Ctr. for Competitive Politics v. Harris

• Decision Date: 01 May 2015
• Docket Number: No. 14–15978.,14–15978.
• Citation: 784 F.3d 1307
• Parties: CENTER FOR COMPETITIVE POLITICS, Plaintiff–Appellant, v. Kamala D. HARRIS, in her official capacity as Attorney General of the State of California, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

784 F.3d 1307

CENTER FOR COMPETITIVE POLITICS, Plaintiff–Appellant

v.Kamala D. HARRIS, in her official capacity as Attorney General of the State of California, Defendant–Appellee.

No. 14–15978.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 8, 2014.

Filed May 1, 2015.

Allen J. Dickerson (argued), Center for Competitive Politics, Alexandria, VA; Alan Gura, Gura & Possessky, PLLC, Alexandria, VA, for Plaintiff–Appellant.

Kamala Harris, California Attorney General, Alexandra Robert Gordon (argued), Deputy Attorney General, San Francisco, CA, for Defendant–Appellee.

Joseph Vanderhulst, ActRight Legal Foundation, Plainfield, IN, for Amici Curiae National Organization for Marriage, Inc., and National Organization for Marriage Educational Trust Fund.

Bradley Benbrook and Stephen Duvernay, Benbrook Law Group, PC, Sacramento, CA, for Amicus Curiae Charles M. Watkins.

Appeal from the United States District Court for the Eastern District of California, Morrison C. England, Jr., Chief District Judge, Presiding. D.C. No. 2:14–cv–00636–MCE–DAD.

Before: A. WALLACE TASHIMA and RICHARD A. PAEZ, Circuit Judges, and GORDON J. QUIST, Senior District Judge.^*

OPINION

PAEZ, Circuit Judge:

In order to solicit tax deductible contributions in California, a non-profit corporation or other organization must be registered with the state's Registry of Charitable Trusts. Cal. Gov.Code § 12585. To maintain its registered status, an entity must file an annual report with the California Attorney General's Office, and must include IRS Form 990 Schedule B. The Internal Revenue Service (IRS) requires non-profit educational or charitable organizations registered under 26 U.S.C. § 501(c)(3) to disclose the names and contributions of their “significant donors” (donors who have contributed more than $5,000 in a single year) on Form 990 Schedule B. The Center for Competitive Politics (CCP), a non-profit educational organization under § 501(c)(3), brings this lawsuit under 42 U.S.C. § 1983, seeking to enjoin the Attorney General from requiring it to file an unredacted Form 990 Schedule B. CCP argues that disclosure of its major donors' names violates the right of free association guaranteed to CCP and its supporters by the First Amendment.

CCP appeals the district court's denial of CCP's motion for a preliminary injunction to prevent the Attorney General from enforcing the disclosure requirement. We have jurisdiction under 28 U.S.C. § 1292(a)(1), and we affirm.

I.

A.

CCP is a Virginia non-profit corporation, recognized by the IRS as an educational organization under § 501(c)(3). CCP's “mission is to promote and defend the First Amendment rights of free political speech, assembly, association, and petition through research, education, and strategic litigation.” CCP supports itself through financial donations from contributors across the United States, including California. CCP argues that the disclosure requirement infringes its and its supporters' First Amendment right to freedom of association. CCP also argues that federal law preempts California's disclosure requirement.

Defendant Kamala Harris, the Attorney General of California, is the chief law enforcement officer of the State of California. See Cal. Const. art. 5, § 13. Furthermore, under the Supervision of Trustees and Fundraisers for Charitable Purposes Act (the Act), Cal. Gov't Code § 12580 et seq., the Attorney General also has primary responsibility to supervise charitable trusts and public benefit corporations incorporated in or conducting business in California, and to protect charitable assets for their intended use. Cal. Gov't Code §§ 12598(a), 12581. The Act requires the Attorney General to maintain a registry of charitable corporations and their trustees and trusts, and authorizes the Attorney General to obtain “whatever information, copies of instruments, reports, and records are needed for the establishment and maintenance of the register.” Cal. Gov't Code § 12584.

An organization must maintain membership in the registry in order to solicit funds from California residents. Cal. Gov't Code § 12585. The Act requires that corporations file periodic written reports, and requires the Attorney General to promulgate rules and regulations specifying both the filing procedures and the contents of the reports. Cal. Gov't Code § 12586(b), Cal.Code Regs. tit. 11, § 300 et seq. (2014). One of the regulations adopted by the Attorney General requires that the periodic written reports include Form 990.¹ Cal.Code Regs. tit. 11, § 301 (2014). Although many documents filed in the registry are open to public inspection, see Cal.Code Regs. tit. 11, § 310, Form 990 Schedule B is confidential, accessible only to in-house staff and handled separately from non-confidential documents.

The Attorney General argues that there is a compelling law enforcement interest in the disclosure of the names of significant donors. She argues that such information is necessary to determine whether a charity is actually engaged in a charitable purpose, or is instead violating California law by engaging in self-dealing, improper loans, or other unfair business practices. See Cal. Corp.Code §§ 5233, 5236, 5227. At oral argument, counsel elaborated and provided an example of how the Attorney General uses Form 990 Schedule B in order to enforce these laws: having significant donor information allows the Attorney General to determine when an organization has inflated its revenue by overestimating the value of “in kind” donations. Knowing the significant donor's identity allows her to determine what the “in kind” donation actually was, as well as its real value. Thus, having the donor's information immediately available allows her to identify suspicious behavior. She also argues that requiring unredacted versions of Form 990 Schedule B increases her investigative efficiency and obviates the need for expensive and burdensome audits.

B.

CCP has been a member of the registry since 2008. Since its initial registration, CCP has filed redacted versions of Form 990 Schedule B, omitting the names and addresses of its donors. In 2014, for the first time, the Attorney General required CCP to submit an unredacted Form 990 Schedule B. In response to this demand, CCP filed suit, alleging that the Attorney General's requirement that CCP file an unredacted Form 990 Schedule B amounted to a compelled disclosure of its supporters' identities that infringed CCP's and its supporters' First Amendment rights to freedom of association. CCP also alleged that a section of the Internal Revenue Code, 26 U.S.C. § 6104, which restricts disclosure of the information contained in Schedule B, preempted the Attorney General's requirement.

As noted above, the district court denied CCP's motion for a preliminary injunction, ruling that CCP was unlikely to succeed on the merits of either of its claims, and that, therefore, CCP could not show that it would suffer irreparable harm or that the public interest weighed in favor of granting the relief it requested. Ctr. for Competitive Politics v. Harris, No. 2:14–cv–00636–MCE–DAD, 2014 WL 2002244 (E.D.Cal. May 14, 2014).

II.

We review a district court's ruling on a motion for preliminary injunctive relief for abuse of discretion. See FTC v. Enforma Natural Prods., 362 F.3d 1204, 1211–12 (9th Cir.2004) ; Harris v. Bd. of Supervisors, L.A. Cnty., 366 F.3d 754, 760 (9th Cir.2004). We review findings of fact for clear error and conclusions of law de novo. See Indep. Living Ctr. of S. Cal., Inc. v. Shewry, 543 F.3d 1050, 1055 (9th Cir.2008). Our review of a denial of preliminary injunctive relief must be “limited and deferential.” Harris, 366 F.3d at 760.

“A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”

Winter v. NRDC, 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). A preliminary injunction is “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Id. at 22, 129 S.Ct. 365 (citing Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S.Ct. 1865, 138 L.Ed.2d 162 (1997) ). Thus, CCP bears the heavy burden of making a “clear showing” that it was entitled to a preliminary injunction.

We apply exacting scrutiny in the context of First Amendment challenges to disclosure requirements. “Disclaimer and disclosure requirements may burden the ability to speak, but they ... do not prevent anyone from speaking.” Citizens United v. FEC, 558 U.S. 310, 366, 130 S.Ct. 876, 175 L.Ed.2d 753 (2010) (internal citations and quotation marks omitted). Therefore, courts have “subjected these requirements to ‘exacting scrutiny,’ which requires a ‘substantial relation’ between the disclosure requirement and a ‘sufficiently important’ governmental interest.” Id. at 366–67, 130 S.Ct. 876 (quoting Buckley v. Valeo, 424 U.S. 1, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976) ).² Exacting scrutiny encompasses a balancing test. In order for a government action to survive exacting scrutiny, “the strength of the governmental interest must reflect the seriousness of the actual burden on First Amendment rights.” John Doe No. 1, 561 U.S. at 196, 130 S.Ct. 2811 (quoting Davis v. FEC, 554 U.S. 724, 744, 128 S.Ct. 2759, 171 L.Ed.2d 737 (2008) ) (emphasis added).

III.

A.

CCP argues that the Attorney General's disclosure requirement is, in and of itself, injurious to CCP's and its supporters' exercise of their First Amendment rights to freedom of association. CCP further argues that the Attorney General must have a compelling interest in the disclosure requirement, and that the requirement must be narrowly tailored in order to justify the First Amendment harm it causes. This is a novel theory, but it is not supported by our case law or by Supreme Court precedent.

In arguing that the...