A Minnesota law requiring all associations to make independent political expenditures through a fund “is most likely unconstitutional,” the U.S. Court of Appeals for the Eighth Circuit has ruled, finding the reporting requirements to be “onerous.”
On September 5, the full appeals court, in a 6-4-1 ruling, partially reversed a lower court’s denial of the plaintiffs’ preliminary injunction motion against several Minnesota campaign finance laws.
The majority opinion in Minnesota Citizens Concerned for Life, Inc. v. Swanson, authored by Chief Judge William Jay Riley, reversed the denial of a preliminary injunction on ongoing reporting requirements for associations that are not Minnesota political action committees (PACs) and remanded the case. Judges Bobby Shepherd, Duane Benton, Raymond Gruender, James Loken and Roger Wollman joined him.
The majority also affirmed the lower court’s denial of a preliminary injunction on Minnesota’s ban on corporate political contributions.
Riley noted that the Eighth Circuit has no opinion at this stage of the case “as to whether any of the other obligations Minnesota imposed upon associations speaking through political funds would, by themselves or collectively, survive exacting scrutiny.”
Judge Michael Melloy filed an opinion concurring in part and dissenting in part, joined by judges Kermit Bye, Diana Murphy and Lavenski Smith.
Judge Steven Colloton filed a separate concurring-in-part and dissenting-in-part opinion.
Three Minnesota organizations sued several Minnesota officials in July 2010 to challenge the constitutionality of certain Minnesota campaign finance laws. Under Minnesota law, companies that wish to make independent election-related expenditures can contribute to an existing political fund or create their own political fund. Political funds must make disclosures to the Minnesota Campaign Finance and Public Disclosure Board.
The plaintiffs claimed the laws violate their rights to make contributions to candidates and political parties and independent expenditures promoting the support or defeat of a particular candidate.
In September 2010, Judge Donovan Frank of the District of Minnesota denied the plaintiffs’ motion for a preliminary injunction.
In May 2011, a divided Eighth Circuit panel affirmed that denial, and the court later agreed to hear the case en banc.
In the court’s en banc opinion, Riley wrote, “By subjecting political funds to the same regulatory burdens as PACs, Minnesota has, in effect, substantially extended the reach of PAC-like regulation to all associations that ever make independent expenditures.”
After detailing the Minnesota’s reporting requirements for political spending, Riley wrote that “the collective burdens associated with Minnesota’s independent expenditure law chill political speech.”
“Because Minnesota has not advanced any relevant correlation between its identified interests and ongoing reporting requirements, we conclude Minnesota’s requirement that all associations make independent expenditures through an independent expenditure political fund…is most likely unconstitutional,” Riley wrote.
Riley then turned to the plaintiffs’ challenge to Minnesota’s prohibition on corporate contributions. He found this ban likely to be constitutional based on the U.S. Supreme Court’s 2003 ruling in FEC v. Beaumont. Quoting from this ruling, Riley wrote, “Put simply, ‘restrictions on contributions require less compelling justification than restrictions on independent spending.’ “
In his concurring and dissenting opinion, Melloy agreed with the majority that “Minnesota’s ban on corporate political contributions is likely constitutional.”
Melloy then wrote that the majority “fails to fully apply” the Supreme Court’s 2010 holding in Citizens United v. Federal Election Commission to the analysis of Minnesota’s reporting requirements. Citizens United held that the First Amendment bars government restrictions on corporations’ and unions’ independent political expenditures.
“First, corporations have a First Amendment right to speak through political contributions…and second, the voting public has a right to know where the money is coming from…In my view, the majority gives short shrift to this second fundamental principle of Citizens United,” Melloy wrote.
Melloy also wrote that while “the Minnesota laws impose some burden on associations wishing to make political expenditures, that burden is not out of proportion with either the state’s interest in the legislation or to other administrative burdens associations bear on a daily basis.”
Colloton’s opinion agreed with the other two opinions that Minnesota’s ban on corporate political contributions is probably constitutional.
Colloton also concurred with Melloy’s opinion on the disclosure requirements except for language about a state interest in deterring “improper or suspect relationships” between elected officials and supporters making independent expenditures: “The other interests invoked by the State are sufficiently important to justify the disclosure requirements at issue here.”
James Bopp Jr. of The Bopp Law Firm in Terre Haute, Ind., who argued for the plaintiffs, said, “I think this is a decision that will turn the corner on some of the post-Citizens United claims that Citizens United gave carte blanche authority for the government to require disclosure.”
Minnesota solicitor general Alan Gilbert who argued for the Minnesota Attorney General’s Office referred questions to Gary Goldsmith, the executive director of the Minnesota Campaign Finance and Public Disclosure Board. Goldsmith said the board was the main respondent in the case. “On our initial reading of the opinion, we do not believe it has the sweeping effect that some commentators have suggested, Goldsmith said.
He also said that the board believes its policy and application of the statute will remedy the problems the appellate court has pointed out, but it would also consider proposing legislation as a long-term solution.
This article originally appeared in The National Law Journal.
