In NAACP v. Alabama ex rel. Patterson, the Supreme Court recognized a First Amendment right to privacy of association and belief. Almost 60 years later, while California's Attorney General began requiring charities to provide their office with a federal form listing major donors. That document -- Schedule B to IRS Form 990 -- is provided directly to the IRS, and its privacy is guaranteed by federal law. The California Attorney General asserted that her office would also protect donors' privacy, and that the information was necessary to pursue law enforcement duties. The American for Prosperity Foundation and others assert the evidence at trial indicated that donor information was publicly available, and that California authorities seldom used it for the reasons stated. The Supreme Court has been asked to review the Attorney General's policy, and has called for the views of the Solicitor General in what could prove a seminal case concerning associational privacy.
Mr. Robert Alt, President & CEO, The Buckeye Institute
Mr. Allen Dickerson, Legal Director, Institute for Free Speech
Mr. Paul S. Ryan, Vice President, Policy & Litigation, Common Cause
Mr. Derek Shaffer, Partner, Quinn Emanuel Urquhart & Sullivan, LLP
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Greg Walsh: Welcome to The Federalist Society's Teleforum conference call. This afternoon's topic is titled "Litigation Update: Associational Privacy at the Supreme Court." My name is Greg Walsh, and I am Assistant Director of Practice Groups at The Federalist Society.
As always, please note that all expressions of opinion are those of the experts on today's call.
Today, we are fortunate to have with us Mr. Robert Alt, the President and CEO of The Buckeye Institute; Mr. Allen Dickerson, the Legal Director at the Institute for Free Speech; Mr. Paul S. Ryan, the Vice President for Policy & Litigation at Common Cause; and Mr. Derek Shaffer, a partner at Quinn Emanuel Urquhart & Sullivan.
After our speakers give their opening remarks, we will go to audience Q&A. Thank you all for sharing with us today. Allen, the floor is yours.
Allen Dickerson: Thank you, Greg. And thank you to everyone who's called in this afternoon to join our discussion. We're here to talk about a particular case pending before the Supreme Court, Americans for Prosperity Foundation v. Becerra, which has the potential to reshape First Amendment law and clarify the extent to which Americans may privately contribute to charities and other groups they support.
But first, I'd like to give a bit of background and set the stage for our discussion. This case touches on long-standing American traditions. Anonymous speech and private association have a long history in the United States, including, most famously, the Federalist Papers, which were written by three prominent political figures but published anonymously.
This was common enough during the revolution, and political debates in both 18th century Britain and the early American Republic were very often anonymous. Anonymous charitable giving is older still. Sources as varied as the Gospel of Mark, the Koran, and the writings of Maimonides, Augustine, and Luther all commend the practice.
But states have long had the authority to regulate charities, which enjoy significant legal advantages, not least the ability to receive tax-deductible contributions. And nonprofit organizations, and their donors, are a significant portion of the economy.
In 2018, Americans donated more than $400 billion to such groups. That's the largest amount in the world and, perhaps, evidence that the robust civil society Tocqueville marveled at has had some staying power.
So there's some tension between the government's legitimate need to police a $100 billion sector for fraud and abuse, on one hand, and on the other, the legitimate and long-founded expectation that Americans have a fundamental right to gather together for what they see as the public good, fund their joint activities, and do so free of governmental surveillance.
Like so many fundamental liberties, this one came into renewed focus during the civil rights era. Southern segregationist governments, under pressure from effective civil society groups like the NAACP, sought to use their authority to unmask and intimidate those organizations, members, and funders. And after one of the most fascinating and storied legal struggles in the history of the Republic, the question arrived before the Supreme Court.
There, in a series of cases, most famously NAACP v. Alabama, the Court held that the First Amendment protects the right of Americans "to pursue their lawful private interests privately and to associate freely with others in so doing." And it enforced that right in a variety of contexts, preventing states from demanding to know one's associations when testifying before the legislature, applying for public employment, or receiving a license to do business in the state.
The law, since then, has been something of a muddle. We know that states may demand the public disclosure of contributors to candidates and political parties and those funding certain kinds of election advocacy, although the contours of that rule are contested. We know that petition circulators cannot be required to wear nametags, and we have a few other data points, but we don't know the answer to the larger question. Precisely, when may governments demand to know the members of and donors to a nonprofit, nonpolitical organization? And what burdens must governments meet before doing so?
Which brings us to this case and a novel policy by California's Attorney General. As in most states, charities must register with the state government before soliciting funds in California. And for many years, nonprofit organizations had done so, including a copy of their annual IRS filing together with their California application. But they would exclude one thing: the list of major donors provided to the IRS in confidence and protected from public disclosure by federal law.
Beginning in 2010, however, California's Attorney General began demanding an unredacted copy of that donor list, which is called Schedule B. Demand letters were issued, and in response, my organization sued. In its preliminary injunction papers, the State claimed that it would maintain Schedule B in confidence, and had always done so, and it asserted a need for donor information for law enforcement purposes, including determining whether a charity had violated self-dealing laws or engaged in improper financial activity. But it never explained precisely how donor information helped with those goals, and it did not offer any evidence that it ever actually used donor information for that purpose.
The district court declined to issue a preliminary injunction, and the Ninth Circuit affirmed. The Ninth Circuit held that, in a facial context, the mere disclosure of donor names to the government was not a First Amendment injury, and that, consequently, the government's assertion of an interest that was not wholly irrational was sufficient under the First Amendment.
But while declining to facially enjoin the attorney general's policy or to demand proof that donor information was, in fact, important to that office's law enforcement work, it left the door slightly ajar. Facial claims were foreclosed, but organizations subject to particularized evidence of threats, harassment, or reprisals were invited to bring as-applied claims asking for individual dispensation from the attorney general's policy. And the Americans for Prosperity Foundation and the Thomas More Law Center accepted that invitation, which brings us to today's main event.
Here to discuss the important questions raised in this case are three outstanding experts. First, we have Derek Shaffer. Derek's a Partner at Quinn Emanuel Urquhart & Sullivan and co-chair of its government and regulatory litigation practice. He has deep litigation experience in private practice and as a former Executive Director of the Stanford Constitutional Law Center. But most importantly for our purposes, he has been counsel to the Americans for Prosperity Foundation in this case since its inception, through trial and appeal, and is now counsel of record on its petition before the Supreme Court.
Next, Robert Alt is President and CEO of The Buckeye Center and a noted commentator on constitutional law, both in Ohio and nationally. He was previously a Director in the Heritage Foundation Center for Legal and Judicial Studies, and of importance here, he has significant experience with the various practical ways in which governmental regulation impacts nonprofit fundraising and governance, and his organization filed a prominent amicus brief in this case discussing those issues.
Finally, we're joined by Paul Seamus Ryan, Vice President of Policy & Litigation at Common Cause and previously Deputy Executive Director of the Campaign Legal Center. Paul is one of the leading voices in the political reform movement and has more than 20 years' experience as a litigator and policy expert in the areas of political regulation and election law.
Derek, I wonder if you could start us off by taking a few minutes to tell us about your case.
Derek Shaffer: Sure thing. Well, Allen, thank you for the kind introduction. Thank you, Greg, and The Federalist Society for hosting us today. And thanks to all of you for joining.
Let me just emphasize what you rightly say at the outset, which is, expert though I may be, I'm not disinterested when it comes to this case. I have a dog in the fight. I have a client in the fight. And so I do bring that perspective and that experience to my reflections on the case. But I do sincerely think it has broader First Amendment import for the reasons you alluded to, and I think that our experience in the case may be helpful to everyone's understanding of it.
So let me just emphasize at the outset that this is a litigation that we started after you all had brought your initial challenge on. But we brought our challenge in December of 2014, so we've got some years of litigation under our belts at this point. And from my perspective, I want to emphasize it is not a campaign finance case. I think everyone agrees with that. Our client is a 501(c)(3) that does not engage in political activities, and California disavowed the traditional campaign-related interest and elections-related interest in public disclosure of donor identities.
And I also think it's a classic First Amendment case. I'm lucky enough to handle a number of different types of First Amendment cases, but this is, in my view, a nonpartisan one that really -- the considerations at stake extend all across the political spectrum, and I think that that's reflected in the amicus report that we'll be talking about.
And I also want to emphasize that I think it really does go, as you rightly frame it, to the heart of freedom of association and the privacy of association, which the Supreme Court, and all other courts, have agreed are constitutionally protected interests, and the First Amendment tells us are constitutionally protected interests. So there is clearly a freedom of association that all Americans have, and it has been rightly held that governmental intrusion, unjustified governmental intrusion, on that private association is a First Amendment concern. And unless properly justified by the government, it's a First Amendment violation.
And that, as you also note, has been with us in the seminal cases from NAACP v. Alabama on forward. And there are number of different cases and a number of different factual settings on which the Supreme Court has repeated that basic proposition and enforced that basic proposition. And it is absolutely the case.
We've been clear about this since we first brought the challenge, and it's true in everything we've done in petitioning for cert, that we recognize that our era is happily a different era from what was being experienced in parts of the United States and throughout the United States at the time of NAACP v. Alabama. The harms that we're identifying and that our charity and its donors are very concerned about, it's not fire bombings, it's not lynching, it is not widespread perpetration of violence upon members, but that's the good news.
There's also bad news in terms of our backdrop. We live in an era where the internet will preserve information for all time and broadcast it throughout the known human universe. We live in a time of increased political polarization where people are willing to mobilize against their perceived enemies and adversaries and to do that using all means at their disposal, legal and illegal.
And when we first moved for and obtained a preliminary injunction, we were able to emphasize that from the perspective of our client organization and its donors, there is an empirical reality that this charity, which is closely associated with Charles and David Koch and has been something of a lightning rod in terms of how it's been perceived and treated in the media and in public discourse, it has experienced horrific threats of violence, perpetration of violence, efforts to unearth and go after any person who can be associated with it.
And on the strength of that showing, and especially because California was not able to identify any way that it had ever requested or required the Schedule B information in the past, or any particular use it would make, we obtained a preliminary injunction protecting the First Amendment interest at stake. That was quickly appealed by California up to the Ninth Circuit, and a panel of the Ninth Circuit reversed, in part, the entry of the preliminary injunction.
Basically, the Ninth Circuit said that California couldn't protect the Schedule B information. But California at that time had no confident -- it didn't even purport to have a regulation on the book that would protect what everyone agrees is confidential, sensitive donor information.
So recognizing as much, the Ninth Circuit said that California would be forbidden from publicly disclosing the Schedule B information. But during the relatively short interval from when the Ninth Circuit panel handed down its decision and when we were scheduled to have our bench trial in front of Judge Reel, the late Judge Reel, in the Central District of California, we were able to protect the Schedule B information. It was never turned over to California.
And we went through what was, basically, a multi-day and multi-week bench trial that involved the presentation of live testimony and extensive documentary evidence by both sides. You don't have to take my word for it. I think the district court's findings reflected that there was overwhelming, multi-faceted evidence of chill that the Americans for Prosperity Foundation and its donors had experienced. And you can see the district court's account of that and its opinion granting a permanent injunction. You can see it, frankly, in the panel's decision that then came out.
But the witnesses who were testifying for us were the CEO, the CFO, the state director of fundraising, a prominent donor who offered a cautionary tale about what his experience had been having been publicly associated with Americans for Prosperity Foundation, the general counsel of Koch Industries who testified about the death threats that were directed against them, along with other members of their network, including the Foundation. And we had experts who testified about the larger phenomena that were reflected in our record and really confirmed that there was a very reasonable, well-founded threat of harassment and retaliation for any donors who might be on a Schedule B and might be at risk of disclosure. So that was our side of the case.
On the State's side of it, they had to put up their witnesses, who supposedly would make use of the Schedule B information, this blanket dragnet collection of all Schedule B information from all registered challenges. And those witnesses, if you look through their testimony, they certainly mouth the words of the State having interest in this information. But when you got through specifics of whether and how they would actually use it, that's where they fell down.
And there were sworn concessions to the effect that there were only five instances that their lead auditor, who was the State's designee on this point, could identify in 10 years where a Schedule B had ever been used for investigative purposes. He couldn't even say whether the Schedule B was on hand the outset of an investigation.
It came out that California never looks at this information in a proactive way. California will only start investigating a charity when it sees an external complaint. Whenever it receives an external complaint, it always sends an audit letter that asks the charity for all of its most complete and up-to-date documentation that would include a Schedule B. And really, it was never apparent to any of the witnesses whether, when those sorts of instances arose, they had the Schedule B on hand in their files, which had never been reviewed before, or whether they obtained it in response to an audit letter. So I think there was an extensive showing that there really wasn't a serious justification that the State could offer for its demands.
And it also came out that California, through your litigation and our litigation, had been repeatedly submitting to courts that there was no known instance where a Schedule B had ever leaked, or any other confidential information had leaked. That, in fact, was not true. Not only had Schedule Bs been leaking, and we identified, ultimately, 1,800-plus instances where they actually had been affirmatively posted on the website.
And not only was every confidential document that was supposedly confidential available through the website, if you just moved through URL addresses and went from one document to the next in train, you could hit on all this information. That was true during the course of our litigation.
But it was also turned up through testimony and through discovery that the AG's office had learned specifically of instances where, for instance, Planned Parenthood's Schedule B had been publicly posted, and a couple of dozen others had gotten out. But there was no reporting of that. There was no acknowledgement of it. There was, essentially, a cover up that continued right up until we got to the trial. And the statements that were mistaken and inaccurate at the time that had been submitted to the Ninth Circuit and the district court have never, to this day, been corrected by California itself.
So following that trial, the district court offered specific, well-substantiated factual findings as to why there was a very real and demonstrated risk of chill to the charity and its donors. And on the other side of the scale, there was really no serious showing by the State that it needed this information, or that it had narrowly tailored its demands for the information consistent with the First Amendment interest at stake.
Last and not least, the lack of meaningful confidentiality protections left reasonable donors to our charity concerned, rightly, that their donor identities would be at risk and compromised once turned over to California.
So that, all together, made for a successful as-applied challenge, according to the district court, which granted a permanent injunction. We then went back up to the Ninth Circuit, and they decided the appeal in September of 2018. That bench trial was decided March 2016. The Ninth Circuit appeal was pending, then, for more than two years.
But at the end of it, the Ninth Circuit not only reversed the district court but essentially remanded for entry of judgment in favor of the attorney general. And in the course of that opinion, the Ninth Circuit basically disavowed, in this non-election context, any requirement of narrow tailoring, at least for our case.
And as, Allen, you noted, the law here is not the model of clarity. But one thing that we thought had been clear is that there really was exacting constitutional scrutiny that would be applied in a case like ours, and that narrow tailoring would be part and of it. But the Ninth Circuit really abandoned any such requirement and said the district court was wrong to insist upon it. It took, I think, a very begrudging approach, shall we say, to the evidence of chill and the factual findings that the district court had made on that point and others.
And one other point that comes through from the Ninth Circuit panel's decision is, even if they were reversing, they were themselves saying that they shared a serious concern about the confidentiality breaches that had been revealed at trial. But they felt they would take California at its word, essentially, and that those would be corrected going forward, and, if anything, California should be working cooperatively to further address those, if there were any persisting concerns.
So we petitioned for rehearing en banc following the panel's decision, and there was a strong dissent lead by Judge Ikuta with five judges on the Ninth Circuit joining that dissent on the denial of rehearing en banc. I commend to anyone who's interested in the case the competing opinions between those dissenters and the Ninth Circuit panel. But the dissent really emphasized the strong evidence of, among other things, the confidentiality breaches, the lack of a serious state justification for the Schedule B information, and the very strong evidence of chill that's found in our record.
And they also, in addition to noting and faulting the panel's disavowal of narrow tailoring and saying that was a critical mistake on the panel's part that they would've reheard the case in order to address, they noted what they called egregious appellate fact finding by the Ninth Circuit panel, which had really gone quite far to not only second guess the district court's fact finding, but basically to find that certain factual findings were clearly erroneous when, in fact, it's really difficult to understand how the district court could've found anything different, given the proof that it had at trial, including concessions by the attorney general's witnesses.
So we petitioned for cert. The petition is pending. We filed our cert petition in August of 2019. The court, this past February, invited the solicitor general to respond, and now everyone's awaiting the solicitor general's response. We, in the petition, emphasized that, I think, that there are serious spillover effects that come from enfeebling First Amendment scrutiny in this context generally and specifically dispensing with the requirement of narrowed tailoring, which is so important, in our view, to make sure that First Amendment freedoms are not unduly abridged.
And we're also very gratified by what's been a continued outpouring amicus support. And I'll leave it to Robert to talk more about that. But we're not the only ones who see this is an important First Amendment case. There are 14 states that have joined in supporting our cert petition. The NAACP Legal Defense Fund supported us on the merits before the Ninth Circuit panel. The Center for American-Islamic Relations is with us as an amicus currently urging a grant of cert.
So I do think that others recognize that this case carries important implications, really, across the political and ideological spectrum. And with that, I'll turn it over to Robert.
Robert Alt: Well, thank you so much. As Allen mentioned in his kind introduction, I'm the CEO at The Buckeye Institute, a nonprofit organization that, among other things, critiques bad policy and seeks to improve policies promoted by state and federal officials.
Well, this makes my organization a friend of those who like good policy. It doesn't always endear me with policymakers. Indeed, it creates the very real possibility and, at times, the reality, of retaliation. And I'll offer a bit more on that later. But as such, I can tell you from actual experience that policies such as California's that require the disclosure of private associational information have a demonstrable chilling effect on speech and association.
First, looking at California in particular, it is worth noting that California has a shameful record of failing to safeguard taxpayers' Schedule B information about protected association. As Judge Ikuta detailed in her dissent from the denial of en banc review, California posted over 1,400 Schedule Bs online in the fall, and 350,000 Schedule Bs—again, these are the schedules that contain the donor information—were easily accessible online due to severe vulnerabilities in how they warehouse the records.
Even after safeguards were allegedly put in place, in anticipation of trial, an expert was able to obtain 40 additional Schedule Bs online that were supposed to be secure. While the Ninth Circuit put great stock in the safeguards that California subsequently put in place, they are still woefully inadequate.
Unlike federal law, California law imposes no civil or criminal sanctions for disclosing this confidential information. And yet, even with these federal prohibitions in place, the criminal sanctions, this is not sufficient to protect against public disclosure in all cases, as a few notorious examples have illustrated.
Accordingly, prohibitions such as California's without adequate means of enforcement is hardly enough to offset the dramatic chilling effect of California's disclosure law. And of course, none of this takes into account efforts that might be made by hackers to obtain this warehoused information, as has occurred far too frequently. We've all read about the massive disclosure of information that was warehoused at OMB, for instance. The simple fact of warehousing this information is something that carries with it attendant risk.
But all of this, I'd say, is something of a side show to the major issue. Even if governmental entities could assure with perfect certainty that the information would not be released to third parties, this would not cure the First Amendment harm, and so promises of future improvement in data management are inadequate.
Buckeye's own experience demonstrates that there is a chilling effect that comes from the act of reporting donors to the government itself. In 2013, shortly after the Ohio General Assembly relied upon The Buckeye Institute's policy arguments in rejecting, at least for a time, Medicaid expansion, The Buckeye Institute learned that it would be audited by the Cincinnati Office of the IRS.
The audit notification came on the heels of widespread reporting and congressional investigations of wrongdoing by the same Cincinnati Field Office for the IRS, which an IRS inspector general's audit found singled out groups for special scrutiny that, among other things, exercised their First Amendment rights by criticizing the government.
Against that notorious backdrop, Buckeye's donors feared that this audit was politically motivated retaliation against Buckeye for opposition to a White House priority. These donors personally expressed concern to me that if their names appeared on Buckeye's Schedule B or other Buckeye records subject to disclosure in the audit, they too would be subjected to retaliatory audits. And indeed, those sorts of fears ended up coming to fruition in the course of IRS investigations of retaliatory audits that occurred with regard to donors to other organizations.
Numerous individuals, therefore, opted to make smaller, anonymous cash donations, foregoing a donation receipt entirely, in order to avoid any potential retribution based upon their contributions to The Buckeye Institute. To be clear, the concern here on the part of these donors was not potential disclosure of their information to third parties but rather how governmental entities would use, or misuse, the information themselves.
This concern about disclosure to a government agency, which could be used in facilitating government retaliation for protected activity, had a demonstrable chilling effect on the freedom to associate. The chilling effect arises in substantial measure from the legitimate concerns many Americans have about the politicization of governmental action following the revelation of actions by the Cincinnati IRS field office that targeted groups based upon their protected speech.
But these concerns exist just as much, if not more, in the state context as in the federal context. Think tanks like the AFP Foundation and The Buckeye Institute routinely take positions opposing either direct action by a state's attorney general or state laws the attorney general's office is bound to uphold and defend.
It is logical then for donors to think tanks or public policy organizations to reasonably fear reprisal from state officials, including state attorneys general, for actions taken in opposition to those officials' policies. The chilling effect of requiring these same think tanks to disclose their donors is readily apparent. What then justifies the chilling of speech and association created by these policies?
California argues it needs the information to regulate charities operating in its state. But that claim doesn't hold up even to the lightest of scrutiny. In a recent rulemaking, the IRS conceded that it "does not need the names and addresses of substantial contributors to 501(c)(4) entities in order to carry out the internal revenue laws."
And for the state, the lack of necessity is indicated by practice. Forty-seven states in the District of Columbia are able to successfully regulate charitable entities without warehousing private information about how Americans have chosen to exercise their associational rights. The outliers, New York, California, and New Jersey, were all able to effectively regulate charitable organizations operating in their states—thank you very much—without storing, too often insecurely at that, information about the charitable giving habits of Americans until a few short years ago.
Indeed, even in their brief to the Supreme Court in this case, among the scant evidence that California relies upon to justify the policy is the assertion that warehousing donor information is useful in policing overvaluation of non-cash contributions which might be used to inflate executive compensation.
But the primary evidence that regulators would need to perform that regulatory function is not the non-private schedule of donors, but the public schedule of non-cash contributions, a public schedule to which they have access to in the absence of the Schedule B disclosure. What we are left with is an argument of administrative convenience. And that simply is not sufficient to justify the genuine chilling effect created by California's policy.
We began the call with a conversation about the NAACP case. It is a powerful case and shows the extraordinary threats to freedom of association that can occur and paints a vivid picture of the danger of taking non-public information and making it a public record. But the NAACP case leads some to the illogical conclusion that to receive First Amendment protection, a group must first show intimidation to the level of mortal peril. This simply should not be the standard.
The First Amendment is offended by governmental action which chills speech and association. At least, that is the standard we use everywhere else in First Amendment law. We need not punctuate that standard by adding with "under threat of death," as tragic and real as that threat was in the NAACP case.
For starters, it is very speculative to meet this heightened intimidation standard, at least until it is too late. For example, in the wake of violence against abortion clinics, an abortion-related nonprofit could be concerned that its donors could become targets of violence. But such claims would likely be too speculative to justify limitations on disclosure under an aggressive intimidation standard, again, until it was too late. We shouldn't require tragedy, or imminent tragedy, to protect association. In addition to the basic humanity of the issue, it doesn't take that level of intimidation to chill association. Again, my own case with regard to the IRS audits speaks to that fact.
In the end, much of what outlier states like California and New York have argued amounts to a claim that government warehousing of private taxpayer information, which is not necessary to execute internal revenue laws, is nonetheless useful to potential future enforcement actions. Undoubtedly, that is true. The Constitution is frequently an impediment to prosecutorial and regulatory efficiency, but protections against chilling speech and providing due process must nonetheless be honored.
Thank you very much.
Paul S. Ryan: This is Paul Seamus Ryan. Thank you for the opportunity to participate in the discussion.
I see a couple of important and interesting legal issues in this case, which Derek and Robert and Allen have touched on. For example, is there a different legal standard applicable in First Amendment challenges to disclosure laws inside and outside of the political or electoral context? More specifically, does the legal standard applicable in this case require a narrow tailoring of the disclosure requirement to the stated governmental interest? And how does the threats, harassments, or reprisals exemption from disclosure laws that other have mentioned stemming from the NAACP case apply to the facts of this case?
In short, I agree with the Ninth Circuit panel's reasoning and holding in this case, so I'm providing a different perspective than Allen, Derek, and Robert. California's filing requirement obligates charities to submit to the state information that they already file with the IRS. The requirement survives exacting scrutiny, according to the Ninth Circuit panel, as applied to the plaintiffs or petitioners in this case because even assuming arguendo that the plaintiffs' contributors would face substantial harassment if the information became public—in other words, meet the NAACP test, which I'll circle back to in a few minutes—the disclosure requirement the court found is substantially related to an important state interest in policing charitable fraud.
And the strength of the state interest in collecting the information reflects the actual burden on First Amendment rights of these litigants because the information is collected solely for non-public use. And the court found that the risk of inadvertent public disclosure is slight because the court found the state has, in short, cleaned up its act in recent years and now does effectively safeguard these disclosure forms.
The Ninth Circuit panel found that exacting scrutiny is not a least-restrictive means test. And the court expressly rejected the proposition that the Schedule B disclosure requirement is insufficiently tailored because the state could achieve its enforcement goals through the use of its subpoena power or audit letters, law enforcement methods that would be both less efficient and less effective.
The Ninth Circuit panel wrote, "Even if the Attorney General can achieve his goals through other means, nothing in the substantial relation test requires him to forego the most efficient and effective means of doing so, at least not absent a showing of a significant burden on First Amendment rights." And this Ninth Circuit panel decision in this case is consistent with the recent Second Circuit decision upholding New York's Schedule B disclosure requirement.
But I want to circle back now to the NAACP test and the potential for harassment. I am an NAACP member, and I am very sensitive to the possibility that supporters of an organization might face threats, harassment, or reprisals as a result of the government disclosure requirement. Indeed, throughout my 20-year career as a government watchdog, I've received death threats from the left and from the right. Within the last year alone, I've received death threats from both Bernie Sanders and Donald Trump supporters with respect to complaints I filed with the Federal Election Commission and the Department of Justice alleging violations of campaign finance law.
My employer, Common Cause, solicits funds in California and is subject to the Schedule B disclosure requirement, Schedule B filing requirement with the State of California. In this case, the Ninth Circuit acknowledged that both plaintiffs had shown at least some evidence that some individuals publicly associated with the groups have been subjected to threats, harassments, or economic reprisals from other members of the public.
I don't believe there was evidence in the case, at least there's none mentioned by the Ninth Circuit panel, that these groups produced evidence that they would be subject or had been subject to threats, harassments, or reprisals from government entities. But the court concluded correctly, in my opinion, that there is not a reasonable probability that the donor information filed with California's Attorney General would become public. And therefore, the court decided there was no reasonable probability that disclosure to the state would itself lead to threats, harassments, or reprisals against any of the plaintiff's donors.
In a way, the facts of this case enabled the Ninth Circuit to avoid the harder question. If groups' donors were disclosed to the public -- if these group's donors, these plaintiff's donors, were disclosed to the public, would they then meet the threats, harassments, or reprisals test?
So I could, and probably should, stop there. The court doesn't require, and the Ninth Circuit doesn't require, us to really address that question because of its conclusion that these disclosure forms would not be made public. But instead, I'm going to finish with some likely provocative thoughts, some of which you would find in the Campaign Legal Center's amicus brief filed with the Ninth Circuit back in 2016. And as Allen mentioned at the outset of this discussion, I worked at the Campaign Legal Center for 12 years. I left the Campaign Legal Center in 2016.
So first, the harassment exemption was designed to protect vulnerable and pervasively abused minority groups, groups like the NAACP in the 1950s in Alabama, groups like the Socialist Workers Party throughout the Cold War, another group that has availed itself of this exemption from federal campaign finance law. This harassment exemption was not designed or intended to protect politically powerful and wealthy donors.
Another point: public criticism is not harassment, and peaceful protests and boycotts are not threats. The Supreme Court majority told us in Citizens United, a landmark decision you've all undoubtedly heard of, as the court struck down a restriction on corporate political spending that disclosure of money in politics provides citizens with the information needed to hold corporations accountable for their positions in politics.
A broad legal document that treats criticism and boycotts and peaceful protests as threats, harassments, or reprisals sufficient to justify exemption from disclosure laws would render meaningless the Supreme Court's promise that Americans will have the information they need to hold corporations accountable, including 501(c)(3) corporations like the one I work for.
And I'll close by reminding us what Justice Scalia had to say about disclosure in his concurrence in the Doe v. Reed decision. Justice Scalia wrote, "There are laws against threats and intimidation, and harsh criticism, short of unlawful action, is a price our people have traditionally been willing to pay for self-governance. Requiring people to stand up in public for their political acts fosters civic courage without which democracy is doomed."
I'll end there and repeat, again, that I really appreciate the opportunity to participate in this teleconference. Thank you.
Allen Dickerson: Thank you so much, Paul. This is Allen again. I'm going to take the moderator's privilege of throwing out a first question, and it delves really into a lot of what Paul was just talking about. And that is I've read these opinions a number of times now and I'm not sure that the Ninth Circuit ever squarely addresses the issue that Paul raises, which is does it matter for a First Amendment analysis whether the expected threat or harassment or reprisal comes from the government itself or whether the compelled disclosure of information leads to retaliation or other harms directed by private parties?
I think it's an important question because it really gets at the heart of how we think about the right. Are we talking here about what's essentially a prophylactic rule against violence and retaliation, in which case, it's probably appropriate to be engaging in these sort of very fact-intensive risk analyses, or are we talking instead about something that's fundamental and where, even if inconvenient, we're dealing with a right against government surveillance even if it's benign or effectively kept private? I wonder if any of you have any thoughts on that.
Derek Shaffer: Well, let me take a stab at it, Allen. This is Derek. From our perspective, I think that the facial challenge should be there. It's inherent in the demand for this sort of very sensitive information and the exacting scrutiny that's supposed to attach to any such demand.
So we do think that when you're demanding information in this sort of a setting, probing into private charities' donor list -- and by the way, there's nothing in the decision that suggests that the rationale is limited to a Schedule B because, of course, to the extent that the Schedule B is limited in its contents, it's also limited in terms of its law enforcement utility. So as we read the opinion, the same reasoning would justify an across-the-board demand for all donation information because the state wants to have that available for investigative purposes.
And I think, when you're talking about that sort of a demand, I think that some measure of narrow tailoring is required. That is, the state can't be gratuitously overbroad and be doing things that essentially serve to maximize rather than minimize the chill. And we think we would win the case as long as we're right in that premise.
But I also want to emphasize that our record does reflect threats of governmental harassment directed against individual donors, once they are identified, and real demonstrated hostilities, specifically by California, against this organization and others like it. So I think it may be a distinction without a difference on a record like that.
But last, I would note that at least when there's a serious showing that the government is essentially compromising the information and allowing it to drift into the public realm, the fact that there is harassment and retaliation that results from that against a specific organization and those associated with it, I think, should certainly suffice to trigger exacting scrutiny and require a greater showing than what the Ninth Circuit required of California in our case.
Paul S. Ryan: This is Paul. I think it's an excellent question, Allen. And my mind immediately goes to what I'd consider to be a more threshold question of how do we even define threats, harassments, or reprisals—and I touched on this a little bit in my prepared remarks—regardless of whether it's coming from members of the public or from the government?
And my concern is that if we define what constitutes threats, harassments, or reprisals very broadly, then the exception to the rule of disclosure, to the extent or in the context where there is a rule requiring disclosure, the exception then swallows the rule because I'm having a hard time imagining a group that is engaged in politics, whether that be electoral politics or in the case of Common Cause's nonpartisan, non-electoral politics, a group that doesn't sometimes criticize the government, or at least many do, and could be subject or vulnerable to threats or harassment or reprisal if it's defined very, very, very broadly under the law.
Derek Shaffer: Let me see if I can take a stab at persuading Paul here and just put it to you this way, Paul. I understand your concern, but I think this may be the wrong case to express it in because it is a shared premise, even by the State of California, that this donor information should never be disclosed. The public has no right to know it.
And so I guess my friendly question to you is doesn't that categorically distinguish this case from the case where you might be concerned that the ability of the public to find out information that's relevant to its political calculus is somehow being obstructed?
Paul S. Ryan: A couple of thoughts. I readily acknowledge this is not a traditional political disclosure case. This is a law enforcement case. And I will simultaneously say that I view politics much more broadly than electoral politics or partisan politics. Though they aren't electoral organizations, the plaintiffs, your clients in this case, 501(c)(3) organizations can and regularly do engage in political activity, including lobbying and public educational policy issues. I've worked for 501(c)(3) charities for the past 20 years and I'm regularly told, mostly by conservative critics, of just how political my nonpartisan, non-electoral work is.
So I agree with you that this maybe isn't the best case to flesh this out because this is not a public disclosure case. This is a disclosure to government records maintained in confidence. But at the same time, we have counterarguments to that. One of the key arguments that Robert has made this afternoon is we can't trust that these documents will be kept in private. This is, therefore, a public disclosure case at its core. And it's that potential for public disclosure that chills donors, if I understood Robert's arguments or remarks correctly.
Robert Alt: Well, let me actually jump in there. I began with that, but you'll note I had the pivot where I said that that was, quite frankly, the side show to the chilling effect that is created by revealing this information to the government, in particular that many donors fear reprisal, particularly when you're dealing with organizations whose function is a watchdog or to critique policies that are made by governmental entities.
The fear, then, is that, to use Buckeye's example, Buckeye succeeds in preventing the implementation of a key priority of the administration. Six weeks later, it's subjected to the first full-feel audit in the last 30 years in central Ohio. Donors reasonably have the intuition that perhaps this is not merely a coincidence and that reprisals could extend beyond the four corners of the institution to supporters of the institution.
These are not unreasonable assumptions to be made. And so going to Allen's larger question about if there's a distinction or a difference between reprisals from governmental entities versus private entities through the disclosure to third parties, the one thing that I think we also emphasized in our brief that's worth noting, in situations where you have either inadvertent malicious or intentional disclosure to third parties of this confidential information, the harm here does seem to be more substantial in the internet era.
As we've seen in other contexts, the ability to coordinate and to catalogue information in very useful and very aggressive fashions, to combine it with, for instance, personal information such as home addresses, mapping information, and to use that information to coordinate intimidation efforts has been well catalogued from recent events. I think that creates even greater risk with regard to the potential for third-party intimidation, and I think that's a unique loss that we have to keep in mind in these cases as well.
Allen Dickerson: Well, thanks for that rich colloquy. Hopefully, we can now go to some questions from the listeners.
Greg Walsh: We will now go to the first question.
Eugene Kerman (sp): Hey, speakers. Eugene Kerman here. One of the ideas that I heard that protections were meant for certain groups but not certain powerful groups, but how can we assume that a group, say, in a majority liberal state that advocates a conservative view, how can we say that that group is powerful? Thank you.
Paul S. Ryan: This is Paul. I think that question is directed at me. I was the one who made those remarks. And I will rephrase it. I wouldn't say "powerful groups," but that the exception was, at its inception and in cases where it's been applied since, it has been applied to include groups that were vulnerable, typically discreet and vulnerable minorities, not powerful groups or individuals that are not vulnerable. But it really kind of hinges, I think, the application, on the vulnerability to these threats, harassments, or reprisals.
And I'll use as -- there's been a bunch of litigation that Allen and I have been in conversation with and about for more than a decade now. There's been case law out of California, for example, having to do with the same-sex marriage ban constitutional amendment. And there, the court rejected the application of this NAACP-type exemption to proponents of the same-sex marriage ban, saying that these folks were not a discreet and vulnerable minority. They constituted roughly half of the population, and for better or worse, regardless of what one thinks of the political issue itself.
And the court went on to conclude that the types of harassment that were asserted by the group in that litigation were, what the court determined, were sort of garden-variety politicking, yard signs being destroyed, crank calls, things of that sort. So I think it has to do with the vulnerability more so than trying to get some assertation of power, levels of power.
Robert Alt: This is Robert jumping in. I guess one problem that I would think would arise, naturally, from that standard is again the question as to whether or not the intimidation arises from third parties or from the government itself.
If we're dealing with a question of, for instance, bad actions by the IRS or by state attorneys generals’ offices or the like, I suppose the question becomes, in that context, who isn't a vulnerable party? Even the Koch brothers themselves, if juxtaposed against the federal government or the Attorney General of the State of California, could be characterized as a vulnerable entity insofar as the resources available at the disposal of governmental entities are significant even against those significant actors. Against ordinary donors, even ordinary donors who might be subjected to a Schedule B, these individuals would seem vulnerable against that kind of opposition being put to them.
So the prospect of potential audits, the prospect of the use or misuse of this information, I think, would justify pause about a vulnerability analysis as it would be difficult, I think, to find anyone who wouldn't be vulnerable under those circumstances.
Derek Shaffer: And this is Derek. Just to quickly chime in, I think it's an astute question. And I would emphasize the Schedule B information is nationwide information, and to the extent that it is obtained by California and it leaks out from California, depending upon time and place, the donor who's on the right side of issues from the many perspectives in one part of the country at one point in time may find themselves in a very different predicament depending upon the time and the place.
And I think especially in the internet era, the group that may look powerful may be extremely vulnerable from the perspective of the individual donor and that person's specific circumstances. And of course, that makes all the difference in the world when donors think about are they going to contribute.
Greg Walsh: Thank you. Let's go to the next question.
Caller 2: Hello. I actually had the same question about who was a vulnerable organization and that's been discussed, so I'll ask a more basic question. It's a little unusual of the court to ask for the SG's views in a case that doesn't involve a technical issue. The court is very familiar with this. Of course, it does implicate tax returns, but I wonder if the panelists have any thoughts on what they expect the government -- what the court expects and what they expect the government to do?
Allen Dickerson: Well, I don't want to put Derek in an uncomfortable position with a pending petition, so would someone else like to take that one? Derek, obviously, you're free to speak up. I'm a First Amendment litigator. But if you'd like, one of us can jump in for you.
Derek Shaffer: Appreciate that. I'll leave it to others.
Robert Alt: I'll go ahead. This is Robert. I'll go ahead and jump in to save him since he has client interests in this particular case.
No, I think first and foremost, given the fact that this involves an IRS schedule, it's not terribly surprising in that sense that the court should ask for the interpretation of the solicitor general.
In this sense, I think you're going to see the solicitor general sort of take a look at the realities on the ground in terms of is, in fact, this information requisite for charitable enforcement? And there, the IRS has already spoken to some measure on this with regard to 501(c)(4) organizations, expressly stating that it's not necessary, even for the federal government, to actually execute the revenue laws.
And I anticipate that they'll also take a look at the facts on the ground in the states and see that this is an extraordinary minority position that's taken by California, New York, and New Jersey, that it's not a position that they have taken for most of the time in which they've been enforcing these laws that they proffer justifications.
As I mentioned, a lot of their justifications turn on the questions which are revealed by other public sections of the 990. They're able to actually complete these oversight functions looking at Schedule Ms, for instance, which cover non-cash contributions, and to go ahead and seek the specific information that they need on a case-by-case basis rather than on a prophylactic warehousing basis.
So I just think that the evidentiary record with regard to actual enforcement practices, both at the federal and state level, mitigate so heavily against California's policy on this point that you'll see much of that come to play in the SG's brief. But obviously, we'll see when it actually is issued.
Greg Walsh: Perfect. Let's go to the next question. Caller from 858, you're on the line.
Caller 3: Thank you. I'm wondering about the open records aspect of this. When the attorney general tried to bolster its litigation position out here in California by putting forward regulations to assert confidentiality under the charitable section regulations, it had difficulty pointing to statutory authority for that confidentiality.
So there remains the risk that there could be a request under the California Public Records Act, the California FOIA, and if records are just on hand and not part of a current investigation, perhaps they could be disclosed by a judge making a sympathetic ruling under the California Public Records Act.
Derek Shaffer: Well, this is Derek. Let me just share the premise behind the question and note the following. At the time that Allen's challenge was brought and the preliminary injunction was denied and the Ninth Circuit panel affirmed the denial of the preliminary injunction, the Ninth Circuit basically dismissed the concern that Schedule Bs, once obtained by California, would, in fact, be subject to public records requests and would not be treated confidential under any known California law. And essentially, the panel just adopted the representations by the California Attorney General, the assurances that Schedule Bs would be treated as confidential under a supposedly longstanding policy that was nowhere memorialized.
And that was, even by the Ninth Circuit's subsequent account, a mistake. Our panel that reversed, in part, the entry of a preliminary injunction in our case recognized that at that time there was no -- there was not even a regulation that purportedly memorialized any confidential treatment of Schedule Bs or any other document that might be filed with the California Attorney General.
At the time that our trial record concluded in the Americans for Prosperity Foundation case --there's another parallel challenge brought by the Thomas More Law Center that went to trial shortly thereafter. But at the time that our record closed, there was no California regulation that had been adopted. And California acknowledged that the confidentiality regulation that they had proposed would not change California's policy governing confidentiality. It would just memorialize the supposed policy.
And we obtained sworn testimony from Tania Ibanez, the head of the California Registry for Charitable Trusts, the attorney general's representative who presides over the registrar, that she would treat public records requests as an exception to the supposed confidentiality. Requests by academics for this information, and any number of other requests, would all qualify for disclosure.
And the last point I'll make is we commented specifically in the proposed regulation to note that, as proposed and as ultimately adopted, it was toothless. There are no remedies for confidentiality breaches. Ms. Ibanez also testified that an inadvertent leak of a Schedule B is not considered a breach under the policy. There is no reporting mechanism for affected charities and donors to know if a Schedule B has leaked. There's none of the assurances that are real assurances, that have force of law, and that you see, for instance, if you check at the federal level, with what governs the IRS and its treatment of Schedule Bs.
So I think that there are a number of persisting concerns, and as I noted, even the panel decision that reversed the district court in our case as to the permanent injunction, it said it had serious confidentiality concerns about what had come to light, but it was nonetheless crediting the latest from the California Attorney General. And I wish we could be saying we've been reassured as the Ninth Circuit panel is, but we're not.
Greg Walsh: Let's now go to our next caller.
Caller 4: Yes, thank you for this presentation. It's very interesting. I was just wondering if anyone would comment on, perhaps, another angle on this discussion in the U.S. v. Carpenter decision, the recent CSLI cell site location information case.
And that is in the Gorsuch dissent, there is a discussion of the Fifth Amendment privilege against compelled production of papers, including of organizations, that is discussed in Gorsuch's dissent and his citation to Dr. Pernell's case which is a common-law case from the 1740s. Obviously, well, Justice Gorsuch discussed whether that would apply, potentially, to cell site records, but these are also, I think, issues about associational chilling. And I'm just wondering if you have any comments on that?
Derek Shaffer: This is Derek. I'll try to take it and just say I think it's a good observation. I do think that there are related cases in which the court has expressed related concerns, but I would just note that I think a number of justices in different ways, in different cases, have expressed shared concern about the risk that associations and their donors face. And I do think that there are a number of jurisprudential currents that we think help, should help, our prospects.
Greg Walsh: To what degree is the future of these kinds of cases dependent on the issue of government transparency versus public disclosure from watchdog groups?
Derek Shaffer: This is Derek again. I would just say, I think to the extent that the bottom-line concern here is that donors want to maintain privacy in their association and they feel otherwise at risk, and they will be chilled from maintaining their level of support, I think both of those things are of concern. I think that California's effort to pursue transparency at the expense of maintaining the integrity of their confidentiality assurances that did result in what Robert alluded to.
There was an extended period of time during which every confidential document, every supposedly confidential document, that California had obtained was available through its website, and for a portion of that time, California knew that there was this gaping vulnerability, and the person responsible for the registry nonetheless decided that she wanted to maintain the website and disclosure. And so they were going to keep all this information available, improperly, for more than a week while the vulnerability existed.
And so I think, to the extent that California offers the assurances that it does, those assurances could be hollow the moment that a California official or a line employee just decides that they want to leak a Schedule B. And I think that the push towards government transparency, unless it's very carefully controlled, is one that exacerbates the First Amendment concerns in our case.
And when it comes to watchdog groups—and I totally support the work of Paul and others in that regard—I think that they confessedly want this information. And if there is a vulnerability or if there is a leak, they're out to exploit it. And if something is posted on the website by one particular state or one rogue employee, it is going to be preserved and exploited for all time, and that's part of what we offered in terms of our evidentiary record, that there have been instances where Schedule Bs have gotten out improperly and individual donors and perceived donors have suffered the consequences for that.
So I think the fact that we have these phenomena at work means it's not really a speculative or trivial concern when you have a group like Americans for Prosperity Foundation and you have its donors expressing their reasonable concerns about the risk that they're going to be outed due to this sort of dragnet collection.
Robert Alt: This is Robert. I just wanted to jump in. I think there was an interesting feature or element of the conversation that was brought up by this question. What ends up driving or perhaps being more important, government transparency or watchdog groups?
One thing that was missing there from the term "watchdog groups" is the adjective that you generally use, which is to say "government watchdog groups." And one of the problems, I think, that you see in this case -- I think it's true that watchdog groups, many of them would want access to this information, but one of the keys here is that it's not necessarily appropriate or within their function for them to have it.
This is confidential information about associations between private entities, not with regard to the government. And this is a core distinction between these cases and some of the political electioneering disclosure cases. There, the putative justification associated with government disclosure is that there's a risk of quid pro quo corruption, and therefore we need to have access to this information. Where we've got contributions that are flowing into the hands of candidates or elected officials, and we need access to that information in order to make sure that there's not corruption or corrupting activity occurring.
Here, we've got money flowing between nonprofit entities and supporters, associational activities. There are not the same concerns, as has been suggested on this call. To the extent that there is a government interest, the government interest is in the regulation of charitable entities. This is not a question of governmental corruption or of some other governmental record. The only thing that makes it a governmental record is the government requesting and warehousing this private information.
So in that sense, it's actually difficult to see how the watchdog groups, unless they're watchdog groups that are assigned to watch over private entities, what interest they have. And additionally, in terms of government transparency, this isn't government transparency. This isn't transparency as to how it is the government is using funds or the like. This is government making transparent private transactions, which is inappropriate, absent a sufficient important or compelling governmental reason for doing so.
Paul S. Ryan: I want to just jump in. Because the topic of watchdog groups and their motivations and desires have been mentioned a couple times in the last few minutes, I want to make abundantly clear that Common Cause has never advocated for the public disclosure of donors to 501(c)(3) charities. Also, to be clear, Common Cause chooses to disclose all of its donors of $250.00 or more to the public.
But again, we don't advocate. We're not asking for public disclosure of donors to (c)(3) organizations. So it seemed like a great opportunity to, in a sense, agree with my colleagues here in this discussion that this case is about disclosure to the government. Common Cause doesn't have a dog in that fight.
We are interested in the case because of potential spillover effects, particularly with regard to the NAACP exemption standard into—and this is where we do advocate disclosure—more explicit and expressed political spending and contributing. But yeah, I agree this case is about disclosure to the government, not disclosure to the public.
Greg Walsh: Thank you. On behalf of the The Federalist Society, I want to thank our speakers for the benefit of their valuable time and expertise today. We welcome listener feedback by email at firstname.lastname@example.org. Thank you all for joining us. We are adjourned.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.