Source: https://ij.org/case/arizona-free-enterprise-clubs-freedom-club-pac-v-bennett/
Timestamp: 2019-04-26 10:00:50+00:00

Document:
In 2008, the Institute for Justice and the Goldwater Institute teamed up to challenge Arizona’s punitive system of funding campaigns with taxpayer money. The consolidated challenges to the “matching funds” provision of Arizona’s so-called “Clean Elections” Act eventually made their way to the U.S. Supreme Court, which on March 28, 2011, heard argument in Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett (No. 10-238) and McComish v.Bennett (No. 10-239).
The cases sought to vindicate the rights of independent political groups and candidates who did not take taxpayer funds to speak freely during political campaigns without having the government attempt to “level the playing field.” Under the Arizona law, if a group made an independent expenditure in favor of a privately financed candidate, the unelected bureaucrats at the Clean Elections Commission doled out an almost dollar-for-dollar amount of “matching funds” to the publicly funded candidate. That meant that for every dollar a group or individual spent to support the candidate of their choice, over the publicly funded candidate’s initial government subsidy, the government paid an equal amount of money to the political competition.
The Ninth Circuit, in conflict with controlling Supreme Court precedent and contrary to decisions from other federal appellate courts, found this system to be constitutional. IJ and Goldwater successfully petitioned the Supreme Court for review of that decision, and on June 27, 2011, the Court reversed the Ninth Circuit, striking down Arizona’s unconstitutional “Clean Elections” system.
So-called “clean elections” systems are a particularly burdensome and punishing form of public funding. Currently, eight states and three municipalities have clean elections systems in place. Under these laws, the government gives additional funds to government-funded candidates when their privately funded opponents speak above an arbitrary government-set limit. Since the 1990s, there have been numerous constitutional challenges to these laws, but prior to 2008, most courts concluded that the First Amendment did not prevent the government from “leveling the playing field” among government and privately funded candidates.
That trend changed in 2008, however, when the U.S. Supreme Court decided Davis v. FEC. In that case, the Court struck down a federal law that attempted to “level the playing field” among candidates with differing levels of wealth. Then, in 2010 in another victory for free political speech, the Court held in Citizens United v. FEC that the government could not burden or limit the independent speech of a group supporting or opposing a candidate.
IJ’s and Goldwater’s challenges to Arizona clean elections law—Arizona Freedom Club PAC v. Bennett and McComish v. Bennett—ask two important questions that build off of both Davis and Citizens United. The first is whether Arizona may level the electoral playing field by doling out money to publicly financed candidates when their political opponents speak. The second is whether Arizona can indirectly limit independent groups’ speech by cutting a check to politicians they oppose when they speak out.
The initiative passed by a single percentage point and the Act took effect in 2000.4 It applies to statewide and state legislative offices. Under the Act, candidates who accept government funds must comply with a host of conditions. They must use only government funds,5 are forbidden from accepting any monetary or in-kind donations from outside sources,6 and may not spend their own money on their campaigns.
Worse, the scheme chills the speech of privately funded candidates and independent groups by giving additional subsidies to government-funded candidates—up to two times the base amount—whenever independent groups spend, or privately funded candidates raise or spend, more than the amount the government initially provides to taxpayer-funded candidates.9 These subsidies are nearly dollar for dollar, so if an independent expenditure group or privately funded candidate spends $10,000 above the spending limit, the government gives almost $10,000 to each government-funded candidate.
These additional subsidies, sometimes referred to as “matching” or “rescue” funds, seek to force independent groups and privately funded candidates to abide by the spending limits imposed on their government-funded opponents—or trigger even more money for their opponents. The government provides matching funds to all government funded candidates in a race. So, if there is one privately funded candidate and three government-funded candidates, one dollar used by an independent group to support the privately funded candidate results in the Arizona government giving nearly one dollar to each one of the privately funded candidate’s opponents. In other words, one dollar worth of speech results in nearly $3 in government funds to “match” it.
In short, Arizona’s law limits the speech of both government-funded candidates and privately funded candidates while significantly tilting the playing field toward candidates who run on public money. The Act makes it extremely difficult to run a traditional campaign against a government-funded opponent: Low contribution limits make it hard to raise funds, matching funds punish candidates who dare to speak more than Arizona election bureaucrats deem fit, and extensive reporting requirements force private candidates to use up precious time and resources that could be better spend on campaigning. Moreover, independent expenditure groups are also punished for speaking, but only when they speak out against government-funded candidates or in favor of privately funded candidates.
In Citizens United, the U.S. Supreme Court made clear that the government may not burden or suppress the speech of groups making independent expenditures because “independent expenditures … do not give rise to corruption or the appearance of corruption.”12 But in Arizona, any time an independent group spends money on speech—such as a radio ad—to support a candidate running with private funds, that candidate’s government-funded opponent gets still more public money. Speaking out therefore triggers an outpouring of taxpayer dollars to the candidate that the independent group opposes. For independent expenditure groups, that means that they must take matching funds into account when deciding whether to speak about specific races.
But independent groups are not alone in feeling the effects of Arizona’s punitive system of publicly financed campaigns. The matching-funds provision also impacts the speech of privately funded candidates. Rick Murphy and Dean Martin have intentionally delayed and limited their fundraising activities in order to minimize the amount of equalization funds paid to their publicly funded opponents. In particular, Dean Martin has actively discouraged independent political groups from making independent expenditures that would trigger equalization funds to his government-funded opponents. When he ran for governor in 2010, he had to run as a government-funded candidate because the system is skewed so heavily against privately funded candidates. Also, Rick Murphy did not fundraise in the 2008 general election because he faced three government-funded opponents and would have triggered almost $3 in matching funds for every $1 he raised beyond the general election trigger amount.
Recent research confirms the experience of IJ’s and Goldwater’s clients that matching funds burden the political activity of both independent groups and candidates. University of Rochester political scientist David Primo analyzed campaign finance data from four Arizona election cycles and found that privately funded candidates at risk of triggering matching funds for their opponents raise and spend significantly more at the end of campaigns. This is because at the end of a campaign the government cannot “level” speech by directly financing a candidate’s political and ideological opponent. There is simply not enough time for Arizona to send funds to the publicly funded candidate before the election occurs.15 In other words, to avoid triggering government handouts to their opponents, private candidates often delay raising and spending money on speech until as late as possible. Thus, matching funds mean that private candidates speak less earlier in the campaign than they might otherwise.
In upholding matching funds, the Ninth Circuit characterized these decisions as mere strategic choices that are insignificant to the First Amendment.18 But the First Amendment guarantees that it is the individual, not the government, who decides whether—and when—to speak. Research and experience make clear the impossible choice independent groups and privately supported candidates face as a result of matching funds: Speak too much at the wrong time and trigger additional campaign money to opponents, or be quiet and avoid funding the opposition. Arizona has no right to punish independent groups and candidates for speaking “too much” or at the “wrong” time.
The U.S. Supreme Court has consistently said that governments may not limit how much money candidates and independent groups spend in political campaigns.26 Therefore, to pass constitutional muster, a system like Arizona’s has to be truly voluntary27 and Arizona’s expenditure and contribution limits cannot indirectly force candidates who refuse taxpayer dollars to limit their speech.
In contrast, the First,32 Fourth33 and Sixth34 Circuits have all upheld public-financing laws in Maine, North Carolina and Kentucky, respectively, and specifically rejected the Eighth Circuit’s holding. In upholding Maine’s equalization scheme, the First Circuit wrongly claimed that “[t]he public funding system in no way limits the quantity of speech one can engage in or the amount of money one can spend in engaging in political speech, nor does it threaten censure or penalty for such expenditures.”35 More bizarrely, the First Circuit upheld equalization payments in part based on the reasoning that people do not have a constitutional right to speak free from response.36 But the court missed the point. People do not have a constitutional right to speak free from response—but they do have a right to speak freely without their speech trigging government funds to the very candidate whom they wish to see defeated.
The U.S. Supreme Court concluded that the Millionaire’s Amendment imposed “an unprecedented penalty” on any candidate who “robustly exercised” his First Amendment right to expend personal funds.39 In other words, the Millionaire’s Amendment “require[d] a candidate to choose between the First Amendment right to engage in unfettered speech and subjection to discriminatory fundraising limitations.”40 Even though candidates could choose to make large personal expenditures to support their campaigns, “they must shoulder a special and potentially significant burden if they make that choice.”41 Notably, the Court cited to the Eighth Circuit’s decision for this proposition.
Then, in 2010, the U.S. Supreme Court issued its decision in Citizens United, which held that the government could not burden the speech of groups making independent expenditures. The Court’s strong pronouncement that the federal government and the states should keep their hands off the political speech of independent groups called into serious question the constitutionality of clean elections systems. After all, in clean elections systems, the government attempts to “level” the speech of such groups by providing matching funds to their political and ideological opponents based solely on their exercise of free speech. If the speech of such groups cannot be burdened directly, there should be no reason the courts would allow the government to burden their speech indirectly.
Many commentators,44 courts45 and public officials46 believed that Davis spelled the end of clean elections systems, with Citizens United putting the nail in the coffin for such systems’ regulation of independent expenditure groups. Matching-funds systems like Arizona’s are actually worse than the Millionaire’s Amendment. Under the Millionaire’s Amendment, a non-self-financing candidate still had to raise money for her campaign once the limit was raised. In clean elections systems, however, the government simply gives money to the publicly financed candidate based on the exercise of First Amendment rights by independent expenditure groups and privately financed candidates. Indeed, the constitutionality of such systems was so seriously doubted that pro-regulation members of Congress removed a matching-funds provision from a proposed federal public-funding system after the Court decided Davis.
All signs pointed to the end of clean elections after Davis. The Ninth U.S. Circuit Court of Appeals, however, had other thoughts.
Thus, there exists a split in the circuits regarding the constitutionality of matching funds and the existence of a circuit split is a significant reason for the Supreme Court to grant review in a case. The split between the Second and Eleventh Circuits on the one hand and Ninth Circuit on the other does not, however, affect elections only in the states in those circuits. At the time of the Ninth Circuit’s decision, three states—Maine,53 Arizona54 and Connecticut55— used public-funding systems with matching funds to fund all of their statewide and legislative political campaigns. At least six other states have public-funding systems with matching-fund mechanisms for certain offices: Florida (governor),56 Hawaii (pilot program for county of Hawaii Council elections),57 New Mexico (Public Regulation Commission and statewide judicial elections),58 North Carolina (judicial elections),59 West Virginia (judicial elections)60 and isconsin (judicial elections).61 Nebraska provides government subsidies to candidates for statewide and legislative offices who agree to abide by a spending limit to match the expenditures by those candidates’ opponents that the government deems excessive.62 Still more states have considered enacting such systems, including New York, Illinois, Maryland, Washington and Wyoming.63 In addition, in the cities of Tucson, Ariz.,64 Portland, Ore.65 and Albuquerque, N.M.,66 municipal taxpayers are forced to fund citywide races. The idea has even caught on with some members of Congress; U.S. Senators Richard Durbin (D-IL) and Arlen Specter (D-PA) have introduced a taxpayer-funding scheme for federal elections, the “Fair Elections Now Act,” although the senators removed the matching-funds provision from later versions of this bill after the Supreme Court’s decision in Davis.67 Moreover, anti-speech advocates continue to push clean elections proposals across the country, even in light of the decision in Davis.
Freedom Club PAC and McComish provide the U.S. Supreme Court with the most immediate and best chance to clarify whether these publicly funded “clean elections” schemes are constitutional. The Ninth Circuit—covering most of the western United States—has refused to give meaning to Davis’ protections. The Second Circuit—covering much of the Northeast—and the Eleventh Circuit—covering much of the Southeast—have accepted Davis’ meaning. Thus, Americans are now enjoying very different federal constitutional rights depending solely on where they live. Moreover, other courts, faced with the diametrically opposed decisions of the Second, Eleventh and Ninth Circuits will need the Supreme Court to provide a conclusive answer. The Court should stop these laws from suppressing even more political speech and stop these systems from spreading to other jurisdictions by striking down Arizona’s Clean Elections Act as unconstitutional.
Back in district court, Martin was joined in IJ’s challenge by two independent expenditure groups, Arizona Taxpayers Action Committee and the Freedom Club PAC. On August 21, 2008, John McComish, Nancy McClain, Tony Bouie and other privately funded candidates, represented by the Goldwater Institute, filed a separate challenge to matching funds in the U.S. District Court, before the Honorable Roslyn Silver. These plaintiffs likewise argued that the matching-funds provision of the Arizona Clean Elections Act violated the First Amendment. Judge Carroll refused to consolidate the two cases, however, so IJ’s clients intervened in the McComish case and voluntarily dismissed the case before Judge Carroll. Joining Martin and the independent groups seeking intervention were privately financed candidates Rick Murphy and Robert Burns.
On January 20, 2010, Judge Silver again found that the matching-funds provision was unconstitutional because independent expenditure groups and privately financed candidates “face a choice very similar to that faced in Davis: either ‘abide by a limit on personal expenditures’ or face potentially serious negative consequences” of having their opponents be additionally funded by the government.73 Judge Silver granted the challengers’ motions for summary judgment and enjoined the operation of the matching-funds provision. However, Judge Silver stayed the effect of the injunction for ten days to permit the state of Arizona to appeal. The state appealed both IJ and the Goldwater Institute’s cases to the Ninth U.S Circuit Court of Appeals, which consolidated the appeals. The Ninth Circuit extended the stay of the injunction and expedited the case.74 As noted above, it then reversed the district court and held that matching funds do not burden free speech.
The Supreme Court, however, refused to let stand the Ninth Circuit’s rejection of Davis. On June 8, 2010, at the urging of both the Institute for Justice and the Goldwater Institute, the Court vacated the Ninth Circuit’s stay of the district court’s injunction and stayed the mandate of the Ninth Circuit “pending the timely filing and disposition of a petition for a writ of certiorari.” The Court ordered, in effect, that Judge Silver’s original injunction take effect and that matching funds in Arizona be stopped.75 That ruling was an early sign of just how badly the Ninth Circuit erred in upholding Arizona’s unconstitutional system.
William R. Maurer, executive director of the Institute for Justice Washington Chapter, is the lead attorney in Arizona Freedom Club PAC v. Bennett. Maurer has won significant free speech victories before both the Ninth Circuit and the Washington Supreme Court. Timothy D. Keller, executive director of the Institute for Justice Arizona Chapter, and Paul V. Avelar, staff attorney for IJ-AZ, are assisting on the case.
Nick Dranias, the director of the Goldwater Institutes Center for Constitutional Government, is the lead attorney in McComish v. Bennett.
SpeechNow.org is a group of citizens who want to defend free speech at the ballot box by running ads that oppose candidates who do not support First Amendment rights. But under federal law, if the group spends more than a small amount of money on ads that call for the election or defeat of political candidates, it must register with the government as a political action committee or “PAC” and be subjected to a host of burdensome regulations before speaking. SpeechNow.org—represented by the Institute for Justice (IJ) and the Center for Competitive Politics (CCP)—filed its suit arguing that the campaign finance laws that apply to PACs could not constitutionally apply to a group that simply engages in independent political speech—speech that is not coordinated with any political candidates. In March 2010, the D.C. Circuit Court of Appeals issued a unanimous, nine-judge decision holding that SpeechNow.org could accept unlimited donations to fund its political ads. Unfortunately, the court also held that if SpeechNow.org chose to speak out it would have to register with the government as a PAC. On July 23, 2010, IJ and CCP appealed this case to the U.S. Supreme Court.
In May of 2009, the Institute for Justice secured a federal court decision striking down Florida’s so-called “electioneering communications” law. That law made it illegal for any group to merely mention a candidate or ballot issue, let alone express an opinion, without registering with the state as an “electioneering communications organization.” Once registered, groups had to appoint a campaign treasurer, make regular reports, record expenditures and disclose all donors—even those whose contributions were not intended to support political speech. There were almost 100 possible violations of the law, and failure to comply could have led to fines and jail time. The time and money required to navigate this bureaucratic red tape was too much for many citizen groups and non-profits, leaving them no choice but to stay silent. That is why the Broward Coalition, University of Florida College Libertarians and National Taxpayers Union joined with IJ to challenge Florida’s law as a violation of First Amendment rights. In June 2009, the state of Florida declined to appeal the federal court’s ruling, marking a final victory for the nonprofit groups that challenged the law as a violation of First Amendment rights.
The Institute for Justice secured a unanimous opinion from the Washington Supreme Court halting efforts by the government to treat on-air radio commentary about an initiative campaign as “in-kind” contributions subject to regulation under state campaign finance laws.
The Institute for Justice is challenging Colorado’s campaign finance laws in federal court on behalf of six neighbors in Parker North, Colo., sued by political opponents for speaking out against the annexation of their neighborhood to a nearby town. This case demonstrates how complicated campaign finance laws are often used by political operatives to try to silence their opponents.

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