Colo. Dep't of St. v. Unite for Colo.

551 P.3d 687

2024 COA 31

COLORADO DEPARTMENT OF STATE; Jena Griswold, in her official capacity as Colorado Secretary of State; and Christopher P. Beall, in his official capacity as Colorado Deputy Secretary of State, Plaintiffs-Appellants,

v.UNITE FOR COLORADO, Defendant-Appellee.

Court of Appeals No. 23CA0989

Colorado Court of Appeals, Div. II.

Announced March 28, 2024

City and County of Denver District Court Nos. 22CV30098 & 22CV30101, Honorable David H. Goldberg, Judge

Philip J. Weiser, Attorney General, Peter G. Baumann, Senior Assistant Attorney General, Denver, Colorado, for Plaintiffs-Appellants

West Group Law & Policy, Suzanne M. Taheri, Englewood, Colorado, for Defendant-Appellee

Opinion by JUDGE FOX

¶ 1 In this campaign finance dispute, plaintiffs, the Colorado Department of State and Jena Griswold, in her capacity as Colorado Secretary of State (collectively, the Department), and Christopher P. Beall, in his capacity as Colorado Deputy Secretary of State (the Deputy), appeal the district court’s determination that defendant, Unite for Colorado (Unite), did not have a major purpose of supporting or opposing any ballot initiative in the 2020 election. Construing the statutory scheme applicable to the 2020 dispute, which has since been repealed and replaced, we conclude that the Department had authority to consider the organization’s ballot initiative spending in the aggregate, as opposed to considering its spending on a proposition-by-proposition basis. We therefore reverse and remand with instructions to reinstate the Department’s final decision.

I. Background

A. Legal Background

¶ 2 The ballot initiative process reserves for the people of Colorado the power to propose laws and constitutional amendments independent of the General Assembly. Colo. Const. art. V, § 1; Colo. Cmty. Health Network v. Colo. Gen. Assembly, 166 P.3d 280, 284-85 (Colo. App. 2007). But before a proposed law or constitutional amendment is submitted to Colorado voters at the polls, the initiative’s proponent must gather a certain number of signatures according to Colorado Constitution article V, section 1(2). § 1-40-109(1), C.R.S. 2023.

¶ 3 As relevant here, Colorado’s campaign finance laws require that issue committees — groups that have a major purpose of supporting or opposing "any" ballot issue or ballot question — disclose to the Department their contributions, donors, expenditures, and obligations. Colo. Const. art. XXVIII, § 2(10)(a); § l-45-103(12)(a), C.R.S. 2023; § 1-45-108(1)(a)(I), C.R.S. 2023. Issue committees must also register as such with the Department shortly before contributing, receiving contributions, or making expenditures to support or oppose a ballot initiative. § 1-45-108(3.3).

B. Factual History

¶ 4 Unite is a nonprofit corporation that was formed in Colorado in November 2019. Unite began operating in January 2020 under an executive manager, Dustin Zvonek, and a registered agent and board member, Katie Kennedy. Unite did not employ anyone else.

¶ 5 Unite’s articles of incorporation omit its organizational purposes, but its website at the time described it as "an issue advocacy organization that believes in a smaller, more accountable government." Unite’s mission included supporting state and local policies that "increase economic opportunity and greater government transparency" and opposing policies it deemed "harmful to Colorado’s economic wellbeing, and efforts to unnecessarily grow the size and reach of government." Zvonek oversaw Unite’s operations and chose the causes that Unite supported and opposed.

¶ 6 Unite’s expenditures totaled $17,174,246.70 in 2020. It spent over four million dollars to support or oppose three ballot initiatives on Colorado’s 2020 ballot; it supported Propositions 116 and 117 and opposed Proposition 113:

• Proposition 116 advanced a state income tax rate reduction. Colo. Sec’y of State, Amendments and Propositions on the 2020 Ballot, https://perma.cc/PR 32-J4HW.

• Proposition 117 urged the adoption of a statute that would require voter approval of certain newly created state enterprises that would be exempt from the Taxpayer’s Bill of Rights. Id

• Proposition 113 advocated for an agreement among the states to elect the President of the United States by national popular vote. Id.

[1] ¶ 7 In total, Unite spent $4,026,017.26 to support or oppose these propositions, amounting to approximately 23.44% of its total expenditures.¹ Unite contributed to the initiatives as follows:

Prop.	Qualification and Contributions	Advertising	Total	% Annual Spending
117	$783,314.08	$1,026,896.08	$1,810,210.16	10.54%
116	$764,996.25	$200,002.00	$964,998.25	5.62%
113	$250,000.00	$1,000,808.85	$1,250,808.85	7.28%
Total	$1,798,310.33	$2,227,706.93	$4,026,017.26	23.44%

¶ 8 Unite spent $1,810,210.16 (10.54% of its annual expenditures) supporting Proposition 117.² Unite made sixteen separate expenditures in support of Proposition 117 between May and October 2020, with $1,026,896.08 of that total devoted to advertising and the rest to signature gathering and printing costs.

¶ 9 To support Proposition 116, Unite made ten separate expenditures between May and September 2020. Unite spent $964,998.25 (5.62% of its annual expenditures) supporting Proposition 116, with $200,002 going to advertising and the rest going to signature gathering and printing costs.

¶ 10 Unite spent $1,250,808.85 (7.28% of its annual expenditures) opposing Proposition 113, with $1,000,808.85 going to advertising and the rest as donations to another issue committee opposing the measure. Unite made ten separate expenditures between September and November 2020 to oppose Proposition 113.

¶ 11 Unite approached the proponents of Propositions 116 and 117 in the spring of 2020 about running the signature gathering efforts for those initiatives. Beginning in May 2020, Unite assumed signature gathering responsibility for both propositions. Unite’s in-kind contributions were accompanied by a letter stating that Unite "does not have the major purpose" of supporting or opposing the initiative in question.

¶ 12 The record does not clearly identify where Unite spent the remainder of its budget in 2020. But some evidence in the record suggests that Unite contributed over one million dollars to Unite for Colorado Action IEC (UCA), an independent expenditure committee supporting political candidates. Unite also spent some of its budget opposing John Hickenlooper’s campaign for the United States Senate in 2020. In a deposition, Zvonek testified that Unite’s business expenses included his consulting fee, attorney fees, accountant fees, and "regular expenses," but that Unite did not have building expenses because it did not operate from an office. Zvonek testified that he spent much of his time in 2020 getting the organization up and running, developing partnerships, and soliciting contributions to support Unite’s mission. Contributions were not designated for specific causes.

¶ 13 Believing it did not fit the issue committee criteria, Unite did not register with the Department or disclose its contributions and expenditures.

C. Procedural History

¶ 14 Section 1-45-111.7, C.R.S. 2023, establishes Colorado’s campaign finance complaint procedures. A complainant files a campaign finance complaint with the Department, § 1-45-111.7(2)(a), and the Elections Division of the office then conducts an initial review, § 1-45-111.7(3)(a). Following that initial review, the Elections Division does one of the following:

1. Files a motion to dismiss the campaign finance complaint with the Deputy. § 1-45-111.7(3)(b)(I).

2. Allows the violating party an opportunity to cure any alleged violations. § 1-45-111.7(3)(b)(II).

3. Files a formal complaint with a hearing officer (ALJ). § 1-45-111.7(3)(b)(III).

4. Conducts further investigation before determining whether to file a complaint or move to dismiss. Id.

¶ 15 If the Elections Division files a motion to dismiss, but the Deputy denies the motion, the Elections Division must file a complaint with an ALJ. § 1-45-111.7(5)(a)(IV). After a hearing, the ALJ makes an initial determination, which is subject to review by the Deputy after exceptions are filed. § 1-45-111.7(6)(b); see also § 24-4-105, C.R.S. 2023 (defining the applicable procedures for proceedings before an ALJ). The Deputy issues the final agency decision, which is subject to judicial review by the district court. § 1-45-111.7(6)(b); see also § 24-4-106, C.R.S. 2023 (outlining the applicable procedures for judicial review of agency action).

¶ 16 In August 2020, two registered voters filed a campaign finance complaint with the Department against Unite alleging that Unite was an issue committee that had failed to comply with Colorado’s disclosure and registration requirements.

¶ 17 After its investigation, the Elections Division moved to dismiss the campaign finance complaint, concluding that the complainants did not allege sufficient facts to support a conclusion that Unite had a major purpose of supporting or opposing a ballot measure. The Elections Division thought the statutory scheme restricted its analysis to an organization’s involvement in a ballot issue or ballot question, rather than an organization’s general involvement in initiative advocacy. So it concluded that Unite’s expenditures for or against each proposition did not amount to a major purpose compared to its other expenditures.

¶ 18 The Deputy at the time, Ian Rayder, disagreed. He concluded that the Elections Division "placed too much weight on the proportion of [Unite’s] disclosed expenditures and communications related to the initiatives as relative to [Unite’s] overall activities, and not enough weight on the consistent pattern of conduct demonstrated by [Unite’s] activities." The Deputy found that Unite made repeated, consistent expenditures for signature gathering and broadcast communications, evidencing a major purpose of supporting or opposing each initiative.

¶ 19 The Elections Division then filed a formal complaint...