Protect Our Ariz. v. Fontes

• Decision Date: 17 January 2023
• Docket Number: CV-22-0203-AP/EL
• Citation: 88 Arizona Cases Digest 9,522 P.3d 678
• Parties: PROTECT OUR ARIZONA, a Political Committee, Plaintiff/Appellant, v. Adrian FONTES, in his capacity as the Secretary of State of Arizona, Defendant/Appellee, and Arizonans Fed up With Failing Healthcare (healthcare rising az), a political Committee, Real Party in Interest/Appellee.
• Court: Arizona Supreme Court

88 Arizona Cases Digest 9

522 P.3d 678

PROTECT OUR ARIZONA, a Political Committee, Plaintiff/Appellant,

v. Adrian FONTES, in his capacity as the Secretary of State of Arizona,¹ Defendant/Appellee,andArizonans Fed up With Failing Healthcare (healthcare rising az), a political Committee, Real Party in Interest/Appellee.

No. CV-22-0203-AP/EL

Supreme Court of Arizona.

Filed January 17, 2023

Kory Langhofer, Thomas Basile, Statecraft PLLC, Phoenix, Attorneys for Protect Our Arizona, a Political Committee

Amy Chan, Noah Gabrielsen, Arizona Secretary of State's Office, Phoenix, Attorneys for Adrian Fontes, Secretary of State

James E. Barton II, Jacqueline Mendez Soto, Barton Mendez Soto PLLC, Tempe; and Joshua D. Bendor, Joshua J. Messer, Travis C. Hunt, Osborn Maledon, P.A., Phoenix, Attorneys for Arizonans Fed Up With Failing Healthcare (Healthcare Rising AZ), a Political Committee

Christina Sandefur, Timothy Sandefur, Scharf-Norton Center for Constitutional Litigation at the Goldwater Institute, Phoenix, Attorneys for Amicus Curiae Goldwater Institute

Daniel J. Adelman, Samuel Schnarch, Arizona Center for Law in the Public Interest, Phoenix, Attorneys for Amici Curiae Laura N. Coordes, Professor Christopher G. Bradley, and Professor Kara J. Bruce

Patrick J. Kane, Maurice Wutscher LLP, Solana Beach, California, Attorneys for Amicus Curiae Receivables Management Association International

Roy Herrera, Daniel A. Arellano, Herrera Arellano LLP, Phoenix, Attorneys for Amici Curiae Center for Responsible Lending and Southwest Center for Economic Integrity

Timothy A. La Sota, Timothy A. La Sota, PLC, Phoenix, Attorney for Amicus Curiae Direct Contact, LLC

Dominic E. Draye, Greenberg Traurig, LLP, Phoenix, Attorney for Amici Curiae Governor Doug Ducey, Senate President Karen Fann, and Speaker of the House Russell "Rusty" Bowers

Barney M. Holzman, Bernardo M. Velasco, Mesch Clark Rothschild, Tucson, Attorneys for Amici Curiae Arizona Creditors Bar Association and National Creditors Bar Association

JUSTICE KING authored the Opinion of the Court, in which CHIEF JUSTICE BRUTINEL, VICE CHIEF JUSTICE TIMMER, and JUSTICES BOLICK, LOPEZ, BEENE, and MONTGOMERY joined.

JUSTICE KING, Opinion of the Court:

¶1 Arizona Revised Statutes § 19-102(A) (2014) requires a 100-word description of the principal provisions of the proposed measure as part of the petition.² The final statement in the "Predatory Debt Collection Protection Act" initiative description read: "Does not change existing law regarding secured debt." At issue here is whether this single statement rendered the description objectively false or misleading. As reflected in our prior order, we hold the description, when read in its entirety, does not communicate objectively false or misleading information.

I. BACKGROUND

¶2 Real Party in Interest Arizonans Fed Up with Failing Healthcare (Healthcare Rising Arizona) (the "Committee") is the political committee that sponsored the Predatory Debt Collection Protection Act initiative for the November 8, 2022 general election ballot. The Committee prepared the following 98-word description:

Caps interest rate on "medical debt," as defined in the Act; applies this cap to judgments on medical debt as well as to medical debt incurred. Increases the value of assets – a homestead, certain household possessions, a motor vehicle, funds in a single bank account, and disposable earnings – protected from certain legal processes to collect debt. Annually adjusts these amended exemptions for inflation beginning 2024. Allows courts to further reduce the amount of disposable earnings subject to garnishment in some cases of extreme economic hardship. Does not affect existing contracts. Does not change existing law regarding secured debt.

Additionally, pursuant to § 19-102(A), the initiative petition provided the following required notice:

Notice: This is only a description of the proposed measure (or constitutional amendment) prepared by the sponsor of the measure. It may not include every provision contained in the measure. Before signing, make sure the title and text of the measure are attached. You have the right to read or examine the title and text before signing.

In July 2022, the Committee submitted the signatures it had gathered to the Secretary of State. Thereafter, the Secretary of State certified the initiative as Proposition 209 for the general election ballot.

¶3 Protect Our Arizona ("POA") filed a complaint claiming the initiative description was legally insufficient because the final statement—"Does not change existing law regarding secured debt"—was objectively false or misleading. More specifically, the complaint alleged "debt can be secured by a debtor's voluntary pledge of collateral (for example, a purchase money mortgage on real property)," but often "secured debt is created involuntarily—commonly by a judgment lien." Further, "[w]hile the Act generally may not affect existing laws concerning voluntarily secured debt, it substantially and pervasively changes existing laws regarding involuntarily secured debt," but the final statement "fail[s] to distinguish existing laws regarding voluntarily secured debt from laws regarding involuntarily secured debt." According to POA, the final statement "conveys objectively false or misleading information because the Act would, in fact, ‘change existing law regarding secured debt’ by preventing some secured creditors from collecting against certain debtor assets that are subject to levy under current law."

¶4 In evaluating whether the description was objectively false or misleading, the trial court first considered what the term "secured debt" is "commonly understood to mean," citing Molera v. Hobbs (Molera II ), 250 Ariz. 13, 22 ¶ 21, 474 P.3d 667, 676 (2020). The court considered whether "secured debt" is commonly understood to mean both voluntarily secured debt (e.g., loans for the purchase of real property or a vehicle where such property is offered as collateral) and involuntarily secured debt (e.g., judgment liens). The court explained that POA's objection "only applies if the term ‘secured debt’ is commonly understood to also mean involuntarily secured debt .... Thus, to the extent the term ‘secured debt’ is commonly understood to only mean voluntarily secured debt, [the objection] is not well-taken and the summary is not ‘objectively false or misleading.’ " Citing a dictionary definition of "secured debt," the court concluded "secured debt" is "commonly understood to mean voluntarily secured debt." Secured Debt , Cambridge Dictionary, https://dictionary.cambridge.org/us/dictionary/english/secured-debt (defining "secured debt" as "a debt or debts that include an agreement for the lender to take particular assets from the borrower if the money is not paid back") (last visited Dec. 21, 2022).

¶5 The court went on to explain, "even assuming that the term ‘secured debt’ is commonly understood to also mean involuntarily secured debt, the Court still finds that the summary, when read as [a] whole, is not ‘objectively false or misleading.’ " The court noted POA's objection that the initiative amends five statutes governing the collection of involuntarily secured debts. But the court explained the description "addresses these changes, including any distinction about the collection of involuntarily secured debt," elsewhere in the description "when it says: ‘Increases the value of assets—a homestead, certain household possessions, a motor vehicle, funds in a single bank, and disposable earnings —protected from certain legal processes to collect debt .... Allows courts to further reduce the amount of disposable earnings subject to garnishment in some cases of extreme hardships.’ " Thus, the court concluded "the chosen language would alert a reasonable person to the principal provisions’ general objectives," and "that is sufficient." The court denied POA's objection and ordered "that the Act qualifies to appear on the general election ballot."

¶6 This expedited appeal followed. We have jurisdiction under article 6, section 5(3) of the Arizona Constitution. After considering the briefs and authorities filed by the parties and amici, we issued a decision order on August 24, 2022, concluding that "the summary is sufficient and alerted a reasonable person to the principal provisions’ general objectives .... The summary, when read as a whole, is not objectively false or misleading." We now explain our reasoning in greater detail.

II. DISCUSSION

¶7 "The only issue before us involves interpretation and application of constitutional and statutory provisions regarding initiatives, which we review de novo." Molera v. Reagan (Molera I ), 245 Ariz. 291, 294 ¶ 8, 428 P.3d 490, 493 (2018).

A. The Need for Multiple Circulator Affidavits

¶8 In this case, POA claimed that signatures collected by some initiative petition circulators must be disqualified because those circulators failed to strictly comply with A.R.S. § 19-118(B)(5) ’s circulator affidavit requirement. For the reasons explained in Leibsohn v. Hobbs , 254 Ariz. 1, 6–9 ¶¶ 18–32, 517 P.3d 45, 50-53 (2022), which addressed the identical issue, we decline to disqualify the signatures on this basis.

B. Does the 100-Word Description Communicate Objectively False or Misleading Information?

¶9 "The Arizona Constitution reserves to this state's citizens the power to propose and enact laws by initiative." Molera I , 245 Ariz. at 294 ¶ 9, 428 P.3d at 493 (citing Ariz. Const. art. 4, pt. 1, § 1 (1)–(2)). "Under our constitutional separation of powers, the courts must not intrude upon the people's power to legislate, subject to constitutional and proper statutory requirements." Id. (citing Kromko v. Superior Court, 168 Ariz. 51, 57–58, 811 P.2d 12, 18-19 (1991) ).

¶10 The statutory provision at issue here requires "the title and body of [an initiative] petition" to include "a description of no more than one hundred words of the principal provisions of the proposed measure." § 19-102(A)...