Campaign Integrity Watchdog LLC v. Colo. Republican Party Indep. Expenditure Comm., Court of Appeals No. 16CA0140

• Decision Date: 09 March 2017
• Docket Number: Court of Appeals No. 16CA0140
• Citation: 395 P.3d 1192
• Parties: CAMPAIGN INTEGRITY WATCHDOG LLC, Petitioner-Appellant, v. COLORADO REPUBLICAN PARTY INDEPENDENT EXPENDITURE COMMITTEE, Respondent-Appellee, and Colorado Secretary of State, Intervenor-Appellee, and Office of Administrative Courts, Appellee.
• Court: Colorado Court of Appeals

395 P.3d 1192

CAMPAIGN INTEGRITY WATCHDOG LLC, Petitioner-Appellant,

v. COLORADO REPUBLICAN PARTY INDEPENDENT EXPENDITURE COMMITTEE, Respondent-Appellee,andColorado Secretary of State, Intervenor-Appellee,andOffice of Administrative Courts, Appellee.

Court of Appeals No. 16CA0140

Colorado Court of Appeals, Div. I.

Announced March 9, 2017

Matthew Arnold, Authorized Representative, Denver, Colorado, of Campaign Integrity Watchdog

Brownstein Hyatt Farber Schreck, LLP, Christopher O. Murray, David B. Meschke, Denver, Colorado, for Respondent-Appellee

Cynthia H. Coffman, Attorney General, Matthew D. Grove, Assistant Solicitor General, Denver, Colorado, for Intervenor-Appellee

No Appearance for Appellee

Opinion by JUDGE NAVARRO

¶ 1 Campaign Integrity Watchdog LLC (CIW) alleges that the Colorado Republican Party Independent Expenditure Committee (CORE) violated various campaign finance laws. An administrative law judge (ALJ) dismissed CIW's claims. CIW appeals, but we affirm the ALJ's order. In doing so, we hold that the applicable campaign finance provisions do not require an independent expenditure committee (IEC) to disclose a donation unless the donation was given for the purpose of making an independent expenditure.

I. Factual and Procedural History

¶ 2 According to CIW's complaint, its claims stem from two earlier campaign finance proceedings against CORE, both initiated by CIW and resolved by an ALJ. In the first case, an ALJ penalized CORE in the amount of $200. In the second case, an ALJ imposed a $600 aggregate penalty and an award of $255 in costs. The Colorado Republican Party paid these penalties and costs on CORE's behalf. CORE did not disclose these payments in its periodic campaign finance disclosure reports. Around the same time, a private person paid $50,000 to a law firm to settle CORE's legal expenses. CORE disclosed this payment as a "contribution" in its periodic campaign finance disclosure report.

¶ 3 CIW filed a complaint alleging that CORE did not comply with the disclosure requirements of article XXVIII of the Colorado Constitution, the Fair Campaign Practices Act (FCPA), §§ 1-45-101 to -118, C.R.S. 2016, and the Colorado Secretary of State's Rules Concerning Campaign and Political Finance. CIW maintained that CORE should have disclosed as "donations" or "contributions" the payments made by the Colorado Republican Party and that CORE should have disclosed as "expenditures" all the payments.

¶ 4 CORE moved to dismiss the complaint. The Colorado Secretary of State moved to intervene as a respondent and filed his own motion to dismiss. The ALJ permitted the Secretary to intervene for a limited purpose and considered his motion as an "amicus-style brief."

¶ 5 The ALJ dismissed CIW's complaint under C.R.C.P. 12(b)(5) for failure to state a claim upon which relief could be granted. The ALJ decided as follows:

• CORE, as an IEC, was not required to report as "donations" the payments made on its behalf by the Colorado Republican Party because they were made for the purpose of satisfying CORE's fines and costs, not for the purpose of making an independent expenditure.

• CORE was not required to report as "contributions" the payments made on its behalf by the Colorado Republican Party because the statute requiring disclosure of contributions does not apply to an IEC.

• CORE was not required to report as "expenditures" the payments made on its behalf by the Colorado Republican Party and the private person because the payments were for fines, costs, and legal services, not for express advocacy.

¶ 6 CIW appeals. Both CORE and the Secretary have filed answer briefs defending the ALJ's decision.

II. Analysis

¶ 7 As it asserted in the administrative proceedings, CIW contends on appeal that CORE was required to report some of the subject payments as "donations" or "contributions" and to report all the payments as "expenditures." CIW is mistaken.

¶ 8 First, even if we assume that some payments constituted donations under the applicable statutory definition, CORE was not required to report them because the statute does not require an IEC to report donations unless they were made for the purpose of an independent expenditure (and they were not here). Second, the law requiring some entities to report contributions does not apply to an IEC. Third, although the law requires an IEC to disclose certain information after making some expenditures, the payments here do not qualify as expenditures under the relevant constitutional and statutory definitions. And the broader definition of expenditure set forth in the Secretary's campaign finance rule does not apply to an IEC.

A. Standard of Review and Interpretive Principles

¶ 9 We review de novo a decision to dismiss a complaint under C.R.C.P. 12(b)(5). Allen v. Steele , 252 P.3d 476, 481 (Colo.2011). We accept all factual allegations in the complaint as true and view them in the light most favorable to the plaintiff. Id. ; see also Warne v. Hall , 2016 CO 50, ¶¶ 9, 27, 373 P.3d 588 (recognizing that a court need not accept as true legal conclusions or conclusory allegations). But "[a] court may not consider information outside the confines of the pleading." Allen , 252 P.3d at 481. In addition, we review de novo statutory provisions, constitutional provisions, and an administrative agency's conclusions of law. Campaign IntegrityWatchdog v. Coloradans for a Better Future , 2016 COA 51, ¶ 16, ––– P.3d –––– (cert. granted Sept. 12, 2016).

¶ 10 We do not look beyond the plain language of a constitutional or statutory provision if its meaning is clear on its face. Vigil v. Franklin , 103 P.3d 322, 327 (Colo.2004) ; see Colo. Republican Party v. Williams , 2016 COA 26, ¶ 15, 370 P.3d 650 ("The rules of construction are essentially the same for constitutional and statutory provisions."). Where a constitutional provision and a statute pertain to the same subject matter, we construe them in harmony. Williams , ¶ 15.

B. CORE's Status

¶ 11 Because CORE's status informs our analysis, we emphasize that CORE is an IEC as defined by the FCPA and as confirmed by a division of this court. Id. at ¶ 34. An IEC is a person or group of persons that makes independent expenditures of over $1000 or collects over $1000 from other persons for the purpose of making an independent expenditure. § 1-45-103(11.5), C.R.S. 2016. "Expenditure" means a payment "expressly advocating the election or defeat of a candidate or supporting or opposing a ballot issue or ballot question." Colo. Const. art. XXVIII, § 2 (8)(a); § 1-45-103(10). An "independent expenditure" is an expenditure not controlled by or coordinated with any candidate or agent of such candidate. Colo. Const. art. XXVIII, § 2 (9); § 1-45-103(11).

¶ 12 To the extent CIW contends in its reply brief that CORE does not qualify as an IEC, we do not consider the contention for two reasons. First, CIW did not assert in its complaint that CORE is not an IEC. As noted, a division of this court has held that CORE is an IEC because its standing rules protect against coordination with the Colorado Republican Party or its candidates, Williams , ¶ 34. CIW did not allege in its complaint that CORE had failed to follow its standing rules.¹ Thus, the ALJ did not resolve this question. Second, CIW did not challenge CORE's status as an IEC in its opening brief in this court. See DeHerrera v. Am. Family Mut. Ins. Co. , 219 P.3d 346, 352 (Colo.App.2009) (refusing to consider argument raised for first time in reply brief). On the contrary, CIW seemed to premise its opening brief on the fact that CORE is an IEC and then argued that an IEC must make certain disclosures.

¶ 13 As a result, the disclosure requirements applicable to an IEC matter here. Section 1-45-107.5, C.R.S. 2016, applies to an IEC. See Williams , ¶ 7. In contrast, section 1-45-108(1)(a)(I), C.R.S. 2016, sets forth disclosure requirements for other entities: "candidate committees, political committees, issue committees, small donor committees, and political parties." See also Dep't of State Regs. 10.2, 10.3, 8 Code Colo. Regs. 1505-6 (explaining that the disclosure requirements in section 1-45-108(1) apply to all committees "[e]xcept for independent expenditure committees" ). The Colorado Constitution does not mention an IEC at all, but the constitution does require any person making an independent expenditure of more than $1000 to disclose certain information about the expenditure. See Colo. Const. art. XXVIII, § 5.

¶ 14 Therefore, section 1-45-107.5 and Colorado Constitution article XXVIII, section 5 control this case.

C. Donations

¶ 15 As relevant here, section 1-45-107.5 requires an IEC to do the following regarding donations:

• Register with the Secretary if it accepts a "donation" over $1000 "that is given for the purpose of making an independent expenditure ." § 1-45-107.5(3)(a) (emphasis added).

• Disclose the name and address of any person who "donates" more than $250 in one year "for the purpose of making an independent expenditure " if the IEC makes independent expenditures of more than $1000 in one year. § 1-45-107.5(4)(b) (emphasis added).

• Disclose, in accord with the schedule applicable to political committees, any "donation" over $20 given "for the purpose of making an independent expenditure " to an IEC making independent expenditures of more than $1000 in one year. § 1-45-107.5(8) (emphasis added).

See also Dep't of State Reg. 5.2, 8 Code Colo. Regs. 1505-6 (An IEC "must report donations over twenty dollars given for the purpose of making an independent expenditure .") (emphasis added).

¶ 16 "Donation" means:

(I) The payment, loan, pledge, gift, or advance of money, or the guarantee of a loan, made to any person for the purpose of making an independent expenditure ;

(II) Any payment made to a third party that relates to, and is made for the benefit of, any person that makes an independent expenditure;

(III) The fair market value of any gift or loan of property that is given to any person for the purpose of

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