Ctr. For Ariz. Policy v. Ariz. Sec'y of State

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CENTER FOR ARIZONA POLICY INC, et al., Plaintiffs/Appellants, v. ARIZONA SECRETARY OF STATE, et al., Defendants/Appellees, KRISTIN MAYES, ARIZONA ATTORNEY GENERAL, et al., Intervenors/Appellees.

No. 1 CA-CV 24-0272

Court of Appeals of Arizona, First Division

November 8, 2024

Appeal from the Superior Court in Maricopa County No. CV2022-016564 The Honorable M. Scott McCoy, Judge

Scharf-Norton Center for Constitutional Litigation at the Goldwater Institute, Phoenix By Jonathan Riches, Scott Day Freeman, Parker Jackson Co-Counsel for Plaintiffs/Appellants

Holtzman Vogel Baran Torchinsky & Josefiak PLLC, Phoenix By Andrew Gould, Emily Gould, Brennan A.R. Bowman, Daniel Tilleman, Oliver Roberts Co-Counsel for Plaintiffs/Appellants

Osborn Maledon, P.A., Phoenix By Eric M. Fraser, Mary R O'Grady, Alexandria N. Karpurk Counsel for Defendant/Appellee, Arizona Citizens Clean Elections Commission

Sherman & Howard LLC, Phoenix By Craig A. Morgan, Shayna Stuart Counsel for Defendant/Appellee, Arizona Secretary of State Adrian Fontes

Arizona Center for Law in the Public Interest, Phoenix By Daniel J. Adelman, Chanele N. Reyes Co-Counsel for Intervenor/Appellee, Voters' Right to Know

Campaign Legal Center, Washington D.C. By David Kolker, Tara Malloy, Elizabeth D. Shimek (pro hac vice) Co-Counsel for Intervenor/Appellee, Voters' Right to Know

Office of the Arizona Attorney General, Phoenix By Alexander W. Samuels, Nathan T. Arrowsmith, Kathryn E. Boughton Counsel for Intervenor/Appellee, Arizona Attorney General Kristin Mayes

Statecraft PLLC, Phoenix By Kory Langhofer, Thomas Basile Counsel for Amicus Curiae Arizona Women of Action

Arizona Chamber of Commerce & Industry, Phoenix By Nate Curtisi Counsel for Amicus Curiae Arizona Chamber of Commerce & Industry

Greenberg Traurig, LLP, Phoenix By Dominic E. Draye Counsel for Amici Curiae Americans for Prosperity & Americans for Prosperity Foundation

Snell & Wilmer L.L.P., Phoenix By Brett W. Johnson, Tracy A. Olson, Ryan P. Hogan, Charlene A. Warner Counsel for Amici Curiae Speaker Ben Toma and President Warren Petersen

Office of the Phoenix City Attorney, Phoenix By Deryck R. Lavelle, Dustin S. Cammack Counsel for Amicus Curiae City of Phoenix

Presiding Judge Jennifer B. Campbell delivered the opinion of the Court, in which Judge Kent E. Cattani and Judge Paul J. McMurdie joined.

CAMPBELL, JUDGE

¶1 Does Proposition 211, known as the "Voter's Right to Know Act" (Act), violate the Constitutional protections of free speech, association, privacy, and separation of powers? In this opinion, we review the superior court's rulings granting the defendants' and intervenors' (collectively, Defendants') motions to dismiss and denying their requests for injunctions on claims alleging that the Act violates the Arizona Constitution. For the reasons below, we affirm.

BACKGROUND

I. The Act

¶2 In November 2022, Arizona voters approved Proposition 211. The Act aims to stop "dark money" in Arizona politics. 2022 Ariz. Legis. Serv. Prop. 211 § 2(C). The Act seeks to regulate "the practice of laundering political contributions, often through multiple intermediaries, to hide the original source." Id.

¶3 To achieve that purpose, the Act requires a "covered person" to disclose the original source of campaign donations exceeding $5,000 used for "campaign media spending." See A.R.S. § 16-973(A). A "covered person" is "any person [or entity] whose total campaign media spending . . . in an election cycle is more than $50,000 in statewide campaigns or more than $25,000 in any other type of campaigns." A.R.S § 16-971(7)(a). This definition excludes "candidate committee[s]," individuals spending only their own monies, organizations spending only their own business income, and political action committees (PACs) or political parties receiving no more than $20,000 in contributions from any one person in an election cycle. A.R.S. § 16-971(7)(b).

¶4 "Campaign media spending" means spending for certain enumerated election-related "public communication[s]," "activit[ies] . . . that support[] the election or defeat of candidates . . . or political part[ies]," and "[r]esearch, design, production, polling, data analytics, mailing or social media list acquisition or any other activity conducted in preparation for or in conjunction with any of the" enumerated public communications or activities. A.R.S. § 16-971(2)(a)(i)-(vii). This definition excludes certain spending, including spending to disseminate news or commentary, publish books or documentaries, encourage voter participation, or facilitate candidate debates. A.R.S. § 16-971(2)(b)(i)-(iv).

¶5 Both covered persons and qualifying donors-those contributing more than $5,000 during an election cycle-have recordkeeping responsibilities. A.R.S. § 16-972(D). Covered persons must maintain "transfer records" documenting "the identity of each person that directly or indirectly contributed or transferred more than $2,500 of original monies used for campaign media spending." A.R.S. §§ 16-971(19), 16-973(A). In other words, covered persons must document the original source of a contribution and anyone possessing the funds before they reach the covered person. Donors giving more than $5,000 to a covered person during an election cycle must report to the covered person the identity of anyone who contributed more than $2,500 of those funds. A.R.S. § 16-972(D). If the funds were conglomerated, the donor must identify intermediaries who transferred or donated more than $2,500 and identify those intermediate transactions. Id. This must be done within ten days after being requested by the covered person. Id.

¶6 Covered persons are also tasked with disclosure requirements. "Within five days after spending" at least $50,000 on campaign media in statewide campaigns or at least $25,000 on campaign media in any other type of campaign during an election cycle, covered persons must file a report with the Arizona Secretary of State (the Secretary). A.R.S. § 16-973(A). Each donor contributing more than $5,000 of original monies used for campaign media spending must be listed. A.R.S. § 16-973(A), (G). The Secretary will "promptly make the information public." A.R.S. § 16-973(H). Additionally, covered persons must include a disclaimer in public communications, stating "the names of the . . . donors who directly or indirectly made the three largest contributions of original monies [to them] during the election cycle." A.R.S. § 16-974(C).

¶7 Donors who prefer to remain anonymous may opt out of having their contributions used for campaign media spending, ensuring their identities are never made public. A.R.S. § 16-972(B). Before a covered person can use contributions for campaign media spending, they must give the donor written notice of the opt-out provision. Id. The covered person shall not use the donated funds for campaign media spending for 21 days unless the donor waives the waiting period by written consent. A.R.S. 16-972(C). There are additional protections for original donors, whose identities "shall not be disclosed or included in a disclaimer" if (1) "there is a reasonable probability that public knowledge of the original source's identity would subject the source or [their] family to a serious risk of physical harm," or (2) the donor's identity is "otherwise protected from disclosure by law or a court order." A.R.S. § 16-973(F).

¶8 The Arizona Clean Elections Commission (the Commission) is empowered to "implement and enforce" the disclosure requirements in the Act. A.R.S. § 16-974(A). The Commission may, among other things, (1) "adopt and enforce rules," (2) "initiate enforcement actions," (3) "[i]mpose civil penalties for noncompliance," (4) "seek . . . relief in court as necessary," and (5) "[p]erform any other act that may assist in implementing [the Act]." A.R.S. § 16-974(A)(1)-(8). The Act provides that the Commission's rules and enforcement actions "are not subject to the approval of or any prohibition or limit imposed by any other executive or legislative governmental body or official." A.R.S. § 16-974(D). Voters may file "verified complaint[s]" with the Commission alleging a person has violated the Act. A.R.S. § 16-977(A).

II. Procedural Background

¶9 Two organizations and two individuals (collectively, Plaintiffs) filed a verified complaint challenging the Act's constitutionality. Plaintiffs named the Secretary and the Commission as defendants. The Arizona Attorney General and Voters' Right to Know, the Act's sponsoring organization, intervened to defend the Act.

¶10 The two plaintiff organizations, the Center for Arizona Policy Inc. (CAP) and the Arizona Free Enterprise Club (FEC), are nonprofit, taxexempt organizations considered covered persons under the Act.^[1] CAP describes itself as a "statewide research and education organization that seeks to promote and defend foundational principles of life, marriage, family, and religious freedom." FEC is a "statewide research and public policy organization that advocates for principles of free enterprise and progrowth, limited government policies through extensive public education, lobbying, and grassroots activity, including hosting public policy events, issuing policy papers, and communicating with individual citizens, the media, and policymakers on public policy." The individual plaintiffs are both citizens of Arizona who donate to organizations engaging in campaign media spending. Both individuals wish to remain anonymous.

¶11 Plaintiffs assert that the Act facially violates the free speech and private affairs clauses of the Arizona Constitution. They also argue the Act violates the separation of powers clause of the Arizona Constitution by granting "the Commission plenary power to...