July 22, 2019

Colorado Supreme Court: Political Committee Must Report Payments to Law Firm as Contributions, Not Expenditures

The Colorado Supreme Court issued its opinion in Campaign Integrity Watchdog v. Alliance for a Safe and Independent Woodmen Hills on Monday, January 30, 2018.

Election Law—Constitutional Law—Political Speech.

The supreme court held that a political committee must report payments to a law firm for its legal defense as contributions, but not as expenditures. “[E]xpenditures . . . and obligations” under C.R.S. § 1-45-108(1)(a)(I) are limited to payments and obligations for expressly advocating the election or defeat of a candidate; payments for legal defense are not for express electoral advocacy. But, pursuant to Colo. Const. art. XXVIII, § 2(5)(a)(II), payments to a third-party law firm for a political committee’s legal defense count as reportable contributions because they are payments “made to a third party for the benefit of any . . . political committee.”

The court reversed the administrative law judge’s determination that the contribution-reporting requirement is unconstitutional as applied to Alliance for a Safe and Independent Woodmen Hills (Alliance). Under Buckley v. Valeo, 424 U.S. 1, 61–68 (1976), for political committees like Alliance whose major purpose is influencing elections, the governmental interests in political transparency and preventing corruption justify the First Amendment burdens of reporting and disclosure. It makes little difference that the payments here were made post-election and for legal defense; elections are cyclical and money is fungible.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court: Lawyer’s Donations of Legal Services Were Not “Contributions” Under Campaign Finance Law

The Colorado Supreme Court issued its opinion in Coloradans for a Better Future v. Campaign Integrity Watchdog on Monday, January 29, 2018.

Election Law—Disclosure.

A lawyer filed a report for Coloradans for a Better Future (Better Future), a political organization, without charging a fee. The supreme court reversed the court of appeals’ determination that Better Future was required to report the donated legal service as a “contribution” under Colorado’s campaign-finance laws. The constitutional definition of “contribution” does not address political organizations, and neither part of the statutory definition relied on by the court of appeals covers legal services donated to political organizations. C.R.S. § 1-45-103(6)(b) does not apply to political organizations, and the word “gift” in C.R.S. § 1-45-103(6)(c)(I) does not include gifts of service.

Summary provided courtesy of Colorado Lawyer.

HB 17-1155: Allowing Cure of Campaign Finance Disclosure Violations Without Penalty

On February 6, 2017, Rep. Dan Thurlow and Sen. Bob Gardner introduced HB 17-1155, “Concerning the Ability to Cure Campaign Finance Reporting Deficiencies without Penalty.”

Upon receipt of a complaint alleging that a campaign finance disclosure report contains errors or omissions, the bill requires the secretary of state to give notice to the committee or party treasurer by e-mail of the deficiencies alleged in the complaint. Upon receipt of the notice from the secretary of state, the committee or party treasurer may request from the appropriate officer a postponement of a hearing on the complaint and, if such request is timely submitted, has 15 business days from the date of the notice to file an addendum to the relevant report that cures any such deficiencies.

Where the committee or party treasurer files an addendum that cures all deficiencies alleged in the complaint before the expiration of the 15-day period specified in the bill, the bill prohibits the appropriate officer from assessing a penalty against the committee or treasurer that otherwise would have been assessed for the for the deficiencies for the period from the first date of the alleged violation through the expiration of the cure period. Upon filing an addendum to the relevant report by the committee or party treasurer that cures all such deficiencies, the appropriate officer is required to set a hearing to determine whether all issues raised by the complaint have been resolved. If the committee or party treasurer fails to cure any such discrepancy, any penalty imposed for such deficiency continues to accrue until further resolution of the matter.

The bill’s requirements only apply in the case of a good faith effort by a committee or party treasurer, as applicable, to make timely disclosure or where the disclosure report is in substantial compliance with governing legal requirements.

The bill was introduced in House and assigned to the State, Veterans, and Military Affairs Committee. It is scheduled to be heard in committee on February 23 upon adjournment.

SB 16-106: Giving Secretary of State Authority to Appoint ALJs to Handle Campaign Finance Complaints

On January 29, 2016, Sen. Chris Holbert and Rep. Joseph Salazar introduced SB 16-106Concerning Measures to Facilitate The Efficient Administration of Colorado Laws Governing Campaign Finance, and, in Connection Therewith, Making and Reducing an Appropriation. The bill was introduced in the Senate State, Veterans, & Military Affairs Committee, where it was amended and referred to Appropriations. The Senate Appropriations Committee further amended the bill and referred it to the Senate floor for Second Reading. The bill passed Second Reading in the Senate with amendments and passed Third Reading with no further amendments. The bill was referred to the House and introduced in the State, Veterans, & Military Affairs Committee.

This bill aims to do two things in order to facilitate the administration of Colorado laws governing campaign finance. First, Section 1 of the bill modified the definition of limited liability company in the Fair Campaign Practices Act. The reengrossed bill, however, does not provide the new definition for limited liability company.

Second, C.R.S. § 24-30-1004(1)(a) of the bill gives the Secretary of State the authority to appoint and designate persons to serve as Administrative Law Judges (ALJ) in connection with any complaint alleging a violation of the campaign finance laws that is referred to such ALJ. Additionally, Section 2 of the bill specifies the procedures by which ALJ appointments are to be made.

Specifically, under Subsection (I), the Secretary of State shall appoint two persons, who must have been affiliated with a major political party for at least five years, to a recommendations committee to assist in appointing ALJs.

Under Subsection (II), the committee must solicit with 30 days of appointment, by notice on the Secretary of State’s website, a list of candidates being considered for an ALJ appointment.

Subsection (IV) provides that, not later than 30 days after posting the list of candidates for notice & comment, the recommendations committee shall recommend two candidates for each ALJ appointment opening to the Secretary of State. The bill also provides that, for the initial appointment, five candidates shall be recommended.

Subsection (V) provides the term lengths for the appointed ALJs. The initial three appointments will serve terms of two years, three years, and four years, respectively. The term for appointments made following the initial ALJs will be three years.

Furthermore, the bill stipulates the minimum requirements, powers, and duties for a person appointed to be an ALJ. Section 2 also requires the Secretary of State, not later than January 1, 2017, to establish and maintain a program to train ALJs to undertake their powers and duties.

Mark Proust is a 2016 J.D. Candidate at the University of Denver Sturm College of Law.

Colorado Court of Appeals: Costs of Defending Lawsuit Not Campaign Expenditures

The Colorado Court of Appeals issued its opinion in Campaign Integrity Watchdog v. Coloradans for a Better Future on Thursday, April 7, 2016.

Reporting Contributions and Spending—Fair Campaign Practices Act.

In 2012, Arnold lost the Republican primary election for University of Colorado Regent to Davidson. During the run-up to the election, Coloradans for a Better Future (CBF) purchased a radio advertisement supporting Davidson and other radio advertisements unfavorable to Arnold. After the election, Arnold, and later Campaign Integrity Watchdog (CIW) with Arnold as its principal officer, filed a series of complaints with the Colorado Secretary of State (Secretary) alleging violations of Colorado’s Fair Campaign Practices Act (FCPA). This is the third such complaint.

Specifically, CIW challenged CBF’s failure to report funds donated to CBF to pay Arnold’s court costs from an earlier case, arguing those funds were a contribution and spending and were incorrectly reported in CBF’s initial January 2014 contributions and expenditures report. The administrative law judge (ALJ) dismissed the complaint. The ALJ found that on January 22, 2014, CBF filed a contribution and expenditures report with the Secretary. Its report wasn’t due until May 5, but it intended to terminate its activities as a political organization and thus filed early. On the same day, CBF’s legal counsel sent an email to the Secretary seeking to amend the report to show that Colorado Justice Alliance (CJA) contributed $200.20 to pay Arnold’s court costs. The Secretary’s electronic reporting system didn’t allow the change to be made by CBF, and the Secretary’s staff couldn’t change the report either. CIW filed its complaint on March 3, 2014 and CBF’s report was publicly amended on March 6, 2014. The ALJ concluded that CBF had already reported the CJA contribution to the Secretary when CIW filed its complaint and that the complaint was premature because the report was not due until May 2014. The ALJ further concluded that the payment of Arnold’s court costs did not meet the FCPA definition of spending and did not have to be reported as such.

On appeal, CIW contended that the $200.20 CJA donated to help CBF satisfy its obligation to pay Arnold’s court costs was a contribution that was incorrectly reported on the initial report. Specifically, CIW argued that the ALJ (1) invented findings of fact, (2) misrepresented facts regarding CBF’s request to amend its report, and (3) erred in concluding the complaint was premature. As to the first argument, CIW failed to cite specific findings or record support; as to the second argument, the allegation concerned a question of law rather than fact; and as to the third argument, the court concluded the report was corrected on January 22, when CBF notified the Secretary of its mistake. CIW also argued that CBF violated the FCPA because it listed the payee of the $200.20 as the Denver District Court rather than Arnold; the court found this too insignificant to amount to a violation of the reporting law. Thus, the Court concluded that the ALJ did not err when he concluded CBF correctly reported the $200.20.

CIW also argued that the $200.20 CBF paid to Arnold constituted spending and should have been reported. The court found the funds were not “expended influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any state or local public office in the state,” and thus concluded they were not reportable spending.

CIW’s request for costs and fees was denied. CBF’s request for attorney fees was denied, but its request for costs was granted.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Political Organization Required to Report Donations of Legal Services

The Colorado Court of Appeals issued its opinion in Campaign Integrity Watchdog v. Coloradans for a Better Future on Thursday, April 7, 2016.


This is the fourth in a series of complaints brought by claimant, Campaign Integrity Watchdog (CIW), or its principal officer, Matthew Arnold, against Coloradans for a Better Future (CBF), a political organization under CRS § 1-45-103(14.5), to challenge CBF’s alleged failure to report contributions and spending. Specifically, CIW challenged CBF’s spending on legal fees in 2012 and 2013, as well as donated legal services in 2013 and 2014. The administrative law judge (ALJ) found in favor of CBF.

On appeal, CIW argued that the ALJ erred in concluding that CBF did not need to report certain legal services as spending. The Colorado Court of Appeals disagreed. The money that CBF spent on legal services in 2012 or 2013 either for defending previous campaign finance complaints or for its attorney fees fell outside the category of expenditures defined by the Fair Campaign Practices Act. Therefore, it did not constitute reportable spending.

CIW also argued that the ALJ erred in concluding that CBF only needed to report contributions that were for the purpose of promoting a candidate’s nomination or election. The court agreed. CBF received “in-kind” contributions of legal services. It is undisputed that the legal services at issue were either a gift of services for which less than equivalent value was received (if the services were billed but not paid) or they were pro bono services. Therefore, CBF received a contribution that it was required to report.

The order was affirmed in part and reversed in part, and the case was remanded.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Political Party Can Establish Expenditure Committee Not Subject to Contribution Limits

The Colorado Court of Appeals issued its opinion in Colorado Republican Party v. Williams on Thursday, February 25, 2016.

Independent Expenditure Committee—Political Party—Contributions—Constitutional Limits—Campaign and Political Finance Amendment—Fair Campaign Practices Act.

The Colorado Republican Party (Party) is a Colorado unincorporated nonprofit association. The Party created an Independent Expenditure Committee (IEC) to make independent expenditures and raise funds through donations and otherwise in any amount from any permissible source to fund that committee. The Party filed the current lawsuit seeking declaratory relief to confirm its actions. The district court granted summary judgment, concluding that the current constitutional and statutory scheme allows a political party to create an IEC and that such a committee is not subject to any contribution limits applicable to political parties under the Campaign and Political Finance Amendment and the Fair Campaign Practices Act.

On appeal, intervenor Colorado Ethics Watch, a nonprofit organization authorized to do business in Colorado, contended that the district court erred when it interpreted the Fair Campaign Practices Act to allow a political party to establish an IEC not subject to the source and contribution limits set forth in the Colorado Constitution, article XXVIII (the Campaign and Political Finance Amendment) and CRS §§ 1-45-101 to -118 (the Fair Campaign Practices Act). The current legislative scheme and pertinent case law, however, provide no barrier to the Party’s establishment of the IEC.

Ethics Watch also asked the Court of Appeals to conclude as a matter of law, based on federal precedent, that any IEC established by a political party is per se incapable of independence in that it is always controlled by or coordinated with the party, therefore subjecting the committee to source and contribution limits. The Court declined to “read an exception to the law that is not there.”

The order was affirmed.

Summary and full case available here, courtesy of The Colorado Lawyer.

Tenth Circuit: Defendant Must Have Direct Stake in Outcome of Litigation to Establish Standing

The Tenth Circuit Court of Appeals issued its opinion in Greenbaum v. Bailey on Tuesday, March 31, 2015.

In 2007, the Albuquerque city charter was amended to prohibit campaign contributions from businesses. On May 6, 2013, plaintiffs Greenbaum and three other individuals filed a civil rights complaint against Bailey in her official capacity as Clerk for the City of Albuquerque and against the City Board of Ethics and Campaign Practices, alleging the amendment prohibiting campaign contributions violated the First and Fourteenth Amendments. Plaintiffs sought declaratory and injunctive relief, nominal damages, fees, and costs. The Committee to Elect Pete Dinelli Mayor (“committee”) was granted leave to file a complaint in intervention seeking declaratory relief that the amendment was constitutional. The committee also filed a brief in support of Bailey’s motion to dismiss, arguing that the plaintiffs (all of whom are individuals) lacked standing to challenge the amendment. Shortly thereafter, Giant Cab Co. moved to intervene as plaintiff and the four original individual plaintiffs were dismissed, leaving Giant Cab as the only plaintiff.

The district court ruled the city charter’s amendment violates the First Amendment and entered judgment in favor of Giant Cab. Bailey and the ethics board declined to appeal, but the committee appealed, alleging the amendment is constitutional because it is closely drawn to further government interests in preventing quid pro quo corruption, the appearance of corruption, and circumvention of individual campaign contribution limits.

In its appellate brief, Giant Cab asserted the committee lacked standing and moved to dismiss the appeal. The Tenth Circuit requested further briefing on the standing issue, and noted that standing can either be piggybacked or individualized, but because Bailey and the board did not appeal, the committee’s standing for the appeal must be evaluated on an individual basis. Following the recent Supreme Court decision in Hollingsworth v. Perry, the Tenth Circuit declined to address the merits of the committee’s appeal, finding instead that the committee had no direct stake in the outcome of the litigation, and found compelling Giant Cab’s assertion that the committee’s standing was no different than that of the general public. The Tenth Circuit found the committee lacked standing to pursue the appeal, and granted Giant Cab’s motion to dismiss.

Tenth Circuit: Politically Active Organization Entitled to Media Exemption from Campaign Disclosure Requirements

The Tenth Circuit Court of Appeals issued its opinion in Citizens United v. Gessler on October 27, 2014, and reissued it as a published opinion on Wednesday, November 12, 2014.

Citizens United is a nonprofit corporation engaged in independent political and religious activity. Since 2004 it has produced and released 24 films on political and religious topics, including Rocky Mountain Heist, which discussed political candidates by name and was set to release just before the 2014 mid-term election. Because the film unambiguously referred to Colorado elected officials by name, it comes under some of Colorado’s election laws regarding “electioneering communications” and “independent expenditures.” In April 2014, Citizens United sought a ruling from the Secretary of State that Rocky Mountain Heist and related advertising would not qualify as “electioneering communications” or “expenditures” under Colorado law. In support of its motion, it cited a similar exemption from the Federal Election Commission under the Federal Election Campaign Act’s disclosure and expenditure rules, which are similar to Colorado’s. The FEC determined Citizen United was entitled to the press exemption. The Secretary denied its request, finding that the film and advertising did not fall under Colorado’s exemption for print media and Citizens United is not a broadcast facility. The Secretary’s order concluded that Rocky Mountain Heist would be an electioneering communication not entitled to any exemption.

After the Secretary denied its motion, Citizens United brought suit against the Colorado Secretary of State in the U.S. District Court for the District of Colorado, alleging Colorado’s reporting and disclosure requirements violate the First Amendment. It sought a preliminary injunction against enforcing the provisions that do not apply to exempted media, which the district court denied, finding that Citizens United’s facial and as-applied challenges were not likely to succeed on the merits. Citizens United appealed.

The Tenth Circuit agreed with Citizens United’s as-applied challenge to Colorado’s campaign disclosure requirements, finding that under an exact scrutiny standard, the First Amendment required the Secretary to treat Citizens United the same as the exempt media. The Tenth Circuit questioned the Secretary’s assertion that journalism seeks to inform the public in a transparent, balanced, and accountable manner, noting that “our nation’s founding and history are replete with examples of highly partisan newspapers, and many observers would say that some modern media continue the tradition.” The Tenth Circuit similarly disposed of the Secretary’s argument that the media should be distinguished from “single-shot speakers,” finding instead that Citizens United was well-established for these purposes so disclosure of its financial backers was unnecessary. The Tenth Circuit found Citizens United entitled to a media exemption from disclosure and expenditure requirements under Colorado law.

The Tenth Circuit did not find that the exemption extended to advertisements for Rocky Mountain Heist, which mention candidates and express support for or opposition to candidates. These politically charged ads require disclosure of financial supporters so the general public can make an informed decision about the legitimacy of the advertisements.

The district court’s denial of the preliminary injunction was reversed, and the case was remanded with instructions to issue the preliminary injunction. Judge Phillips dissented.

Colorado Supreme Court: Secretary of State Exceeded Rulemaking Authority in Expanding Contribution Limits

The Colorado Supreme Court issued its opinion in Gessler v. Colorado Common Cause on Monday, June 16, 2014.

Issue Committees—Colo. Const. art. XXVIII, § 2(10)(a)(II)—CRS § 1-45-108(1)(a)(I)—8 CCR § 1505-6:4.1.

The Supreme Court held that Sampson v. Buescher, 625 F.3d 1247 (10th Cir. 2010), did not facially invalidate either the $200 contribution and expenditure threshold for issue committees under art. XXVIII, § 2(10)(a)(II) of the Colorado Constitution or the retrospective reporting requirement under CRS § 1-45-108(1)(a)(I) of the Fair Campaign Practices Act. The Court further held that Secretary of State Rule 4.1., 8 Colo. Code Regs. § 1505-6:4.1 (2013), promulgated by the Secretary of State after Sampson was decided, conflicts with both the $200 threshold in article XXVIII and the retrospective reporting requirement in CRS § 1-45-108(1)(a)(I). Because the Secretary of State does not have authority to promulgate rules that conflict with other provisions of law, the Court affirmed the judgment of the court of appeals and set aside Rule 4.1.

Summary and full case available here.

Tenth Circuit: Citizens United Case Requires Court to Affirm District Court’s Issuance of Preliminary Injunction Enjoining Enforcement of New Mexico Campaign Finance Law

The Tenth Circuit Court of Appeals published its opinion in Republican Party of New Mexico v. King on Wednesday, December 18, 2013.

This case required the Tenth Circuit to consider state campaign finance regulations in light of the Supreme Court’s ruling in Citizens United v. FEC, 558 U.S. 310 (2010). Citizens United held that federal election law violated the First Amendment by restricting independent political spending because the speaker was a corporation—the holding allowed corporate entities to make unlimited independent expenditures supporting or opposing issues or candidates as long as the expenditures were not coordinated with a candidate for federal office.

Before the Court’s decision in Citizens United, New Mexico had introduced a new state campaign finance law that imposed a host of contribution and other limitations on political parties, political action committees, and donors to such entities. In particular, the state limited the amount an individual may contribute to a political committee. Potential donors, political parties, and political committees mounted an as-applied challenge to the law in federal district court, contending several of its provisions violated the First Amendment.

The district court agreed and issued a preliminary injunction, enjoining the enforcement of two provisions: (1) limits on contributions to political committees for use in federal campaigns, and (2) limits on contributions to political committees that are to be used for independent expenditures, i.e., expenditures not authorized by or coordinated with a candidate or candidate committee. New Mexico appealed the latter ruling, contending that the limit on contributions furthers the state’s compelling interest in preventing corruption or the appearance of corruption in campaign spending.

Citizens United resolved a longstanding debate over whether other governmental interests could support restrictions on campaign financing. After Citizens United, there was no valid governmental interest sufficient to justify imposing limits on fundraising by independent expenditure organizations. The Supreme Court firmly rejected the contention that independent expenditures give rise to corruption or the appearance of corruption: “The appearance of influence or access . . . will not cause the electorate to lose faith in our democracy. By definition, an independent expenditure is political speech . . . not coordinated with a candidate.” Citizens United, 558 U.S. at 360. In sum, Citizens United resolved the right of a non-profit corporation to make independent expenditures without limits as to their source and amount. In its wake, the circuit courts have also uniformly struck down limitations on contributions to entities engaged in independent expenditures.

The Tenth Circuit held that the district court was correct that the challenged provision cannot be reconciled with Citizens United. Because there is no corruption interest in limiting independent expenditures, there can also be no interest in limiting contributions to non-party entities that make independent expenditures. Consequently, as the district court found, plaintiffs are likely to succeed on the merits of its First Amendment challenges to New Mexico’s law.

As a result, did not err in entering a preliminary injunction.