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Media Alerts - Citizens United v. Gessler- Tenth Circuit
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November 17, 2014
  Citizens United v. Gessler- Tenth Circuit
Headline: Tenth Circuit issues preliminary injunction against Colorado campaign disclosure laws, rules nonprofit group Citizens United qualifies for exemption from disclosure for film

Areas of Law: Constitutional Law

Issues Presented:

1. Does barring Citizens United from qualifying for an exemption from campaign disclosure laws as a media entity for its film, Rocky Mountain Heist, and its advertisements violate Citizens United's First Amendment rights?

Brief Summary:

Citizens United sought review of the district court's denial of a preliminary injunction barring the Colorado Secretary of State from enforcing its disclosure laws against its film, Rocky Mountain Heist, and its advertisements. Citizens United asserted that the Colorado disclosure provisions violated the First Amendment both on its face and as applied to Citizens United because it is treated differently from exempted media. The court held that the disclosure laws were likely to be found unconstitutional as applied to the film, and that a preliminary injunction should have been granted. The case was reversed and remanded. Judge Phillips issued an opinion concurring in part and dissenting in part, agreeing with the majority that the advertisements were not exempted from disclosure laws, but disagreeing with the majority's determination that the film was exempted from disclosure laws.

Extended Summary:

Non-profit organization Citizens United brought suit against the Colorado Secretary of State, challenging Colorado disclosure provisions as contrary to the First Amendment both on their face and as applied to Citizens United because it is treated differently from various media that are exempted from the disclosure provisions. The suit arises out of a film titled Rocky Mountain Heist, which is to be distributed through DVD, television, online streaming and downloading. Some of the advertising for the film mentions Colorado officials running for office, and shows footage of events in favor of, or against, specific candidates. The film falls under what Colorado's campaign-practices laws term "electioneering communications" and "independent expenditures." Citizens United also asked for a preliminary injunction against enforcing the provisions that do not apply to exempted media. The district court denied that injunction, giving rise to this appeal.

The majority reversed the district court without addressing Citizens United's facial challenge to the laws. The majority explained that because Citizens United was likely to succeed on the merits of the case, that it was entitled to the injunction. The court noted three things in particular in support of its decision that the Secretary had not shown a substantial relation between the government's interest in the disclosure requirements and treating Rocky Mountain Heist as an "electioneering communication" or "independent expenditure": "(1) the Colorado disclosure exemptions for printed periodicals, cable and over-the-air broadcasters, and Internet periodicals and blogs, (2) the rationale presented for these exemptions, and (3) Citizen United's history of producing and distributing two dozen documentary films over the course of a decade." Citizens United failed to show, however, that its advertisements should be exempted, because it failed to show how it would be treated differently from exempted media.

The majority began by noting that "electioneering communications are statements about candidates made shortly before an election," while expenditures are "money spent to endorse or oppose a candidate." It also quoted from the Colorado Constitution and Colorado's Fair Campaign Practices Act for the definition of independent expenditure as "an expenditure that is not controlled by or coordinated with any candidate or agent of such candidate." It also noted that the term "candidate" only means candidates for office in Colorado. Under the Colorado Constitution, any person who spends $1000 or more in one year on electioneering communications must make a report to the Secretary that includes the amounts spent, the name of the candidate in the communication, and the name, address, occupation and employer of anyone who donates more than $250 per year for the communication. The reports are due every two weeks in the two months before a general election, and a final report must be submitted 30 days after the election.

The court noted that the Secretary admitted an oversight of this section of the disclosure requirements at oral argument, explaining that he does not require disclosure because there is no communicative aspect to the production. Further, the disclosure requirements only require disclosure of amounts that are donated specifically for electioneering communications.

With respect to independent expenditures, the Colorado Constitution states that any person who makes an independent expenditure of $1000 or more in one year must give notice to the Secretary describing the use of the independent expenditure, stating the amount and the candidate the expenditure is intended to support or oppose. Anyone who wishes to make an independent expenditure or accept a donation to make an independent expenditure must create a committee and register with the secretary. If the person is a corporation, it must also report details about its corporate form and ownership structure. Finally, the person must maintain a separate bank account for independent expenditure purposes.

Any person that makes more than $1000 of independent expenditures in one year must report the amounts spent and the name, address, occupation, and employer of anyone who donated more than $250 for the making of an independent expenditure. Additionally, any donation over $20 for the making of an independent expenditure during the reporting period must be disclosed. The same timeline for electioneering communications applies, except that expenditures made within 30 days of a general or primary election must be reported 48 hours after obligating the money for an independent expenditure.

The majority explained that the expenditure laws would require disclosure of production costs if Rocky Mountain Heist attacked or supported a candidate, but did not require donations to be disclosed if they were not specifically earmarked for the purpose of supporting or attacking Colorado candidates.

Next the majority noted that any person who feels there has been a violation of the disclosure laws may seek enforcement by filing a complaint with the Secretary, who then refers it to an administrative law judge. If the judge finds a violation and the Secretary does not file an enforcement action within 30 days, the complainant may file suit in state district court. The penalty for violating the disclosure requirements is $50 per day for every day that the information is not filed. If the party fails to file three or more reports in a row, it is subject to a penalty of $500 per day for each day the report is not filed.

The court then set forth the exceptions excluded from the definition of expenditure listed in the Colorado Constitution and the statutes. It also noted that there are four exemptions from the definition of electioneering communication, three of which are practically the same as the expenditures exemption. The court noted that the Secretary has interpreted the first two exemptions broadly - for printed periodicals and broadcast facilities. Although there is a question as to whether something like a blog is a periodical, the Secretary stated that he uses court decisions as guidance for his decisions. The court noted that not all campaign-related activity by exempted media qualifies for an exemption. For example, an advertisement that expressly states support for a candidate, or opposes one may be treated as an electioneering communication or expenditure.

Citizens United filed for a Declaratory Order with the Secretary asserting that Rocky Mountain Heist and related advertisements were not electioneering communications or expenditures, arguing that the Federal Election Commission granted it an exemption from disclosure, and noting that the Federal Election Campaign Act of 1971 had definitions of electioneering communications and expenditures similar to Colorado's. The Secretary denied the order, holding that the film and advertising did not qualify for an exemption as print media, and that Citizens United is not a broadcast facility. Further, it stated that the regular-business exemption did not apply because the exemption only applied to persons who distribute content as a service, relying on Colorado Citizens for Ethics in Government v. Committee for the American Dream, 187 P.3d 1207 (Colo. Ct. App. 2008). Additionally, the Secretary stated that it could not read a "press exemption" similar to the FEC's exemption for Citizen United's films into the plain language of Colorado law. The Secretary determined it was an electioneering communication, but did not determine whether it was an independent expenditure. Rather than having the Order reviewed by a Colorado Court, Citizens United filed suit in federal court and requested an injunction.

Citizens United attacked the exemptions for print and broadcast media arguing that the exemptions are facially invalid because they discriminate based on the identity of the speaker and alternatively that Citizens United should qualify for the same exemptions as print and broadcast media.

The majority stated that the court must consider "(1) the likelihood that the movant will succeed on the merits; (2) the threat of irreparable harm to the movant; (3) the relative weight of the harm alleged by the movant and the harm to the non-moving party; and (4) the public interest" in deciding whether to grant a preliminary injunction. The standard of review of a court denying a preliminary injunction is abuse of discretion.

The majority did not address Citizens United's facial challenge, but stated that it did agree with Citizens United's position on the as-applied challenge. The majority began by stating that the laws had to reach the standard of exacting scrutiny.

The majority considered the government's interest in disclosure, which the Secretary stated were to ensure that electors can discern who is attempting to influence their votes and to discourage corruption by making independent expenditures public record. The majority recognized that the Supreme Court had already recognized that disclosures is helpful to keep voting citizens informed. Citizens United v.Fed. Election Comm'n , 558 U.S. 310 368 (2010), but did not accept the Secretary's assertion of the need for disclosure laws to prevent corruption. The Secretary relied on McCutcheon v. Federal Election Commission, 134 S. Ct. 1434, 1459 (2014) and Buckley v. Valeo, 424 U.S. 1 at 67 (1976), but the court explained that these cases were distinguishable because the disclosure requirements applied to more than independent expenditures. Further, the majority pointed to the Supreme Court's decision in Citizens United, where the Court determined that independent expenditures are not tied to corruption. Under Citizens United, the majority stated that the Secretary failed to show how disclosures of independent expenditures would deter quid pro quo corruption.

Next the majority explained the rationale for exempting the media. No reporting is required for news or opinion pieces in periodicals, or for letters to the editor or op-eds. Additionally, newspapers and blogs are considered "printed" even if they have an ideological bias. Further, opinions stated in broadcasts are exempt. News reports by broadcast media are treated the same as news reports in print media by the Secretary even though there is not a stated exemption for them.

The Secretary offered a number of explanations for the media exemptions. The first -- that corporations which are part of the media industry are different than those that are not in the news business -- the court determined was not valid after the Supreme Court's decision in Citizens United, and that such a distinction cannot be the basis for disparate treatment under the First Amendment. The second, that political advertisements disrupt the transparent, balanced, and accountable manner of journalism, the court stated was invalid because newspapers and broadcast station are not all transparent, balanced and accountable. The third justification, that the electorate can properly assess a statement by exempted media because it is familiar with the source, the court stated does have some merit, and stated that it was at least reasonable to allow a media exemption on this ground. The length of time and frequency of communications with the electorate gives the electorate the ability to evaluate the source. The Secretary, however, has not explained why Citizens United does not qualify for this same exemption.

Although the Secretary analogized Citizens United to "drop-in" advocates, the majority analogized Citizens United to exempted blogs and opinion shows because of their history of producing works similar to TV reports or magazines than to advertising clips. The length of time and variety of topics provide information about the organization that the public may use for evaluation.

The majority then addressed the dissent's critique that it should not focus on the disclosure but on the substantial relation between the State's interest and the disclosure scheme as a whole. It responded by explaining that this approach precludes review of as-applied challenges, and noted that courts often uphold laws while eliminating them in specific instances. Further, the dissent argued that a statutory imposition can withstand constitutional scrutiny when it recognizes exemptions because statutes can be constitutionally sound when there are no exemptions. The majority responded that exemptions call the validity of a governmental interest into question because it suggests that the governmental interest may be narrower than it asserts. The majority explained that in Greater New Orleans Broadcasting Ass'n v. U.S., 527 U.S. 173 (1999), the Supreme Court struck down a ban on broadcasting advertisements for casino gaming because the statute allowed for exemptions for other forms of legal gaming that undermined the asserted governmental interests. Finally, the majority stated that the dissent's concerns about figuring out who qualifies for a media exemption was not a sufficient reason to avoid deciding a constitutional question, and noted that this is an issue that the Secretary has already had to deal with.

The majority stated that its holding does not apply to advertisements for Rocky Mountain Heist. The advertisements do not come within the media exemption and Citizens United has not shown that it should be treated differently from exempted media.

Finally, the court held that the other issues regarding the preliminary injunction were easily resolved. Citizens United would suffer irreparable injury if it were forced to comply with the disclosure provisions. Additionally, because the challenge includes issues of constitutional law, the government's interests do not outweigh Citizens United's interest in protecting its constitutional rights. Further, the public interest is always protected in preventing the violation of constitutional rights. Thus, the preliminary injunction factors weight in favor of Citizens United.

Judge Phillips issued an opinion concurring in part and dissenting in part. He agreed with the majority that Citizens United should comply with the disclosure requirements for the advertisements related to Rocky Mountain Heist, but dissented from the majority opinion that the disclosure requirements violated Citizens United's First Amendment rights.

Judge Phillips agreed that exacting scrutiny was the proper standard of review, and that the government interest in ensuring that electors are able to evaluate who is trying to influence their votes is a sufficient reason to uphold the disclosure requirements against a First Amendment challenge. Judge Phillips, however, agreed with the reasoning of the district court that the governmental interest and the disclosure scheme should be evaluated as a whole as opposed to as a "single hypothetical."

Judge Phillips criticized the majority's approach to the case because he believes it is essentially a First Amendment/Equal Protection legal theory, for which the court cites no cases. Additionally, Judge Phillips asserts that the Denver Post is distinguishable from Citizens United because unlike subscribers, advertisers or lenders from the Post, voters may wish to know who is contributing to the making of Citizens United's films. Furthermore, Judge Phillips believes that the assumption that Citizens United is being treated differently from exempted media is an error. Judge Phillips also pointed out that traditional news organizations do not do fundraising for advocacy pieces in the same way that Citizens United does.

Judge Philips also criticized the majority's remedy upon finding that the disclosure scheme is contrary to the First Amendment, because it should either sever the media exemption or strike the disclosure scheme altogether. Judge Phillips stated that the majority's approach of essentially adding in a category of entities that have a right to an exemption is very close to lawmaking.

Finally, Judge Phillips states that although the majority does not adopt this reasoning explicitly, he disagrees with Citizens United's argument that the FEC advisory opinions supports its position. The advisory opinions grant the exemption under the federal disclosure provisions, not under the First Amendment.

To read the full opinion, please visit:

https://www.ca10.uscourts.gov/opinions/14/14-1387.pdf

Panel: Hartz, Tymkovich, Phillips

Date of Issued Opinion: November 12, 2014

Docket Number: No. 14-1387

Decided: Decision by the district court to deny a preliminary injunction was reversed and remanded.

Counsel:

Theodore B. Olson, Gibson, Dunn & Crutcher LLP, (Matthew D. McGill, Amir C.
Tayrani, Lucas C. Townsend, Gibson, Dunn & Crutcher LLP, and Michael Boos,
Citizens United, with him on the brief), Washington, D.C., for Plaintiff -Appellant.

Matthew D. Grove, Assistant Solicitor General, (Daniel D. Domenico, Solicitor General; Leeann Morrill, First Assistant Attorney General; Kathryn A. Starnella, Assistant Attorney General; with him on the brief), Public Official Unit, State Services Section, Denver, Colorado, for Defendants - Appellees.

Martha M. Tierney and Edward T. Ramey, Heizer Paul LLP, Denver, Colorado, filed an Intervenor-Defendants' Brief for Colorado Democratic Party, Garold A. Fornander, Lucía Guzmán, and Dickey Lee Hullinghorst.

David R. Fine and Lino S. Lipinsky de Orlov, McKenna Long & Aldridge LLP, Denver, Colorado; Luis A. Toro and Margaret G. Perl, Colorado Ethics Watch, Denver, Colorado, filed an amicus curiae brief for Citizens for Responsibility and Ethics in Washington, Colorado Common Cause, Colorado Ethics Watch, and Progressive United.

Author: Hartz

Case Alert Author: Ashley L. Funkhouser

Case Alert Circuit Supervisor: Barbara Bergman

    Posted By: Dawinder Sidhu @ 11/17/2014 09:22 AM     10th Circuit  

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