Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00921/USCOURTS-azd-2_11-cv-00921-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 28:1331 Fed. Question

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United Food and Commercial Workers

Local 99 et al., 

Plaintiffs, 

-andArizona Education Association, et al.,

Plaintiff-Intervenors,

vs.

Jan Brewer, in her capacity as Governor of

the State of Arizona, et al., 

Defendant.

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No. CV-11-921-PHX-GMS

ORDER

Pending before this Court are Plaintiffs’ Motion for Preliminary Injunction and

Plaintiff-Intervenors’ Motion for Preliminary Injunction. (Docs. 14, 77). For the reasons

stated below, Plaintiff-Intervenors’ Motion is granted and Plaintiffs’ Motion is dismissed as

moot.

BACKGROUND

An employee in the state of Arizona may authorize his or her employer to withhold

certain amounts from the employee’s pay and to transfer those funds to a separate entity.

Through such payroll deduction programs, employees pay their health care or other welfare

benefit premiums to insurance companies, invest for retirement with banks and financial

institutions, make donations to charitable organizations, and pay dues to their unions. All of

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1

 Charitable organizations may lose their federal tax-exempt status if a “substantial

part” of their activities include “carrying on propaganda, or otherwise attempting, to

influence legislation.” 26 U.S.C. § 501(c)(3). Although there is no statutory or regulatory

definition of what constitutes a “substantial part” of an organization’s activities, courts have

found that less than 5% of an organization’s activity is not substantial, while over 16.6% is

substantial. See Seasongood v. Comm’r, 227 F.2d 907 (6th Cir. 1955); Haswell v. U.S., 500

F.2d 1133 (Ct. Cl. 1974).

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these organizations are permitted to engage in political activity, including lobbying, by using

money in their general operating fund. See Citizens United v. FEC, 130 S. Ct. 876, 904

(2010).1

On April 18 and 19, 2011, the Arizona House and Senate passed Senate Bill 1365, the

“Protect Arizona Employees’ Paychecks from Politics Act,” 2011 Arizona Session Laws,

Chapter 251, which Governor Janice K. Brewer signed into law on April 26, 2011.The law

amended Title 23, Chapter 2, Article 7 of the Arizona Revised Statutes (“A.R.S.”) by adding

section 23-361.02. The statute requires that organizations collecting funds through checkoff

payroll deductions either affirm to the employers who process the deductions that none of

their general fund is used for “political purposes,” or specify the percentage of their general

fund so used. A.R.S. § 23-361.02(B). The law defines “political purposes” to mean

“supporting or opposing any candidate for public office, political party, referendum, initiative,

political issue advocacy, political action committee, or other similar group.” Id. § 23-

361.02(I). Employers may not deduct the percentage of an employee’s contribution used for

political purposes without written authorization from the employee; consent must be reauthorized each year. Id. § 23-361.02(B),(C). An organization receiving funds from payroll

deduction that spends more of its operating fund on political purposes than the percentage it

reported to the employer is subject to a minimum civil fine of $10,000. Id. § 23-361.02(D).

While the law is written to have general application to all payroll deductions, it

explicitly exempts a number of types of deductions from its scope, including, among others,

deductions for the benefit of charitable organizations and organizations that provide employee

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 No injunction is sought against SB 1363.

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health care, retiree, or welfare benefits. Id. § 23-361.02(E). In addition, SB 1365 excludes

from its definition of employee “any public safety employee, including a peace officer,

firefighter, corrections officer, probation officer or surveillance officer.” Id. § 23-361.02(H).

As a result, no public safety employee union would be obliged to comply with the statute to

obtain its dues through payroll deductions from public safety employees. The law is scheduled

to go into effect on October 1, 2011. Id. § 23-361.02(A).

On May 9, 2011, Plaintiffs United Food & Commercial Workers 99, et al. filed a

complaint challenging SB 1365’s companion legislation, SB 1363, as unconstitutional. (Doc.

1). Plaintiffs amended their complaint to allege that SB 1365 is also unconstitutional. (Doc.

8). Plaintiffs further moved for a preliminary injunction to prevent SB 1365 from going into

effect. (Doc. 14).2

 This Court granted leave to the American Education Association and other

unions to intervene as Plaintiffs. (Doc. 47). Plaintiff-Intervenors moved for a preliminary

injunction on August 4, 2011. (Doc. 77). This Order considers the claims made in both

Plaintiffs’ and Plaintiff-Intervenors’ motions.

DISCUSSION

I. SUBJECT-MATTER JURISDICTION AND RIPENESS

In their response, Defendants apparently incorporate the arguments made in their

Motion to Dismiss on lack of subject-matter jurisdiction, lack of ripeness, and immunity from

suit under the Eleventh Amendment to the United States Constitution. (Doc. 50). To the extent

they do so, these arguments lack merit. Federal courts have subject-matter jurisdiction over

“all civil actions arising under the Constitution, laws, or treaties of the United States.” 28

U.S.C. § 1331. Plaintiffs allege that SB 1365 is pre-empted by the Supremacy Clause of the

U.S. Constitution, and Plaintiff-Intervenors allege that SB 1365 violates the First Amendment.

(Docs. 8, 52). The Court has jurisdiction to entertain constitutional challenges to state statutes.

28 U.S.C. § 1331. To the extent that the parties allege they may choose to restrict their own

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 In their Motion to Dismiss, State Defendants further argue that Governor Brewer,

Secretary of State Bennett, and Director of the Labor Department Maruca are immune from

suit under the Eleventh Amendment. (Doc. 40). Because Plaintiff-Intervenors have only

sought a preliminary injunction against Attorney General Horne, it is not yet necessary to

determine whether immunity protects the other parties. (Doc. 77).

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speech in order to comply with an unconstitutional law, the complaint is ripe for adjudication.

LSO, Ltd. v. Stroh, 205 F.3d 1146, 1154–55 (9th Cir. 2000) (holding that a court may hear a

constitutional challenge to a law that has not yet been enforced when “the plaintiff intends to

engage in ‘a course of conduct arguably affected with a constitutional interest’ and that there

is a credible threat that the challenged provision will be invoked against the plaintiff.”)

(quoting Babbitt v. United Farm Workers Nat’l Union, 442 U.S. 289, 298 (1979)). Finally,

Plaintiff-Intervernors are seeking injunctive relief against the Attorney General to prevent him

from enforcing an allegedly unconstitutional state law; such suits are not barred by the

Eleventh Amendment because “official-capacity actions for prospective relief are not treated

as actions against the State.” Kentucky v. Graham, 473 U.S. 159, 167 n.14 (1985); see also

Ex Parte Young, 209 U.S. 123 (1908).3

II. LEGAL STANDARD

To be granted a preliminary injunction, a plaintiff must establish four elements. A

plaintiff must establish “that he is likely to succeed on the merits, that he is likely to suffer

irreparable harm in the absence of preliminary relief, that the balance of equities tips in his

favor, and that an injunction is in the public interest.” Winter v. Nat’t Res. Def. Council, 555

U.S. 7, 20 (2008); see FED. R. CIV. P. 65. The Ninth Circuit continues to analyze these four

elements using a “sliding scale” approach, in which “the elements of the preliminary

injunction test are balanced, so that a stronger showing of one element may offset a weaker

showing of another.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir.

2011). The element of irreparable injury is not subject to balance; the moving party must

“demonstrate that irreparable injury is likely in the absence of an injunction.” Winter, 555

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U.S. at 22 (emphasis in original). Should the moving party demonstrate a very high likelihood

of injury, however, the likelihood of success on the merits may be relaxed. In such cases, an

injunction may be granted when “serious questions going to the merits were raised and the

balance of hardships tips sharply in the plaintiff’s favor.” Wild Rockies, 632 F.3d at 1135,

quoting The Lands Council v. McNair, 57 F.3d 981, 987 (9th Cir. 2008).

III. MERIT OF CLAIMS

Plaintiffs make three broad arguments regarding SB 1365. First, they argue that the

statute is unconstitutional under the Supremacy Clause because it is pre-empted by the Labor

Management Relations Act (“LMRA”) and the National Labor Relations Act (“NLRA”).

Next, they argue that the statute is impermissibly vague and overbroad. Finally, they claim

that the statute is pre-empted by the Federal Election Campaign Act (“FECA”). (Doc. 14).

Plaintiff-Intervenors argue that the law violates the First Amendment, both because it burdens

protected political speech and it discriminates on the basis of speaker and viewpoint. Next,

they argue that the law violates the Fourteenth Amendment because its exception for public

safety unions is not rationally related to a legitimate governmental interest. They also argue

that the law imposes unconstitutional conditions on payroll deductions. They claim that the

law violates the Contracts Clause of the United States Constitution. They also assert that the

statute is unconstitutionally vague. (Doc. 77).

This Order addresses the First Amendment challenges in detail. Because the Court

determines that Plaintiffs are likely to succeed in demonstrating that SB 1365 violates the First

Amendment, Defendants are from enforcing it, pending determination on the merits. It will

therefore not be necessary to discuss Plaintiffs’ and Plaintiff-Intervenors’ remaining claims.

The statute specifically exempts from its regulatory structure payroll deductions for

contributions to charitable organizations; payments to organizations that administer

healthcare, retirement, or welfare benefits; payment of taxes; and donations to unions’

political action committees. A.R.S. § 23-361.02(E). Five types of public safety employees,

including police officers, firefighters, corrections officers, probation officers, and surveillance

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officers, are exempted from the law’s definition of “employee.” Id. § 23-361.02(H). As a

result, the burdens imposed by the law do not fall equally on similarly-situated groups. The

law therefore violates the First Amendment by discriminating against “those wishing to

express less favored or more controversial views.” Police Dept. of City of Chicago v. Mosley,

408 U.S. 92, 96 (1972).

Viewpoint discrimination occurs when the government burdens “speech by particular

speakers, thereby suppressing a particular view about a subject.” Moss v. U.S. Secret Service,

572 F.3d 962, 970 (9th Cir. 2009) (internal quotations omitted). Statutes engage in viewpoint

discrimination when they place “special prohibitions on those speakers who express views on

disfavored subjects.” R.A.V. v. St. Paul, 505 U.S. 377, 391 (1992). “The government must

abstain from regulating speech when the specific motivating ideology or the opinion or

perspective of the speaker is the rationale for the restriction.” Rosenberger v. Rector and

Visitors of the University of Virginia, 515 U.S. 819, 829 (1995). On the other hand, “laws that

confer benefits or impose burdens on speech without reference to the ideas or views expressed

are in most instances content neutral.” Turner Broad. Sys. v. F.C.C., 512 U.S. 622, 643

(1994).

A regulation that burdens speech may discriminate by viewpoint through its

underinclusiveness—that is, because it fails to burden all similarly situated parties equally.

In particular, “an exemption from an otherwise permissible regulation of speech may represent

a governmental ‘attempt to give one side of a debatable public question an advantage in

expressing its views to the people.’” City of Ladue v. Gilleo, 512 U.S. 43, 51 (1994) (quoting

First Nat. Bank of Boston v. Bellotti, 435 U.S. 765, 785 (1978)). “Underinclusiveness raises

serious doubts about whether the government is in fact pursuing the interest it invokes, rather

than disfavoring a particular speaker or viewpoint.” Brown v. Entertainment Merchants

Ass’n., 131 S. Ct 2729, 2740 (2011).

A recent Supreme Court case upholding a statute barring public sector employees from

contributing to political action committees through payroll deductions includes instructive

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commentary on underinclusiveness. See Ysursa v. Pocatello Educ. Ass’n., 129 S. Ct. 1093

(2009). The statute at issue in Ysursa prevented public-sector employees from using the

payroll-deduction system to donate to any political action committee. I.C. §§ 44.2001–07. The

law only applied to public-sector employees and only prohibited them from using payroll

deduction to donate to overtly political organizations. Id. It treated union and non-union

employees identically, did not exempt particular unions, and did not change how union

members paid their regular dues. Id. The Court reasoned that the statute was not subject to

strict scrutiny, because “Idaho does not suppress political speech but simply declines to

promote it through public employer checkoffs for political activities.” Ysursa, 129 S. Ct. at

1099. The Court emphasized that the statute does not impose on First Amendment rights

because it “applies to all organizations, to any deduction regarding political issues, applies

regardless of viewpoint or message, applies to all employers, and it does not single out any

candidates or issues.” Id. at 1099 n.3. The Court emphasized that the law’s treatment of

similarly-situated organizations (all of them overtly political organizations) was

“evenhanded.” Id. It further stated that, should the state enforce the ban in an uneven manner,

the unions could bring a challenge to the law as it was applied, suggesting that such

enforcement might violate the First Amendment. Id.

The law at issue here, however, places restrictions on an employee’s ability to donate

through payroll deductions to an organization that engages in political activity depending

upon the identity of the organization receiving the donation. Employees may thus use payroll

deductions to supply money to charitable organizations; banks, trusts, and organizations that

administer retiree plans; or insurance companies or other organizations that provide health

care or welfare benefits. A.R.S. § 23-361.02(E)(1–5). The Defendants do not dispute that such

organizations may spend such funds for political purposes. Moreover, SB 1365 overtly

exempts employees who typically are members of public safety unions from its regulations.

Id. § 23-361.02(H). The functional result of SB 1365’s numerous exceptions is that the

burdens imposed by the law fall principally, if not solely, on unions collecting dues. Even

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then, they do not fall squarely on unions representing police officers, firefighters, corrections

officers, probation officers, or surveillance officers. Id.

Organizations that wish to use payroll deduction to fund their political activity but are

not exempted from the statute are disadvantaged from doing so in at least three ways. First,

the statute requires them to disclose to the employers of their constituents the maximum

percent of the amount deducted that will be used for political activity. A.R.S. § 23-361.02(B).

Second, the law imposes a minimum fine of $10,000 per occurrence if an organization

exceeds that maximum percent. Id. § 23-361.02(D). Third, it requires the annual authorization

of each employee to initiate or continue payroll deduction. Id. § 23-361.02(B). Exempted

organizations are subject to no such requirements to receive payroll deductions subsidizing

their political activity.

As the Court recognized in Citizens United, some disclosure requirements that may

burden speech are subjected to something less than strict scrutiny. Citizens United, 130 S.Ct.

at 915 (holding a statute requiring the identification of political contributors valid because the

state demonstrated “a ‘substantial relation’ between the disclosure requirement and a

‘sufficiently important’ governmental interest.”) (quoting Buckley v. Valeo, 424 U.S. 1, 64,

66 (1976). Of course, there are a number of distinctions between the permissible disclosure

requirement discussed in Citizens United and the statute set forth here. First among them is

that Citizens United made no suggestion that the state could compel some political speakers

in a similar class to disclose their donors, while exempting other similarly-situated political

speakers from such a requirement.

Second, unlike the provisions upheld in Citizens United or Buckley, the requirements

of SB 1365 are forward-looking. They apparently require the non-exempt organizations to

anticipate in advance the amount they intend to spend on political purposes for a given year.

If they underestimate, they are penalized a minimum of $10,000. A.R.S. 23-361.02(A),(D).

This fine “serves to deter and may even preclude expression necessary to provide an

immediate response to late-breaking events.” Grossman v. City of Portland, 33 F.3d 1200,

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1206 (9th Cir. 1994) (internal quotations omitted). Since such organizations would be bound

by estimates they must make long before the facts of any particular political season emerge

with clarity, the provision places a $10,000 penalty on “speech in situations where the

communication was not, or could not have been, prepared far enough in advance.” Arizona

Right to Life Political Action Committee v. Bayless, 320 F. 3d 1002, 1008 (9th Cir. 2003).

This fine, and the ceiling on spending that this fine enforces, is not a disclosure

requirement. It is a financial burden that political speakers subject to the law may be required

to pay to match the speech of their political opponents. The Supreme Court has held that

adding costs to political speech relative to a political speaker’s rivals represents “a special and

potentially significant burden.” Davis v. Federal Election Comm’n, 554 U.S. 724, 739 (2008);

see also Arizona Free Enterprise Club’s Freedom Club Freedom PAC v. Bennett, 131 S.Ct.

2806, 2822 (2011).

The Court, however, need not analyze whether the state, through a law written to be

generally applicable and uniformly applied, could impose such burdens on collecting funds

through the payroll deduction program for political purposes. The statute at issue is not

generally applicable, and is not “evenhanded.” Ysursa, 129 S. Ct. at 1099 n.3. By imposing

its burdens on the political speech of some unions and other organizations and not imposing

like costs upon other similarly-situated unions, or on other organizations that can use the

funds for political activity, the law is underinclusive and discriminates according to speaker.

City of Ladue, 512 U.S. at 51. As such, the law is subject to strict scrutiny. Defendants do not

argue that SB 1365 can survive strict scrutiny. Plaintiffs are therefore likely to succeed on the

merits of their claim that the law violates the First Amendment and is therefore

unconstitutional.

The statute contains a severability clause, which provides that “[i]f any provision of

this act or its application to any person or circumstance is held invalid, the invalidity shall not

affect other provisions or applications of this act that can be given effect without the invalid

provision or application, and to this end the provisions of this act are severable.” Ariz. Laws

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2011, Ch. 251 § 3. Whether or not to enforce a severability provision “is of course a matter

of state law.” Leavitt v. Jane L., 518 U.S. 137, 139 (1996). In Arizona, determining whether

a provision may be severed “requires ascertaining legislative intent.” Republic Inv. Fund v.

Town of Surprise, 166 Ariz. 143, 151, 800 P.2d 1259 (1990). A court may invalidate a law

in its entirety if the valid and invalid portions are so interrelated as “to raise the presumption

that the legislature would not have enacted the one without the other.” Campana v. Arizona

State Land Dep’t, 176 Ariz. 288, 294, 860 P.2d 1341, 1347 (1993) (internal quotations

omitted).

Here, to render SB 1365 viewpoint-neutral, it would be necessary to sever not merely

the public safety employee provisions, but also the exemptions for donations to charitable

organizations and to health, welfare and retiree benefit associations as well. A.R.S. § 23-

361.02(E)(2–3),(H). As a result, every charity, health insurance company, bank, or investment

firm that receives money through any Arizona worker’s payroll deduction would need to start

complying with the law’s provisions by October 1. Such a law would be dramatically broader

in scope than the one that the legislature in fact passed. Arizona courts have refused to strike

unconstitutional exceptions to legislation when they conclude “that the legislature would not

have enacted the statute without [the exception].” In re Cesar R., 197 Ariz. 437, 441, 4 P.3d

980, 984 (1999). Striking only the exceptions and permitting a much broader regulation

would, “in effect, cause the court to legislate a blanket [regulation] that the [legislature] did

not itself enact.” World Wide Rush, LLC v. City of L.A., 563 F. Supp. 2d 1132, 1146 (C.D.

Cal. 2008). For this reason, the Court determines that it cannot sever the sections of the statute

that make it likely Plaintiff-Intervenors will prevail on their claims.

IV. IRREPARABLE HARM

In addition to demonstrating a likelihood of success on the merits, Plaintiffs must

demonstrate “that irreparable injury is likely in the absence of an injunction.” Winter, 555 U.S.

at 20 (emphasis in original). “The loss of First Amendment freedoms, for even minimal

periods of time, unquestionably constitutes irreparable injury.” Elrod v. Burns, 427 U.S. 347,

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373 (1976). When the speech that is so burdened is political in nature, “[t]he harm is

particularly irreparable.” Klein v. City of San Clemente, 584 F. 3d 1196, 1208 (9th Cir. 2009).

Since Plaintiff-Intervenors’ claim implicates the core protections offered by the First

Amendment, the harms they would suffer should SB 1365 go into effect are irreparable per

se.

V. BALANCE OF EQUITIES

The third preliminary injunction factor requires the court “to balance the interests of

all parties and weigh the damage to each.” L.A. Memorial Coliseum Comm’n v. Nat’l Football

League, 634 F.2d 1197, 1203 (9th Cir. 1980). At this step, “balancing the injury of a third

party against plaintiff’s” is frowned upon. Id.

As discussed above, Plaintiffs and Plaintiff-Intervenors have demonstrated that they

are likely to suffer irreparable loss of core First Amendment rights. Defendants will suffer the

hardship of both delay in the implementation of the law should it ultimately be found to be

constitutional and delay in writing the rules that will implement the legislation. Defendants’

harms are not substantial enough to tip the balance of equities against Plaintiffs and PlaintiffIntervenors. The balance of equities weigh in favor of an injunction.

VI. PUBLIC INTEREST

 Determining whether an injunction is in the public interest “addresses impact on nonparties rather than parties.” Sammartano v. First Judicial Dist. Court, 303 F.3d 959, 974 (9th

Cir. 2002). In the First Amendment context, the public interest can tilt against an injunction

in certain limited circumstances. See, e.g., Hale v. Dep’t of Energy, 806 F.2d 910, 918 (9th

Cir. 1986) (safety and security of nuclear testing site may favor public interest over First

Amendment claim). Ordinarily, however, courts have “consistently recognized the significant

public interest in upholding First Amendment principles,” even when the rights at stake are

those of the parties and not the general public. Sammartano, 303 F.3d at 974. Moreover,

employees and organizations who are not parties to this lawsuit would see their political

speech burdened should the law go into effect. Since Plaintiff-Intervenors demonstrate that

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they are likely to succeed in showing that the law violates the First Amendment because it

discriminates according to viewpoint, the public interest tilts in favor of an injunction.

VII. SECURITY

A court may issue a preliminary injunction “only if the movant gives security in an

amount that the court considers proper to pay the costs and damages sustained by any party

found to have been wrongfully enjoined or restrained.” FED. R. CIV. P. 65(c). Although the

plain language of the rule suggests that a bond is mandatory, the Ninth Circuit has held that

it “invests the district court with discretion as to the amount of security required, if any.”

Johnson v. Courturier, 575 F.3d 1067, 1086 (9th Cir. 2009). A district court need not require

a bond “when it concludes there is no realistic likelihood of harm to the defendant from

enjoining his or her conduct.” Jorgensen v. Cassiday, 320 F.3d 906, 919 (9th Cir. 2003).

There is no realistic likelihood that Defendants will be harmed by being enjoined from

enforcing a law that constitutes viewpoint discrimination in violation of the First Amendment

on its face. No bond will be required.

VIII. OTHER CLAIMS

The Court has read and considered the remaining claims, and the statute presents

further questions beyond those discussed above. The pre-emption questions are serious and

complex. However, since SB 1365, as a law of general application, could only be pre-empted

as it applies to private sector employees covered by the LMRA and the NLRA, and since

Defendants are, at any rate, enjoined from enforcing the law in its entirety on First

Amendment grounds, it is unnecessary at this stage to determine such issues. For the same

reason, the Court will refrain from ruling on the other claims, including those alleging that the

law is impermissibly vague, imposes unconstitutional conditions, violates equal protection,

is pre-empted by election law, and violates the Contracts Clause.

CONCLUSION

Plaintiffs and Plaintiff-Intervenors have shown a likelihood that they will succeed in

demonstrating that the law’s exceptions render it underinclusive, and that it therefore

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discriminates according to viewpoint in violation of the First Amendment. The claims allege

constitutional harms, which are necessarily irreparable. The balance of equities and the public

interest likewise tilt in favor of enjoining a law that implicates core constitutional rights.

IT IS THEREFORE ORDERED that Plaintiff-Intervenors’ Motion for a Preliminary

Injunction (Doc. 77) is GRANTED.

IT IS FURTHER ORDERED that Plaintiffs’ Motion for a Preliminary Injunction

(Doc. 14) is DISMISSED AS MOOT.

IT IS FURTHER ORDERED that Attorney General Horne is preliminarily enjoined

from enforcing Senate Bill 1365, creating A.R.S. § 23-361.02.

DATED this 23rd day of September, 2011.

Case 2:11-cv-00921-GMS Document 99 Filed 09/23/11 Page 13 of 13