Litigation We're Watching

By Terry Martin

Last Updated 03/1/2019

Exline v. Gilmor (Santa Clara County Superior Court, parties currently filing opening briefs): The Political Reform Act requires public officers to disclose their economic interests on the FPPC Form 700 in order to allow the agency and members of the public to identify conflicts of interest.

A private citizen initiated suit against the Mayor of Santa Clara for failing to list the d/b/a name of a company in which she was alleged to have an ownership interest on multiple Form 700s.

The private citizen initiated the suit after the District Attorney refused to bring an enforcement action, arguing that the Mayor did not have a financial interest in the company during some of those years, and during others she properly reported the legal name of the company even if she omitted the d/b/a name. The case is expected to provide some clarity as to the scope of the required disclosures.

Institute for Free Speech v. Jackley (D. South Dakota, parties currently filing briefs after motion for TRO/PI granted in part and denied in part): South Dakota law requires organizations that incur expenditures over $100 for communications “concerning… ballot questions” to include a statement in their ads disclaiming coordination with any candidate, officeholder, or committee, further revealing the organization’s name, web address, and mailing address, and finally identifying the five largest contributors to the entity in the preceding calendar year

A nonprofit exempt from tax under IRC section 501(c)(3) challenged these restrictions under the First Amendment as being vague for failing to include sufficiently precise definitions for the conditions that trigger the law’s application and for failing to allow a state agency to provide advice as to the same, and by regulating advertisements about issues that are not campaign related.

The case could provide a data point in determining at what point the state’s interest in providing the public with information via comprehensive regulation is overcome by the constitutional guarantee of fair notice, and additionally whether protections for “issue speech” that do not obviously relate to a campaign have continuing significance to campaign finance law in the area of public disclosure.

Citizens for Responsibility and Ethics in Washington v. Federal Election Commission (notice of appeal filed by subject party Crossroads GPS): Federal Election Commission (“FEC”) regulations interpreting the Federal Election Campaign Act (“FECA”) require a committee to disclose a third party contributor only if his contribution is earmarked for a specific independent expenditure.

Citizens for Responsibility and Ethics in Washington (“CREW”) challenged this regulation as being an unreasonable narrowing of the FECA provision it was promulgated to implement. The lower court agreed and struck the regulation.

The subject party, Crossroads GPS, has appealed to the U.S. Court of Appeals for the District of Columbia Circuit, with further proceedings expected to have immediate implications for transparency on the campaign trail and the scope of a federal agency’s authority to promulgate regulations.

Thompson v. Hebdon (9th Circuit, challenge sustained, on remand to D. Alaska where opening briefs are being filed): First Amendment law forbids discriminating against speakers based on identity, with rare exceptions such as certain forms of foreign national participation in the political process. Alaska enforces a statutory provision that limits the aggregate contributions a candidate may accept from out-of-state residents.

A panel of the 9th Circuit ruled that such a law does in fact infringe unconstitutionally on First Amendment rights. Appeal to the 9th Circuit en banc is expected, with potential U.S. Supreme Court interest on the horizon.

Americans for Prosperity Foundation v. Becerra (9th Circuit opinion issued, awaiting certiorari petition): The California Attorney General requires nonprofits exempt from tax under Section 501(c)(3) of the Internal Revenue Code to submit an unredacted Schedule B list of donors and addresses with their annual IRS Form 990 tax returns.

Americans for Prosperity Foundation (“AFPF”) challenged this requirement under the First Amendment’s implied guarantee of expressive association, claiming that by compelling AFPF to submit its donor information to the government, potential donors would be disincentivized for fear of government targeting if the officials disagree with AFPF’s viewpoint.

The 9th Circuit rejected this challenge, arguing that because only the government would see the donor info, AFPF was unlikely to experience harassment, and the risk of inadvertent disclosure was only slight. The case comes against a wide split of authority among lower federal courts regarding the scope of First Amendment privacy rights and the authority of governments to compel disclosure of nonprofit or campaign donor information.