JAIME A. MOLERA, AN INDIVIDUAL AND QUALIFIED ELECTOR; ARIZONANS FOR GREAT SCHOOLS AND A STRONG ECONOMY, A POLITICAL ACTION COMMITTEE, Plaintiffs/Appellees/Cross-Appellants, v. KATIE HOBBS, IN HER OFFICIAL CAPACITY AS ARIZONA SECRETARY OF STATE; INVEST IN EDUCATION (SPONSORED BY AEA AND STAND FOR CHILDREN), A POLITICAL ACTION COMMITTEE, Defendants/Appellants/Cross-Appellees
No. CV-20-0213-AP/EL
Supreme Court of the State of Arizona
October 26, 2020
Appeal from the Superior Court in Maricopa County, The Honorable Christopher A. Coury, Judge, No. CV2020-007964. AFFIRMED IN PART, REVERSED IN PART
Brett W. Johnson, Eric H. Spencer, Colin P. Ahler, Snell & Wilmer L.L.P., Phoenix; Dominic E. Draye, Greenberg Traurig, LLP, Phoenix, Attorneys for Jaime A. Molera, et al.
Roopali H. Desai, D. Andrew Gaona, Marvin C. Ruth, Kristen Yost, Coppersmith Brockelman PLC, Phoenix, Attorneys for Invest in Education (Sponsored by AEA and Stand for Children)
Grant Woods, Michael Riikola, Gallagher & Kennedy, P.A., Phoenix, Attorneys for Amicus Curiae Wes Oswald and Kelley Fisher, et al.
Rhonda L. Barnes, Jane Ahern, Arizona House of Representatives, Phoenix; Lisette Flores, Arizona Senate, Phoenix, Attorneys for Amici Legislative Democrats
Oscar S. Lizardi, Rebecca K. O‘Brien, Rusing Lopez & Lizardi, P.L.L.C., Tucson; Isaac S. Crum, Rusing Lopez & Lizardi, P.L.L.C., Scottsdale, Attorneys for Amicus Curiae The Arizona Business Community
Erin Adele Scharff, Sandra Day O‘Connor College of Law, Phoenix, Attorney for Amici Curiae Tax Scholars
Roy Herrera, Daniel A. Arellano, Jillian L. Andrews, Ballard Spahr LLP, Phoenix, Attorneys for Amici Curiae Ballot Initiative Strategy Center, et al.
Paul F. Eckstein, Daniel C. Barr, Austin C. Yost, Margo R. Casselman, Perkins Coie LLP, Phoenix, Attorneys for Amici Curiae Kathy Hoffman, et al.
Daniel J. Adelman, Arizona Center for Law in the Public Interest, Phoenix, Attorneys for Amici Curiae Save Our Schools Arizona, et al.
Timothy Sandefur, Christina Sandefur, Scharf-Norton Center for Constitutional Litigation at the Goldwater Institute, Attorneys for Amici Curiae Goldwater Institute, et al.
Mary R. O‘Grady, Joshua D. Bendor, Emma J. Cone-Roddy, Osborn Maledon, P.A., Phoenix, Attorneys for Amici Curiae Arizona Non-Profit Organizations, et al.
Lisa T. Hauser, Bonnett, Fairbourn, Friedman & Balint, PC, Phoenix, Attorneys for Amicus Curiae Lisa T. Hauser
Kory Langhofer, Statecraft, Phoenix, Attorney for Amicus Curiae Rich Crandall
Kraig J. Marton, Jeffrey A. Silence, Jaburg & Wilk, P.C., Phoenix; Patricia Ronan, Patricia E. Ronan Law, LLC, Phoenix; Christopher Houk, Houk Law Firm, PLLC, Tempe, Attorneys for Amicus Curiae Arizona Employment Lawyers Association
VICE CHIEF JUSTICE TIMMER authored the opinion of the Court, in which CHIEF JUSTICE BRUTINEL, and JUSTICES BOLICK, GOULD, LOPEZ, BEENE, and MONTGOMERY joined.
VICE CHIEF JUSTICE TIMMER, opinion of the Court:
¶1 In Molera v. Reagan, 245 Ariz. 291, 293 ¶ 1 (2018), we disqualified an “Invest in Education Act” initiative from the 2018 ballot because proponents failed to comply with
BACKGROUND
¶2 Defendant is a political action committee (the “Committee“) seeking to place the “Invest in Education Act” initiative (“Initiative“) on the 2020 ballot. To qualify, the Committee was required to obtain 237,645 valid petition signatures demonstrating support for the measure. See
¶3 Plaintiffs are a qualified elector and a political action committee (“Challengers“) who oppose the Initiative. On July 10, before completion of the signature verification process, they filed a verified complaint asking the superior court to enjoin the Secretary from placing the Initiative on the ballot because (1) the 100-word description on petition sheets violated
¶4 After conducting a bench trial, the superior court rejected the Challengers’ signature-based objection. But it found that the 100-word description on the petition signature sheets failed to comply with
DISCUSSION
I. The 100-word description
A. General principles
¶6 Section
Notice: This is only a description of the proposed measure (or constitutional amendment) prepared by the sponsor of the measure. It may not include every provision contained in the measure. Before signing, make sure the title and text of the measure are attached. You have the right to read or examine the title and text before signing.
¶7 Increasingly, sponsors, opponents, and courts have struggled both to identify “principal provisions” in measures and to determine whether their descriptions satisfy
¶8 There are two grounds on which to challenge a measure‘s 100-word description under
¶9 What are “principal provisions“? They are the “most important,” “consequential,” and “primary” features of the initiative. Id. ¶ 24 (quoting Sklar v. Town of Fountain Hills, 220 Ariz. 449, 453 ¶ 13 (App. 2008)). They are not all provisions. The 100-word description serves as the “elevator pitch” that alerts prospective signatories to the measure‘s key operative provisions, enabling them to decide in short order whether to sign the petition, refuse to do so, or make further inquiry about the measure. See id. at 297 ¶ 27 (stating that the purpose of the description is to enable prospective signatories to determine whether to endorse the measure for the ballot); see also Kromko v. Superior Court, 168 Ariz. 51, 60 (1991) (observing that “rare is the elector who stops long enough in the summer heat to read or listen to a complete description of the entire nature and scope of a proposed measure“).
¶10 The second ground on which to challenge a 100-word description focuses on the manner of describing the measure‘s principal provisions. Section
¶11 Reasonable people can differ about the best way to describe a principal provision, but a court should not enmesh itself in such quarrels. See id. at 209 ¶ 13. If the chosen language would alert a reasonable person to the principal provisions’ general objectives, that is sufficient. Applying this reasonable person standard, the trial judge should ordinarily decide the sufficiency of a description without expert witness evidence. See
¶12 What constitutes a deficient description under
¶13 The court should disqualify an initiative from the ballot whenever the 100-word description either communicates objectively false or misleading information or obscures the principal provisions’ basic thrust. The latter can occur through the language used to describe the principal provisions or by failing to refer to key features of those provisions. In other words, although sponsors are free to describe the measure in a positive way and emphasize its most popular features, they may not engage in a “bait and switch” in which the summary attracts signers but misrepresents or omits key provisions. In addressing challenges, a court should “consider the meaning a reasonable person would ascribe to the description.” Ariz. Chapter of the Associated Gen. Contractors of Am. v. City of Phoenix, 247 Ariz. 45, 48 ¶ 15 (2019).
B. Application to this case
¶14 The Initiative is nine pages long and proposes to amend both
The Invest in Education Act provides additional funding for public education by establishing a 3.5% surcharge on taxable income above $250,000 annually for single persons or married persons filing separately, and on taxable income above $500,000 annually for married persons filing jointly or head of household filers; dedicates additional revenue to (a) hire and increase salaries for teachers, classroom support personnel and student support services personnel, (b) mentoring and retention programs for new classroom teachers, (c) career training and post-secondary preparation programs, (d) Arizona Teachers Academy; amends the Arizona Teachers Academy statute; requires annual accounting of additional revenue.
The notice required by
¶15 The superior court found that this summary omitted five principal provisions, which also made the description misleading and “created a significant danger of confusion or unfairness to a reasonable Arizona voter.” It further ruled that use of the word “surcharge” masked the Initiative‘s proposal to substantially increase the tax rate for wealthier taxpayers. We review the court‘s ruling de novo. See Molera, 245 Ariz. at 294 ¶ 8.
¶16 (1) Percentage distribution of new revenues. The 100-word description listed who would receive the new tax revenues but not in what percentages. The superior court reasoned that the percentage distribution is a principal provision because a reasonable voter‘s decision whether to support or
¶17 The percentage distribution is not a principal provision because it is not the Initiative‘s “most important,” “consequential,” or “primary” provision that must be described to alert prospective petition signatories to the measure‘s key operative provisions. See Molera, 245 Ariz. at 297 ¶¶ 24, 27. The Initiative‘s principal provisions impose a substantially increased tax rate on individuals’ taxable income exceeding $250,000 and $500,000, depending on filing status (the “marginal tax rate“), and dedicate the resulting revenues to public education needs. The 100-word description sufficiently describes these provisions by setting out the tax rate increase and identifying the recipients who will divide the resulting revenues. It was not necessary to describe the percentage distribution for the reader to understand these provisions. Similarly, omission of this detail did not make any part of the description false or misleading or obscure the Initiative‘s key operative provisions. Pursuant to the required notice beneath the 100-word description, prospective signatories interested in learning the percentage distribution could readily discover it by reading the Initiative text appended to the petition.
¶18 (2) The percentage increase in the marginal tax rate. The superior court found that the Committee omitted a principal provision by failing to describe the percentage increase in the marginal tax rate. It construed Molera, 245 Ariz. at 298 ¶ 29, which disqualified that initiative for falsely describing the proposed percentage increase of a marginal tax rate, as meaning that the percentage increase of the marginal tax rate is a principal provision. Likewise, the court ruled that omission of that information concealed “how profoundly taxes are being increased” for wealthier individuals.
¶19 The superior court misconstrued Molera and therefore erred in its ruling. The 100-word description there stated that the measure would raise the tax rate “by 3.46%” on individual incomes over $250,000 and household incomes over $500,000, and “by 4.46%” for individual incomes over $500,000 and household incomes over $1,000,000. Id. at 293 ¶ 2. In fact, the affected tax rates would have increased by 76% and 98%, respectively, making the description false. Id. at 298 ¶ 29. But in finding that the description of the tax rate increase was false, we did not require that any percentage increase in a given tax rate must be included in an initiative description to comply with
¶20 The description here accurately stated that a 3.5% surcharge would be imposed on individuals’ taxable incomes over specified amounts. This sufficiently communicated a principal provision—raising the marginal tax rate on wealthier taxpayers—to alert a prospective signatory to the Initiative‘s substance. See Ariz. Chapter of the Associated Gen. Contractors of Am., 247 Ariz. at 49 ¶ 18 (stating sponsors are not required to describe “all potential effects of a measure“). Although the Committee could have provided the percentage increase, it was entitled to cast its description in the best light to garner support, as long as the wording was accurate and did not obscure the tax increase. See Molera, 245 Ariz. at 295 ¶ 13 (noting that a sponsor is not required to use neutral wording); Save Our Vote, 231 Ariz. at 152–53 ¶¶ 27-28 (to same effect).
¶22 (3) The applicability to pass-through business income. Under existing tax law, income generated by some businesses, for example, Subchapter S corporations and partnerships, is “passed through” to owners and taxed as individual taxable income. See, e.g., Watts v. Ariz. Dep‘t of Revenue, 221 Ariz. 97, 100 ¶ 8 (App. 2009). The superior court found that the description omitted a principal provision by failing to alert prospective signatories that the proposed marginal tax rate would apply to business income. It further found that this omission created a substantial danger that a signatory would fail to appreciate this fact. We disagree.
¶23 What is taxable as income is dictated by state and federal law. The Initiative does not alter or affect the type of income Arizona has chosen to tax as individual taxable income, including business income. The fact the increased marginal tax rate on individual taxable income would encompass business income taxable to individuals is therefore not a principal provision, but rather is an effect of a principal provision that was not required to be included in the description. See Ariz. Chapter of the Associated Gen. Contractors of Am., 247 Ariz. at 49 ¶ 18. Also, omission of language describing this application does not make any language in the description false or misleading, nor does it obscure a basic thrust of the Initiative. Challengers and amici argue that the Initiative‘s applicability to pass-through taxable income is material to reasonable voters due to the “impact on economic growth, employment, and the uneven profits that a business generates from year to year.” That may be so, but “[t]he proper forum to argue the consequences of passing the Initiative is in statements of support and opposition, editorials, and the like.” Id.
¶24 (4) The proscription on decreasing other education funding. The Initiative proposes adding
¶25 The Committee did not violate
¶26 (5) Expenditure limitation. Article 9, section 21 of the Arizona Constitution imposes an expenditure limitation on school districts. Proposed
¶27 In sum, the 100-word description here complies with
for the ballot, reject it, or seek more information. It did not contain any objectively false or misleading information or conceal a basic thrust of the Initiative. The superior court erred by ruling otherwise. In light of our holding, we do not address the Committee‘s additional arguments concerning the 100-word description.
II. Circulator compensation
¶28 The Committee hired AZ Petition Partners, LLC (“Petition Partners“), a signature-gathering business, to obtain enough signatures to qualify the Initiative for the ballot. Petition Partners employed registered circulators and paid them an hourly rate on a weekly basis to collect signatures on petitions for all Petition Partners’ clients, including the Committee.
¶29 Although three pay scales applied while the Initiative petitions circulated, they operated similarly. The scales had multiple levels, each of which set an hourly rate and an expected average number-range of signatures to be gathered each hour. The higher the productivity expectation the higher the rate, and vice versa. Circulators were eligible to move up or down the pay scale from week to week depending on whether they exceeded or fell below their level‘s productivity expectation the week before and the existence of other factors, such as the number of hours worked and how the circulators conducted themselves. All adjustments to hourly rates were prospective only.
¶30 Circulators could also earn additional money each week through incentive programs. One such program offered in June 2020 permitted circulators to spin a wheel for prizes each Monday when they turned in collected signatures. The prizes ranged from $10 to $100, an extra hour of pay, or double these “spins.”
¶31 The superior court rejected Challengers’ arguments that Petition Partners’ hourly rate structure and the “spin-the-wheel” program violated
A. Hourly rate structure and spin-the-wheel program
¶32 In 2017, the legislature enacted
A person shall not pay or receive money or any other thing of value based on the number of signatures collected on a statewide initiative or referendum petition. Signatures that are obtained by a paid circulator who violates this section are void and shall not be counted in determining the legal sufficiency of the petition.
Paying or receiving compensation in violation of this restriction is punishable as a class one misdemeanor.
¶33 Challengers argue that Petition Partners’ “forward-looking rates” and the spin-the-wheel program violated
¶34 Resolving this dispute depends on the meaning of “based on” in
¶35 The legislature did not define “based on,” so we give the term its common meaning. See Chaparro v. Shinn, 248 Ariz. 138, 141 ¶ 14 (2020). Dictionaries define the verb “base,” in relevant part, as “to use as a base or basis for: establish, found,” see Base, Webster‘s Third New International Dictionary (3d ed. 2002), and “to ground,” see Base, Black‘s Law Dictionary (11th ed. 2019). Applying these definitions,
compensation paid to a circulator for collecting signatures is dependent on or calculated by, in whole or in part, the number of signatures collected during the compensation period. Thus, for example,
¶36 We reject Challengers’ assertion that “based on” “indicates a broad connection between two things,” and Petition Partners was therefore prohibited from basing prospective hourly rates on, or otherwise rewarding circulators for, past productivity. The plain meaning of “base,” which uses descriptors like “ground[ing],” “establish[ing],” and “foundation[al]” rather than words like “relating to” does not support this view. But even if “based on” could reasonably mean “a broad connection between two things,” we would reject this interpretation in favor of our narrower one after applying secondary interpretive principles. See Rosas, 249 Ariz. at 28 ¶ 13.
¶37 First, adopting a narrow interpretation of “based on” avoids possible constitutional conflict. See Slayton v. Shumway, 166 Ariz. 87, 92 (1990) (“[W]here alternate constructions are available, we should choose that which avoids constitutional difficulty.“). By limiting how circulators may be paid,
unproductive, they carry a significant burden in exercising their right to core political speech.” Id. at 386–87.
¶38 The constitutionality of
¶39 Second, the legislative history for
¶40 Finally, we are persuaded to apply a narrow interpretation of “based on” by considering the practical application of Challengers’ broader view. See Rosas, 249 Ariz. at 28 ¶ 13. Interpreting “based on” as a “broad connection between two things” would mean that circulators’ compensation could not relate in any way to their only assigned task—collecting signatures. Taken to its logical conclusion, Challengers’ interpretation would prohibit a sponsor from requiring circulators to gather any number of signatures as doing so would constitute payment “based on the number of signatures collected.” Such a result would be peculiar considering the legislature permits the practice of paying circulators to collect signatures, see
¶41 Turning to the record here, we agree with the superior court that Petition Partners’ graduated hourly wage scales did not violate
¶42 The superior court likewise did not err by rejecting the challenge to the spin-the-wheel program as violating
¶43 The record supports the court‘s factual findings. Petition Partners advertised that a circulator could spin the wheel once or twice, depending, in part, on the number of self-reported signatures collected. If the program operated that way, whether it violated
¶44 Circulator Colby Jensen testified he “[didn‘t] know of any prerequisites” to spin the wheel, including “the number of signatures [a circulator] collected.” He characterized the program as “a fun thing at the end of turn-in to keep everyone from getting depressed having to stand in a parking lot around a ton of people for hours,” and said he never saw anyone turned away from spinning the wheel who wanted to.
¶45 Petition Partners manager Tom Bilsten similarly described the program as a “show” and stated that the number of self-reported signatures did not disqualify a circulator from spinning the wheel. He said Petition Partners “did not deny anyone an opportunity to spin the wheel as long as they were an employee in good standing and they were nice to people.” Bilsten emphasized that Petition Partners never conditioned a spin-the-
wheel opportunity on the number of signatures collected by a circulator. Owner Andrew Chavez echoed this testimony, stating that “people who actually didn‘t get their signatures . . . spun the wheel too.”
¶46 In light of this evidence, the superior court did not err in ruling that the spin-the-wheel program did not violate
B. Identifying disqualified signatures
¶47 Challengers next argue the superior court incorrectly disqualified only signatures collected by circulators during the weeks they participated in one or more of the bonus programs that violated
¶48 Section
C. Preliminary injunction
¶49 Challengers finally argue the superior court erred by refusing to preliminarily enjoin the Initiative from the ballot to permit them to conduct discovery to identify the number of signatures collected during the weeks circulators were paid bonuses in violation of
¶50 The superior court ruled that Challengers did not have a strong likelihood of successfully voiding enough signatures to keep the Initiative from the ballot. See Apache Produce Imps., LLC v. Malena Produce, Inc., 247 Ariz. 160, 164 ¶ 10 (App. 2019) (listing “a strong likelihood of success” on the merits as a consideration in ruling on a preliminary injunction request). Although the court found that 146 circulators
received weekly compensation that included improper payments, the record did not reflect exactly how many signatures were collected during those weeks. Regardless,
¶51 Challengers argue that their inability to demonstrate a likelihood of success on the merits was “tied to [the Committee‘s] failure to maintain sufficient records,” and so the Committee “should bear the burden of proving that the circulators who were improperly paid collected too few ballots to enjoin the Initiative.” Even if we agreed, we fail to see how enjoining the Initiative to permit discovery would have remedied insufficient record-keeping or a misplaced burden of proof. Regardless, we reject Challengers’ implicit premise that the Committee was obligated to maintain any records linking circulator compensation to the number of signatures collected. Neither
¶52 We also disagree that Challengers’ burden to prove the invalidity of petition signatures by clear and convincing evidence, see Leach v. Reagan, 245 Ariz. 430, 437 ¶ 30 (2018), shifted to the Committee to prove that the number of signatures collected under the improper bonus programs were too few to disqualify the Initiative. The caselaw relied on by Challengers shifts the burden of coming forward with evidence, not the burden of proof, “[w]hen proof of a negative assertion lies ‘peculiarly within the knowledge of the adverse party.‘” See Woerth v. City of Flagstaff, 167 Ariz. 412, 419 (App. 1990) (quoting Sw. Cotton Co. v. Ryan, 22 Ariz. 520, 533 (1921)); see also Parker v. City of Tucson, 233 Ariz. 422, 432 ¶ 24 n.9 (App. 2013). Here, Challengers were not tasked with proving a negative by establishing the number of signatures that were collected by 146 circulators during the weeks in which they received payment in violation of
¶53 In sum, the superior court did not err by ruling that Petition Partners’ graduated hourly rate scale and spin-the-wheel program complied with
we need not address the Committee‘s arguments that the court erred by invalidating any signatures under
CONCLUSION
¶54 For the foregoing reasons, we affirm the superior court‘s judgment in part and reverse in part. The Initiative will be placed on the November 3, 2020 ballot.