Iowa Right To Life Comm. Inc. v. Smithson

• Decision Date: 20 October 2010
• Docket Number: No. 4:10–cv–00416.,4:10–cv–00416.
• Citation: 750 F.Supp.2d 1020
• Parties: IOWA RIGHT TO LIFE COMMITTEE, INC., Plaintiff,v.W. Charles SMITHSON, in his official capacity as Iowa Ethics and Campaign Disclosure Board Executive Director; James Albert, John Walsh, Patricia Harper, Gerald Sullivan, Saima Zafar, and Carole Tillotson, in their official capacities as Iowa Ethics and Campaign Disclosure Board Members; and John Sarcone, in his official capacity as Polk County Attorney, Defendants.
• Court: U.S. District Court — Southern District of Iowa

750 F.Supp.2d 1020

IOWA RIGHT TO LIFE COMMITTEE, INC., Plaintiff,

v.W. Charles SMITHSON, in his official capacity as Iowa Ethics and Campaign Disclosure Board Executive Director; James Albert, John Walsh, Patricia Harper, Gerald Sullivan, Saima Zafar, and Carole Tillotson, in their official capacities as Iowa Ethics and Campaign Disclosure Board Members; and John Sarcone, in his official capacity as Polk County Attorney, Defendants.

No. 4:10–cv–00416.

United States District Court, S.D. Iowa, Central Division.

Oct. 20, 2010.

Adam C. Gregg, Brian P. Rickert, Sean P. Moore, Brown Winick Graves Gross Baskerville & Schoenebaum PLC, Des Moines, IA, James Bopp, Jr., Jared Haynie, Joseph E. La Rue, Kaylan L. Phillips, Richard E. Coleson, Bopp Coleson & Bostrom, Terre Haute, IN, for Plaintiff.Jeffrey S. Thompson, Attorney General of Iowa, Michael Bernard Omeara, Des Moines, IA, for Defendants.

ORDER

ROBERT W. PRATT, Chief Judge.

On September 7, 2010, Iowa Right to Life Committee, Inc. (“IRTL”) filed a “Verified Complaint for Declaratory and Injunctive Relief” against the above-captioned government officials (collectively, “Defendants”), alleging that several provisions of Iowa's campaign finance laws violate the First and Fourteenth Amendments of the United States Constitution. Clerk's No. 1. On the same date, IRTL also filed a Motion for Preliminary Injunction, which is currently before the Court.¹ Defendants filed their responses in opposition to IRTL's motion for a preliminary injunction on September 14, 2010. Clerk's Nos. 20, 22. The Court held a hearing on the motion on September 15, 2010. See Clerk's No. 23. The matter is fully submitted.

I. FACTUAL BACKGROUND

A. Recent Changes to Iowa Law

1. Pre-existing Iowa law.

Prior to January 2010, the Iowa Code banned corporations from making both independent expenditures and campaign contributions. It provided that:

Except as provided in subsections 3 and 4, it is unlawful for an insurance company, savings and loan association, bank, credit union, or corporation organized pursuant to the laws of this state, the United States, or any other state, territory, or foreign country, whether for profit or not, or an officer, agent, or representative acting for such insurance company, savings and loan association, bank, credit union, or corporation, to contribute any money, property, labor, or thing of value, directly or indirectly, to a committee, or to expressly advocate that the vote of an elector be used to nominate, elect, or defeat a candidate for public office, except that such resources may be so expended in connection with a utility franchise election held pursuant to section 364.2, subsection 4, or a ballot issue. All such expenditures are subject to the disclosure requirements of this chapter.

Iowa Code § 68A.503(1) (2009).²

However, while corporations were banned from using their own general treasury funds to make independent expenditures and contributions directly, they were allowed to do these things indirectly through political committees.³ See id. § 68A.503(3) (allowing corporations to engage in election-related activities by sponsoring and financing their own “committees”); § 68A.102(8) (defining “committee” to “include[ ] a political committee and a candidate's committee”). A “political committee” was defined, in relevant part, as:

An association, lodge, society, cooperative, union, fraternity, sorority, educational institution, civic organization, labor organization, religious organization, or professional organization that ... makes expenditures in excess of seven hundred fifty dollars in the aggregate ... in any one calendar year to expressly advocate the nomination, election, or defeat of a candidate for public office....Id. § 68A.102(18)(b). If an organization “was originally organized for purposes other than engaging in election activities,” but temporarily engaged in activities covered by § 68A.102(18), that organization was deemed a “permanent organization” and required to organize a political committee. Id. § 402(9). Both political committees and permanent organizations were required to segregate their election-related funds. See id.; id. § 68A.203(2)(d).

In addition to these provisions, § 68A.404(3) required disclosure from any “person, other than a committee registered under this chapter” who made independent expenditures. The statute defined an independent expenditure as “one or more expenditures in excess of one hundred dollars in the aggregate for a communication that expressly advocates the nomination, election, or defeat of a clearly identified candidate ... without the prior approval or coordination with a candidate [or] candidate's committee.” Id. § 68A.404(1). The statute expressly distinguished between persons covered by § 68A.404(3) and political committees. See id. § 68A.404(3)(b) ( “This section does not apply to ... a political committee.”) (emphasis added).

2. The Supreme Court's Opinion in Citizen's United.

In January 2010, the United States Supreme Court issued its opinion in Citizens United v. Federal Election Commission. See ––– U.S. ––––, 130 S.Ct. 876, 886, 175 L.Ed.2d 753 (2010). The federal statute at issue in Citizens United barred corporations “from using general treasury funds to make direct contributions to candidates or independent expenditures that expressly advocate the election or defeat of a candidate” in certain federal elections. Id. at 887 (citing 2 U.S.C. § 441b). The statute, however, allowed corporations to establish “a ‘separate segregated fund'(known as a political action committee, or PAC) for these purposes.” Id. Although § 441b applied to contributions and independent expenditures, the Supreme Court limited its discussion to independent expenditures. See id. at 909 (“Citizens United has not made direct contributions to candidates, and it has not suggested that the Court should reconsider whether contribution limits should be subjected to rigorous First Amendment scrutiny.”).

The Supreme Court stated that, as it pertained to independent expenditures, § 441b was a ban on corporate speech. Id. at 897. The Court reasoned that a PAC is a separate entity from the corporation itself; therefore, even though the statute allowed PACs to speak, it still did not allow the corporations themselves to speak. Id. Because the statute was a ban on speech, the Supreme Court analyzed it under strict scrutiny. Id. at 888. A previous Supreme Court case, Austin v. Michigan Chamber of Commerce, had upheld restrictions based on the fact that a speaker was a corporation. See id. at 903 (citing Austin v. Mich. Chamber of Commerce, 494 U.S. 652, 695, 110 S.Ct. 1391, 108 L.Ed.2d 652 (1990)). But in Citizens United, the Supreme Court overruled that portion of Austin and concluded that “the Government may not suppress political speech on the basis of the speaker's corporate identity” because “[n]o sufficient governmental interest justifies” banning speech on that basis. See id. at 913. Accordingly, the Court held that the federal ban on corporate independent expenditures was invalid. Id.

Notably, although the Supreme Court struck down the federal ban on independent expenditures, it upheld federal disclosure and disclaimer requirements for independent expenditures. Id. at 913–14. The Supreme Court stated that “the public has an interest in knowing who is speaking about a candidate shortly before an election,” and concluded that this informational interest alone was sufficient to justify the federal disclosure requirements. Id. at 915–16. The Supreme Court also touted the benefits of prompt disclosures:

With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation's political speech advances the corporation's interest in making profits, and citizens can see whether elected officials are in the pocket of so-called moneyed interests. The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.

Id. at 916 (internal quotation marks and citations omitted).

Therefore, under Citizens United, “[t]he Government may regulate corporate political speech through disclaimer and disclosure requirements, but it may not suppress that speech altogether.” Id. at 886.

3. Iowa's response.a. Amendments to the Iowa Code.

In response to Citizens United, the Iowa Legislature passed several amendments to Iowa's campaign-finance laws. Defs.' Resp. to Pl.'s Mot. for Prelim. Inj. (hereinafter “Defs.' Br.”) at 3 (Clerk's No. 20); Smithson Aff. ¶ 5 (Clerk's No. 20–1); Prelim. Inj. Hr'g Tr. (hereinafter “Hr'g Tr.”) 37:3–7 (Clerk's No. 35); Senate File 2354, 83rd G.A., 2d. Sess., as reprinted in 2010 Iowa Legis. Serv. S.F. 2354 (West) (hereinafter “S.F. 2354”). Most significantly, the Iowa Legislature deleted the text of § 68A.503 in its entirety and replaced it with new language, eliminating the ban on corporate independent expenditures and narrowing the scope of banned contributions. See S.F. 2354 § 5. The new text of § 68A.503 also exempted the use of corporate “funds for independent expenditures as provided in section 68A.404.” Iowa Code § 68A.503(4)(d).

The Iowa Legislature made other notable changes. It amended the definition of an “independent expenditure” to change the threshold from one hundred dollars to seven hundred fifty dollars. S.F. 2354 § 3 (amending Iowa Code § 68A.404(1)). The Iowa Legislature also added a requirement that organizations “other than an individual or individuals” obtain approval by “a majority of the entity's board of directors, executive council, or similar organizational leadership body”...