Empower Texans, Inc. v. Tex. Ethics Comm'n

657 S.W.3d 737

EMPOWER TEXANS, INC. & Michael Quinn Sullivan, Appellants,

v.TEXAS ETHICS COMMISSION, Appellee.

No. 08-20-00153-CV

Court of Appeals of Texas, El Paso.

October 12, 2022

ATTORNEY FOR APPELLANTS: Tony McDonald, The Law Offices of Tony McDonald, 1501 Leander Dr., Bldg. B, Ste. 2, Leander, TX 78641.

ATTORNEYS FOR APPELLEE: Amanda G. Taylor, Eric J.R. Nichols, Christopher R. Cowan, Butler Snow LLP 1400 Lavaca St., Suite 1000, Austin, TX 78701.

AMICUS CURIAE: Kedric Payne, 1101 14th St. NW, Suite 400, Washington, DC 20005, Andrew Cates, Cates Legal Group PLLC, 105 West 8th St., Ste. 2B, Austin, TX 79701, Randy Howry, Howry Breen & Herman, LLP, 1900 Pearl Street, Austin, TX 78705.

Before Rodriguez, C.J., Palafox, and Alley, JJ.

OPINION

YVONNE T. RODRIGUEZ, Chief Justice This is an appeal from a final judgment on cross motions for summary judgment dismissing a declaratory judgment counterclaim filed by Appellants Empower Texans, Inc. (ETI) and Michael Quinn Sullivan (Sullivan) (together Appellants) against Appellee the Texas Ethics Commission (the Commission). Appellants sought declarations that sections 571.061, .172, and .173 of the Texas Government Code violate the Texas Constitution's Separation of Powers Clause because they delegate executive powers to the Commission, a state agency that Appellants contend is a legislative body. The trial court granted the Commission's motion and denied Appellants’ motion, holding the delegation of enforcement powers to the Commission did not violate the constitution because the Commission is an executive body with legislative powers constitutionally granted. We affirm the trial court's judgment.

PROCEDURAL BACKGROUND

I. ETI and Sullivan are Engaged in Activity That Attempts to Influence Elections and Elected Officials.

Appellants are well known conservative activists operating within the Texas political arena.² ETI is a nonprofit corporation doing business as Texans for Fiscal Responsibility (TFR). According to its formation documents filed with the Texas Secretary of State in 2006, ETI was formed "exclusively for educational purposes to benefit the social welfare." The formation documents state that ETI's mission is to "work for a more prosperous future for all Texans by informing the public regarding government spending and tax policy and empowering citizens to take action on these issues." The formation documents expressly prohibit ETI from engaging in "any activities not permitted to be conducted or carried on by an organization recognized under Section 501(c)(4) of the Internal Revenue Code and its regulations."³

Since ETI's formation Tim Dunn⁴ has served as ETI's Chairman and Director, and Sullivan has served as ETI's President. According to Appellants, following the 2007 Texas Legislative Session, Sullivan formed Empower Texans Political Action Committee (the PAC). Dunn appointed Sullivan to serve as the PAC's campaign treasurer on July 12, 2007. On January 16, 2012, the PAC reported to the Commission it made no political expenditures between July 1, 2011 and December 31, 2011 and that it maintained $4,283.28 in political contributions.

On January 24, 2012, in a response to a public information request seeking information about whether Sullivan had registered as a lobbyist in 2010 or 2011, the Commission confirmed that Sullivan had not. Two days later, on January 26, 2012, in response to a different public information request seeking information about whether ETI had "filed a report of direct campaign expenditures as described by Section 254.261(a), Election Code,"⁵ the Commission confirmed that ETI had not.

II. The Ethics Complaints Against Sullivan and ETI

A. Sworn complaints alleging Appellants violated ethics laws in 2010 and 2011 are filed with the Commission.

For the express purpose of regulating elections and eliminating opportunities for undue influence over elections and governmental actions, the Commission receives and investigates sworn complaints alleging violations of certain state ethics laws. See TEX.GOV'T CODE ANN. § 571.001. On April 3, 2012, the Commission received four sworn ethics complaints⁶ alleging both Sullivan and ETI violated state ethics laws in 2010 and 2011. Two of the four complaints alleged Sullivan in 2010 and 2011 was paid by ETI to lobby members of the legislature and their staff and did so in those years without registering as a lobbyist (the lobbyist complaints).⁷ The two other complaints alleged ETI violated campaign finance laws (the campaign-finance complaints) in 2010 and 2011 under two alternate theories.

Under the first theory, the campaign-finance complaints alleged that if ETI was "not acting in concert with another," ETI failed to file with the Commission a report disclosing its direct campaign expenditures totaling more than $100 no later than January 17, 2012.⁸ Under the second theory, the campaign-finance complaints alleged that "if [ETI] was acting in concert with another," ETI had accepted political contributions and made political expenditures during 2010 and 2011 but did not have on file with the Commission a campaign treasurer appointment in each of those years.⁹

After determining all four complaints complied with statutory prerequisites invoking the Commission's jurisdiction, the Commission made several attempts between 2012 and 2013 through its preliminary review process to obtain from Sullivan and ETI information relevant to the complaints.¹⁰ However, Sullivan, individually, and as president of ETI, refused to cooperate with the Commission's requests for information.

Meanwhile, on May 21, 2012, Sullivan on behalf of ETI filed with the Commission pursuant to Section 254.261 of the Election Code, a "first filed" "General-Purpose Committee Campaign Finance Report" disclosing that ETI made over $241,000 in political expenditures between April 30, 2012 and May 19, 2012 promoting or opposing certain political candidates shortly before a primary election was scheduled to occur on May 29, 2012. In the section designating the name and address of the campaign treasurer, Sullivan wrote "N/A."

On January 28, 2014, after it was unable to reach an informal resolution, the Commission served notice of its intent to proceed to a formal hearing on all four complaints.¹¹ In anticipation of the formal hearing which was scheduled to begin on April 3, 2014, the Commission issued two subpoenas on February 13, 2014.¹² Each subpoena pertained to all four ethics complaints. One subpoena was directed to Sullivan and the other was directed to ETI. The subpoenas directed Appellants to produce documents requested therein by March 6, 2014.

B. Appellants file suit against the Commission in federal and state courts.

Rather than comply with the Commission's subpoenas or file a motion to quash in the administrative proceeding, on February 26, 2014, Appellants filed suit in a federal district court seeking to enjoin the Commission and its interim director from enforcing its subpoenas.¹³ Appellants alleged, among other things, they were being selectively prosecuted, being denied due process, and the subpoenas violated their rights under the First Amendment.

On March 20, 2014, a hearing was held on Appellants’ motion for temporary injunction in which the federal district judge expressed concern about the breadth of the Commission's subpoenas, describing them as "absurd" and stating he knew of "no courtroom in the land [in which] those subpoenas would be approved." However, in its order eventually dismissing the federal lawsuit on abstention¹⁴ grounds,¹⁵ the district court acknowledged the existence of a pending state administrative proceeding before the Commission, as well as several procedural mechanisms, including the ability to move to quash the subpoenas and seek appellate review of an adverse final determination, that Appellants could invoke in state courts to protect their rights and interests. The order of dismissal was signed on April 25, 2014.

Meanwhile, the Commission withdrew both of its original subpoenas and issued two amended subpoenas on April 7, 2014 which were served on Appellants on April 8, 2014. The amended subpoenas narrowed the scope of the original requests¹⁶ and identified 19 specific categories of documents the Commission requested produced, as opposed to only a few broad categories identified in the original subpoenas. In addition, the amended subpoenas contained definitions that the original subpoenas lacked.

Appellants nevertheless objected to the amended subpoenas in a lengthy motion to quash filed with the Commission on April 21, 2014. The objections were based on various grounds, but primarily complained that the requests were overly broad, sought information that was irrelevant, confidential and privileged, were submitted for the "improper purpose of harassment and/or annoyance," and violated Sullivan's rights under the First and Fourteenth Amendments.

In addition to the motion to quash, on April 30, 2014, Appellants filed suit in state district court. Seizing on the federal district court's verbal disapproval of the original subpoenas, Appellants sought a state court order quashing the amended subpoenas, among other relief. This time, Appellants sued the Commission, its executive director, and all eight of its commissioners in both their individual and official capacities.¹⁷

On May 29, 2014, while the state lawsuit was pending, the Commission entered an order granting in part and denying in part Appellants’ motion to quash filed in the administrative proceeding. The Commission's order further modified and/or clarified the amended subpoena requests and also imposed a June 13, 2014 deadline by when Appellants were required to respond to eleven of the nineteen requests, as modified. On June 13, 2014, Appellants submitted 76 documents to the Commission, but continued to object to the amended subpoenas as modified.

C. The Commission sustains the lobbyist complaints against Sullivan.

On June 25, 2014, the eight-member Commission...