Colorado Ethics Watch v. Senate Majority Fund, LLC, 10SC276.

Citation2012 CO 12,269 P.3d 1248
Decision Date21 February 2012
Docket NumberNo. 10SC276.,10SC276.
PartiesCOLORADO ETHICS WATCH, Petitioner, v. SENATE MAJORITY FUND, LLC; Colorado Leadership Fund, LLC; and the Office of the Administrative Courts, Respondents.
CourtSupreme Court of Colorado

OPINION TEXT STARTS HERE

Luis Toro, Chantell Taylor, Denver, Colorado, Attorneys for Petitioner Colorado Ethics Watch.

Hackstaff Law Group, LLC, Steven A. Klenda, Mario D. Nicolais, II, Denver, Colorado, Attorneys for Respondent Senate Majority Fund, LLC.

Brownstein Hyatt Farber Schreck, LLP, Jason R. Dunn, Denver, Colorado, Attorneys for Respondents Colorado Leadership Fund.Heizer Paul Grueskin LLP, Martha M. Tierney, Denver, Colorado, Attorneys for Amicus Curiae Colorado Common Cause.Heizer Paul Grueskin LLP, Mark G. Grueskin, Denver, Colorado, Attorneys for Amicus Curiae Colorado Education Association.Holland & Hart LLP, J. Lee Gray, Greenwood Village, Colorado, Attorneys for Amicus Curiae Colorado Bar Association.Patton Boggs LLP, Kathryn E. Biber, Denver, Colorado, Attorneys for Amicus Curiae The Center for Competitive Politics.No appearance by or on behalf of the Office of the Administrative Courts.Chief Justice BENDER delivered the Opinion of the Court.

¶ 1 In this appeal, we review the court of appeals opinion in Colorado Ethics Watch v. Senate Majority Fund, LLC, ––– P.3d ––––, 2010 WL 963199 (Colo.App.2010). The court of appeals below affirmed the dismissal of the present action by the administrative law judge (ALJ) for failing to state a claim upon which relief could be granted. At issue is the meaning of “expressly advocating the election or defeat of a candidate,” as that phrase is used within the definition of “expenditure” in article XXVIII of the Colorado Constitution, the Campaign and Political Finance provision. Colo. Const. art. XXVIII, § 2(8).

¶ 2 The appellees, the Senate Majority Fund (SMF) and the Colorado Leadership Fund (CLF), contend that “express advocacy” encompasses only those advertisements that explicitly exhort the viewer, listener, or reader to vote for or against a candidate in an upcoming election. This includes the use of so-called “magic words,” as set forth in Buckley v. Valeo, 424 U.S. 1, 44 n. 52, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976), as well as substantially similar synonyms of the “magic words.”

¶ 3 Conversely, the appellant, Colorado Ethics Watch (Ethics Watch), argues that the category of advertisements that “expressly advocate” is more expansive and encompasses any advertisement that is the functional equivalent of “express advocacy.” According to Ethics Watch, the functional equivalent of “express advocacy” is any advertisement that has no reasonable interpretation other than that it supports or opposes a candidate's election.

¶ 4 The court of appeals rejected Ethics Watch's argument and held that, given the settled definition of “express advocacy” at the time that article XXVIII of the Colorado Constitution was adopted, the category of advertisements that constitute “express advocacy” was intentionally limited to include only those ads that use the “magic words” or substantially similar synonyms that explicitly advocate for the election or defeat of a candidate. Colorado Ethics Watch, ––– P.3d at ––––. Additionally, the court of appeals reasoned that it could not adopt a functional equivalence test because this would potentially implicate the vagueness and overbreadth concerns addressed by the Supreme Court in Buckley and thus result in an interpretation that violates the First Amendment. Id. at ––––.

¶ 5 After reviewing article XXVIII and the legal context in which it was adopted as a citizen's initiative in 2002 (known as Amendment 27), we agree with the court of appeals that “expenditure” was intentionally and narrowly defined in article XXVIII to include only “express advocacy,” so that it covers only those communications that explicitly advocate for the election or defeat of a candidate in an upcoming election. Given the settled legal definition of “express advocacy” in Colorado at the time that Amendment 27 was passed, we interpret this phrase consistent with Colorado jurisprudence to cover only those advertisements that use the “magic words” or substantially similar synonyms.

¶ 6 Hence, we affirm and remand to the court of appeals to return this case to the ALJ to enter judgment consistent with this opinion.

I. Factual Background

¶ 7 During the November 2008 election season, both SMF and CLF were registered with the I.R.S. as so-called “527” tax-exempt political organizations. 26 U.S.C. § 527(e)(1) (2011). SMF's stated purpose was “supporting candidates for the state senate.” CLF's stated purpose was “electing Republicans.” Both SMF and CLF concede that they were “political organizations” as defined in section 1–45–103(14.5), C.R.S. (2011), and thus they registered with the secretary of state and filed regular reports detailing their contributions and spending pursuant to section 1–45–108.5.1

¶ 8 In contrast, however, neither SMF nor CLF complied with the special rules governing “political committees,” including the registration requirement, see Colo. Const. art. XXVIII, § 8, and the restriction on political committees that they may not accept contributions of more than $500 per person or organizational donor, id. § 3(5). Specifically, neither SMF nor CLF registered as a political committee and each accepted numerous corporate contributions that far exceeded the $500 contribution limit applicable to political committees.

¶ 9 In the run-up to the November 2008 election, SMF distributed eight printed political ads and one television ad and CLF distributed eight printed ads that are the subject of the present dispute. It is stipulated that the production and distribution of each of these ads cost more than $200 and that each shared the following six characteristics:

1. The ads identify a candidate by name and picture;

2. The ads identify the office for which the candidate is running;

3. The ads summarize the qualifications of the candidate;

4. The ads summarize some of the key issues the candidate supports or opposes;

5. The ads summarize what the candidate will do if elected;

6. The ads invite the voter to contact and thank the candidate for his or her efforts.

None of the seventeen ads contained words or phrases that specifically directed the viewer to “vote for,” “elect,” “support,” “cast your ballot for [candidate],” “vote against,” “defeat,” or “reject.” Similarly, none of the ads included the phrase [candidate] for [office].” The closest any ad came to explicitly advocating for or against the election of a candidate was an SMF ad that included the phrase “Local Leaders endorse Dave Kerber.” (Emphasis added.) These seventeen ads are the basis of the present dispute.

¶ 10 Ethics Watch filed civil complaints against SMF and CLF with the secretary of state, alleging that these advertisements violated article XXVIII of the Colorado Constitution.2 The secretary of state referred the matter to an ALJ for an administrative hearing.3

¶ 11 In the consolidated claims before the ALJ, Ethics Watch argued that these ads constituted “express advocacy” for or against the election of the candidates they depicted and thus amounted to “expenditures” of more than $200. Ethics Watch claimed that this elevated the status of SMF and CLF to “political committees.” Thus, Ethics Watch argued, SMF and CLF violated article XXVIII by failing to register as “political committees” and by failing to adhere to the contribution limit of $500 per person or organization that applies to “political committees.”

¶ 12 SMF and CLF denied all of Ethics Watch's allegations and moved to dismiss the complaint for failure to state a claim upon which relief could be granted, pursuant to C.R.C.P. 12(b)(5).4 SMF and CLF moved for dismissal on the grounds that neither was a “political committee” because none of the ads amounted to “express advocacy” and therefore none of the ads met the legal definition of “expenditures.” Consequently, SMF and CLF argued, they were not subject to regulation as “political committees.”

¶ 13 In a written order, the ALJ agreed with SMF and CLF that neither group met the definition of “political committee” because neither had made an “expenditure” during the election cycle. The ALJ reasoned that none of the ads constituted “express advocacy” because none of them contained either “magic words” or substantially similar synonyms that amounted to an exhortation to vote for or against a particular candidate. Accordingly, the ALJ ruled that neither SMF nor CLF was a “political committee” and dismissed Ethics Watch's complaint for failure to state a claim upon which relief could be granted.

¶ 14 Ethics Watch appealed the dismissal, and the court of appeals affirmed. The court of appeals similarly rejected the notion that “express advocacy” means anything more than the “magic words” listed in Buckley, 424 U.S. at 44 n. 52, 96 S.Ct. 612, or other substantially similar synonyms as explained in League of Women Voters v. Davidson, 23 P.3d 1266, 1277 (Colo.App.2001). The court of appeals rejected the functional equivalence test that Ethics Watch urged it to adopt on the grounds that “express advocacy” had a clear and settled definition at the time that the Colorado Constitution was amended to include article XXVIII.

¶ 15 Ethics Watch petitioned this court for certiorari review, which we granted.5

II. Standard of Review

¶ 16 We review a dismissal for failure to state a claim under C.R.C.P. 12(b)(5) de novo and apply the same standards as the trial court. Bly v. Story, 241 P.3d 529, 533 (Colo.2010). Accordingly, we accept all allegations in the complaint as true and view them in the light most favorable to the non-moving party. Id. Dismissal under C.R.C.P. 12(b)(5) is only proper where the factual allegations in the complaint cannot, as a matter of law, support the claim for relief. Rosenthal v. Dean Witter Reynolds, Inc., 908 P.2d 1095, 1099 (Colo.19...

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