Upstate Jobs Party v. Kosinski

106 F.4th 232

UPSTATE JOBS PARTY, Martin Babinec, John Bullis, Plaintiffs-Appellees-Cross-Appellants, v. Peter S. KOSINSKI, New York State Board of Elections Co-Chair Commissioner,in his official capacity, Henry T. Berger, New York State Board of ElectionsCo-Chair Commissioner, in his official capacity, Essma Bagnuola,New York State Board of Elections Commissioner, in her official capacity,Anthony J. Casale, New York State Board of Elections Commissioner,in his official capacity, Defendants-Appellants-Cross-Appellees.^*

No. 21-2518

No. 21-2557

August Term 2022

United States Court of Appeals, Second Circuit

Argued: Wednesday May 10, 2023

Decided: July 3, 2024

Appeal from the United States District Court for the Northern District of New York (Suddaby, C.J.)

For Plaintiffs-Appellees-Cross-Appellants: Shawn Toomey Sheehy (Edward Wenger & Phillip Michael Gordon, on the brief), Holtzman Vogel Baran Torchinsky & Josefiak, PLLC, Haymarket, VA; Michael Burger, Santiago Burger LLP, Rochester, NY, on the brief.

For Defendants-Appellants-Cross-Appellees: Sarah L. Rosenbluth, Assistant Solicitor General (Jeffrey W. Lang, Deputy Solicitor General, on the brief), for Letitia James, Attorney General of the State of New York, Albany, NY.

Before: Livingston, Chief Judge, Raggi, and Nardini, Circuit Judges.

Debra Ann Livingston, Chief Judge:

In this appeal, a political organization known as Upstate Jobs Party ("Upstate Jobs"), as well as its founder, Martin Babinec, and its Chairman and Executive Director, John Bullis, seek declaratory and injunctive relief, alleging that various New York election campaign finance laws violate the First and Fourteenth Amendments. Specifically, Upstate Jobs and its leaders (collectively, "UJP") challenge New York campaign finance laws that distinguish between political parties, which must demonstrate a particular level of statewide support to qualify as such, and independent bodies, which are defined as all candidate-nominating groups that do not qualify as political parties. Due to this statutory distinction, independent bodies such as Upstate Jobs can neither accept individual contributions as large as those that parties can accept, nor transfer as much money to their candidates as parties can transfer. In addition, New York law provides a "housekeeping account" exception to contribution limits, allowing parties, but not independent bodies, to accept unlimited contributions for maintaining permanent headquarters, employing staff, and other activities that are not for the express purpose of promoting candidates. According to UJP, such unequal treatment violates the Fourteenth Amendment's Equal Protection Clause, as well as the First Amendment rights of Upstate Jobs and its supporters.

The district court determined that the contribution limit distinctions were supported by New York's legitimate interest in stanching corruption but were neither closely drawn nor the least restrictive means of achieving this aim. Thus, the district court granted UJP's requested relief as to contribution limits under both the First Amendment and the Fourteenth Amendment. However, after determining that the housekeeping exception was closely drawn and the least restrictive means of achieving the state's anticorruption goals, the district court denied UJP's requested relief as to housekeeping accounts under both the First Amendment and the Fourteenth Amendment.

The district court erred in multiple respects. First, UJP's Fourteenth Amendment challenges—as to both the contribution limits and the housekeeping exception—falter at the threshold. Political parties and independent bodies are not similarly situated merely because they may both nominate candidates to run in the same election. Accordingly, UJP has not shown an equal protection violation. Second, as to the First Amendment challenges, New York has sufficiently demonstrated that its contribution limits and the absence of a housekeeping account exception for independent bodies are supported by a substantial anticorruption objective and are closely drawn to serve that goal. As a result, the state's campaign finance laws withstand all constitutional challenges raised below, and we AFFIRM in part and REVERSE in part accordingly.

BACKGROUND

I. New York Election Law

Under New York law, a political organization becomes a "party" when its gubernatorial and presidential candidates in the last preceding election received the greater of 130,000 votes or two percent of the total votes cast. N.Y. Elec. Law § 1-104(3).¹ All other organizations that nominate electoral candidates but do not qualify as parties are "independent bodies." Id. § 1-104(12) (defining "independent body" as "any organization or group of voters which nominates a candidate or candidates for office to be voted for at an election, and which is not a party as herein provided"). Typically, an independent body functions as the "alter ego of a candidate," App'x 81, existing only because a candidate decided to run as an independent. In other words, independent bodies usually lack "a distinct identity . . . that is separate and apart from the candidate." Id. at 82. Thus, in broad terms, New York has enacted a regulatory scheme for political organizations that demonstrate a baseline level of statewide support (i.e., parties) that is distinct from campaign finance rules that apply to all other individuals and organizations that nominate candidates for elections (i.e., independent bodies).²

Attaining party status unlocks a suite of statutory provisions that confer benefits and impose organizational and administrative obligations. See SAM Party of N.Y., 987 F.3d at 271-72. A "principal privilege[ ] of party status is a designated ballot line or 'berth.' " Id. at 271; see also N.Y. Elec. Law § 7-104(4). More relevant here, once an organization qualifies as a party, it may accept larger contributions from individuals, see N.Y. Elec. Law §§ 14-114(1), 14-114(10), make uncapped transfers to party candidates, see id. §§ 14-100(9)(2), 14-100(10), 14-114(3), and accept unlimited contributions to housekeeping accounts for expenses "on ordinary activities which are not for the express purpose of promoting the candidacy of specific candidates," see id. § 14-124(3). These benefits come with associated burdens, including requirements to file rules concerning party governance with the state and county boards of elections, N.Y. Elec. Law § 2-114; to create a state committee composed of enrolled party members elected biannually, id. §§ 2-102, 2-106; to form county committees in each of New York's 62 counties, typically by electing two or more party members in each election district within each county, id. § 2-104; to file information regarding the officers of state and county committees with the state and county boards of elections, id. § 2-112(d); to afford certain due process protections before removing party officers or members, id. § 2-116; and to select nominees for election to public or party office through specified procedures, frequently primaries, id. §§ 2-106, 6-110.

Independent bodies, on the other hand, do not enjoy designated ballot berths; their candidates must obtain a specified number of signatures on an independent nomination petition to gain ballot access. See id. § 6-142. Independent bodies also must adhere to the same contribution limits that apply to individuals, see id. § 14-114(1), and the exception that permits parties to accept unlimited contributions to housekeeping accounts does not apply to them, see id. § 14-124(3). While independent bodies do not benefit from these party-specific regulations, they also do not bear the party-specific organizational and administrative burdens described above. And, like party supporters, the supporters of an independent body can establish campaign finance vehicles such as a political action committee ("PAC") or an independent expenditure committee ("IEC"), which may receive unlimited individual contributions subject to some parameters.³

At issue in this case are two elements of New York's campaign finance regime that distinguish between parties and independent bodies: contribution limits and the housekeeping account exception to those limits. As to the first, New York law establishes different individual contribution limits for parties and independent bodies. Parties may receive contributions up to $138,600 from an individual annually. 9 N.Y.C.R.R. § 6214.0.⁴ By contrast, contribution limits to independent bodies "depend on how the [entity] is organized for campaign finance purposes" and most often track the individual contribution limits for the office the candidate seeks. See App'x 158-59. For instance, Upstate Jobs averred in its complaint that it intended to field a gubernatorial candidate, meaning it could only accept individual contributions up to $9,000, consistent with the general individual contribution limit for statewide general elections. See N.Y. Elec. Law § 14-114(1).⁵ A second component of these contribution limits pertains to the amount of money that parties or independent bodies can, in turn, transfer to candidates. Under New York law, parties may transfer unlimited funds to their candidates, whereas independent bodies may transfer funds only up to the same contribution limits generally applicable to a particular office. See id. §§ 14-100(9)(2), 14-100(10), 14-114(3).

Second, parties enjoy an exception to contribution limits for donations received and spent "to maintain a permanent headquarters and staff and carry on ordinary activities which are not for the express purpose of promoting the candidacy of specific candidates." Id. at § 14-124(3). These so-called "housekeeping" funds must be kept in a segregated bank account. Id. The housekeeping exception does not apply to independent bodies, which must abide by generally applicable contribution limits when allocating funds for headquarters and staff. See id. (applying the exception only to "party committee[s]").

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