Federal Judge rebukes Colorado Supreme Court in ruling on 1st Amendment challenge to state’s campaign finance law

Senior U.S. District Judge John L. Kane strongly rebuked the Colorado Supreme Court in an Order issued Friday (10 October 2014) enjoining the enforcement of Colorado’s campaign finance laws that require registration, financial disclosure and reporting against a small group speaking out on public policy issues.

The Order held that, as applied to plaintiffs in this case, “Colorado registration and reporting requirements have unconstitutionally hindered their First Amendment right of free association.”

Judge Kane added, in a stinging rebuke to the Colorado Supreme Court,

This conclusion is so obvious, moreover, that having to adjudicate it in every instance as the Colorado Supreme Court implies is necessary itself offends the First Amendment. By setting in stone the uncertainty that precipitated this litigation in the first place, the Court’s interpretation chills robust discussion at the very core of our electoral process. [Order at 2]

This challenge to Colorado’s registration and reporting requirements applying to small issues-advocacy groups dates back over two years; the original court case, as announced in this press release from the Center for Competitive Politics (a public-interest advocacy organization working to “promote and defend First Amendment rights to free political speech” representing plaintiffs Coalition for a Secular Government) was filed on 2 July 2012.

The Complaint alleged that several provisions of Colorado’s Amendment XXVIII (and implementing state statute, the “Fair Campaign Practices Act” or FCPA) are overbroad, vague, and unconstitutionally infringe upon fundamental free speech rights, as applied to groups engaged in issues advocacy and public policy discussion that are not financed by “large campaign contributions made to influence election outcomes [that] allow wealthy individuals, corporations, and special interest groups to exercise a disproportionate level of influence over the political process” (Amendment XXVIII and FCPA, declaratory purpose).

Colorado’s Constitution (Amendment XXVIII) and state statute (the “Fair Campaign Practices Act” or FCPA) require registration, financial disclosure and reporting by “issue committees” – defined as:

(10) (a) “Issue committee” means any person, other than a natural person, or any group of two or more persons, including natural persons:
(I) That has a major purpose of supporting or opposing any ballot issue or ballot question; or
(II) That has accepted or made contributions or expenditures in excess of two hundred dollars to support or oppose any ballot issue or ballot question.

However, the $200 threshold was invalidated by a 2010 10th Circuit Federal Court case, Sampson v. Buescher – which, although ruling that some $2,000 in contributions and expenditures are “well below the line” at which Colorado’s regulatory burdens are constitutionally acceptable, failed to “draw a bright line below which a ballot-issue committee cannot be required to report contributions and expenditures” [Sampson v. Buescher at 30] – leaving a huge grey area under the law, in which issues-advocacy groups cannot be sure if they’re operating in compliance with the law, or not.

Colorado’s Secretary of State, Scott Gessler, attempted to clarify the rules and eliminate this grey area; after submitting public comment and testimony, including public hearings held on 15 December 2011 on rules changes oriented towards clarifying and reforming Colorado’s unconstitutional campaign finance laws.  (Clear The Bench Colorado‘s Director Matt Arnold spoke out in favor of many of the proposed changes), the Secretary set a new threshold of $5,000 for qualifying as an “issue committee” by rule – which was almost immediately challenged by groups with a history of advocating for restricting free speech, the left-leaning “Common Cause” and “Colorado Ethics Watch” (CEW, pronounced “sue” – it’s what they do) groups (Common Cause v. Gessler, 2012).

The legal challenge to the Secretary of State’s rules changes to issue committee reporting thresholds – and the failure of the ballot initiative opposed by CSG in 2012 to qualify for the ballot – combined to delay resolution of the case, although the federal judge submitted an Order Certifying Questions asking the Colorado Supreme Court for clarification of Colorado’s campaign finance laws in October 2012.

The Colorado Supreme Court heard oral argument on the 1st Amendment challenge to Colorado’s campaign finance laws on 8 May 2013 – which, as a guest commentary by Center for Competitive Politics attorney Tyler Martinez noted, was “Colorado’s Opportunity to Protect First Amendment Rights” in a case that could have had major implications for political free speech nationwide.

Unfortunately – over a year later – the Colorado Supreme Court, instead of striking a blow for free speech rights, punted.  After rejecting the Colorado Secretary of State’s appeal in his attempt to eliminate or at least clarify the legal “grey area” created by the 10th Circuit ruling in Sampson v. Buescher, the Colorado Supreme Court summarily dismissed the previously-submitted certified questions “in light of the Court’s decision in case 12SC783 Gessler v Colorado Common Cause, which was issued June 16, 2014” in an order dated, ironically, 2 years to the day after which the Complaint was originally filed – on 2 July 2014).

As a result, the case wound up back in federal court, without benefit of legal interpretation or guidance from the Colorado Supreme Court.  Following an evidentiary hearing on 3 October, Judge Kane issued his ruling the following Friday (10 October 2014).

After noting that

of the three “proper” justifications for reporting and disclosing campaign finances articulated by the Supreme Court in Buckley v. Valeo, 424 U.S. 1, 68 (1976), only the third – the public’s “informational interest” – applies to ballot issue committees [footnoting that the 1st, contribution limits, and 2nd, quid pro quo corruption, don’t apply in ballot issues][Ruling at 9]

Judge Kane stated that based on the nature of the expenditures,

this is a a case where the state’s informational interest is truly “not obvious.”

since

Colorado’s issue committee disclosure laws are concerned with “large campaign contributions” that allow “wealthy individuals, corporations, and special interest groups to exercise a disproportionate level of influence over the political process.”

Judge Kane’s ruling concludes:

Unfortunately, given the Tenth Circuit’s refusal “to establish a bright line below which a ballot issue committee cannot be required to report contributions and expenditures” and the Supreme Court’s election not to answer the certified questions, I must make a ruling on the specific facts of this case based on what I determine, sui generis, to be reasonable. I say “unfortunately” because this state of affairs means that no precedent has been established and the stability this matter of considerable public importance so needfully requires will have to await another day or days and even more lawsuits.

Based on the foregoing, it is formally ORDERED and DECLARED that CSG’s expected activity of $3,500 does not require registration or disclosure as an “issue committee” and the Secretary is ENJOINED from enforcing FCPA disclosure requirements against it. [Ruling at 30]

Analysis:

Judge Kane’s ruling, although it decisively settles this case and grants relief (and offers prospective relief in future cases) to litigants in awarding attorney’s fees, ultimately fails to resolve the remaining “grey area” remaining as a result of Sampson v. Buescher‘s as-applied invalidation of the $200 threshold for issue committees in the face of the Colorado Supreme Court’s refusal in Gessler v. Common Cause to more broadly settle the issue of where the registration and reporting threshold passes constitutional muster.

Sadly, unless and until the Colorado Supreme Court (or, potentially, the Supreme Court of the United States) definitively rules on the issue, or until Colorado’s unconstitutional campaign finance laws are amended or reformed by ballot initiative and/or legislation, Colorado citizens wishing to associate and pool resources to speak out on issues of public policy will still have to fight for their free speech rights in court.

 Related Articles:

• Colorado Supreme Court to hear 1st Amendment challenge to state’s campaign finance laws
• Colorado’s Opportunity to Protect First Amendment Rights
• Colorado Supreme Court asked by Federal judge to clarify state campaign finance laws
• Speaking Out on Reforming Colorado’s Campaign Finance Laws

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