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Minnesota Citizens Concerned For Life, Inc.; the Taxpayers League of v. Lori Swanson

May 16, 2011

MINNESOTA CITIZENS CONCERNED FOR LIFE, INC.; THE TAXPAYERS LEAGUE OF MINNESOTA; COASTAL TRAVEL ENTERPRISES, LLC, PLAINTIFFS-APPELLANTS,
v.
LORI SWANSON, MINNESOTA ATTORNEY GENERAL, IN HER OFFICIAL CAPACITY; BOB MILBERT; JOHN SCANLON; TERRI ASHMORE; HILDA BETTERMANN; FELICIA BOYD; GREG MCCULLOUGH, MINNESOTA CAMPAIGN FINANCE AND PUBLIC DISCLOSURE BOARD MEMBERS, IN THEIR OFFICIAL CAPACITIES; RAYMOND KRAUSE, CHIEF ADMINISTRATIVE LAW JUDGE OF THE MINNESOTA OFFICE OF ADMINISTRATIVE HEARINGS, IN HIS OFFICIAL CAPACITY; ERIC LIPMAN, ASSISTANT CHIEF ADMINISTRATIVE LAW JUDGE OF THE MINNESOTA OFFICE OF ADMINISTRATIVE HEARINGS, IN HIS OFFICIAL CAPACITY; MANUEL CERVANTES; BEVERLY HEYDINGER; RICHARD LUIS; STEVE MIHALCHICK; BARBARA NEILSON; KATHLEEN SHEEHY, ADMINISTRATIVE LAW JUDGES OF THE MINNESOTA OFFICE OF ADMINISTRATIVE HEARINGS, IN THEIR OFFICIAL CAPACITIES; MICHAEL FREEMAN, HENNEPIN COUNTY * ATTORNEY, IN HIS OFFICIAL CAPACITY, DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the District of Minnesota.

The opinion of the court was delivered by: Melloy, Circuit Judge.

Campaign Legal Center; Democracy 21; and The Brennan Center for Justice, NYU School of Law, Amici on Behalf of Appellee.

Submitted: January 11, 2011

Before RILEY, Chief Judge, BYE and MELLOY, Circuit Judges.

Minnesota Citizens Concerned for Life, Inc., The Taxpayers League of Minnesota, and Coastal Travel Enterprises, LLC, (collectively "Minnesota Citizens") are Minnesota corporations challenging several provisions of Minnesota's corporate election laws. Specifically, Minnesota Citizens seeks to invalidate (1) Minnesota's ban on corporations making direct contributions to candidates and political parties and (2) Minnesota's regulation of how corporations may make independent expenditures, as defined in the next section. Minnesota Citizens brings this challenge in response to the Supreme Court's recent decision in Citizens United v. Federal Election Commission, 130 S. Ct. 876 (2010). At the outset of the proceeding below, Minnesota Citizens moved for a preliminary injunction. The district court*fn1 denied the motion, and Minnesota Citizens appeals this denial. We affirm.

I. The First Amendment provides in part that "Congress shall make no law . . . abridging the freedom of speech." Interpreting this provision, the Supreme Court in Citizens United overruled its prior precedent and held that the government may not ban corporations from making independent expenditures, that is, "political speech presented to the electorate that is not coordinated with a candidate," advocating the election or defeat of a candidate. 130 S. Ct. at 910, 913. The Supreme Court further held that the government may not force corporations wishing to make independent expenditures to speak through "separate segregated fund[s]," known as political action committees ("PACs"), at least where the PACs are "separate association[s] from the corporation" and where the PACs are subject to "burdensome" regulations. Id. at 897. The Supreme Court, however, upheld a federal disclaimer and disclosure law at issue and did not expressly overrule its prior precedent allowing the government to prohibit direct corporate contributions to candidates and other entities, like political parties, that work in conjunction with candidates. Id. at 886, 917.

In response, Minnesota amended portions of its election laws. Minnesota retained a longstanding prohibition on direct corporate contributions to candidates and affiliated entities. Minn. Stat. § 211B.15, subdiv. 2. At most, according to Minnesota Citizens, Minnesota permits corporations to establish conduit funds to which others may contribute. See id. subdiv. 16. In contrast, Minnesota amended its regulations on corporate independent expenditures and created two means by which corporations could make such expenditures. Id., subdiv. 3; Minn. Stat. § 10A.12, subdiv. 1a. Minnesota first defined an independent expenditure as: an expenditure expressly advocating the election or defeat of a clearly identified candidate, if the expenditure is made without the express or implied consent, authorization, or cooperation of, and not in concert with or at the request or suggestion of, any candidate or any candidate's principal campaign committee or agent.

Minn Stat. § 10A.01, subdiv. 18. Minnesota then required corporations wishing to make such expenditures to either "form[] and register[] an independent expenditure political fund if the expenditure is in excess of $100 or [contribute to an] existing independent expenditure political committee or political fund." Id. § 10A.12, subdiv. 1a; see also Minn. Stat. § 211B.15, subdiv. 3.

If a corporation chooses to establish a political fund, then the corporation and its political fund are subject to a series of statutory requirements. Under the revised Minnesota law, the corporation must first appoint a treasurer for the political fund, and the treasurer must then register the fund within fourteen days by filling out a two-page form disclosing, among other things, a listing of all of the fund's depositories and the names and addresses of the fund, treasurer, and any deputy treasurers. Id. §§ 10A.12, subdiv. 3, 10A.14, subdivs. 1, 2. The political fund must also segregate its funds from any other funds. Id. § 10A.12, subdiv. 2. If a corporation is the sole donor to its fund, a corporation can segregate funds with an internal bookkeeping device, such as a spreadsheet. Once established, the political fund must further file periodic, detailed reports. As the district court explained:

The fund must file five reports during a general-election year and one report during a non-general-election year. Minn. Stat. § 10A.20. The report must disclose the amount of liquid assets at the beginning of a reporting period; the name and address of each individual or association whose contributions within the year exceed $100; the amount and date of such contributions; the sum of contributions during the reporting period; each loan made or received that exceeds $100; the name and address of the lender; receipts over $100 during the reporting period not otherwise listed; the sum of those receipts; the name and address of each individual or association to whom the reporting entity made expenditures within the year exceeding $100; the sum of all expenditures made by the reporting entity during the reporting period; the name and address of each political committee, political fund, principal campaign committee, or party unit to which contributions in excess of $100 were made; the sum of all contributions; the amount and nature of any advance of credit incurred; the name and address of each individual or association to whom noncampaign disbursements have been made that aggregate in excess of $100 and the purpose of each noncampaign disbursement; the sum of all noncampaign disbursements; and the name and address of a nonprofit corporation that provides administrative assistance to the political committee or political fund. Minn. Stat. § 10A.20.

Moreover, the treasurer for a political fund must keep certain records and make them available for an audit. Id. § 10A.13. Finally, if a political fund wants to dissolve, then it must settle its debts, dispose of its remaining assets, and file a termination report. Id. § 10A.24. One method in which a political fund can dispose of its assets is by returning contributions to their sources. Id. § 211B.12; § 10A.01, subdiv. 26(2).

If, on the other hand, a corporation chooses to contribute to an existing political fund, then the corporation is subject to fewer statutory requirements. A for-profit corporation need only provide its name and address for contributions made from its general treasury. A non-profit corporation, by contrast, would also need to disclose information regarding the underlying source of the contribution if the corporation contributed more than $5,000 to a political fund or committee. Similarly, a corporation that solicits and receives contributions for a political fund must disclose the source of the contributions.

In this case, appellants are three Minnesota corporations seeking to advance their respective social and commercial interests. Minnesota Citizens Concerned for Life is a non-profit corporation seeking to "secure protections for innocent human life from conception until natural death through effective education, legislation, and political action." The Taxpayer League of Minnesota is a non-profit corporation advocating for "lower taxes, limited government, and full empowerment of taxpaying citizens." Finally, Coastal Travel Enterprises, LLC, is a for-profit, limited-liability corporation that provides "retail travel industry services." Each corporation exists for a purpose other than nominating or electing specific candidates, but each corporation wishes to make independent expenditures and to contribute directly to candidates and political parties.*fn2 The companies filed suit to enjoin Minnesota elections laws on independent expenditures and corporate contributions to candidates and political parties and moved for a preliminary injunction. The district court denied the motion to enjoin primarily because the corporations failed to show a "likelihood of success." This appeal followed.

II. Minnesota Citizens argues that the district court erred in failing to grant a preliminary injunction. According to Minnesota Citizens, it is likely to prevail on the merits with respect to the issue of corporate independent expenditures because Minnesota regulates such expenditures in a manner Citizens United prohibits. Minnesota Citizens maintains that Minnesota effectively retained its ban on corporate independent expenditures by requiring corporations to use separate entities-i.e., political funds-to speak and by imposing "burdensome" regulations on political funds similar to those that the Supreme Court found to constitute a de facto ban in Citizens United. Minnesota Citizens also argues that it is likely to prevail on the issue of direct corporate contributions because Citizens United broadly holds that the First Amendment proscribes any governmental ban on corporate political speech. Minnesota Citizens alternatively asserts that prior Supreme Court precedent, when properly interpreted, allows the government to limit direct contributions to candidates and affiliated entities only when corporations have another means of speaking, which Minnesota Citizens does not have because Minnesota functionally banned all forms of direct corporate contributions. Moreover, Minnesota Citizens claims that Minnesota's disputed election laws are not properly tailored in light of the constitutionally heightened level of scrutiny. Finally, Minnesota Citizens argues that it satisfied the remaining requirements for issuing an injunction. We disagree and address each of Minnesota Citizens's arguments in turn.

When evaluating whether to issue a preliminary injunction, a court should consider four factors: (1) the probability that the movant will succeed on the merits; (2) the threat of irreparable harm to the movant; (3) the state of balance between this harm and the injury that granting the injunction will inflict on other parties; and (4) the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981). A party seeking to challenge the validity of a duly enacted state statute must meet a more rigorous standard of success, however, and show that it is "likely to prevail on the merits" because of the deference owed to laws which are the product of the democratic process. Planned Parenthood Minn., N.D., S.D. v. Rounds, 530 F.3d 724, 733 (8th Cir. 2008). Nevertheless, as to the merits of a specific issue, "the burdens at the preliminary injunction stage track the burdens at trial." Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 429 (2006). Additionally, a court's determination regarding the ability of a moving party to prevail will often be determinative of the matter, especially in First Amendment cases where a party is seeking to enjoin a law that restricts speech. Phelps-Roper v. Nixon, 545 F.3d 685, 690 (8th Cir. 2008); see also Planned Parenthood, 530 F.3d at 732 ("If the party with the burden of proof makes a threshold showing that it is likely to prevail on the merits, the district court should then proceed to weigh the other Dataphase factors."). Finally, we review the denial of a preliminary injunction for an abuse of discretion, which may occur when "the district court rests its conclusion on clearly erroneous factual findings or erroneous legal conclusions." Planned Parenthood, 530 F.3d at 733 (internal quotation marks omitted).

A. Minnesota Citizens first argues that Minnesota impermissibly preserved its ban on corporate independent expenditures when amending its election laws. Minnesota Citizens asserts that Minnesota still bans corporations from making independent expenditures because corporations can only contribute to political funds, which are separate entities. This runs afoul of the Supreme Court's "clear" holding in Citizens United, which, according to Minnesota Citizens, mandates that "corporations must be allowed to make their own, general-fund independent expenditures." Minnesota Citizens alternatively argues Minnesota's extensive regulation of political funds serves as a de facto ban even if a corporation could theoretically speak through a political fund. For support, Minnesota Citizens argues the regulations Minnesota imposes are materially indistinguishable from the PAC regulations the Supreme Court found to be unconstitutionally burdensome in Citizens United. Minnesota Citizens specifically takes issue with Minnesota's requirement of periodic reports, segregated funds, and the appointment of a treasurer. We disagree, finding that Minnesota's provisions on corporate independent expenditures are similar in purpose and effect to the disclosure laws that the Supreme Court upheld in Citizens United.

To address Minnesota Citizen's arguments, we first turn to the Supreme Court's decision in Citizens United. In Citizens United, the Supreme Court considered the constitutionality of a federal law that prohibited "corporations and unions from using their general treasury funds to make independent expenditures for speech defined as an 'electioneering communication' or for speech expressly advocating the election or defeat of a candidate."*fn3 130 S. Ct. at 886 (quoting 2 U.S.C. ยง 441b). Related provisions of federal law, though, permitted corporations and unions to establish and administer "separate segregated fund[s] (known as . . . political action committee[s], or PAC[s]) for these purposes," but limited "moneys received by the segregated fund[s] . . . to donations from stockholders and employees of the corporation[s] or, in the case of unions, members of the union[s]." Id. at ...


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