Winred, Inc. v. Ellison, Civil No. 21-1575 (JRT/BRT)
| Court | United States District Courts. 8th Circuit. United States District Court of Minnesota |
| Writing for the Court | JOHN R. TUNHEIM, Chief Judge |
| Citation | 581 F.Supp.3d 1152 |
| Parties | WINRED, INC, Plaintiff, v. Keith ELLISON, in his official capacity, Letitia James, in her official capacity, William Tong, in his official capacity, and Brian Frosh, in his official capacity, Defendants. |
| Docket Number | Civil No. 21-1575 (JRT/BRT) |
| Decision Date | 26 January 2022 |
581 F.Supp.3d 1152
WINRED, INC, Plaintiff,
v.
Keith ELLISON, in his official capacity, Letitia James, in her official capacity, William Tong, in his official capacity, and Brian Frosh, in his official capacity, Defendants.
Civil No. 21-1575 (JRT/BRT)
United States District Court, D. Minnesota.
Signed January 26, 2022
Edward M. Wenger, Holtzman Vogel Baran Torchinsky & Josefiak PLLC, 2300 N Street Northwest, Suite 643a, Washington, DC 20037; Jason Brett Torchinsky, Holtzman Vogel Baran Torchinsky & Josefiak PLLC, 15405 John Marshall Highway, Haymarket, VA 20169; and Kyle R. Kroll and Thomas R. Boyd, Winthrop & Weinstine, PA, 225 South Sixth Street, Suite 3500, Minneapolis, MN 55402, for plaintiff.
Erin Elizabeth Conti, Minnesota Attorney General's Office, 445 Minnesota Street, Suite 1200, Saint Paul, MN 55101; James W. Canaday, Minnesota Attorney General's Office, 445 Minnesota Street, Suite 1400, Saint Paul, MN 55101; and Jason Marisam, Minnesota Attorney General's Office, 445 Minnesota Street, Suite 1100, Saint Paul, MN 55101, for Defendant Keith Ellison.
James W. Canaday, Minnesota Attorney General's Office, 445 Minnesota Street, Suite 1400, Saint Paul, MN 55101; and Jane Melissa Azia, Laura Levine, and Mark H. Ladov, New York State Attorney General's Office, 28 Liberty Street, 20th Floor, New York, NY 10005, for Defendant Letitia James.
James W. Canaday, Minnesota Attorney General's Office, 445 Minnesota Street, Suite 1400, Saint Paul, MN 55101 and Jonathan Blake, Connecticut Attorney General's Office, 165 Capitol Avenue, Hartford, CT 06115, for Defendant William Tong.
Andrea W. Trento, Maryland Attorney General's Office, 200 Saint Paul Plaza, 20th Floor, Baltimore, MD 21202 and James W. Canaday, Minnesota Attorney General's Office, 445 Minnesota Street, Suite 1400, Saint Paul, MN 55101, for Defendant Brian Frosh.
MEMORANDUM OPINION AND ORDER GRANTING MOTION TO DISMISS AND DENYING MOTION FOR PRELIMINARY INJUNCTION
JOHN R. TUNHEIM, Chief Judge
WinRed, Inc. brought this action against Defendants William Tong, Brian Frosh, Keith Ellison, and Letitia James in their official capacities as the Attorneys General of Connecticut, Maryland, Minnesota, and New York, respectively. The Attorneys General initiated investigations of WinRed to determine if WinRed had violated each states’ consumer protection statutes through the use of pre-checked recurring donation boxes on its website. WinRed seeks a declaratory judgment that the Federal Election Campaign Act ("FECA") preempts the relevant state laws with regards to WinRed's conduct and a permanent injunction enjoining the investigations and any enforcement action by the Attorneys General against WinRed in connection with the pre-checked recurring donation boxes.
After WinRed filed this case, the Attorneys General issued subpoenas to WinRed. WinRed moved for a preliminary injunction blocking enforcement of the subpoenas. The Attorneys General then filed a Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6) asserting that (1) the Court lacks personal jurisdiction over the Connecticut, Maryland, and New York Attorneys General and (2) WinRed's Complaint fails to state a viable claim upon which relief can be granted. The Court will grant the Motion to Dismiss under Rule 12(b)(2) as to the Connecticut, Maryland, and New York Attorneys General because conspiracy-based personal jurisdiction does not apply to this case. The Court will also grant the Motion to Dismiss as to Minnesota's Attorney General because FECA does not preempt the applicable state laws. The Court will deny WinRed's Motion for a Preliminary Injunction as moot.
BACKGROUND
I. FACTUAL BACKGROUND
Plaintiff WinRed is a federal political action committee incorporated in Delaware with its principal place of business in Virginia. (Compl. ¶ 8, July 7, 2021, Docket No. 1.) It assists the fundraising efforts of
candidates, parties, and political committees affiliated with the Republican Party. (Id. ¶¶ 6, 8.) It does this by accepting contributions from donors that are earmarked for candidates and other committees and then passing those contributions along to the earmarked candidate, party unit, or committee. (Id. )
The Defendants are the Attorneys General of four states—Connecticut, Maryland, Minnesota, and New York—who are named as defendants in their official capacities only. (Id. ¶¶ 9–12.) Each is responsible for administering their states’ respective consumer protection laws. (Id. )
WinRed's Complaint alleges that its sole activities are related to accepting and distributing contributions for federal office. (Id. ¶ 6.) It accepts earmarked donations from donors across the United States. (Id. ¶ 8.) WinRed is federally registered with the Federal Election Commission ("FEC"). (Id. ¶ 4.)
Allegedly, WinRed's fundraising platform sometimes uses pre-checked recurring donation boxes which sign the donors up to make repeated donations rather than a single donation. (Compl., Ex. A at 2, July 7, 2021, Docket No. 1-1.) While some donors may intend to make recurring donations, others have allegedly been charged for multiple contributions even though they intended to only make a one-time contribution. (See id. )
After news reports surfaced of WinRed's alleged practice, the Attorneys General began investigating WinRed to determine if WinRed's practices are illegal. (Id. ) The Attorneys General allege that various state and federal laws require "clear and conspicuous disclosures to consumers before an automatic renewal or additional purchase can take effect, and define the failure to do so as a deceptive practice." (Id. )
On April 29, 2021, the New York Attorney General's office sent WinRed a letter on behalf of all four Attorneys General. (Compl. ¶ 35; Compl. Ex. A.) To assist the investigations, the letter requests WinRed provide the Attorneys General with various information including WinRed's organizational structure; clients who have used pre-checked recurring donation boxes; complaints about recurring donations from Connecticut, Maryland, Minnesota, and New York residents; refunds provided to residents of those states; policies concerning pre-checked recurring donation boxes; internal and external communications about the boxes; and all examples of pre-checked solicitation pages. (Compl. ¶ 39; Compl. Ex. A at 2–3.) The letter requests a response by May 17, 2021. (Compl., Ex. A at 4.)
On June 1, 2021, WinRed responded to the letter by refusing to comply with the requests because WinRed asserted the relevant state consumer protection laws and the investigations are preempted by FECA. (Compl. ¶ 40; Compl. Ex. B at 6–8.) The Attorneys General responded on June 17, 2021 that the laws and the investigations are not preempted by FECA and renewed their request for information and documents with a deadline of June 30, 2021. (Compl. ¶ 41; Compl. Ex. C at 10–12.) On June 30, 2021, WinRed reasserted its preemption position and provided only copies of FEC filings that were already publicly available. (Compl. ¶ 42; Compl. Ex. D at 14.)
II. PROCEDURAL HISTORY
On July 7, 2021, WinRed brought this action against the Attorneys General seeking a declaratory judgment that the state consumer protection laws at issue and investigations under them are preempted "with respect to" fundraising for federal elections by FECA and the FEC regulations promulgated under FECA. (Compl. ¶¶ 46, 48, 58, 60, 68, 70.) WinRed asks the Court to permanently enjoin the Attorneys
General from investigating or taking enforcement action against WinRed with respect to its online fundraising practices under the state consumer protection laws. (Compl. at 14.)
On July 16, 2021, the Attorneys General issued subpoenas and civil investigative demands to WinRed demanding compliance with the document and information requests by August 16, 2021. (Decl. of Gerrit Lansing, Exs. 1–4, July 27, 2021, Docket No. 24-1.) WinRed filed a Motion for a Preliminary Injunction asking the Court to enjoin enforcement of the subpoenas and demands. (Mot. Preliminary Injunction, July 27, 2021, Docket No. 20.) The Attorneys General oppose the Preliminary Injunction but agreed to stay enforcement of the subpoenas and demands and to delay action pending resolution of the Motion. (Mem. Opp. Preliminary Injunction, Aug. 19, 2021, Docket No. 39; Stip. ¶ 4, July 29, 2021, Docket No. 29.)
On July 29, 2021, the Attorneys General filed a Motion to Dismiss WinRed's case asserting the Court lacks personal jurisdiction over the Connecticut, Maryland, and New York Attorneys General and the Complaint fails to state a claim upon which relief may be granted. (Mot. Dismiss, July 29, 2021, Docket No. 31.) WinRed opposes both grounds for the Motion to Dismiss. (Mem. Opp. Mot. Dismiss, Aug. 19, 2021, Docket No. 44.)
DISCUSSION
I. PERSONAL JURISDICTION
A. Standard of Review
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