COMMITTEE FOR JUSTICE & FAIRNESS (CJF), a non-profit organization, Plaintiff/Appellee, v. ARIZONA SECRETARY OF STATE‘S OFFICE, a governmental entity; Ken Bennett, in his official capacity as Secretary of State; Amy Chan, in her official capacity as State Elections Director for the Secretary of State; William G. Montgomery, Maricopa County Attorney, in his official capacity; Maricopa County Attorney‘s Office, a governmental entity, Defendants/Appellants.
No. 1 CA-CV 13-0037.
Court of Appeals of Arizona, Division 1.
Aug. 7, 2014.
332 P.3d 94 | 347
and
CONCLUSION
¶34 We affirm the dismissal of Counts 1, 2, and 6 for Rose‘s failure to comply with the derivative demand requirement. We vacate the superior court‘s order dismissing Counts 3, 4, and 5, and remand for further proceedings on those counts. Further, we vacate the award of attorneys’ fees for the trial court to reconsider the request upon the resolution of the case.
Maricopa County Attorney‘s Office, By M. Colleen Connor, Bruce P. White, Phoenix, for Defendants/Appellants.
Ballard Spahr, L.L.P., By Joseph A. Kanefield, Brunn W. Roysden III, Phoenix, for Amicus Curiae Citizens Clean Elections Commission.
Scharf-Norton Center for Constitutional Litigation, By Nicholas C. Dranias, Phoenix, for Amicus Curiae Goldwater Institute.
Judge LAWRENCE F. WINTHROP delivered the opinion of the Court, in which Presiding Judge PATRICIA A. OROZCO and Judge KENTON D. JONES joined.
OPINION
WINTHROP, Judge.
¶ 1 The Committee for Justice and Fairness (“CJF“) is a national political organization that operates primarily for the purpose of influencing state and local elections. In 2010, CJF financed the creation and dissemination of an advertisement broadcast on a Phoenix-area television station immediately before the general election. The ad attacked the record of one of the two candidates for Attorney General, Tom Horne. After learning CJF had failed to follow Arizona‘s registration and disclosure requirements applicable to political committees that raise and spend money to influence the outcome of an election in Arizona, see generally
¶ 2 After an Administrative Law Judge (“ALJ“) recommended MCAO‘s order be upheld, the Maricopa County Attorney issued a Final Decision ordering CJF to register as a political committee and comply with the applicable campaign reporting and disclosure requirements. The superior court reversed and vacated the recommended order and Final Decision after concluding (1) the ad was not subject to Arizona‘s disclosure requirements because it was merely issue-oriented speech rather than express advocacy, and (2) the disclosure statutes at issue are unconstitutional.
¶ 3 In this opinion, we conclude CJF‘s advertisement qualifies as “express advocacy” as defined in
FACTS AND PROCEDURAL HISTORY
¶ 4 In 2010, shortly before the November general election, CJF caused to be broadcast on Phoenix area Channel 12 a television advertisement regarding Tom Horne, one of the two candidates for Attorney General. At the time, Horne was still the Superintendent for Public Instruction. The advertisement claimed that (1) when Horne was a state legislator, he had “voted against tougher penalties for statutory rape,”3 and (2) when Horne was on the Arizona Board of Education, he used his vote to allow “back in the classroom” a teacher who had been caught by students “looking at child pornography on a school computer.”4 The advertisement urged viewers to “[t]ell Superintendent Horne to protect children, not people who harm them,” and displayed photographs of Horne and his office telephone number as Superintendent of Public Instruction.
¶ 5 On October 21, 2010, Horne filed suit in Maricopa County Superior Court, seeking a temporary restraining order (“TRO“) to enjoin CJF and local television stations from airing the advertisement. Based on Pacion v. Thomas, 225 Ariz. 168, 236 P.3d 395 (2010), and the exclusive remedy set forth in
¶ 6 Meanwhile, on October 22, 2010, Horne‘s election committee filed with the Arizona Secretary of State a complaint alleging CJF had engaged in express advocacy and was thus subject to the requirements of
¶ 7 On October 25, 2010, the Arizona Secretary of State issued a Reasonable Cause Notice, stating there was reasonable cause to believe CJF had violated
¶ 8 On May 23, 2011, MCAO issued an Order Requiring Compliance to CJF pursuant to
¶ 9 On August 31, 2011, the ALJ held an administrative hearing, and on September 23, he issued a Decision, supported by his findings of fact and conclusions of law. The ALJ determined in part that (1) CJF had made expenditures that expressly advocated against the election of Horne, (2) CJF is a political committee as defined by
¶ 10 CJF filed a complaint in the Maricopa County Superior Court seeking judicial review of the Maricopa County Attorney‘s October 17 Final Decision accepting and adopting the ALJ‘s September 23 Decision. See
¶ 11 In a minute entry filed October 11, 2012, the superior court reversed and vacated the recommended order of the ALJ and the Final Decision of the Maricopa County Attorney. The superior court concluded (1) the advertisement “was issue-oriented speech and not ‘express advocacy,‘” (and thus CJF was not required to register or file financial reports), and (2) ”
¶ 12 On November 28, 2012, the superior court entered its final judgment in favor of CJF, including an award of costs and attorneys’ fees. The final judgment identified only the following provisions of Arizona‘s campaign finance laws as unconstitutional: (1) the portion of
¶ 13 The Arizona Secretary of State and MCAO filed a timely notice of appeal. We have jurisdiction pursuant to
ANALYSIS
¶ 14 In its opening brief, MCAO raises two issues for review: (1) whether CJF qualifies as a political committee that must comply with Arizona‘s political committee registration and disclosure requirements, and (2) whether Arizona‘s disclosure requirements are constitutional.
I. Was CJF Required To Comply With Arizona‘s Political Committee Registration And Disclosure Requirements?
A. Standard of Review
¶ 15 Subsection (C) of
The court may affirm, reverse, modify or vacate and remand the agency action. The court shall affirm the agency action unless after reviewing the administrative record and supplementing evidence presented at the evidentiary hearing the court concludes that the action is not supported by substantial evidence, is contrary to law, is arbitrary and capricious or is an abuse of discretion.
¶ 16 Thus, in reviewing an administrative decision, the superior court examines whether the challenged action was illegal, arbitrary, capricious, or involved an abuse of discretion. See Gaveck v. Ariz. State Bd. of Podiatry Exam‘rs, 222 Ariz. 433, 436, ¶ 11, 215 P.3d 1114, 1117 (App.2009); Havasu Heights Ranch & Dev. Corp. v. Desert Valley Wood Prods., Inc., 167 Ariz. 383, 386, 807 P.2d 1119, 1122 (App.1990). The superior court defers to factual findings supported by substantial evidence, and may not substitute its own judgment where factual questions and substantive expertise are involved. See Gaveck, 222 Ariz. at 436, ¶ 11, 215 P.3d at 1117 (“If an agency‘s decision is supported by the record, substantial evidence exists to support the decision even if the record also supports a different conclusion.” (citing DeGroot v. Ariz. Racing Comm‘n, 141 Ariz. 331, 336, 686 P.2d 1301, 1306 (App.1984))).
¶ 17 On appeal, we determine whether the record contains evidence to support the superior court‘s judgment, and in so doing, we also reach the underlying question of whether the administrative entity acted in contravention of the law, arbitrarily, capriciously, or in abuse of its discretion. Saldate v. Montgomery, 228 Ariz. 495, 498, ¶ 10, 268 P.3d 1152, 1155 (App.2012); accord Sanders v. Novick, 151 Ariz. 606, 608, 729 P.2d 960, 962 (App.1986). In administrative appeals, neither the superior court nor this court reweighs the evidence. St. Joseph‘s Hosp. v. Ariz. Health Care Cost Containment Sys., 185 Ariz. 309, 312, 916 P.2d 499, 502 (App. 1996) (citing Havasu Heights, 167 Ariz. at 387, 807 P.2d at 1123). Nevertheless, “[w]hether substantial evidence exists is a question of law for our independent determination.” Gaveck, 222 Ariz. at 436, ¶ 12, 215 P.3d at 1117 (citations omitted). Furthermore, we review de novo the legal issues, including those involving statutory interpretation. Id.; Kromko v. City of Tucson, 202 Ariz. 499, 501, ¶ 4, 47 P.3d 1137, 1139 (App.2002).
B. Analysis
¶ 18 MCAO argues that CJF qualifies as a political committee that must comply
¶ 19 Title 16, Chapter 6, of the Arizona Revised Statutes provides the statutory framework for the regulation of “Campaign Contributions and Expenses” in Arizona. Under
¶ 20 Under
“Political committee” means ... any association or combination of persons that is organized, conducted or combined for the purpose of influencing the result of any election or to determine whether an individual will become a candidate for election in this state ... that engages in political activity in behalf of or against a candidate for election ... that receives contributions or makes expenditures of more than two hundred fifty dollars in connection therewith, notwithstanding that the association or combination of persons may be part of a larger association, combination of persons or sponsoring organization not primarily organized, conducted or combined for the purpose of influencing the result of any election in this state or in any county, city, town or precinct in this state.
(Emphasis added.)7 Thus, a committee or group organized for the purpose of influencing the result of an election, which engages in political activity for or against a candidate and makes expenditures8 in connection therewith, qualifies as a political committee subject to registration and disclosure requirements. See generally Van Riper v. Threadgill, 183 Ariz. 580, 582-83, 905 P.2d 589, 591-92 (App.1995).
¶ 21 In this case, the ALJ found that CJF, whose business office is in Washington, D.C. and primary financial contributor is the Democratic Attorneys General Association (“DAGA“) located in Denver, Colorado, is a political organization as defined by the Internal Revenue Code at
¶ 22 CJF cannot and does not dispute that it is a political organization, or that it spent money to create and disseminate the advertisement in question. Nevertheless, CJF argues, and the ALJ found, that nowhere in the advertisement is there a specific reference to Horne as a candidate, and the advertisement does not mention any other candidate, election, or political party. CJF therefore maintains it should not be required to register as a political committee and comply with the disclosure requirements because its advertisement was merely an “issue-oriented television ad” designed to advocate “for America‘s middle-class families” and did not qualify as political activity designed to influence the impending election for Attorney General.
¶ 23 MCAO argues, however, that CJF‘s advertisement qualifies as an independent expenditure designed to influence the 2010 Attorney General election. An independent expenditure is defined in pertinent part as follows:
“Independent expenditure” means an expenditure by a person or political committee, other than a candidate‘s campaign committee, that expressly advocates the election or defeat of a clearly identified candidate, that is made without cooperation or consultation with any candidate or committee or agent of the candidate and that is not made in concert with or at the request or suggestion of a candidate, or any committee or agent of the candidate.
¶ 24 The parties’ argument revolves around the “expressly advocates” language of
A. For purposes of this chapter, “expressly advocates” means:
1. Conveying a communication containing a phrase such as “vote for,” “elect,” “re-elect,” “support,” “endorse,” “cast your ballot for,” “(name of candidate) in (year),” “(name of candidate) for (office),” “vote against,” “defeat,” “reject,” or a campaign slogan or words that in context can have no reasonable meaning other than to advocate the election or defeat of one or more clearly identified candidates, or
2. Making a general public communication, such as in a broadcast medium, newspaper, magazine, billboard, or direct mailer referring to one or more clearly identified candidates and targeted to the electorate of that candidate(s):
(a) That in context can have no reasonable meaning other than to advocate the election or defeat of the candidate(s), as evidenced by factors such as the presentation of the candidate(s) in a favorable or unfavorable light, the targeting, placement, or timing of the communication, or the inclusion of statements of the candidate(s) or opponents, or
(b) In the sixteen-week period immediately preceding a general election.
¶ 25 In this case, CJF‘s advertisement clearly did not use any of the “magic words” listed in
¶ 26 In his conclusions of law, the ALJ concluded that “CJF‘s advertisement constituted express advocacy pursuant to
The advertisement referred by name to Tom Horne, who was by that time clearly identified as the Republican candidate for Attorney General. It was aired on Channel 12, which broadcasts in the greater Phoenix metropolitan area and beyond, and thus may be presumed to have targeted the electorate for such a statewide office. Although the advertisement only referred to Tom Horne in his then[-] position of Superintendent of Public Instruction and called upon viewers to contact him at his office in the Department of Education, the only reasonable purpose for running an advertisement, during an election campaign, which cost approximately $1.5 million to produce and broadcast, to critique Tom Horne‘s past actions as a former member of the legislature and as an occupant of a post he would soon vacate, was to advocate his defeat as candidate for Attorney General.
¶ 27 These facts meet the test for express advocacy under
¶ 28 Further, although CJF argues Horne was not a “clearly identified candidate” because the advertisement did not specifically identify him as a candidate for Attorney General, no question exists that Horne was in fact a “clearly identified candidate” as defined under Arizona‘s statutory scheme. “‘Clearly identified candidate’ means that the name, a photograph or a drawing of the candidate appears or the identity of the candidate is otherwise apparent by unambiguous reference.”
¶ 29 Finally, as the ALJ noted, the advertisement criticized Horne‘s past actions both
¶ 30 In sum, CJF as a political organization made a general public communication in a broadcast medium referring to a clearly identified candidate and targeted to the electorate of that candidate, that in context could have no reasonable meaning other than to advocate the defeat of that candidate, as evidenced by factors such as the presentation of the candidate in an unfavorable light and the targeting, placement, and timing of the communication. In this case, reasonable minds could not differ as to whether CJF‘s advertisement encouraged a vote against Horne.12 As a result, CJF‘s advertisement was express advocacy as statutorily defined in
II. Are Arizona‘s Disclosure Requirements Constitutional?
¶ 31 MCAO next argues the superior court erred in concluding that
A. Standard of Review—Exacting Scrutiny
¶ 32 The parties disagree as to the standard of review this court should employ in analyzing the statutes at issue, either “strict scrutiny” or a less stringent “exacting scrutiny” standard. Citing Federal Election Commission v. Wisconsin Right to Life, Inc. (“WRTL“), 551 U.S. 449, 464, 127 S.Ct. 2652, 168 L.Ed.2d 329 (2007), CJF argues it was involved in issue advocacy, and the strict scrutiny standard must be applied to any statute attempting to regulate or prohibit such speech. See Id. at 464 (“Because [the statute] burdens political speech, it is subject to strict scrutiny.“).14 Under strict scrutiny, the government
¶ 33 In this case, however, because
¶ 34 Moreover, CJF‘s reference to Citizens United for its argument in favor of the application of strict scrutiny is misplaced. See RTAA, 681 F.3d at 549. CJF notes the Citizens United majority‘s reference to “onerous restrictions” on political action committee speech, which would ordinarily be subject to strict scrutiny, see 558 U.S. at 337-40, and argues that Arizona‘s statutory scheme is similar to the one in Citizens United. As the Fourth Circuit Court of Appeals has recognized, however, the Supreme Court in Citizens United “distinguished its application of the strict scrutiny standard to expenditure restrictions from the exacting scrutiny standard applicable to disclosure requirement provisions.” RTAA, 681 F.3d at 549. The statutes at issue in this case do not prevent anyone from speaking or impose ceilings on campaign-related activities. See RTAA, 681 F.3d at 554 (“In contrast, [the regulation] does not restrain speech; it only implicates the requirement for disclosing specified information.” (emphasis in original)). Accordingly, we apply exacting scrutiny to determine whether the statutes implicating Arizona‘s registration and disclosure requirements are constitutional.15
B. A.R.S. § 16-901.01(A)(2)(a) and Disclosure Requirements
¶ 35 CJF challenges on an as-applied and facial basis the constitutionality of
¶ 36 Relying on Colorado Ethics Watch (“CEW“) v. Senate Majority Fund, LLC, 269 P.3d 1248 (Colo.2012), CJF suggests express advocacy cannot permissibly extend beyond the Buckley “magic words” or substantially similar synonyms, as codified in subsection (A)(1) of
¶ 37 In McConnell, the Supreme Court considered a facial overbreadth challenge to Title II, § 201, of the BCRA, which included a provision defining express advocacy for purposes of electioneering communications. 540 U.S. at 190-91. In rejecting the challenge, the Court noted Buckley‘s narrow construction of the Federal Election Campaign Act of 1971 to require express advocacy “was a function of the vagueness of the [original] statutory definition of ‘expenditure,’ not an absolute First Amendment imperative.” Free Speech, 720 F.3d at 794 (bracketed portion omitted from original) (quoting RTAA, 681 F.3d at 550 (citing McConnell, 540 U.S. at 191-92)). Consequently, the Court held “Congress could permissibly regulate not only communications containing the ‘magic words’ of Buckley, but also communications that were ‘the functional equivalent’ of express advocacy.” Id. at 795 (quoting RTAA, 681 F.3d at 550-51 (citing McConnell, 540 U.S. at 193)).17
¶ 38 In WRTL, the Court adopted a “functional equivalent” test. See Free Speech, 720 F.3d at 795 (citing WRTL, 551 U.S. at 474 n. 7; RTAA, 681 F.3d at 552). The Court‘s controlling opinion held “a court should find that an ad is the functional equivalent of express advocacy only if the ad is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.” WRTL, 551 U.S. at 469-70. This test closely correlates to the test set forth in
¶ 39 Citizens United reaffirmed the WRTL functional equivalent test‘s constitutionality and provided further support for the use of such a test to define express advocacy. See Free Speech, 720 F.3d at 795. In Citizens United, the Supreme Court applied the WRTL test to determine whether the communication at issue (a film released by Citizens United entitled Hillary: The Movie) would be prohibited by the corporate funding restrictions set forth in Title II of the BCRA. 558 U.S. at 324-26. The Court ultimately concluded that, “[u]nder the standard stated in McConnell and further elaborated in WRTL, the film qualifies as the
¶ 40 CJF‘s reliance on Federal Election Commission v. Massachusetts Citizens for Life, Inc. (“MCFL“), 479 U.S. 238 (1986), is also unavailing. In MCFL, the Supreme Court held that a section of the Federal Election Campaign Act prohibiting direct expenditure of corporate funds in connection with any federal election violated the First Amendment as applied to a nonprofit corporation that published a newsletter urging readers to vote “pro-life” and listing approximately 400 candidates for state and federal office in Massachusetts who either supported or opposed the corporation‘s views. Id. at 241-45, 263-65. CJF speculates the position advocated by MCAO in this case (treating CJF‘s advertisement as express advocacy subject to Arizona‘s disclosure requirements) could force issue advocacy groups such as MCFL to register as political committees and be subject to Arizona‘s disclosure requirements by treating their communications as express advocacy.
¶ 41 MCFL involved whether a nonprofit advocacy group that was engaged in express advocacy could raise and spend general fund money directly on an election. Id. at 249-65. Thus, it was a case challenging a restriction on independent spending as applied to MCFL, see id. at 263-64, not a case directly challenging the constitutionality of disclosure laws, and we see no reason to speculate on the potential overbreadth of
A communication within the scope of subsection A, paragraph 2 shall not be considered as one that expressly advocates merely because it presents information about the voting record or position on a campaign issue of three or more candidates, so long as it is not made in coordination with a candidate, political party, agent of the candidate or party or a person who is coordinating with a candidate or candidate‘s agent.18
¶ 42 Consequently, under
¶ 43 We also reject CJF‘s argument that
¶ 44 Additionally, the mere fact that
3. Potential Chilling Effect
¶ 45 CJF maintains that the possibility citizens or groups might have to register as a political committee and disclose their largest donors could have an impermissible chilling effect on speech. Although the potential exists for disclosure requirements to have an unconstitutional chilling effect on speech if a “reasonable probability” exists an organization or its members may face threats, harassment, or reprisals due to disclosure, see McConnell, 540 U.S. at 197-98; Citizens United, 558 U.S. at 370, CJF has identified no instance of harassment or retaliation involving CJF or its donors, despite the fact that CJF discloses contributor information through reports filed with the Internal Revenue Service. Additionally, CJF has not presented evidence that it was unfairly targeted by MCAO, or that MCAO or the ALJ had an inherent bias against CJF.19
¶ 46 CJF also notes that violations of Arizona‘s disclosure laws may result in civil or even criminal penalties. See generally
¶ 47 In sum, CJF has failed to show Arizona‘s disclosure laws are unconstitutional as applied to CJF or that any, much less a substantial number, of the applications of the disclosure laws are unconstitutional. See Stevens, 559 U.S. at 473; see also Ctr. for Individual Freedom v. Madigan, 697 F.3d 464, 470 n. 1 (7th Cir.2012) (recognizing numerous decisions by federal courts of appeals upholding federal and state disclosure regulations against facial attacks), aff‘g 735 F.Supp.2d 994 (N.D.III.2010). Accordingly, we find no constitutional infirmity in Arizona‘s disclosure requirements, including
4. Purpose of Disclosure
¶ 48 The purpose of a registration requirement is to ensure disclosure. See, e.g., Madigan, 735 F.Supp.2d at 1000 (equating “election-law disclosure requirements” discussed in Citizens United with “registration requirements, including related reporting, record-keeping, and disclosure requirements“). Disclosure serves “substantial governmental interests,” including (1) providing voters with information to aid them in evaluating candidates and the sources of a candidate‘s support, (2) deterring actual corruption and avoiding the appearance of corruption by exposing large contributions and expenditures to public light, and (3) providing a means of gathering the data necessary to detect violators. Buckley, 424 U.S. at 67-68; accord McConnell, 540 U.S. at 196 (acknowledging Buckley and recognizing the “important state interests” served by disclosure, including “providing the electorate with information, deterring actual corruption and avoiding any appearance thereof, and gathering the data necessary to enforce more substantive electioneering restrictions“); Citizens United, 558 U.S. at 371 (“The First Amendment protects political speech; and disclosure permits citizens ... to react to the speech ... in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.“); see also Human Life of Washington, 624 F.3d at 1005-06 (recognizing the “vital provision of information” to voters through disclosure laws “repeatedly has been recognized as a sufficiently important, if not compelling, governmental interest“). The requirement of disclosure in this case is substantially related to a sufficiently important governmental interest. See Citizens United, 558 U.S. at 366.
III. Attorneys’ Fees
¶ 49 Citing
CONCLUSION
¶ 50 We vacate the portion of the superior court‘s judgment holding unconstitutional
LAWRENCE F. WINTHROP
Judge of the Court