SD Voice v. Noem

380 F.Supp.3d 939

SD VOICE and Cory Heidelberger, Plaintiffs,

v.Kristi G. NOEM, South Dakota Governor in Her Official Capacity; Jason Ravnsborg, South Dakota Attorney General in His Official Capacity; and Steve Barnett, South Dakota Secretary of State in His Official Capacity; Defendants.

South Dakota Newspaper Association, South Dakota Retailers Association, South Dakota Broadcasters Association, South Dakota Chamber Ballot Action Committee, Thomas Barnett Jr., and Americans for Prosperity, Plaintiffs,

v.Steve Barnett, in His Official Capacity as South Dakota Secretary of State, and Jason Ravnsborg, in His Official Capacity as South Dakota Attorney General, Defendants.

1:19-CV-01003-CBK

3:19-CV-03010-CBK

United States District Court, D. South Dakota, Northern Division.

Signed May 9, 2019

James D. Leach, Attorney at Law, Rapid City, SD, Plaintiffs.

Stacy R. Hegge, Attorney General of South Dakota, Pierre, SD, for Defendants.

OPINION AND ORDER

CHARLES B. KORNMANN, United States District Judge Plaintiffs in these two cases filed complaints seeking a preliminary and permanent injunction preventing the State of South Dakota from enforcing Initiated Measure 24¹ ("IM 24"), which was enacted by the South Dakota voters in the 2018 general election. IM 24 bans out-of-state contributions to South Dakota ballot question committees. Plaintiffs assert that IM 24 violates the First and Fourteenth Amendments and the Commerce Clause of the United States Constitution. The trial on the merits was advanced and consolidated with the hearing on the motion for a preliminary injunction as authorized by Fed. R. Civ. P. 65(a)(1).

DECISION

Any judge must view with great deference any legislative enactment, especially when enacted by a majority of the voters of South Dakota, which is the case here. I do so here.

The South Dakota Constitution expressly reserves to the electorate the rights to initiative and referendum. S.D. Const. art. III, § 1. Initiated or referred laws are placed on the ballot only after the sponsor complies with the provisions of SDCL Chapter 2-1. Once a proposed measure complies with all laws required for placement on the ballot, the South Dakota Secretary of State oversees the collection of pro and con statements as well as the Attorney General's statement that will accompany the proposed measure on the ballot, in compliance with SDCL Chapter. 12-13. The Secretary of State also oversees compliance with campaign finance laws, SDCL Chapter 12-27, applicable to, inter alia , ballot question committees.

In 2016, South Dakota voters passed Constitutional Amendment S, a crime victim's rights measure which was dubbed in the media as "Marsy's Law² ," despite an extensive media campaign by opponents who complained it was entirely funded by an out-of-state interest. Marsy's Law was not the only measure on the 2016 ballot that was supported by out-of-state interests. According to then-Governor Dennis Daugaard in his published pro statement in support of IM 24, six of the seven initiated measures on the 2016 general election ballot were urged by out-of-state interests who donated 97% of the $ 9.6 million spent on such initiatives.

That year, out-of-state interests used South Dakota's low signature requirements and cheap media markets as a testing ground for their ideas. They have turned our state founders' intent completely on its head. Let's send their political business model somewhere else. Support initiated measure 24 to ban out-of-state financial contributions to ballot committees. Let's protect a SOUTH DAKOTAN's right to petition the people, but deny that privilege to New York, Massachusetts and California business interests. They don't have kids in our schools, they don't attend our churches, and you won't see them at the football game this weekend. That's because they don't live here. Let's limit their involvement unless they can demonstrate either residency or a legitimate business interest in South Dakota.

https://sdsos.gov/elections-voting/assets/2018BQPamphlet.pdf (visited May 7, 2019).

IM 24, which will be codified as part of South Dakota's campaign finance laws at SDCL 12-27-18.2 effective July 1, 2019, provides:

Any contribution to a statewide ballot question committee by a person who is not a resident of the state at the time of the contribution, a political committee that is organized outside South Dakota, or an entity that is not filed as an entity with the secretary of state for the four years preceding such contribution is prohibited. If a statewide ballot question committee accepts a contribution prohibited by this section, the secretary of state shall impose a civil penalty equal to two hundred percent of the prohibited contribution after notice and opportunity to be heard pursuant to chapter 1-26. Any civil penalty collected pursuant to this section shall be deposited into the state general fund.

The prohibition on receipt of out-of-state contributions applies only to ballot question committees. No restriction on out-of-state contributions applies to candidates or candidate committees, political action committees, or political parties.

A person who is not a resident of South Dakota cannot donate to a statewide ballot question committee but no state law prevents an individual from making an independent communication expenditure, as defined by SDCL 12-27-1(11), to support or oppose a ballot initiative. An entity, defined by SDCL 12-27-1(15), that is not "filed" with the Secretary of State may not contribute to a ballot question committee but nothing prevents a foreign corporation organized under the laws of another state but registered with the Secretary of State to do business in South Dakota from contributing (as long as they have been so registered at least 4 years). Further, an "entity" organized in South Dakota can freely contribute to a ballot question committee without regard to the source of the funds contributed.

The term "statewide ballot question committee" is not defined by IM 24 nor by South Dakota's campaign finance laws, SDCL Title 12-27, where IM 24 is to be codified.

Although ballot question committees must register with the Secretary of State, SDCL 12-27-3, and comply with state campaign finance rules, individuals, whether they are residents or non-residents, have no obligation to register their independent spending in support of or in opposition to a ballot measure.

DECISION

I. First Amendment Claims.

Plaintiffs contend that IM 24 violates their First Amendment right to engage in debate on public issues through contributions to fund advocacy efforts. Plaintiffs South Dakota Newspaper Association, et al. also contend that IM 24 prohibits their associational rights protected by the First Amendment.

The major purpose of the First Amendment "was to protect the free discussion of governmental affairs." Mills v. State of Ala., 384 U.S. 214, 218, 86 S.Ct. 1434, 1437, 16 L.Ed.2d 484 (1966). This protection extends to the discussion of all matters related to political processes. Id. "The First Amendment affords the broadest protection to such political expression in order ‘to assure (the) unfettered interchange of ideas for the bringing about of political and social changes desired by the people.’ " Buckley v. Valeo, 424 U.S. 1, 14, 96 S.Ct. 612, 632, 46 L.Ed.2d 659 (1976) (quoting Roth v. United States, 354 U.S. 476, 484, 77 S.Ct. 1304, 1308, 1 L.Ed.2d 1498 (1957) ). "The First Amendment protects political association as well as political expression" because "effective advocacy of both public and private points of view, particularly controversial ones, is undeniably enhanced by group association." Buckley v. Valeo, 424 U.S. at 15, 96 S.Ct. at 632–33.

The Supreme Court has long recognized that "virtually every means of communicating ideas in today's mass society requires the expenditure of money." Id. at 19, 96 S.Ct. at 635. "All speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech, and the First Amendment protects the resulting speech." Citizens United v. Fed. Election Comm'n, 558 U.S. 310, 130 S.Ct. 876, 884, 175 L.Ed.2d 753 (2010). A restriction on the amount of money a person or group can contribute to a campaign "necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached." Buckley v. Valeo, 424 U.S. at 19, 96 S.Ct. at 634. "Given the important role of contributions in financing political campaigns, contribution restrictions could have a severe impact on political dialogue if the limitations prevented candidates and political committees from amassing the resources necessary for effective advocacy." Buckley v. Valeo, 424 U.S. at 21, 96 S.Ct. at 636.

The Supreme Court has held that the First Amendment prohibits "restrictions distinguishing among different speakers, allowing speech by some but not others." Citizens United v. Fed. Election Comm'n, 558 U.S. at 340, 130 S.Ct. at 898. "Speech restrictions based on the identity of the speaker are all too often simply a means to control content." Id. , 130 S.Ct. at 899. "The Government may not by these means deprive the public of the right and privilege to determine for itself what speech and speakers are worthy of consideration. The First Amendment protects speech and speaker, and the ideas that flow from each." Citizens United v. Fed. Election Comm'n, 558 U.S. at 340–41, 130 S.Ct. at 899. IM 24 prohibits out-of-state persons from expressing their viewpoint through certain campaign contributions and instead favors in-state speech on ballot initiative issues. "When a state restricts speech, it bears the burden of proving the constitutionality of its actions." Missourians for Fiscal Accountability v. Klahr, 892 F.3d 944, 949 (8th Cir. 2018) (quoting McCutcheon v. FEC, 572 U.S. 185, 210, 134 S.Ct. 1434, 1452, 188 L.Ed.2d 468 (2014) ) (cleaned up³ ).

The First Amendment includes, in addition to the right...