Court Opinion

ID: 4152682
Source: CourtListenerOpinion
Date Created: 2017-03-15 15:06:04.680237+00
Date Added: 2024-06-11T07:46:34.388639
License: Public Domain

COLORADO COURT OF APPEALS                                    2017COA32

Court of Appeals No. 16CA0140
Office of Administrative Courts Case No. OS 2015-0020

Campaign Integrity Watchdog LLC,

Petitioner-Appellant,

v.

Colorado Republican Party Independent Expenditure Committee,

Respondent-Appellee,

and

Colorado Secretary of State,

Intervenor-Appellee,

and

Office of Administrative Courts,

Appellee.

                               ORDER AFFIRMED

                                   Division I
                          Opinion by JUDGE NAVARRO
                        Taubman and Graham, JJ., concur

                           Announced March 9, 2017

Matthew Arnold, Authorized Representative, Denver, Colorado, of Campaign
Integrity Watchdog

Brownstein Hyatt Farber Schreck, LLP, Christopher O. Murray, David B.
Meschke, Denver, Colorado, for Respondent-Appellee
Cynthia H. Coffman, Attorney General, Matthew D. Grove, Assistant Solicitor
General, Denver, Colorado, for Intervenor-Appellee

No Appearance for Appellee
¶1    Campaign Integrity Watchdog LLC (CIW) alleges that the

 Colorado Republican Party Independent Expenditure Committee

 (CORE) violated various campaign finance laws. An administrative

 law judge (ALJ) dismissed CIW’s claims. CIW appeals, but we affirm

 the ALJ’s order. In doing so, we hold that the applicable campaign

 finance provisions do not require an independent expenditure

 committee (IEC) to disclose a donation unless the donation was

 given for the purpose of making an independent expenditure.

               I.     Factual and Procedural History

¶2    According to CIW’s complaint, its claims stem from two earlier

 campaign finance proceedings against CORE, both initiated by CIW

 and resolved by an ALJ. In the first case, an ALJ penalized CORE

 in the amount of $200. In the second case, an ALJ imposed a $600

 aggregate penalty and an award of $255 in costs. The Colorado

 Republican Party paid these penalties and costs on CORE’s behalf.

 CORE did not disclose these payments in its periodic campaign

 finance disclosure reports. Around the same time, a private person

 paid $50,000 to a law firm to settle CORE’s legal expenses. CORE

 disclosed this payment as a “contribution” in its periodic campaign

 finance disclosure report.

                                  1
¶3     CIW filed a complaint alleging that CORE did not comply with

 the disclosure requirements of article XXVIII of the Colorado

 Constitution, the Fair Campaign Practices Act (FCPA), §§ 1-45-101

 to -118, C.R.S. 2016, and the Colorado Secretary of State’s Rules

 Concerning Campaign and Political Finance. CIW maintained that

 CORE should have disclosed as “donations” or “contributions” the

 payments made by the Colorado Republican Party and that CORE

 should have disclosed as “expenditures” all the payments.

¶4     CORE moved to dismiss the complaint. The Colorado

 Secretary of State moved to intervene as a respondent and filed his

 own motion to dismiss. The ALJ permitted the Secretary to

 intervene for a limited purpose and considered his motion as an

 “amicus-style brief.”

¶5     The ALJ dismissed CIW’s complaint under C.R.C.P. 12(b)(5) for

 failure to state a claim upon which relief could be granted. The ALJ

 decided as follows:

      CORE, as an IEC, was not required to report as “donations”

       the payments made on its behalf by the Colorado Republican

       Party because they were made for the purpose of satisfying

                                   2
       CORE’s fines and costs, not for the purpose of making an

       independent expenditure.

      CORE was not required to report as “contributions” the

       payments made on its behalf by the Colorado Republican

       Party because the statute requiring disclosure of contributions

       does not apply to an IEC.

      CORE was not required to report as “expenditures” the

       payments made on its behalf by the Colorado Republican

       Party and the private person because the payments were for

       fines, costs, and legal services, not for express advocacy.

¶6     CIW appeals. Both CORE and the Secretary have filed answer

 briefs defending the ALJ’s decision.

                           II.     Analysis

¶7     As it asserted in the administrative proceedings, CIW contends

 on appeal that CORE was required to report some of the subject

 payments as “donations” or “contributions” and to report all the

 payments as “expenditures.” CIW is mistaken.

¶8     First, even if we assume that some payments constituted

 donations under the applicable statutory definition, CORE was not

 required to report them because the statute does not require an IEC

                                    3
 to report donations unless they were made for the purpose of an

 independent expenditure (and they were not here). Second, the law

 requiring some entities to report contributions does not apply to an

 IEC. Third, although the law requires an IEC to disclose certain

 information after making some expenditures, the payments here do

 not qualify as expenditures under the relevant constitutional and

 statutory definitions. And the broader definition of expenditure set

 forth in the Secretary’s campaign finance rule does not apply to an

 IEC.

           A.   Standard of Review and Interpretive Principles

¶9      We review de novo a decision to dismiss a complaint under

 C.R.C.P. 12(b)(5). Allen v. Steele, 252 P.3d 476, 481 (Colo. 2011).

 We accept all factual allegations in the complaint as true and view

 them in the light most favorable to the plaintiff. Id.; see also Warne

 v. Hall, 2016 CO 50, ¶¶ 9, 27 (recognizing that a court need not

 accept as true legal conclusions or conclusory allegations). But “[a]

 court may not consider information outside the confines of the

 pleading.” Allen, 252 P.3d at 481. In addition, we review de novo

 statutory provisions, constitutional provisions, and an

 administrative agency’s conclusions of law. Campaign Integrity

                                   4
  Watchdog v. Coloradans for a Better Future, 2016 COA 51, ¶ 16

  (cert. granted Sept. 12, 2016).

¶ 10   We do not look beyond the plain language of a constitutional

  or statutory provision if its meaning is clear on its face. Vigil v.

  Franklin, 103 P.3d 322, 327 (Colo. 2004); see Colo. Republican Party

  v. Williams, 2016 COA 26, ¶ 15 (“The rules of construction are

  essentially the same for constitutional and statutory provisions.”).

  Where a constitutional provision and a statute pertain to the same

  subject matter, we construe them in harmony. Williams, ¶ 15.

                            B.   CORE’s Status

¶ 11   Because CORE’s status informs our analysis, we emphasize

  that CORE is an IEC as defined by the FCPA and as confirmed by a

  division of this court. Id. at ¶ 34. An IEC is a person or group of

  persons that makes independent expenditures of over $1000 or

  collects over $1000 from other persons for the purpose of making

  an independent expenditure. § 1-45-103(11.5), C.R.S. 2016.

  “Expenditure” means a payment “expressly advocating the election

  or defeat of a candidate or supporting or opposing a ballot issue or

  ballot question.” Colo. Const. art. XXVIII, § 2(8)(a); § 1-45-103(10).

  An “independent expenditure” is an expenditure not controlled by or

                                      5
  coordinated with any candidate or agent of such candidate. Colo.

  Const. art. XXVIII, § 2(9); § 1-45-103(11).

¶ 12   To the extent CIW contends in its reply brief that CORE does

  not qualify as an IEC, we do not consider the contention for two

  reasons. First, CIW did not assert in its complaint that CORE is

  not an IEC. As noted, a division of this court has held that CORE is

  an IEC because its standing rules protect against coordination with

  the Colorado Republican Party or its candidates, Williams, ¶ 34.

  CIW did not allege in its complaint that CORE had failed to follow

  its standing rules.1 Thus, the ALJ did not resolve this question.

  Second, CIW did not challenge CORE’s status as an IEC in its

  opening brief in this court. See DeHerrera v. Am. Family Mut. Ins.

  Co., 219 P.3d 346, 352 (Colo. App. 2009) (refusing to consider

  argument raised for first time in reply brief). On the contrary, CIW

  seemed to premise its opening brief on the fact that CORE is an IEC

  and then argued that an IEC must make certain disclosures.

  1 CIW suggested in its response to the motion to dismiss that CORE
  might not qualify as an IEC. But CIW did not make such a claim in
  its complaint. We recognize that CIW filed its complaint before
  Colorado Republican Party v. Williams, 2016 COA 26, was
  announced. Still, like the ALJ’s, our analysis must focus
  exclusively on the allegations of the complaint at issue here.

                                     6
¶ 13   As a result, the disclosure requirements applicable to an IEC

  matter here. Section 1-45-107.5, C.R.S. 2016, applies to an IEC.

  See Williams, ¶ 7. In contrast, section 1-45-108(1)(a)(I), C.R.S.

  2016, sets forth disclosure requirements for other entities:

  “candidate committees, political committees, issue committees,

  small donor committees, and political parties.” See also Dep’t of

  State Regs. 10.2, 10.3, 8 Code Colo. Regs. 1505-6 (explaining that

  the disclosure requirements in section 1-45-108(1) apply to all

  committees “[e]xcept for independent expenditure committees”).

  The Colorado Constitution does not mention an IEC at all, but the

  constitution does require any person making an independent

  expenditure of more than $1000 to disclose certain information

  about the expenditure. See Colo. Const. art. XXVIII, § 5.

¶ 14   Therefore, section 1-45-107.5 and Colorado Constitution

  article XXVIII, section 5 control this case.

                              C.   Donations

¶ 15   As relevant here, section 1-45-107.5 requires an IEC to do the

  following regarding donations:

                                     7
        Register with the Secretary if it accepts a “donation” over

         $1000 “that is given for the purpose of making an independent

         expenditure.” § 1-45-107.5(3)(a) (emphasis added).

        Disclose the name and address of any person who “donates”

         more than $250 in one year “for the purpose of making an

         independent expenditure” if the IEC makes independent

         expenditures of more than $1000 in one year.

         § 1-45-107.5(4)(b) (emphasis added).

        Disclose, in accord with the schedule applicable to political

         committees, any “donation” over $20 given “for the purpose of

         making an independent expenditure” to an IEC making

         independent expenditures of more than $1000 in one year.

         § 1-45-107.5(8) (emphasis added).

  See also Dep’t of State Reg. 5.2, 8 Code Colo. Regs. 1505-6 (An IEC

  “must report donations over twenty dollars given for the purpose of

  making an independent expenditure.”) (emphasis added).

¶ 16     “Donation” means:

               (I)  The payment, loan, pledge, gift, or
               advance of money, or the guarantee of a loan,
               made to any person for the purpose of making
               an independent expenditure;

                                      8
             (II) Any payment made to a third party that
             relates to, and is made for the benefit of, any
             person that makes an independent
             expenditure;

             (III) The fair market value of any gift or loan
             of property that is given to any person for the
             purpose of making an independent expenditure;
             or

             (IV) Anything of value given, directly or
             indirectly, to any person for the purpose of
             making an independent expenditure.

  § 1-45-103(7.3)(a) (emphasis added).

¶ 17   CIW relies on the definition of donation in section

  1-45-103(7.3)(a)(II) because that definition does not seem to require

  the donation to be given for the purpose of making an independent

  expenditure. And CIW correctly observes that the ALJ did not

  explicitly address this particular aspect of section

  1-45-103(7.3)(a)(II).

¶ 18   We need not decide, however, whether the payments here

  constituted donations under section 1-45-103(7.3)(a)(II). Even if

  they did, the plain language of section 1-45-107.5 does not require

  CORE to disclose them unless they were given for the purpose of

  making an independent expenditure, as the above citations show.

  But CIW’s complaint asserted that the payments were made to

                                     9
  satisfy CORE’s administrative penalties and costs. Accepting these

  allegations as true, we conclude that these payments were not given

  for the purpose of making an independent expenditure. Indeed,

  CIW does not suggest they were given for that purpose.

¶ 19   Instead, CIW maintains that the broader disclosure

  requirements of section 1-45-108(1) apply to an IEC because:

  (1) section 1-45-107.5(4)(a) begins with the phrase “[i]n addition to

  any other applicable disclosure requirements specified in this

  article or in article XXVIII of the state constitution”; and (2) some of

  the Secretary’s online disclosure forms cite section 1-45-108. We

  disagree for two reasons.

¶ 20   First, while an IEC must comply with other “applicable”

  constitutional and statutory disclosure requirements, the

  constitution requires an IEC to disclose information about

  expenditures not donations, and section 1-45-108(1) does not apply

  to an IEC. See Colo. Const. art. XXVIII, art. 5; § 1-45-108(1)(a)(I);

  Dep’t of State Regs. 10.2, 10.3, 8 Code Colo. Regs. 1505-6; cf. Colo.

  Const. art. XXVIII, § 7 (“The disclosure requirements relevant to

  candidate committees, political committees, issue committees, and

  political parties, that are currently set forth in section 1-45-108,

                                     10
  C.R.S., or any successor section, shall be extended to include small

  donor committees.”). Second, although the Secretary’s “Detailed

  Summary” form cites section 1-45-108 in connection with

  disclosing monetary itemized donations of $20 or more, the

  Secretary’s more specific “Itemized Donation Statement ($20 or

  more)” form directs an IEC to “reference section 1-45-107.5 for

  donation reporting requirements.” And the Secretary’s separate IEC

  registration form cites section 1-45-107.5. In any event, the

  constitution and relevant statutes, not the Secretary’s forms, direct

  our analysis.

¶ 21   For all of these reasons, CORE did not have to disclose the

  payments at issue as donations.

                           D.   Contributions

¶ 22   Section 1-45-107.5 does not require an IEC to disclose a

  “contribution.” This fact makes sense because the definition of

  contribution does not include payments made to or for the benefit

  of an IEC. “Contribution” includes payments made to or for the

  benefit of “any candidate committee, issue committee, political

  committee, small donor committee, or political party,” as well as

  anything of value given to a candidate to promote the candidate’s

                                    11
  election. Colo. Const. art. XXVIII, § 2(5)(a); § 1-45-103(6)(a); see

  also § 1-45-103(6)(c) (expanding “contribution” to include some

  payments to a “political organization,” which is different from an

  IEC); § 1-45-103(14.5) (defining “political organization”).

¶ 23   Consequently, CORE was not required to disclose the

  payments at issue as contributions.

                            E.   Expenditures

¶ 24   Article XXVIII, section 5 of the Colorado Constitution, as well

  as subsections (3)(a), (4)(a), and (6) of section 1-45-107.5, require

  an IEC to register and to report certain information if it makes an

  independent expenditure of over $1000 in aggregate in one year.

¶ 25   To repeat, “[e]xpenditure” generally means payments

  “expressly advocating the election or defeat of a candidate or

  supporting or opposing a ballot issue or ballot question.” Colo.

  Const. art. XXVIII, § 2(8)(a); § 1-45-103(10). As the ALJ found,

  however, the payments here were not expressly advocating the

  election or defeat of a candidate or supporting or opposing a ballot

  issue or ballot question, and so they did not satisfy the general

  definition of expenditure.

                                     12
¶ 26   CIW invokes, however, the broader definition of “expenditure”

  provided by a Secretary rule. See Dep’t of State Reg. 1.6, 8 Code

  Colo. Regs. 1505-6. But that rule applies to expenditures and

  obligations “as used in section 1-45-108(1)(a)(I),” and section

  1-45-108(1)(a)(I) does not apply to an IEC, as we have explained. Id.

¶ 27   Accordingly, CIW was not required to report the payments as

  expenditures.

                      III.        Other Contentions

¶ 28   Because we have concluded that CORE was not required to

  disclose the payments, we need not address CORE’s objections to

  disclosure based on the First Amendment and Citizens United v.

  Federal Election Commission, 558 U.S. 310 (2010).

                   IV.       CIW’s Request for Costs

¶ 29   CIW requests “sanctions and costs” against CORE under

  C.A.R. 39 and C.A.R. 39.1 (formerly C.A.R. 39.5). Because we rule

  in favor of CORE, we deny CIW’s request for appellate costs and

  sanctions. See C.A.R. 39(a).

                             V.      Conclusion

¶ 30   The order of dismissal is affirmed.

       JUDGE TAUBMAN and JUDGE GRAHAM concur.

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