e.g., Democratic Committees' Mot. to Dismiss Br. at 9–11; Republican Committees' Summ. J. Reply at 7. The Court addresses each of these objections in turn.
A. TUFTA's Discovery Rule Applies to the Receiver's Claims
The Political Committees' first two objections assume that only the Court's use of equitable tolling, specifically the doctrine of adverse domination, may bring the Receiver's claims within the ambit of TUFTA's discovery rule. "Under the common law doctrine of adverse domination, the statute of limitations for an entity's claim is tolled when the entity is controlled or dominated by individuals engaged in conduct that is harmful to the entity." Warfield v. Carnie, 2007 WL 1112591, at * 15 (N.D.Tex.2007) (Buchmeyer, J.) (citing, inter alia, FDIC v. Dawson, 4 F.3d 1303 (5th Cir.1993)). If TUFTA operates as a statute of repose, the argument goes, it renders unavailable adverse domination as a way to void the Stanford Defendants' ab initio knowledge of the contributions' fraudulent nature.
The viability of the Receiver's claims, however, does not hinge on equitable tolling. As an initial matter, the Political Committees overlook the possibility that adverse domination has relevance here beyond its potential deployment as an equitable tolling mechanism. The Court declines to venture an Erie guess on whether TUFTA's extinguishment provision operates as a statute of repose or limitations. Even if it is a statute of repose,FN6 the plain language of the subsection applicable to the Receiver's claims preserves the discovery rule. And, when "the discovery rule is explicitly available by statute ... the [Texas Supreme] court's [common law] 'inherently undiscoverable' analysis, which focuses on a plaintiff's exercise of reasonable diligence," applies because it "is relevant to the statutory issue ... of when [the] transfer could reasonably have been discovered." Cadle Company, 136 S.W.3d at 351 (citing TEX. BUS. & COM.CODE sec. 24.010(a)(1)) (emphasis in original). Thus, R. Allen Stanford and his associates' adverse domination of the numerous Stanford enterprises may serve as a conceptual factor in establishing the reasonableness of the Receiver's delay in discovering the contributions; the Court is not constrained to use solely adverse domination as a tool to allow a claim to proceed when the Texas Legislature allegedly has provided to the contrary.
FN6. Although the Court refrains from deciding the issue, it notes that TUFTA contains at least two provisions that create considerable tension with its ostensibly repose-related goals. First, section 24.010(a)(1)'s discovery rule creates the possibility of indefinite liability for at least some claims brought under TUFTA, something the Supreme Court of Texas considers "clearly incompatible with the purpose" underlying statutes of repose. Galbraith Engineering, 290 S.W.3d at 869 (ruling that the term "limitations" in section 33.004 of the Texas Civil Practice and Remedies Code did not extend to statutes of repose "[ b]ecause application of the revival statute in [that] instance effectively [would have] render[ed] the period of repose indefinite"). Query, then, whether the Cadle Company and Duran courts were correct in assuming that, by titling section 24.010 "Extinguishment of Cause of Action," the Texas Legislature intended for every subsection of section 24.010 to operate as a statute of repose.
Second, TUFTA expressly provides creditors with potentially expansive equitable remedies. See TEX. BUS. & COM.CODE sec. 24 .008(a)(3) (providing that "subject to applicable principles of equity and in accordance with applicable rules of civil procedure" TUFTA claimants may obtain injunctive relief, the appointment of a receiver, or "any other relief the circumstances may require"). Although not incompatible with viewing section 24.010 as a statute of repose in toto, this does counsel against reading in an intent on the part of the Texas Legislature to inhibit courts' recourse to equitable principles when deciding TUFTA cases. Indeed, the Texas Legislature adopted the Uniform Fraudulent Transfer Act's "Supplementary Provisions" section wholesale. See TEX. BUS. & COM.CODE sec. 24.011 ("Unless displaced by the provisions of this chapter, the principles of law and equity, including the law merchant and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake, insolvency, or other validating or invalidating cause, supplement its provisions."); Unif. Fraudulent Transfer Act sec. 10 (1984) (same, except that Texas uses "chapter" in place of "Act"). Because nothing in section 24.010 explicitly "displaces" equitable principles, it is not at all clear that applying equitable doctrines like adverse domination to section 24.010(a)(1) would constitute an impermissible "elevat[ion][of] the Court's own judgment regarding equity above the Texas State Legislature's, [as] embodied by the plain-language of the statute." In re IFS Fin. Corp., 417 B.R. 419, 447–48 (Bankr.S.D.Tex.2009); cf. Young v. United States, 535 U.S. 43, 49 (2002) (noting that "limitations periods are customarily subject to equitable tolling, unless tolling would be inconsistent with the text of the relevant statute") (internal citations and quotation marks omitted).
As the statute itself makes clear, moreover, the Texas Legislature adopted TUFTA with the specific purpose that it be applied uniformly with other states' versions of the Act. See TEX. BUS. & COM.CODE sec. 24.012 ("This chapter shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it."). Other courts, it turns out, have used adverse domination in the context of similar UFTA statutes. See, e.g., Wing v. Kendrick, 2009 WL 1362383, at *3 (D.Utah 2009) (Utah UFTA) (citing similar holding in Quilling v. Cristell, 2006 WL 316981, at *6 (W.D.N.C.2006)); Carnie, 2007 WL 1112591, at *15–19 (Washington State UFTA). Indeed, as a matter of "[c]ommon sense and ... statutory purpose," the Washington Supreme Court overruled an intermediate appellate court's construction of the Washington State UFTA as a statute of repose. Freitag v. McGhie, 947 P.2d 1186, 1189–90 (Wash.1997) ("[N]othing in the UFTA leads us to conclude that the UFTA sought to eliminate the common law and the former UFCA [discovery] rule that a claimant have knowledge of the fraudulent nature of a transfer before the statute of limitations begins to run.").
*5 More importantly, the Political Committees' first two objections depend on a cramped—and recently rejected—interpretation of the Receiver's authority to bring claims besides those available to the Stanford Defendants. The Fifth Circuit recently held in another assetrecovery case that the Receiver may stand in the shoes of the Stanford Defendants and also represent defrauded creditors in their recovery efforts. See Janvey v. Alguire, 628 F.3d 164, 183 (5th Cir.2010) (noting that receivers are "legal hybrids" who " 'stand[ ] in the shoes of the person for whom [they] ha[ve] been appointed,' " serve as " 'instrument[s] of the court ... acting also for the stockholders ... and creditors of the corporation,' " and "are imbued with rights and obligations analogous to the various actors required to effectively manage an estate in the absence of the 'true' owner" (quoting Armstrong v. McAlpin, 699 F.2d 79, 89 (2d Cir.1983); Drennen v. S. States Fire Ins. Co., 252 F. 776, 788 (5th Cir.1918))). Indeed, the Fifth Circuit explicitly held that the Receiver has standing to bring creditors' TUFTA claims. Alguire, 628 F.3d at 184–85.
The discovery rule's application here thus turns on whether the facts giving rise to the Receiver's claims were inherently undiscoverable to the Stanford Defendants' creditors; when the Stanford Defendants obtained knowledge of the contributions is irrelevant. Cf. Cadle Company, 136 S.W.3d at 350 ("The discovery rule defers the accrual of a cause of action until the plaintiff knew or, through the exercise of reasonable diligence, should have known of the facts giving rise to the cause of action.") (emphasis added) (citations omitted); Crook, 93 S.W.3d at 271–273 (rejecting TUFTA defendant's attempt to overturn trial court's denial of summary judgment because the defendant "did not conclusively establish when [the] Receiver knew or should have known about the allegedly fraudulent transfer" (citing Eckert v. Wendel, 40 S.W.2d 796, 797 (Tex.1931))) (emphasis added); Duran, 71 S.W.3d at 839 ("A creditor's cause of action to set aside a fraudulent conveyance accrues when the creditor acquires knowledge of the fraud, or would have acquired such knowledge in the exercise of ordinary care." (citing Eckert, 40 S.W.2d 796)) (emphasis added).FN7
FN7. See also Eckert, 40 S.W.2d at 797 ("The creditor's cause of action to annul a fraudulent conveyance accrues when the creditor acquires knowledge of the fraud or would have acquired such knowledge in the exercise of ordinary care.").
Texas courts generally apply the discovery rule when "the alleged wrongful act and resulting injury were inherently undiscoverable at the time they occurred but may be objectively verified." S.V. v. R. V., 933 S.W.2d 1, 6 (Tex.1996). "Requiring [both elements] assures that the policy underpinnings of statutes of limitations are met—balancing the possibility of stale or fraudulent claims against individual injustice." Computer Assocs. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 457 (Tex.1996). Under Texas law, "[a]n injury is inherently undiscoverable if it is by nature the type of injury that is unlikely to be discovered within the prescribed limitations period despite due diligence." Cadle Company, 136 S.W.3d at 351 (citing S. V., 933 S.W.2d at 7; Altai, 918 S.W.2d at 456). The Court has not found a succinct statement of the objective verifiability element, but it appears to block plaintiffs from avoiding statutes of limitation merely to present claims that, although undiscoverable during the limitations period, require resolution of "a swearing match between parties over facts and between experts over opinions." S. V., 933 S.W.2d at 15. In general, plaintiffs satisfy the objective verifiability element when evidence of "the alleged injury [is] indisputable," id. at 7, or established by "recognized expert opinion on a particular subject [that is] so near consensus that, in conjunction with objective evidence not based on the plaintiff's assertions," the Court may presume the injury occurred. Id. at 15. Over time, the Supreme Court of Texas "has narrowed application of the discovery rule to a class of cases in which the injury was so concealed as to be effectively undetectable by the claimant without some type of expertise, or at least until the harm was already done." Cadle Company, 136 S.W.3d at 351 (collecting cases).
*6 The facts underlying the Receiver's claims were inherently undiscoverable to the Stanford Defendants' creditors, and the creditors' injuries are objectively verifiable. Even if the Stanford Defendants' contributions were publicly disclosed, the possibility that the Stanford Defendants essentially funneled their creditors' money to the Political Committees through an elaborate Ponzi scheme was not. The Stanford Defendants' creditors would have had notice of that only after the Receiver's appointment. FN8 And, although the Receiver brings claims based on contributions made approximately a decade ago, the Receiver presents his forensic accountant's objectively verifiable—and uncontradicted—evidence showing that the Stanford Defendants operated a Ponzi scheme.FN9 The Political Committees admit receiving the contributions and provide no evidence that the Stanford Defendants' contributions were derived from untainted funds.FN10 Under these circumstances, the Court holds that the fraudulent transfers and the creditors' resulting injuries "were inherently undiscoverable at the time they occurred" and are backed by "objectively verified" information. S. V., 933 S.W.2d at 6. Accordingly, TUFTA's discovery rule applies to the Receiver's claims, and the Political Committees' first two objections fail as a matter of law.
FN8. Cf. Cadle Company, 136 S.W.3d at 353 (declining to apply section 24.010(a)(1) when the plaintiff "should have discovered the fraudulent nature of the transfer within a year after it first learned of [the transfer's] existence") (emphasis added). Uncovering the fraudulent nature of the Stanford Defendants' scheme would have required the creditors to discover, among other things, the Stanford entities' insolvency. See TEX. BUS. & COM.CODE sec. 24.005(b)(9); Warfield v. Byron, 436 F.3d 551, 558 (5th Cir.2006) (observing that Ponzi schemes are, "as a matter of law, insolvent from [their] inception" (citing Cunningham v. Brown, 265 U.S. 1, 7–8 (1924))). As the extensive use of forensic accounting in the Stanford litigation demonstrates, the creditors could not have made that discovery "without some type of expertise." Cadle Company, 136 S.W.3d at 351.
FN9. See Receiver's Summ. J.App. Ex. 2 (forensic accountant's report) [hereinafter "Van Tassel Decl."] .
[M]y findings are consistent with the SEC's allegations and James Davis's admission that the Stanford enterprise was a Ponzi scheme. [Stanford International Bank, Ltd., ("SIB") ] was insolvent ... from at least 2004 and probably for much longer, yet it continued selling CDs to the end. .... The Stanford Ponzi scheme could only be continued by selling yet more CDs and using the proceeds to pay redemptions, interest and operating expenses. Significant sums were also diverted to finance Allen Stanford's opulent life style of yachts, jet planes, travel, multiple homes, company credit cards, etc. Davis ... and other insiders were paid handsomely for their complicity. .... James Davis admitted in his rearraignment that the Stanford enterprise was a Ponzi scheme from the beginning, and I have not seen anything in the records I have reviewed to indicate otherwise.
Van Tassel Decl. at 4–5 (App. at 37–38). Among other things, Van Tassel drew her conclusions from objectively verifiable Stanford entity, customer, and third party records, worksheets, and databases "using reliable practices and methodologies that are standard in the fields of accounting and finance." Id. at 3–4 (App. at 36–37). In particular, Van Tassel's investigation discovered SIB worksheets designed to "reverse engineer" desired revenue levels by giving "fictitious revenue amounts to each category ... of a fictitious investment allocation." Id. at 7 (App. at 40).
The Court overrules the various objections to the Receiver's summary judgment evidence. Davis's guilty plea constitutes admissible evidence that Van Tassel may rely upon even if hearsay. See FED.R.EVID. 807, 803(22), & 703; In re Slatkin, 525 F.3d 805, 812–13 (9th Cir.2008) (holding that Ponzi schemer's plea was admissible under Federal Rule of Evidence 807 and, accordingly, that district court did not abuse its discretion in considering the plea as summary judgment evidence); First Nat'l Bank of Louisville v. Lustig, 96 F.3d 1554, 1576 (5th Cir.1996) ("Experts may rely on hearsay evidence in forming their opinions." (citing Moss v. Ole South Real Estate, Inc., 933 F.2d 1300, 1309 (5th Cir.1991))).
Van Tassel later supplemented her report, "[ b]ased on [her] continued investigation." App. to Receiver's Opp. to Republican's Mot. for Summ. J. at 5 [hereinafter "Van Tassel Supp. Decl."] [94–1]. Among other things, she revised her conclusion concerning the length of time the Stanford Defendants operated a Ponzi scheme from 2004 to 1999 and determined that: (1) "SIB was insolvent ... from at least 1999 forward," (2) R. Allen Stanford's income was derived "almost exclusively from the Stanford Entities, including proceeds from SIB CDs," and (3) "SFGC was insolvent ... from at least 2000 and received SIB CD funds." Id.
Although the Court denied the Republican Committees' motion to strike Van Tassel's Supplemental Declaration, it granted the Republican Committees leave to file a supplemental response. In it, the Republican Committees maintain their objections. See, e.g., Republican Committees' Supp. Reply Br. at 1 n. 1. The Court, however, overrules those objections, too. See, e.g., In re Enron Corp. Sec., Derivative & "ERISA" Litig., 491 F.Supp.2d 690, 704–05 (S.D.Tex.2007) ("[A] district court may rely on arguments and evidence presented for the first time in a reply brief as long as the court gives the nonmovant an adequate opportunity to respond." (quoting Vais Arms, Inc. v. Vais, 383 F.3d 287, 292 & n. 10 (5th Cir.2004) and collecting cases). To the extent the Republican Committees believe Van Tassel failed to reference certain methodologies and other material statements from her first declaration, Van Tassel expressly incorporated into her Supplemental Declaration "[a]ll of the opinions and statements contained" in the original. Van Tassel Supp. Decl. at 1. The Court therefore properly references Van Tassel's Supplemental Declaration.
FN10. See Receiver's Summ. J.App. Exs. 3, 5–7 (Political Committees, sans NRCC, Admissions). The NRCC later produced evidence showing that it in fact had received the sought-after contributions. See Receiver's Summ. J. Reply App. Ex. 2. The Republican Committees' failure to provide evidence concerning the Ponzi scheme's existence stems in part from its decision to forego deposing Van Tassel. See Receiver's Summ. J. Reply App. Ex. 4 at 60.
B. The Receiver Filed Within the Discovery Rule Period as a Matter of Law
"A defendant moving for summary judgment on the affirmative defense of limitations has the burden to establish that defense conclusively." Cadle Company, 136 S.W.3d at 352 (citing KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999)). To prevail, "the defendant must (1) conclusively prove when the cause of action accrued, and (2) negate the discovery rule, if it applies and has been pleaded or otherwise raised, by proving as a matter of law that there is no genuine issue of material fact about when the plaintiff discovered, or in the exercise of reasonable diligence should have discovered, the nature of its injury." Id. (citing KPMG, 988 S.W.2d at 748). "When a plaintiff knew or should have known of an injury is generally a question of fact." Id. (citing Nat'l W. Life Ins. Co. v. Rowe, 86 S.W.3d 285, 298 (Tex.App.-Austin 2002, pet. den), rev'd on other grounds, 164 S.W.3d 389 (Tex.2005); Houston Endowment, Inc. v. Atl. Richfield Co., 972 S.W.2d 156, 160 (Tex.App.-Houston [14th Dist.] 1998, no pet.)). But, "if reasonable minds could not differ about the conclusion to be drawn from the facts in the record, then the start of the limitations period may be determined as a matter of law." Id. at 352 (citing, inter alia, Childs v. Haussecker, 974 S.W.2d 31, 44 (Tex.1998)).
According to the Political Committees, the Receiver reasonably could have discovered the Stanford Defendants' contributions before February 19, 2009. As evidence, they point primarily to the ostensibly vast resources at the Receiver's disposal, publicly-available FEC records, and certain websites, news articles, and blogs discussing the Stanford Defendants' many campaign and other political contributions. Under this view, the Receiver untimely filed his complaint outside of section 24.010(a)(1)'s one-year window because he did not sue until February 19, 2010.
*7 For summary judgment purposes, however, the Republican Committees fail to show conclusively when the Receiver's cause of action accrued or when he reasonably should have discovered the contributions. The Receiver avers that he did not discover the contributions until February 20, 2009. See, e.g., Receiver's Resp. to Mot. to Compel at 6. The Political Committees have submitted no summary judgment evidence establishing that the Receiver actually discovered the contributions on February 16, 17, 18, or 19.FN11 And, because the Receiver represents the Stanford Defendants' creditors in this action, no basis exists for concluding that on his appointment the Receiver acceded to the Stanford Defendants' knowledge that their contributions to the Political Committees were fraudulent.FN12 The Court thus considers only whether it was unreasonable for the Receiver to discover the Stanford Defendants' contributions as late as February 20, 2009.
FN11. The publicly available contribution disclosures required under federal law "do not of themselves raise a presumption of constructive knowledge." Duran, 71 S.W.3d at 839. Such disclosures serve as "merely one circumstance bearing on the creditor's actual or presumed knowledge." Id. (citing Eckert, 40 S.W.2d 796). And, the Political Committees "present[ ] no argument or authorities explaining why the [Receiver] had a particular duty to investigate" FEC records or otherwise give priority to discovering the Stanford Defendants' contributions. Id .
FN12. The Court rejects the Democratic Committees' attempts to establish constructive notice by referencing testimony at congressional hearings concerning the SEC's failure to discover the Stanford Defendants' scheme despite receiving various warnings. See Notice of Supp. Authorities [ 107]. Even on the (dubious) assumption that the Stanford Defendants' creditors possessed the requisite expertise and resources to conduct a securities fraud investigation, the Democratic Committees still fail to show how the creditors could have learned of certain SEC personnel and former Stanford insiders' suspicions that the Stanford enterprise was, in reality, a Ponzi scheme. The Democratic Committees do not allege that the creditors had an obligation to follow Financial Industry Regulatory Authority ("FINRA") arbitration proceedings. And even if they did, the proffered testimony establishes that FINRA " 'sided with Stanford in every single ... case,' " id. at 3 (quoting testimony of Charles Rawls), evidence tending to support the Stanford enterprises' veneer of legitimacy. Accordingly, the Democratic Committees' supplemental authorities do not alter the Court's concluding that the discovery rule applies here.
The Court concludes that no reasonable minds could differ as to the timeliness of the Receiver's discovery. It is simply unreasonable to expect the Receiver to have discovered the $1.6 million in contributions—out of a complex, long-lasting, intentionally-concealed, international scheme involving billions of dollars and myriad transactions—in less than four days. Under the circumstances, the Receiver reasonably might have taken longer. TUFTA requires only the exercise of reasonable diligence, not omniscience.FN13 The Political Committees' limitations defenses thus fail as a matter of law. Accordingly, the Court declines to dismiss the Receiver's claims or to grant summary judgment in favor of the Republican Committees on limitations grounds.
FN13. Nor does it require clairvoyance, as the Republican Committees suggest by referencing the Receiver's pre-appointment communications with the SEC. Republican Committees' Supp. Reply Br. at 7. The proffered deposition testimony fails to show that the Receiver could have learned of the Political Committees' contributions from those discussions, see Republican Committees' Supp. Reply App. (Janvey Dep.) , and the Receiver lacked access to the Stanford Defendants' records prior to his appointment.
IV. FECA DOES NOT PREEMPT THE RECEIVER'S CLAIMS
The Republican Committees next move for summary judgment on the admittedly "novel" grounds that federal election laws preempt the Receiver's state law fraudulent transfer claims.FN14 Republican Committees' Summ. J. Reply Br. at 5. As the Republican Committees note, courts have not "squarely addressed" this argument. Id. Nonetheless, preemption caselaw and the relevant campaign finance statutes provide sufficient guidance to conclude that the Political Committees contentions fail as a matter of law.
FN14. The Democratic Committees raise the same arguments in their motion to dismiss.
The Political Committees argue broadly that FECA, BCRA, and their associated regulations "expressly preempt state law and comprehensively address what contributions are illegal, how the national committees are to handle illegal contributions, and when and how nonfederal contributions received by national political committees were to be disgorged." Republican Committees' Summ. J. Br. at 3 [91–1 ]. According to the Political Committees, the Receiver's TUFTA claims also "infringe on the domain set forth by Congress and the FEC" because, "even if [TUFTA's] purpose is completely unrelated to elections ..., as applied, [it] encroach[es] on federal law" by effectively appending Ponzi scheme-derived contributions to FECA's "comprehensive"—and therefore exclusive—"list of prohibited contributions." Id. at 4. Combined with a "regulatory scheme [that also] instructs political committee treasurers on how to assess the legality of contributions ... and sets the conditions and timetable of each contribution refund," federal law simply "leaves no room for additional 'avoidance' at the behest of state law plaintiffs." Id . at 6. And, finally, because the Stanford Defendants' made primarily "soft money" contributions, the Political Committees contend that honoring the Receiver's request would "breach the long-standing principle of separating 'soft money' from 'hard money' ... at the core of the FECA" by requiring the disgorgement of a now-prohibited type of contribution for which Congress provided two "sole" means of disposal. Id. at 8 (emphasis removed).
A. Preemption Principles
*8 Because "[a] fundamental principle of the Constitution is that Congress has the power to preempt state law," Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 372 (2000) (citations omitted), discerning and effectuating " '[t]he purpose of Congress is the ultimate touchstone' of pre-emption analysis." Cipollone v.. Liggett Grp., Inc., 505 U.S. 504, 516 (1992) (alteration in original) (quoting rule first articulated in Retail Clerks v. Schermerhorn, 375 U.S. 96, 103 (1963)). To that end, courts look to "the language of the pre-emption statute and the statutory framework surrounding it" as well as "the structure and purpose of the statute as a whole, as revealed not only in the text, but through the reviewing court's reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect" interested parties. Medtronic, Inc. v. Lohr, 518 U.S. 470, 486 (1996) (internal citations and quotation marks omitted). Federalism dictates, and courts "have long presumed[,] that Congress does not cavalierly pre-empt state-law causes of action." Lohr, 518 U.S. at 485; see also Altria Grp., Inc. v. Good, 555 U.S. 70, 129 S.Ct. 535, 543 (2008) (discussing presumption against preemption (citing, inter alia, Rice v. Sante Fe Elevator Corp., 331 U.S. 218, 230 (1947))); FN15 Karl Rove & Co. v. Thornburgh, 39 F.3d 1273, 1280 (5th Cir.1994) (noting that the presumption is "strong") (citation and internal quotation marks omitted).
FN15. Because pagination for the United States Reports remains unavailable, the Court will use the Supreme Court Reporter when citing Altria.
Explicit statutory or regulatory language provides the clearest expression of preemptive intent. See English v. Gen. Elec. Co., 496 U.S. 72, 79 (1990); Hillsborough County v. Automated Med. Lab., Inc., 471 U.S. 707, 713 (1985) (acknowledging and citing authorities holding that "state laws can be pre-empted by federal regulations as well as by federal statutes"). But, federal law also may preempt state law impliedly "[w]hen Congress intends federal law to occupy the field" regulated by the statute or "to the extent" state law creates "any conflict with a federal statute." Crosby, 530 U.S. at 372 (internal quotation marks and citations omitted). Although not "rigidly distinct" conceptually, courts generally refer to these three broad categories as express, field, and conflict (or obstacle) preemption. English, 496 U.S. at 79 n. 5. The Political Committees raise preemption arguments under all three varieties.
B. The Court Narrowly Construes FECA's Express Preemption Provision
"When Congress has considered the issue of pre-emption and has included in the enacted legislation a provision explicitly addressing that issue, and when that provision provides a reliable indicium of congressional intent with respect to state authority, there is no need to infer congressional intent to pre-empt state laws from the substantive provisions of the legislation." Cipollone, 505 U.S. at 517 (internal quotation marks and citations omitted). "[W]hen the text of a pre-emption clause is susceptible of more than one plausible reading," however, "courts ordinarily accept the reading that disfavors pre-emption." Altria, 129 S.Ct. at 543 (internal quotation marks and citation omitted). Because express and field preemption often operate "no different[ly] in practice," in many FECA cases "[t]he only real issue" for the court to determine "is the [preemption provision's] effective reach." Teper v. Miller, 82 F.3d 989, 994 n. 5 (11th Cir.1996). Here, the Court analyzes the Political Committees' express and field preemption arguments separately.
*9 1. FECA's Plain Text Does Not Expressly Preempt the Receiver's Claims.—FECA expressly "supersede[s] and preempt[s] any provision of State law with respect to election to Federal office." 2 U.S.C. sec. 453(a). As several courts have noted, section 453's plain text supports more than one plausible reading. See, e.g., Weber v. Heaney, 995 F.2d 872, 875 (8th Cir.1993) ("We recognize that sec. 453 is subject to more than one reading, and the areas preempted may vary with different readings." (citing Reeder v. Kansas City Bd. of Police Comm'rs, 733 F.2d 543, 545 (8th Cir.1984))).
Given the background assumption against preemption of state law causes of action, the Court—in line with long-standing precedent—reads section 453 to allow the Receiver's claims.FN16 Although section 453 contains expansive "any provision" language, it simultaneously limits FECA's preemptive reach with the restrictive modifier "with respect to." Unlike the phrase "relating to," which the Supreme Court has found "synonymous with 'having a connection with,' " Altria, 129 S.Ct. at 548 (quoting Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992)),FN17 "with respect to," like the phrase " 'based on,' " " 'indicates a but-for causal relationship and thus a necessary logical condition' " generally incompatible with broad preemptive intent. Id. (quoting Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 63 (2007)). Narrowly construed, then, FECA preempts only those State laws that regulate directly, either facially or as applied, "election to Federal office."
FN16. "[C]ourts have given section 453 a narrow preemptive effect in light of its legislative history." Karl Rove, 39 F.3d at 1280 & n. 18 (citation omitted) (collecting cases); see also Stern v. Gen. Elec. Co., 924 F.2d 472, 475 & n. 3 (2d Cir.1991) ("The narrow wording of [section 453] suggests that Congress did not intend to preempt state regulation with respect to non-election-related activities." (analogizing section 453 to [the Employee Retirement Income Security Act of 1974's ("ERISA"), 29 U.S.C. sec. 1144(a),] preemption provision and citing Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 7–8 (1987))).
FN17. In Morales, the Supreme Court, "[r]elying on precedents construing the pre-emptive effect of ['relating to'] in [ERISA], ... concluded that the phrase 'relating to' [in the Airline Deregulation Act of 1978, 49 App. U.S.C. sec. 1305(a)(1) ] indicate[d] Congress' intent to preempt a large area of state law to further [the statute's] purpose." Altria, 129 S.Ct. at 548 (citing 504 U.S. at 383–84).
A plain reading, however, must also take into account that FECA uses "election" and "Federal office" as terms of art. FECA defines "election" as
(A) a general, special, primary, or runoff election; (B) a convention or caucus of a political party which has authority to nominate a candidate; (C) a primary election held for the selection of delegates to a national nominating convention of a political party; and (D) a primary election held for the expression of a preference for the nomination of individuals for election to the office of President.
2 U.S.C. sec. 431(1). FECA provides that "[t]he term 'Federal office' means the office of President or Vice President, or of Senator or Representative in, or Delegate or Resident Commissioner to, the Congress." 2 U.S.C. sec. 431(3). FECA also contains specific definitions for the terms "contribution" and "expenditure" that limit their application to uses "made ... for the purpose of influencing any election for Federal office." 2 U.S.C. secs. 431(8)(A) ( "contribution") & 431(9)(A) ("expenditure").
These definitions demonstrate that TUFTA simply has nothing to do with "election to Federal office." The Political Committees concede, as they must, that TUFTA facially contains no provision that could be construed to touch on federal campaign finance or election law. See Republican Committees' Summ. J. Reply at 1, 4–5 (noting that, as opposed to a "broad" facial challenge, the Political Committees object to TUFTA "as applied"). But even as applied, the Receiver's claim implicates the covered elections and conventions only in the most tangential and immaterial way. The Court accepts that the Stanford Defendants contributed funds for election-related purposes,FN18 and presumably the Political Committees used the funds as such. The Receiver's claims, however, do not implicate those uses or attempt to regulate contributions or expenditures as made for the purpose of influencing any election for Federal office.
FN18. Of course, the Stanford Defendants' large-scale soft money contributions to both parties suggests that, like "many corporate contribut[ors]," they gave out of "a desire for access to candidates and a fear of being placed at a disadvantage in the legislative process relative to other contributors, rather than by ideological support for the candidates and parties." McConnell, 540 U.S. at 124–25.
*10 Forcing the Political Committees to disgorge funds that presumably will come from present-day monies they would rather spend on core campaign-related activities may have a connection to topical areas, such as campaign finance, regulated by FECA. " '[ b]ut that possibility does not change [the Receiver's] case from one about [fraudulent transfer] into one about' " election to Federal office. Altria, 129 S.Ct. at 546 (quoting Altria Grp., Inc. v. Good, 501 F.3d 29, 44 (1st Cir.2007)). As with the issue of candidates' personal liability for state law contract claims, FECA says nothing concerning political parties and their affiliated campaign committees' liability for a host of state statutory and common law causes of action, including fraudulent transfers. Cf. Karl Rove, 39 F.3d at 1280. Accordingly, the Court concludes that FECA does not expressly preempt the Receiver's TUFTA claim.
2. FECA's Implementing Regulations Do Not Expressly Preempt the Receiver's Claims.—An examination of the regulations related to FECA's preemption provision demonstrates that FECA's regulatory scheme, too, fails to evince an intent to preempt state law fraudulent transfer claims. The Political Committees contend that the "Effect on State law" regulations at 11 C.F.R. sec. 108.7 show that FECA's "reach extends to the regulation of campaign financing for federal elective office through federal political committees." Democratic Committees' Mot. to Dismiss at 12. Section 108.7 includes FECA's statutory express preemption provision verbatim in subsection (a) and, in subsections (b) and (c), supplemental preemption provisions elaborating on FECA's preemptive reach.
Section 108.7(b) provides that "Federal law supersedes State law concerning the (1) Organization and registration of political committees supporting Federal candidates; (2) Disclosure of receipts and expenditures by Federal candidates and political committees; and (3) Limitation on contributions and expenditures regarding Federal candidates and political committees." Although the Political Committees do not make the point clearly, they appear to argue that as applied TUFTA works here as a preempted "[l]imitation on contributions and expenditures." See, e.g., Republican Committees' Mot. for Summ. J. at 3–4.
The Court disagrees. The Receiver's claims limit neither contributions or expenditures as those terms are used in section 108 .7(b)(3). FECA's regulations, like the statute itself, rely on terms of art that render incomplete plain-text readings that are uninformed by the statute or regulation's intent in using a particular term. In relevant part, the regulations use "contribution" to refer to a "gift ... or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office," 11 C.F.R. sec. 100.52(a), and "expenditure" to refer to any "purchase, payment, distribution, loan ..., advance, deposit, or gift of money or anything of value, made by any person for the purpose of influencing any election for Federal office." 11 C.F.R. sec. 100.111(a). Neither FECA nor its regulations define the word "limitation," but the first nontautological definition supplied by Black's defines it as "a restriction." BLACK'S LAW DICTIONARY 947 (8th ed.2004). Section 108.7(b)(3), therefore, preempts only state laws that place restrictions on those contributions and expenditures "made ... for the purpose of influencing any election for Federal office."
*11 In this light, the Receiver's claims fall outside of section 108.7(b)(3)'s scope. The Receiver deploys TUFTA here to compel the Political Committees to disgorge the value of contributions made by the Stanford Defendants—with others' money—years ago,FN19 not to effect a restriction on any person's ability to influence elections to federal office. Similarly, although disgorgement will entail a "payment" by the Political Committees, they will make it for the purpose of satisfying a money judgment rather than influencing election for federal office. As a matter of plain language, therefore, section 108.7(b)(3) imposes no bar to the Receiver's TUFTA claims.
FN19. A TUFTA plaintiff seeks to recover "judgment for the value of the asset transferred," TEX. BUS. & COM.CODE sec. 24.009(b), not the specific asset itself, which in many cases—as here—left the defendant's possession long ago.
The Political Committees' section 108.7(b)(3) argument, moreover, reads the provision in isolation. Section 108.7(b)(3)'s reference to "[l]imitation[s] on contributions and expenditures" must be analyzed in light of Congress and the FEC's use of that phrasing in other places. As the Court discusses in more detail below in analyzing FECA's preemptive scope, the statute and its regulations expressly concern only certain types of "contribution and expenditure limitations and prohibitions." 11 C.F.R. sec. sec. 110.1–.20; see also 2 U.S.C. sec. 441a ("Limitations on contributions and expenditures"). Read in context, section 108.7(b)(3) expressly preempts only state laws that impose restrictions on contributions and expenditures, such as contribution caps, similar to those already provided for in FECA—not any generally applicable state law that might conceivably implicate contributions and expenditures. Cf. Karl Rove, 39 F.3d at 1280 ("Although [the defendant] attempts to stretch sec. 453 far enough to create a preemptive bar to applying state law to hold federal candidates personally liable, we cannot read FECA as extending that far."). Accordingly, the Court concludes that neither FECA nor its implementing regulations expressly preempt the Receiver's TUFTA claims.
C. TUFTA Does Not Encroach on FECA's Domain
Although the presence of an express preemption provision "means that [courts] need not go beyond [the provision's] language to determine whether Congress intended the [statute] to pre-empt at least some state law, [they] must nonetheless identify the domain expressly pre-empted by that language." Lohr, 518 U.S. at 484 (internal quotation marks and citations omitted). In this case, that requires the Court to determine whether other indicia demonstrate that Congress intended FECA to have broader preemptive scope than that established in the Court's express preemption analysis above.FN20 Such an "intent may be inferred from a 'scheme of federal regulation ... so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it,' or where an Act of Congress 'touch[es] a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject." English, 496 U.S. at 79 (quoting Rice, 331 U.S. at 230 (1947)) (alterations in original). " 'Where ... the field which Congress is said to have pre-empted' includes areas that have 'been traditionally occupied by the States,' " however, "congressional intent to supersede state laws must be 'clear and manifest.' " Id . (quoting Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977)) (alterations in original).
FN20. Because "Congress' enactment of a provision defining the pre-emptive reach of a statute implies that matters beyond that reach are not pre-empted," the Supreme Court has suggested that a statute's "pre-emptive scope ... is governed entirely by the express [statutory] language." Cipollone, 505 U.S. at 517; see also Chamber of Commerce v. Whiting, No. 09–115, slip op. at 14 (Sup.Ct. May 26, 2011) ("Congress's 'authoritative statement is the statutory text, not the legislative history.' " (quoting Exxon Mobil Corp. v. Allapattah Serv., Inc., 545 U.S. 546, 568 (2005))). The Court agrees as a matter of principle, but resorts to field preemption analysis here because FECA's preemptive provision supports more than one plausible plain-text reading. "[FECA's] preemption statute, then, is not so clear (if any statute ever is) as to preclude [the Court] from consulting the legislative history." Reeder, 733 F.2d at 545. [ Continued In Next Post ]
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