UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


PUB OFF CORP

v.

CLINTON PRES COM


99-7002a

D.C. Cir. 1999


*	*	*


Wald, Circuit Judge: Appellants, the Public Office Corpo- ration
("POC") and its directors, provided computer systems 


services to appellees, the Clinton for President Committee  and its
auxiliaries ("Committee"). As part of a routine audit  mandated by
federal election campaign law, auditors for the  Federal Election
Commission ("FEC" or "the Commission")  issued an interim report in
which they identified possible  discrepancies in the Committee's
accounts. In response to  this audit report, the Committee attributed
these disparities  in part to the actions of an unnamed computer
vendor.  Alleging that the Committee had made libelous statements 
about them in its response to the report, appellants filed suit. 
Appellees moved to dismiss the libel suit under 2 U.S.C.  s 437d(c),
which provides statutory immunity against civil  liability for
disclosing information "at the request of the  Commission." 2 U.S.C. s
437d(c). This is an appeal from  the district court's order dismissing
the suit. Appellants  argue that the allegedly libelous statements
made by the  Committee were not immune because they were not made "at 
the request of the Commission." Id. We hold in conformity  with the
district court that the Commission's audit report did  constitute a
request for information. Thus, the Committee's  statements in response
to that report were immunized under  s 437d(c).


I. Background


Appellants, POC and its directors, William and Patricia  Anderson,
provided data processing services and assistance in  complying with
federal election laws to political campaigns.  Appellees, the Clinton
for President Committee and the Clin- ton/Gore '92 General Election
Compliance Fund, retained  POC to provide computer systems support
during the pri- mary and general election campaigns. As is customary
under  federal election campaign law, the FEC conducted an audit of 
the Committee's accounts; in their report the auditors found 
discrepancies. In response to an interim report issued by the  FEC's
auditors, the Committee attributed some of these  disparities to
errors made by one of its vendors. Alleging  that their professional
reputation had been damaged by three  statements, POC and its


for libel against the Committee and its attorney.1 This  appeal arises
from an order issued by the district court  granting the appellees'
motion to dismiss appellants' libel suit  under 2 U.S.C. s 437d(c),
which provides statutory immunity  against civil liability for
disclosing information "at the request  of the Commission." 2 U.S.C. s


The Committee received federal election campaign funds  under the
Presidential Primary Matching Payment Account  Act ("PPMPAA"), 26
U.S.C. s 9031 et seq. As a condition of  receiving such funds, a
campaign committee is required to  "agree to an audit and examination
by the Commission." 26  U.S.C. s 9033(a)(3). The PPMPAA and
implementing regu- lations set out a mandatory procedural framework
for con- ducting an audit. See 2 U.S.C. s 9038(a); 11 C.F.R. s 9038.1.
 The auditing process involves four steps.2 First, the Commit- tee
must submit documentation to the FEC's auditors to be  utilized in
conducting the audit. Second, the audit staff  releases an interim
audit report detailing its preliminary  findings and recommendations.
See 11 C.F.R. s 9038.1(c)(1).  These recommendations may include
tentative repayment  amounts, if the Committee is found to have
received federal  funds in excess of actual eligibility. Third, the
Committee  "will have an opportunity to submit, in writing ... legal
and  factual materials disputing or commenting on the contents of  the
interim report." 11 C.F.R. s 9038.1(c)(2). Fourth, after 
consideration of the Committee's responses, the Commission 




__________

n 1 The Clinton/Gore '92 General Election Compliance Fund was  formed
by the Committee to ensure compliance with legal and  accounting
functions for the 1992 Clinton/Gore election campaign.  For all
purposes relevant to this case, the General Election Compli- ance Fund
operated in conjunction with the Committee. Similarly,  Carolyn
("Lyn") Utrecht was an attorney employed by the Commit- tee with
responsibility for FEC audit matters. Thus, the term  "Committee" when
used in this opinion is inclusive of the General  Election Compliance


2 This description of the auditing process is based on the 1994 
version of section 9038.1. In 1995, section 9038.1 was revised to 
replace the interim audit report with an exit conference memoran- dum.
All parties agree, however, that the 1994 version is applicable  to
the instant case.


publicly releases its final audit report, which may differ from  its
interim audit report. The Commission may publish a  committee's
responses in its own final report.


In this case, the interim audit report discussed several  alleged
discrepancies in the Committee's accounts, including  excessive
redesignations. Contributions made to a primary  campaign may, in
certain limited circumstances, be trans- ferred to the general
election campaign by written redesig- nation. See 11 C.F.R. ss 103.3,
110.1, 110.2, and 9003.3. The  audit staff found that in many
instances, the "redesignations  pursued by the Committee were not
permissible." Joint  Appendix ("J.A.") at 250.


Moreover, according to the report, the excessive redesig- nation effort
caused the Committee to receive matching funds  in excess of
entitlement. By redesignating funds from the  primary election
campaign to the general election campaign,  it appeared that the
Committee did not have sufficient private  funds in its primary
campaign to meet its financial obli- gations. J.A. at 248-50.
Therefore, the primary campaign  remained eligible for matching funds.
However, the Commis- sion staff contended that most of the funds were
improperly  redesignated and should have been considered available to 
the primary campaign to discharge its financial obligations.  Thus, it
concluded that "the Candidate had received matching  funds in excess
of his entitlement." J.A. at 249. Given this  finding, the report
recommended that "the Committee pro- vide evidence to demonstrate that
it did not receive matching  funds in excess of entitlement." J.A. at


The issue in this case is whether three statements about  POC that the
Committee made in its response to the interim  audit report fall
within the statutory grant of immunity for  information given "at the
request of the Commission." 2  U.S.C. s 437d(c). The first alleged
defamatory statement  involves the Committee's response to the
report's finding that  the Committee had received excessive public
funds, primarily  due to the volume of improper redesignations. Since
the  propriety of this finding depended on whether the Committee  had
improperly conducted redesignations, the Committee  sought to explain
its redesignation efforts. Agreeing that 


many redesignations were "superfluous," J.A. at 101, the  Committee
referred to an unnamed vendor whose "contract  ... included an
incentive for the vendor to treat contributions  as though additional
documentation or affidavit was neces- sary." J.A. at 100. This
statement was later published by  the FEC in its final audit report.
Contending that this  statement was libelous, POC asserted that the
clear implica- tion was that it had conducted improper redesignations
to  augment its profits. POC further argued that although the  vendor
was not named, it could easily be identified since a  vendor list was
published with the final report.


In the second and third "defamatory" statements, appel- lants also
alleged that the Committee essentially tried to shift  blame for its
accounting discrepancies to POC. The second  statement concerned the
Committee's assertion that discrep- ancies in its account balances
were "essentially due to errors  by one of the Committee's computer
vendors who failed to  reconcile her records." J.A. at 63. POC
asserted that while  she was not named, the "her" was an obvious
reference to its  director, Patricia Anderson, who performed these
functions  and was widely known to have done so. In the third state-
ment, the Committee explained recordkeeping errors by stat- ing that
"[d]uring this period, the Committee experienced  significant
difficulties with the vendor preparing the Primary  Committee's


In response to the lawsuit, appellees filed a motion arguing  that 2
U.S.C. s 437d(c), the provision that provides statutory  immunity for
information disclosed at the FEC's request,  mandated dismissal. The
district court granted the defen- dant's motion to dismiss, finding
that the statements made by  the Committee to the FEC were in fact
"privileged against  civil liability under s 437d(c)." Memorandum
Opinion at 13  (reprinted in J.A. at 18). The court determined that  s
437d(c) set forth a "two-fold test" for immunity: "the  statements
must be (1) at the request (2) of the Commission."  Memorandum Opinion
at 7 (reprinted in J.A. at 12). The  court determined that the report
"contain[ed] unequivocal  requests for information." Memorandum
Opinion at 9 (re- printed in J.A. at 14). The court also held that the
second  prong of s 437d(c) was satisfied, rejecting the argument that


the audit staff was a separate entity from the Commission.  However,
the court declined to accept appellees' ambitious  contention that all
audit submissions necessarily constitute  responses to Commission
requests that fall within s 437d(c)'s  scope.


On appeal, appellants assert that the statements do not  meet s
437d(c)'s bifurcated test. Noting that s 437d(c)'s  grant of immunity
is contingent on the issuance of a "re- quest," appellants first
contend that the statements in the  Commission's interim report were
not "requests." Appellants  also assert that because the report was
not issued by the  Commission, but by its audit staff, which is an
entity distinct  from the Commission, the statements fail to meet the
second  prong of s 437d(c)'s test.


II. Discussion


The viability of appellants' libel suit turns on whether the  allegedly
defamatory statements fall within the immunity  provision's scope. See
2 U.S.C. s 437d(c). Recalling the  Supreme Court's holding that "in
any case of statutory con- struction, our analysis begins with the
language of the stat- ute," we turn to the text of s 437d(c). Hughes
Aircraft Co. v.  Jacobson, -- U.S. --, 119 S.Ct. 755, 760 (1999)
(internal  quotation marks omitted).


That text is straightforward. Section 437d(c) provides that  "n[o]
person shall be subject to civil liability to any person  (other than
the Commission or the United States) for disclos- ing information at
the request of the [Federal Election]  Commission." 2 U.S.C. s
437d(c). Thus, the contested state- ments must be made in response to
a request by the Commis- sion.


A. "At the Request" Of We first determine whether the statements in
this case  were made "at the request" of the FEC and in that pursuit, 
we begin with a careful reading of the FEC's interim audit  report. If
we find there are such requests we will decide  whether the
Committee's statements were responsive to  them. The first disputed
statement is as follows:


The auditors focused here on whether these contribu- tions were
properly redesignated to the Compliance  Fund, but, in fact, in order
to have been considered  primary contributions in the first instance,
the regula- tions required that they be designated in writing for the 
primary. Very few of them were so designated. The  Committee's vendor
who processed these contributions  treated them as "redesignations"
even though they were  not. That vendor's contract had been negotiated
early in  the campaign by the Committee's original counsel and 
included an incentive for the vendor to treat contribu- tions as
though additional documentation or affidavit was  necessary. Under the
contract, the vendor received an  additional amount per contribution
for which additional  documentation or an affidavit was obtained. The
Com- mittee staff did not see these contributions until well  after
the election, but relied solely on the vendor's exper- tise to handle
the contributions appropriately.


J.A. at 100 (emphasis in original).


That statement directly responds to that portion of the  interim report
in which the audit staff contended that the  Committee was conducting
impermissible redesignations. In  a section entitled "Receipt of
Matching Funds in Excess of  Entitlement," the interim audit report
finds that the Commit- tee received funds in excess of its actual
eligibility, primarily  due to the volume of improper redesignations.
J.A. at 247- 51.3 In its conclusion to that section, the audit staff
issued  the following recommendation:




__________

n 3 The auditors found that:


[d]uring the period when the redesignations were being sought  for the
contributions deposited into the Suspense Account, the  Committee
continued to request and receive matching fund  payments based on ...
statements that apparently did not  recognize contributions deposited
into the suspense ac- count.... Therefore, as of September 2, 1992,
the Candidate  had received matching funds in excess of his


J.A. at 248-49.


The Audit staff recommends that within 30 calendar days  of service of
this report, the Committee provide evidence  to demonstrate that it
did not receive matching funds in  excess of entitlement. Absent such
a demonstration, the  Audit staff will recommend ... that the
Committee  repay $3,674,353 to the U.S. Treasury.


J.A. at 251 ("Recommendation Ten") (emphasis added).


Appellants' contention that this recommendation is not a  request is
hardly credible. Surely a recommendation that the  committee "provide
evidence" to demonstrate that it was not  violating the law is a
genuine request for more information in  ordinary parlance and
especially in the context of a govern- ment audit.


Moreover, even if this language were not sufficiently clear,  the
transmittal letter accompanying the audit report removes  all doubts
that Recommendation Ten was in fact a "request."  Prominently featured
in the letter accompanying the report is  the following instruction:


This report is to formally advise you of the findings and 
recommendations of the Audit staff resulting from the  audit of the
Clinton for President Committee. You are  requested to comply with the
recommendations by May 4,  1994.


J.A. at 205 (emphasis added). Recommendation Ten, read in  conjunction
with the transmittal letter, clearly confirms that  the report did in
fact contain a specific request to which the  Committee was responding
in its first disputed statement.4


Appellants accurately point out that the other two disputed  statements
were responsive to sections of the report in which  the audit staff
recommended that no further action be taken.  See J.A. at 211, 212.
From that fact, appellants argue that 




__________

n 4 Appellants also argue that even if Recommendation Ten does 
constitute a request, the Committee's response is not material to  the
request. We may easily dismiss this contention. To the extent  that
the audit staff asserted that the excessive payments were due  to
unnecessary redesignations, appellees quite reasonably chose to 
address the necessity of such redesignations.


there is no need for any response and no reason to construe  the audit
report as calling for one. The second statement in  which the
Committee attributed misstatements in its account- ing to errors by an
unnamed computer vendor, was made in  response to a section of the
report entitled "Misstatement of  Financial Activity." J.A. at 210-11.
This section delineated  discrepancies in the Committee's accounts and
charged the  Committee with failure to maintain supporting
documentation  that might have explained away these discrepancies.
While  this section of the audit report does not so clearly cry out
for  a response as Recommendation Ten, it confirms a clear 
implication of past wrongdoing by the Committee.


For example, the audit report notes that although the  Committee
claimed to have identified all disbursements in its  pre-audit
inventory, further research by the auditors revealed  "significantly
different" disbursements. J.A. at 210-11.  Moreover, the report states
that although the Committee  later corrected these misstatements, it
failed to maintain the  supporting documentation that would have
allowed the audit  staff to "identify the reasons for the
misstatements." J.A. at  211. The Committee could quite reasonably
construe such a  suggestion of accounting discrepancies and shoddy
record- keeping as a request for explanatory information, in the 
absence of which the auditors' tentative conclusion of wrong- doing
would remain on the record, even if no remedies were  sought. The
Committee's issuance of an explanatory state- ment in an effort to
account for the discrepancies falls within  the scope of a


The third statement in which the Committee referred to  difficulties
with an unnamed vendor who prepared its reports,  was made in response
to a section entitled "Itemization of  Receipts." J.A. at 211-12.
Although this section of the audit  report was admittedly more neutral
so far as any implication  of wrongdoing was concerned than the
section just described,  it essentially highlighted the Committee's
failure to itemize  its records. For example, the report noted that a
significant  percentage of the contributions which required
itemization  were not correctly itemized. J.A. at 211. Given the
inevita- bly tense atmosphere of an audit, especially one of a


tee which does ongoing business with the agency and whose  members can
be expected to be repeat supplicants for federal  money, the auditee
will understandably feel it imperative to  provide answers to
questions raised by the audit report.  Additionally, it bears noting
that the report was an interim  one. Even the recommendation for no
further action would  not become final until the Commission acted upon
it--hence  the felt need of the subject to provide any exculpatory 


Importantly, in this case, there can be little question that  the
Committee's statements were relevant and responsive to  the
Commission's concerns. There is then no need to even  consider
appellees' contention that any information submitted  within the
context of an audit is immunized irrespective of  whether it is
germane to the Commission's report. The  district court reasonably
rejected appellees' assertion of an  immunity so broad that it would
include even gratuitous  information that was not responsive to the


In sum, we hold that the Commission's report did indeed  constitute a
request for information in the three areas dis- cussed and thus, the
Committee's statements in response to  these requests are immunized
under s 437d(c). Having  found that the statements meet s 437d(c)'s
first request  prong, we discuss briefly whether these requests were
issued  at the request "of the Commission."


B. "Of the Commission"


Appellants allege that even if the statements were respon- sive to
requests contained in the audit report, this report was  not issued by
the Commission itself but by its audit staff,  which under the statute
constitutes a distinct entity.5 Thus, 




__________

n 5 Appellants assert that there is a clear distinction between the 
Commission and its staff on the face of the statute. They emphasize 
that the statutory provision establishing the FEC states that it 
consists of "the Secretary of the Senate and the Clerk of the House 
of Representatives or their designees, ex officio and without the 
right to vote, and six members appointed by the President, by and 
with the advice and consent of the Senate." 2 U.S.C. s 437c(a)(1).  On
appellants' reading, any person who is not included within this 


appellants assert that even if the report did contain requests,  the
audit staff had no power to confer immunity under  s 437d(c), since
any immunity-conferring requests must be  issued by the Commission
itself. Appellants' strained distinc- tion between the FEC and the
staff working under its  direction simply does not cut the mustard. We
agree with  the district court that "it was the Commission, acting
pursu- ant to its statutory authority, that conducted the interim 
audit." Memorandum Opinion at 11 (reprinted in J.A. at 16).6


III. Conclusion


For the foregoing reasons, we hold that the Committee's  statements are
immunized under s 437d(c). The decision of  the district court is


Affirmed.




__________

n definition may not act on behalf of the Commission, so far as  s
437d(c) is concerned. The district court dismissed appellants' 
argument noting that "this definition describes the membership of  the
Committee and not its duties. By contrast the focus of this case  is
the functions of the Commission." Memorandum Opinion at 10  (reprinted
in J.A. at 15).


6 See, e.g., 2 U.S.C. s 438(b) ("The Commission may conduct  audits and
field investigations ... [p]rior to conducting any audit  ... the
Commission shall perform an internal review of reports  filed by
selected committees."); 26 U.S.C. s 9038(a) ("After each  matching
payment period, the Commission shall conduct a thorough  examination
and audit."); 26 U.S.C. s 9040(b) ("The Commission is  authorized ...
to institute actions ... to seek recovery of any  amounts determined
to be payable to the Secretary as a result of an  examination and
audit made pursuant to section 9038."); 11 C.F.R.  s 9038.1 (c)(1)
(1994) ("The Commission will issue an interim audit  report to the
candidate and his or her authorized committee."); 11  C.F.R. s
9038.1(c)(3) ("The Commission will consider any written  legal and
factual materials submitted by the candidate or his or her  authorized
committee.") (emphasis added in all citations).