115 F. Supp. 3d 457
S.D.N.Y.2015Background
- Citizens United (501(c)(4)) and Citizens United Foundation (501(c)(3)) solicit donations nationwide and are registered charities required to file New York CHAR500 annual reports.
- IRS Form 990 Schedule B (identifying donors giving $5,000+) is confidential under federal law but is part of federal Form 990 submissions; New York regulation 13 NYCRR § 91.5 requires charities to attach a “complete” Form 990 with schedules to CHAR500, which the Attorney General interprets to include Schedule B (the "Schedule B policy").
- Plaintiffs historically did not file Schedule B with New York; after a 2012 compliance review the NY Charities Bureau notified plaintiffs in 2013 their filings were incomplete for lacking Schedule B.
- Plaintiffs sued seeking a preliminary injunction, arguing the Schedule B policy violates the First Amendment (speech and association; prior restraint), the State Administrative Procedure Act (SAPA), federal preemption, and due process.
- The Attorney General defends the policy as necessary to oversee charities, detect fraud/abuse, and enforce solicitation laws; he keeps Schedule B confidential and does not disclose it under FOIL.
- The district court denied the preliminary injunction, finding plaintiffs unlikely to succeed on the merits and not shown to face irreparable harm.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| First Amendment — unconstitutional burden from disclosure requirement | Schedule B disclosure to the state chills donors, infringes freedom of association and speech | Schedule B aids enforcement of solicitation laws and fraud detection; risk of public disclosure is speculative; records are kept confidential | Denied — the policy survives exacting scrutiny: substantial relation to important government interests and only minimal burdens on speech/association |
| First Amendment — prior restraint (unbridled discretion) | Article 7‑A and § 91.5 give the AG unbounded discretion to demand information as a precondition to solicitation | Regulation 13 NYCRR § 91.5 and CHAR500 create narrow, definite, closed standards limiting discretion | Denied — statute plus binding regulation and implementing practice cabin discretion; not an unconstitutional prior restraint |
| Due process (fair notice / change in interpretation) | AG reversed prior interpretation without notice and began enforcing Schedule B in 2012–13, depriving charities of fair warning | AG consistently interpreted § 91.5 to require Schedule B; CHAR500 checklists and instructions (since 2006/2010) put filers on notice | Denied — record shows longstanding interpretation and prior notice; later enforcement does not violate due process |
| Federal preemption (and SAPA challenge overlap) | Federal statutes create a process for states to obtain Schedule B from IRS and protect its confidentiality; NY policy circumvents that scheme; SAPA requires rulemaking for new requirements | Federal law does not clearly preclude states from obtaining Schedule B directly from charities; Schedule B requirement is an agency interpretation, not a new rule subject to SAPA notice-and-comment | Denied — no clear congressional intent to preempt state collection; NY practice is an interpretation of an existing rule, not an unpromulgated rule |
Key Cases Cited
- Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) (standard for preliminary injunction)
- Citizens United v. Federal Election Commission, 558 U.S. 310 (2010) (exacting scrutiny for disclosure rules affecting political speech)
- John Doe No. 1 v. Reed, 561 U.S. 186 (2010) (exacting scrutiny and facial/as-applied framing in disclosure cases)
- Center for Competitive Politics v. Harris, 784 F.3d 1307 (9th Cir. 2015) (upholding a similar state Schedule B requirement; persuasive authority)
- Village of Schaumburg v. Citizens for a Better Environment, 444 U.S. 620 (1980) (charitable solicitation protected by First Amendment)
- Buckley v. Valeo, 424 U.S. 1 (1976) (recordkeeping and disclosure aid enforcement)
- City of Lakewood v. Plain Dealer Publishing Co., 486 U.S. 750 (1988) (prior restraint doctrine—unbridled discretion)
- Forsyth County v. Nationalist Movement, 505 U.S. 123 (1992) (licensing/prior restraint standards)
- Riley v. National Federation of the Blind of N.C., Inc., 487 U.S. 781 (1988) (state interests in regulating charities)