Thalheimer v. City of San Diego, Nos. 10–55322

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: OPINION
• Citation: 645 F.3d 1109
• Parties: Phil THALHEIMER; Associated Builders & Contractors PAC, sponsored by Associated Builders & Contractors, Inc. San Diego Chapter; Lincoln Club of San Diego County; Republican Party of San Diego; John Nienstedt, Sr., Plaintiffs–Appellees,v.CITY OF SAN DIEGO, Defendant–Appellant.Phil Thalheimer; Associated Builders & Contractors PAC, sponsored by Associated Builders & Contractors, Inc. San Diego Chapter; Lincoln Club of San Diego County; Republican Party of San Diego; John Nienstedt, Sr., Plaintiffs–Appellees,v.City of San Diego, Defendant–Appellant.Phil Thalheimer; Associated Builders & Contractors PAC, sponsored by Associated Builders & Contractors, Inc. San Diego Chapter; Lincoln Club of San Diego County; Republican Party of San Diego; John Nienstedt, Sr., Plaintiffs–Appellants,v.City of San Diego, Defendant–Appellee.
• Docket Number: Nos. 10–55322,10–55324,10–55434.
• Decision Date: 09 June 2011

645 F.3d 1109
11 Cal. Daily Op. Serv. 7069
2011 Daily Journal D.A.R. 8498

Phil THALHEIMER; Associated Builders & Contractors PAC, sponsored by Associated Builders & Contractors, Inc. San Diego Chapter; Lincoln Club of San Diego County; Republican Party of San Diego; John Nienstedt, Sr., Plaintiffs–Appellees,
v.
CITY OF SAN DIEGO, Defendant–Appellant.Phil Thalheimer; Associated Builders & Contractors PAC, sponsored by Associated Builders & Contractors, Inc. San Diego Chapter; Lincoln Club of San Diego County; Republican Party of San Diego; John Nienstedt, Sr., Plaintiffs–Appellees,
v.
City of San Diego, Defendant–Appellant.Phil Thalheimer; Associated Builders & Contractors PAC, sponsored by Associated Builders & Contractors, Inc. San Diego Chapter; Lincoln Club of San Diego County; Republican Party of San Diego; John Nienstedt, Sr., Plaintiffs–Appellants,
v.
City of San Diego, Defendant–Appellee.

Nos. 10–55322

10–55324

10–55434.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 4, 2010.Filed June 9, 2011.

[645 F.3d 1112]

Richard L. Hasen (argued); Dick A. Semerdjian, Schwartz Semerdjian Haile Ballard & Cauley LLP, San Diego, CA, for the defendant-appellant.James Bopp, Jr. (argued), Anita Y. Woudenberg, and Joseph E. La Rue, Bopp, Coleson & Bostrom, Terre Haute, IN; Gary D. Leasure, Law Offices of Gary D. Leasure, San Diego, CA, for the plaintiffs-appellees.J. Gerald Hebert, Tara Malloy, Paul S. Ryan, The Campaign Legal Center, Washington, DC, for the amici curiae Campaign Legal Center, Center for Governmental Studies, and Common Cause.David Blair–Loy, ACLU Foundation of San Diego & Imperial Counties, San Diego, CA, for the amicus curiae American Civil Liberties Union of San Diego & Imperial Counties.Appeal from the United States District Court for the Southern District of California, Irma E. Gonzalez, Chief District Judge, Presiding. D.C. No. 3:09–cv–02862–IEG–WMC.Before: KIM McLANE WARDLAW and WILLIAM A. FLETCHER, Circuit Judges, and ROBERT J. TIMLIN, Senior District Judge.^*

OPINION WARDLAW, Circuit Judge:

The modern era of campaign finance reform began in 1972, following the infamous

[645 F.3d 1113]

break-in at the Watergate hotel. Congress responded to the ensuing scandal by overhauling the Federal Election Campaign Act to impose new caps on political spending, as states and cities followed suit with laws of their own. The City of San Diego (the “City”) enacted its Municipal Election Campaign Control Ordinance (“ECCO”) in 1973. See San Diego, Cal., Municipal Code ch. 2, art. 7, div. 29. Then, in Buckley v. Valeo, 424 U.S. 1, 14, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976), the Supreme Court held that campaign finance regulations “operate in an area of the most fundamental First Amendment activities.” The crucial constitutional distinction, according to the Buckley Court, was between limitations on campaign expenditures and campaign contributions. The Court reasoned that expenditure limits “represent substantial rather than merely theoretical restraints on the quantity and diversity of political speech,” while contribution limits “entail[ ] only a marginal restriction upon the contributor's ability to engage in free communication.” Id. at 19–20, 96 S.Ct. 612. Since Buckley, the Supreme Court has considered numerous laws that regulate the flow of political money. Some have been upheld, others struck down. But in each case the Court's analysis continued to build upon the familiar Buckley distinction.

Recent Supreme Court decisions, notably Citizens United v. FEC, –––U.S. ––––, 130 S.Ct. 876, 175 L.Ed.2d 753 (2010), have once again placed the constitutionality of campaign finance reform in flux, inspiring new challenges to election laws across the country. This is one such case. Plaintiffs mount a First Amendment challenge to San Diego's campaign finance laws. The district court considered the constitutionality of five provisions and generally upheld the City's pure contribution limits, but enjoined a provision that restricts both the fundraising and spending of independent political committees. The district court correctly recognized that even as the campaign finance reform landscape has shifted, nearly four decades after the Watergate break-in Buckley 's expenditure-contribution distinction continues to frame the constitutional analysis of campaign finance regulations. Because the district court properly applied the applicable preliminary injunction standard in the context of the presently discernible rules governing campaign finance restrictions, we affirm.

I. Factual and Procedural Background

ECCO is a comprehensive law governing all aspects of campaign finance in San Diego city elections. Plaintiffs Phil Thalheimer, a former and future city council candidate; ABC PAC, a political action committee for the Associated Builders and Contractors San Diego chapter; the Lincoln Club, a registered political action committee; the San Diego County Republican Party, the local branch of the national Party; and John Nienstedt, a San Diego resident who regularly contributes to local candidates and political committees, sued to enjoin enforcement of five ECCO provisions they claim violate their respective First Amendment rights, facially and as applied. Plaintiffs filed a verified complaint seeking a preliminary injunction to block enforcement of the challenged ECCO provisions before trial, a time period they noted would likely encompass at least two municipal elections: San Diego's June 8, 2010 primary, and the November 2, 2010 general election.

Plaintiffs challenged ECCO § 27.2936, which restricts the fundraising and spending of political committees, § 27.2938, which imposes a ban on contributions to candidates outside of a 12–month pre-election window, §§ 27.2950–51, which prohibit contributions by any non-individual entities,

[645 F.3d 1114]

and § 27.2935, which imposes a $500 limit for contributions to candidates and committees supporting or opposing a candidate.

ECCO § 27.2936 applies to “general purpose recipient committees,” defined elsewhere in the ordinance as committees “not controlled by a candidate” that receive $1,000 or more in annual donations for the purpose of supporting or opposing candidates or ballot measures. Id. at § 27.2903. Such committees may not “use a contribution for the purpose of supporting or opposing a candidate unless the contribution is attributable to an individual in an amount that does not exceed $500 per candidate per election.” Id. at § 27.2936(b). The law applies only to contributions made with the specific purpose of participation in municipal elections, thus excluding “dues, donations, fees, or other forms of monetary transactions” from its scope. Id. at § 27.2936(f). The specific dollar amount of the limits are adjusted every two years based on the Consumer Price Index. Id. at § 27.2937(a).

The temporal limit, ECCO § 27.2938, makes it unlawful for any candidate or candidate-controlled political committee “to solicit or accept contributions prior to the twelve months preceding the primary election for the office sought.” Id. at § 27.2938(a). The San Diego Ethics Commission has interpreted this provision as also preventing candidates from spending their own money on their campaigns outside of the 12–month window.

The organizational contribution limit, ECCO § 27.2950, prohibits “any person other than an individual” from contributing to a candidate or candidate-controlled committee. Id. at § 27.2950(a). The ordinance defines “person” as including “any individual, proprietorship, firm, partnership, joint venture, syndicate, business trust, company, corporation, association, committee, labor union, or any other organization or group of persons acting in concert.” Id. at § 27.2903. The effect of the provision is to bar contributions to candidates from all organizations and other non-individual entities. ECCO § 27.2951 underscores the prohibition by making it unlawful for candidates to accept contributions drawn against checking or credit card accounts “unless such account belongs to one or more individuals in their individual capacity.” Id. at § 27.2951(a).¹

On February 16, the district court preliminarily enjoined enforcement of ECCO § 27.2936, the committee fund-raising/spending limit, but held that Plaintiffs were unlikely to succeed in their First Amendment challenge to the temporal contribution ban, § 27.2938, except as to the San Diego Ethics Commission's enforcement position that the temporal ban may prohibit candidates' spending their own money on their behalf. As to the non-individual contribution limits, §§ 27.2950 and 27.2951, the district court concluded that Plaintiffs were unlikely to succeed in their claim that the laws are unconstitutional as applied generally to corporations and other organizational entities, but enjoined the provisions as applied to political parties. The district court also concluded that Plaintiffs were unlikely to succeed in challenging ECCO § 27.2935, the City's $500 individual contribution limit. Plaintiffs do not appeal this portion of the ruling.

[645 F.3d 1115]

In a February 22 order, the district court clarified that its preliminary injunction against enforcement of § 27.2936, the committee fundraising and spending limit, applied to committees that make only independent expenditures, and covered contributions made by both individuals and non-individual entities. The district court also granted in part Plaintiffs' request for an injunction against § 27.2951, the limit on contributions drawn against non-individual entities' credit card and checking accounts, to the extent that it barred contributions drawn against organizational accounts to committees that make only independent expenditures. These cross-appeals ensued.

II. Jurisdiction and Standard of Review

The district court had jurisdiction pursuant to 28 U.S.C. § 1331. We have jurisdiction under 28 U.S.C. § 1292(a)(1). We review a district court's decision to grant or deny a...