Opinion ID: 1465122
Heading Depth: 1
Heading Rank: 6

Heading: Free Speech Challenge

Text: The Church challenges the financial and organizational disclosures that a group of two or more people must make upon becoming an incidental committee. The Church argues that, as applied to its activities, the disclosure requirements imposed under Montana law violate its First Amendment rights by imposing an unjustified burden on its constitutionally protected election-related speech. We conclude that, as applied to the one-time in-kind de minimis expenditures involved in this case, the state reporting requirements violate the Church's First Amendment rights.
The degree of scrutiny that we must apply to Montana's disclosure requirements with respect to the Church's activities is somewhat unclear, due in part to arguably inconsistent precedent and in part to the uncertain status of the Church as a multi-purpose advocacy organization. [13] See Alaska Right To Life Comm. v. Miles, 441 F.3d 773, 787-88 (9th Cir.2006) (questioning whether, in the wake of McConnell v. FEC, 540 U.S. 93, 124 S.Ct. 619, 157 L.Ed.2d 491 (2003), disclosure requirements should be subjected to strict scrutiny in an as-applied challenge brought by a multi-purpose organization and assuming without deciding that strict scrutiny applied). But see Cal. Pro-Life Council, Inc. v. Randolph ( Cal. Pro-Life II ), 507 F.3d 1172, 1178 (9th Cir.2007) (applying strict scrutiny to a multi-purpose organization after McConnell, albeit relying in part on the law of the case doctrine). We do not need to decide this complex question to adjudicate this case, however. We will assume without deciding that heightenednot strictscrutiny applies to the Church's challenge. [14] In other words, we ask whether the Montana disclosure requirement has a `relevant correlation' or `substantial relation,' Buckley v. Valeo, 424 U.S. 1, 64, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976) (footnote omitted), to an important state interest, McConnell, 540 U.S. at 195, 124 S.Ct. 619. Even under this standard, the state disclosure requirement, as applied to the Church's de minimis in-kind expenditures, runs afoul of the First Amendment.
The State articulates only one interest in defense of its disclosure scheme: providing its citizenry with information about the constituencies supporting and opposing ballot issues. We are satisfied that this interest is important. In Buckley and again in McConnell, the Supreme Court identified three important interests that justified campaign finance disclosure in the context of elections for federal office: providing the electorate with information, deterring actual corruption and avoiding any appearance thereof, and gathering the data necessary to enforce more substantive electioneering restrictions. McConnell, 540 U.S. at 196, 124 S.Ct. 619 (citing Buckley, 424 U.S. at 67-68, 96 S.Ct. 612). Of these, the second interestdeterring corruption or the appearance thereoffalls out of the picture in the context of ballot initiatives, for such referenda present no risk of quid pro quo. See, e.g., First Nat'l Bank of Boston v. Bellotti, 435 U.S. 765, 790, 98 S.Ct. 1407, 55 L.Ed.2d 707 (1978) (The risk of corruption perceived in cases involving candidate elections . . . is not present in a popular vote on a public issue.); Mont. Chamber of Commerce v. Argenbright, 226 F.3d 1049, 1056 (9th Cir.2000) (same). In addition, the state disclosure requirements at issue in this case are evidently not substantially related to the third important interest: aid in enforcing more substantive electioneering restrictions,  for no substantive limits on contributions or expenditures apply in the context of Montana's ballot issues. McConnell, 540 U.S. at 196, 124 S.Ct. 619 (emphasis added); see Mont. Chamber of Commerce, 226 F.3d at 1057-58 (striking down Montana's ban on corporate expenditures and contributions in ballot issues under Mont.Code Ann. § 13-35-227). With respect to the remaining interest, we have little trouble concluding that Montana's informational interest is generally important in the context of Montana's statewide ballot issues. Indeed, we recently observed that California had produced evidence sufficient to qualify its informational interest in disclosure of contributions to a ballot issue as compelling. Cal. Pro-Life II, 507 F.3d at 1179-80 nn. 8 & 9. Although the evidence put forth by Montana in this case is not as formidable as that provided by California in Cal. Pro-Life II, [15] Montana's case is convincing and its burden lighter. [16] See Nixon v. Shrink Mo. Gov't PAC, 528 U.S. 377, 391, 120 S.Ct. 897, 145 L.Ed.2d 886 (2000) (The quantum of empirical evidence needed to satisfy heightened judicial scrutiny of legislative judgments will vary up or down with the novelty and plausibility of the justification raised.). We have already held that, as a general matter, mandating disclosure of the financiers of a ballot initiative may prevent the wolf from masquerading in sheep's clothing. Cal. Pro-Life Council, Inc. v. Getman (Cal. Pro-Life I), 328 F.3d 1088, 1106 n. 24 (9th Cir.2003). [B]y knowing who backs or opposes a given initiative, voters will have a pretty good idea of who stands to benefit from the legislation. Id. at 1106. We also reject the suggestion that, because Montana's election system appears to be open and highly functional, the need for disclosure is somehow decreased. We are not willing to count Montanans' current confidence in their state ballot process against the State's informational interest. See Mont. Chamber of Commerce, 28 F.Supp.2d 593, 598-99 (D.Mont.1998), aff'd 226 F.3d 1049, 1056 (9th Cir.2000) (The ballot issue process in Montana is healthy and not corrupt.). We conclude that, in the context of ballot issues in which this case arises, Montana's interest in keeping its citizens well informed with respect to the groups financially supporting and opposing voter initiatives remains important today. It is essential to keep in mind, however, just what information the State has determined that the public needs. The information to be disclosed is the identity of persons financially supporting or opposing a candidate or ballot proposition. See, e.g., Mont. Admin. Rule 44.10.411(4); see also Buckley, 424 U.S. at 78, 96 S.Ct. 612 (Congress wished to promote full disclosure of campaign-oriented spending to insure both the reality and appearance of purity and openness of the federal election process.). The disclosure requirements are not designed to advise the public generally what groups may be in favor of, or opposed to, a particular candidate or ballot issue; they are designed to inform the public what groups have demonstrated an interest in the passage or defeat of a candidate or ballot issue by their contributions or expenditures directed to that result. This point regarding the nature of the informational interest becomes especially important when we examine whether the Montana regulations as applied to the Church are substantially related to that interest.
We next assess the fit between Montana's disclosure requirements and the State's informational interest. We must decide whether the informational value, as we have just described it, to the public derived from disclosure of the Church's de minimis in-kind expenditures justifies the burden imposed by the reporting requirement. We note at the outset that the question is one of degree, not kind, for it is well established that, in the ordinary case, a state informational interest is sufficient to justify the mandatory reporting of expenditures and contributions in the context of ballot initiatives. See, e.g., Alaska Right To Life Comm., 441 F.3d at 789-92 (upholding disclosure requirements under strict scrutiny ); Cal. Pro-Life II, 507 F.3d at 1189 (endorsing disclosure requirements in the context of ballot initiatives on the authority of Mass. Citizens for Life, 479 U.S. at 262, 107 S.Ct. 616). In Buckley, the Supreme Court reviewed a federal reporting scheme requiring record-keeping of contributions above $10 and disclosure of contributions above $100. Buckley, 424 U.S. at 82-85, 96 S.Ct. 612. It noted that, in setting thresholds for disclosure of campaign finance activities, [t]he line is necessarily a judgmental decision, best left in the context of this complex legislation to congressional discretion. Id. at 83, 96 S.Ct. 612. It concluded that, on the bare record before the Court, the limits designated [we]re [not] wholly without rationality, even though there was little in the legislative history to indicate that Congress focused carefully on the appropriate level at which to require recording and disclosure. Id. (footnote omitted). Because the federal statute did not require disclosure of contributions below $100, the Court expressly reserved judgment on whether information concerning gifts [between $10 and $100] can be made available to the public without trespassing impermissibly on First Amendment rights. Id. at 84, 96 S.Ct. 612. The question, then, becomes whether Montana's zero dollar threshold for disclosure is wholly without rationality. Id. at 83, 96 S.Ct. 612. On the one hand, we recognize the principle that signals are transmitted . . . not only by a contribution's size but also by the contributor's identity. Vote Choice v. DiStefano, 4 F.3d 26, 32 (1st Cir.1993). On the other hand, we cannot say that the informational value derived by the citizenry is the same across expenditures of all sizes. As we have explained, in the ballot issue context, the relevant informational goal is to inform voters as to who backs or opposes a given initiative financially, so that the voters will have a pretty good idea of who stands to benefit from the legislation. Cal. Pro-Life I, 328 F.3d at 1106. As a matter of common sense, the value of this financial information to the voters declines drastically as the value of the expenditure or contribution sinks to a negligible level. As the monetary value of an expenditure in support of a ballot issue approaches zero, financial sponsorship fades into support and then into mere sympathy. In the present case, the voters could learn little about the financial backing of the ballot proposition by gaining access to information about the Church's activities of minimal economic effect. Meanwhile, the burden of reporting remains constant even though the size of the in-kind expenditure decreases to a negligible level. The Commissioner of Political Practices has issued two forms applicable to incidental political committees: Form C-2, Statement of Organization; and Form C-4, the Incidental Political Committee Finance Report. Form C-2 requires a statement of purpose, the name and address of the committee, its designated treasurer and other officers, and the bank holding the committee's depository account. Form C-4 goes further and requires a list of earmarked contributions received by the committeeincluding the donors' names, addresses, occupations, employers, and amounts contributed for contributions greater than $35and expenditures made by the committeeincluding amount, purpose, and name and address of payee. While not exceedingly onerous, such requirements undoubtedly constitute a burden, even in the case of one-time expenditures, which may be reported in a combined initial and closing report. We conclude that, if the Supreme Court's rationality test for threshold disclosure levels has any force at all, there must be a level below which mandatory disclosure of campaign expenditures by incidental committees runs afoul of the First Amendment. It may very well be that such a level is not susceptible to dollar estimation or that all monetary contributions convey sufficiently valuable information about the supporters of an initiative to justify the burden of disclosure. But if we are to give any effect to Buckley 's rationality test, at some point enough must be enough. Applying the disclosure provisions to the Church's de minimis in-kind expenditures lies beyond that point. Expending a few moments of a pastor's time, or a marginal additional space in the Church for petitions, is so lacking in economic substance that we have already held that requiring their reporting creates fatal problems of unconstitutional vagueness. Similarly, the value of public knowledge that the Church permitted a single like-minded person to use its copy machine on a single occasion to make a few dozen copies on her own paperas the Church did in this casedoes not justify the burden imposed by Montana's disclosure requirements. [17] We conclude that, by applying its disclosure provisions to the Church's de minimis in-kind contributions in the context of a state ballot initiative, the Commission violated the Church's First Amendment rights. We limit our holding to this formulation. In this case, we are not concerned withand express no view about the constitutionality of Montana's disclosure requirements in the context of candidate elections or as applied to monetary contributions of any size. We also do not purport to establish a level above de minimis at which a disclosure requirement for in-kind expenditures for ballot issues passes constitutional muster. The fixing of any such level is for the Montana authorities in the first instance. We are satisfied, however, that the application of Montana's disclosure requirements to the Church because of its de minimis activities in this case impermissibly infringes on the Church's free speech rights.