CRG Network v. Barland et al

Filing 14

ORDER signed by Judge Rudolph T. Randa on 9/5/2014 GRANTING 7 Motion for Preliminary Injunction. Defendants enjoined from implementing or enforcing Wis. Stat. § 11.26(9). (cc: all counsel) (cb)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
CRG NETWORK,
Plaintiff,
-vs-

Case No. 14-C-719

THOMAS BARLAND, HAROLD FROELICH,
MICHAEL BRENNAN, ELSA LAMELAS,
GERALD C. NICHOL, and TIMOTHY VOCKE,
Defendants.
DECISION AND ORDER
The plaintiff, CRG Network, is an organization whose mission is to
help citizens elect fiscally conservative candidates, assert property rights,
and remove corrupt and/or fiscally irresponsible politicians from office.
CRG is a “committee” as that term is defined in Wisconsin‟s campaign
finance law. Wis. Stat. § 11.01(4).
In the upcoming general election, CRG believes that Dan Knodl,
Robyn Vos, John Nygren and Dale Kooyenga are excellent candidates for
the Wisconsin Assembly because they share the same fundamental beliefs
as CRG with respect to fiscal conservatism, limited government, property
rights, individual liberty, and clean and ethical government. As such, CRG
sent $250 campaign donations to each of these individuals. Mr. Knodl

accepted his donation, but the other candidates returned their respective
donations, either in whole or in part, because they had reached the $7,763
limit on donations from committees like CRG. See Wis. Stat. § 11.26(9)(b),
discussed more fully below.
In this action, CRG argues that the contribution limits in § 11.26(9)
violate its First Amendment right to participate in the upcoming election.
CRG moves for a preliminary injunction, arguing that recent Supreme
Court case law, especially McCutcheon v. FEC, 134 S. Ct. 1434 (2014),
demonstrates that it is likely to succeed on the merits of its claim.
The Court agrees. The defendants, various members of the
Wisconsin Government Accountability Board, will be enjoined from
enforcing § 11.26(9).
***
To obtain a preliminary injunction, the moving party must show
that it has (1) no adequate remedy at law and will suffer irreparable harm
if a preliminary injunction is denied and (2) some likelihood of success on
the merits. Wis. Right to Life, Inc. v. Barland, 751 F.3d 804, 830 (7th Cir.
2014). If this showing is made, the Court “weighs the competing harms to
the parties if an injunction is granted or denied and also considers the
public interest.” Korte v. Sebelius, 735 F.3d 654, 665 (7th Cir. 2013). In the
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First Amendment context, however, likelihood of success is “usually the
decisive factor.” Barland at 830. This is because the loss of First
Amendment freedoms “unquestionably constitutes irreparable injury,” and
“injunctions protecting First Amendment freedoms are always in the public
interest.” ACLU v. Alvarez, 679 F.3d 583, 589, 590 (7th Cir. 2012).
CRG, as noted, meets the statutory definition of a “committee,”
which is “any person other than an individual and any combination of 2 or
more persons, permanent or temporary, which makes or accepts
contributions or makes disbursements, whether or not engaged in activities
which are exclusively political, except that a „committee‟ does not include a
political „group‟ under this chapter.” § 11.01(4). Committees must comply
with extensive regulations, including registering with the GAB, § 11.05(1),
having an official treasurer and separate campaign depository account, §
11.05(3), paying an annual filing fee of $100, § 11.055, and filing extensive
disclosure reports twice per year, § 11.06. A committee is prohibited from
donating more than $500 to any one candidate for the State Assembly, §
11.26(2)(c), as is an individual, § 11.26(1)(c).
Subsection 11.26(9) imposes additional limits on donations. As
relevant here, no individual who is a candidate for state or local office may
receive “more than 45 percent of the value of the total disbursement level
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determined under s. 11.31 for the office for which he or she is a candidate
during any primary and election campaign combined from all committees
other than political party and legislative campaign committees subject to a
filing requirement, not including any transfer from any personal campaign
committee to another personal campaign committee.” § 11.26(9)(b).1
Contributions received in excess of those limits must be returned to the
donor. § 11.26(11). The “total disbursement level” for State Assembly
Candidates is $17,250, § 11.31(1)(f); forty-five percent of that amount is
$7,763. Therefore, once a candidate for State Assembly receives $7,763 in
donations from committees, the candidate must return any further
donations to the donor. Accordingly, Messrs. Vos and Nygren returned
CRG‟s entire donation because they had already accepted $7,763 in
committee donations; Mr. Kooyenga returned $86, presumably because he
had already received $7,599 prior to receiving CRG‟s donation.
In McCutcheon, the Supreme Court addressed the aggregate
contribution limits in the Federal Election Campaign Act of 1971 (FECA),

§ 11.26(9)(a) is identical in all material respects, with the differences
emphasized as follows: “No individual who is a candidate for state or local office may
receive and accept more than 65 percent of the value of the total disbursement level
determined under s. 11.31 for the office for which he or she is a candidate during any
primary and election campaign combined from all committees subject to a filing
requirement, including political party and legislative campaign committees, including
any transfer from any personal campaign committee to another personal campaign
committee.”
1

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as amended by the Bipartisan Campaign Reform Act of 2002 (BCRA). The
Court began its analysis, of course, with Buckley v. Valeo, 424 U.S. 1
(1976), and the fundamental distinction in campaign finance law between
expenditures and contributions. Expenditure limits “necessarily reduce[]
the quantity of expression by restricting the number of issues discussed,
the depth of their exploration, and the size of the audience reached.” 134
S. Ct. at 1444 (quoting Buckley at 19). Thus, expenditure limits are subject
to “the exacting scrutiny applicable to limitations on core First Amendment
rights of political expression.”

Id. (quoting Buckley at 44-45). Under

exacting scrutiny, the government may regulate protected speech only if
the regulation promotes a compelling interest and is the least restrictive
means to further the articulated interest. Id.
Contribution limits, as explained in Buckley, “impose a lesser
restraint on political speech because they „permit[] the symbolic expression
of support evidenced by a contribution but do[] not in any way infringe the
contributor‟s freedom to discuss candidates and issues.” Id. (quoting
Buckley at 21). The Court applied a lesser but “still rigorous standard of
review” with respect to contributions, under which even a “significant
interference with protected rights of political association may be sustained
if the State demonstrates a sufficiently important interest and employs
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means closely drawn to avoid unnecessary abridgement of associational
freedoms.” Id. The government‟s interest in preventing quid pro quo
corruption or its appearance is a “sufficiently important” government
interest for purposes of this lesser standard of review. Id. at 1445. Even so,
the Court in McCutcheon found a “substantial mismatch” between this
objective and the “means selected to achieve it,” i.e., the aggregate limit on
total individual contributions. Id. at 1446. Thus, the Court declared the
aggregate limits unconstitutional because they “do little, if anything, to
[combat corruption], while seriously restricting participation in the
democratic process.” Id. at 1442.
To illustrate, the base limit at issue in McCutcheon was $2,600 per
election to a federal candidate ($5,200 total for the primary and general
elections); the aggregate limit was $48,600. As the Chief Justice wrote:
The difficulty is that once the aggregate limits kick in, they
ban all contributions of any amount. But Congress‟s selection
of a $5,200 base limit indicates its belief that contributions of
that amount or less do not create a cognizable risk of
corruption. If there is no corruption concern in giving nine
candidates $5,200 each, it is difficult to understand how a
tenth candidate can be regarded as corruptible if given $1,801,
and all others corruptible if given a dime. And if there is no
risk that additional candidates will be corrupted by donations
of up to $5,200, then the Government must defend the
aggregate limits by demonstrating that they prevent
circumvention of the base limits.

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Id. at 1452 (emphasis in original). Similarly here, if another committee‟s
single donation of up to $500 to a particular candidate carries no risk of
quid pro quo corruption, how can CRG‟s $250 donation to the same
candidate be deemed corrupting? Moreover, how could the same $250
donation be non-corrupting when given before the aggregate limit is
reached, but carry the potential for corruption if given thereafter? It
cannot. CRG cannot be prevented from making a donation up to the base
statutory limit simply because of the aggregation of previous donations.
See, e.g., Seaton v. Wiener, --- F. Supp. 2d ----, Civil No. 14-1016
(DWF/JSM), 2014 WL 2081898, at *5 (D. Minn. May 19, 2014), which
granted a preliminary injunction against Minnesota‟s “special sources”
limit, following McCutcheon: “One would assume that the thirteenth
contribution to a legislative candidate in the amount of $1,000 causes no
more concern of corruption than the first twelve $1,000 donations.”
Accordingly, the government must “defend the aggregate limits by
demonstrating that they prevent circumvention of the base limits.”
McCutcheon at 1452. In this respect, the defendants cling to the anticircumvention rationale expressed by the Wisconsin Supreme Court in
Gard v. Wis. State Elections Bd., 456 N.W. 2d 809, 823 (Wis. 1990) (noting
that “no provisions prevent narrow issue PACs from proliferating into
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several other committees. Therefore, there is potential for these narrow
issue PACs with large aggregations of wealth to circumvent the PACcandidate contribution limits if it were not for sec. 11.26(9)(a) and (b)”).
Moreover, the defendants insist that McCutcheon is distinguishable
because federal campaign finance law, unlike Wisconsin law, includes
statutes and rules that discourage or prevent individuals from creating
multiple political committees to circumvent individual contribution
limitations. This is a twisted view of McCutcheon and the current state of
campaign finance law. In essence, the defendants seek to justify the
violation of fundamental First Amendment rights because there aren‟t
enough laws or rules in place to accomplish their goals.
To begin with, there are laws in place to prevent circumvention of
the base contribution limits. See § 11.24(1) (“No person may, directly or
indirectly, furnish funds or property to another person for the purpose of
making a contribution in other than the person‟s own name”); Gard at 823
(“Both „earmarking‟ contributions to a party for a specific candidate and
„laundering‟ contributions for a candidate through a party are prohibited by
secs. 11.16(4) and 11.30(1), Stats., respectively”). Committees are also
subject to disclosure requirements that expose exactly where contributions
directly to candidates come from, regardless of how many hands they pass
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through. § 11.06(1).
The defendants argue that the existence of an anti-proliferation rule
under federal law, absent under Wisconsin law, distinguishes this case
from McCutcheon. 134 S. Ct. at 1447 (2 U.S.C. § 441a(1)(5) “eliminates a
donor‟s ability to create and use his own political committees to direct
funds in excess of the individual base limits. It thus blocks a
straightforward method of achieving . . . circumvention . . .”). Again, this is
a fundamental misreading of McCutcheon. There are provisions in place
under Wisconsin law to prevent circumvention of the base contributions,
and if those are deemed insufficient, there are many other methods,
including an anti-proliferation rule, that may be enacted. The existence of
such alternatives, enacted or not, demonstrates that the aggregate limit in
§ 11.26(9) is not “closely drawn” to prevent base limit circumvention.
McCutcheon at 1458 (“Importantly, there are multiple alternatives
available

to

Congress

that

would

serve

the

Government‟s

anticircumvention interest, while avoiding „unnecessary abridgement‟ of
First Amendment rights”).
Moreover, the defendants‟ imagined scenario, in which individuals
create numerous political committees, donate money to each of them and
then have those committees in turn contribute the money to the
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individual‟s preferred candidate, is unlikely and impractical. It is
impractical because of the administrative burdens associated therewith. §§
11.05(1), 11.05(3), 11.055, 11.06, Wis. Stats. It is unlikely because a
wealthy and motivated donor could simply spend unlimited funds for
independent expenditures on behalf of his chosen candidate, as opposed to
funneling contributions through multiple committees. McCutcheon at 1454
(“On a more basic level, it is hard to believe that a rational actor would
engage in such machinations. In the example described, a dedicated donor
spent $500,000 – donating the full $5,000 to 100 different PACs – to add
just $26,000 to Smith‟s campaign coffers. That same donor, meanwhile,
could have spent unlimited funds on independent expenditures on behalf of
Smith”).
Therefore, and in light of the Supreme Court‟s increasing impatience
with this type of “prophylaxis-upon-prophylaxis” approach, CRG is likely to
succeed on the merits of its claim that § 11.26(9) violates the First
Amendment. McCutcheon at 1458 (“It is worth keeping in mind that the
base limits themselves are a prophylactic measure. As we have explained,
„restrictions on direct contributions are preventative, because few if any
contributions to candidates will involve quid pro quo arrangements‟”)
(quoting Citizens United v. FEC, 558 U.S. 310, 357 (2010)) (emphasis in
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original). The harm caused by this violation is irreparable, for which there
is no adequate remedy at law. Alvarez, 679 F.3d at 589. Indeed, the clock is
ticking towards election day, making preliminary injunctive relief all the
more appropriate. The Court‟s injunction will also serve the public interest
by vindicating First Amendment freedoms. Id. at 590 (“the public interest
is not harmed by preliminarily enjoining the enforcement of a statute that
is probably unconstitutional”).
With regard to the scope of the injunction, the defendants argue that
CRG lacks standing to challenge § 11.26(9) insofar as it applies to
contributions to candidates other than those for State Assembly (i.e., for
State Senate, Governor, or other state offices). This is incorrect. CRG has
standing to pursue, as it has, a facial challenge to the statute. 4805
Convoy, Inc. v. City of San Diego, 183 F.3d 1108, 1112 n.4 (9th Cir. 1999)
(“a plaintiff whose conduct is protected may also bring a facial challenge to
a statute that he contends is unconstitutional, without having to employ
the overbreadth doctrine, by arguing that the statute could never be
applied in a valid manner and would chill the speech of others”). Section
11.26(9) will be enjoined in its entirety.
***

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NOW, THEREFORE, BASED ON THE FOREGOING, IT IS
HEREBY ORDERED THAT CRG‟s motion for a preliminary injunction
[ECF No. 7] is

GRANTED. The defendants are

enjoined from

implementing or enforcing Wis. Stat. § 11.26(9).
Dated at Milwaukee, Wisconsin, this 5th day of September, 2014.
BY THE COURT:
__________________________
HON. RUDOLPH T. RANDA
U.S. District Judge

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