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SCOTUS Decision: Americans for Prosperity Foundation v. Bonta
The case of Americans for Prosperity Foundation v. Bonta (19-251) was heard by the Supreme Court of the United States. It was argued argued April 26th, 2021 and decided July 1st, 2021. (The full opinion is available in PDF format.)
This case originated when Americans for Prosperity Foundation and the Thomas Moore Law Center (Petitioners) filed against the Attorney General’s Office of California claiming violation of their, and their donors') First Amendment Rights.
Prior to this ruling, a charitable organization in California was required to disclose the identities of its major donors. California law empowered the Attorney General to make rules and regulations regarding the registration and the renewal process for charitable organizations. Under that authority, the Attorney General required charities renewing their registrations to file copies of their Internal Revenue Service Form 990, along with any attachments and schedules. (IRS Form 990 contains information regarding tax-exempt organizations’ mission, leadership, and finances.)
Schedule B of Form 990 (the document that gives rise to the present dispute) requires organizations to disclose the names and addresses of donors who have contributed more than $5,000 in a particular tax year (or, in some cases, donors who have given more than 2 percent of an organization’s total contributions).
The Plaintiffs' Complaint
The Law Center and the Foundation (plaintiffs) are tax-exempt charities that solicit contributions in California and are subject to the Attorney General’s registration and renewal requirements. Neither petitioner has provided the state with a copy of their Form 990 Schedule B since 2001, out of concern for their donor’s anonymity. This was not an issue until 2010, when the California Department of Justice “ramped up its efforts to enforce charities’ Schedule B obligations, sending thousands of deficiency letters to charities that had not complied with the Schedule B requirement.”
The Law Center and the Foundation received deficiency letters in 2012 and 2013, respectively. When they continued to resist disclosing their contributors’ identities, the Attorney General threatened to suspend their registrations and fine their directors and officers.
Both plaintiffs sought and received injunctive relief, claiming that the Attorney General had violated their First Amendment rights and the rights of their donors. The petitioners alleged that Schedule B disclosure would make their donors less likely to contribute and would subject them to the risk of reprisal. Both organizations challenged the disclosure requirement on its face and as it applied to them.
Findings of District Court
The District Court found for the plaintiffs and prohibited the Attorney General’s Office from collecting their Schedule B information. The Ninth Circuit vacated the District Court’s ruling and remanded it for retrial. Again, the District Court ruled in favor of the plaintiffs and permanently enjoined the Attorney General from collecting their Schedule Bs.
The District Court found that the disclosure requirements were not narrowly tailored enough. The court determined that the information sought was rarely used to audit or investigate claims and found that, even in situations where such information was used, it could be obtained from other sources. Further, the District Court determined that the requirements opened donors to potential threats or harassment. Historically, the Attorney General's Office could not ensure the confidentiality of donor information, since over 2,000 confidential Schedule B forms had been inadvertently posted online by the Attorney General’s Office. The Ninth Circuit again vacated and ruled for the Attorney General’s Office. Then certiorari was granted by the Supreme Court of the United States (SCOTUS).
Interestingly, in this action, more than 300 amici curiae briefs were filed.
Amicus briefs are filed by people who typically take the position of one side in a case to support a cause that has some bearing on the issues in the case. The groups most likely to file amicus briefs are businesses, academics, government entities, non-profits, and trade associations.
Here a wide variety of charitable organizations ranging the full ideological spectrum submitted amicus briefs in support of the plaintiff’s position. Groups filing briefs in support ranged from the American Civil Liberties Union to the Proposition 8 Legal Defense Fund; from the Council on American-Islamic Relations to the Zionist Organization of America; from Feeding America—Eastern Wisconsin to PBS Reno. These represented a diversity of perspectives and a range of issues including health, faith, civil rights, and racial justice -- among others.
The briefs submitted showed the deterrent effect feared by these organizations is real and pervasive, even if their concerns are not shared by every single charity operating or raising funds in California.
This Supreme Court of the United States (SCOTUS) heard arguments in this case on April 26th of 2021. The Justices entered their opinion on July 1st of 2021.
SCOTUS first looks into First Amendment rights.
The First Amendment prohibits government from “abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” Implicit in a person’s right to engage in protected activities is their right to associate with others, known as protected association.
SCOTUS has addressed government infringement on protected association previously and found compelled disclosure of information or affiliation with groups engaged in advocacy can constitute a restraint on freedom of association as effective as any other government action.
SCOTUS dealt with this in its starkest form in NAACP v Alabama ex rel. Patterson, 357 U. S. 449, 462 (1958). The NAACP opened an office in Alabama, with the goal of racial integration in higher education and public transportation. NAACP members were threatened with threats of economic reprisal and violence. In this case, the Attorney General’s Office was seeking access to the group’s membership lists.
SCOTUS held that the First Amendment prohibited such compelled disclosure; that “effective advocacy of both public and private points of view, particularly controversial ones, is undeniably enhanced by group association.” NAACP members faced a significant risk of reprisals if their affiliation with the organization became known AND Alabama had demonstrated no offsetting interest “sufficient to justify the deterrent effect” of disclosure -- thus their disclosure requirement violated the First Amendment.
This First Amendment challenges to compelled discourse fall under the “exacting scrutiny” standard. [Buckley v. Valeo, 424 U. S. 1, 64 (1976)] Exacting scrutiny requires “a substantial relation between the disclosure requirement and a sufficiently important governmental interest.” The governmental interest must reflect the seriousness of the actual burden placed upon a person or entity's First Amendment rights. This means the more serious the burden, the more serious the governmental interest must be. Exacting scrutiny is triggered by “state action which may have the effect of curtailing the freedom to associate,” and by the “possible deterrent effect” of disclosure. [NAACP v. Alabama, 357 U. S., at 460–461.]
Further, the disclosure requirement must be narrowly tailored to the asserted government interest.
“Narrow tailoring is crucial where First Amendment activity is chilled—even if indirectly because First Amendment freedoms need breathing space to survive.”
This means that, for a government to require an organization to reveal sensitive information about its members and supporters, there must be a substantial relationship between the disclosure and the interest AND the requirements must be narrowly tailored to the interest being promoted.
The California Case
SCOTUS ruled that California’s disclosure requirement was unconstitutional on its face. The Court found that California DOES have a substantial government interest in preventing fraud. However, pre-investigation collection of Schedule B information was not used a single time in investigation, regulation, or enforcement efforts by the Attorney General’s Office. The main rationale behind the disclosure requirement seemed to be efficiency, which is not sufficient.
California failed to provide proof that its disclosure requirement was necessary and narrowly tailored to prevent fraud, and so was found facially unconstitutional.