Sanger v. Dennis

Citation148 P.3d 404
Decision Date28 September 2006
Docket NumberNo. 06CA1944.,06CA1944.
PartiesDavid SANGER; American Federation of Teachers, Local 858, a Colorado membership organization; Colorado Federation of Teachers, School, Health, and Public Employees, a Colorado small donor committee; Walter Beckart, resident and citizen of Colorado; Vivian Stoval, resident and citizen of Colorado; Colorado Education Association, a Colorado membership organization; Public Education Committee, a Colorado small donor committee; Lynn Mason, resident and citizen of Colorado; Kerrie Dallman, resident and citizen of Colorado; and Michael Cerbo, candidate for State Representative from House District 2, Plaintiffs-Appellees, v. Ginette DENNIS, in her official capacity as Colorado Secretary of State, Defendant-Appellant.
CourtCourt of Appeals of Colorado

Isaacson Rosenbaum, P.C., Mark G. Grueskin, Byeongsook Seo, Kara Veitch, Denver, Colorado, for Plaintiffs-Appellees.

John W. Suthers, Attorney General, Jason R. Dunn, Deputy Attorney General, Denver, Colorado, for Defendant-Appellant.

Jonathan M. Anderson, Monica S. Aldridge, Denver, Colorado, for Amicus Curiae Bill Owens, Colorado Governor.

Kelly, Haglund, Garnsey & Kahn, LLC, David R. Fine, Denver, Colorado, for Amicus Curiae Colorado Common Cause.

Opinion by Judge ROTHENBERG.

Defendant, Ginette Dennis, appeals an order of the Denver District Court granting a preliminary injunction enjoining the implementation of an administrative rule that she recently adopted in her official capacity as the Colorado Secretary of State. Rule 1.14(b), if implemented, would force labor and other covered organizations to get written permission before using an individual's dues or contributions to fund political campaigns. At issue in this appeal is whether the district court applied an incorrect legal standard and abused its discretion in determining that plaintiffs, who are described in detail below, had shown a reasonable probability (1) that the Secretary of State exceeded her rulemaking authority in enacting Rule 1.14(b); (2) that Rule 1.14(b), as applied in this case, violates the First and Fourteenth Amendment rights of association of plaintiffs, and (3) that plaintiffs were entitled to a preliminary injunction prohibiting the Secretary of State from enforcing the new rule until further order of the court. Because we conclude the district court correctly applied the law and did not abuse its discretion, we affirm the order and remand for further proceedings.

I. Background

Most of the salient facts are undisputed. In 2002, Colorado voters passed the Campaign and Political Finance Amendment, Colo. Const. art. XXVIII, an initiative regulating campaign financing. The measure was intended to regulate political speech designed to influence the outcome of state elections. Harwood v. Senate Majority Fund, LLC, 141 P.3d 962 (Colo.App.2006).

Under Article XXVIII, a "membership organization" such as a labor union is permitted to establish a "small donor committee" for the purpose of pooling member dues and contributions and making political contributions. A "small donor committee" is defined as a committee that accepts contributions only from natural persons, each of whom contributes no more than $50 per year. Article XXVIII, § 2(14)(a). Corporations and labor organizations are otherwise prohibited from financing a candidate's election. Article XXVIII, § 3(4)(a).

The term "member" is not defined in Article XXVIII. The Fair Campaign Practices Act (FPCA), § 1-45-101, et seq., C.R.S.2006, also does not define "member," but provides that "small donor committee" shall have the same meaning as set forth in Article XXVIII, § 2(14). Section 1-45-103(16), C.R.S.2006.

Article XXVIII excludes from the definition of "contribution" the transfer of "member" dues from a membership organization to a small donor committee sponsored by such membership organization. Article XXVIII, § 2(5)(b). Thus, as long as a membership organization collects funds only from natural persons at a rate of no more than $50 per year, it is permitted to transfer unlimited amounts to its small donor committee. The small donor committee, in turn, can contribute to candidates at ten times the limits that individuals must follow. Article XXVIII, § 3(2). In other words, while an individual is limited to contributing $400 per election cycle to legislative candidates and $1,000 to state-wide office candidates, small donor committees can contribute $4,000 and $10,000, respectively.

Membership organizations such as labor unions often collect political contributions in small monthly increments from the dues of their members. Hence, their small donor committees are able to take advantage of the provision allowing contributions under $20 per reporting period to be anonymous. The small donor committees need not report the name, address, or occupation of these small contributors, although they must attribute such contributions to their members on a pro rata basis. See Article XXVIII, § 2(14)(a); § 1-45-108(1)(a)(I), C.R.S.2006.

According to the evidence presented at the preliminary injunction hearing in this case, many membership organizations that have small donor committees require that each member contribute a small portion of his or her dues to the organization's small donor committee. These contributions are often collected through automatic monthly payroll deductions by the member's employer. The plaintiff organizations in this case permit any member to request a refund if that member disagrees with the political contributions made by these organizations.

On August 2, 2006, the Secretary adopted Rule 1.14(b), which defines "member" in the context of Article XXVIII, § 2(5)(b) as a person who pays dues to a membership organization and who gives written permission for his or her dues to be used for political purposes. Rule 1.14 now provides:

"Member", as used in Article XXVIII, Sections 2(5)(b) and 2(14)(a) only, is a person who:

(a) pays membership dues, and;

(b) at least annually gives the membership organization specific written permission to transfer dues to a political committee or small donor committee.

Rule 1.14, 8 Code Colo. Regs. § 15056 (emphasis added).

Plaintiffs in this case are (1) two labor unions: the American Federation of Teachers, Local 858(AFT), and the Colorado Education Association (CEA); (2) their respective small donor committees: the Colorado Federation of Teachers, Health & Public Employees, and the Public Education Committee; (3) David Sanger, Walter Beckart, Vivian Stovall, Lynn Mason, and Kerrie Dallman, all of whom are residents and citizens of Colorado and associated members of at least one of these membership organizations; and (4) Michael Cerbo, a candidate for the state legislature.

On August 22, 2006, plaintiffs filed this action challenging three different campaign finance rules adopted by the Secretary. Plaintiffs alleged, as relevant here, that (1) amended Rules 1.3, 1.14(b), and 4.5, which were adopted by the Secretary on August 2, were not issued in compliance with the Colorado Administrative Procedure Act (APA), § 24-4-106, C.R.C.P.S.2006; and (2) the enforcement of these rules would violate plaintiffs' First Amendment rights to freedom of speech and association, and their Fourteenth Amendment rights to due process and equal protection.

The Secretary's position is that she properly adopted these rules concerning campaign and political finance pursuant to Article XXVIII, § 9, which confers upon her the obligation to enforce and administer the state's campaign finance laws and requires her, as relevant here, to promulgate rules "necessary to administer and enforce any provision of this article." Article XXVIII, § 9(b). The Secretary asserts that "[b]ecause of the impending election, the rules were adopted on an emergency basis to go into effect immediately."

The parties settled their dispute as to one rule, and the other two were litigated in the district court. On September 15, 2006, following a hearing, the Denver District Court denied plaintiffs' request for a preliminary injunction as to one rule not at issue here, but granted a preliminary injunction enjoining the implementation of Rule 1.14(b) until a further hearing could be held on the merits of plaintiffs' complaint.

The district court found that plaintiffs had not shown a reasonable probability of success on their claim that the Secretary had violated the APA in promulgating Rule 1.14(b). But the court found that plaintiffs had shown a reasonable probability of success on the merits as to their allegations that in promulgating the rule, the Secretary had acted in excess of her rulemaking authority and that the application of Rule 1.14(b) violated plaintiffs' First and Fourteenth Amendment associational rights.

The court found that (1) Rule 1.14(b), if implemented, would force organizations to get written permission before using individuals' dues to fund political campaigns; (2) it would "probably take two to three months, at a cost of up to four dollars per member" to comply with Rule 1.14(b); and (3) "the time frame of its enactment and the fact that it's effective immediately denies the members of the membership organization . . . the constitutional right to associate [with respect to the November 2006 election]."

The district court also determined that the Secretary's newly enacted definition of "member" conflicted with the commonly understood dictionary definition of "member," reasoning that, "[w]hen a statute [or] constitutional provision does not define the term, the Court should apply the commonly understood dictionary meaning."

After finding that plaintiffs had satisfied all the requirements for a preliminary injunction set forth in Rathke v. MacFarlane, 648 P.2d 648 (Colo.1982), the district court granted a preliminary injunction staying the enforcement of Rule 1.14(b). The court also granted...

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