Elections Board v. Wisconsin Manufacturers & Commerce, No. 98-0596 (Wis. 7/7/1999), 98-0596.

• Decision Date: 07 July 1999
• Docket Number: No. 98-0596.,98-0596.
• Parties: Elections Board of the State of Wisconsin, Plaintiff-Appellant, v. Wisconsin Manufacturers & Commerce, WMC Issues Mobilization Council, Inc., ABC Corporation and XYZ Corporation, Defendants-Respondents.
• Court: Wisconsin Supreme Court

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Elections Board of the State of Wisconsin, Plaintiff-Appellant, v. Wisconsin Manufacturers & Commerce, WMC Issues Mobilization Council, Inc., ABC Corporation and XYZ Corporation, Defendants-Respondents.

No. 98-0596.

Supreme Court of Wisconsin.

Opinion Filed: July 7, 1999.

APPEAL from a judgment and an order of the Circuit Court for Dane County, Sarah B. O'Brien, Circuit Court Judge. Affirmed.

For the plaintiff-appellant the cause was argued by Cynthia R. Hirsch, assistant attorney general, with whom on the briefs (in the Court of Appeals) was James E. Doyle, attorney general.

For the defendants-respondents there was a brief (in the Court of Appeals) by Robert J. Dreps, Brady C. Williamson and LaFollette & Sinykin, Madison and oral argument by Brady C. Williamson, Jr.

Amicus curiae brief (in the Court of Appeals) was filed by Jan Witold Baran, Kirk Lincoln Jowers and Wiley, Rein & Fielding, Washington, D.C.; Robert C. Burrell, R. Jeffrey Wagner and Borgelt, Powell, Peterson & Frauen, S.C., Milwaukee; of counsel, Stephen A. Bokat, Robin S. Conrad and National Chamber Litigation Center, Inc., Washington, D.C.; Jan Amundson and National Association of Manufacturers, Washington, D.C. for the Chamber of Commerce of the United States, the National Association of Manufacturers, the National Association of Wholesaler-Distributors, Food Distributors International and the Association for Manufacturing Technology.

Amicus curiae brief (in the Court of Appeals) was filed by Glenn Moramarco and Brennan Center for Justice, New York, NY and Elizabeth Adelman and Adelman & Hynes, S.C., Milwaukee for Senator Charles Chvala.

Amicus curiae brief (in the Court of Appeals) was filed by Dan Conley, Brian D. Winters, Michael Fischer and Quarles & Brady, Milwaukee and Peter M. Koneazny, legal director, Milwaukee for the American Civil Liberties Union of Wisconsin, Inc.

Amicus curiae brief (in the Court of Appeals) was filed by Lillian BeVier and University of Virginia Law School, Charlottesville, VA and Paul W. Schwarzenbart and Lee Kilkelly, Paulson & Kabaker, S.C., Madison for the Wisconsin Grocers Association, Inc.

N. PATRICK CROOKS, J.

¶ 1 This case is before the court as a result of the parties' joint petition to bypass pursuant to Wis. Stat. § (Rule) 809.60 (1995-96).¹ The issue presented is whether the circuit court properly dismissed the complaint of the Elections Board of the State of Wisconsin (the "Board") charging the respondents with various violations of the campaign finance laws contained in Wis. Stat. ch. 11 following the respondents' broadcast of several advertisements. The Board contends that respondents are subject to ch. 11 regulation because their ads had the "political purpose of expressly advocating" the defeat or re-election of the incumbent state senators and representatives named in the ads. We conclude that the respondents, when they broadcast the advertisements, lacked fair warning that the ads could qualify as express advocacy in Wisconsin under a context-based approach. The Board, in effect, engaged in retroactive rule-making in attempting to apply such an approach.

¶ 2 Since this violation of due process — fundamental fairness — is determinative of the issue of whether these respondents can be prosecuted for the ads involved, there is no need for us to decide whether the ads are express advocacy. We therefore affirm the circuit court's dismissal of the Board's complaint.

¶ 3 We also determine that the definition of the term express advocacy is not limited to the specific list of "magic words" such as "vote for" or "defeat" found in Buckley footnote 52. A context-based approach to defining express advocacy may present an attractive alternative, but we note that several courts have rejected such an approach.² If there is to be a further attempt to fashion a rule governing express advocacy advertisements, leaving that task is appropriately left to the legislature or the Board, consistent with this opinion.

I.

¶ 4 The respondents in this action are four Wisconsin corporations. Respondent WMC Issues Mobilization Council, Inc., (IMC), is a non-stock, non-profit corporation which receives financial support from respondents ABC Corporation and XYZ Corporation. To protect their privacy, IMC has refused to name ABC and XYZ. Respondent Wisconsin Manufacturers & Commerce, a non-profit corporation, also provides financial support to IMC.

¶ 5 The Board is the state agency responsible for the administration of the campaign finance laws in Wis. Stat. ch. 11 and other laws related to elections and campaigns. See Wis. Stat. §§ 5.05(1), 15.61. In the event of a ch. 11 violation involving a statewide election or the filing of a required report or statement, the Board may bring a civil forfeiture action under Wis. Stat. § 11.60. § 5.05(1)(c). The Board may seek injunctive or other relief to enforce laws governing elections and campaigns. § 5.05(1)(d). The Board also has the power to enact rules pursuant to Wis. Stat. ch. 227 to interpret and administer the election and campaign laws. See § 5.05(1)(f).

¶ 6 In late October, 1996, IMC produced advertisements referring to six incumbent state legislators who were hoping to be re-elected in the November 5, 1996, general election. Each ad described a legislator's vote on specific issues and encouraged viewers or listeners to call the legislator to express approval or disapproval of the legislator's position.³ The ads aired on television and/or radio stations in the relevant state senate and assembly districts.

¶ 7 The legislators featured by the ads filed administrative complaints with the Board against IMC, contending that the advertisements subjected IMC to regulation under Wis. Stat. ch. 11. When the Board did not immediately address their complaints, the legislators sought injunctive relief under Wis. Stat. § 11.66 in circuit courts around the state. On October 31, 1996, the Dane County Circuit Court ordered a temporary injunction restraining IMC from broadcasting its advertisements. The circuit courts involved in the related suits swiftly did the same. IMC filed an emergency petition for a supervisory writ with the court of appeals. The court of appeals granted the writ in part and denied it in part, leaving the injunctions in place.

¶ 8 On March 14, 1997, the Board issued its order regarding the legislators' administrative complaints. The Board found that IMC had engaged in express advocacy and ordered IMC to comply with the provisions of Wis. Stat. ch. 11 by April 15, 1997. Specifically, the Board ordered IMC to file a campaign registration statement and a campaign finance report detailing all contributions made or received, and all disbursements made or obligations incurred, during 1996.

¶ 9 IMC refused to comply with the Board's order. The Board responded by filing the present action in Dane County Circuit Court on June 26, 1997. In its complaint, the Board alleged that IMC's advertisements had the "political purpose of expressly advocating" defeat or re-election of the named legislators. Therefore, the Board asserted, the four respondents (collectively, "WMC") were subject to various regulations under the campaign finance laws. The Board alleged that WMC failed to comply with the March 14, 1997, order⁴ and had violated Wisconsin's campaign finance laws by: (1) failing to register in violation of Wis. Stat. § 11.05(1);⁵ (2) failing to file financial reports regarding contributions in violation of Wis. Stat. § 11.06(1)(a);⁶ (3) failing to file financial reports required by Wis. Stat. § 11.20(1) and (2);⁷ and (4) making contributions and/or disbursements for purposes unrelated to a referendum, in violation of Wis. Stat. § 11.38(1).⁸ The Board sought per diem civil forfeitures as provided in Wis. Stat. §§ 11.60 and 11.38(4), costs, and an injunction requiring WMC to comply with the applicable statutory provisions.

¶ 10 WMC moved to dismiss the Board's complaint for failure to state a claim upon which relief can be granted. On January 16, 1998, the Dane County Circuit Court, Judge Sarah B. O'Brien presiding, granted WMC's motion. In a 29-page decision, the court determined that the Board could adopt a definition of express advocacy other than the one set forth by the United States Supreme Court in Buckley v. Valeo, 424 U.S. 1 (1976) (per curiam), as long as that definition met the requirements of the First and Fourteenth Amendments to the United States Constitution. According to the court, the standard for express advocacy urged by the Board was a case-by-case determination based on the five-factor test of Crawford v. Whittow, 123 Wis. 2d 174, 183, 366 N.W.2d 155 (Ct. App. 1985),⁹ and could not fairly be applied to WMC because the Board had not previously published or formally adopted it. Further, the court reasoned, the Board's standard was unconstitutionally vague and was not sufficiently narrow to serve compelling governmental interests. Based on its conclusions, the court dismissed the Board's complaint with prejudice.

II.

¶ 11 We apply a de novo standard when reviewing a circuit court's dismissal of a complaint for failure to state a claim. Hermann v. Town of Delavan, 215 Wis. 2d 370, 378, 572 N.W.2d 855 (1998); Watts v. Watts, 137 Wis. 2d 506, 512, 405 N.W.2d 305 (1987). In our review, we must accept as true all facts in the complaint and all reasonable inferences which may be drawn from them. Watts, 137 Wis. 2d at 512. See Hermann, 215 Wis. 2d at 378. Dismissal is proper only when it is clear that the plaintiff would not be entitled to relief under any facts which could be proved. Hermann, 215 Wis. 2d at 378; Watts, 137 Wis. 2d at 512; Crawford, 123 Wis. 2d at 178.

¶ 12 In its complaint, the Board alleges that WMC is subject to regulation because its ads had the "political purpose of expressly advocating the defeat" or re-election of the featured legislators. Under Wis. Stat. § 11.01(16)(a)1, "[t]he making of a communication which...