What's Good for American Apparel...

Published on February 6, 2008
by Michael Schrimpf, Michael Darner, Steve Hoersting, Brad Smith

On Super Tuesday, the homepage for retailer American Apparel featured company "endorsements" of Senators Barack Obama and John McCain. The website has since reverted back to a less political front page, but not before Politico questioned the applicability of campaign finance laws to American Apparel's "endorsements."

An FEC spokesman would not comment on the specifics, but told Politico, "In general terms corporations are not permitted to use their websites that are available to the general public for expressly advocating the election or defeat of federal candidates.... Similarly, specific email communications with employees depends on the status of the people receiving the email - if they qualify as part of the company's 'restricted class' - i.e. those who could be solicited by the company PAC to make contributions, then the email would in general terms be ok, but only for employees who qualify (generally managerial employees or stockholders)."

There is no question that immigration has long interested American Apparel.  Beginning in 2003 the company produced advertisements advocating for immigration reform.  In this vein, American Apparel does not seem to differ from other "socially conscious" corporations, like Patagonia and Ben & Jerry's, that engage in issue advocacy.

The legal question, ever murky in campaign finance law, is when does permissible issue advocacy crossover into impermissible political activity?

American Apparel's email, assuming it was sent only to members of its restricted class, is a legally permissible communication under 11 C.F.R. 114.3(a), which states, "Corporations and labor organizations may make communications on any subject, including communications containing express advocacy, to their restricted class or any part of that class. Corporations and labor organizations may also make the communications permitted under 11 CFR 114.4 to their restricted class or any part of that class."

The company's support of McCain and Obama on its website may very well also be permissible activity.

If American Apparel had broadcast its advocacy, it likely would have been barred by the speech restricting electioneering communication provision of McCain-Feingold. But, American Apparel notably did not broadcast, and instead, simply used it website to highlight their candidate preference.

11 CFR sec. 100.73 states, "Any cost incurred in covering or carrying a news story, commentary, or editorial by any broadcasting station (including a cable television operator, programmer or producer), Web site, newspaper, magazine, or other periodical publication, including any Internet or electronic publication, is not a contribution unless the facility is owned or controlled by any political party, political committee, or candidate

While the regulation doesn't address corporate website communication explicitly, a more than compelling case can be made for American Apparel by answering two questions:

1. Is it a website? (yes)
2. Does it offer a commentary? (yes)

If nothing else, all this should underscore the imprudence of campaign finance laws.  American Apparel was acting in good faith and consistent with its core belief in immigration reform by highlighting Obama and McCain on its website.