203 F.Supp.3d 397
S.D.N.Y.2016Background
- Plaintiffs Citizens United (a 26 U.S.C. §501(c)(4) social-welfare org) and Citizens United Foundation (a §501(c)(3) charity) challenge NY Attorney General Schneiderman's rule requiring charities to file unredacted IRS Form 990 Schedule B (donor names and amounts) with the AG before soliciting in New York.
- Plaintiffs historically filed only the first page of Schedule B (no donor info); in 2012 the AG asserted charities must file unredacted Schedule B and sent deficiency notices to plaintiffs; plaintiffs refused and faced possible loss of registration and fines up to $100/day.
- Plaintiffs moved for a preliminary injunction (denied previously); they amended the complaint and the AG moved to dismiss under Fed. R. Civ. P. 12(b)(6).
- Claims asserted: First Amendment (prior restraint, facial and as-applied challenges to Schedule B disclosure), procedural due process (change in policy without notice), federal preemption (IRC), and a state-law ultra vires challenge to regulate a §501(c)(4).
- Court applied Twombly/Iqbal plausibility standard, treated disclosure requirement under exacting scrutiny, and evaluated ripeness for the due-process claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Prior Restraint | AG's Schedule B requirement and alleged policy change create an unconstitutional prior restraint and unbridled discretion | Statute + regulations prescribe a closed set of filing requirements; discretion is sufficiently cabined; policy change does not show unconstitutional discretion | Dismissed without prejudice — plaintiffs failed to plausibly allege unconstitutional discretion or nonuniform application |
| Facial First Amendment Challenge | Requiring unredacted Schedule B is unconstitutional in all applications | Disclosure substantially serves important state interests (fraud detection, regulation of charities) and is a longstanding, legitimate disclosure regime | Dismissed without prejudice — failed to plead that no circumstance exists where the rule would be valid; exacting scrutiny satisfied on the pleadings |
| As‑Applied First Amendment Challenge | Disclosure will cause donors harassment, chilling, and loss of association/ donations for Citizens United | Plaintiffs offer only conclusory allegations; no past instances of harassment; AG unlikely to publish donors publicly as alleged | Dismissed without prejudice — failed to plausibly allege a reasonable probability of threats, harassment, or reprisals |
| Procedural Due Process (Fox) | AG changed long-standing practice without notice, exposing plaintiffs to penalties and loss of registration | Plaintiffs have not suffered fines or revocation; penalties discretionary; claim not yet ripe | Dismissed for lack of subject-matter jurisdiction (unripe) — prudential and constitutional ripeness lacking |
| Federal Preemption | IRC and IRS disclosure regime precludes NY from demanding Schedule B or circumvents federal process | Congress did not clearly displace state authority; §6104 limits IRS disclosure but does not bar state collection from organizations themselves | Dismissed with prejudice — no clear and manifest congressional purpose to preempt state requirement |
| Ultra Vires / State‑law Claim | (Citizens United) §501(c)(4) social-welfare orgs are not "charitable organizations" and thus outside AG's authority | NY statute and regulations reasonably encompass organizations promoting social welfare and education; AG can define "charitable" within delegation | Dismissed with prejudice — social welfare organizations fall within NY's definition and AG authority |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for pleadings)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- Doe v. Reed, 561 U.S. 186 (exacting scrutiny for disclosure; limits on facial challenges)
- Citizens United v. Federal Election Commission, 558 U.S. 310 (disclosure doctrine; as-applied standard re: threats/harassment)
- NAACP v. Alabama, 357 U.S. 449 (freedom of association protection against compelled disclosure)
- FCC v. Fox Television Stations, 132 S. Ct. 2307 (due-process concerns for unannounced policy changes; fair notice)
- Forsyth County v. Nationalist Movement, 505 U.S. 123 (limits on licensing discretion; standards required)
- City of Lakewood v. Plain Dealer Publishing Co., 486 U.S. 750 (prohibition on unbridled discretion in licensing)
- Buckley v. Valeo, 424 U.S. 1 (disclosure and recordkeeping as means to detect violations)
- Riley v. National Federation of the Blind of N.C., 487 U.S. 781 (state may require fundraisers to disclose information for fraud detection)