Denise L. Cote – U.S. District Court Judge for the Southern District of New York.

Parts of a state ethics law passed in New York three years ago to compel tax-exempt organizations involved in issue advocacy campaigns to disclose their financial supporters was struck down this week by a federal judge, who said the provisions violated the First Amendment.

U.S. District Judge Denise Cote of the Southern District of New York wrote in a decision handed down late Monday that the law couldn't survive a measure against the right to free speech.

"There is no question that public disclosure of donor identities burdens the First Amendment rights to free speech and free association," Cote wrote.

The law was challenged in federal court three years ago by Citizens Union, a good government group based in New York City that's regularly involved in ethics advocacy campaigns. The group was represented by attorneys from Gibson, Dunn & Crutcher.

Randy Mastro, the lead attorney on the case from Gibson Dunn who also chairs the board of directors for Citizens Union, cheered the decision and criticized the original law in a conversation with the New York Law Journal.

"This state law targeted not-for-profit good government groups that have had the temerity to raise ethics issues and have tried to get the government to do better," Mastro said. "It's blatantly unconstitutional and we are grateful to the court for invalidating it."

They were challenging two parts of a measure passed by the state Legislature, and approved by Gov. Andrew Cuomo to strengthen the state's laws on government ethics and campaign finance. Both measures, broadly, compelled certain tax exempt groups to disclose who their donors were when they spend a certain amount of money.

The first section was written to require a 501(c)(3) to disclose all of its donors who contributed more than $2,500 when the organization makes an in-kind donation to a 501(c)(4) that engages in lobbying, either on its own behalf or through a lobbyist.

The second section was written to require a 501(c)(4) to disclose donors who contribute $1,000 or more when the organization spends more than $10,000 in a calendar year on communications made to at least 500 members of the public concerning political or legislative issues.

The measure, which was intended to promote transparency among the financial backers of groups engaged in issue advocacy, was ironically approved by the Legislature in the middle of the night during the final days of the legislative session in 2016.

Good government groups, like Citizens Union, immediately took issue with the law, saying it would chill their ability to advocate because supporters would be less willing to contribute if they knew their donation would be viewable by the public.

Citizens Union, like other issue advocacy groups, exists as both a 501(c)(3) and 501(c)(4). The former type of group can receive tax-deductible donations but not engage widely in political advocacy, while the latter can be more active on issues without tax-deductible donations.

Under the law, groups like Citizens Union would have had to disclose their donors in certain instances. They argued in the suit three years ago that the mandate violated the First Amendment.

Cote, in the decision handed down Tuesday, agreed with their interpretation of the statute. While there are instances when the government can limit free speech if there's a compelling interest, she wrote, that wasn't the case when this law was approved.

"The First Amendment rights to publicly discuss and advocate on issues of public interest, and to do so anonymously, have long been recognized," Cote wrote.

Richard Azzopardi, a senior adviser to Gov. Andrew Cuomo, who was a target of the lawsuit, said the state is considering appealing the decision.

"Everyone preaches transparency until transparency shows up on their own front door," Azzopardi said. "We are reviewing this decision and considering next steps including appeal but the question remains, what is the advocacy industrial complex hiding?"

Cuomo, earlier this year, had proposed a series of amendments to the provisions of the law challenged by Citizens Union, according to Cote. Lawmakers declined to include them in final negotiations on the state budget in March.

The lawsuit had originally targeted Cuomo, former New York Attorney General Eric Schneiderman, and the Joint Commission on Public Ethics, the state government's ethics watchdog group.

After Citizens Union sued over the measure, the state agreed to delay enforcement of the law until a decision from the federal court on the its constitutionality. Despite taking effect years ago, the law was never enforced by the state, per a stipulation agreed to at the end of 2016.

If the state seeks to appeal the decision, it would go before the Second Circuit U.S. Court of Appeals, but not anytime soon. That means the law, if upheld by the appellate court as written, wouldn't be enforced for quite some time.

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