Opinion ID: 3050500
Heading Depth: 5
Heading Rank: 3

Heading: Pro-Ration and The Articulated Exception For

Text: Organizations With Other Funds Further Demonstrate That The Definition Of “Contribution” Is Narrowly Tailored. [13] A recipient committee is only required to disclose those “contributions” that on a pro-rated basis are $100 or more. According to California, pro-ration advances its compelling governmental interest because “[t]he greater the organization’s political involvement and the greater the size of the contribution, the greater the disclosure.” [14] CPLC counters that the pro-ration is not narrowly tailored because “the larger a group’s receipts, the smaller the chance that a donation will be disclosed as a ‘contribution.’ ” Contrary to this assertion, the pro-ration approach actually demonstrates California’s attempt to narrow the statute and capture only those payments “made for the purpose of influencing” voters, because a donation is disclosed only to the extent that the donee corporation participates in ballot measure advocacy. CPLC asserts that there is a resulting underinclusiveness because “the same donation made to two groups (with the same lack of any communicated ‘purpose to influence’ voters) would be disclosable as a prorated ‘contribution’ if made to one but not the other.” CPLC explains that the California scheme “permits the group to first count any proceeds it has from sales toward the expenditure, so if a group has offsetting CALIFORNIA PRO-LIFE COUNCIL v. RANDOLPH 14825 proceeds from sales it does not need to report any ‘contributions.’ ” However, this challenge is based on a misinterpretation of how the PRA provisions operate. In fact, the pro-ration provision applies only if the organization’s “contributions or expenditures are made solely from that source . . .” Fishburn Advice Letter, at  (explaining that this provision addresses circumstances where “an organization has sufficient income [from sources other than donations or membership dues] . . . and [its] contributions or expenditures are made solely from that source”) (emphasis added). [15] California examined alternatives and reasonably determined that the alternatives do not advance its compelling interest or were more restrictive. Additionally, CPLC failed to establish that the presumption was impermissibly overinclusive or underinclusive. Therefore, the PRA’s disclosure provisions meet the “narrowly tailored” requirement. 3. California Has Not Satisfied Its Burden Of Demonstrating That The Political Action Committee-Like Requirements Imposed On A Group Like CPLC Are Narrowly Tailored To California’s Compelling Informational Interest. [16] In addition to requiring disclosure of “contributions,” the PRA imposes political action committee-like requirements on a group like CPLC, a multi-purpose organization. California makes two primary arguments in support of these requirements. “First, the Constitution permits California to require CPLC to form and use a PAC [Political Action Committee] for its political activities, treating all its ‘donations’ as ‘contributions.’ ” “Second, CPLC is not the kind of organization exempted from PAC-like reporting obligations under the teaching of MCFL.” California’s arguments ignore the distinction between candidate and ballot measure elections. Instead, California relies on its observation that “the federal counterpart to the PRA has 14826 CALIFORNIA PRO-LIFE COUNCIL v. RANDOLPH required all groups organized in corporate form, including non-profit corporations, to channel express campaign advocacy through PACs, to which all ‘donations’ are, of course, ‘contributions.’ ” The following language in McConnell is specified in support of this proposition: Since our decision in Buckley, Congress’ power to prohibit corporations and unions from using funds in their treasuries to finance advertisements expressly advocating the election or defeat of candidates in federal elections has been firmly embedded in our law. The ability to form and administer separate segregated funds authorized by FECA . . . has provided corporations and unions with a constitutionally sufficient opportunity to engage in express advocacy. That has been this Court’s unanimous view, and it is not challenged in this litigation. Id. (citing McConnell, 540 U.S. at 203) (citation and footnote reference omitted) (emphasis added). However, California’s reliance on McConnell and its interpretation of the federal statute are both mistaken. McConnell supports the required use of a separate segregated fund when the organization is “expressly advocating the election or defeat of candidates . . .” 540 U.S. at 203 (emphasis added). The reasoning of McConnell extends no further. See also MCFL, 479 U.S. at 241, 247-48 (interpreting 2 U.S.C. § 441b to cover expenditures made directly to candidates as well as on behalf of candidates). This reading is further supported by the language of § 441b(a) making it unlawful “for any . . . corporation . . . to make a contribution or expenditure in connection with any election to any political office, or in connection with any primary election . . . held to select candidates for any political office . . .” 2 U.S.C. § 441b(a) (emphasis added). “Contribution” is defined as “any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of CALIFORNIA PRO-LIFE COUNCIL v. RANDOLPH 14827 influencing any election for Federal office[.]” § 431(8)(A)(I) (emphasis added). “Expenditure” is defined as “any purchase, payment, distribution, loan, advance, deposit, or gift of money or anything of value, made by any person for the purpose of influencing any election for Federal office[.]” § 431(9)(A)(I) (emphasis added). “Federal office” is defined as “the office of President or Vice President, or of Senator or Representative in, or Delegate or Resident Commissioner to, the Congress.” § 431(3). Thus, the requirement of a separate segregated fund pursuant to § 441b appears to only be in the context of contributions or expenditures to or on behalf of candidates. California’s citation to Bellotti does not salvage its argument. In Bellotti, 435 U.S. at 767, the Supreme Court considered a “state criminal statute that for[bade] certain expenditures by banks and business corporations for the purpose of influencing the vote on referendum proposals . . .” The Court held the statute to be unconstitutional, noting “[t]he risk of corruption perceived in cases involving candidate elections, simply is not present in a popular vote on a public issue.” Id. at 776, 790 (citations and footnote reference omitted). California contends that “[t]he statute at issue in Bellotti did not provide corporations with the ‘PAC option’ that Buckley found to be a ‘constitutionally sufficient opportunity’ for corporations wishing to engage in political speech.” California asks us to conclude that the Supreme Court would have upheld the statute reviewed in Bellotti had such an option existed. However, the Court’s decision simply does not support that conclusion. The weakness of California’s first argument undermines its second argument. Based on the fact that McConnell recognized an exception from the § 441b segregated-fund requirement for MCFL-type corporations, see McConnell, 540 U.S. at 211, California contends that because CPLC does not qualify as an MCFL-type corporation, it “is not entitled to an ‘exemption’ from requirements that it disclose the sources of 14828 CALIFORNIA PRO-LIFE COUNCIL v. RANDOLPH money actually spent on ballot measure advocacy.”20 However, as discussed above, it is not at all certain that the Supreme Court would apply the same criteria to ballot measure advocacy as it did when election of candidates was involved. In addition to these two primary arguments, California presented testimony demonstrating that a group such as CPLC could form a PAC to simplify reporting. However, the Court in MCFL discounted that fact in analyzing the disclosure requirements. See 540 U.S. at 203 & n.86. California also argues that the “reporting, registration, record-keeping and notice requirements . . . imposed on CPLC or groups like CPLC are necessary and reasonable[,]” because the “ ‘burdens’ enumerated [by] CPLC[ ] . . . have all been upheld by the Supreme Court and could constitutionally be imposed on CPLC by California.” However, this argument is again unpersuasive because McConnell dealt solely with disclosures in the candidate context. See 540 U.S. at 194. [17] In MCFL, the Federal Election Commission argued that “the inapplicability of § 441b to MCFL would open the door to massive, undisclosed political spending by similar entities, and to their use as conduits for undisclosed spending by business corporations and unions.” MCFL, 479 U.S. at 262. The Court responded that it “s[aw] no such danger. Even if § 441b is inapplicable, an independent expenditure of as lit20 In its reply brief, CPLC argues that it would “likely qualify as an MCFL-type because donations from corporations, if any, would be de minimis, and several federal courts have held that the exception requirement is satisfied with de minimis corporate donations.” We need not address this argument because it is raised for the first time in the reply brief. See Martinez-Serrano v. INS, 94 F.3d 1256, 1259 (9th Cir. 1996) (“It is well established in this circuit that the general rule is that appellants cannot raise a new issue for the first time in their reply briefs.”) (citation and alteration omitted). Moreover, insufficient evidence exists in the record to determine whether corporate donations were in fact de minimis. CALIFORNIA PRO-LIFE COUNCIL v. RANDOLPH 14829 tle as $250 by MCFL will trigger the disclosure provisions of § 434(c).” Id. “These reporting obligations provide precisely the information necessary to monitor MCFL’s independent spending activity and its receipt of contributions. The state interest in disclosure therefore can be met in a manner less restrictive than imposing the full panoply of regulations that accompany status as a political committee under the Act.” Id.; see also Bellotti, 435 U.S. at 767, 795 (invalidating a Massachusetts statute that restricted corporations from contributing to ballot measure referenda). E. CPLC Has Failed To Establish Overbreadth. To prevail on its overbreadth challenge, CPLC must demonstrate that “the overbreadth of [the] statute [is] not only . . . real, but substantial as well, judged in relation to the statute’s plainly legitimate sweep.” Broadrick, 413 U.S. at 615. CPLC argues that the “reason to know” presumption contained in CCR § 18215(b) is irrebuttable and thus overbroad. CPLC contends that “[i]f a donor makes a gift to a group like CPLC for the earmarked purpose of building a new office and the transmogrifying presumption engages, there is no exception in the PRA regulations that permits the group to exclude that gift from being considered a prorated contribution . . . . California insists that it was ‘made for the purpose of influencing’ voters.” This argument fails because as discussed above, the presumption may be rebutted. See CGC § 82015(a), CCR § 18215(b). CPLC also asserts that its associational rights are violated. In NAACP v. Alabama, 357 U.S. 449, 462 (1958), the Supreme Court invalidated compelled disclosure of membership in an organization because the NAACP “made an uncontroverted showing that on past occasions revelation of the identity of its rank-and-file members has exposed these members to economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility.” 14830 CALIFORNIA PRO-LIFE COUNCIL v. RANDOLPH The Court in McConnell clarified that for compelled disclosure to be unconstitutional, as in NAACP, “the evidence must demonstrate a reasonable probability that the compelled disclosure of a party’s contributors’ names will subject them to threats, harassment or reprisals from either Government officials or private parties.” McConnell, 540 U.S. at 198 (citation omitted). CPLC made no such showing. Thus, California has met its burden of demonstrating that the definition of “contribution” is narrowly tailored to its compelling informational interest, and CPLC may be required to disclose “contributions,” as defined by the PRA.