FSC -- California Donor Confidentiality Injunction Means Fight Not Over
April 27, 2016
For many months, FSC has been opposing efforts by California and others to compel nonprofit organizations to disclose the names and addresses
of their high dollar donors to state officials. This email reports on recent developments in California in which FSC has been involved.
Injunction Issued
On April 21, 2016, the U.S. District Court for the Central District of California enjoined California Attorney General (AG) Kamala Harris from demanding the
confidential donor list of Americans for Prosperity Foundation (AFPF) before AFPF may register as a charity in California to solicit funds. (Harris is now a
Democratic candidate for the U.S. Senate from California.)
The district court's opinion is available
here.
The injunction was primarily based on three findings reached after trial. First, the California AG had not previously used donor information in its
enforcement of California law and demonstrated no real need for the high dollar donor information. Second, AFPF demonstrated that its donors had come
under threat for giving money in the past. Third, the California AG's staff had treated the confidential donor information carelessly, allowing nearly
2,000 confidential records to be posted on line.
Although this order represents a significant victory, the injunction only applies to AFPF - not to all charities required to register to do fundraising in
California. And not all charities will likely be able to make the showing of threats to its donors and careless disclosures by California charity officials
that AFPF demonstrated during its trial.
Background
Nonprofit organizations that file an IRS Form 990 "Information return" with the IRS also include as Schedule B, a list of their largest donors, including the
donors' names and addresses. Such list must be kept confidential by the IRS and is protected against unauthorized disclosure.
Under California law, charities must register with the AG in order to solicit contributions in that state and must file a copy of the IRS Form 990 with their
registrations. For many years, charities filed a redacted version of the Schedule B, omitting the names and addresses of large donors. However, in recent
years, AG Harris began demanding that charities also provide the unredacted, complete list of donors. The AG is extorting disclosure of the donors list by
threatening suspension of registrations, fines, etc.
Litigation
AFPF and Thomas More Law Center filed separate suits in the U.S. District Court for the Central District of California (Docket Nos. 2:14-cv-9448 and
2:15-cv-3048) challenging the AG's demands for the names and addresses of the organizations' contributors (Schedule B). Each organization obtained a
preliminary injunction prohibiting the AG from demanding the plaintiffs' Schedules B during the pendency of the litigation.
The AG appealed those preliminary injunctions to the U.S. Court of Appeals for the Ninth Circuit which, on December 29, 2015, vacated the preliminary
injunctions and instead ordered the district court to enter an injunction prohibiting the AG from publicly disclosing Schedules B which it acquires. The
Ninth Circuit opinion is here.
FSC amicus brief in the Ninth Circuit
On January 11, 2016, AFPF/Thomas More filed a petition for rehearing en banc with the Ninth Circuit, and FSDEF/FSC filed an amicus curiae
brief in support of the petition for rehearing.
Our amicus brief argued that the Ninth Circuit's decision failed to properly apply U.S. Supreme Court precedents governing the First Amendment's anonymity
principle and precedents relating to state charitable solicitation laws. Rather, the Ninth Circuit had applied precedents relating to election law, which
did not apply.
The AG responded to the petition for rehearing en banc on February 9, 2016. On April 6, 2016, the Ninth Circuit denied rehearing en banc.
District Court Trial
While the appeal on the preliminary injunctions was pending, litigation in the district court proceeded on the permanent injunctions. AFPF's trial concluded
in February 2016. Thomas More's trial scheduled to begin June 28, 2016.
The April 21 decision was on the permanent injunction as applied to AFPF, based on the evidence that was produced at trial - the AG has no official use for
the donor list, AFPF donors have been subjected to harassment, etc. The AG may appeal the permanent injunction to the Ninth Circuit.
Facial Challenge vs. As-Applied Challenge
The district court's injunction resolved an "as applied" challenge made by AFPF - that the law was unconstitutional as applied to AFPF. The district court
was precluded from considering a "facial" challenge because the Ninth Circuit had previously ruled against such a challenge in an appeal brought by the
Center for Competitive Politics. In that case, the Ninth Circuit decision is available
here. After the Center for Competitive Politics lost its case in the Ninth Circuit, it unsuccessfully sought review by the U.S. Supreme Court.
Postscript: Congressional Developments
Yesterday, Congressman Peter Roskam (R-IL-6) introduced H.R. 5053 to prohibit the IRS from requiring donor information. The House Ways and Means Committee
has scheduled a
hearing Thursday morning to consider that bill.
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The Free Speech Coalition, Inc. is a nonpartisan, nonprofit 501(c)(4) organization which educates,
lobbies, and litigates to defend the rights of advocacy organizations and their members. FSC needs
your support to continue its fight to protect the rights of citizens to associate together and exercise
their First Amendment right to petition their government for redress of their grievances. Contributions
to the Free Speech Coalition, Inc. are not tax-deductible. However, contributions to the Free Speech
Defense & Education Fund, Inc., a 501(c)(3) public charity, are tax-deductible.
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Phone:(703) 356-6912 , Fax:(703) 356-5085
http://www.freespeechcoalition.org, freespeech@mindspring.com
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