ORDER FOR JUDGMENT IN FAVOR OF PLAINITFF
For the reasons that follow, this Court grants Americans For Prosperity Foundation’s (“AFP”) motion for a permanent injunction to enjoin the Attorney General of California from demanding its Schedule B form. After conducting a full bench trial, this Court finds the Attorney General’s Schedule B disclosure requirement unconstitutional as-applied to AFP.
Plaintiff AFP is a non-profit corporation organized under Internal Revenue, Code section 501(c)(3) that funds its activities by raising charitable contributions frоm donors throughout the country, including in California. California state law requires charitable organizations, such as AFP, to file a copy of its IRS Form 990, including its Schedule B, with the State Registry. See e.g., Cal. Code Regs. tit. 11, § 301. An organization’s Schedule B includes all the names and addresses of every individual nationwide who donated more than $5,000 to the charity during a given tax year. While a nonprofit’s federal tax return, IRS Form 990, must be made available to the public, an organization’s Schedule B does nоt. 26 U.S.C. § 6104(b), (d)(3)(A).
Since 2001, AFP has filed its Form 990 as part of its periodic reporting with the Attorney General, without including its Schedule B. For each year from 2001 through 2010, the Attorney General accepted AFP’s registration renewal and listed AFP as an active charity in compliance with the law. In a letter dated March 7, 2013, the Attorney General declared AFP’s 2011 filing incomplete because it did not include the organization’s unredacted Schedule B. In December 2014, AFP brought the present aсtion seeking an order preliminarily enjoining the Attorney General from demanding its Schedule B. Among other claims, AFP argued that the California law requiring disclosure of its Schedule B to the Attorney General was facially unconstitutional. AFP also argued that the disclosure requirement was unconstitutional as-applied to it.
On February 23, 2015, this Court granted AFP’s motion for preliminary injunction, finding that the Plaintiff had raised serious questions going to the merits of its case and demonstrated that the balance of hardships sharply favored Plaintiff. That decision was appealed by the Attorney General and remanded by the Ninth Circuit. Americans for Prosperity Found. v. Harris,
Although AFP argues that this Court is not bound by the Ninth Circuit’s prior rulings on its facial challenge since the record before the Court is much denser now than it was then, the “strong medicine” of facial invalidation need not and generally should not be administered
I.
Courts review First Amendment challenges to disclosure requirements under an “exacting scrutiny” standard. John Doe No. 1 v. Reed,
A. Strength of Governmental Interest
Defendant argues that the state law requiring that all charities file a complete copy of IRS Form 990 Schedule B places no actual burden on First Amendment rights and is substantially related to the Attorney General’s compelling interest in enforcing the law and protecting the public. Before the Ninth Circuit, as well as this Court, the Attorney General has claimed that her use for Schedule B information is compelling since that information reveals not just how much revenue a charity receives, but also who is donating it and how it is being donated. Additionally, the Attorney General claims that such information allows her to determine whether an organization has violated the law, including laws against self-dealing, improper loans, interested persons, or illegal or unfair business practices. The Court finds two issues with this stated purpose. First, over the course of trial, the Attorney General was hard pressed to find a single witness who could corroborate the necessity of Schedule B forms in conjunction with their office’s investigations. And second, even assuming arguendo that this information does genuinely assist in the Attorney General’s investigations, its disclosure demand of Schedule B is more burdensome than necessary.
i. Sufficiently Important Governmental Interest
Although Center for Competitive Politics found that the Attorney General’s “disclosure requirement bears a ‘substantial relation’ to a ‘sufficiently important’ government interest,” this Court, unlike the Ninth Circuit, had the benefit of holding a bench trial in the matter and was left unconvinced that the Attorney General actually needs Schedule B forms to effectively conduct its investigations.
ii. Narrowly Tailored
The Attorney General argues that exacting scrutiny does not require the least restrictive means. This contention is supported by the Ninth Circuit’s previous review in this case. Americans for Prosperity Found.,
In the context of elections and campaign finance disclosure laws, which have been the majority of cases in recent years applying exacting scrutiny, unique consideratiоns apply that specifically shape and define the application of exacting scrutiny. See Ctr. for Competitive Politics,
B. Actual Burden on First Amendment Rights
Setting aside the Attorney General’s failure to establish a substantial relationship between her demand for AFP’s Schedule B and a compelling governmental interest, AFP would independently prevail on its as-applied challenge because it has proven thаt disclosing its Schedule B to the Attorney General would create a burden on its First Amendment rights. While the Ninth Circuit in Center for Competitive Politics foreclosed any facial challenge to the Schedule B requirement, it specifically left open the possibility that a party could show “’a reasonable probability that the compelled disclosure of [its] contributors’ names will subject them to threats, harassment, or reprisal from either Government officials or private parties’ that would warrant relief on an as-applied challenge.”
During the course of trial, the Court heard ample evidence establishing that AFP, its employees, supporters and donors face public threats, harassment, intimidation, and retaliation once their support for and affiliation with the organization becomes publicly known. For example, Lucas Hilgemann, Chief Executive Officer of
The Court also heard from Mark Holden, General Counsel for Koch Industries, who testified that Charles and David Koch, two of AFP’s most high-profile associates, have faced threats, attacks, and harassment, including death threats. (Holden Test. 2/23/16 Vol. II, p. 30:17-35:13). Not only have these threats been made to the Koch brothers because'of their ties with AFP, but death threats have also been made against their families, including their grandchildren. (Id. at 31:3-10). Mr. Pope has faced similar death threats due to his affiliation with AFP and has even encountered boycotts of his nationwide stores, Variety Wholesalers. (Pope Test. 2/24/16 Vol. II, p. 22:8-15, 29:5-17). In December 2013, about 130 protestors picketed in front of his stores, in part, because of his affiliation with AFP. (Id. 32:24-33:2). As a result of these boycotts, threats, and exposure, Mr. Pope testified that he considered stopping funding or providing support to AFP. (Id. at 50:1-3).
The Court can keep listing all the examples of threats and harassment presented at trial; however, in light of these threats, protests, boycotts, reprisals, and harassment directed at those individuals publically associated with AFP, the Court finds that AFP supporters have been subjected to abuses that warrant relief on an as-applied challenge. And although the Attorney General correctly points out that such abuses arе not as violent or pervasive as those encountered in NAACP v. Alabama or other cases from that era, this Court is not prepared to wait until an AFP opponent carries out one of the numerous death threats made against its members.
II.
A final argument to consider by the Attorney General is that its office is only seeking disclosure of AFP’s Schedule B for nonpublic use and therefore there is no potential for public targeting of private donors; however, the Attorney General’s inability to keep confidential Schedule Bs private is of serious concern. In its previous order remanding this case, the Ninth Circuit found that “plaintiffs [ ] have raised serious questions as to whether the Attorney General’s current policy actually prevents public disclosure.” Americans for Prosperity Found.,
Pursuant to the Attorney General’s purported confidentiality policy, Schedule Bs should never be accessible through its Registry’s public website. The Attorney General’s Registry receives more than 60,-000 renewal filings each year, 90% of which are paper filings. Once the Registry receives these filings, it is supposed to scan and then electronically store the documents, separately tagging confidential documents such as Schedule Bs. Kevis Foley, former Registrar, testified at her deposition that separating оut Schedule Bs and other confidential materials from public filings is “very tedious, very boring work” and that “there is room for errors to be made.” (Foley Dep. TX-734, p. 174:8-21). While human error can sometimes be unavoidable, the amount of careless mistakes made by the Attorney General’s Registry is shocking.
During the course of this litigation, AFP conducted a search of the Attorney General’s public website and discovered over 1,400 publically available Schedule Bs. (TX-56). Within 24 hours, all of thоse confidential documents were removed from the Registry’s website. (TX-736, p. 107:12-15). Just one example of the Attorney General’s inadvertent disclosures was the Schedule B for Planned Parenthood Affiliates of California. The Attorney General was made aware that the Registry had pub-lically posted Planned Parenthood’s confidential Schedule B, which included all the names and addresses of hundreds of donors. (TX-131). An investigator for the Attorney General admitted that “posting that kind of information publically could be very damaging to Planned Parenthood...” (Johns Test. 2/25/16 Vol. II, p. 41:18-21). All told, AFP identified 1,778 confidential Schedule Bs that the Attorney General had publically posted on the Registry’s website, including 38 which were discovered the day before this trial. (McClave Test. 2/24/16 Vol. I, p. 27:6-32:17). The pervasive, recurring pattern of uncontained Schedule B disclosures—a pattern that has persisted even during this'trial—is irreconcilable with the Attorney General’s assurances and contentions as to the confidentiality of Schedule Bs collected by the Registry.
The Attorney General has continuously maintained that the Registry is underfunded, understaffed, and underequipped when it comes to the policy surrounding Schedule Bs. The current Registrar effectively acknowledges that the Registry’s approach to maintaining the supposed confidentiality of Schedule Bs have been indefensible. Not only did he admit that information has been imрroperly classified, which would make it available to the public, but he also conceded that the Registry has more work to do before it can get a handle on maintaining confidentiality. (Eller Test. 3/3/16 Vol. II, p. 95:7-11).
While the Attorney General will have this Court believe that proper procedures are now in place to prevent negligent disclosures of Schedule Bs, the Court is unconvinced. Once a confidential Schedule B has been publically disseminаted via the internet, there is no way to meaningfully restore confidentiality. Given the extensive disclosures of Schedule Bs, even after explicit promises to keep them confidential, the Attorney, General’s current approach to confidentiality obviously and profoundly risks disclosure of any Schedule B the Registry may obtain from AFP. Accordingly, the Court finds against the Attorney General on the alternative grounds that her current confidentiality policy cаnnot effectively avoid inadvertent disclosure.
Because AFP has prevailed on its First Amendment as-applied challenge, it is entitled to declaratory and in-junctive relief. Equitable relief has long been recognized as appropriate to prevent government officials from acting unconstitutionally. Free Enter. Fund v. Pub. Co. Accounting Oversight Bd.,
A “plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief.” eBay Inc. v. MercExchange, L.L.C.,
AFP has suffered irreparable harm. The Attorney General’s requirement that AFP submit its Schedule B chills the exercise of its donor’s First Amendment freedoms to speak anonymously and to engage in expressive association. Among other things, plaintiffs have demonstrated that the Schedule B disclosure requirement places donors in fear of exercising their First Amendment right to support AFP’s expressive activity; the effect then is to diminish the amount of expressive and associational activity by AFP. Moreover, if AFP refuses to comply with the Attorney General’s Schedule B submission requirement, the Attorney General has threatened to cancel its charitable registration, which would preclude it from exercising its First Amendment right to solicit funds in California. Any “loss of First Amendment freedoms ... unquestionably constitutes irreparable injury.” Elrod v. Burns,
Additionally, AFP’s irreparable First Amendment injuries cannot adequately be compensated by damages or any other remedy available at law. Unlike a monetary injury, violations of the First Amendment “cannot be adequately rеmedied through damages.” Stormans, Inc. v. Selecky,
The balance of hardships also favors granting an injunction. Once AFP’s donor information is disclosed, it cannot be clawed back. Thus, if the Attorney General is allowed to compel AFP to disclose its Schedule B, the ensuing intimidation and harassment of AFP’s donors, and resulting
Finally, the public interest favors an injunction. As the Ninth Circuit has “consistently recognized,” there is a “significant public interest in upholding First Amendment principles.” Doe v. Harris,
IT IS HEREBY ORDERED that the Attorney General is Permanently Enjoined from Requiring AFP to File with the Registry a Periodic Written Report Containing a Copy of its Schedule B to IRS Form 990. AFP Shall No Longer Be Considered Deficient or Delinquent in its Reporting Requirement because it Does Not File its Confidential Schedule B with the Attorney General, Each Party Shall Bear its Own Costs.
